Teladoc Health (TDOC) 31 Jul 242024 Q2 Earnings call transcript

Hello all, and welcome to Teladoc Health Second Quarter 2024 Earnings Call. My name is Lydia, and I will be your operator today. [Operator Instructions] I'll now hand you over to Michael Minchak, Head of Investor Relations at Teladoc Health, to begin. Please go ahead.

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

our question-and-answer During session. we and discuss be will our also call, remarks followed this outlook, will prepared by a

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

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

good and everyone. Mike, afternoon, Thanks,

in I've share Health want joined the which and company further engage to innovators. joining visit results, care commitment performance. and me I've employees discussions and to the excited had have care has depth but together annual about of Let of talent have upon attending recently since the of members the future. our optimism also organization June. to on stakeholders, and am forum These the the opportunity virtual Teladoc strengths build company higher serving been and perspectives to early advocates and customers and how by quarter's many to organization start execution levels by customers, and forward. the including many brought of some saying to reinforced lead my I'll comment to with I drive with level going The our resiliency event, our a impressed and health across employees patients. I leaders,

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brands marketplace. scaled recognized and well have in leading are business that We also the

potential and success and are international of our strong to people including Over to to about teams our in and internationally, serve we momentum excited products I'm also the needs or ability increase XX intend one today, access results additional our have million delivering. over U.S. our the market more that time.

in Since is X direction joining not that evaluating strategic of is of weeks this our I've terms value. acting can together business, fullest with we and the and product ago, performance improved company that our aspects on team, our potential. the long-term priorities, of the market drive our and said, delivering be current And business all company offerings its performance opportunities will and units shareholder a potential, All yet outlook accordingly. where been we for on

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and greater cost XXXX and underway savings streamlining we of efficiency are intend commitments, decision-making, strengthen eye already accelerate ensure going joining further to been Mala greater the our look deliverables forward markets, actions, since now further. will the company updates unlock to pace towards other and both terms clarifying changes as time. of reinforcing company, we scrutinizing forward. over customers respect future. With which to value are speed I area including accountabilities best cost the on the organization, the This to be serve for continues and market innovation focus cost to previously, key actions we and shared we've making that target and achieving is structure to and and our with of initiatives comment providing both an organized to XXXX already and into and deliver Through on has for shareholders and these In a

guidance some quarter second reported Mala consolidated I'll more quarter we to handing previous total, provide with In revenues along second and EBITDA the before the the range, within in adjusted company's turn our range. detail. for to brief over overall results comments above

the $XXX,XXX continued sequential and EBITDA basis. of and members to top Our since the a U.S., adjusted In beginning people International nearly Integrated expansion Care year, and achieved by business create X million opportunities. financial including results have grow the further on Integrated business quarter including solid line business basis. the both Care grown on

in of various together X/X to create pleased businesses that new our to bookings the cross-selling we've our Teladoc of also perspective, past our into are business, second I'm our the remainder From additional came coming quarters of the book areas momentum differentiation commercial several see new Health. teams the with seen for existing continuing a ways across over from working quarter from clients.

clients, and our Chronic Our from penetration increasing solid solutions existing are on people. Care we focused bundled remain interest serve generating to more product new and

unique health annual a basis health. business X better Net Score team the of well-being on and of to is the over to work proud is individuals The Promoter We're an Shifting has support the well over mental million and people. of doing XX. serving

the is operating remains paying who acquisition with resonating it challenging services continue the results. are While costs for elevated to pocket customer line both of environment consumers impact top bottom out and and today,

third actions changes BetterHelp position, ranging scale, transition, results while guidance to a the coverage performance. ways market-leading and with approach more in continued growth enhancements. and modify more Several can through needing in insurance reach benefit to comment We'll see believe a furthering expansion, update business from initiatives appropriate also this we're we Mala product these find quarter also the from one at it's on to the We moment. provide access business impact as navigate call, the and our going forward, positively but in are challenges. additional in taking on but pursued balancing further point financial pursuing service will international as for the BetterHelp U.S. people who a to a being

Mala our In on me marketplace, performance. Through have efforts ahead our and sense committed closing, let over say of both deliver drive strong that, and we opportunities in the the expect our operating we for and are our potential call position proposition, turn our in us value execution and quarter employees intensified long-term success results with customers that and of to a leadership review to strengthening I'll second of urgency the outlook. the and and our talented and to organization. With our

afternoon, and Chuck, you, Thank everyone. good

quarter $XXX X% Second revenue decreased of consolidated million year-over-year.

