Teladoc closed out a down Q1 with buying UpLift. The $30 million acquisition is clearly strategic in bolstering BetterHelp, their floundering direct-to-consumer mental health provider. It closed on 30 April, the same day as Teladoc’s Q1 results call. UpLift was bought in an all-cash transaction, with up to $15 million in additional contingent earnout consideration. UpLift’s 2024 revenue was approximately $15 million. It is small compared to BetterHelp’s Q1 revenue of $239.9 million, which fell 11% versus Q1 2024 and continuing a decrease from Q4 2024, when its revenue was $250 million, after sinking through the entire fiscal year.
What UpLift adds is insurance-reimbursable mental health coverage with all major commercial insurers, including Medicare and Medicaid, something that the cash-pay-only BetterHelp lacked. It also adds coverage of 100 million lives and a network of over 1,500 mental health providers. According to the release, BetterHelp will work with its customers to help them access insurance coverage. Their network providers will “have an opportunity to be considered for inclusion in the benefits coverage network, based on the respective requirements, needs and interests”, which is an interesting way to present it.
Teladoc said in the release and on the earnings call that UpLift will be reported under BetterHelp’s results, although it will be run separately under its current CEO Kyle Talcott. There is no further indication as to management transitions. The impression given from the release at least in the short term is that it will be run separately for management of their provider network, quality and patient outcome oversight and the acceptance and administration of insurance coverage.
What does this mean? How much of a lift UpLift will give this year to BetterHelp is anyone’s guess, but adding insurance coverage is a much needed move by Teladoc, given BetterHelp’s expensive DTC cash model.
- Teladoc has known for some time that lack of insurance coverage was a key part of BetterHelp’s performance problems. UpLift will help in that regard.
- In the past 18 months, it moved from Teladoc’s great hope, one which former CEO Jason Gorevic bet ‘large’ on only for him to depart in a haze of red ink [TTA 5 Apr 2024], to a slowly eroding asset or worse, a rolling failure. It is particularly inexplicable given the growth of virtual mental health.
- In the past year, BetterHelp operations were responsible for a $790 million impairment that hit Teladoc’s Q2 and a nasty, embarrassing rap by short seller Blue Orca Capital on ChatGPT being used in therapeutic responses [TTA 25 Feb], vigorously denied by Teladoc [TTA 25 Feb].
- BetterHelp’s revenue for the remainder of 2025 is expected to shrink by up to 9.75%.
The main Teladoc operation, segmented as Integrated Care, also performs virtual mental health care within its services. This is noted in the release: “Teladoc Health’s Integrated Care segment offers a range of digital tools, coaching, therapy, and psychiatry services for employers and health plans (Editor’s emphasis), and completed nearly a million mental health visits in 2024.” Since those virtual mental health services are within Integrated Care, its performance is not public.
Is a real solution a rebranding of BetterHelp when it is integrated (as it eventually will be) with UpLift?
HIT Consultant, FierceHealthcare, Mobihealthnews
Teladoc Q1 financial highlights:
There wasn’t much encouragement across the board in Teladoc’s Q1 report.
- Total Q1 revenue decreased 3% to $629.4 million from prior year’s $646.1 million in First Quarter 2024
- The bright spot was that their main business under Integrated Care had a revenue increase of 3% to $389.5 million
- As mentioned, BetterHelp’s revenue decreased by 11% to $239.9 million
- By domestic versus international, US revenue decreased 4% to $525.0 million. International revenue grew 6% to $104.4 million.
- Net loss also increased to $93.0 million, or $0.53 per share, versus prior year’s Q1 $81.9 million, or $0.49 per share.
- Adjusted EBITDA for Q1 decreased 8% to $58.1 million, versus $63.1 million in the prior year. \
- Integrated Care’s adjusted EBITDA increased 6% to $50.4 million.
- BetterHelp’s adjusted EBITDA decreased 50% to $7.7 million.
The release also confirms full year 2025 revenue projections of $2,468 – $2,576 million. BetterHelp’s revenue is projected to continue to shrink by 3.75 to 9.75%.
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