Teladoc Inc Stock

Ladies and gentlemen, thank you for joining us and welcome to the Teladoc Health Q2 '26 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Michael Minchak. Michael, please go ahead.

Thank you and good afternoon. Today, after the market close, we issued a press release announcing our second quarter 2026 financial results. This press release and the accompanying slide presentation are available in the investor relations section of the teladochealth.com website. On this call to discuss the results will be Chuck Divita, Chief Executive Officer. Our prepared remarks will be followed by a question-and-answer session. Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating our performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website.

During this call, we will make forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, without limitation, statements regarding our 2026 financial outlook, the timing, availability, and market response of new products and services, including Teladoc One, expected BetterHelp insurance revenue and exit run rate, expected cash pay trends, provider network capacity, advertising and marketing spending and efficiency, the timing and impact of our BetterHelp insurance rollout, and the expected benefits of the actions we are taking. Such statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the cautionary statement in today's earnings release and the risk factors in our most recent Form 10-K and Form 10-Q for this quarter, including risks relating specifically to each of our reporting segments.

I would now like to turn the call over to Chuck.

Thanks, Mike. Let's begin with the health care landscape that we operate in. The industry continues to evolve with changes in client needs and expectations and meaningful shifts in how consumers access care. These changes reinforce our confidence in the strategic priorities we previously outlined and will continue to shape how we innovate, where we invest, how we allocate resources, and where we focus the organization to drive long-term value. Against this backdrop, we have seen continued progress in the second quarter, strengthening our position as the global leader in virtual care while building on this foundation for sustainable financial performance. Our second quarter results were within our guidance ranges on a consolidated basis and reflected distinct dynamics across our 2 segments. In Integrated Care, we again delivered solid performance with revenue and adjusted EBITDA both above the midpoint of our guidance ranges.

Our ongoing focus on innovation was underscored by the recent launch of Teladoc One, our new connected care model that brings together the full breadth of our clinical and technical capabilities to deliver outcomes for each individual and across populations for our clients. Within BetterHelp, our top priority remains the scaling of insurance and in-network services. For the quarter, insurance-related revenue was near the high end of our expected range. Additionally, we established a baseline national footprint for insurance during the quarter ahead of our prior expected rollout schedule, launching all remaining states in the U.S. Adjusted EBITDA for the segment tracked closely to the midpoint of our guidance range, although segment revenue came in at the lower end of the range due to lower cash pay revenue.

As I will explain in more detail in a moment, through mid-May, operating trends at BetterHelp remained generally consistent with the assumptions and the guidance provided with our first quarter results on April 29. However, as we moved through the rest of May and into June, the increasing speed of consumer movement towards insurance, provider capacity and network constraints against this increased demand, and a more accelerated decline in cash pay users and other factors became more pronounced and persistent than the assumptions underlying our prior outlook. These developments led us to reassess our plans and priorities and accordingly revise our BetterHelp revenue outlook. Before spending more time on BetterHelp, let me first make some comments on our Integrated Care segment. We've established a leading position by providing a broad range of virtual care services to support physical health and mental wellbeing.

Health care continues to be significantly impacted by rising costs, burden of chronic illness, access issues, and other concerns, and we believe our scale, clinical approach, and extensive platform position us well against this market backdrop. We've been accelerating innovation in our products, services, and capabilities to further capitalize on our strengths, lean into this market opportunity, and deliver greater value to our clients. We conduct millions of visits annually in this segment, and earlier this year brought new innovations to our flagship 24/7 care service. The enhanced offering addresses more conditions, provides specialist support to treating clinicians, and includes other value-added features to make these visits more impactful and connected engagement points. We've advanced technology and capability innovations to support our integrated patient care model.

This includes Teladoc Health Pulse, our new intelligence engine, which brings together unique multidimensional data and advanced AI models to power clinical insights, guide targeted actions, optimize experiences, and to surface these insights and other actionable information directly at the point of care for appropriate action by our clinical team.

We've been building one of the most extensive integrated practices in virtual care, broadening and deepening our clinical model, and investing in purpose-built technology to support it. Working to bring this all together in a comprehensive new solution that we believe clearly differentiates us, including by orienting around the care and needs of the individual and not a fragmented product category as is prevalent across the market today. Last week, we introduced this new approach called Teladoc One, which we view as the most comprehensive offering ever brought to market by the company. It is a new care model that delivers a predictive and adaptive experience designed around an individual's health care journey rather than a specific or singular condition. For clients, Teladoc One provides the ability to address needs across populations with accountability for both clinical performance and total cost of care impact.

At its core, Teladoc One leverages the full extent of our clinical capabilities delivered through a unified, multidisciplinary care team spanning clinicians, specialists, therapists, coaches, and dieticians. Complemented by AI-enabled capabilities through Pulse to efficiently support care teams, enable timely and effective interventions, enhance engagement, and help people stay on track with their care plans between clinical interactions. The care model is designed to help coordinate care across settings, including with the individual's local care provider when applicable, and to help ensure care needs are addressed timely and consistently. With broad availability beginning January 2027, we will initially apply this care model to populations impacted by cardiometabolic health conditions, a major driver of health care cost and market focus for us. Over time, we also see opportunities to extend the model across additional populations, further expanding value for clients and market potential.

We believe that the addition of Teladoc One to our portfolio and our continued focus on innovation and delivering differentiated solutions to clients will further leverage the strengths and potential of our Integrated Care segment. Let me turn back to BetterHelp to provide a more detailed update on the business, our priorities for the remainder of 2026, and our updated outlook as we continue to focus on rapidly scaling insurance in the U.S. and pivoting the business more towards an in-network model. As we have previously discussed, the U.S. cash pay market has been under continued pressure and the principal reason we began building an insurance-covered in-network offering. The BetterHelp revenue growth outlook provided with our first quarter results assumed we would achieve the dual goals of scaling insurance, while at the same time stabilizing and growing overall BetterHelp segment revenues as we progress through the year.

We expected that the combination of strong growth of insurance sessions and growth of cash pay users in non-U.S. markets would increasingly offset the impact of expected declines in U.S. cash pay users, including the movement of potential cash pay users towards insurance and lower planned advertising spending levels compared to the prior year. Operating information available to us through April, including cash pay user trends, advertising and customer acquisition cost factors, insurance session growth, and insurance provider network expansion were within the assumptions underlying our outlook at the time of our first quarter earnings call. Results continued to be generally consistent and reflective of those assumptions through mid-May, including insurance user gains largely offsetting declines in U.S. cash pay users. After that point, certain changes in the business became more pronounced and persistent than we had anticipated.

As we moved through the second half of May and into June, 3 related developments became increasingly clear to us. First, consumer demand for insurance versus cash pay increased faster than expected and reflective of sustained high levels of consumer preference for insurance. Approximately 70% of potential users indicating a preference for insurance and as much as 80% in certain markets. Second, high preference and demand for insurance caused a greater and faster shift away from cash pay acquisition than we had modeled, including potential users who previously might have entered through the cash pay pathway, increasingly shifting towards insurance or otherwise converting to paying users at a lower rate. The decline in cash pay users and cash pay revenue, therefore, accelerated beyond the decline incorporated in our prior outlook.

Third, while insurance provider capacity continued to increase, it did not expand at the same pace as the increase in demand. Although we had credentialed thousands of providers for the network, available capacity also depends on provider availability for the applicable state and payer, as well as clinical need, appointment time, and length. Higher demand, therefore, exceeded the capacity available to convert this into a greater number of paying users, completed sessions, and revenue. As a result, cash pay revenue declined faster than anticipated, while insurance revenue could not increase at a level sufficient to offset the cash pay decline. The insurance business grew well, and revenue was in line with our expected range. However, because the pace and geographic construct of the demand for insurance exceeded available capacity, overall BetterHelp revenue was pressured as the transition away from cash pay accelerated.

Business patterns can fluctuate over short periods, including during the state-by-state insurance rollout and factors such as varying indications of consumer behavior, provider network requirements, and payer mix considerations. As we moved through June, we concluded that these developments likely represented sustained changes in the business rather than short-term variability, and that assumptions supporting our prior full year BetterHelp segment revenue expectations are no longer representative of the business outlook as we transition more towards an in-network model. Additionally, seeing sustained high levels of consumer preference for insurance, and given the strategic importance of insurance to BetterHelp, we accelerated national insurance availability during the quarter and ahead of our earlier expectation to roll out over the remainder of 2026. The additional 20 states launched comprise nearly 1/3 of the U.S. population, and therefore, were essential to moving to a national capability for insurance.

We believe the national rollout will provide a more representative view of consumer behavior and operating requirements, as well as further enable the evolution of BetterHelp's advertising and marketing approach towards a more insurance-oriented model over time. Early indications from this emerging national footprint further demonstrated that insurance preference and market-specific capacity requirements were developing differently and more rapidly across the broader footprint as compared to the earlier state-by-state rollout approach. The developments I just covered caused us to conclude that our prior revenue assumptions had to be adjusted, and we made several strategic decisions in response. Those decisions and resulting actions will place further pressure on cash pay revenue, but we believe they are the appropriate actions to strengthen the business and build a durable insurance position over the longer term.

We are highly focused on expanding insurance network capacity, including a greater ability to support and adapt capacity on a market-by-market basis in response to demand dynamics. This includes initiatives to support accelerated provider recruitment, activation, and long-term retention, as well as enhancements to the insurance platform to support productivity, capacity, and user experience. We've made considerable progress in building the insurance offering, including establishing a baseline national footprint a year after launching our first state. We have contracted for over $150 million in-network lives and credentialed more than 8,000 mental health professionals for the network at this point.

Insurance coverage sessions have grown substantially over the rollout, with over 20,000 sessions completed last week alone, representing an estimated annualized revenue run rate on that basis of over $110 million, up from over at $75 million at the time of our first quarter earnings call, and more than double the level from the fourth quarter 2025 earnings call held in February. We are evolving BetterHelp's historical direct-to-consumer cash pay advertising and marketing approach to more prominently reflect insurance objectives. This includes better aligning the expected demand generation of advertising spending levels with available provider capacity, as well as moving from state-level insurance marketing to more national strategies. We believe these and other changes can improve marketing efficiency and user conversion economics over time, as insurance becomes a higher mix of our revenue.

As a result of these actions, we now expect advertising spending in 2026 to be lower than our prior plans, as we continue to focus on supporting overall margin objectives for the business. While reduced advertising spending will have a negative impact on cash pay user acquisition, we believe this evolving approach better aligns us with the growing part of the U.S. market in network services with lesser orientation on the declining U.S. cash pay market. We are reducing near-term emphasis on markets outside the U.S., including associated resource allocation and reduction in advertising levels. This is not expected to be a permanent shift as we continue to see meaningful opportunities outside the U.S. longer term, given the large addressable market and significant unmet need.

Given the importance of the U.S. insurance market to BetterHelp, we believe the highest return use of our product engineering, operational, and marketing resources in the near term is supporting our insurance initiatives in the U.S. We are also reprioritizing certain other previously planned initiatives to support this effort as well. Our updated guidance leads to a BetterHelp segment revenue range of $770 million to $830 million for 2026. Relative to our expectations at the time of the first quarter earnings call, this new range reflects cash pay revenue declining faster than anticipated due to the factors and actions I mentioned. We are reaffirming our expectation for 2026 insurance revenue of $90 million to $105 million.

While the actions we are taking and planned initiatives to address more insurance demand will take time to implement and drive impact, we remain encouraged by the momentum we are seeing and expect these and other moves to further strengthen the insurance business in 2026 and position it for continued strong insurance revenue growth in 2027. With respect to BetterHelp's adjusted EBITDA margin, we continue to expect a range of 3.0% to 4.6% for the full year and have aligned our actions to support our ability to invest in the insurance opportunity ahead. While the business dynamics are different than we previously anticipated and presenting more challenges as we make this business model transition at BetterHelp, we are also encouraged by the progress being made towards building out our insurance position and the opportunity ahead in the insurance market.

We believe the actions we are taking are focused on the right areas to make BetterHelp a stronger and more durable business over time. Now let me cover our results for the second quarter. Consolidated revenue was $607 million, and adjusted EBITDA was $66 million, representing a 10.8% margin on a consolidated basis. Net loss per share was $0.21 and includes the following pre-tax per share amounts. Amortization of intangible assets of $0.49 and stock-based compensation of $0.05. Free cash flow for the quarter was $36 million. And we ended the second quarter with $774 million in cash and cash equivalents on the balance sheet. Net debt to trailing adjusted EBITDA was 0.8x, and 3.6x on gross debt basis.

Turning to segment results, second quarter Integrated Care revenue was $394 million, an increase of 0.7% over the prior year, and in the upper half of our guidance range. Factors that contributed to the year-over-year revenue increase included international, which was again up by double digits this quarter, boosted by a 30% increase in revenue from hybrid care models and, to a lesser extent, higher chronic care enrollment and visit revenue growth in the segment. In aggregate, these factors more than offset the headwind from lower subscription revenue we've spoken about previously. Approximately 60 basis points of year-over-year growth came from acquisitions. We finished the quarter with 100.3 million U.S. Integrated Care members, slightly above the high end of our guidance range. We've modestly raised our full year outlook by roughly 1 million lives at the midpoint based on results seen thus far.

Our full year range still contemplates some slight moderation as our health plan clients deal with potential changes to their underlying enrollment levels. Chronic care program enrollment was 1.27 million at quarter end, up approximately 6% sequentially and 14% higher year-over-year, driven largely by continued client adoption of multi-condition bundles, which in turn expand the potential enrollee population. Second quarter Integrated Care adjusted EBITDA was $65 million, up 13.6% over the prior year period and represented a 16.5% margin. This was above the high end of our guidance range and up approximately 190 basis points from the second quarter of 2025. Adjusted EBITDA performance was driven by the revenue upside versus our midpoint, as well as disciplined cost management, which more than offset mix-related gross margin pressure from the shift to visit-based arrangements.

BetterHelp's second quarter revenue was $213 million, 11.6% lower than the prior year period and down 2.6% sequentially. Insurance revenue of $22 million was near the high end of our expectation and up approximately $9 million sequentially. This was offset by a greater-than-expected decline in the cash pay business, including the result of deliberate actions we took during the quarter, including reduced advertising spending as we prioritize the acceleration of the insurance rollout and the achievement of profitability objectives. Average paying users in total declined 11% from the prior year's quarter to 346,000, and were down 4% sequentially, while insurance users increased by over 70% sequentially and reflecting a growing part of BetterHelp's business. BetterHelp's adjusted EBITDA for the quarter was $0.5 million, a 0.2% margin, just slightly below the midpoint of the guidance range.

This was impacted by lower cash pay revenue and additional investments to support the scaling of insurance, including the accelerated nationwide rollout. These items were somewhat offset by a 17% decline in advertising and marketing expense versus the second quarter of 2025. Now turning to guidance. We expect 2026 consolidated revenue of $2.36 billion to $2.45 billion, a 5% reduction at the midpoint versus the prior range, primarily attributable to the updated BetterHelp cash pay outlook. We expect adjusted EBITDA of $271 million to $303 million, up slightly at the midpoint versus the prior range, and representing approximately 85 basis points of margin expansion versus 2025. Our free cash flow guidance remains unchanged at $130 million to $170 million. We now expect full year stock-based compensation expense to be below $50 million, which would represent a decline of over 35% from 2025 and 75% lower than 2023 levels.

We now project net loss per share of $1 to $0.75. Note that our cash flow and net loss per share guidance ranges do not incorporate any potential impact from changes in our current debt structure. For the third quarter, we expect consolidated revenue in the range of $569 million to $609 million and adjusted EBITDA in the range of $62 million to $74 million. Moving to the segments. For Integrated Care, we expect 2026 revenue growth of 0.8% to 2.4%. There were several factors that contributed to the updated range, including the deferral of a previously expected contract implementation in 2026 to 2027 at the client's request, and a lower relative forecast for FX, where we now expect the tailwind to be approximately 10 to 15 basis points below our prior expectation.

We continue to expect international revenue growth in the high single digits on an organic constant currency basis. Our full year Integrated Care adjusted EBITDA margin guidance of 15.6% to 16.4% is up 40 basis points at the midpoint versus our prior guidance range and represents an increase of approximately 85 basis points over 2025. We are guiding the third quarter Integrated Care revenue flat to up 3% year-over-year, which includes roughly 25 basis points of contribution from prior acquisitions. Adjusted EBITDA margin in the range of 15.7% to 17.2%. Looking at the cadence for the balance of the year for Integrated Care, we expect the third quarter to fourth quarter ramp to be slightly greater versus 2025. This includes typical seasonality with respect to flu and infectious disease visits and impact of in-year implementations on the fourth quarter.

Adjusted EBITDA is expected to benefit from continued execution of cost savings and productivity initiatives. Moving to BetterHelp. Based on the factors and actions described earlier, we now expect 2026 segment revenue to decline 19.0% to 12.7% versus 2025, reflecting a greater decline in cash pay revenue. We expect insurance revenue in the range of $90 million to $105 million. While the total segment revenue range is wider, we believe it is appropriate based on the uncertainties inherent in cash pay and ongoing business model transition. Key swing factors include the timing and progress of insurance network capacity and platform-related initiatives, growth and mix of insurance-covered sessions, advertising and marketing spend levels, customer acquisition cost trends, and user conversion efficiency and user retention. We are reaffirming our adjusted EBITDA margin guidance of 3.0% to 4.6%.

This range contemplates mix impacts, investments to support insurance initiatives, and reduction in advertising and marketing expense in the mid to high 20% range, more in line with the insurance priorities mentioned earlier. For the third quarter, we are guiding to BetterHelp revenue down 24.2% to 12.3%. Insurance revenue is expected to be in the range of $25 million to $31 million in the quarter, up 29% sequentially at the midpoint. We expect an adjusted EBITDA margin of 0.5% to 2.5%, which is generally consistent with the prior year period at the midpoint. Looking ahead to the fourth quarter, we expect continued sequential growth in insurance revenue. Based on the third quarter insurance revenue range, if fourth quarter results are consistent with the midpoint of the implied fourth quarter range, that would equate to an annualized insurance revenue exit run rate approaching $140 million.

Cash pay revenue in the fourth quarter is expected to be impacted by the actions we are taking to align with and support insurance objectives, as well as lower advertising and marketing spending due to holiday ad pricing dynamics. As a result, and similar to prior years, we expect the fourth quarter to see the highest adjusted EBITDA of the year. In closing, we have made meaningful progress on key initiatives that support our strategic priorities. While there is more work ahead, the team remains focused on disciplined execution and delivering results with urgency. We remain confident in our strategy, and we are taking deliberate actions that we believe will strengthen the durability of our business, improve long-term performance, and create sustainable value for shareholders.

With that, we are now ready for questions.

[Operator Instructions] Our first question comes from Sarah James from Cantor.

So I'm hoping to get a better idea of what the pacing to closing the supply gap looks like for the therapists that are taking insurance. So you went from 6,000 to 8,000. I think you have a network of 30 or so. How big is the supply gap right now? What do you mean by, you mentioned accelerating insurance adoptions through certain programs that you're doing. Can you be more explicit about that, and how do you think about the ramp going forward?

Yes, thanks, Sarah. Appreciate the question. As you mentioned, we've continued to grow the total number of credentialed therapists pretty significantly over the course of the year, and that continues. That's been able to support the insurance sessions and revenue and things that we had expected. I think this higher level of demand and the strong preference for insurance, now our national rollout, obviously, is why we're making these moves and these changes. I would say there's a number of initiatives going on, but let me bucket them into 2 areas. First of all, I would say around provider acquisition and retention. This is really things that are aimed at recruitment, both out of the BetterHelp network that you referenced, the cash pay network, as well as therapists that are not in the network that are more traditional in terms of taking insurance.

We've got a number of things going on there to look at our recruitment processes, the effectiveness of that, and how we can scale those more quickly. We are also continuing to look at ways that we can expand delegated credentialing with payers. We have begun in going through the process to pursue NCQA accreditation for delegated credentialing. We think that's going to be a benefit. We've also got some initiatives around the onboarding and engagement of therapists onto the platform and get them using it and serving the patients. The second area is around what I would say about improving existing provider capacity in addition to new recruitment. This is really things like improving the platform, the insurance platform we have, the tooling, looking at scheduling efficiencies. We've done a lot there.

I mentioned in the last quarter some of the things that we had done around AI to support efficiency and documentation, things looking at the experience of the providers and the user experience. We're also putting into place and have been, but we're doing more, looking at state-by-state and payer level initiatives to be able to respond to demand and capacity needs on a more dynamic basis, as that demand and capacity will change over time. There's a number of things underneath that and really why we took the actions to refocus resources and really lean into this insurance opportunity we have.

Just any view on the timing of closing the gap of where demand is to where supply is?

Look, we're actively working on it and have been. We reaffirmed our revenue range that I had mentioned in my prepared remarks. We're obviously taking these actions to strengthen our position in 2026 to position for strong insurance revenue growth in 2027. I don't want to speak on the timing of that. I would just say that we've got a number of things underway and really why we have refocused the resources the way we have.

Our next question comes from the line of Lisa Gill from JPMorgan.

In fact, thank you for all the comments on BetterHelp. Just 2 things I want to try to better understand. One, is the reimbursement under insurance materially different for the provider, where they have a preference for cash pay versus insurance coverage? Secondly, as we make that conversion over to insurance, can you talk about the profitability to Teladoc? Will that look materially different? I know your advertising costs are going to materially change over time as you won't have to do as much direct-to-consumer advertising, and your customer acquisition costs won't be as high. How do I think about that transition and the impact on your margin as well?

Let me take the first comment. Certainly in a cash pay environment, the therapists are approaching that on a cash pay basis for a number of reasons, including flexibility. They don't necessarily have to do all the same documentation requirements that you would have to get reimbursement from a payer. Similar therapy and visit and all that, but different kind of model. In the insurance side of the house, obviously there's more requirements of the therapists, in terms of the documentation, the administration. Obviously there's claim submission that happens and all those kinds of things. It is a bit of a different dynamic, and it's not necessarily for everyone. I think the reimbursement really will focus on kind of supply and demand dynamics, and its market-by-market basis. We continue to evaluate compensation programs that will make sure that those therapists are supported.

It's a little bit of a different animal between the 2 because of the cash pay versus the payer reimbursement. In terms of the margin view, I would say, first of all, we're going to be very focused on scaling insurance. We see this in-network move and pivot for BetterHelp as a really important one to create a more durable business because of the volatility that comes with the cash pay side. From a margin perspective, we're sort of looking at it this way. We should expect, I've said this before, a lower gross margin % in insurance versus cash pay. Cash pay requires a significant level of advertising and marketing, as you referenced. The gross margin profile is different. We do expect and should expect a lower gross margin % in insurance. It's just the dynamic in insurance.

We would also expect that the lifetime value for insurance will be more reflective of the patient's need and less around whether the cost is as much of a barrier as it is obviously in cash pay, fully out of pocket. We do see the ability over time to improve our ad spend efficiency and the spending levels. We had expected that to occur over time, obviously a bit more accelerated now in terms of the advertising spending levels. We do expect that to create some efficiencies. We're investing ahead of the opportunity here, we expect to see operating leverage kick in as insurance continues to scale further. Beyond that, the margin profile for BetterHelp will depend on those kinds of factors, the pace of the business transition, how cash pay evolves. That's how we're looking at margins under the insurance model.

Our next question comes from the line of George Hill from Deutsche Bank.

Forgive me if I missed this part, but have we addressed what percentage of the capacity that you currently have in BetterHelp can address the capacity needs in the insured segment? Again, I apologize if I missed this part. Do we need to find a bunch of new therapists to serve the insurance business, or is there a licensing issue why the therapists that serve the cash pay business can't serve the insurance business? Or is it more addressed to Lisa's question, which is there's a compensation issue as opposed to a licensing issue?

Yes. The therapist network that's part of the cash pay market are experienced a very significant part of BetterHelp's value proposition on the cash pay side. We have continued to recruit and offer insurance to the network as we've rolled out these states, We've seen good, solid interest in therapists looking at the insurance side. We're not just limiting ourselves to the therapist network and the cash pay side. We've been recruiting and going after therapists that aren't necessarily in the cash pay network. It's a combination of both that's occurring. It is a significant network in the cash pay side that gives us an opportunity to bring insurance to market. I think what we're seeing, though, is the demand really outpacing what our expectations were in terms of the movement from cash to insurance.

We've grown the capacity pretty significantly over the last many number of months, as was noted. It's a market-by-market, payer-by-payer dynamic. We don't have capacity constraints uniformly. It varies by market. We're approaching it that way as well. I think it's both. It's a cash pay therapist moving to insurance as well as recruiting therapists that are not in the cash pay network today.

Okay. Maybe just a real quick follow-up. Is there a quick way to frame, can we put a number on by what order of magnitude are we missing capacity? How much revenue are we missing by not having the capacity to capture the volume?

Yes, I don't want to comment on that. I think, again, we've done well in terms of growing capacity. The insurance sessions are growing well. We're able to be at the higher end of our revenue expectations. Because of the size of the cash pay market in the U.S. and the cash pay user base that's out there, it obviously creates a significant capacity issue when you throttle all that demand towards insurance. That's how we're looking at it and why we've taken these actions to refocus more on insurance, as well as take into consideration more in our advertising and marketing, which is intended to create awareness and demand generation to more increasingly focus on the insurance objective so that we're not out there spending money to generate demand beyond what we have the capacity to fulfill as we grow the network.

Our next question comes from the line of Daniel Grosslight from Citi.

I'll stick with BetterHelp here, and really focusing on the international segment here, because it's been a pretty consistent area of strength for you in BetterHelp. I get there's a lot to focus on in the U.S., but I'm curious why you've chosen to deprioritize international now, and at what point would you consider re-accelerating investment in international markets?

Yes, I appreciate the question there. It has been an important part of BetterHelp and continues to be. We are maintaining our position in the markets that we're in today, and international will continue to be an important area for BetterHelp. We really see this more as a near term prioritization action here. We've got finite resources at BetterHelp, and we feel like the product, the engineering, the operating resources, the marketing resources that could benefit our insurance scaling, that the best, highest use of them is to focus on insurance scaling given the demand and the preference we see. I wouldn't see it necessarily as a moving away from those non-U.S. markets. There's still a large market opportunity. There's a lot of unmet need out there that BetterHelp is leading into, and we're going to maintain our positions and presence in those markets.

We have the opportunity once we see these insurance initiatives take hold to revisit those non-U.S. markets in terms of the level of focus we have there. I would more look at that as a near term prioritization item and do see it as a longer term opportunity for the company.

Got it. Okay. As we think about the cash pay part of BetterHelp in '27, I know you're not giving formal guidance now, but would it be fair to back out what the cash pay is in 4Q and then annualize that as a good run rate for '27, just again, just on the cash pay side, or do you think we'll see continued declines in the cash pay business in '27 from that 4Q run rate?

Yes, I don't want to comment on 2027, but I would say that obviously we're making these moves because we see significant additional opportunity in the insurance market and to position us to grow insurance revenues in 2027. And we had expected and continue to expect pressure on the U.S. cash pay market. Obviously, that's accelerated further than we were thinking. As you get to the fourth quarter, you've got a couple things going on. You've got that dynamic as well as you, I know you're aware of this, but we have a typically pull back in ad spending during the holiday season, which impacts the cash pay market as well. I wouldn't necessarily take the fourth quarter and annualize that. I would just say that we would expect continued pressure on the cash pay market.

We'd expect to continue to drive insurance revenue growth, including through the actions we're taking. To the earlier question, we'll revisit how we're looking at the non-U.S. markets and how we look to grow there as well.

Our next question comes from the line of Jessica Tassan from Piper Sandler.