and share impact in $X.XX of to per our net per of goodwill price amortization and was of in of Teladoc XX% margin per decline XXXX. acquired second impairment the BetterHelp. by representing higher guidance of second per of quarter particularly loss $X.XX million, in $X.XX impairment in Consolidated Net rate range per share goodwill the share. The and share, lower Health $X.XX charge flows, discount the was the adjusted noncash by and loss quarter the amount which cash above was at compared a with $X.XX EBITDA share of of was forecasted testing of year-over-year a a intangibles high compensation expense the loss Second triggered challenges impairment impacted share $XX.X up the quarter per share net quarter end included XX.X%. a second stock-based

million second $XX.X in quarter to Second quarter was free compared $XX.X flow million of cash XXXX. the

in -- billion cash refund was flow with the year non-income quarter We and up $X.X quarter, ended XX%. Excluding on tax the equivalents free balance our in nonrecurring prior sheet. the approximately cash

the million, our by versus weight of drivers programs, $X.XX Care followed sequentially. diabetes the up key segment prior was were with year-over-year year-over-year Integrated ended a Chronic Turning quarter Chronic and Care X% up Care of year quarter. prevention enrollment growth segment revenue and revenue results. X% largest period The Chronic We year-over-year million $XXX our increased second to to program growth. enrollment the management X% in this contributor Care to hypertension.

As self-insured to advanced Blues newly Diabetes population license also of our the continued insured Solution with fully our the our strategy, Solution expanded for population. and to fully for all land a example insured we Management large an at their plan it from seeing a members are recently we while Management Diabetes success Weight launched securing and upgraded hunting Plus expand regional

growth, revenue enrollment Chronic a in earning we our In performance-based outcomes. benefit delivering are programs on addition saw from we the where fees to for successfully quarter Care also in

a in to quarter. arrangements contribute year that arrangements leveraging onboarded prior second revenue types these our success our results members of we members range. value-based sequentially, our new the was health This our $X.XX, will end line unlock business, our segment general positive year-over-year going driven million forward. opportunities. U.S. strong XX.X medical systems also with to the of is portion decreased product Integrated in of with they member. new approximately mix as we materially typically, average X% U.S. by less per guidance member the by XXX,XXX members, Care by driven membership to our was an Average hospital smaller growth are have significant by and the revenue ability lever quarter, we system by a Care BXB up deliver number public per Integrated increasing offering business, $X.XX and revenue health of at an versus quarter our important within in seeing of and International while in contributor believe While important currently also remain represent

As our said, over on Care we revenue expand significant our and additional time, runway have based Chronic see services. including products to land cross-sell higher we strategy,

Care EBITDA to a the basis of contribute range Integrated quarter. of XXXX. was growth in second upside points XX% above well the Second quarter range second $XX versus XXX to XX% represented quarter of adjusted guidance over of XX% million, of XX% to the the was and XXXX. approximately Three quarter Adjusted helped our EBITDA guidance margin the versus increase factors

The our in programs. first was revenue Chronic performance-based the Care

in operating timing performance margin into BetterHelp pushed the related factors The for to In half expansion. marketing to other X of accruals performance, benefit these factor And expenses the year-over-year with second second including line XXX lower-than-expected basis aggregate, is as adjustments over and of the business. year to accounted certain year. current part compensation were third our in points was

the X% the X.X% first the the in versus Turning user XXXX average second paid quarter versus versus segment. the of average quarter, to revenue first below to and fewer and With users in down versus XXXX second period decline users additions guidance result sequentially. improving to BetterHelp quarter million X%. revenue stable was half of slightly declined prior a X% of user down Revenue of was first down our Revenue in by XXXX, and was platform. the the range the the year X.X% of as generally per churn half $XXX

advertising quarter on health talked in We've advertising of early quarter, themselves. within In revenue us pull including the the media, our dollars our through a overall costs how channels variety and factors to and cost goals the dynamics the yield margin. back about of influence the we QX, customer of consumer challenging advertising which first the with acquisition growth balance on caused in saw keeping to spend,

see signs in few to headwinds quarter line the users, we performance, creating Although costs advertising levels we entered at of second lower the QX our paid weeks. with first did top stabilizing

acquisition deterioration this context, line with a we June. in quarter. seen advertising saw during spend. help levels the double-digit additions exiting in with put back to customer we user for spend, of our lower the saw the dollar we percentage appropriate May growth May from drove and To the to trend This a that ensure a in those had into we second what to made first quarter to increase costs fewer However, continuing further in in versus return paid In decline the revenue on optimize constantly marginal quarter. pull for the led decision count, which return level strategy

being in customer the are higher several U.S. costs believe acquisition by We driven factors.

weakening of broadly many pressure consumer. of we channels, seeing suggests macro some which advertising our acquisition First, broader the customer across are cost

efficiently deploy dollars to customers. growth Next, new to marketing on is ability acquire BetterHelp our dependent

inflating largest of ad health. a channels, only so the virtual mental At points further our of short is not inefficient is us without to appropriate while at period diversified to acquisition these an in we conscious below and of makes we can various And much customer return. incremental scale customer elevated costs, a chase advertiser across acquisition acquisition time spending making decision there our are Our scale drive levels our customer spend costs.

and balanced growth overall to on as margin key is costs ROI come advertising top approach in acquisition elevated. as at our customer going lower focus a this remain rate long So channels and of line driving

noted, BetterHelp have we a in business transition. As is

and pivots address strategic expand these several addressable our market. challenges to undertaking are We

As discussed, insurance on the the we proposition working actively had BetterHelp market. to bringing Chuck are value

strong with In addition, markets, on non-U.S. seen is we moving international prior focus further beyond we BetterHelp. our expansion customer in have with also are at growth with costs Consistent commentary, to healthier revenue which current much non-English-speaking footprint forward a translating our markets. certain international acquisition

of year-over-year the of quarter, a year prior range XX% the in and BetterHelp just to X% basis representing adjusted million EBITDA our Adjusted was was points above second the margin midpoint quarter. X.X%, $XX EBITDA XX% decline. of XXX decreased guidance versus

EBITDA consistent faced As during our certain spend deliberate on in higher-than-expected to us our the the quarter, meet business to the return focus which adjusted ad we margin to an we customer made managing moderate channels target allowed was acquisition with decision spend. advertising appropriate costs, on and

to turn guidance. me let Now

mid-single revenue Care, the we low to growth continue XXXX Integrated For in expect to digits.

for expect to XXX which our now XXX to range points. be adjusted We expansion, are up narrowing EBITDA basis margin we

of the in which related guidance flat slower third on basis relatively enrollment half to offset Our a reflects performance, Care delays being first lead a client-driven will the by quarter. to ramp primarily populations, member in launch Chronic sequential the Care likely in certain Chronic enrollment

member raising end Care are XX year-end. at expect Integrated the lower guidance to We and members range our million of U.S. XX.X million now

is in For revenue that XX.X margin million note in to to Integrated be members. the expect X% the EBITDA XX.X to expected Integrated range the revenue down Care third quarter, members third million quarter year adjusted deceleration we the from and in be the tougher due due comp of well and of impact basis prior approximately enrollment. lower XXX period as EBITDA quarter Care which guarantees realization to in added of a to the in points XXXX, Chronic performance growth third adjusted margin We up between year-over-year growth Care and in XX%. U.S. X% XX.X% are to as of the part

are to Based presidential by actively impact appropriate trend could there near-term return on further business over the brand on ad visibility leading both taking and in we BetterHelp For outcomes. an revenue ad at higher spend, of choosing our have is at BetterHelp, as segment potential quarter, provide which, acquisition few be third are not manage we metrics on the guidance business costs quarters, are the customer atypically have the election our to pricing. for we continued actions limited on we withdrawing is time. the unknown and the the as adjusted path we guidance affected time, upcoming past the while EBITDA discussed, wide an for positioning segment and year full this long-term same for of or for Therefore, success, this range to

for loss with for our third decision presents are, We flow low to customer per free second not standpoint. would if in to cash to revenue we challenge guidance note provide provide segment, therefore, consolidated XXXX the current guidance the EBITDA, expect adjusted or a we or we double this digits. not acquisition level, from the net modeling year full that providing BetterHelp the Therefore, costs continue recognize revenue, baseline, quarter decline company the for half at share Consistent XXXX. a

executing progress in on business in deliver of and make $XX million on a initiatives, savings a productivity XXXX. remain and our our million to for to continue in $XX total against track basis cost We cost-saving we XXXX GAAP

XXXX As that outlook, including mentioned longer-term a we initiatives Chuck. are beyond, look there our and the to by number of areas will inform

While our driving the focus full for longer-term provide not an a position in forecast sustainable on to financial or for segments XXXX time. performance are for including current value a we creation, and company, remains our at the outlook

With call that, I will to turn the back Chuck.