I'm curious if you can give us a sense of just how many insured lives or what level of run rate revenue your 8,000 BetterHelp insured providers can support? And then just how are you thinking about the insurance business growing in 2027, and what level of capacity do you need in order to support that growth? Then just my quick follow-up would be, can you comment at all on the behavior that you're observing within the BetterHelp insured business? How many visits? What level of acuity? Just what are you seeing in those members? How long are they staying with the product, et cetera?

Okay. Well, I think, I'll try to tick through those. The first question, the 8,000 credentialed therapists in total, we continue to grow the total number, which is important, but it's also important their availability from a state perspective, from a payer perspective, obviously capacity and availability for the clinical need, the appointment time, and the length of the time. There's a lot of things that go into it beyond the raw number. Both are important. Continue to grow the credential network, as well as these actions that I mentioned earlier around the provider acquisition and retention, and improvements, frankly, that we can make to the insurance platform to drive that. I don't want to give a number in terms of what the 8,000 equate to. It's more about the capacity and the utilization that's there as well.

I think that's how I would answer that. In terms of the revenue run rate, we've reinstated our guidance there, reinforced our guidance around $90 million to $105 million. These actions are being taken so that we can strengthen our position in 2026 and drive a strong insurance revenue growth in 2027, and that's really what we're going at. In terms of how the users are behaving, it's early. Obviously, this national rollout, we think, is going to give us maybe a bit more representative view of the consumer behavior. Not just the cash pay versus insurance, but how they use the platform, what the ongoing operating requirements are. We had referenced a few things in the last quarter call, and we are seeing good usage in the first 90 days relative to cash pay. We're seeing good session growth, as I mentioned before, the 20,000.

So a lot of those factors are coming into play as we think about the outlook moving forward.

Our next question comes from the line of Allen Lutz from Bank of America.

Chuck, I want to follow up on the BetterHelp thread here. You're still expecting the same EBITDA margins despite the issues in cash pay. Cash pay is going to have higher gross profit dollars as you talked about, but it seems like you're able to at least somewhat manage this through lower advertising spend. In response to a prior question, you talked about the trajectory of gross profit margin and the trajectory of advertising spend as you make this shift from cash pay to insurance. I'm not asking for any type of guidance here, but just conceptually, over the next couple of years or however you want to frame it, how should we think about the cadence of gross margin, and the timing of gross margin degradation versus EBITDA margin expansion?

Do we need to see EBITDA margins go down before they go up based on the dynamics here around cash pay? Thank you.

Yes, I don't want to go too far on that last point, but I would say that, yes, we have taken into consideration in the EBITDA margin guidance, the initiatives that we're planning to take and the actions we're taking here, as well as how we're looking at our advertising spending. That is a big lever. As you know, the cash pay business, there's a significant expenditure to acquire members. There's a high churn with cash pay, and so it has its own set of dynamics in terms of the efficiency of that spend and how that plays into margins. We do believe that over time, that this scaling of insurance will give us a greater ability to impact ad spend efficiency and user acquisition efficiency. Now, this is a bit more accelerated given the preference and demand we're seeing.

We always expected that we would need to evolve that approach over time as insurance continued to scale and grow. I think the fourth quarter dynamic that we've seen in terms of adjusted EBITDA being higher for BetterHelp in the fourth quarter, tending to be at least, than other quarters. That dynamic, I think, is still going to continue to be there even within the insurance market as well, just given the ad spend dynamics around the holidays. Beyond that, I don't necessarily want to get into cadence of gross margin, but we do believe that insurance will create a more durable position for BetterHelp, and I think create a more durable view of how that gross margin and the financial profile of the company is going to proceed going forward.

Our next question comes from the line of Jailendra Singh from Truist.

I actually want to maybe talk about Integrated Care business. I know we are still in the middle selling season. Maybe if you can talk about any updates, how the trends have been compared to last year, how does the pipeline look? Are you seeing larger deals, better win rates of more product consolidation? How is Teladoc One affecting selling season conversation? Any update there would be helpful.

Appreciate that, Jailendra. I would say, first of all, with respect to the selling season, I think the operating environment that we are in is really in line with what we've spoken about previously. I would say in the employer market, looking for solutions that align with their goals. I think they are concerned around fragmentation and driving impact from the programs they have in place. With the health plans, as you know, they're working through a number of challenges, higher medical costs, regulatory dynamics, and business decisions they're making around that. That kind of continues to be a similar environment. We are seeing solid interest across the channels in what we're doing. Through the second quarter, I would say the selling season overall was in line with our expectations, and in line with where we were in the first half of 2025.

I would say the conversations we're having with clients are productive. They're, I would say, more strategic in nature, as they look at their challenges and what they want to do and what the benefits of programs like ours can have. The innovation focus we have, our capabilities, the outcomes we can drive, and our focus on reducing fragmentation, I think all those things resonate with them. We have had some nice wins and expansions so far this year. We've also faced some pressures just because of the competitive nature and the market environment. There's a lot of the year left to go, as you referenced. I think we're seeing really good interest across our solutions in virtual care, in chronic care. Adoption of bundles continues to be a theme. We've seen good growth in weight and obesity management programs.

I think all of that is in line with where we expected to be, and we're really excited about bringing Teladoc One to market. This is really the culmination of a lot of work over the last year or so. As you know, the products and services that are brought to market today are focused on a particular problem or a particular need, whereas Teladoc One is a much more comprehensive approach because it's focused on what the individual need is, and not necessarily one condition or a fragmented product solution that's prevalent out in the market today. We launched it last week, actually, with our clients. We had a client forum. I think there was good excitement about what Teladoc is doing in this renewed innovation.

I think they understand why we're going after it this way in terms of this comprehensive model, and why it can really benefit them and benefit their members. We're excited to get it in the hands of our sellers and get it out to clients. It's really new. We just launched it last week, but very encouraging in terms of the market acceptance and awareness of what we're doing, at least from that client forum, and we're going to build on it going forward.

That's super helpful. Just one quick follow-up, and it's a clarification on, I'm sorry if I missed this, but did you say if cash pay trends, did they stabilize in July? Or the trends you saw in Q2 have continued in Q3 here in July?

I don't believe I spoke about July, but certainly as we progressed through the tail end of the second quarter, it caused us to really take the view that these were not short-term variations that we were seeing, that these were more sustained business developments, and really required us to reassess the assumptions that were underlying our prior outlook, given what was evolving in the marketplace, as well as the impact of the actions we're taking. I think all of that factored into how we are setting the expectations going forward.

Our next question comes from the line of Sean Dodge from BMO Capital Markets.

It's Chris Charlton on for Sean. Sticking on Integrated Care, can you share some more color on the competitive dynamics within the chronic care portion and kind of what some of the drivers were behind the big step up in enrollment in the quarter? I know you mentioned greater adoption of the multi-condition bundle and called out weight management, but are there any other areas of strength or demand clout here in how this is setting your expectations for the rest of the selling season and into 2027?

Yes. I appreciate the question. I think there's a couple of things going on, and I referenced those, but I'll just maybe give a bit more detail. Certainly, we're seeing, and have seen, but strong adoption of bundles by clients. Again, it addresses more needs of the people that they're serving, creates more recruitable population for us, and in turn, the ability to increase and improve enrollees. That's important in terms of meeting more needs, but also stickiness with the program, engagement. All of those things kind of factor into the benefits to us of bundle. Weight and obesity programs have seen significant and solid growth, as you mentioned. Those carry a different, lower PMPM than some of the other programs, so there's a little bit of a mix thing going on there.

I think that having more enrollees and having these bundle programs also bodes well with respect to how we bring Teladoc One to the market because it's a more comprehensive offering. In terms of the competitive landscape, it's very competitive, and it has been. I think the actions we're taking to really lean into our strengths, bring new capabilities to market, and really differentiate on this clinical care model that's very comprehensive, obviously enabled by the AI investments that we've made, I think are going to create some distance and differentiation relative to point solutions that are out there. I think that's how we're looking at it. I think we're in the right space. Cardiometabolic health area is a significant part of health care expenditure.

A lot of challenges that face those individuals, and by us bringing the full breadth of our clinical capabilities, we think we can help them, and we think we can drive impact for our clients.

Our next question comes from the line of Elizabeth Anderson with Evercore. [Operator Instructions] Our next question comes from the line of Charles Rhyee with TD Cowen.

Yes. I guess just to kind of -- I don't know if you explicitly connected these 2 issues, but is the issue that we're seeing in the accelerated demand as people come to BetterHelp and they go through the process, they realize they can get insurance coverage, and they seek insurance coverage? Then there's a capacity issue where they can't get access to a therapist quickly, and then they decide, you know what? If I can't get it now, I'm going to hold off, and I don't choose the DTC option. Are these 2 directly linked? As such, as you talk about trying to expand capacity in the areas where you're having this issue, what does this do in terms of your ability to expand into other regions on the insurance side, or are those two still 2 separate things?

Yes, I think the traditional historical advertising and marketing approach for BetterHelp really is about brand awareness and demand generation for the cash pay environment. I think we're seeing the demand generation occur with the level of advertising we were doing. To your point, now that BetterHelp is becoming more aware that we are offering insurance, and as we scale and grow more markets, and during the quarter actually launched all the remaining markets that we now have a baseline footprint nationally. There's more awareness and more interest, which we had expected because it really underscores why we got into insurance to begin with. The pressure on the consumer and affordability and the greater acknowledgement about the need for mental health by payers and more in-network availability.

All of those things have factored in, and really what we needed to do was, as a result of this higher demand and this accelerated cash pay situation, is that we needed to evolve that marketing approach to more and more take into consideration this emerging national footprint. That we weren't generating demand both for cash pay, but also for insurance that we weren't able to meet. That's what's going on there. We think we are evolving that appropriately, and we'll be able to, I think, more effectively tailor the advertising to the capacity that we have. Again, as I said earlier, it's not a uniform challenge. We have capacity that grows and subtracts in different markets.

I think this evolution really is people wanting to use BetterHelp, people wanting to use BetterHelp and use their insurance coverage, and part of that is our demand generation and then ultimately our conversion of that demand into insurance users paying sessions and revenue. That's what's going on and why we really felt that it wasn't a short-term variation that we needed to reevaluate, not just the assumptions underlying our prior outlook, but what actions we could take to really strengthen and lean into this insurance market opportunity that we have ahead of us.

Just to follow up, I think from Allen's question earlier, you've maintained the margins guide. How long is this sustainable? Because obviously you are pulling back on the ad spend in the short term as you're trying to adjust to this capacity issue. But clearly you need the advertising for the DTC demand side of the equation. It's sustainable for a certain period, but just curious how long you think this transition will take. Is this something that we think we can get fixed within '26, or could this take longer?

Well, I touched on before how we're thinking about the margin. I think this evolving the advertising and marketing approach to more strongly consider our insurance footprint and capacity, I think is an important part of that answer. We have always and we will continue to focus on the bottom line of the company and making sure that we're good financial stewards in terms of how we deploy advertising and so forth. As I mentioned before, we are investing ahead of this opportunity. We are scaling insurance. We've gone from one state in less than a year to all 50 states and plus D.C. There's some investments that we're making and some operating costs that we believe that we're going to be able to get some leverage out of as we continue to scale insurance.

I think all of that is in play with the answer to that question. I think you should be aware that we are always looking at the bottom line financial performance of the company.

The Q&A session has ended. This concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Colby, and I'll be your conference operator today. At this time, I would like to welcome you to the Teladoc Health Q1 '26 Earnings Conference Call. [Operator Instructions]

I'll now turn the call over to Michael Minchak. You may begin.

Thank you, and good afternoon. Today, after the market closed, we issued a press release announcing our first quarter 2026 financial results. This press release and the accompanying slide presentation are available in the Investor Relations section of the teladochealth.com website.

On this call to discuss the results will be Chuck Divita, Chief Executive Officer. During the call, we will also discuss our outlook, and our prepared remarks will be followed by a question-and-answer session. Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating our performance.

Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website. Also, please note that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied on this call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website.

I would now like to turn the call over to Chuck.

Thanks, Mike. I'm pleased with our performance for the quarter with consolidated revenue and adjusted EBITDA both exceeding the midpoint of our guidance ranges and reflecting solid performance in Integrated Care and progress we're making in scaling insurance of BetterHelp.

Let me start with some comments on the market environment as it shapes everything we'll discuss today and the actions we're taking to move the business forward. The U.S. market served by our Integrated Care segment had meaningfully evolved in recent years, creating both challenges and new opportunities to build upon our scale platform.

We've established a market-leading position by delivering at a national scale and by expanding services over time to address episodic and longitudinal care needs, improve the health of people living with chronic conditions and to support mental health. We see our ability to provide more comprehensive care at scale, positioning us well for the opportunities ahead.

One of the more significant market shifts has been with client preferences moving from subscription-based access towards visit-based arrangements and are more in line with the fee-for-service construct of the U.S. health care system. While this shift has created some near-term changes to our model, we've embraced it as an opportunity to expand our role and the impact we can have through each visit and interaction with Teladoc Health.

For example, earlier this year, we significantly enhanced our flagship 24/7 care offering, broadening the conditions we can address, bringing specialist support to our treating clinicians, adding real-time prescription benefit checks and expanding our ability to connect patients to additional in-network care as needed.

Multiple health plans have added the enhanced offering already, and we expect more to follow suit. And together with other virtual care services, we expect to see a moderation in the revenue headwinds we've experienced because of the migration of subscriptions to visits and to exit the year with this moving to a net tailwind.

The market for chronic care programs has also evolved in recent years, including the proliferation of point solutions that add more fragmentation. Chronic disease affects more than half of American adults and remains a major challenge for patients, health plans and employers and the U.S. health care system. Clients are increasingly looking for a more comprehensive approach supporting people with chronic conditions, a shift that plays well to our strengths.

Over the past several quarters, we've taken deliberate actions to strengthen our position, deepen our clinical model and drive innovation in our products and in our capabilities. And we see advancements in artificial intelligence as an important catalyst and opportunity for us to lean into these market changes.

While we've been using AI and adjacent technologies for some time, we are excited about the potential to leverage it more extensively in our business and advance how we deliver outcomes and results for our clients and the people we serve. This is why we've invested over the past year in our data infrastructure to power AI through our new Pulse intelligence engine as well as enhancements to our Prism Care delivery platform used by our providers.

By doing so, we are turning our extensive data and AI-driven insights into action as we engage with patients and support their needs. Combined with our deep clinical expertise, our range of services and trusted relationships with clients, we can deploy AI responsibly and effectively in a virtual native health care setting. And to bring all of this together for the market, we are actively developing new products for release later this year that leverage the full breadth of our clinical services and our AI-enabled capabilities in a comprehensive solution.

We believe this new approach will further build on the strengths of our well-established platform, create clear market differentiation and support sustainable growth. I look forward to providing a further update on this product innovation initiative on our second quarter call.

Mental health also represents an important market, and we see strong demand for our services given the extensive unmet need out there. Mental health conditions impact over 60 million adults in the U.S. with half of those not receiving treatment and over 1/3 of the U.S. population living in areas with a shortage of mental health professionals.

Because of this, the virtual care modality has become an essential access point and our services an important avenue for people seeking help and support. Within Integrated Care alone, we generated nearly $140 million in annual revenue for mental health services in 2025 and saw further traction and growth in the first quarter of 2026. And our ability to deliver comprehensive services across virtual care, chronic conditions and mental health to support overall health is valued by our clients and strategically important to our Integrated Care business.

The mental health market is also important to BetterHelp, which has built a leading global position in direct-to-consumer virtual therapy. Its high brand awareness, scaled platform and large and diverse therapist network come together to deliver an exceptional patient experience and achieve positive clinical outcomes. And having served over 6 million people since inception, BetterHelp also represents an important marketplace for mental health professionals to be matched with patients, over 90% of the time in less than 48 hours.

However, with mounting pressure on BetterHelp's U.S. direct-to-consumer cash pay business, we took decisive action to enter the insurance market and move towards a more durable and balanced model. In support, we made the highly strategic acquisition of UpLift last year, securing important capabilities, talent and a baseline of insurance contracts.

The integration has gone very well, and the insurance rollout is progressing ahead of our expectations. We are live in 30 states in Washington, D.C. and have credentialed and enrolled over 6,000 providers. We've also grown insurance contracted lives to over 150 million, a 30 million increase since year-end 2025. Early engagement data is also encouraging with insurance covered users averaging approximately 20% more sessions than cash-pay users in their first 90 days, suggesting benefits coverage is helping remove cost barriers.

Funnel conversion is also stronger with covered users that enter insurance information during onboarding compared to those moving through a cash pay-only flow. This is particularly important given BetterHelp's large inbound demand funnel and opportunity to convert a greater share of interested users into active ones and resulting in improved customer acquisition efficiency over time.

And we're beginning to see some meaningful separation in performance between markets where insurance has been active for an extended period compared to cash-only markets. For example, in states where insurance was live by the third quarter of 2025, we're seeing a nearly 800 basis point improvement in revenue performance compared to cash pay-only markets, an indication that insurance access is improving activation and helping stabilize underlying trends as markets scale.

As a result of this momentum, BetterHelp's total insurance covered sessions are now running at over 14,000 per week, representing an annualized revenue run rate of over $75 million, and we now expect to exit 2026 with a run rate of $125 million or more. This further illustrates the real progress we are making in the insurance rollout and in creating a stronger position in the U.S. for BetterHelp.

Markets outside the U.S. also represent an important growth opportunity for BetterHelp, contributing to solid growth in user trends and benefiting from more favorable customer acquisition costs on average. Our localized country launches in 2025 are delivering solid end market growth, and we look to target 1 to 2 new markets for launch in the second half of 2026.

Finally, operational excellence remains a key area of focus across both business segments, including operating efficiency and effectiveness. We've elevated execution and operating discipline with a clear focus on our cost structure. AI is playing a role here as well as we continue to deploy new capabilities across our business. For example, within BetterHelp, new AI-assisted clinical documentation is reducing administrative burden so therapists can focus more on delivering care.

Since launch, we've generated over 300,000 notes with strong therapist satisfaction and more than 2,000 therapists have used it across 30,000 sessions in our insurance workflows alone. This technology is saving about 15 minutes per session and adding up to more than 4 million minutes so far.

We will continue to look for ways to leverage AI and continue to focus on our cost structure more broadly. Our strategic priorities are aimed squarely at building a stronger business, supported by our financial strength and approach to capital allocation. This includes making both organic and inorganic investments that are well aligned with our needs and market opportunities and ensuring a strong balance sheet and financial profile, which is also important to our clients.

As I mentioned on the last earnings call, we intend to address our 2027 convertible notes in 2 phases to meaningfully lower our gross debt position. First, by paying down a substantial portion with available cash and securing new traditional term debt, potentially before year-end and then paying off the remainder with cash at maturity in 2027.

We believe this appropriately aligns with the cash flow profile and need of the business, and we will continue to evaluate our capital with a focus on financial strength and long-term shareholder value.

Now let me cover our results for the first quarter. Consolidated revenue was $614 million and adjusted EBITDA was $58 million, representing a 9.5% margin. Net loss per share was $0.36 and includes the following pretax per share amounts: amortization of intangible assets of $0.50, stock-based compensation of $0.08 and restructuring costs of $0.07 per share.

Consistent with historical seasonality, free cash flow for the quarter was a net outflow of $26 million, ending with $751 million in cash and cash equivalents on the balance sheet. Net debt to trailing adjusted EBITDA was under 0.9x and 3.6x on a gross debt basis.

Turning to segment results. First quarter Integrated Care revenue was $395 million, an increase of 1.5% over the prior year and came in towards the upper end of our guidance range. Acquisitions contributed approximately 170 basis points to year-over-year growth with a high single-digit increase in visit revenue, largely offset by lower subscription revenues in the quarter.

International revenues again grew double digits over the prior year period, including a 30% increase from our hybrid care models that provide virtual services and physical settings. U.S. Integrated Care membership finished the quarter at 101.2 million members, above the high end of our guidance range. We retained our full year outlook, which contemplates moderation over the course of the year as health plans deal with potential changes to their underlying enrollment levels.

Chronic Care program enrollment was 1.2 million at quarter end, up approximately 1% sequentially and 4% higher year-over-year, driven largely by an increased adoption of multi-condition bundles by clients seeking a more integrated and comprehensive approach. First quarter Integrated Care adjusted EBITDA was $56 million, up 12% over the prior year period and representing a 14.2% margin, slightly above the high end of our guidance range and up approximately 130 basis points from the first quarter of 2025.

Strong adjusted EBITDA performance was driven by the revenue upside I mentioned earlier as well as disciplined cost management, which more than offset mix-related gross margin pressure from the shift to visit-based arrangements. BetterHelp's first quarter revenue was $218 million, 9% lower than the prior year period, reflecting continued pressure on the direct-to-consumer cash pay business.

This was offset to some extent by $13 million in insurance-based revenue, which was up $6 million sequentially and at the high end of our expectations. Average paying users declined 9% from the prior year's quarter to 361,000, reflecting a mid-teens decline in the U.S., partially offset by high single-digit growth in non-U.S. markets.

BetterHelp's adjusted EBITDA for the quarter was $2 million, a 0.9% margin and down from 3.2% in the prior year. Lower cash pay revenue and the timing of investments to support the stronger insurance rollout drove a lower margin result. These items were somewhat offset by 12% lower advertising and marketing expense versus first quarter 2025, an intentional move as we balance funnel activation and brand awareness to support both cash pay and insurance.

Now turning to guidance. We expect 2026 consolidated revenue for the year of $2.48 billion to $2.58 billion, adjusted EBITDA of $267 million to $306 million and free cash flow of $130 million to $170 million, with the midpoint of each of these ranges unchanged from our prior outlook.

We now expect full year stock-based compensation expense to be below $55 million, which would represent a decline of over 30% from 2025 and down over 70% since 2023. We project net loss per share of $1.05 to $0.75 per share. Note that our cash flow and net loss per share guidance ranges do not include any potential impact from changes in our current debt structure as our remaining convertible notes don't mature until June 2027, and we are still evaluating options to address the notes.

For the second quarter, we expect consolidated revenue in the range of $597 million to $626 million and adjusted EBITDA in the range of $55 million to $67 million. For Integrated Care, we expect revenue to grow 0.8% to 3.5% with the range narrowing slightly and the midpoint unchanged. This range includes roughly 65 basis points of inorganic growth from prior acquisitions and approximately 60 basis points of benefit from FX.

We expect International revenue growth in the high single digits on an organic constant currency basis and high single-digit growth in visit revenues to be largely offset by lower subscription revenue. As I mentioned earlier, we expect this dynamic to further moderate in the second half of 2026 and to exit the year being a tailwind to growth.

Our full year Integrated Care adjusted EBITDA margin guidance of 15.1% to 16.1% is unchanged, which at the midpoint reflects an increase of approximately 45 basis points over 2025. Margin improvement is expected to be driven by ongoing cost savings and productivity initiatives, largely offsetting mix pressure from the subscription to visit shift.

We continue to be highly focused on ensuring our underlying cost base is aligned with our needs and the opportunities ahead. We are guiding to second quarter Integrated Care revenue down 1.75% to up 1.75% year-over-year, which includes roughly 70 basis points of contribution from prior acquisitions.

The sequential comparison versus the first quarter 2026 is impacted by timing factors, including client revenue that we expected to recognize in the second quarter that was recognized in the first quarter, the deferral of certain new contract implementations now expected to go live in the second half of 2026 and a reduced FX outlook.

Adjusted EBITDA margin is expected to be in the range of 14.7% to 16.0% in the second quarter, representing a year-over-year increase of approximately 65 basis points at the midpoint. Looking out to the second half of the year for the Integrated Care segment, we expect growth to benefit from contract implementations and strong visit revenue growth due in part to our enhanced 24/7 care offering as well as targeted enhancements to our visit funnel conversion.

In addition to those factors, adjusted EBITDA is expected to benefit from continued execution on cost savings and productivity initiatives. Moving to BetterHelp. We are narrowing our 2026 revenue guidance range to down 6.5% to down 1.0% versus 2025, with the midpoint unchanged. This now contemplates full year insurance revenue in the range of $90 million to $105 million, a $15 million increase from our prior expectation and an anticipated exit run rate of at least $125 million in the fourth quarter.

Cash pay revenue reflects a continued challenging consumer backdrop, together with the impact of continued scaling of insurance and disciplined advertising and marketing spending. Our guidance for adjusted EBITDA margin of 3.0% to 4.6% is unchanged versus our prior range. This reflects mix impacts and investments to support the scaling of insurance, partially offset by the lower level of expected ad spending.

For the second quarter, we are guiding to BetterHelp revenue down 11.75% to down 5.25%. At the midpoint, this reflects modest sequential growth, an early milestone reflecting progress towards stabilizing the business. This contemplates insurance revenue in the range of $18 million to $22 million in the quarter, up over 50% sequentially at the midpoint.

We expect an adjusted EBITDA margin of minus 0.5% to plus 1.5%, down on a year-over-year basis due to lower cash pay revenue, mix impacts on gross margin and continued investments to scale insurance, partially offset by lower ad spend.

Looking at the balance of the year for BetterHelp, we expect continued sequential revenue growth in the third and fourth quarter, driven by higher insurance revenues and growth in non-U.S. markets and similar seasonality with respect to adjusted EBITDA with the fourth quarter being the highest due to lower ad spend as a result of holiday ad pricing dynamics.

In closing, we are pleased with our first quarter performance and remain on track with our outlook. We are confident in the actions we are taking and encouraged by the progress across our key priorities. Our team remains highly focused on disciplined execution, and we will continue to prioritize actions to drive long-term shareholder value.

With that, let's open it up for questions. Operator?

[Operator Instructions] Your first question comes from David Roman with Goldman Sachs.

Maybe I'll just pick up on something where you just -- I think you made in your last remarks there around stabilizing the business here and reflected in your second quarter guidance for Integrated Care. Maybe just talk a little bit more about the return to growth here that you're contemplating? And if you're at a point now where you think that's on a sustainable trajectory? And then maybe just if you could give us a little bit of help here on the BetterHelp side, what you're looking for in calling kind of a turn in growth trajectory in that business?

Yes. Thanks, David. Thanks for the question. I think on the Integrated Care side, and I'll ask Mike to talk a little bit about some of the puts and takes in the first quarter as well as the second quarter guidance. But in terms of how we look at the rest of the year, there's a few things that I think are important to point out.

First of all, we've talked about this for a while. I talked about it in my prepared remarks, but this mix shift from subscriptions to visit has been pretty dramatic. Just a few years ago, 70% of the revenues of the company -- or excuse me, the membership that we had of the company was in subscription-based models and 30% in visit-based models.

Just a few years later and as we exit 2026, that's going to flip. We'll have about 70% of the memberships in visit-based arrangements versus subscription-based arrangements. So as we see that dynamic play out and including with some of the new product innovations I mentioned earlier, we're going to see that move to a net tailwind. And you'll start to see that a bit in the third quarter and in the fourth quarter.

Now in the second quarter, it's still a net tailwind, and you're seeing that in the numbers. Let me ask Mike to comment a little bit on the first quarter and second quarter guidance, and then I'll come back on BetterHelp.

Yes. Thanks, Chuck. So if we look at the first quarter, I would say we had a nice beat versus the midpoint of the guidance range. And I would say about 1/3 of that was due to timing and nonrecurring factors. And then the other part was due to good execution across the business. The timing factors, we did have a pull forward from an earlier booking that we -- that benefited the first quarter and is not recurring in the second quarter. So that was pulled forward.

The second is we've had a few contract implementations that we were anticipating in the second quarter that are now expected to occur in the second half. And I'd say the third factor is slightly lower FX impact relative to what we had previously assumed in the second quarter.