Mala. as quarter to including earnings October. aspects continue to our allocation. our long-term offerings our cost the sharing The and comes call product on to investments evaluate our business, in all further structure, guidance strategic I decision the business, Thanks, our priorities, in details look forward of withdraw capital I third

With open Operator? up we it will questions. for that,

from JPMorgan. Lisa Gill [Operator Instructions] with Our comes first question today

release, comment I entire with greater that unlocking the and Chuck, was value press start company. a the in across want was to that

it, potentially of component the to And around think some company? the be of are I BetterHelp we things strategically of of across in somebody better this? company should comments Mala's that thinking going think that's should BetterHelp, the about be would maybe listened we the comments I and way greater comment about a forward As this hands if not not other that and in owning should what opportunity is this your else

Yes. Thank the for question. you

respect serving with results out great BetterHelp, important a capability. to of well X think paying built largest people, its It's to consumers pocket. of kind, are company that the really I it's with who million great has note the over

that So terrific. is of all

on opportunities of transition in challenges part international of value, operating terms scale in company this think performance. With important any that an the financial today, and Mala managing synergies our when well market, we're to we're think I deliverables there company. continue touched on like talking you're that through enhancements balancing now of, business, about operating When a creates focused on realized this and expansion, what long-term primarily at more. the and insurance I opportunities Mala unlocking financial point, doing, the said, look there across is the right evaluate BetterHelp way are We're are the that strength going aware there's already businesses, touched to -- I'm of period, value. other do advancing has we're you shareholder but being to where some and

business BXB for our need You've resonated business. engagement we in consumer and got have has a that well,

have a We scale well. parts can as other of BXB business from organization that benefit the

of to but to is going meet broader I'm unlock and explore. what value of the there's the we're And a and for differentiate. own its potential, those areas market needs to where each as opportunities company, looking think that number I realize new So business part individual

Stephanie is Barclays. question with next from Our Davis

prepared BetterHelp Mala, Chuck, remarks. your in pursuing to coverage for you insurance talked both

I'd strength? for taking going that. How steps? current your about talk compare that to what insurance reimburse like time lines to construct? these for a need out-of-pocket products you'll approximate that my are versus an And make is are to steps little take to the to bit you So more the What

process, product. what high to costs consumers then see my a this. through is logical start is move BetterHelp. coverage. and choose eyes significant site I'll on But as I well can percentage a the a Yes, add perspective, insurance don't out-of-pocket to From the of as lot as the having next forward, got number, of people for step that work those significant Mala this We've

access their be to coverage offer where those want can. the to able consumers to we we ability So to

time at so to that. to course line, deliverables to by call, offer year-end Obviously, be we rolling insurance of working with be what contracting we're terms now forth, right and technical the In able out it on have least, will of over the XXXX. capabilities

additional some where cetera. way et control is approaching credentialing. other that, which you experience, way we're where we operational contracting, As to There's a those. think, requirements, note, very areas there the additional key are The experience, I thoughtful are handling are want the to requirements, we

as But increases leveraging that to for to we make reduces it partners need that investments experience. to speed see That also core live. the bring don't areas third-party to we market, we're the

we as see I investment building capability. out product that access want -- on to need we coverage. it's eyes but again, insurance So as that that underscore, their be we progression. focused But we're a on able terms see a in they would do the manageable logical to primarily now, upfront meeting this of But the their consumer have

accessible what I'd to it's a step health BetterHelp through honestly if our churn. Stephanie, don't the what the as take go offering to with to always enroll convert. mission for more think to is users is, Chuck customer about for and insurance, reason main path sort efforts back has been BetterHelp And #X look, affordability Yes. you mental make the everyone. of care And said And cause add they

spend, you TAM about inflation, if we think expand to have et you the were with, that opportunity our we quite cash macros cetera, to If of beyond consumer pay. about an are think softening if sort we expand dealing actually significantly

the -- sort are that's So this. being approach we we thoughtful on very of how

in what standpoint, that and the we we trigger getting will precision, this return with to sure make to with and of looking are from investment execute make that each investments on the are do into We modalities, thoughtfully step we appropriate implement space. this an