So I would say if you adjust for those factors, the impact of those was, I would say, a few million dollars. The sequential progression from the first to second quarter would look more consistent. And then I would say just we had indicated last quarter that in terms of the first half versus the second half revenue split for Integrated Care in '26, we had expected to be slightly more weighted to the second half relative to 2025, although generally consistent with the average split over the last few years -- over the past few years. We still expect that to be the case. So those are some of the dynamics that are impacting the first and second quarter and then the full year.

Yes. And then one additional thing on Integrated Care. As I mentioned earlier, it's really about driving greater value for our clients, and we've been very focused on product innovation, and you've seen some of that rollout. I'm excited about the work that we've got going on right now for some new comprehensive solutions to roll out later in the year, really to lean into the core strengths we have as a company be able to show up more comprehensively for our clients.

And the combination of this change in mix that's occurring as well as these new product innovations is really how we're going to drive growth in Integrated Care, of course, as well as our growing International position. In BetterHelp, the insurance entry point is going very, very well. We're excited about how that is scaling.

We think that as we progress through the year, we're going to continue to see that grow as well as start to moderate. And I mentioned in my prepared remarks, some of the moderation we're seeing in some states that have been live really since the third quarter of last year and the lift we're seeing in revenue there as a result.

So we're seeing some market stabilization. We're seeing early signs that the availability of insurance is creating -- is taking down that cost barrier. So we're seeing more sessions. So insurance really is a major catalyst for the turnaround and growth of BetterHelp in the U.S.

And then, of course, as I mentioned earlier, in my prepared remarks that international growth. So both segments have their story in terms of mix changes and growth outlook, and we feel confident that we've reflected that in our outlook and in our guidance.

Your next question comes from the line of Sarah James with Cantor Fitzgerald.

I was hoping you could unpack a little bit more the Integrated Care revenue guide. What are you assuming for the ACA subsidy-related disenrollment as we go through the year? Was it as big of an impact on 1Q as you had expected? And then as you think about the assumptions made in tightening the guide here, are you assuming any move in visit utilization or retention going forward?

Yes. Thank you for the question. We -- I think the ACA market, as you know, it's still working its way through. And I think the health plans, generally speaking, are expecting to see some continued moderation in their enrollment as payments are due and things like that.

And we've reflected that in our guidance. I was surprised to see a little bit higher enrollment in the first quarter, but we kept our guidance moderating down through the year for that reason. As I mentioned in our last earnings call, that we didn't see that having a material impact in terms of our revenues or our visits, just the nature of the mix and how we see that.

And so in terms of how we see the rest of the year, as I mentioned before, this mix shift change where we now have -- we're going to end the year with about 70% of membership in visit arrangements and the fact that we continue to grow visit revenues you're really going to start to see that take hold more in the third quarter and even certainly more in the fourth quarter and as we go into 2027.

Your next question comes from the line of Daniel Grosslight with Citi.

I want to go back to the BetterHelp insurance rollout. It seems to be going a bit better than expectations, maybe at the high end of expectations. With a few quarters under your belt now, I'm curious what the biggest drivers of upside have been and maybe some -- what have some surprises on the downside been for you as conversion and cannibalization progressed as you had anticipated really? And then I guess on top of that, given the success of the insurance business and the continued weakness in the DTC business, I'm curious if that changes the calculus at all on retaining the DTC business?

Yes. I think we've -- I think we've executed pretty well. We had a thesis when we acquired UpLift and when we decided to move BetterHelp and insurance. You may recall when I joined, that was one of the main priorities I laid out there. I felt like we needed that to turn that business around.

And I think the team has done a really exceptional job of executing that and rolling out states methodically, but with urgency. I think we understand the importance of turning that business around. So I think we've been -- I wouldn't say overly surprised, but pleasantly surprised that as consumers are able to come through and see that they have insurance coverage available to them, that it's driving more funnel conversion once they're with the program, higher number of sessions that we're seeing with cash pay, and we're seeing the markets that we're live in for an extended period of time, start to make -- move the needle in terms of overall revenues, which speaks to the cannibalization point.

So I think that's been a nice surprise, although I think we were intending to execute that well. I think one of the challenges we have in insurance is we've got to make sure that we've got the right therapist capacity to meet the demand. I mean BetterHelp come at this from a pretty large market position.

So we want to make sure we've got the therapist coverage. As I mentioned in my prepared remarks, we've now credentialed and enrolled over 6,000 providers, and BetterHelp has a large therapist network of over 30,000 in its consumer cash pay business.

So we're just urgently activating that and making sure we've got the right provider network to do it. So that's probably been one of the more significant constraints to your point. When you say retaining our direct-to-consumer business, I do believe, again, our starting point is a little different from others in this space because we have such a substantial market position in consumers, and because there's so much unmet need out there, I don't see necessarily that us turning off that consumer channel. We think it's important.

However, I do believe we're going to see this continued growth in insurance, not just in 2026, but as we go into 2027 and ultimately in the U.S., seeing insurance surpass consumer. So we'll revisit that at appropriate time. But for now, we think being able to offer that on a consumer basis, cash pay basis as well as scaling insurance is the right thing for the business right now.

Your next question comes from the line of Jailendra Singh with Truist Securities.

I actually want to ask about the Chronic Care business. Chuck, would you describe that the worst is behind given the momentum you seem to be seeing there, kind of some stabilization? And I know it is early in terms of selling season, but can you share anything in terms of early reads on the selling season? Any color on RFP trends, demand environment, the type of offerings you're seeing most interest?

Yes. I'll touch on the selling season first. I would say, generally speaking, the environment is similar to what I've spoken about previously. Just as a reminder, last year, we saw good overall results in the employer channels really across our solutions and ongoing challenges in the health plan space with all the macro challenges going on there.

But we did have some nice wins and some expansions, but some pressure as well. I would say it's early in the year to be definitive around the selling season outlook. But I'm encouraged by some of the things we're seeing. We're about in the same place we were last year, but we're seeing some higher win ratios and things like that.

And we're also having good strategic conversations with our clients. Obviously, they're facing a number of challenges with the rising medical costs and other kinds of issues and looking to, frankly, consolidate and reduce the number of point solutions and interested in the scope of services that we can bring to the table.

And with respect to Chronic Care, for sure, and the bundled products, which are now about 70% of what we're doing there. So I think the market is similar, although starting to see some encouraging signs. The health plans are -- they're sophisticated organizations. And as I've said previously, they will work through those challenges, and it might take a cycle or 2 to do that.

But that -- ultimately, that's going to be a tailwind to companies like Teladoc because they need those type of services to drive impact. Also, I think we're having really good conversations around some of these new product offerings. I mentioned enhanced 24/7 care. We thought that would be an attractive offering because of what it does and the kind of impact it can make as well as the role that it can play with these millions of visits that we have in a broader way in terms of driving engagement and connecting with other services.

We're seeing that with 24/7 care and with Catapult. So it's early in the year, but there are some encouraging signs, including the level of conversations we're having. The last thing I would say is as we think about product innovation and really driving an increased level of value, that's ultimately what is going to make a difference here. And I think over time, the scope of our services and the fact that we can come at this as a provider organization resonates, and I think it will continue to resonate with the customers.

Your next question comes from the line of Jessica Tassan with Piper Sandler.

I want to just follow up on Jailendra's. When you all say that we are in the same place as we were last year, is that referring to Chronic Care, so just implying flat revenue year-over-year in that subsegment? And then just if that's the case, how are you guys thinking about product innovation in that category specifically for 2027?

And as your posture just on kind of GLP-1 comprehensive prescribing and administration maintenance a product oriented towards that. Has your kind of philosophy changed at all just in light of the extension of the bridge model and just proliferation of the category?

Yes. Thanks for the question. First of all, my comments to Jailendra were really about the selling season and where we are at this point in time. Obviously, it's early and having conversations and building the pipeline. So that's really what I was referring to there.

In Chronic Care, we've got some exciting innovations that we're working on and really taking what I would call a more population-oriented view where we can really bring to bear the breadth of the clinical services that we have across our offerings, bring them together leverage the data and AI that we've built, and I could touch a little bit more on that later, but be able to bring that to the market in a way that is going to allow them to consolidate some of the services as well as drive stronger outcome for them.

In terms of GLP-1s, that market, as you know, has evolved. And of course, it's on the minds of employers and health plans for sure. And I think many continue to try to figure that out. We've seen a lot of changes in terms of capacity and pricing and different modalities and things like that coming to market.

We've come at this throughout that whole time really from a clinical point of view and making sure that we're focused on patient care and outcomes and not on prescribing per se. So we think that's the right place to be for our clients and the wraparound services we have as well as our ability to prescribe, I think, resonates.

So Again, this weight and obesity management space is something that we've been in for some time. We continue to look for ways to reach patients. We've got these arrangements we've done with Gifthealth and Lilly and those kinds of things. So I think our product portfolio is pretty well positioned. But ultimately, the product innovation I mentioned, I think, is going to go broader than just weight management.

Your next question comes from Sean Dodge with BMO Capital Markets.

It's Chris Charlton on for Sean here. On the Integrated Care side, there's been a lot of work being done here to increasingly monetize the members added over the past few years. And I know you've talked about some of the dynamics with to visit-based revenues. But where else are you seeing good traction so far on some of the initiatives that you've been rolling out here broadly? And then what are some of the next steps as you kind of get deeper into the year to kind of continue to drive the revenue growth here in the back of the year?

Yes. Thank you. Well, I mean, look, the virtual care part of our business is very important. And in addition to the mix changes I mentioned, the new 24/7 enhanced care offering really broadens the level of the services that we can provide, helps address things in the visit that may be previously required a specialist referral, those kinds of things and using it as a way to connect to other services.

For example, making sure that, that care provider is aware that someone is eligible for one of our chronic care programs and if it's appropriate for them, making them aware of it. We've connected that in with Catapult, acquisition we made last year, where we can, in those kinds of moments, make sure that if there's a need that we can connect them to the other services we have.

So I think a lot of those kinds of things really we're trying to take this scaled platform that we have, the integrated approach and look for all those activation points where maybe perhaps we weren't connecting all the dots or weren't able to benefit from that or the patients weren't aware.

I think the innovation that we're driving beyond 24/7 care, I think, is going to make a real difference here. These chronic care programs that are out there, it's become a highly competitive and crowded space, a lot of point solutions out there. And that there's a lot of point solution fatigue. So the fact that we can show up and do a multiple -- a multitude of things for the patient and then in turn, demonstrate to the client the value of all those things together ultimately is how we're going to drive growth in Chronic Care.

Your next question comes from the line of Charles Rhyee with TD Cowen.

I just wanted to follow up a little bit. Chuck, you were saying that in the states that you have launched the insurance product, you're seeing stabilization of the business. I think one of the things that you guys have talked about in the past was sort of when people are going through the funnel, how many people don't convert because of the cost. And it sounds like maybe that's -- you're starting to see that. I'm just curious, though, to the extent that it's kind of hard to see from this high-level view, are you seeing any type of cannibalization of people that might have gone into -- are you able to tell whether someone who have gone into the -- the cash pay has -- now has insurance has gone that way. Just trying to understand that dynamic a little bit? Or has this all really, would you say, been additive in the states that you've launched so far?

Yes. I appreciate the question. Again, with the caveat that it's still relatively early, but we do have a little bit more maturity in some of the states, as I mentioned before. And what we're seeing is net of -- there is some cannibalization risk, but net of that, we're seeing about 800 basis points of revenue lift improvement relative to states where we don't have cash pay.

So what that tells me is not only is insurance helping increase the ability for people to use BetterHelp, but it's -- that's net of any cannibalization. So we do expect to see some of that. I've mentioned that before. But ultimately, since, as you pointed out, a large portion of the people coming through BetterHelp's traditional funnel, over 80% drop off and don't become active users.

There's various reasons for that, but the largest reason is we're asking people to pay out of pocket. And now that they can access their insurance, we are seeing higher conversion, funnel conversion, and we are seeing in those states where we have insurance live a net improvement, a net lift in revenue.

So I think all of that is pointing to that the strategy is working and on track. Ultimately, we've got to see how that plays out. We will see some cannibalization, but I do also believe we're going to see some net growth as well.

Your next question comes from the line of Brian Tanquilut with Jefferies.

Maybe just to follow up on the BetterHelp discussion. So can you talk to us what the biggest challenge would be in building therapist capacity here as we grow the insurance-focused part of the offering? Or maybe another part of that is, are there any swing factors that could speed up this adoption, whether both on the insurance side, both on the supply side and also on the demand side?

Yes, great question. Look, I think we're doing a lot to make sure we've got therapist access, and I referenced 6,000, that's a significant number if you look at other players out there. And we are -- in addition to the 30,000 therapists that BetterHelp has, which is a high-quality network, not all of them want to do insurance. We also obviously haven't stopped recruiting other therapists to the platform for insurance.

So it is a bit of a gating factor from that perspective, but we're on track, and we continue to progress. So I think that really our ability to accelerate through the year, if I look at what we've accomplished so far, gives me confidence that we're going to see that progression through the year. And as I mentioned before, raised the range we think we have for the year as well as our exit.

So there are some -- we're scaling something very material. Think about exiting the year at $125 million of revenue when it was 0 at the middle of last year. And between our Integrated Care segment with $140 million of revenue and that $125 million, makes us a major player in mental health.

So I think we're going to -- we may face a few challenges here or there, but I've seen the team execute really well, and I'm confident that we'll be able to move it forward.

Your next question comes from the line of Allen Lutz with Bank of America.

Chuck, on the BetterHelp business, can you talk about for the, I guess, the back half or the back quarter of 2025 and the first quarter of 2026, what's the average co-pay that insurance covered patients are paying on the platform? And then how does that compare to cash pay? And then you made a comment responding to Charles' question where you said 800 bps of revenue lift improvement relative to states where you have cash pay. Can you unpack that a little bit? What exactly does that mean?

Okay. Great. Well, it's a combination of things, and it depends on someone's insurance coverage, et cetera. We will see -- I think we're going to see stronger lifetime value in the insurance space and maybe a bit lower ARPU initially here as it builds in terms of the level of sessions that grow.

So I think that's how I'd answer that. The reference to the 800 basis points is we looked at states that were live before third quarter -- by the end of third quarter 2025 as a measure of states that had some level of maturity to them. And then we looked at states that don't have insurance live. And what we see in terms of the trajectory of the business in cash pay only versus cash pay that has insurance, we're seeing about 800 basis points improvement or lift. So as we roll out states and as those states mature, that's an indicator that we're going to see that level of moderation. And ultimately, as we continue to expand capacity, convert those states into net growers.

Your next question comes from the line of Elizabeth Anderson with Evercore ISI.

This is Ayush on for Elizabeth. You guys are now at 30 states, and I think you mentioned you have around 6,000 credentialed therapists for insurance. So I guess what do you see as a realistic pace or cadence to get to all 50 states? Is it by the end of 2026, mid-2027? Or is it further out? And I guess, what do you see as the gating factor? Is that payer contracts, therapist credentialing or your own operation capacity?

Yes. I appreciate the question. We expect to be substantially all states, maybe not every state, but substantially all states by the end of the year, and we're progressing quite well against that. In fact, the 30 states is ahead of where we thought we'd be at this point in time. So that's progressing well.

There are some gating factors. I mean, there are some states that some of the payer contracts made a little bit more challenging. We're looking at different strategies to make sure we overcome any of those barriers. But to date, we've been able to advance the strategy pretty well.

So I think we're going to be substantially nationwide by the end of the year. And in terms of the therapist access, I think, one, BetterHelp continues to invest in its platform and make sure we've got a great experience for those therapists. Obviously, for insurance, we're asking them to do a little bit more administratively. And that's why in my prepared remarks, I referenced some of the things we're doing there that have really made it a much more efficient experience.

So I think the combination of the actions we're taking as well as you've got to remember, BetterHelp being as large as it is, these therapists at the end of the day, they need to fill up their calendars, right? This is their patient acquisition funnel. So our ability to, at scale, bring patient flow into their calendar so that their business model as a therapist can be vibrant is a factor as well and why we have so many therapists on the BetterHelp platform to begin with. So again, there's more to execute and more to come through the year, but the results to date demonstrate that we're having good progress there.

Your next question comes from the line of George Hill with Deutsche Bank.

I guess, Chuck, could you revisit your expectations for margin expansion as the BetterHelp business scales beyond 2026. And I'm also wondering -- I'm wondering if there's a positive mix effect because I know you guys have discussed in the past as the business grows, like the net rate is a little bit lower. But are you guys able to mix up from a therapist perspective? And just trying to think about how that business evolves as insurance coverage expands?

Yes, I appreciate the question. There's a few things in that. Obviously, right now, we're in build mode and expansion mode. So that's pressuring the near-term margins as we invest to scale. And because we're ahead of where we thought we'd be, we want to continue to do that. Ultimately, as that matures, we do believe we're going to see a margin profile that certainly expands from where we are right now. And I think that between the consumer channel and the insurance part of the business, will give us an opportunity for margin expansion as we get operating leverage.

We're able to make the ad spending more efficient in terms of customer acquisition and so forth. So I think there's a lot of opportunity for margin expansion. And ultimately, we want to scale insurance as quickly but also as smartly as possible. And then ultimately, we'll make decisions around kind of where we go from there. I think the ad spend efficiency is something that we're seeing some early signs of, and I'm looking forward to seeing a business that's got more durability. And I think insurance becoming a much larger part of that is going to be how we get there as well as expand margins.

Your next question comes from the line of Michael Cherny with Leerink Partners.

This is Dan Clark on for Mike. Just wanted to talk a little bit more about the 800 basis point growth differential between insurance and cash pay for BetterHelp. When you think about the back half of the year, are you assuming a similar level of kind of growth divergence? Should that widen as you sort of pick up more best practices on the insurance side? Or like how should we think about that?

Yes. I appreciate that. Well, we do expect to see -- at the midpoint for the second quarter, we do expect to see sequential -- modest sequential revenue growth relative to the first quarter. I think that's a good early milestone, initial milestone and expect to see some revenue -- marginal revenue growth in the third quarter and the fourth quarter. And a lot of that is really driven by insurance and scaling out to more states and the ability to expand the number of sessions that we have per user.

I referenced that a little bit in the prepared remarks. So the combination of getting it live, getting the therapist capacity there and being able to treat people and care for people where the cost barrier has come down, all of those things are going to come together in terms of how we see revenue growth. I mentioned the 800 basis points because it's a good indicator of once the market is mature, now obviously, with the caveat that we're still early here, we should start to see and we are seeing some stabilization in the market as well as returning to a net growth.

Again, remember, when over 80% of people that come through the funnel drop off because we are asking them to enter their credit card and cash pay, we think we've got fertile ground to grow that book. And candidly, there's a lot of unmet mental health need out there. I referenced that as well. And we're seeing growth in the Integrated Care of mental health, and we should expect to see good underlying growth beyond the expansion in BetterHelp insurance.

Your next question comes from the line of Scott Schoenhaus with KeyBanc.

I wanted to go back to Chronic Care. So it sounds like you have more announcements on the product cycle coming up for us, which is exciting. And it also sounds like you're able to get new customers coming in that want to consolidate from multiple point solutions to one vendor with multiple chronic conditions like you guys. And then it also sounds like you're engaging more with your current customers using the 24/7 platform and leveraging AI.

I want to talk more about the margin of this business going forward, given those considerations. Are you able to drive pricing up perhaps maybe by engaging more with the population set, showing ROI with health plans and employers? And then also you're able to leverage costs with this AI-enhanced model?

Well, great question, and you've said a lot in that question that would be my response. I mean, certainly, the Chronic Care programs of today, we've continued to enhance those. And the way those work, there's a significant amount of recruitables that we're able to go after and obviously market to them and enroll them and serve them.

And there's a cost to that. And so the more that we -- our products can not only be efficient, but continue to speak to the needs of the patient more comprehensively as well as to the needs of the client, over time, we should be able to be more efficient at what we're doing there.

So there is an economic model, and we think there's opportunity for strong margins there as well. I think the point about ROI for our clients, ultimately, over time, our ability to demonstrate that and back it up for our clients is really what is needed.

So I think the leverage you mentioned actually in your question is the ones that I would respond to. I think we're going to see new growth opportunities from these products we're working on. And we're going to continue to see advancements in AI benefit both administratively as well as how we engage people. And ultimately, we think that's going to drive growth and margin.

Your next question comes from the line of Peter Warendorf with Barclays.

I noticed that the Integrated Care membership guidance for the full year ticked up slightly. I'm just curious, given the current employment environment, what's driving that? And then maybe there's anything worth noting on the competitive landscape? And then just one quick one other than that is if you had any update on the CFO search and the timing there.

Okay. Great. We did see in the first quarter outperformance relative to our earlier guidance on membership, although we've maintained our full year guide for membership, which we expect to moderate downward for the reasons that I know you're well aware, the Affordable Care Act, the expiration of enhanced subsidies, the changes in Medicaid and some of the pressures on Medicare.

So we are expecting that to moderate downward on that. The competitive environment, we operate in very competitive markets. I think the innovations that we're doing really have distinguished our enhance 24/7 care in a way that is very difficult for others to match.

We've enhanced our Chronic Care programs in a number of ways this year. And then obviously, I mentioned the additional product innovation. So all that's progressing. On the CFO search, the search is ongoing. We're evaluating several candidates really across a variety of backgrounds, importantly, looking for the right fit, the combination of experiences they have, but also the fit with the organization and being a good strategic partner to the management team and myself really to use their financial acumen and the background to help drive the performance and execution of the business.

I will say we have an excellent finance team, and they've done a great job, and they're managing our financial areas very well, and we'll continue to keep you updated as the search progresses.

Your next question comes from the line of Jeff Garro with Stephens.

I want to double-click on a couple of comments and questions around BetterHelp margins. First, I wanted to ask what you're seeing in terms of gross margins in the insurance paid portion versus your internal expectations? And then given your comments on starting to see some ad spend efficiency, I was hoping you could elaborate on how you expect to manage a pullback in DTC-focused ad spend as the insurance portion ramps.

Yes, I appreciate that. The gross margin, as we've mentioned before, the gross margin insurance will be lower than the direct-to-consumer. Now the direct-to-consumer channel has to have high margins because it's got such a high advertising costs and relatively low operating costs, and that's kind of the economic model. Whereas in insurance, there's more documentation, there's the payer rates. And so there is a bit of a lower gross margin.

So far, it's right in line with what we would have expected. In terms of ad spend efficiency, and again, it's early, but what we're seeing and what we expect to see that over time, we're not having to reacquire those members. They are aware that BetterHelp takes insurance, and they're able to stay on the platform longer.

And we're even right now thinking about some ways to now that we've got some scale in some markets, maybe thinking about our advertising differently in terms of how we go about awareness and activation for people that have insurance, where to date, the advertising has been more consistent with what we've done in the past.

So there's a number of things we're doing on the advertising front that I think over time with insurance scaling more and more gives us a more effective way to leverage the ad spend and obviously drive margin enhancements from that.

Your next question comes from the line of Ryan MacDonald with Needham.

Maybe on the Integrated Care segment, can you unpack a little bit more of the implementation delays that you talked about pushing into the second half, whether that was client driven or if there's something internal there? And then on -- you mentioned in the prior answer that obviously, you've seen a flip from more subscription-based to more visit-based sort of revenue models. Given that these implementations are going to hit in sort of the second half of the year, can you talk about sort of the level of visibility you have in terms of the ramp and utilization on those visit-based contracts and whether that poses a risk on the Integrated Care side at all?

They're moving forward. There's no -- we don't have concerns at this point that they're not going to go live. It was more of a timing thing in terms of requirements that they had to get through. So we feel good about that. This move from subscription models to visits, as I mentioned before, a very significant move over the last few years.

It really can't be understated. And I've talked about what the -- not only what the impact that's made, but how we see that progressing. And now we believe that we're going to end 2026 it being a net tailwind and 70% of the membership being in a visit arrangement, and we continue to grow visit revenue. So I think that's going to work its way through. With these client delays, we've got good line of sight to the ability to implement those in the second half.

Thank you. That is all the time allotted for today's question-and-answer session. This will conclude today's conference call. You may now disconnect.

All right. So to kick things off, thanks, everybody, for joining us today. We are hosting Teladoc and the CEO, Chuck Divita For those of you that don't know me, my name is Peter Warendorf. I cover Teladoc at Barclays as well as some other health care technology names. So yes, maybe a good place to start, Chuck. We're coming up on 2 years in your tenure at Teladoc. Is there anything -- can you take us through your time there? Maybe in your experience so far, is there anything that's gone better than you thought, and maybe anything that's been a little bit more challenging than what you were expecting?

Yes. I was a long-time customer of the company, actually was an executive at a large health plan, large Blue Plan for many years. And Teladoc was something I'd watch through the years. I remember when I took over responsibility for a big part of the payer in the commercial space, I remember being at a broker's office and talking about this Teladoc thing, this was in 2018 and why it was important to his customer base.

But it was awkward, it was a buy up at the time. And I went back and talked to our team and I said, why aren't we doing this more broadly? And we talked about it. And I decided to roll it out to all of our commercial members, and we finished that in the fall of 2019. And of course, the pandemic hit and all of our members had access to virtual care. And we had expanded virtual care to all of our population in additional chronic care management programs. So I had a lot of good understanding at Teladoc when I came in.

I came in from the perspective of how do we take this scale historically strong player to drive more value in the health care system. And so when it came in, I had some expectations I think what I found was probably maybe more acute on both ends of the spectrum, some strengths and assets and capabilities that I probably didn't appreciate fully and then some challenges that I probably wanted to address more significantly and we can go through those, if you'd like.

So I think the course of my time as CEO has been trying to increase strategic focus, our operational rigor, our product innovation, which we needed to reinvigorate. And of course, I'm sure we'll talk about turning around BetterHelp, which was about 40% of the revenues of the company. So that's been quite the journey. So it's been a quick 2 years. I think we've got a much stronger footing heading into 2026. I'm happy to talk more about that with you.

Great. Yes. And then -- before we kick it off and start to jump in on the business, can maybe get an update on the CFO search and kind of the timeline for things there?

Yes. It's been going well. I mean, we hired a large search firm to go after that opportunity, it's an important position for us. I've interviewed many, many candidates really looking for the right combination of, of course, financial expertise, as you would expect. But operational rigor business background really to be a strong partner as we execute these various initiatives. And we've been very fortunate that we have a strong finance team that had been built. So we got a little bit of the luxury of making sure we get the right person in that seat. So it's progressing well, but nothing to report right now.

Perfect. On the Integrated Care side, maybe we start there. The business has been a low to mid-single-digit grower with low double to mid-teens EBITDA margins over the last few years with some margin expansion. I mean, what's your overall assessment of how that business has performed and kind of what the opportunity is there?

Yes. I think there's a few things I would highlight for those that are familiar with Teladoc really was a pioneer in the space. I've been around for about 20 years. And for a large part of its history was really predominantly a subscription-based model because the market wasn't quite sure how to think of this new space and companies like Teladoc needed some predictability in revenues and cash flows and things like that.

So it was a subscription-based model within the pandemic, and obviously, broad adoption of virtual care and post-pandemic. We've been seeing a migration from those subscription models to like more the rest of the U.S. health care system works as a fee-for-service base, we call it business-based arrangements in Teladoc. And so inside of Integrated Care, we've had this mix shift that's going on, and I can add more color on that.

But I think we're in the middle to later stages of that transition and had good underlying growth in visit revenues to offset that. And then the chronic care space, which we've had some good enrollment growth there. So I think the inside of Integrated Care, there's 2 or 3 big levers that are going on there, changes. And then the last thing is we've got a significant international position in Integrated Care. So I think as we look at the sort of growth algorithm going forward, you're going to see this visit-based growth, subsiding subscription mix headwind, growth and penetration in chronic care and continued grow internationally, and that should drive the revenue growth as well as the EBITDA margin expansion.