Our next question comes Sandler. from Piper with Jess Tassan

Care can plan, Teladoc like a you what rank just today how kind a be resolved And fruit having market? And of many among or in starting you wanted get for maybe the Chronic role. from the by address? Chronic on issues platform? the platform condition health in would are of Care a think curious Chronic low-hanging that are the to your of the solution, access XX%, Chuck, come but number perspective people biggest kind or I competitors Congrats, you to that the so quick who Care what have ameliorated then [indiscernible] was the actually follow-up have be just that eligible is today? would Teladoc how I'm can diabetes enrollment,

Yes. more I'll from take are a stab of Mala a perspective, further. From perspective, at it, Chronic thoughtful former were the Care customer really in can a what think way that and we needs. I being in role. company comment targeting a company's effective, then specific to comprehensive that member model prior my terms I they're the purchaser a a approaches just that products that market the situation and opposed of as like else

than more conditions, As condition in than most it's people, cases, lot like wrestling And that just bigger play. with. things of with matter a chronic you one it's one know, with they're

I the that me. company So comprehensive approach with like resonated that takes and the

example of been terms relative I see And opportunities journey think services and would company of would say a weight its that position benefit I those we with others, in can our on In that. more headed highlight terms to that. where has I create good it's have I of that where to management the is obesity the patients.

They're will, for value. and you've there demonstrated measurements I looking for buyer, if out they're looking a got ultimately, think, against sophisticated you that.

new by nice terms in job we've with think both health I value our Chronic a Milliman. Care model our that cardiometabolic and of ROI done was validated models

market. say approach. I think So I is impact would impressive. look and on guess thing a add do And if resonating at want to value. last engage, if patients comprehensive, we've nice you you having in demonstrating that It's the we're Mala got it's would the it for anything, pretty I the I the that It's say,

a So upon. more position I there, but to think build we're in obviously good

that look, bundles offerings, say, right? fact product We I good to And seeing our second a strength strength of here's that recruitables is the the continuing to your momentum the see The answer Chronic Jess, are news, to And in have, would continues. selling recruitables Yes. in right? Care question, number we that testament increasingly. are we

Livongo our about those actual I of if converting your you recruitable overall it number Chronic bookings, question in strong around terms enrollees, than to mentioned and think about is the Care of Care Chronic are quoted we bundles. into reason was enrollment, Care to If think continues give how increase more Chronic you doing we this relative don't from reason in an perspective. you it half see et be as but enroll what is, The our enrollees of bundles the days. And Chronic will helps ability you is enrollment you sell increasingly program, use diabetes one enrollment cetera. And . do numbers what multiple in all programs when into essentially conditions, Care the that multiple of the that our rather than, you for say, if that think clients, to about to happens

Our next question Jailendra with Securities. Singh from Truist comes

activity weight I which likely GLP-X spend caught top in some program mind still and likely last could I for terms GLP-X management segment, resulted offguard cycle of costs, provider-led employers? in sales the guys that you traction elongated. your mean, were was on this and most I year given [getting], are your on getting speak is heart of time Curious seeing remains wondering because of are in in seeing generally we what maybe Given RFP employees year, interest? of Care selling season, employer to you're Integrated what if the primarily believe you

for couple Thank A Yes. you of questions. the things.

of again, I for we're as about this as for, In but they a managing reduce point terms pipeline mentioned overall. terms in seeing are feeling I good before, bookings of buyer The looking the selling the really progressing mean, that's demonstrated on market season, both is that good I if I you value, activity, generally at definitely sales think we're as sophisticated think raising And looking the to actively will, in teams base opportunities. well are what bar ways fragmentation.

these all point least So having experience I think solutions. a at effective versus more

that's So theme there. out trend definitely a and

think we'll after good continue that we're to go board, so the seeing I and across that. activity --

to with respect the but with management, not weight as and just obviously, with holistically. GLP-X, a area that's think I significant just more employers, of obesity manage focus, know, issue this to particularly you how

approaches kind there. a out. to I of it's there's little think think early I play out see range how those And all of a

where we're create to I employers what for think is we trying to on they're play a depending solve. options place what customized trying can

physician most obesity trained know, up our includes access, as management. all Teladoc that's And to advanced in program which you the way a physician

make a more we're lot this whole trying think do thought and the so we're early something that's than something making but sustainable into that I for we there we're I in of to taking perhaps maybe year, is the And process. the interest impact probably even what that's fix. sure maybe we're versus quick it's is a long perhaps we're So think seeing approach haul the there, coming

Our Genuity. next question from comes Canaccord with Close Richard

was Mala, curious on the I charge.

get assume follow-up book low really If about process? BetterHelp costs the a leveraging and the of my existing that coverage, BetterHelp? And you into BetteHelp on business, could employer that component that, just of are then, go insurance little if which would into is be I details would the acquisition of you for bit thinking on just you

Yes.