Great. And maybe we'll start on the membership side within Integrated Care. I know you guys have right around 100 million lives, which is a pretty impressive membership base, but you're guiding to that being down kind of a low single-digit number this year. I know there's a little bit of nuance, can you maybe unpack that for us and what's happening there? Because I know that in Q1, maybe the membership guidance is a little bit higher than the expectation for the full year. So if you can unpack that as well as the timing of those customers?

Yes. We've grown membership pretty materially over the last several years, up about 40% since 2020 including adding some big clients last year. We've got good stability in the membership base, good stability retention with the clients. What we tried to factor into the guidance was there's a lot of things going on in health care, as you all know, that are tracking this, you've got Medicaid redeterminations. You've got the enhanced subsidies going away, some challenges in Medicare.

So we just try to look at that and what do we think membership is going to look like for us in the year. And then we'll see how that unfolds. There's some indications that maybe the challenges in the Affordable Care Act in terms of retention may be better than some people think we just need to see how it plays out. I think that's different from what converts to revenues for us, though, because we've seen this migration I mentioned towards visit-based arrangements. And so it's really about not just the raw membership number, but the utilization of the services, which is why our guidance in 2026 shows revenue growth even with some headwind in the raw membership count, and we'll just see how that plays out.

Got it. And maybe touching on Chronic Care within the Integrated Care segment. I mean, enrollment has grown a little bit sequentially each of the last couple of quarters. How would you characterize the opportunity there? I mean -- and how much of that comes from upselling versus engaging new members? Are there any products that you guys get particularly excited about? I know we get a lot of options on weight loss more broadly. So if there's anything you would highlight within chronic care?

Yes. We've had sequential growth in enrollment, like you said. We do have a tough comp year-over-year because of last year in the second quarter, I mentioned the customer loss that we had, and that will comp out, if you will. And then we do expect to continue to see Chronic Care enrollment growth. We have a -- the way that, that business works is we sell the product, we can sell -- cross-sell multiple products in chronic care.

And then we get what we call recruitables. There's -- it's the addressable lives that we can go after and then we activate them, enroll them and retain them. And we have many multiples of the 1.2 million that we have enrolled in Chronic Care as recruitable. So clearly, there's opportunity and penetration there, and we've continued to grow the recruitable base. There's penetration into that 100 million lives. We've made nice progress there. So there's upside there.

I think within the portfolio, and I think maybe it distinguishes us a little bit in this area is at the end of the day, Teladoc is a provider. And we approach these populations more with that provider clinically-oriented lens. So the more services we can do for the population, the more they engage, the stickier they are, those kinds of things. And so within the product suite that's within chronic care to address more populations, we have seen more interest in weight management to your point.

Obviously, there's been a lot of interest out there and a lot of outsized interest within our portfolio. But we're really trying to cross-sell multiple products so that we can have deeper penetration and sort of longer sustainability of population health. So that's kind of the way we approach it. I think it's a little bit different from others.

Okay. And then you mentioned earlier the visit based, the shift to visit based revenues within Integrated Care. Can you remind us, like who is pushing for those visit-based fees or visit-based revenues? Is that the customers pushing for that? Is that something that you're dictating? And which kind of contracting is maybe more beneficial to you guys?

Yes. It's more of a market environment. If you think about it, I mentioned a little bit earlier, but pre-pandemic, it was a subscription model for the reasons I mentioned. The customers wanted it. Teladoc wanted it for predictability purposes. And there's still a significant percentage of the -- of our customer base -- that sees the subscriptions as valuable, right, because it's predictable and you can plan for it.

But as we've now had broad adoption of virtual care, the customer base is more like, well, I'd like to pay you like the rest of the U.S. health care system which is a fee-for-service environment. So the market is kind of evolving, I think, naturally and predictably towards these more visit-based arrangements. From a perspective, we can be, we're fine with either way.

I think we have seen a headwind from the subscription to visit mix over the last few years that will subside. But ultimately, that visit is an opportunity for us to provide services, engage and connect them with other services we have. So we see those visits as beneficial beyond just what we saw in the subscription model.

Got it. And is there any difference in the operating expense line with that different -- that change in model? Like are you guys -- is there any difference in the cadence of maybe advertising costs throughout the year or anything like that?

There's a few differences in a fee-for-service environment versus the subscriptions. So there's a different gross margin profile. And I would say in the visit-based arrangements, the gross margin moves with the visit, if you will, as opposed to if you think about a subscription model, visits may be a bad thing to gross margin or lack of visits may be a good thing to gross margin but at the end of the day, you want people utilizing your services.

So I think we see a little bit of a difference there. The advertising and marketing, we've actually been able to bring that expenditure down as a percentage of revenue in Integrated Care over the last few years. And we've always been a B2B2C kind of business. So I think we're going to be able to manage that as a percentage of revenues and then the OpEx is just the same level of complexity that we've had in subscriptions versus visits, installing the client's eligibility, the systems we use and all that. So I think when we're towards the tail end of that migration, we're going to see that settle out. But we've been able to deliver a strong line results through operational expense savings and other things. So I think we've been able to manage.

All right. That all makes sense. Maybe we'll move over to BetterHelp now where I would say maybe that business has been a little bit more volatile. You've seen some of the membership numbers have moved lower. It feels like we're maybe getting to a place now where that's starting to stabilize. I guess what's your assessment of that business? And where are you at kind of in the turnaround of the overall business.

Yes. I mean that's one of the business when I joined the company, obviously, and when I was interviewing for the role, I learned more about BetterHelp. I was not as familiar with BetterHelp before that, it was more focused on the payer side and Integrated Care. And what I found was one, I had been a big proponent of us in my payer life, adding more access to mental health.

And I'm glad to see post-pandemic, there's much more appreciation for the mental health challenges out there and BetterHelp had really build a lead position in the consumer-oriented space the largest, by far, in what it did, but had run into some challenges because direct-to-consumer cash pay model and you're basically asking somebody to pay the equivalent of a car payment every month for therapy out of pocket.

So I looked at that when I came in and said, we really need to pivot this asset more towards where the rest of the U.S. system is, which is insurance coverage. And we did an acquisition, and we've been executing that, and we're going to see nice growth this year. So to me, BetterHelp is, I think it's a story, chapters are still being written, amazing consumer experience, by far the strongest brand awareness, 30,000-plus therapist network, huge scale business, and its customer base needs to be able to access their insurance, and we should be able to see significant growth in insurance in 2026 and then ultimately, the stabilization and growth outlook for that business.

Great. Yes, that makes complete sense. And I mean, if we're trying to think about maybe it was a mid -- membership being a mid-single-digit headwind in 2025, is there a point in '26 where you can kind of see that trajectory start to move upward and maybe bottom out? Like is there a sequential step-up at some point in '26? Do you think?

Look, I think we're going to see -- there's 2 main parts of BetterHelp. Obviously, we have the U.S. business, which I'll touch on, which is really at the heart of your question. And we have a non-U.S. business. BetterHelp is actually in several countries and represents about 24% of revenues in this segment at this point, and that continues to grow.

So we expect to see continued growth internationally because of the access concerns in other countries, and mental health is not just a U.S. phenomenon. There's challenges globally. In the U.S. business, because of the size of BetterHelp's consumer business, again, the largest by far in that direct-to-consumer channel. We have seen that user growth be negative for a little bit. As we grow insurance. We expect to cross that at some point where we see the overall users, whether they're consumer or insurance to stabilize and grow and we need to see more results from what we're doing, but we like what we're seeing so far.

And is that an area as they move -- as customers come on the insurance product? Is there some natural cannibalization of the consumer or the DTC product where those customers say, hey, look, I can see -- get this for cheaper using my insurance, the cash outlay for them is lower, so that they naturally move to that insured product?

Look, we expect to see some cannibalization. But I think stepping back on BetterHelp, just as a few data points. We have millions of people every year that start the registration process at BetterHelp, give us their e-mail. They have a need and they express the interest. Over 80% drop off in the cash pay model because, again, we're asking for a credit card, we're asking them to pay out of pocket.

So the insurance scaling is about taking that funnel and by having affordability be less of an issue for them, less of a barrier, if they have an interest and a need to convert to users. So there'll be some cannibalization, but I would argue that a lot of the cannibalization we're seeing in BetterHelp was already occurring because those people were choosing not to use BetterHelp and perhaps use their insurance because we've seen growth in insurance coverage in our Integrated Care as well as with competitors.

So there'll be some of that. But I do think that more of the funnel being converted to users of BetterHelp is the play. And again, with millions of people starting the process and less than 20% converting, we've got a lot of upside as we roll out insurance. And I think that will overcome cannibalization at some point.

Yes. And with those insurance customers, have you seen anything with the initial ones like in terms of duration that they stay on the platform or any different ways that they use it that you think are worth mentioning?

Well I'll tell you what we're expecting to see, and I would say that the information is early, so I want to caveat that. We want to see more progress before we say something too definitive.

However, as we've seen our Integrated Care side, and we've seen with competitors with insurance coverage, the -- there is an opportunity for greater lifetime value of a member, of a user as well as a more efficient use of the acquisition cost, the advertising customer acquisition costs. And so we do expect and believe that we will see more sessions per user because we're taking the cost issue, the cost barrier down with insurance coverage and a more efficient use of advertising spend because we won't have to necessarily reacquire that member over and over again or that patient over and over again. But early on, we like what we're seeing in the data as we continue to scale it, but I don't want to get too far ahead of that other than we are expecting to see that, but I want to see more results first.

Great. And obviously, there was some news in the space, on the behavioral health space, I'd be remiss, if I didn't that. Do you have any initial reactions to the M&A news that came out yesterday with one of your competitors?

Look, I think it's a validation of what we're looking to do with BetterHelp. The unmet mental health need is very real. There's strong demand out there and taking BetterHelp, which has the predominant known brand in that space into insurance coverage, we can see the potential of what that could look like. And I think that transaction is something to look at and say, there's a validation of the value of virtual mental health which, post-pandemic, has been one of the modalities that's been most widely adopted and sustained is virtual care and mental health because you don't necessarily need to be seen in-person for that, and that's continued on. So again, I think it's a validation of what we're trying to do.

Great. Moving over to maybe the financial and kind of guidance kind of things. So obviously, with 1Q, you guided 1Q, you guided fiscal '26 that implies a reasonable ramp throughout the year in terms of revenue growth and margins, I would say. Can you maybe help us think about some of the underlying assumptions there? And what gets you to that revenue and EBITDA ramp and how that split between maybe operational execution or any macro improvement that you guys are assuming?

Yes. I think for Integrated Care, what we've really got is -- and I would say, overall, when you look at it, the first half, second half look at Integrated Care is going to be pretty consistent with what we've seen in prior years. As I mentioned, the more we've migrated to visit-based arrangements, you see visits and therefore, volumes of visits be more of a factor in that equation.

We saw that in the fourth quarter where we had -- we exceeded our midpoint and we're at the upper end of the guidance. And one of the drivers was visits from the flu season. And in the first quarter, we brought that down a bit because of the timing of that flu season. So you've got volume going on through the year, including in the fourth quarter and how we see the first quarter. So that's in there.

Chronic Care enrollment builds through the year. So we expect to see that. So I think in Integrated Care, that coupled with our international growth, explains the ramp and we've got continued cost management efforts underway. We've done pretty well on that, I believe, and we continue to focus on costs that help -- will drive some of the EBITDA results. In BetterHelp it's really all about insurance scaling and our international growth, and we did guide.

We had a modest amount of insurance in 2025. We guided to $75 million to $90 million of insurance revenues in 2026 and that's going to ramp pretty notably each quarter. The last thing I would say about BetterHelp, and this is a little bit on the Integrated Care side, too, is you've got more days after the first quarter, there's another day in the second quarter and 2 more days in the -- and other ones and on a volume-based business, that could be a needle mover also.

Great. A quick one we'll touch on the balance sheet. I know we're coming up on time here. You guys have $1 billion of debt coming due in the middle of next year, current interest rates are pretty low on that one. I mean can you give us an update on the timeline there? And then similarly, I know M&A has been part of the business in the past, like what's your appetite for additional M&A? And what might that look like over the next couple of years?

Yes. I'll hit the debt first. We had $550 million of converts due at the middle of 2025. We paid those off with existing cash. We ended the year with $780 million in cash on the balance sheet and we have these $1 billion or so converts to middle next year. So absent other needs or demands or changes in market conditions, what I said on the earnings call was we're assuming we're going to pay down a material portion of that outstanding debt, maybe potentially before the end of the year, we'll see how that goes through a combination of more traditional term debt as well as the cash that we have available.

And then the remainder, we will pay down at the -- at maturity, ultimately have a lower gross leverage position than we have today. And I think that's just a prudent place for us to be as a company. So we've got a lot of cash, a lot of good cash flow and options with respect to the debt. In terms of M&A, we have done some M&A since I joined, as you know, I think it's been really more strategic. We bought a company called Catapult Health to deepen our penetration in our Integrated Care side in the U.S., really exciting capability we bought there.

We bought UpLift right to get us into the insurance market in BetterHelp. That was our accelerant. And we bought a company in Australia to deepen our position there. So we're going to look at our strategic priorities. We're going to focus where we can accelerate our progress. But I would say predominantly where you're going to see our focus is in the U.S. market.

We think we have tremendous opportunity with this scale position we have, 12,000-plus clients, 100 million lives. Our customers have more challenges, not less challenges in health care. So we think we can lean into that more, and I think M&A will play a part of that.

Great. And I know we're coming up on time now so maybe to wrap it up, a lot of ACIT has been hit by some of these AI concerns. So I'm just curious like how defensible do you see your business is? Like what kind of moats do you think Teladoc has? And then any other thoughts you have on the business or what you think investors might be missing before we wrap it up?

Yes. I mean it's an exciting time with the advancements in AI. And I think health care is going to benefit from AI materially in terms of engagement, awareness, access, support, those kinds of things. Teladoc has been an active user of AI in its history, mostly in the machine learning area and some of the things we do. But last year, we saw this coming, and we made some significant investments in what we call our Pulse data and AI platform.

We have a lot of data, 20 years of history across conditions, across a number of things. We're unifying that data, putting intelligence on that data. And then most importantly, you got to activate that data into where there's a clinical intervention. Otherwise, it's just an insight. Well, we are a virtually-native company. All of our processes, our workflows, everything is built virtually. So we believe strongly that we're going to have ability to deploy AI and already are across the things we do.

But we're going to do it in a responsible way because we want to make sure that clinician-patient relationship remains at the forefront and it's strong and it's complementary. In terms of our moats, as I mentioned, we're deeply embedded in the U.S. health care system. 12,000-plus clients across health plans and employers used to operating in those types of environments. Two, we have tremendous data and data fuels AI and that's important. Third is the breadth of our clinical position. We provide services in a variety of ways across mental health, chronic care, primary care, 24/7 care.

So that we're going to continue to expand. And then the last part which I think is very important. We've got deep expertise in health care. And health care is a highly regulated industry. And I think the ability to deploy these tools in a way all of those things, I think, create moats for us.

Great. And if there's anything else you think investors are missing before we wrap up?

I think we've covered it. I just think that keep an eye on us. We've been executing. We've laid out our priorities. We're giving the proof points. I think we've got a lot of opportunities ahead of us.

All right. Thanks. Chuck Divita, Teladoc, CEO.

Good afternoon. Thank you for attending today's Teladoc Health Q4 2025 Earnings Conference Call. My name is Tamia, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to your host, Michael Minchak, Head of Investor Relations. Please proceed.

[indiscernible] press release announcing our fourth quarter 2025 financial results. This press release and the accompanying slide presentation are available in the Investor Relations section of the teladochealth.com website. On the call to discuss the results will be Chuck Divita, Chief Executive Officer. During this call, we will also discuss our outlook, and our prepared remarks will be followed by a question-and-answer session.

Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating our performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website. Also, please note that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied on this call.

For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website. I would now like to turn the call over to Chuck.

Thanks, Mike. Our financial performance reflects a solid finish to 2025 as well as progress we've made across our strategic priorities. Fourth quarter results were generally in line with our previously discussed expectations, including consolidated revenue and adjusted EBITDA both modestly above the midpoint of our guidance ranges. Consolidated revenue was $642 million, slightly higher than the prior year period, and adjusted EBITDA was $84 million, representing a 13% margin for the quarter. Net loss per share was $0.14, which included amortization of intangible assets of $0.52 per share pretax and stock-based compensation of $0.09 per share pretax.

For the full year, consolidated revenue of $2.53 billion was 1.5% lower than the prior year, and adjusted EBITDA was $281 million, representing an 11.1% margin. Net loss per share of $1.14 included the following pretax amounts, amortization of intangible assets of $1.99 per share, stock-based compensation expense of $0.46 per share, a noncash goodwill impairment charge of $0.41 per share and restructuring costs of $0.11 per share. These items were partially offset by discrete tax benefits totaling $0.20 per share.

Full year free cash flow was $167 million, and we ended 2025 with $781 million in cash and cash equivalents on the balance sheet after retiring $550 million in convertible debt at maturity in June. Net debt to trailing fourth quarter adjusted EBITDA was under 0.8x at year-end.

Turning to segment results. Fourth quarter Integrated Care revenue of $409 million grew 4.7% over the prior year's quarter and came in near the upper end of our guidance range, benefiting from both performance-based revenue and U.S. virtual care visit volume related to a strong flu season. The acquisitions of Catapult Health and TeleCare contributed approximately 260 basis points to year-over-year growth and international delivered double-digit constant currency revenue growth.

Chronic Care program enrollment was $1.19 million at quarter end, increasing 2% sequentially versus the third quarter. U.S. integrated care membership finished the quarter at 101.8 million members. Fourth quarter Integrated Care adjusted EBITDA was $65 million, up 23% over the prior year period and representing a 16% margin for the quarter. For the full year, Integrated Care segment revenue increased 3.3% to $1.58 billion, with acquisitions contributing approximately 210 basis points to segment revenue growth. U.S. Virtual care visit revenue grew double digits year-over-year. more than offset by a lower subscription revenue due to the shift towards visit-based arrangements we've spoken about previously.

International revenue grew mid-teens on a constant currency basis for the full year. Adjusted EBITDA increased 2.7% over 2024 to $239 million, representing a 15.1% margin, about 10 basis points lower than 2024. Excluding the impact of M&A, adjusted EBITDA margin would have been up approximately 20 basis points year-over-year. Shifting to better health. Fourth quarter revenue was $233 million, 6.7% lower than fourth quarter of 2024. Average paying users for the quarter declined 6% year-over-year to 375,000 with a low double-digit increase in non-U.S. users, partially offsetting a low double-digit decline in U.S. users.

Segment results also included approximately $7 million in insurance-based revenue, in line with our expectation. In the fourth quarter, BetterHelp adjusted EBITDA increased to $18 million, up from $4 million in the third quarter. The adjusted EBITDA margin was 7.9% compared to 1.6% in the third quarter and was driven primarily by seasonal pullback in ad spend due in part to higher ad prices during the holiday season. For the full year, BetterHelp revenue was $950 million, a decline of 9% from the prior year. This included insurance revenue of $13 million, in line with our expectation of $12 million to $14 million.

Adjusted EBITDA of $42 million represented a margin of 4.4% compared to 7.5% in the prior year period. This year-over-year decline was driven by lower overall revenue and investments to scale the insurance offering, partially offset by a 7% reduction in advertising and marketing spend compared to the prior year.

With that overview of our results, I would like to shift the focus to 2026, our priorities and where we see opportunities going forward. First, a critical area of focus for us is advancing our position in the U.S. markets served within our Integrated Care segment. While we have a well-established leadership position, we see opportunities to broaden our impact on patient care and client value and in turn, business growth and performance. We're going after this opportunity through product and capability of Asian and the strength of our care model across virtual care, chronic condition management and mental health.

For example, we recently launched our enhanced 24/7 care offering, the next generation of our flagship virtual care service. By leaning into the shift from subscriptions to visit-driven value. This new offering creates broader engagement points by expanding the range of conditions we can address, supporting our care providers with real-time access to specialists and placing more information at the point of care to address care gaps and other needs. We're also advancing innovations in our chronic care programs to support and improve the health of people living with chronic conditions.

The human toll and the cost of chronic illness are major issues facing the health care system, and we intend to deepen our role in this area. In 2026, we're leveraging our extensive data in new AI-enabled stratification capabilities together with additional targeted clinical interventions to address the needs of rising and high-risk members, including coordination with primary and specialty care when appropriate and managed care more holistically. These AI models align and efficiently activate care teams for personalized action. In addition, we are rolling out new connected devices, in-home testing and other features to support our comprehensive approach, and we intend to build on these advancements in our product development pipeline going forward.

And as part of our care model, we can also extend our various services for new and impactful use cases to support our clients. For example, as part of a broader implementation, a large blue plan is utilizing Catapult Health's virtual checkup program to engage Medicare Advantage members to ensure they complete their annual wellness visit. An example of how we can further leverage the potential of our virtual care assets and capabilities, meet people where they are and connect them with the care and support they need. As a virtual native clinically focused organization, technology is central to delivering integrated patient care at scale and the investments over the past year further support our innovation agenda.

These include enhancements to our Prism care delivery platform to surface actionable and personalized information across our care teams and efficiently deploy AI tools to support their important work. And seeing the significant opportunities to leverage AI, more extensively in our business, we made important investments over the last year in our new Pulse data and AI platform. Pulse brings together and unifies our extensive data, provides context, applies intelligence and most importantly, connects AI-driven insights to activation and orchestration in support of patient care.

All of these and other innovations are aimed squarely at driving engagement, clinical outcomes and client value in direct support of our growth opportunities in Integrated Care. In 2026, we also remain highly focused on leveraging our scaled position in virtual mental health services. and have several initiatives underway to advance our position. This includes the launch of Wellbound, our new employee assistance program offering that combines strengths across Integrated Care and BetterHelp as well as rapidly scaling better helps insurance coverage offering. We are making considerable progress, and we are now live in 20 states plus Washington, D.C. and have more than 4,500 credential and enrolled providers at this point.

Additional network arrangements have also been secured bringing covered lives to more than $120 million. Early trends are encouraging, including strong growth in insurance sessions, which now exceed 1,200 sessions on average per day, an annualized revenue run rate of over $40 million, which further informs our approach to 2026 for both the consumer cash pay and emerging insurance market and reflected in the guidance that I'll cover later. We will continue a methodical intervention throughout the year, further scaling provider capacity and payer network coverage while prioritizing and ensuring strong user experience.

And with BetterHelp's broad reach and brand recognition, -- there are millions of potential users that start the registration process and better help each year. In addition to improving conversion by expanding payment options with insurance, we also remain focused on growing our acquisition funnel through greater awareness. As an example, we are excited that BetterHelp has been named the exclusive online therapy provider for AARP, which advocates for 125 million Americans, 50 plus an order with an expected launch over the next 60 days.

In addition, BetterHelp has partnered with Walmart to join their better care services initiative, which launched earlier in the year. BetterHelp's international expansion also continues to be an important growth driver. Non-U.S. revenue represented nearly 24% of total segment revenue in 2025, with continued growth in our English-speaking offering and further boosted by localized launches in France, Germany, the Netherlands, Spain and Austria. With solid performance in these localized markets, we expect to expand the model into additional countries in 2026.

We are actively executing the turnaround of BetterHelp through these initiatives, and look forward to demonstrating the underlying potential of the business as we progress through 2026. Our third priority is driving value creation in Integrated Care to our international offerings, which combine a global reach with a strong understanding of the unique characteristics of each individual market. This includes deepening and expanding long-standing partnerships with existing clients, growth with public health systems and expansion of hybrid care models that bring virtual services into physical care settings to meet local needs, including emergency services, primary care and specialty care across several countries, including Canada, France and Australia.

Finally, our fourth strategic priority is operational excellence. Over the past year, we've sharpened our strategic focus, driven cost and productivity initiatives and accelerated innovation. We also achieved ISO 9001 certification for key U.S. integrated care processes, reflecting the level of operating rigor across the company. In 2026, we had one of the most successful implementation seasons in our history from a volume and performance standpoint, another important validation of the team's relentless and ongoing focus on execution.

I also want to take this opportunity to further comment on the role of technology and artificial intelligence advancements in shaping the future of Carat Teladoc Health. Firmly grounded in clinical care and patient safety. We are excited about the opportunity to responsibly apply AI to improve outcomes, simplify the experience for members and clinicians and reduce friction across the health care journey. Care is at the heart of our innovation agenda with our technology experts working alongside health care professionals to develop, evaluate and align with evidence-based standards and support high-quality care experiences.

Our responsible AI framework ensures that innovations undergo rigorous review to preserve safety, accuracy and trust. With an extensive, diverse and well-established client base of over 12,000 organizations, our partners and patients look to us to deliver quality experiences that perform and endure. We've been building the infrastructure, expertise and partnerships for decades, and our models improve with every touch point, creating smarter systems at scale.

As I mentioned earlier, Teladoc Health Pulse, our data and AI intelligence platform, serves as the backbone of our AI initiatives by unifying unique multidimensional data from patients, care providers and partners. It provides context for the data and the ability to apply AI to this contextualized data to support a wide range of value-accretive activations across the patient experience, clinical and care team support and the operations of our business.

In addition to the gains we've already made, we intend to further scale the benefits of Pulse through 2026, including in our product innovations and initiatives to drive greater efficiency and performance of our business. With that as a backdrop, let me provide a few examples of how AI enhances many of the moments that define high-quality care for us. In our chronic condition and cardiometabolic programs, AI transforms connected device signals, member reported data and other data sources into dynamic health insights. These insights help us personalize outreach, identify changes in health earlier and support healthier decisions related to sleep, nutrition, activity and stress.

This improves engagement and overall health and helps prevent members from progressing to higher risk. In clinical settings, AI helps connect members to the right provider, supports clinicians with ambient generated documentation and informs next best actions for our members. These tools enhance consistency, reduce administrative burden and free clinicians to focus on questions and matters that require judgment and human connection. They do not replace clinical teams, they extend their reach and effectiveness.

Pulse enables us to empower care teams with a more complete picture of a person's health and sharper insights that help them understand and predict patient needs, guide targeted interactions and connect the right care at the right time. It is helping us move faster and smarter, transforming the way we work and our ability to drive better health outcomes. And in our hospital and health systems offerings, our AI-enabled Clarity solution uses computer vision and audio analysis to identify patients [indiscernible] risk and signs of behavior escalation.

This helps care teams intervene earlier, protect staff and patients and expand capacity. These capabilities have become increasingly important as health systems balance safety needs with ongoing workforce constraints. In mental health, including BetterHelp, AI is improving intake and matching while also reducing therapists administrative workload, for example, by automating clinical documentation and enabling clinicians to spend more time on patient care and improving overall efficiency. At the same time, therapy remains grounded in a human relationship where AI assist, it is applied transparently, responsibly and with a clear governance framework that prioritizes quality, privacy and trust.

We believe this is the path to stronger engagement, sustained ROI for our clients and a better whole person experience for the people we serve. This approach positions Teladoc Health to continue leading the evolution of virtual care and to help our clients bring forward the next generation of AI-enabled health care in a safe, integrated, compliant and clinically grounded way. Stepping back, the macro challenges across the health care industry remains significant, and our clients are focused on affordability and rising medical costs, the prevalence of chronic disease, unmet mental health needs and other needs.

And as a strong partner and leader in virtual care, we believe we're well positioned to drive outcomes, leverage advancements in technology and deepen our impact, and the work we are doing across our strategic priorities further enhances that position. We entered 2026 on a stronger foundation and renewed underlying momentum driven by new innovations in Integrated Care products and capabilities, strong progress towards scaling BetterHelp insurance, growth in international markets and continued focus on execution and business fundamentals.