Richard. leveraging side and of are said order, spoke the about by the mean and terms that business earlier you let talked mean thinking go-to-market the is reverse synergies around What what terms do for in what I -- we of of cite Chuck Lisa's examples would I your with how insurance of about BetterHelp questions. across BXB So do one is just that? it where in in for do Chuck we me you Thank the questions When to business.

is, fact look, retention client the over talked the have about have, rate you of The client we about relationships if our we being XX%. strength think

We our And relationships efficient few the point Obviously, have are us platform in this do long-standing we good opportunity BetterHelp with for need we ago. there talked sure that with clients. actually BetterHelp suitable the BXB to a to just things make to that is your and a product. to is that about and minutes smart, use an the for way space, product

question. second your on that's So

first then look, was to the I decline charge, a at discount the it's EBITDA by On us in impairment. And really flows. the said, fact impairment question lower well about that that we is you a -- sort charge impairment, price. and the had take cash expected, do the drivers as for are revenues prepared around triggered business in it's to I think surprise share And of, adjusted charge not your the said we essentially what look the really the really it's have as impairment remarks, for if the take our rate lower BetterHelp as are as and than the the our

question those segments the would the across is based us accounting your goodwill seeing you into you're in it that we perspective, both that So out I value. BetterHelp why charge side. charge the goodwill the years is of on essentially factors BetterHelp are really an of say the the to maybe The implied is allocated last couple thing into that impairment when from that one it we broke coming about the think on is is we did. on how side? the reason ago, went And of the a things If segments sort

ISI. Anderson is Elizabeth next Our with Evercore question from

more what's sort on half are in enrollment and bit you for if I if us also was color BetterHelp talked board? causing wondering the in Care member just we members talk quarter? current comment when if could due in delays as growth those you third year? delays on lower give Integrated what I are come of could you about that second of the expectations tax in updated on Can was little the to about a you not, And the wondering your those

Yes.

Elizabeth. them order, take in I'll So

first the relative of a acquisition had relative through CAC In upon BetterHelp, higher. about cost in expectations double-digit QX, away terms the the we guidance is, to moved that to talked the the reason certainly costs have about sort for quarter. growth we of customer customer went we talked quarter, entering about, as giving we the as the from relative lot acquisition was We've quarter

a we moment, are a relative were lot acquisition customer or not at the improvement higher. to that So seeing, lot costs And trajectory. change this of

advertiser we the this terms of diversified the space. largest in BetterHelp in of right, are the the we channels reasons that all prepared in are but For remarks, cited within business, we

to ad importantly, We are we it more have deploy that to scaled but And revenue harder efficiently business. growth, to do most profitably. incremental spend, the drive is for and and would us harder

top as line balance we efficiency, and challenge. And growth on with ad spend a return increasingly that certainly becomes

see to customer of continue acquisition we So costs. elevated levels

visibility we into the of limited through how rest have We go as play year. will the out those

we provide is us so and large too macros to softening with the of that for felt outcomes combine just range guidance. You

sort of acquisition So on that's customer cost. the

points in One enrollees, launches the client the make. On delays into are the Chronic of couple -- -- to the launch is really XXXX. Care client

of the enroll next year. And members so in year, in those expect half to this would really back we not

The as and I better is execution enrollment that think in this amount to better data, hard you Chuck, I I get would get for for certainly perspective. taking from something more philosophy very better opportunity just an also do and more other to from in are know... of do continue execution add an that to terms your And standpoint, look comment want to mindset don't maybe, in time. an at we sort thing an this execute a there is us and Chuck, to conversion, of we increasing of

Yes.

it I said well. think you

of our leverage look that we an we performance think maximizing this are I end-to-end of we what how an in example us. we we performing, taking how we it, do how example, front are potential do out we by are in in and we mean do is how so eligibles as of this the the get that that process is an each the measure execution and bar of terms how need, raising reach step space on engage, do information at

I we So us to just performing the think the and to operating processes have is delivering that's make sure we and model something expect. is that as going see you're from continuing

comes with Cantor next Fitzgerald. Sarah from James Our question

prioritizing is when be advertising increase could of evenly then shift outliers all maybe if Can chasing talk about clarify beneficial? increasing there the of pricing a your are across you your you're customer as And of should flat total acquisitions, level here? on from that the marketing about think holding of advertising to Or advertising does we being ratio dollar in flattish? more where strategy more you revenue the the it not mix if channels or and mean on a direction spend that

Yes.

on So quarter cost The through them we say is let saw in the heightened turns. the non-auction We our see thing as did the I various second channel. following. went address that channels, what -- in the channels we me would

see the So that, those if quarter, in cost channel. elevation you channels extent some in like we did to did was where think about see significant increase acquisition in podcast, customer our channels quite auction in the we pricing first to relative

the about how terms ad the channels, these think are across you different If somewhat in spend gated works of capacity. dynamics typically Sarah, non-auction of channels

lot And deploying so is have more paid cetera. where really in we channel, ad the auction flexibility a in et search, spend

non-auction because that seeing And consumer things macro is our pressure these remarks quite one the some that's that believe to So we prepared is see But in are costs. pricing we of really that channels the my channels. there customer leads there significant certainly, pressure, across saw where we are increase I softening all in in of the us the of did all cited channels. that acquisition elevation even across in elevation

for not withdrawn the chosen that to for terms withdraw say In just back the adjusted fact for guidance, we've year, our we is to we given the the are have how business going guidance. and to our of speak I'm What BetterHelp, essentially I half following. full would EBITDA or managing this

on spend to revenue, and like if marginal unprofitable. that you profitable revenue returns about is dollar not think optimize What We are are the essentially ad -- the it doing we so table. is not are leaving the it's on dollars of we attempting do return on

So that are when sake. is we we not mean say chasing for what revenue revenue we

line bottom balancing line. are top We and revenue with

question Sean Markets. today from Capital next comes Dodge The with RBC

in X you benefiting Mala, mentioned the margins quarter. factors

you I you you one fee performance you contributed? that related of were ad to also quantify could The spend And was the a in quantify I was the for business. Care of what just if called pushed that out, mentioned about, first that the received Can talking year. related then well? the shift timing back us for to marketing you much half us Chronic you how wondering as QX from think think, a into was I

Yes.

cited of prepared the factors said XXX we points total. we year-over-year. adjusted we So basis were saw we about contributed The roughly look, expansion have what is margin points an to XXX basis remarks in -- EBITDA that in X

healthy basis generally expanded relative we have expect So our excluding to XXX would by very still what that, margins average. we points, on

half say, I half call that. basis The of factor would points, is roughly, XXX offset of of only performance-based thing less that was revenues Sean, or it, about the slightly than

XXX about basis was points So performance-based around revenue.

Charles Rhyee TD The next question from comes Cowen. with

you're second fourth down cadence Mala, in to for sort then I talked last guidance seen and we've just years, historically, using the think ad couple here about But of quarter, over of that you know providing ramping that the mentioned the of third the the about not kind margin. harvest spend you've you've sort on if of BetterHelp. quarters,

least the historically, at years, dollars BetterHelp. of of fourth sort over quarter of in been the last so biggest EBITDA terms couple has And for quarter

Or quarter? the now costs, be of you're expect should bit seeing what sort a historical seasonal in EBITDA? in it like of being -- maybe XQ well, more evident? acquisition expect in CAC, of in still for sort sequentially still should as about we think given EBITDA to that pattern little But customer that flattish looks pattern terms you sort we sort of Would fourth of

Charles. you, Thank Yes.

say Here's you. what to would I

spend happen how much would happened going may have you if on up for into season -- that ad in holiday I at visibility think on is continue the that we limited would on in the But of And historically this what leading decision back have in obviously spend what look to ad that expect that combine customer the given an the you the say, spend will tends we be are in reason, costs to acquisition that to this how important if to I terms has fourth quarter pulled inefficient. for pricing will quarter. again, weigh typically fourth relatively with year. our -- fact I And have to certainly holiday pricing, elections, go.

with user would say, also would line for and ourselves growth balance perspective. a up reasonable in setting that a a perspective XXXX I always, as manner from we top

as I'm what again, mix put thinking along say we go the from into year. every I same year. the no would saying be So considerations line our would through we the different the different is single