Moving now to 2026 guidance. We expect full year consolidated revenue to be in the range of $2.47 billion to $2.59 billion, approximately level with 2025 at the midpoint. Consolidated adjusted EBITDA is expected to be in the range of $266 million to $308 million, representing 2% year-over-year growth at the midpoint. Full year free cash flow is expected to be between $130 million to $170 million and reflect working capital build related to BetterHelp significant growth in insurance in 2026. We as well as lower net interest income on cash and cash equivalents due to the paydown of the 2025 converted and lower assumed interest rates on cash balances generally.

We project full year stock-based compensation expense to be below $60 million in 2026, representing a year-over-year decline of at least $20 million versus 2025 and down more than 70% versus 2023 levels demonstrating significant progress over time and an important area of focus for us. For the first quarter, we expect consolidated revenue in the range of $598 million to $620 million, and adjusted EBITDA in the range of $50 million to $62 million.

For the Integrated Care segment, we expect full year 2026 revenue to grow in the range of 0.4% to 3.9% over 2025. The midpoint includes approximately 60 basis points of tailwind from our recent acquisitions. As we've spoken about previously, segment revenues continue to be impacted by the migration of U.S. virtual care subscriptions towards visit oriented models which are more reflective of the U.S. health care fee-for-service construct. However, with visit revenue now comprising more than half of U.S. Virtual Care revenue, we expect the impact of this shift on our top line to moderate going forward relative to prior years and as we move towards the later stages of this transition.

And over the long term, we expect to see visit revenue growth outpaced the decline in subscription revenue with Virtual Care being a net positive contributor to growth. We are guiding to a full year adjusted EBITDA margin of 15.1% to 16.1% for Integrated Care, which represents an increase of approximately 45 basis points over 2025 at the midpoint. This increase reflects the net impact of gross margin changes resulting from subscription to visit-based revenue and mix-related impacts more than offset by lower operating expenses due to ongoing cost savings and efficiency related initiatives. Our guidance also currently reflects an expected $5 million to $7 million headwind from tariffs in 2026, up from a $3 million headwind in 2025, an area we will continue to monitor for further developments.

We expect U.S. integrated care members to end the year in the range of 97 million to 100 million members, modestly down versus 2025 levels due to reductions in the [indiscernible] certain health plan clients related to government programs, including the impact of expiration of the enhanced subsidies on Affordable Care Act business. We are guiding to first quarter Integrated Care revenue down 1.2% to up 2.0% versus the prior year period. This includes 155 basis points of growth from the Catapult and Telecare acquisitions at the midpoint.

Adjusted EBITDA margin is expected in the range of 12.5% to 14%, up approximately 30 basis points at the midpoint. Factors impacting the first quarter year-over-year comp reflected the prior year's quarter including recognition of favorable performance on risk deals in Chronic Care, the year-over-year headwind from the previously discussed client contract loss in the second quarter of 2025, and lower expected infectious disease visit volume in the first quarter of 2026 compared to the prior year's quarter due to a timing variation in the flu season.

From a cadence standpoint, we'd expect the first half versus second half revenue split in 2026 to be slightly more weighted to the second half relative to 2025, given these factors, although generally consistent with the average split over the past 5 years for Integrated Care. Moving to the BetterHelp segment. we are guiding 2026 revenue down 7% to down 0.5% versus 2025, reflecting a moderating rate of decline versus both 2025 and 2024 at the midpoint of our guidance.

With the traction we expect in our insurance offering, we are focused on scaling it through the year and in turn, moderating the level of advertising and marketing expenditure we expect in 2026. Our guidance also reflects continued growth in non-U.S. markets as well as factors such as the macro backdrop, demand levels, customer acquisition costs and churn rates. With respect to insurance, we expect to generate revenue of $75 million to $90 million in 2026, with a steady sequential ramp and exiting the year at an annualized revenue run rate of more than $100 million.

As I mentioned earlier, insurance sessions continue to grow at a strong pace, and we expect session growth to continue as we progress through the year driven by several factors, including strong underlying demand for mental health services, together with BetterHelp's planned rollout of new states, increasing payer coverage, adding credential providers and growing the insurance user base in existing states.

We also launched insurance-covered psychiatry services in February as well as new enhancements such as new scheduling features and instant therapist matching. We expect continued headwinds in U.S. direct-to-consumer cash pay. driven both by a challenging consumer backdrop and our intentional decision to further rationalize the level of ad spend given our progress in insurance, an opportunity to refocus investments on scaling this rollout. This outlook contemplates direct-to-consumer revenue in total being down 14% to down 9% year-over-year, inclusive of potential cannibalization from our U.S. insurance rollout.

We expect to see double-digit growth in non-U.S. markets with contribution from both the legacy English-speaking offering as well as newer localized market launches. For the first quarter, we are guiding to BetterHelp segment revenue down 11.25% to down 7% year-over-year. This outlook contemplates insurance revenue of $10 million to $13 million in the first quarter, up from $7 million in the fourth quarter of 2025 as well as the timing and impact of advertising and marketing spend actions.

We are targeting sequential quarterly revenue improvement for the BetterHelp segment, beginning with the second quarter and continuing through the balance of 2026. We are guiding to an adjusted EBITDA margin of 3% to 4.6% for the full year and 0.75% to 2.75% in the first quarter. Key factors impacting margin include revenue mix, reduced advertising and marketing spend, which we expect to be down by a mid- to high single-digit percent versus 2025 and investments to enable the successful scaling of the insurance offering.

Similar to prior years, we expect to deliver the highest adjusted EBITDA margin in the fourth quarter. As we ramp and mature our insurance position over time, we expect to see improvements in lifetime value, customer acquisition costs and operating leverage as we stabilize and grow the revenue base and offset changes in gross margin from this revenue mix.

One final note with respect to guidance, the ranges we have provided at this time for free cash flow and net loss per share do not assume any specific changes in our current debt structure as our remaining convertible notes don't mature until June 2027. However, as we previously discussed, we continue to evaluate various options with respect to our long-term financing needs. Subject to market conditions and absent any other significant developments, our current expectation is that we will address the 2027 convertible notes in 2 phases.

The first would be to pay off a substantial portion through a combination of existing balance sheet cash and new traditional term loan debt and do so potentially before year-end. And then second, we would retire the remaining balance at maturity with existing cash at that time. After addressing the 2027 converts, we expect our resulting gross debt position on a go-forward basis to be significantly below the current level and appropriately aligned with our financial profile and needs. We will provide further updates as necessary.

In closing, as we move into 2026, we have clear priorities and the foundation to support our growth and performance initiatives. We are focused on execution and acceleration as we progress through the year and strengthening the underlying drivers of long-term performance and business value.

With that, let us open it up for questions. Operator?

[Operator Instructions] The first question comes from David Roman with Goldman Sachs.

I wanted just to maybe see if you could help us wrap a lot of the moving parts together here. I think it's now been 1.5 years with you in the SedasCEO. As you reflect on the guidance here for 2026, it does include another year of relatively challenging organic revenue growth and year-over-year trends in adjusted EBITDA. So where do you think we are in sort of the journey of stabilizing the business? And what is it going to take to get back to [indiscernible] were consistent year-over-year revenue growth? And is there a path even growing this business at, call it, a low to mid-single-digit rate?

Yes. Thanks for the question. I think first on integrated care, which I think is primarily what you're asking about, as I mentioned in my prepared remarks, and you know we've talked about previously, this headwind from subscriptions to visits has continued to be a factor. We've had strong underlying growth in visit revenues, but not enough to offset that headwind that's come in subscription revenue. We do see that now that we have over 50% of the Virtual Care revenues coming from visits, we do see that moderating and ultimately visit growth being a driver of growth.

And that's been a factor out there that we've spoken about. In Chronic Care, we continue to see opportunities in terms of both the bundled products we have there and the level of recruitables. But more importantly, what we've been building over the last year in terms of the clinical foundations, I mentioned the data and AI capabilities and our ability to really drive stronger ROI across populations for our clients. And in turn, that's going to drive growth for us.

So we entered 2025 with a very similar product portfolio that we had in 2024. And now with these enhancements and the foundations that we've been building, we think there's a bigger opportunity for us to go after. So yes, I do believe there's growth potential in the business. I do acknowledge the headwind that we've had from the subscription, the visit mix changes. That's been well talked about outside. And the underlying growth in visits, I think, will be a factor for us going forward.

In BetterHelp, it's really about the insurance scaling. We were excited to enter the market mid last year. We've been scaling it pretty materially over that time period. And as I mentioned also in my prepared remarks and in the guidance, we're going to see some significant growth in 2026 from that. So I think getting BetterHelp turned around and really leaning into the market opportunity in integrated care, particularly in the U.S. coupled with the growth we're seeing internationally, I think, is how I would answer that.

Next question comes from Richard Close with Canaccord.

Yes. Maybe just a follow-up to that, Chuck, in terms of Chronic Care enrollment. Just curious in terms of how cross-sell is going. If you can just talk about the trends there through the most recent selling season, and are the new products that you're talking about, are they gaining traction? Or just the level of demand interest currently in the new offerings? .

Yes. Well, first of all, our ability to manage across conditions is a selling factor and our ability to do that without multiple integrations in one offering. And that's -- we've had some really good success with that in terms of bundling products and crossing populations. We're seeing continued good interest in our [ Way ] programs and our bundled products. So all of that. I think going forward, in addition to the things that I mentioned in my earlier response, it's really about going after the population health more strongly and more broadly.

And we are uniquely positioned with the clinical model that we have and that we've been building pretty materially over the last year to be able to go after those populations, provide a range of services, really identify where things are falling through the cracks and develop the right levels of clinical interventions for high-risk and rising risk populations. Those are the things that drive the medical costs and there are also things that drive the human costs. So our operating model and our value proposition and, in turn, our product portfolio is going to lean into that. And that's really where we're going to see the longer-term growth of this company.

Clearly, we're out there competing on a day-to-day basis with the product portfolio we have and the competitive environment we have. But ultimately, our ability to lean into this clinical model that we've built is what's going to drive stronger growth going forward.

The following comes from Daniel Grosslight with Citi.

We have one just about the ramp in BetterHelp EBITDA this year. The guide implies a bit of a steeper ramp than prior years. The first quarter EBITDA in BetterHelp is around 11% of full year, in the past, it's been closer due to high teens. Can you just walk us through the cadence of BetterHelp adjusted EBITDA margin improvement this year? What's driving that steeper ramp in the levers that get you to the bottom and top of that full year guidance range? .

Yes. There's some moving parts and better health. Obviously, the level of advertising spend, the most material mover there. And we also have some of the investments we're making, obviously to scale insurance, really the fundamental drivers of the EBITDA margin. Of course, as you've seen in the past, we do expect the fourth quarter EBITDA margin to be the strongest as we pull back ad spend with respect to the holiday season. But Mike, I don't know if you want to comment further on the ramp.

Yes. I would just say, obviously, with the investments that we're making to scale the insurance, that's obviously one of the factors that's impacting the first half of the year. So that's, I think, another factor.

And the levers that get you to the bottom and top end of the range? .

The next question comes from Sarah James with Cantor Fitzgerald.

[indiscernible] question if we're still live on the line.

I don't know if you heard that last question, but I thought it was great. The levers that get you to the high end versus the low end of your 2026 guidance?

I apologize. Can you repeat the question? It broke up a little bit on our end. I apologize if you could restate that.

Yes, no problem. Can you walk us through the primary assumptions that differentiate the high end versus the low end of your 2026 guidance range? .

Are you talking about at a segment level?

I bet you could do the whole company touching on those segments.

Okay. Yes. So I think, first of all, I'll make some comments and then Mike can weigh in. We see the guidance ranges in better health being wider because of the changes we're making there, both in terms of the variability in the consumer market as well as the ramp in insurance. So that's really a driver of the variability you see on the low and the high in Integrated Care, it's a little bit tighter. But obviously, as our business moves more and more to visit-based arrangements, there's some variability there as well as the ramp of Chronic Care enrollment, those kinds of factors and what we see with respect to some seasonality in our visits. So that's the predominant variation around the range. But Mike, anything else you want to add to that?

No, I think that covers all. .

The next question comes from Jailendra Singh with Truist.

Maybe it is a little early to talk about it, but with the 2026 selling season effectively closed, what is the early feedback from 2027 RSP discussions, health plans still in the state of its strategic uncertainty or a clear strength towards unbundling Virtual Care and Chronic Care from broader insurance package, trying to understand if that health plan headwind you have been talking about might start to ease it a little bit more in the next few quarters or few years?

Yes. I appreciate the question. I would say the it's mixed in the sense that the macro environment that we've spoken about and has been facing, and I know you're well aware of in facing the health plans, those things just continue to sort themselves out. And clearly, with the -- what happens with the expiration of the enhanced subsidies ultimately in their books of business, some of the things that are going on at a federal level. Those things are out there. I would say when I say it's mix, we're having much stronger renewed conversations with health plans, and I would characterize more strategic conversations with health plan specifically about how our suite of services and a vision on what we're building can really uniquely help them in the things that are challenging them the most.

And we -- I mentioned in my prepared remarks, what we've done with Catapult as an example, for a large blue plan in terms of their Medicare Advantage population, we need those populations to get their annual wellness visits. It's important to their health, and it's also important to the economics of the health plan. So I think there's a stronger and a renewed interest to really dig in and evaluate how our unique solutions can help them. Another example with our enhanced 24/7 care offering. That's -- it's not your normal 24/7 care. There's a number of features there that are beneficial to all of our clients, but certainly beneficial to health plans in terms of the ability to avoid unnecessary specialist referrals building to navigate patients to the next best action to close care gaps, to address a broader range of services. So those are really resonating in those positions, and I think they're going to give us a lot of opportunities to lean in with our unique set of solutions.

The following question comes from Jessica Tassan with Piper Sandler.

If just given some of the early experience with the insurance paid BetterHelp members, could you just describe kind of how those numbers are behaving how long are they remaining on the cash pay BetterHelp, when are they converting to insurance paid? And then just as they move into insurance, what is their utilization and retention look like? .

Yes. Well, I'll make some directional comments. Obviously, it's still a bit early, right, to draw any definitive conclusions on that. But everything we're seeing that we're looking to accomplish, we're seeing it in the trends in terms of conversion, usage, number of sessions, the interest level in using their insurance. All of those things are consistent with our expectations.

And obviously, in our more mature markets, which is still very, very early. But in our more mature markets, we're really seeing that play out pretty consistently. And as I mentioned earlier, the growth in sessions has been pretty significant since we started this, and it's not just in terms of acquired users with insurance, but it's the utilization of services of those acquired users. So all of those things are directionally supportive of what we're looking to accomplish. Obviously, we want to see it play out longer, but we like what we're seeing so far, and that's why we've really been focused on scaling insurance and really yielding the benefits of the funnel and the platform that we have.

The next question comes from Sean Dodge with BMO Capital.

Yes. Maybe just staying on better help. Chuck, you mentioned the success you've had recently driving growth by scaling it internationally. I know international pricing is a little different than here in the U.S., but so our customer acquisition cost. So I guess just anything you can share on the margin profile of BetterHelp in the U.S. versus BetterHelp international. Is the mix shift that's happening there, is that responsible for some of this better help margin pressure you're guiding to? Or is that -- is kind of the mix impact you're talking about on BetterHelp margins. Is that more from the insurance side?

Yes. It's not only the insurance side, but there is a different profile internationally, although we get to the bottom line margins that we're looking to accomplish there. So there's a little bit of that. And now as you know, and I mentioned, international has been growing nicely, and it's now over 24% of the revenues of BetterHelp in the consumer. And with these localized models as well as our English-speaking offerings, seeing nice growth there. If you think about in a lot of those international markets, there's an access issue. And I think with our consumer experience and the ability to resonate locally, there's a lot of interest. Mental health is not just a U.S. issue.

So I think that's going on as well as, obviously, the growth in insurance. It does have a different margin profile, but we do believe over time is going to have a different economic construct when you think about customer acquisition costs, lifetime value, efficiency of our ad spend. And I think that's predominantly what you're seeing in the margin profile.

The following comes from Elizabeth Anderson with Evercore. You may proceed.

This is Ayush on for Elizabeth. You noted previously that competition from insurance enabled providers has sort of pressured the U.S. cash pay business. As you expand your own insurance footprint, are you guys seeing that competitive dynamic begin to kind of moderate in those markets? And then in the states where insurance has been like the longest, are you seeing any meaningful differences in engagement patterns compared to cash pay users? .

Yes. Yes. I appreciate the questions. The -- there's a number of things going on in Virtual Mental Health. First of all, I would say pre-pandemic, I would say there was not as much probably appreciation of recognition of the challenge that we're out there. And I think post-pandemic, unfortunately, we've seen the payers and everyone really understand and focus on mental health and take a number of actions to expand access there. And also Virtual Care post pandemic is one of the areas of virtual care that's sustained high levels because, obviously, you don't necessarily need to be in person for those kinds of sessions to occur.

So all that's been going on. The underlying unmet need is still there. The demand is there. And so I think that's a factor in our growth and the session growth that we're seeing, and you see that with other parties as well. So I think even though we were a bit later joining the insurance market, we do believe there's going to be strong underlying demand, of course, with BetterHelp's position and funnel and experience we should be able to see that going there. In terms of the behaviors, as I mentioned earlier, it's a little bit hard to draw definitive conclusions. But I we are seeing good data in terms of when we show insurance, people selecting to use insurance, the number of sessions that we're seeing.

So I think the patterns are, at this point, consistent with what we expected. And I think that underlying demand for mental health services is going to continue to go well for our insurance uptake.

The next question comes from George Hill with Deutsche Bank.

I'll say one quick one and one kind of more developed one. The first one is, does the AARP relationship have any significant economic drag to it just because I know AARP tends to extract pretty significant like price concessions to work with them to have that relationship. And then on the topic of moderating the BetterHelp marketing spend. My understanding is the correlation of the revenue to that business with the marketing spend has historically been pretty high. So I guess like how do we think about the risk of pulling back on the marketing spend and better help and the idea that, that leads to accelerating revenue erosion? .

Yes. I appreciate the question. In terms of ARP, I will get into details on it, but what we're doing with AARP, we have reflected in the guidance that we have out there. and we're excited about it. The ability to be the exclusive mental health care to an organization like AARP and bringing that really 2 leading brands between AARP and BetterHelp to address mental health and we see it as an opportunity to grow the awareness and adoption within that population and obviously, new opportunities in terms of the funnel.

The cash pay component of that, people will be able to avail themselves to a discount in the first month of the cash pay and also insurance seems there won't be a discount there. But standard benefits and cost sharing will apply there, but people will be able to access their insurance as we scale that. And we're also able to, in addition to offering this normal services we have, we're going to have virtual mental health webinars, workshops led by our licensed clinicians, with topics that really resonate with that population. And they also get 3 months free of better sleep to help them with sleep and relaxation and stress. So we're excited about AARP. We haven't necessarily -- we're not quite sure what the ultimate demand generation is going to be there. But we've built into our guidance, what we're expecting with respect to AARP, including our arrangement with them. What was your second question, again?

I'm sorry, Chuck. It was just on the -- yes, ad spend, the risk ad spend, yes. .

Yes, I appreciate that. Sorry. there is a high correlation between advertising spend and the direct-to-consumer pay model, and we'll continue to see that correlation we believe we have an opportunity to make that ad spend more efficient. First of all, we have international growth opportunities that are out there and they have a bit of a different expenditure pattern on what it takes to secure that membership. And we also see that there's a number of initiatives to sort of improve the conversion of members. So get more efficiency out of the ad spend, we've broadened our channels, how we -- what levers we pull. So there will be a significant correlation to your point, it is going to be down versus 2025 and 2025 was down versus 2024. But we feel like we've got the right mix of focusing the resources on scaling insurance while also making sure we're activating the top of the funnel.

The next question comes from Brian Tanquilut with Jefferies.

Sorry to pound the table more on BetterHelp. But just as I think about the push into the insurance side of the business, how are you thinking about the KPIs to manage to? And what second looks like when we think of percent of sessions, reimbursed, payer plan coverage breadth, the reimbursement rates to now selection performance, things like that. Just how do we think about those KPIs as we try to think through our models?

Yes. I'll make some comments and then Mike can jump in. So clearly, it's -- we're looking at things like conversion, right, user acquisition. We're looking at the number of sessions that a user -- that a person needs. And we expect that since the One of the barriers you will, with respect is cost. And with kind of removing that barrier or moderating that barrier, it's going to be more about therapy decisions as opposed to economic decisions. So we expect to see that.

We do expect to not have to maybe spend as much money to reacquire users when people need therapy. So the customer acquisition component of it. We do expect to see some, obviously, gross margin differences in that book of business going forward, but also lower cost to acquire those members and be able to achieve the margins we are. We're also looking at therapist capacity. How many sessions -- how many therapies are on the platform, how many sessions they're able to pursue. I mean, that's one of the benefits of BetterHelp and with this massive therapist network. And we're able to, with the demand we have, fill up their calendars. And as you know, these virtual therapists, they've got to secure patients for their own business model.

So our ability to kind of bring that demand and match it up with the therapist is going to be key. And then obviously, there will be some operating expenses as we administer insurance. And to your point, contracted rates with payers for the services we have, and we think we're bringing a lot of value to the table and we should be able to secure the rates we need. So it's those kinds of KPIs. It's not unique in the sense that we have a pretty considerable B2B business in Virtual Care in our Integrated Care business. So we have a good understanding of what those levers look like.

The following is from Allen Lutz with Bank of America.

Chuck, I want to ask another question on the BetterHelp assumptions for 2026. You had $13 million of revenue in 2025 from insurance. How should we think about the visibility into that $75 million to $90 million? Is that just based on you're in a specific region of the country and that equates to that $13 million. And then the size of the addressable market that you're moving into over the course of 2026 correlates pretty directly to that $75 million to $90 million? Or are there other variables we should think about there?

Yes. In terms of 2025, recall that the acquisition of Uplift brought a certain level of revenues and book of business with them. We were able to acquire a solid base of payer contracts, some capabilities and, of course, some talent. And then as a result of the integration, be able to start launching markets with BetterHelp, starting obviously with Virginia. So the revenues in 2025, we're largely uplift insurance revenues. And so what we're seeing now is a significant ramping of BetterHelp's revenues.

And that's why in my prepared remarks, I wanted to share that we're up over 1,200 sessions on average per day, and again, starting from 0 with BetterHelp, not too long ago. And that's been a nice growth week over week over week, and even that basis at an annualized run rate of over $40 million. So as we roll out new markets, as we have more sessions, more users on the platform for longer, we're seeing that play out in the data, and that's what gives us confidence in the ramp, not only based on state rollout, but also based on utilization and access and awareness. And of course, we're always continuing to pay our contracts as well. And that's really what you're going to see the sequential ramp through the year and why we shared on the last point in the prepared remarks about the exit rate as being around $100 million run rate.

The following comes from Stan Berenshteyn with Wells Fargo.

I guess I'll volunteer myself to ask an Integrated Care question here. So you ended the year with about 102 million members. You're guiding 2026, I think at the midpoint, down $3 million, give or take. Can you comment on the drivers here? How should we think about the timing? It seems at least some of this decrease is going to happen after Q1? And should we expect that dynamic to impact chronic care enrollment at all?

Yes. I think on the latter part, no, we don't expect that. We still have a massive membership base to cross-sell into with Chronic Care. I think what you're -- what we're seeing and what we tried to anticipate in our guidance on that particular number was really the dynamics in the marketplace. We've got strong retention, and so none of that is really related to client loss. It's really the enrollment we are expecting. And the reality of it is, with respect to the Affordable Care Act subsides going away, the health plans to quite yet know what the ending enrollment is, even though we're in 2026 already. We believe there was a lot of people that signed up that we're expecting or assuming that the subsidies might continue and they might disenroll.

So we're just trying to factor in what we're thinking there, obviously, the Medicaid situation and ultimately, though, it's less important about the [ RA ] enrollment membership council, though that's -- it's a factor. But as we move more towards visit-oriented economics, it's really about visits and utilization. And what we see in some of these membership declines we've assumed that the level of utilization in some of those areas aren't as penetrated as others. So we're not necessarily seeing that as a significant headwind at the end of the day from a revenue generation standpoint, but we did want to share our thinking on the raw number.

The next question comes from Ryan MacDonald with Needham & Co.

I wanted to ask about incremental opportunities for BetterHelp, especially since as you continue to scale the insurance initiative here. Obviously, CMS had announced the access program that's going to be launching later this year, actually covers multiple areas that I think Teladoc take advantage of in terms of not only mental health but also in diabetes care. Just curious how you view this opportunity given the recently announced reimbursement rates and if it's an attractive opportunity you view for the business to invest towards in 2026.

Yes. I would say, first of all, on BetterHelp. I think we are predominantly focused right now on mostly commercial business. And we've got a number of levers there. I mentioned earlier that we've launched psychiatry in there. So there's a number of levers we have on the BetterHelp side. With respect to ad to access program, it's something that we're continuing to evaluate, certainly aligns with the value prop of our program. And it also -- we frankly like seeing more attention to chronic illness and in particular, even some underserved populations and rural populations. So we're continuing to evaluate it. There's some implications of those programs in terms of the reimbursement levels and other things.

So again, it's something that we're going to continue to evaluate. But longer term, I do think it's really good that the country is focusing more on Chronic Care. And frankly, I think our programs play well into that.

The next question comes from Jeff Garro with Stephens.

I'll ask another one on Integrated Care business development. I was hoping you give some comments breaking down demand between the health plan versus employer channels. particularly given some of the challenges for the health plans and the exchange and MA markets and how that all will impact your go-to-market strategy into the next selling season?

Yes. Thank you. So we ended 2025 on a solid footing. We had really good demand and results in the employer channels. And we had good interest in the health plan channels, notwithstanding the challenges I've talked about. So we had some nice wins and some expansions as well as some headwinds and all that. I think for purposes, as we enter 2026, a lot of the dynamics are still in play, a lot of need and interest in the employer markets. But I think even more in the health plan channel, as I mentioned earlier, having more strategic conversations about how we can move the needle on their medical costs.

And it varies in terms of the population, it varies in terms of lines of business. in terms of what the drivers are to their economics. But because of our position and the suite of services we have and frankly, the investments and the innovations we've done over the last year, we're in a much stronger position to lean into those strategies. They -- there are some health plans that have brick-and-mortar primary care strategies. We think we can complement those. There are others that are heavily focused in particular lines of business.

And so we're really just leaning into where our opportunities are to serve those health plans, move the needle on the populations that they're responsible for and ultimately drive cost outcomes and ROI for them. So I think we're in a good position, notwithstanding some of those macro headwinds that are still out there.

The following comes from Scott Schoenhaus with KeyBanc.

This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

Good afternoon, and welcome. My name is Lisa Gill and I head healthcare services here at JPMorgan. It is with great pleasure this afternoon that I have with us Teladoc Health. Presenting for Teladoc Health is CEO, Chuck Divita. Post Chuck's presentation, we will have a little fireside chat here, okay? So, Chuck?

Great. Thanks, and good afternoon, everyone. Hopefully, you can hear okay with this mic. As Lisa said, I'm Chuck Divita, the CEO of Teladoc Health. Really appreciate the opportunity to be here and also for you attending the session. I'm going to provide a company overview and talk about our 2 main segments. Also how we see the role we play in terms of addressing some of the key challenges in health care. I'm going to talk about a bit our 2025, our priorities we set in early 2025, and the progress we've made there, as well as our areas of focus in 2026, and I'm going to give a few examples of what we've got going on. And then I'll wrap with some closing comments, and then we'll move to Q&A. And I have to do the slides, too. Okay.

As you may know, the company has really been a pioneer in terms of the adoption and scaling of virtual care. Really over the 20-year period that the company has been around and really established a leading global position in what we do. We deliver and we orchestrate care across virtual care, chronic condition management, and mental health. And we leverage technology pretty importantly in how we deliver that.

We have a diversified distribution model in terms of how we go to market. We serve health plans and payers, employers, institutions and consumers. And we operate at substantial scale with respect to our part of the sector, both in the U.S. and a significant and growing international position. We believe that our leadership position, our breadth of products and services, as well as our build to impact client impacts and value are really the things that differentiate us in the marketplace.

As you can see on the slide, we generated $2.5 billion of revenues on a trailing 12-month basis, that's a -- as of the third quarter '25, the last quarter that we reported, and just over $270 million in adjusted EBITDA.

Really, since I've joined the company, which was about 18 months ago, we've really been focused on innovation and leveraging the assets and capabilities that we have from this leadership position that the company has created and really sharpening our focus on execution.

Our largest segment is what we call Integrated Care. This is where you'd see the largest breadth of services that we provide. And we really have developed a really leading position in terms of over 100 million people in the United States have access to 1 or more of our products and services. We have 12,000 clients installed. And as the name suggests, we really take an integrated approach in terms of patient care and helping people with their physical health and their mental well-being. And we do this in 3 primary ways. First is what we call virtual care. So we provide longitudinal care as well as episodic care including through our flagship 24/7 offering, that's an important access point for millions of people in terms of the ability to access care. And one we think we can reset the bar as well, and I'm going to touch on that more later.

We also help people manage their chronic conditions with a particular focus on cardiometabolic health in diabetes, hypertension, weight and obesity. And we have over 1 million people enrolled in those programs today. And we also are a significant player in virtual mental health, both in terms of content, but also therapy, psychiatry because we believe that mental health is a fundamental part of overall health and we conducted 1 million visits last year in the Integrated Care segment alone. And we really leverage purpose-built technology to do this, and I'll just give some examples. We have something called our Prism care delivery platform, which we've made some enhancements over the last year, and this is really the platform and how we can do an integrated approach to care across those various things. And I'll give you an example of how we leverage that a little bit later.

And we also have developed and invested significantly in our data platform, which we call Pulse. And that's -- if you think about the level of data that we have as a leader, we have device data and a variety of different data points, both ours as well as data that we intake. And then we're able to apply artificial intelligence against that data set, in terms of how we engage and activate and the insights it provides. And that platform is really what's going to be fielding that for us going forward.

And we have proprietary devices as well. We serve the hospital and health system market, where we have devices that I'll show you a little bit later that sit in the acute care setting and other health care settings. And we also have proprietary connected devices that help us manage people with chronic conditions. So technology plays a pretty important role in what we do.

In addition to the U.S., like I said, we have a significant international position in Integrated Care. And what distinguishes there is we have an ability to tailor what we do to the unique markets that we serve. As you know, health care varies and it's different in terms of how it's delivered and funded and so forth in different countries.

I won't repeat the data that you see on the slide in terms of the financials, but we generate revenues in this segment in 2 main ways. One is through subscription-based model, so think about per member, per enrollee, those kinds of things, and visit-based arrangements. And think about more like getting paid when you do something, right? And we've seen a migration over a period of time, certainly in recent years, moving from these subscription models more towards visit-based economics. And if you think about it, that's kind of the rest of the U.S. health care system is a fee-for-service system. So while that's had an impact on us, we've leaned into that change, and I'll give you an example a little bit later to show how we have focused on revenues from a perspective of generating via visits and the level of services that we do. So in integrated care, we're executing across a number of levers to drive the performance in that segment.

Our other segment is something called BetterHelp, and you may be familiar with them, but it's the largest virtual therapy business globally. We've had the opportunity to serve over 5,000 people -- or excuse me, 5 million people in 100 different countries. And think about this segment more of a pure-play mental health offering, but with a very strong consumer orientation. We have very strong brand awareness and a Net Promoter Score of over 70. We have a large, diverse and quality therapist network to be able to deliver services over 30,000, and we're able to match people with a therapist over 90% of the time in under 48 hours. And we think that's really critical to obviously timely access to care in mental health, but also in the kinds of outcomes that we could deliver and we think that really distinguishes us.

This is a business that we also continue to expand internationally. Over 20% of the revenues of this segment now are coming from non-U.S. markets. But it's also a business that's been under pressure in recent years, really since 2023. And predominantly in the U.S., where we have a currently a direct-to-consumer cash pay model, and that's been a challenging environment and it continues to be. And that's why when I joined, like I said, 18 months ago, we made the strategic decision to take BetterHelp into the insurance covered benefit space. And we think that's an important initiative for a variety of reasons, but including 1 user conversion, BetterHelp has 4 million people roughly a year start the registration process to use BetterHelp. It's a massive funnel. But less than 20% convert and become active paying users. And while there's various reasons for that delta, the predominant reason is cost because we're asking someone to pay out of pocket. So the ability to access your insurance we believe is going to help with user conversion.

The second is in retention. So giving people the ability to use the platform, both on a cash pay and an insurance model. And then third, we believe we're going to see more sessions per user because people if they need more therapy, it's not making a financial decision as much as they are with insurance. So it's an important initiative. It's early. It's going to take us some time to ramp up insurance to sort of overcome the challenges and the cash pay model, but an important initiative, and we are seeing really good early progress, and I'll touch more on that later. So we're heads down on a number of initiatives to really stabilize BetterHelp and more realize its potential as -- with the leadership position it has globally.

When you step back though, we -- and you all know this very well because you're at a health care conference and you're interested in health care. The challenges in health care are immense. If you think about affordability of health care, medical cost inflation, the prevalence of chronic disease, unmet mental health need and the pressure on providers. And it's really impacting all stakeholders and in some cases, unprecedented in terms of what impact it's having with health plans and with employers. And we believe as the leader, we have an opportunity to really lean into these challenges with our solutions and drive impact for our clients, certainly impact the -- and improve the cost of care. Help people manage their conditions, which is a huge issue globally, but also in the United States, of course, and help people with their mental challenges as well as extend provider capacity. And so that's really how we're looking at this company strategically in terms of how we drive value going forward.

And really why in early 2025, we really refocused the company around 4 key strategic priorities, and let me just hit these quickly. So the first is enhancing our U.S. Integrated Care business really through our services, our clinical impact as well as innovation. The second is to leverage that scaled mental health position. We're a major player in virtual mental health both in Integrated Care, and of course, with BetterHelp. The third is to generate and grow the value of the asset we have with our international position. And fourth is around operational excellence in terms of business performance and operating efficiency.

And I believe we've made pretty significant progress across each of those over the last year, and it's really what's been guiding our investments and actions. So examples, in Integrated Care in the U.S., we have really focused on product innovation, and we have new products coming out for 2026 across virtual care, chronic condition management and mental health, new offerings for 2026 that we're bringing to market. We've also innovated in technology. I mentioned some of those platforms earlier. And we've expanded our ability in preventative care with the acquisition of a company called Catapult Health that really extends our ability to meet people where they are and help them diagnose conditions and get them the care that they need.

In mental health, we've made big moves there, moving BetterHelp into insurance with a credible path to scale and grow that. We've grown internationally. We have these new localized models that we've developed. We're now in 7 countries with local language, local therapists to drive value from an international perspective. And we also developed a new product called Wellbound that leverages the strengths of our Integrated Care business and BetterHelp to be able to serve the employee assistance program market with a new EAP offering.

In International, we delivered double-digit growth, and we've developed and expanded what we call hybrid care models. I'll have an example of that a little bit later. And we also acquired a company called Telecare that expanded our position in the Australian market. And in operational excellence, we've done a number of things to streamline the company. We've been able to also add talent as well over the course of the year, and been able to hit our productivity and our cost savings goals as well.

In addition, we were able to really upgrade our game in terms of operational excellence and how we deliver for clients, including we received ISO 9001 Certification for key U.S. processes. So a lot of things and accomplishments to build on as we enter 2026.

So I want to just share a few examples of what I mean by that, maybe put a little bit more detail on what -- where we're headed. This morning, I'm not sure what time zone, but sometime earlier today, we announced the launch of our new 24/7 offering. And we're really excited about bringing this to market. You may -- if you track the company, you may have heard me talk about the need to make visits more impactful, more impactful for patients, more impactful for clients and certainly more impactful to us as a business. And this new offering expands the scope of services that we can provide in 24/7 care, which is important.

We also have the ability with that Prism platform that I mentioned earlier to surface actionable information right at the point of care, for example, identifying and bringing to the care providers attention a potential gap in care and bringing that to the members, the patient's attention and seeing if we can address that care gap and we're seeing good uptake there. That's important for quality, but it's also important if you're a health plan, closing those care gaps is critical. We also have the ability now to bring specialty to our care provider in a real-time basis, 30 specialties. So our care provider that's got that member and trying to address that particular situation, accessing a specialist to confirm and strengthen and develop the care plan as well as avoid unnecessary referrals, which is a challenge, and it knows does it cost money and you can see the cost savings there, but the patient has to wait and we'll have to -- have to see the specialists. And we're clogging up our specialist practices with unnecessary referrals. So we think that's a really important development.

And we're also able to identify and connect the patient with other services that they may be eligible for and benefit from Teladoc, as well as connect them with inpatient care if that's what's needed. So if you think about this offering where we have millions and millions of visits each year, making those visits have more impact. And as part of a broader Integrated Care strategy, it also ties back to what I said earlier about that migration from subscriptions to visit based model. So now these visits become more valuable, more impactful, we can meet more needs and we can also activate additional strategies and use cases. So that's new, and we're excited to roll that out in 2026.

The next thing I wanted to hit on was chronic care. And I'm sure you know all these statistics, but chronic care is -- chronic additions are a major issue, certainly globally, but definitely in the United States. When you look at the prevalence of hypertension, diabetes, weight, obesity, well over $1 trillion a year spent on chronic disease and a significant portion on cardiometabolic-related diseases and complications. And as a clinical organization looking to drive integrated more holistic care, the ability to help support people with chronic conditions that is fundamental to the value proposition. So we have, like I said, over 1 million people enrolled in these programs.

I think what's distinguished us here is that we can -- we were focused on 1 cohort or 1 condition, we're looking across a client's population so that we can drive the maximum amount of impact and do it at the scale that we do. And we're excited about the new things that we're bringing to market for 2026. We have new AI-enabled stratification models that can look at that information, that data and identify trends and other things. And then importantly, trigger an additional clinical intervention, if you think about high risk or rising risk populations, that's where things go wrong. And so we're excited about the ability to leverage the data we have and the insights to create those actions.

We've also got new connected devices coming online, new features and enhancements to our programs. We're excited about that. And importantly, the ability to bring other care providers to the table. So if you think about someone that's got a chronic condition and a complication, their levels aren't under control, the ability to bring other care providers, including the ability to interact with their care provider. All of this is aimed at driving better outcomes for people and ROI for our clients.

And we think with the -- certainly, the proliferation of point solutions that are out there, our ability to show up for members more holistically and help them with their health across all of those aspects, including mental health, we think going to be differentiators for us.

The third example I wanted to use was the hybrid care model I mentioned earlier that we're doing in our international markets. And again, this is the ability for us to bring virtual services into a physical setting. And so we are leveraging our proprietary devices to do this as well and meet local needs. For example, in Canada, we're using that hybrid model to bring emergency services and primary care to rural and remote communities. And that's really a lifeblood really rather than having to drive 5 hours if you're in some rural parts of Canada, to get care, and it helps the system stay engaged there for access to quality care. In France, a variety of different settings, primary care and specialty care in a hybrid model. And in Australia, we're doing this in the similar ways, also doing some work in elder care.

So I think these hybrid models have a lot of promise. They've certainly been a part of the growth story for our international business, and we're excited about being able to expand these solutions, both in the current markets we're in as well as new markets.

And then the last example I'll use is BetterHelp. I touched on this earlier in terms of the move to the insurance, but let me just provide a few more comments. We really accelerated this effort with a tuck-in acquisition that we completed at the end of April in 2025. And 2 months later, we were in market in our first state with BetterHelp insurance. That was Virginia. And as of year-end, that's increased to 12 states plus D.C. And we're going to continue to roll this out over the course of 2026.

We're also growing our credential therapists. So we're over 3,000 at the end of 2025, in terms of license credential therapists to serve the insurance network. We're also adding new in-network arrangements. We continue to expand that with payers. We're over 120 million people that will have access to BetterHelp once we scale that. And we're methodically rolling this out because we want to make sure we've got that strong user experience that I mentioned earlier as well as to be able to meet the demand. I mean BetterHelp has got a massive brand awareness and a massive funnel. And we want to make sure that as we offer insurance that we're able to meet the demand with the network.

While it's early in the journey. And certainly, like I said, we'll take time to roll out and overcome some of the challenges that we've got in the direct-to-consumer model. We're encouraged by the early results we're seeing, both in terms of the execution of scaling, which I think has been quite remarkable, but also metrics like user conversion, sessions per user and other metrics. So it gives us a lot of -- a lot of excitement in terms of where we can ultimately take insurance as part of BetterHelp. And we're heads down, again, focused on rolling that thing out over the course of 2026.

All these initiatives are really enabled by our sound financial position. We had over $700 million in cash on the balance sheet at the end of 9/30 into the third quarter. And that was after paying off $500 million of converts that were due. We do have $1 billion of converts out there coming due in middle 2027, but we believe with our cash position, our free cash flow generation and our business model that we'll have a good range of options to both address the converts as well as have an appropriate go-forward capital structure for us. And of course, we'll continue to execute across all of the performance levers at the bottom to drive results.

So I think in closing, we're going to continue to lean into our market position and -- with our solutions, with these key health care challenges. We enter 2026 with, I think, a more innovation-led product portfolio, excited about our international prospects and what we're doing there, and certainly encouraged by what we're doing and the progress in BetterHelp insurance as well as what we're doing in terms of operational excellence and driving business performance and efficiencies. So I feel like we've got a good execution year ahead of us, and I'm excited about where we're headed.

And I think with that, maybe Lisa will go to Q&A.

Sounds great. Thanks, Chuck, and thanks for all the highlights. I think if we think back to a year ago or so, you talked about the strategic review. You highlighted the unique assets and positioning. And I think you highlighted some of these in the presentation, enhancing the Integrated Care, advancing the model on the insurance side, in the mental health side, international operational excellence, et cetera. Where do you think you are on that journey as far as getting to where you ultimately want to be?

Yes. Well, you're never done. But look, we recognize we're a show-me story. And that's why I thought it was important to highlight what we said and the priorities we set and then describe what we've been doing, and the impact it's going to have in terms of our go-forward model. So I think from my point of view, over the last 18 months, it's really been around assessing our strengths, looking at our market position, the assets we have, are they fulfilling the promise that I think they have or not, what investments we need to make, et cetera. So I think we've made a good run at that. Now I think as we head into 2026, and I mentioned, it's really an execution year in terms of bringing those products to market, being able to demonstrate to clients that differential value. Like I said, it's an unprecedented time in health care. I know others in the room know that, but I can't remember a time in my time in health care, and I was in the payer world before I was in this role, where you've seen the kinds of challenges across every line of business, right? Usually, it might be Medicare or Medicaid, this is in commercial and ACA, Affordable Care Act. So I think we're well along on that, but I think now it's around execution to really unlock that value for our clients.

And how do I think about the setup going into '26 in the context of your longer term goals. I know you haven't given specific guidance yet. And I'm not asking you to, but just thinking about it...

And I won't. Look, I think -- I'm looking forward to provide an additional business update on our fourth quarter call. I think when you look at 2026, and it's kind of a similar environment that we've talked about in our last earnings call, but 2026 has got its own set of headwinds and tailwinds. From a tailwinds perspective, I like what we're doing in terms of the growth we've had in visit-based revenues, like the international growth we have. And so there's a number of things that we're doing that I think are -- and our client base needs help, right, with some of these challenges. So I think there are some tailwinds there.

But from a headwinds perspective, we've got this mix thing that continues to impact us, of course. And there's a lot of uncertainty in health care. And I think that extends the buying cycle and it extends the kinds of conversations that you have. So I think both of those are going to be in play in Integrated Care. And then in BetterHelp, it's -- we've got those challenges in the consumer market. And now we're about scaling that insurance model and scaling that international. So 2026, I think I would just say it's got its own series of headwinds and tailwinds, and the team is -- we're organized to go after it.

You talked about BetterHelp, 12 states plus D.C. now having insurance coverage. How should we think about the rollout of the rest of the states? Is it you look where the population is, is it more of you look where the relationship is with the managed care company? How do I think about how that rolls out?

I mean, it's all of the above. I mean, we -- certainly, our starting point is what position does BetterHelp have already in those markets in terms of the consumer flow. The second is do we have the therapist network, credential therapist network capacity to be able to meet demand and then, of course, the in-network contracts that are going to come into play there. And we've been very methodical. And as you say, from 1 state to 12 states, we're adding states. I'm not going to say what number it is, but we're adding, continue to add states every month. So I think my best comment on it is we're going to roll it out over the course of '26. But I think we're going to make material progress every quarter along the way. So that by the end of the year we should be in a much more broader sense on a national basis.

AI is something that everyone talks about these days. And I think 1 of the bigger themes at our conference this year -- can you talk about how Teladoc uses AI within your health care platform and the future opportunities that you see?

Yes. I mean it's -- first of all, it's an exciting time with the proliferation of AI and it's so fast moving, right? I mean you can't get -- not look at the news because there's another announcement or something coming out. And we've been pretty extensive users of artificial intelligence, certainly in the machine learning category, if you will, to effectuate a number of different things. So it's pretty widespread in many ways of what we do. And even -- we don't talk about it much, but like in BetterHelp, they're using AI in terms of the questionnaire and the intake to make it smarter and more relevant. So there's a lot of places we're using AI to help our clinicians get ready for a visit, to pull information and summarize and raise trends and get -- arm them so that as they're delivering care, they're armed with that information, using it to -- AI scribe to document things, our tech areas using AI to help code and -- so there's a lot of places where it's showing up in the business.

I think we're going to see in 2026 even more proliferation of that, I think, in health care and certainly, we've got tremendous focus on that. One other example, and again, I've referred back to our hospital and health system capabilities, but these are devices that sit in rooms, in hospitals in many cases, and we're using AI to look for things like fall risk, or elopement risk, looking at worker safety, extending nursing capacity. So I believe that you're going to see AI show up across almost every aspect of health care. What we're going to do is we're going to stay focused on some core principles with that though. We focus on patient safety. Our clinicians are going to be the 1 making the care shots calling care, but we do want to benefit from this proliferation of AI.

When I think about the Integrated Care business, and I always ask you this question in October. But as we sit here in January, maybe an update around the selling season. As we think about how it played out for the rest of the selling season this year, can you maybe just not -- I know you're not ready to give a number, but maybe talk more around what people are looking for, if there's anything different in the marketplace that you're seeing today.

Yes. I think it's very similar to what I've spoken about the last few quarters. The employer market, we've had a lot of interest and a lot of uptake and sort of consistent with what we're thinking. And they're facing a number of challenges. I mean if you monitor and follow any of the cost trend and rate increases and other things that employers are having, it's pretty significant. So they're focused on a lot of the same things that I touched on, but they might have different issues they're going after. But that's progressed well. I think the health plans, there's been a lot of uncertainty there as they figure out and they will figure it out but how they -- what strategies they're going to employ, what markets they're going to be in or not. And that's kind of -- I called that several quarters ago, and it's continued on. And I think that -- that market will -- I think it will improve as they deploy their strategies and so forth.

So I think the selling season has been in line with what I talked about, and I'm excited about these new offerings for 2026. We entered 2025 similarly to the product portfolio we had before. So these are several new moves that I think at least give us an opportunity to talk to clients in new ways in terms of how we can add value.

And do you see an opportunity? Is it more of an upsell? Or is it new clients because of the new products that you're bringing to the market?

I think we're going to see both. I think certainly something that's been largely and broadly adopted like virtual care, right? The ability to distinguish what we do in the ways that I set, I think, are going to be noteworthy of people and may cause them to move. But of course, we're the market leader, so we've got the predominance of it already. I think there will be upsell opportunities because there's additional value that this can bring and these other services as well. So I think it's going to be a little bit of both. But what I'm focused on right now is like what do our clients need most from us. And I think if we deliver that, we're going to see it both with current clients and potential new clients.

You touched on the transition from the subscription model over to a fee-for-service model. Can you talk about that evolution and what it makes -- when we think about it from a financial standpoint, what it looks like over time?

Yes. If you think back to kind of back in the day virtual care, prepandemic, if you will, much of that was around -- much of that adoption was around access and convenience. And since it was relatively new, both the customer and companies like Teladoc needed some predictability in that. And so there were subscription models, PMPM models, if you will, that both parties could say, "Okay, I know what I'm paying for and I know what I have to deliver. And then, of course, the pandemic had, and you've had this really broad adoption. And then since then, it's been more about like, well, why is it being paid for any differently than the rest of the way I'm paying for health care. So this -- it's not unforeseen that you would see this migration. And we've seen more of it in recent years. Now more than 50% in 2025 of our revenues that come from virtual care are in visit-based arrangements. So mathematically, we're past 50%, and you should see the annual year-over-year impact vary, but we've still got some more innings to go. And I don't know where it's going to settle out because there's still plenty of clients that like the PMPM model. They like the predictability. And as we add new services, make that model may be more attractive.

In terms of the economics, it varies. It clearly has been and can be pressure on gross margin as you move away from subscriptions and visits but it depends. You can have subscription models. But if you have a lot of visits, that eats into your gross margin. If you don't have a lot of visits, you have more gross margin, but you weren't adding value. So I think that we've approached it is, it does have an impact on gross margin. And that's what we've been very focused and effective at taking costs out around technology and development, administrative costs, certainly share-based compensation to offset that margin pressure. But it's still going to be a headwind, if you will, but I think a moderating 1 given the percentage I mentioned.

Again, going back to the presentation, you several times throughout the presentation talked about the opportunity to make visits more impactful. And the product enhancements that you've been working on to deliver this promise. You mentioned Prism and Pulse during your presentation, which seem to help enable you to have the ability to make visits more impactful. Maybe talk a little bit more about each of those and what they're actually doing.

Yes. Prism is, if you think about the various services we provide, there's different systems and workflows that go with virtual care, chronic addition management, mental health. And previously, maybe you had to integrate -- literally integrate all that to be able to unlock the value across them. What we've done with Prism and leverage some different technology is that we put what we call a sidecar in front of the care provider, whether they're a coach or a nurse or a physician or whatever, that we can surface things that are relevant for that member in that particular visit, and then they can take action on it.

It's also where we've put our ambient scribe technology in there where that -- so that sidecar can be used for a variety of reasons, but it really helps enable the integrated care.

Pulse is all around the data fabric and the data platform and being able to take all -- benefit from all this information that we have and other getting HIE information and other things and then apply, whether it's AI or other kind of reporting against it to drive the actions we're doing. So both are important, but they relate to each other for all different reasons, yes.

You've had very strong membership in '25, adding 8.5 million members and bringing the total to about 103 million people on your platform, growing 10% over '24. How should I think about the opportunity going forward? I mean, the U.S. population is about 330 million. You've got about 1/3 of the U.S. population on your platform. Is membership growth -- is there still a big opportunity?

Look, I think there's an opportunity, but I don't look at as much around that our growth profile and our outlook is going to be dependent upon 102 becomes 110. Of course, I want it to become 110. But it may be less than 102. But are they using the services? Are we selling more products and services and are people benefiting from what we do? So it's an important lever, but it's not the only lever. Really, it's about activating the usage and for the membership to see value in what we do and trust in what we do and for our clients to adopt more services from us. So we are certainly always looking to grow membership. But when you think about where we are in health care, the Affordable Care Act subsidies expired at least so far, unless something changed today in Washington. And so things like that can affect membership, they can affect it positively or negatively. Ultimately, there's a base of individuals that can benefit from our services, and that's how we look at it.

It's interesting. I don't know if you saw the file today, but they dropped that from CMS. Membership is only down 4%. I guess everybody thinks the subsidies are coming. No, it's kind of...

That's a good point, and we'll see. But I'll tell you from my prior life, what I think is happening, those numbers, they tell part of the story. But I do believe a lot of sign-ups were happening potentially thinking subsidies will be expanding -- so I don't know what the cancellations are going to look. So I think the health plans and all of the -- we'll have to see that.

I'll have to wait and see, but it's interesting to see the numbers today.

It did. I was surprised -- it is good as it is.

Yes, I know. I was too. Can we spend a few minutes on chronic care. How do you think about the competitive backdrop and your positioning in chronic care? And what can really accelerate that growth?

Yes. Look, it's a highly competitive space, and there's a number of solutions out there, depending on which part of chronic care we're talking about. I think our unique position and being a leader in it is and being a clinical organization with providers and the ability to show up and help these individuals with their care beyond just digital health tools and knowledge, I think is impactful. Our clients are ultimately looking for quality outcomes, but also ROI. And if you can understand, identify and engage populations that -- where it's not going well, their sugar is not under control, their hypertension is not under control, what else is going on. You look at the comorbidities of somebody with diabetes. COPD and CKD, there's other things going on that are impacting the care. So for us to be able to identify that with all of our data and then have a clinical intervention to help those people understand what's really going on, I do believe that's going to distinguish us in this chronic care space. There's a lot of competition, there's a lot of solutions out there, but I believe our position is strong because we can show up in a different way.

We touched on the rollout of insurance coverage on BetterHelp. But as we think about this shift and we think about the shift away from cash pay and potentially to insurance, how do we think about the margin impact on BetterHelp?

I think -- well, it's going to change. I mean, I think we've seen enough of what the difference is in terms of insurance-based models, whether it's mental health or otherwise. So there will be a change. BetterHelp currently, the cash pay model has a high gross margin, but a high customer acquisition cost and a high turnover. It's just the nature of the consumer model. So as we are able to convert more users, have an ability to retain them longer, and I believe more sessions because I don't think the therapy need stops when the cash stops, I think you're going to be able to see better lifetime value even though the margins may be a little bit compressed. And I think we're going to have more efficient ad spend as a result of it because we have to spend a lot of -- we're still going to advertise a lot because we want to activate the consumer. That's still key in a virtual business, but I believe we're going to have more efficiency in the ad spend. So I think overall, it's going to fluctuate here until we get the things scaled. But I do believe that the margin profile will be a solid, sustainable margin in the future.

Just given that the number of acquisitions you've completed in the last year, how are you thinking about your M&A strategy from here? Do you have all the pieces of the pie that you need? Are there things you'd like to add?

I don't think we ever have it. I mean, health care is big, it's complex. The needs are out there. It doesn't have to always be M&A. It can be partnerships and commercial relationships and all that. That's why I think it was very clear to establish some clear priorities so that we can stay at those and say, okay, if that's what we're going after, do we have what we need, and it creates some discipline in M&A in terms of where you want to focus because there's endless things you could focus on.

Catapult is an example. We look at our virtual care offering. And we said hey, would it be great if we had an ability to do more preventative care and in a virtual way to where we can send a kit to someone's home, they can do a simple blood draw, do a screening and we're seeing remarkable results. 50% of the people that do that virtual checkup have a chronic condition anywhere from, let's say, 40%, 30% to 50%, depending on the condition, didn't know it. They weren't aware that they had a condition. So you think about the ability to meet people where they are and get them into a care plan. So there's places like that, that I think we can extend what we do. UpLift was a very strategic acquisition in terms of BetterHelp. So I think you're going to see more interest from us, but also disciplined in terms of where we go.

All right. We're out of time, but just 1 last question. Any update on your process for your CFO search?

Thanks for asking. Yes, as I mentioned on the call, we've got a large search firm assisting with us. The process is going well. A lot of interest in the position, a lot of interesting candidates, not ready to announce anything yet, but I think it's progressing along. It's an important position, but we want the right fit for this business in terms of what we need going forward.

Great. Thanks very much, everyone.

Thanks everyone.