Our Cherny next Michael from with Partners. Leerink question comes

with still given point to turn can launch hearing, what about this changes? the about organization, drastic to of the back make would said, commentary asked level is the the it I terms business had you're regarding someone that. any go of if thinking run so I'm pivot around? if as running elevated BetterHelp. of operationally, of earlier why do this organization, those bit as potential of to Are were understand when about targets, using were know relative That a removal managing far little being the pushing just the intention the still targets the had a you all we thinking in of I future can I'm Maybe you've visibility BetterHelp uncertainty given the how lack multiyear you for? you

Yes.

our So -- that contributor flow. BetterHelp address to overall as as to well and then BetterHelp revenue, important free specific profit ways what in it is two we'll cash financial obviously, means, an

look and pivots preparing the need that make. what's the a while on to revenue not our because to really growth spend, relates Really the do chase we is disciplined for it have in optimizing manage near-term visibility, think look, line, important sake. I revenue in top make very balance to ad growth transition. limited line business as strategic we to And business BetterHelp, a to business way So return bottom it's for us to at

we the which international expectations is year. had well the into to expansion, went relative include our that as Those going we

going progress the into making and deeper are English-speaking markets. We

into We are markets. looking judiciously expanding non-English some speaking

into far, we customer had line in with that expectations are what So in this per user line expansion and revenue with gone costs acquisition with. seeing the are we

that's on international. So

about have with talked BetterHelp insurance. We

call, business, managing investment pivot with it at strategic BetterHelp pivots an is business from term for team perspective important as from how the leadership well management looking And the us of we the think what U.S. perspective, are at consumer shorter in from business. of the the I perspective. We other a -- a stabilize bandwidth as of balance I all this core to

I say, So side. the would that BetterHelp is, on

XXXX I guidance standpoint, reformed would say, more our broadly, from Care we've revenue. on Integrated an

points. end from talked EBITDA of expansion bringing taking look a year-over-year, the And low down business. the basis at You've under structure about a and a a many different perspective of XXX adjusted margin the serious things healthy we still to expansion, XXX Chuck's margin are leadership, management

and really clarifying that's are for accountability, going to prioritize investments We our us growth. help

on So take And remarks Chuck has of going bit a process little his spoken aspects business. across a time. how that's that's to in of he's taking comprehensive a the look all

to through back that wanted over what thoughtful him ability to in come you the the to that terms of that, coming all give go of And updated an terms outlook months. in in means we just to So way. will we complete a

Daniel Citi. Grosslight question next with from Our comes

assets care necessarily you're not curious the take 'XX, your more at a year, understand then given experience quarter. small risk, value-based clarify about question population part thinking value-based thinking is guarantees Just to this And but that's last how that forward? technical building wanted beyond? delay, the enrollment I'm about real of Chronic clinical from experience you're issue maybe business mentioned going that But my you right on it's health to separate I how a 'XX really the and Care leveraging care and performance Chuck, now. out and Guidewell,

terms as doing well a in what second and to hit the and base comment. I'll Yes, Mala and what in then a more sophisticated we I be of measurements aligns can terms buyers and Well, more customer with and picture of Yes. are back the that manage outcomes, do part expecting performance we've been patients. to company complete building the will more and think and out

the which the a customer additional going convergence today, expand, base one, think value-based expecting put are allow in as demanding are marketplace in converge there's if we I you in forward that ours more things capabilities see, to to that company participate our measurements and those economics of and but the where you're value and will, So to a create. to the and elements play, able we going are is more willing strong like with move already to

you Mala, organizations of So to I other the would think an add part anything? for going and for like important those be future both us are of us.

mentioned we solved it year first client certainly and really, the of do Look, at in is us. client the hit just have. have That that. we of data say mapping, your that, we really move the as to I'll creates relative on misses don't I were it of prepared that No, What important get execution remarks, part does this sort related the mean question, That's that hierarchies. behind issues and will more that the from beginning challenges had think forward, perspective I is results his we we that like it Daniel. that a to for we've the Chuck because our is have -- plans mapping to over -- the challenges

really a us so are that with those we as to beginning time from our to leadership is going And spending prevent team, having we of... as cetera, governance, certainly are our looking internal at Chuck, kinds structures, work et

any out now We're time questions. of further for

you, as session joining. everyone, Q&A as call. the the for concludes this Thank well So conference

may lines. now You disconnect your