Hi, everyone. Thanks for joining. My name is Jess Tassan. I cover managed care and healthcare IT at Piper. I'm really excited to be here with Chuck Divita, CEO of Teladoc. Teladoc is the global leader in digital or virtual care with a comprehensive platform of solutions for physical and mental health. The Integrated Care segment is about 60% of the company's revenue, but almost 90% of earnings. So that's where we are going to spend most of our time today. Thanks so much for being here, Chuck. Welcome.

Thank you, Jess. Thanks for having me.

So I want just to kick off with your perspective, how should we think about long-term growth and profitability within the Integrated Care segment?

Yes. Well, as you mentioned, we have 2 segments, Integrated Care and BetterHelp. I'm sure we'll touch on BetterHelp a little later. With respect to commenting on growth, we have our fourth quarter earnings call that will come up in February. We'll issue 2026 guidance then. So I don't want to necessarily get over my skis with respect to that. There's a lot of things still in play, how the selling season goes, a lot of the macroeconomic uncertainties [ in ] healthcare and things out there. So I want visibility there. But I do think maybe if we think about low single digits growth, it's in the range of potential outcomes for 2026 for us. But I think what I'd like to do is maybe touch on some of the, what I call, the headwinds and tailwinds for our Integrated Care segment, I think, give some context on that. From a tailwinds perspective, for any that have followed the company and maybe heard some of the things we've talked about, we have seen nice growth in virtual visit revenues over the last period of time and we expect that to continue. So that should be a tailwind for the business. We've got 4 strategic priorities I've talked about, one of which is operational excellence. It doesn't sound as sexy, if you will, but how we execute the business, the complex business we have matters both in terms of performance for clients, but also revenue generation. And that's had an impact on us this year. Expect that to continue. We've got some new products and services that we're launching. So we're excited about that for 2026. And we've had nice international growth, which has been a nice contributor for us. So we have some good underlying momentum in those areas. From a headwinds perspective, I mean you all that follow healthcare know this, but there's a lot going on in healthcare. You've got significant medical cost trends facing employers, you've got health plans that have had a number of challenges they're working through in different lines of business. So that uncertainty is real, and it impacts us. Now I think longer term, could provide some tailwinds for a business like us, but there's some some challenges there. So there's a number of things like that, are in play and Integrated Care, but I think that's really why we're leaning into product innovation, execution and really controlling what we can control as we head into 2026.

So that's helpful. If we think about kind of the drivers in that segment as being lives, visits and price or PMPMs or price per visit? How do we think about kind of each of those core components as we build to the low single digits that you just mentioned?

Yes. Again, not to talk about growth rates, but just for the audience here, there's a number of drivers to the business, and you mentioned some of them. One of those has been membership, we call it membership, and we've had nice growth historically in our membership numbers. But given the broad adoption of virtual care, I think the raw number of membership is not as relevant as much as it used to be in terms of growth. It's really about usage of services. We've had this transition of our business more from subscriptions to visit-based models to be more like the rest of the U.S. health care system. So the utilization and usage of services as an important driver. So that's a factor. In terms of price, obviously, price is always a factor out there, and it really speaks to the competitive environment, what value you're bringing. We've been able to drive price increases in our visit based revenues over time. And I think as we roll out some of these additional enhancements, we'll have that as well. The other part of our business that's in Integrated Care, that's a material contributor. Chronic Care management, we have a broad range of products and services we do there. We've got over 1 million people enrolled in those, and we've got multiples of that in terms of recruitable. So when you look at the sort of fundamental drivers of the business going forward. It's membership, it's utilization, it's pricing power, and it's obviously the penetration of services across the portfolio.

Got it. That's helpful. So just within the $1.575 billion of Integrated Care revenue, obviously, it's growing 3%, 15-ish percent margins in 2025. We think of 3 fundamental businesses: chronic care management; core virtual telehealth; and then there's a hospital-oriented business as well. Can you maybe comment on just the relative sizes of each of these businesses? And then anything you might want to share on just the economics of each of those 3 [indiscernible].

Well, I think in Integrated Care, there's a lot of things going on inside that segment. So let me just try to pull on that thread a little bit. So we have a large U.S. business, which is predominantly what one might think about with Teladoc in terms of the history of the company in there. It's where we see the broadest range of services and 12,000-plus clients and so forth in the U.S. business. And we have a small but growing international business that serves B2B markets as well as public health systems, it's smaller than the U.S. business. And then we have a third market that we serve, which is in our health system. So we have devices and software that health systems use to advance their virtual care strategies. If you go to our website, you might see some pictures of that technology there. But by far, the U.S. business, which includes virtual care, chronic condition management, mental health is the largest within that followed by international, followed by a smaller health system business. As a segment, to your point, we've been able to generate solid margins, 15% or so. And there's a lot of variation in between the different products in terms of what markets they serve and their financial profile. But I think overall, we're generating really good margins for the segment.

Okay. Got it. That's helpful. So I mean, I guess just maybe to frame it loosely, would it be appropriate to think about chronic care and hospitals as half of Integrated Care? Or is it...

We haven't disclosed those statistics externally. I would say that there -- the hospital part of the equation is much smaller and certainly the range of virtual care, chronic care and mental health and Integrated Care in the U.S. is really the driver.

Okay. Got it. So just of your members, how many have access to a chronic care solution today? And how would you expect that to evolve over the next [indiscernible].

Yes. I don't think we've given the aggregate number, but it's many millions of what we call recruitables. And those are typically cross-sold into the broader membership base, the 100 million lives that we talk about. So there's a significant percentage of that business that we've cross-sold, the chronic care management programs. And then we need to activate those recruitables, and if it's relevant for them, make sure that they want to engage in the service. So that's the way I would think about it. We also have a good penetration of our mental health services and Integrated Care to that base, over 60 million people have access to mental health services on our Integrated Care side. So we've done a good job, I believe, of cross-selling and penetrating, with a value prop that's really around integration, really managing populations more holistically across those needs, and that's really what the strategy is for us.

Got it. So can you maybe describe what the engagement rate within chronic care is today or what your hope for the engagement rate would be in the near term?

Yes. We've got really good engagement rates. Again, from a percentage standpoint, we haven't necessarily disclosed that, but our penetration rate relative to accruals is quite good. Again, it's more around activating -- there's 2 things in play. One is just the brand awareness that we have and the ability to reach those consumers, those patients in terms of the services that we offer. That's one. Two, getting them interested in and enrolled in a program that we believe that can be beneficial to them. And then, of course, keeping them engaged in that program over a period of time, all of those contribute to both the enrollment, the penetration and the revenue generation that comes from that, and most importantly, our ability to drive the outcomes for those patients.

Got it. So is there more room to engage the members who today have access to a chronic care solution? Or are we kind of tapped out of the existing [indiscernible].

No, we're not tapped out. In terms of our installed base, we have many multiples of recruitables versus the enrollment. And there's a variety of reasons for that. There's some people that aren't interested, right? They may be eligible, but they're just not something they're interested in. But I think if we continue to approach them with the right value proposition, there's upside to the enrollment penetration.

Okay. That's really helpful. So Teladoc is obviously executing this transition within core virtual telehealth from what used to be predominantly PMPM. Access fee model to a visit fee or utilization-based model. Can you maybe provide the impetus for the time line of that transition? And then just what are the economics?

Yes. I think the way I would maybe frame it is there was kind of 3 major periods in this virtual care space, in my view. There was the pre-pandemic time frame when a lot of the -- what Teladoc was really a trailblazer in terms of the adoption and scaling of virtual care. And it was really around predominantly convenience and access and cost savings to the client. I was a client before I joined as CEO. So I was a customer. So a lot of that was around access, convenience. So both parties, the customer and Teladoc wanted predictability in that model. And so there were subscription-based approaches. So you could -- it was predictability from the customer side in terms of what I'm paying for and the access that we're providing, and predictability to companies like Teladoc in terms of revenues, cash flows, right, because there's was a -- a model there. Then the pandemic hit, and obviously, there was broad adoption of virtual care that we've had there. And since the pandemic, you now have this significant penetration of virtual care across, I mean, everyone in here has some access, I'm sure to virtual care, either through their provider or through a company like Teladoc. And so it's migrating more towards the rest of the U.S. healthcare system, which is you get paid when you do something. So it's a utilization-based approach. So it's not unique to us in terms of getting to a volume or a visit-based approach, it's more of a reflection of maturity of virtual care. So that transition has been occurring because of the market. And the realities of that we're going to be acting more like the rest of the U.S. health care system.

So how much of the core virtual telehealth business has transitioned to the visit fee model? And when that transition occurs, is it neutral from a P&L perspective? Are they -- the new contracts price neutral to the prior PMPM [ numbers ]?

The contracts are priced to achieve the margins we want. It's not neutral in the sense that as you go through that migration from the subscription model, there is a different economic construct, right? And I can touch on that. So right now, to answer the first part of your question, if you exclude chronic care, international health -- and health system business, over 3% of our virtual care revenues in the U.S. are now coming from visit-based arrangements as opposed to subscription-based arrangements. So there's been a pretty material move over the last several years. We expect that to continue a bit as we go into 2026 and beyond. But I do think there's some view that we could see some moderation in the overall impact of that just because it's mathematically representing more of that. So I think that's kind of what's been occurring. In terms of the economic construct, the subscription model has predictability. And so it's -- from a cash flow, from a revenue standpoint, it's around membership and enrollment, right? And then the usage of the service can fluctuate your gross margin. because the more a service is used, the more you have to pay for the services or the less service are used, maybe the gross margin expands. So as we go to a more of a visit-based model, we're achieving the right levels of margins for us but it's going to be more seasonal, and it's going to be more variable in terms of the volume-driven outcomes of that.

Are you referring to gross margin percent or dollars of gross profit?

Really gross margin percent. Now it's going to fluctuate. So I'll give you an example. In a subscription model, if you have a good -- a bad flu season, I would say, let's say, we're right in the middle of the season here. If we have a bad flu season, we'll have more visits but we won't have more revenues. So you would have pressure on the gross margin percentage. The opposite is true, too. If you don't have utilization, you have higher gross margin. So there's a little bit of a disconnect in terms of that. In the visit-based model, obviously, they correspond relatively the same. And so the gross margin percentage is more predictable from that standpoint.

Yes. That makes sense. Okay. That's very helpful. So here, December 2, I suspect I know the answer to this. But any comments you want to leave us with on the 2026 selling season in Integrated Care? Any qualitative color on retention, expansion, decision timing, RFP size or volumes?

I think I would just pull through what I talked about in October and even the prior quarters. Again, not new to the audience here, but we've had a lot of activity and interest in the employer market channel. And so we've had good results there and continue to see that because there's a lot of challenges that the employers face in terms of their medical costs and things like that. The health plan channel has been under pressure. Again, if I think back on my own career in healthcare, I'm not sure I can remember a period of time that had this much change going on all at the same time. Typically, you might see pressure on a health plan in Medicare or Medicaid or commercial, all lines having some kind of impact right now. So that channel, as those companies figure out their strategies, figure out what enrollment is going to look like in 2026 relative to the enhanced subsidies going away, these kinds of things. Some carriers are pulling out of Medicare Advantage completely. So that's kind of created a little bit of uncertainty with respect to that channel, and we've seen that play out. I've been talking about for the past several quarters, but we've seen that play out. That's very similar. Now we've had some wins. We've had some expansions in the health plan channel, but net-net, it's been a headwind. So I think as we finish the year, where we've got a number of opportunities that we're chasing down, but I think it's really similar to what I said in October.

Have those -- are those headwinds reflected in 2025 membership? Or is that yet forthcoming?

The membership would be what's relevant at that period of time. So as we see the membership roles and enrollment role in 2026, that's when it would be reflected. Of course, if there's any changes that have been made prior to that, that would be reflected. But most of what I'm talking about here with the health plans is really a 1/1 and forward in kind of dynamic.

That's helpful. Okay. So can you -- you alluded to it earlier, 60% of Integrated Care members have access to Teladoc's Behavioral Health solution. What is that Behavioral Health product within Integrated Care? How is it priced? And what network supports this offering?

Yes. So it's something that I've tried to talk about more since I've been in the seat because I thought it was a sort of an unmentioned, really good story inside of Integrated Care. There's a lot of unmet mental health need in the U.S., And you can see that play out in a variety of ways. And post-pandemic, one of the more broadly adopted modalities around virtual care is in mental health because you don't necessarily need to be physically seen and there's convenience and some anonymity. So this virtual mental health space is something that has continued to be a growth engine for us. Now the value prop in Integrated Care to our client base in the U.S. is providing a range of services so that your member or the patient has the ability through one experience to be able to serve multiple needs, which is why being able to cross-sell mental health in there. But it's not just around mental health in its own right. We've embedded that in our chronic care management programs. We have the ability for any point of care to know and be aware of what other services this member may be eligible for. So the mental health play in Integrated Care is just that. It's more of [ Integrated Care ]. We have over 60 million people, as I mentioned, the economic model is very similar to the historical virtual care space for Teladoc. So you have some subsets that are in subscriptions. Actually, mental health, we have the majority -- and have had the majority of revenues in visit-based arrangements. And I think it operates very similar. And from a network perspective, we have a broad network, they're credentialed -- Teladoc credentialed providers across therapy and psychiatry in the mnetal health space. And we also have tools that we support the members with digital tools and content, a number of things can help them with their mental health as well.

Got it. That's helpful. So that sounds fairly comprehensive. Are those 60 million members basically covered from a mental health standpoint? Like why would they need access to the incremental services or incremental network that potentially BetterHelp is able to offer? And we'll get into that.

Yes. Yes. I think in Integrated Care right now, it's fairly pure. Now there are some providers in the Integrated Care network that do some services for BetterHelp, but it's not necessarily by design, okay? They may be doing some work across that. So I think the reason why people come to the Integrated Care is there -- it's a convenient access point, just like the rest of Teladoc. They have a need. It's been made available by their health plan or the employer. And it's hard to get therapy out there. There's still a lot of need and a lot of capacity constraints. So they like the convenience, they like the access, and they like that they're already -- it's available to them through their offering. BetterHelp, as you know, is we're moving it into insurance. It's a bit more of a pure-play mental health offering versus the Integrated Care side, the customer base is more trying to broaden the services across physical and mental health.

Understood. So the 60 million who have access to a mental health offering within Integrated Care today are effectively covered and do not represent an opportunity for this BetterHelp transition or do they?

I wouldn't say it doesn't represent an opportunity. One of our -- I would say, our first significant foray into crossing over between segments, if you will, is a product that we're launching 1/1/26 called Wellbound. It's an employee assistance product that we think is going to be a nice new offering for us. It brings the best of Integrated Care, of the things that I mentioned in terms of the ability to service multiple things and has access to BetterHelp's therapy network because there's a great consumer experience a BetterHelp, the ability to meet all kind of needs. For example, we can match someone with a therapist, 90% of the time -- over 90% of the time in less than 48 hours. We have a big network that can meet a variety of needs specific to individuals. So that's our first, I would say, foray into finding the synergy between the 2. And I think there may be more to come, but that's, I would say, down the road.

Okay. That's helpful. So can you maybe describe the transformation that's underway at BetterHelp? What is this $950 million D2C mental health business look like 3 years from now, if all goes according to plan?

Well, I hope all goes according to plan. It's always the plan. BetterHelp, let me just comment on that real quick. And for those that may not be familiar with it, it's the largest direct-to-consumer virtual therapy business in the world. It's multiples larger than anything else close to it. However, it's predominantly a consumer-oriented model, meaning that it's a cash pay consumer pay model. okay? It's got a 70 Net Promoter Score, very large therapist network. I mentioned some of the other statistics. So it's got a lot of brand recognition and a lot of usage. The challenge though is that -- and we have like 4 million people start to sign up a registration process a BetterHelp every year. Significant percentage of those, over 80% drop off though, because we're asking people ultimately to pay. Now there's other reasons they may drop off, but the biggest reason is because it's a financial decision, a cash pay decision. So our movement into insurance is to say to that -- to those consumers that are -- that have a need, they're already interested in BetterHelp. We now have an opportunity for you to access your benefits coverage. So we do believe that we're going to see some improvements in terms of conversion rates, retention, increased number of sessions, therefore, lifetime value as we're able to offer insurance into BetterHelp. Now how it plays out over the next year, what we've talked about already is we're now in we're now in 9 states as of today and plus D.C. So the ramp is -- continues. We'll be in some additional ones before the end of the year, we believe. And then we're going to ramp it over the course of 2026. And then the market is going to determine where that mix sits, right? The consumer having choices -- there may be people who want to use BetterHelp that aren't in network. There may be people that want to use BetterHelp that don't want to use their insurance because of anonymity or other kinds of reasons. So there's a variety of reasons why it's still going to have a significant consumer profile. And then I think we'll see where that plays out over '26 and '27 where that balancing point is. But the strategy that we're employing is to fundamentally stabilize that business, return it to a growth posture and realize more strategic value out of the assets.

Got it. That's helpful. And as we think about just the in-network rate for better BetterHelp visits as they occur. Is it fair to look at a comp like a LifeStance and try to understand -- assume that visits are priced at parity? Or is there some nuance to the BetterHelp network that [indiscernible].

BetterHelps contracts, we did an acquisition at the end of April called UpLift that really accelerated our progress here. And just like with any contracting rate, they are negotiated rates, they're -- and predominantly commercial space. So I don't want to get into what the rates are or comparison, but there's a supply and demand marketplace out there in terms of the rates. But we do believe that the rate structure from a revenue as well as cost structure and delivering the therapy, we'll be able to achieve our margin objectives.

Okay. That's helpful. So just as this transition occurs, how should we think about overall growth and profitability of BetterHelp, again, as this transition to insurance paid occurs? And then just maybe where should we expect BetterHelp margins to bottom?

Yes. Again, I'm not going to get into the -- too much in terms of outlook. But I would say there's 3 main drivers we're going after with BetterHelp. First is this movement into benefits coverage. When I first joined, my first earnings call, I said I got a lot of questions around BetterHelp and still do, questions from you actually on that call, I remember, around BetterHelp. And I said, look, we need to move this business into to be able to access insurance if we're going to -- our goal is to stabilize and return this business to growth. So that's the journey we go on there. That's a material one for 2026 and 2027. We've had good international growth. Over 20% of the revenues are BetterHelp are in non-U.S. markets. There's a lot of unmet need. It's not just specifically in the U.S. There's a lot of need and demand out there. So that's going to be a driver. And third, the team continues to innovate the product offering. All of that is aimed at stabilizing the user base and again, ultimately returning it to growth and again, creating value from this really unparalleled company out there. All of which we have an eye on margin, all of which we have an eye on achieving appropriate financial outcome or we wouldn't be doing it. But I think as we go through that process, we'll give more visibility in 2026 of how we're thinking about it. But as we ramp insurance, there's an investment. There's a little bit change in the economic construct, not necessarily worse but different relative to D2C versus insurance coverage.

Okay. So still forthcoming investment needed to support that transition?

Yes. I think we've made a lot of investments in terms of some of the underlying capabilities and UpLift brought a lot with that, and the integration and the teams coming together has been remarkably good. But as you ramp up the scale of that business, you have to ramp up the -- there's operating cost that go along with that, right? You've got to credential the therapist network. You've got insurance requirements you meet. So we should expect ramp on that. But again, that's all built into the economic model in terms of lifetime value, gross margin, operating cost, all that comes into play.

Okay. That's helpful. And then in our last 30 seconds. Earlier this year, Teladoc settled about $550 million of 2025 converts in cash. You've got $726 million of cash on the balance sheet and about $1 billion of convertible debt maturing in 2027. First off, how should investors think about Teladoc need and appetite for additional tuck-in acquisitions? And then how and when should investors expect Teladoc to address the 2027 [ period ]?

Real quick on acquisitions. We've done 3 tuck-in acquisitions this year, all very highly aligned to the strategic priorities that I've talked about and all have gone well and are meeting the expectations we have there. Healthcare is complex. It's dynamic, there's a lot we're trying to tackle. So M&A should be and continue to be something that we keep our eye on. That's not to replace what we're doing organically, the new products I mentioned. That's all organic development for 2026. So we need to be great at organic development and be open to M&A as well to create value.

With respect to the balance sheet, you mentioned we have over $700 million in cash. We have the $1 billion of converts out there. I think the investors should expect a company like us to have some level of debt as part of our overall capitalization structure relative to the size and cash flow generation that we have. We've got our eye on those converts. We're very well aware of those out there, and we think we're going to have a lot of good options in terms of how we deal with that. I would say right now, sort of middle to second half of 2026 is when we'll provide maybe a little bit more specificity on that. But we're already working on that issue and how we might think about capitalization going forward.

Awesome. Thank you so much, Chuck. Appreciate it. We look forward to hearing from you on the fourth quarter call in February. Thanks.

Thank you.

Good afternoon, everyone, and thank you for joining today's Teladoc Health Q3 '25 Earnings Conference Call. My name is Regan, and I will be your moderator today. [Operator Instructions] I would now like to pass the conference over to our host, Mike Minchak, Head of Investor Relations for Teladoc. Please proceed.

Thank you, and good afternoon. Today, after the market closed, we issued a press release announcing our third quarter 2025 financial results. This press release and the accompanying slide presentation are available in the Investor Relations section of the teladochealth.com website. On this call to discuss the results are Chuck Divita, Chief Executive Officer; and Mala Murthy, Chief Financial Officer.

During this call, we will also discuss our outlook, and our prepared remarks will be followed by a question-and-answer session. Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating our performance. Details on the relationship between these non-GAAP measures and the most comparable GAAP measures and reconciliations thereof can be found in the press release that's posted on our website.

Also, please note that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied on this call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website.

I would now like to turn the call over to Chuck.

Thanks, Mike. Consistent with our preliminary results released last week, our third quarter consolidated revenue and adjusted EBITDA both came in above the midpoint of our respective guidance ranges. This performance reflects our continued focus on execution. Mala will provide more details on our financial results later in the call, including segment level information and our updated full year outlook.

But first, I would like to provide an update on the business and our strategic priorities. With respect to integrated care, we continue to build on our U.S. market leadership position with an emphasis on performance, innovation and client impact. Today, over 100 million people have access to one or more of our services, a testament to the scale and value of our platform. With this reach and vantage point, we are advancing initiatives that expand our service offerings, further connect and orchestrate care and deliver differentiated outcomes for patients and clients.

For example, through enhancements to our Prism care delivery platform this year, we now have a much greater opportunity to surface important information directly at the point of care. This offering enables our providers and care teams to address gaps in care, manage specialists and other referrals and activate relevant programs based on the members' eligibility and needs. Further, our ability to embed provider-to-provider specialist consults into the experience improves timely resolution of the members' care needs and drives cost savings and differentiated value for the client.

As I have shared previously, having visits and other interactions serve as broader engagement points is central to our strategy and value proposition, which we believe will ultimately drive overall growth in virtual care revenues. In Chronic care, where program enrollment in the third quarter grew 4% on a sequential basis, we also continue to advance important innovations there as well. In addition to new connected devices and new program features, we are developing enhanced clinical intervention models for rising risk and high-risk populations.

These models will apply AI-enabled risk evaluation and stratification capabilities and leverage our clinical and care delivery capabilities to identify and activate intervention opportunities. And through these interventions, including engaging with the patient's existing care provider to develop and support the respective care plan, we see additional opportunities to improve clinical outcomes and drive greater client ROI and impact.

We have active pilots underway and expect to bring these new innovations to market in 2026. And through Catapult acquired earlier in the year, we now have a greater ability to engage members earlier in their health journey, including through health screenings, at-home diagnostic testing and clinical support. Our integration with Catapult also provides additional opportunities to create awareness of other eligible Teladoc services and support member activation.

We are seeing strong client interest in Catapult, both as a stand-alone offering and as part of a broader health engagement capability. We believe that our unique and scaled position at the intersection of technology and clinical care will continue to provide opportunities to expand services and impact over time. As a partner to our clients, we deliver, enable and orchestrate care across a wide spectrum of needs, meeting members where they are, supporting their health and mental well-being and driving better outcomes.

As we've shared previously, virtual care revenue models continue to move towards fee-for-service visits, and we're leaning into this change with an approach built around engagement, activation and measurable value. Visit-based revenues in 2025 now comprise over 50% of our U.S. virtual care revenues compared to approximately 40% in 2023. While we expect this mix shift to continue, we also expect the level of impact on overall revenues going forward to see some moderation compared to the impact over the past few years.

And through the strength of our model and ability to serve expanded clinical use cases through our new product enhancements, we look to participate in the value we create, which we believe puts us on a path to sustainable underlying growth in our virtual care business. Now turning to our second strategic priority, leveraging our scaled mental health position. In the third quarter, we again achieved double-digit growth in B2B mental health visits and remain on track for generating over $150 million in total revenue, excluding BetterHelp's new entry into insurance covered benefits.

We're excited about building on this success with our new employee assistance program offering called Wellbound, which leverages strength of both integrated care and BetterHelp, including unmatched scale, a robust network, consumer engagement capabilities and efficient connectivity to a range of services. While early, we're seeing strong interest in Wellbound and our pipeline continues to build out. With respect to BetterHelp's new insurance offering, the UpLift acquisition has brought together important capabilities and payer arrangements.

As I shared last quarter, BetterHelp's first state for insurance, Virginia, was launched within 60 days of the transaction closing. This initial state demonstrated the strength and effectiveness of our combined technology, operations and ability to effectively deliver on our user and provider experience objectives. Key metrics at this point are in line with our expectations, including conversion rates, user growth and sessions per user, among others. We're encouraged by the results, and we're continuing to invest to support the broader rollout of this business.

We are now live in 7 states, including the additions of Florida, Texas and New York as well as being live in the District of Columbia. Several more states are planned over the remainder of 2025. We also continue to expand the credentialed therapist network for insurance to support the rollout. With BetterHelp's substantial network of therapists in the U.S. supporting our D2C business, the strong interest we've seen from our network in the new offering as well as UpLift's existing 1,500-plus credentialed providers, we expect to be able to add the necessary capacity to meet demand.

Separately, BetterHelp's non-U.S. business continued to perform well in this quarter, delivering high single-digit user growth, aided in part by our localized market launches. As we've shared previously, the rollout and scaling of insurance as well as growth in non-U.S. markets continue to be essential to BetterHelp's future given continued pressure on the U.S. cash pay business. Our third strategic priority is driving continued growth in our International Integrated Care business. For the third quarter, revenues grew 14% year-over-year on a constant currency basis, and we see continued opportunities for growth ahead.

This includes in Australia, where we recently acquired Telecare, which operates Australia's leading virtual care clinic and provides software solutions across the health care sector. We intend to build on our existing presence in Australia and deepen our penetration in the public health sector. Finally, operational excellence remains a key strategic priority. In terms of elevating performance, I'm pleased that we recently achieved ISO 9001 certification for key processes within U.S. Integrated Care.

This speaks to the great work done by our operations team to deliver a high-quality experience for our clients and members. We are seeing operational improvements and other client service enhancements reflected in the results of our client survey data, which showed across-the-board strengthening in Net Promoter Scores in our U.S. Integrated Care business. In terms of cost efficiencies, we've driven improvements in a number of areas, including technology and development, administrative costs and share-based compensation.

And as we close out the year and move into 2026, we will continue to focus on opportunities to further streamline our cost structure across expense categories and capital expenditures. In closing, while we've made considerable progress across each of our strategic priorities, we know that we have important work ahead of us. The challenges in health care are substantial, including affordability and rising costs, prevalence of chronic disease, unmet mental health need and intense pressure on providers, among others. And as the market leader, we know that our clients rely on us to help mitigate the impact of these pressures.

We remain committed to driving the next evolution of virtual care and believe that our strategic priorities, investments and product innovations will provide opportunities to drive even greater value and impact going forward. Before I turn it over to Mala to share more on our results, I want to take a moment to recognize her contributions to Teladoc Health. As we announced last week, Mala will be stepping down as Chief Financial Officer next month.

Over the past 6 years, Mala has played a pivotal role in shaping Teladoc's financial strategy and strategic growth initiatives through a period of significant transformation. On behalf of the Board, our leadership team and all of Teladoc Health, we thank Mala for her outstanding contributions and wish her continued success in her next chapter. With that, let me turn it over to Mala.

Thank you, Chuck, and good afternoon, everyone. As Chuck outlined, we are executing well against our strategic priorities, and our third quarter results reflect that momentum with consolidated revenue of $626 million above the midpoint of our guidance range. Revenue declined 2.2% year-over-year as growth in our Integrated Care segment was offset by a decline at BetterHelp. Adjusted EBITDA of $70 million was at the high end of our guidance range, representing 11.2% margin and reflecting disciplined execution across the business.

Net loss per share was $0.28, which included a noncash goodwill impairment charge of $0.07 per share pretax. A charge that was not contemplated in our guidance range as it occurred after the guidance was issued. As outlined in our second quarter 10-Q, the carrying value of the Integrated Care reporting unit continued to exceed its fair value, which triggered the impairment charge. Net loss per share in the quarter also included amortization of intangibles of $0.48 per share pretax and stock-based compensation expense of $0.10 per share pretax.

Free cash flow was $68 million in the third quarter, bringing year-to-date free cash flow to $113 million. We ended the quarter with $726 million in cash and cash equivalents, an increase of $47 million sequentially, further reinforcing our strong liquidity position. Turning to our segment results. Integrated Care revenue was $390 million, up 1.5% over the prior year period. As previously discussed, the resolution of a prior period billing adjustment in the third quarter of 2024 created a 115 basis point headwind to revenue growth this quarter.

We see continued strong performance in our international business, which delivered mid-teens growth on a constant currency basis alongside solid growth in visit revenue. The acquisitions of Catapult and Telecare contributed approximately 245 basis points to segment growth. We delivered solid results across key underlying metrics. U.S. Integrated Care membership ended the quarter at 102.5 million members at the high end of the guidance range and up 9% year-over-year. And as Chuck mentioned, chronic care program enrollment grew 4% on a sequential basis, adding 48,000 lives and reaching 1.17 million and marking a return to sequential growth.

Third quarter Integrated Care adjusted EBITDA was $66 million, representing a 17% margin, which was above the high end of our guidance range. Excluding the 95 basis point benefit from the prior period billing adjustment in the third quarter of 2024, adjusted EBITDA margin would have increased modestly year-over-year. The upside in the quarter reflects the revenue mix and flow-through as well as continued cost discipline, including hiring deferrals. We saw year-over-year improvement in both technology and development and G&A expenses, 2 key areas of focus. Moving to the BetterHelp segment.

Third quarter revenue was $236.9 million, which included approximately $4 million in insurance revenue, the majority of which was from UpLift. As Chuck mentioned, we are still in the early stages of the BetterHelp Insurance rollout, and we are encouraged by the initial traction. Average paying users declined 4% year-over-year to 382,000 with high single-digit growth in non-U.S. users only partially offsetting a high single-digit decline in U.S. users. The backdrop we discussed last quarter, including weaker consumer sentiment and macroeconomic uncertainty has remained consistent through the third quarter.

Further, while growing consumer willingness to access mental health therapy through covered benefits is a headwind to our cash pay business, it validates our insurance initiatives. We continue to believe insurance, coupled with non-U.S. growth, positions BetterHelp for a return to growth over time. Adjusted EBITDA for BetterHelp was $4 million, representing a margin of 1.6%. The year-over-year decline was primarily driven by lower revenue and investments to support the insurance rollout, partly offset by lower ad spend.

Turning to guidance. We now expect 2025 consolidated revenue of $2.510 billion to $2.539 billion and adjusted EBITDA of $270 million to $287 million, with the midpoint of both ranges essentially unchanged versus our previous outlook. Free cash flow is expected to be in the range of $170 million to $185 million. We now expect 2025 stock-based compensation expense of $85 million to $95 million, a $10 million reduction versus our prior outlook. The full year net loss per share guidance range has been narrowed with the midpoint remaining unchanged.

The third quarter goodwill impairment is expected to be largely offset by the reduction in stock-based compensation expense. Our full year guidance implies fourth quarter consolidated revenue in the range of $622 million to $652 million and adjusted EBITDA of $73 million to $90 million. Moving to the segments. Starting with Integrated Care, we are raising and narrowing our full year 2025 revenue and adjusted EBITDA guidance range. We now expect revenue to be up 2.4% to 3.5% over 2024, an increase of 40 basis points at the midpoint versus our prior range.

Roughly half of this increase relates to the Telecare acquisition, with the remainder reflecting strong year-to-date performance and execution. We continue to expect Catapult to contribute approximately 200 basis points to full year revenue growth. We now expect full year 2025 adjusted EBITDA margin of 15% to 15.4%, up by approximately 30 basis points at the midpoint versus prior guidance, reflecting strong 3Q performance, partially offset by a pull forward of marketing spend in 4Q. While the tariff situation remains fluid, we are maintaining our estimate of a roughly $3 million headwind to adjusted EBITDA.

We will continue to monitor tariff-related developments and evaluate mitigation strategies, including alternative sourcing arrangements to diversify our supply chain. For the fourth quarter, Integrated Care segment revenue is expected to increase 1% to 5.2% over the prior year period. Adjusted EBITDA margin is expected to be in the range of 15.3% and 16.8%, up approximately 250 basis points year-over-year at the midpoint, reflecting cost discipline and a higher level of investment spend in the prior year period. Moving to BetterHelp.

We have narrowed our full year revenue outlook to the lower half of the prior guidance range. The expected year-over-year revenue decline of 8% to 9.2% reflects the ongoing headwinds we have discussed in our U.S. cash pay business, partially offset by our non-U.S. business and insurance rollout and growth initiatives. As Chuck outlined, we are encouraged by the early progress of our insurance rollout. And based on early performance from recent state launches, we expect to generate $12 million to $14 million in total insurance revenue in 2025.

We now expect BetterHelp adjusted EBITDA margin of 3.8% to 4.6% for the full year, with the midpoint down approximately 55 basis points versus our prior guidance. This largely reflects the flow-through impact from lower revenue as well as accelerated investments to support the insurance initiative based on the successful early launches. Our updated full year outlook implies fourth quarter BetterHelp segment revenue down 3.8% to 8.8% year-over-year and an adjusted EBITDA margin of 5.5% to 8.6%, with a sequential margin improvement driven by the typical seasonal pullback in advertising spend during the holiday period.

Lastly, our balance sheet remains strong. In August, we completed the acquisition of Telecare for $17 million in net cash. We ended the quarter with $726 million in cash and equivalents and net debt to trailing adjusted EBITDA was under 1x at quarter end. We continue to believe our strong cash balance, cash flow generation and business position provide us with optionality in the future. With that, let me turn the call back to Chuck.

Thanks, Mala. Before we open up for questions, I also wanted to share that we were recently named one of Time Magazine's Top Health Tech Companies of 2025. The list honors the most innovative and impactful organizations transforming health care through technology. Our company was recognized with the top ranking of outstanding in the telehealth and treatment category, reflecting our high marks across the key evaluation areas of financial performance, reputation analysis and online engagement. I couldn't be more proud of our colleagues whose dedication and contributions made this recognition possible. Operator, we're now ready for questions.

[Operator Instructions] Our first question comes from the line of Lisa Gill of JPMorgan.

First off, Mala, I want to wish you the very best in your next endeavor. It's been great working with you the last, I guess, now 6 years. And on to my question, Chuck, just to really maybe better understand, in the last year or so, you've talked about it's going to take time for these initiatives to gain traction. As we sit here today, I would anticipate that you've had most of your conversations for the 2026 selling season.

So really 2 things I want to better understand. One, how are you feeling about things that you're selling for 2026? And one of the things that stood out to me in your prepared comments is you want to participate in the value you create. So should we be assuming that the way that you're contracting is changing in any way, what the plan sponsor is buying in any way? So any color you can give us around that, the timeline of gaining that traction and what you're actually seeing come to fruition for this year's selling season?

Yes, I appreciate that. A few comments. I mean, as I mentioned before, really coming into 2025, really characterizing the year as a repositioning year in many respects. And included in that was really driving higher levels of performance, and we've done that across a number of levers and also driving product innovation, which we needed to do in terms of advancing our value proposition.

We've talked about making our visits and member touch points more valuable using our clinical strength and product breadth and so forth and making a number of important investments. And I think that is really starting to take hold, both in terms of the discussions that we're having with our client base as well as the new products and enhancements that we're rolling out across virtual care, chronic care and mental health, and we've talked about Wellbound, but there's a number of other pilots we have underway and things that we're going to be bringing live in 2026.

So from my perspective, I think we've made good progress on all of those fronts. I'm excited about the new products and services we're going to be bringing to market for the 2026 selling season and happy to talk more about those. I think in terms of the selling season right now, I think the -- we continue to work on a number of opportunities, obviously, to close out the year. But the environment is in line with what we've spoken about previously, solid overall results in the employer channels really across the solutions and ongoing challenges in the health plan sector.

We've had some nice wins and some service expansions, but some pressures there as well. And I think to your point, the actions we've taken to innovate and to drive greater value is resonating. I think the conversations we're having there, I feel are much more strategic in nature in terms of understanding the problems they're trying to solve and how Teladoc can uniquely go after those. And I think inclusive of that is they're looking for more and more, not just the value that our services can provide, but putting skin in the game in terms of levels of performance that they expect.

And in return, as we do that, we should be able to participate in that value if we hit those measures and drive the outcome. So I think over time, while we already have contracting that reflects that kind of nature, you're going to see more and more of that. And I think it's going to differentiate us because we have an ability to deliver on it.

Our next question comes from the line of David Roman of Goldman Sachs.

This is Jamie on for David. I wanted to ask about BetterHelp margins. They were 1.6% in the third quarter. Just as you start to gain some traction shifting some of your visits away from cash pay towards the insurance offering, it would seem like that would come with some pricing pressure offset maybe by lower customer acquisition costs. Is that thinking appropriate? And any other dynamics to consider as that process happens? And then just as this transition occurs, it would seem like there could be some lumpiness in overall margin for BetterHelp. I know we have the guidance for the fourth quarter, but could you frame how this process should impact the profitability of that business on a longer-term basis?

Yes. Thanks, Jamie. We obviously will not go into the details of 2026 BetterHelp margin guidance or any guidance. But let me frame the way we expect to see this directionally. So as you said, we have given the guidance for 4Q. As we think about the BetterHelp business, think of it in 3 different ways. One is our U.S. cash pay business. The second is our BetterHelp International business, which is cash pay, to be clear. And third is the insurance business, including UpLift. So we remain excited about the growth in our BetterHelp International business.

It grew nicely, high single-digit user growth for BetterHelp International in the third quarter. You know the efforts and the investments we have made in providing localized experiences in various countries, France, Germany, et cetera. And we are seeing the results of those investments now beginning to bear fruit in terms of user acquisition growth and what goes along with that is revenue growth. So that is on the international -- the BetterHelp International side. On the insurance, the BetterHelp insurance side, if you -- based on the prepared remarks we gave, we are seeing good early signs of progress early.

We have launched in 7 states and D.C. We expect to launch in more states by the end of this year. And then we expect to be largely national by the end of 2026. So think of the ramp from a revenue perspective for BetterHelp insurance in that -- along those lines. You are right in the way you're thinking about margins for BetterHelp insurance, right? It is certainly -- it is something that we are going to have to monitor carefully, observe carefully. But I will say the metrics that we are looking to see in the BetterHelp insurance rollout, whether it be conversion rates, whether it be number of sessions, whether it be user growth, those are trending in line with what we were expecting.

Still early days yet, but we are beginning to see the sort of the operating metrics in line with our expectations. The U.S. direct-to-consumer cash pay business, I would say, continues to be challenged. One of the reasons for it being challenged, by the way, is we are seeing heavy competition on that one from other participants in the market who offer insurance. So it validates and reinforces the pivot that we are making in BetterHelp in offering insurance as an option. And we expect that to continue to play out in the months ahead. So I would think about BetterHelp progress along these lines between now and the end of 2026.

Our next question comes from the line of Jessica Tassan of Piper Sandler.

Mala, thank you for all the help over the last few years. I appreciate it and good luck when you leave us here. So my question is just -- we appreciate the commentary on BetterHelp margins in 3Q. But should we conclude that BetterHelp margins today reflect basically a DTC ad customer acquisition cost on commercial reimbursement? And then does that present an opportunity heading into '26 as you can potentially pare back DTC ad spend because you've got full insurance coverage and customer acquisition cost starts to kind of more closely resemble that of an integrated care member?

Yes. Thank you, Jess. Look, we are -- BetterHelp is a scale player with over 4 million users coming to the top of the funnel. The ad spend that we have in BetterHelp is what drives that amount of traffic to the top of the funnel. The challenge we have had is converting that into paying users. And the progress we are making on insurance is certainly going to help drive greater conversion over time. And with that, will help gain efficiencies in cost of acquisition.

The thing that I would say is we don't expect BetterHelp to be solely an insurance business. It will always be a mix of direct-to-consumer -- a cash pay business. It's a direct-to-consumer business. It will be a mix of cash pay and insurance as a payment option. So there certainly will be over time, potential efficiencies to be gained on our CAC, on our cost of acquisition. That is something that we will see -- have to see play out over time. In the near term, though, just to remind you all, insurance, as we said in our prepared remarks, is between $12 million to $14 million. It is small compared to the rest of the BetterHelp business. So the economics you see and the margins you see today are almost entirely cash pay.

Our next question comes from the line of Daniel Grosslight of Citi.

You noted -- you've previously noted that one of the reasons for the Catapult acquisition was to create a larger funnel, which I suppose is most relevant for your chronic care solutions and P360 enrollment. I'm wondering if you can share any qualitative or quantitative data around any of those cross-sales that have materialized or I should -- I guess I should put it cross references that have materialized between Catapult and other areas of the Integrated Care business?

Yes, I appreciate the question. I think I would maybe categorize it in 3 areas. One is the Catapult stand-alone offering, which continues to have a solid pipeline and grow as it was prior to us acquiring it, and that continues. Second, as we have members come through the Catapult experience, the ability to present and activate as appropriate additional solutions of Teladoc that may be relevant for that member.

That is live and integrated into the experience and going well in terms of being able to meet those members' needs. And I think third, to your -- to the main point of your question, the ability to bundle doesn't do a justice. It's really to collaborate and integrate the offering in a way that can capture more lives from an engagement standpoint. And that is what's really resonating with the customer base substantially, including with the health plans. I mentioned before, the strategic conversations we're having with them.

Well, Catapult is pretty heavily featured because you think the populations that are giving them challenges, they're typically unengaged or they have conditions that aren't being managed effectively, and they're challenged with their access in terms of their delivery system strategy. So the ability for us to use Catapult and other techniques to reach people, get them aware of their conditions.

As I mentioned, when we acquired Catapult, and not an insignificant percentage of people that come through Catapult are newly diagnosed with conditions that they weren't aware of, meaning they weren't in the health plans claims data, they weren't on anyone's radar, including the patient. And so somewhat ticking time bombs, if you will, in terms of having high pressure and high sugar. So it's really resonating across all 3 as a stand-alone offering, ability to cross-engage members; and third, as part of Teladoc being able to use as a broader engagement capability.

Our next question comes from the line of Jailendra Singh of Truist.

This is Eduardo Ron on for Jailendra. Mala, again, thanks for all the help. Maybe just to follow up on one of the remarks you had about the top of the funnel. I mean, you guys are now live in 7 states in D.C. coming off the pilot. Just curious what share of new sign-ups that you're seeing come in are choosing insurance versus the cash pay in those states? And I guess maybe our main question was just if you could provide an update on your expectations for the 2027 converts and whether you guys anticipate refinancing those or using cash to pay it down.

Yes. So I don't want to go into detailed metrics on the conversion we are seeing. There's -- here's why, at this point in time, Virginia, which is the first state that launched, has achieved some level of seasoning enough for us to look at the data and feel confident that there is some stability in the data. But it is one state. We have launched, as I said, in 6 other states in D.C. We just need to give it a little bit of time for all of the other states to season out to make sure that there is stability in the conversion metrics we are seeing, the session metrics we are seeing.

What I would say to you is it is our intent along the way as this scales and seasons, we will provide updates along the way. This is an important initiative for us, and we will give the appropriate milestones along the way. It's just too early for us to be public with specific details on it. Even though, as I said, it is in line with our initial expectations. On the '27 convert, you saw the cash and equivalents that we have at the end of the third quarter. We will continue to obviously generate free cash flow. That will add to our cash balance. We have a strong balance sheet.

We have our overall leverage metrics well in hand. Our specific plans on 2027 is really going to be an outcome of the things that we will do next year in terms of organic investments and inorganic. As we have shared before, we are in the position of getting a lot of inbounds on various M&A. And we will continue to evaluate them. But hopefully, we have proved out this year, the 3 acquisitions that we have done, UpLift, Catapult and now Telecare in Australia are in line with the strategic priorities that Chuck has laid out, right?

Catapult for Integrated Care, UpLift for BetterHelp insurance and Telecare for international growth. And we have been disciplined in terms of our investment in the inorganic. So our specific plans on the '27 note will be a factor of things we do through the year next year on organic investments and inorganic. And we have some amount of time. We are actively planning already in terms of various options to refinance the note in '27. But we'll obviously continue to look at our plans and make the right decisions and trigger it at the right moment, looking at what the rate environment looks like and what our internal needs are.

Our next question comes from the line of Elizabeth Anderson of Evercore ISI.

This is Ayush on for Elizabeth. As we think about 4Q '25 and the setup for 2026, how should we view the spending cadence across both sales and marketing expenses? Should we think that you are planning on typical 4Q spending patterns as we have seen in recent years? And anything to call out in terms of how you guys expect that to impact the growth cadence in 4Q and 1Q '26?

Yes. So I'll take it by segment. As you know, most of our marketing spend really is in BetterHelp. And you will see -- we do expect a step down in marketing spend in 4Q sequentially relative to 3Q in 2025, very similar to past years. The one additional comment I would make is we do expect the step down in 4Q '25 to be slightly higher than the step down between 3Q and 4Q marketing spend in BetterHelp in 2024. But the pattern will be the same.

On the Integrated Care side, we did make a decision given the profitability delivery that we had in 3Q for Integrated Care, we did make a decision to pull forward a modest amount of marketing spend into 4Q to just get going in terms of our key priorities for next year in terms of key client launches, et cetera. So I would say to you, the pattern and the cadence will largely be the same. The one other thing to note is, last year in 4Q, we did actually have a fairly significant marketing spend that we had done. We don't -- our 4Q investment in marketing for Integrated Care is not going to be that significant step-up as it was in 2024.

Our next question is from the line of Stan Berenshteyn of Wells Fargo Securities.

I want to first echo my well wishes to Mala in her next role. As for my question, I just want to circle back to Integrated Care. So you mentioned you're seeing continued mix shift towards fee-for-service. But I'm curious, what are you seeing in terms of pricing trends for customers that are renewing their PMPM subscriptions?

I think, generally speaking, the pricing is in line. I think it's more of the mix shift that's the factor there. So I haven't seen that much pressure in that area. But obviously, in a highly competitive market, that could be a factor. And if we're expanding services and other things, we take all that into consideration.

Our next question is from the line of Scott Schoenhaus of KeyBanc.

Congrats, Mala, on the new role and opportunity. I guess switching back to BetterHelp. Can you give us a sense of what the payers are talking about for the reimbursement side? Several of the other players that participate on the payer side have always seen low single digit, maybe even mid-single-digit increases on the reimbursement side. What are your discussions like with the payers? And then as you credential your therapist, maybe you can talk about the margin -- upfront margin headwinds that turn into tailwinds?

I don't want to go into details on the reimbursement. The thing I will point out is since we announced the UpLift acquisition and over the past few months, we have actually added several new payers to our book of business. And it's several millions of incremental additional lives that we have now on the BetterHelp side with insurance. So that's all I will be -- that's as far as I would go on your first question.

On the second question, I would say, yes, this is certainly going to be the insurance business. There are well-known public proxies for insured margins in that space. That is going to be something that we are going to monitor. And to be clear, that is something from a unit economic standpoint, we have factored in as we thought about the strategic pivot into insurance. The thing that we are focused on certainly is margins. But what is exciting is the fact that this is going to allow us to capture incremental paying users, more sessions and therefore, more LTV.

And all of that is about revenue growth and therefore, profit dollar growth. So that is what we are looking to grow in the months ahead as we ramp. As you said, this is something that is certainly going to take time. We need to see the revenue ramp. We are making disciplined investments in the back-end capabilities in our revenue cycle management capabilities, et cetera. And as you can see, we are scaling relatively quickly and feel good about that. But the revenue does need to ramp through the year next year for us to be able to get to the dollar profitability growth that is in our thesis.

Yes. Well said, Mala, I think the only thing I would add is, clearly, as we are ramping up the credentialed network and what that takes, the revenue will follow in terms of acquired users and sessions and so forth. And I think the way that BetterHelp is approaching this is quite unique, too, in terms of how they're not just approaching the credentialing, but how they're -- again, with the significant network that they have already, how we're putting into the experience, the therapist part of the experience, the ability to indicate interest and move along that. So I think they're approaching it in a way that will give us that scale benefit as we grow those revenues. But clearly, as we're ramping up the therapist network, there's an investment that's happening there.

Our next question comes from the line of Brian Tanquilut of Jefferies.

Maybe kind of along the same lines of the last question, but slightly different here. As I think about Integrated Care and seeing how the utilization-based revenue there is starting to grow, are there any conversations happening with payers, whether that's rate driven or just trying to figure out how to manage on their side, the utilization of that service?

Yes, it's a great question. There's a couple of things there. Clearly, the customer base has seen and continues to see the value of having a virtual capability and visit, and we have good utilization relative to other market players and drive savings, think about ER avoidance and those kinds of things. I think where -- and kind of going back to the comments I made earlier about these strategic conversations, these are not just visits, but they are engagement points.

And as we've expanded and will be expanding in 2026, the capabilities we have in what we call our 24/7 care offering, being able to address more care needs for the member, the ability to reduce unnecessary specialist referrals by bringing a specialist consult to the table, closing care gaps, navigating the member, doing follow-up, ordering labs, those kinds of things, the clients will see even more value in what we're driving.

And I think that's where we're going to see both additional opportunities for activation, but also back to the earlier question, opportunities to participate in that value as we drive stronger outcomes. So as we migrate to this visit-based environment, like I said in my prepared remarks, we're leaning into that. And the good news is we have millions and millions of visits each year. We're the largest by far, and I think it's an important strategic lever in that broader integrated care strategy. So yes, I think all of that is in play in the virtual care side.

Our next question comes from the line of Kevin Caliendo of UBS.

This is Jack Senft on for Kevin. Mala, I also want to wish you the best of luck in your next endeavor. In your prepared remarks, you guys mentioned that you expect to add necessary capacity to meet demand in the BetterHelp business just as you take it in network. I mean the BetterHelp users have been declining. What does the supply-demand imbalance look like now for the insurance offering? And I guess, like how do you expect that to change going forward? And maybe just a second part to that, like how much supply or I guess, like how many clinicians do you need to add to meet the extended demand there? Just kind of interested to hear how the clinicians are viewing the offering versus staying cash pay. I hope that makes sense.

Yes, it did make sense. At this point, we are keeping up with the demand in the states that we've launched in. In fact, that's a key criteria before we launch is that we have the adequate therapist capacity because we want to make sure that, that user experience and access is strong. So we've been able to do that. And again, we -- that's part of our scaling plan is, importantly, the ability to match the therapist network to meet the demand. And we believe with the interest that has been shown and our ability to credential those therapists that we'll be able to keep up with that.

So again, I think we've been able to meet demand both on the direct-to-consumer side quite well, the ability to match a therapist with the consumer over 90% of the time in less than 48 hours. And it's because this is a consumer-oriented business, regardless of whether it's cash pay or the insurance is paying, we want to make sure we maintain that strong Net Promoter Score and experience. So right now, as we speak, it's a critical part of our rollout plan. And again, we don't go live in a state unless we feel like we have adequate capacity to support the demand.

Our next questions are from the line of Jeff Garro of Stephens.

I want to hit on chronic care enrollment trends. Nice to see that rebound sequentially in Q3, but curious how that played out relative to expectations? How we should think about the ability to ramp from here? And any comments you could give on kind of the built-in growth opportunity there versus the need to sell additional solutions into the client base before converting potential members?

Yes, I'll make a few comments and Mala can add. I want to steer away from sort of 2026 in that question. But we were pleased to see the sequential growth in the quarter. We expected to see that, and we had communicated that, and we delivered. We were excited to see that. We have many more millions of recruitables in our chronic care programs, and we have had a lot of interest in the bundling of programs.

So there's a lot of opportunity for us to go after within what we've already sold. And I think importantly, and I alluded to this earlier, but the new innovations we're bringing to market, again, we entered 2025 largely with the product portfolio we had in 2024. We've got a number of innovations. We've got new device -- new connected devices, which I think are going to be streamlined and helpful, new features with our programs and all of that.

But importantly, we are working on things to drive additional clinical interventions for rising risk populations and high-risk populations because we have the ability to deliver care because of the unique nature of Teladoc, we believe there's an opportunity for us to engage people that are having challenges getting under control, understand their needs, understand if they have an existing care provider, great. If they do, we want to be a complementary part of that. If they don't, we want to make sure we intervene and get the conditions under control and improve their health outcomes.

And I think that will not only drive greater clinical outcomes, which is critical, but greater financial ROI for our customers as those patients are better served. And that will also create an opportunity for us with those customers to activate more engagement strategies as a result. So there's a number of levers that we can pull to continue to build upon the progress we saw in the third quarter. Mala, anything you want to add?

I think that's really well said. The only thing I would add is we are also investing in connecting all of the data that we have to be able to -- when Chuck talks about clinical intervention, to be able to enable our providers at the point of care with the right data, with the right 360 view so that they are not only treating and helping the very sick, but most importantly, they are also helping and treating the emerging sick. And that is when Chuck talks about being able to participate in the value, being able to drive greater ROI, it's really on the back of both.

Our next question comes from the line of David Larsen of BTIG.

Can you talk a little bit about BetterHelp? So like after 1 year, what percentage of patients are still on therapy? Can you talk a little bit about continuity of care? My view is like with -- if somebody is taking insurance and the patient doesn't have to actually pay for it out of pocket, they're more likely to stay on therapy. Just any thoughts there? And then also, what portion of BetterHelp members are also like a part of the integrated care platform? I would think if you're serving employer groups or plans and you could basically refer them to BetterHelp, there would be sort of an immediate opportunity to cover the mental health visit with insurance. So any color there would be helpful.

Yes, I'll make some general comments and see if Mala wants to add anything. Yes, I do -- we do very much expect and believe that as people are able to activate insurance that if they need more therapy that they're able to access it. Right now, from a BetterHelp standpoint, those consumers are making decisions and trade-off decisions in terms of their priorities around their wallet.

And it's typically probably not because they've fully addressed their mental health needs and they've got some challenges. So I think we do a great job there. We have great clinical outcomes on the BetterHelp side. But having the ability to access their insurance should be a benefit. Now to your second point, our real entree in terms of overlap between integrated care and BetterHelp is the launch of our new Wellbound product.

That really is bringing together both -- really the best of both and the ability to support those people with a range of needs, mental health needs, other kinds of support that they have. And I think that's where we're going to see the ability to bring BetterHelp into that arena in terms of serving integrated care. Mala, would you add anything?

I think that's well put.

That was all the time we have for questions for today's call. So that will be the conclusion for today's call. Thank you for your participation. You may now disconnect your lines.