Teladoc Health (NYSE: TDOC) is experiencing a mixed performance in the mental health space, with its B2B-focused Integrated Care division showing solid growth, while its BetterHelp platform, the largest D2C (direct-to-consumer) digital therapy service in the U.S., is facing difficulties. The contrasting performances of these two segments highlight a shift in Teladoc’s approach to mental health care, with the company placing more emphasis on Integrated Care’s broader, more diversified model.
During Teladoc’s year-end and fourth-quarter earnings call on February 26, CEO Chuck Divita shared some of the company’s recent mental health-related metrics. The Integrated Care division reached a milestone of 1 million mental health visits in 2024, marking a 10% increase over 2023. This division contributed roughly $150 million in mental health-related revenue, about 9.8% of Integrated Care’s total revenue of $1.53 billion in 2024. A significant portion of Teladoc’s membership base—60% of 93.8 million members—has access to these mental health services, which include digital tools, therapy, psychiatry services, and coaching, primarily through myStrength Complete, a step-care support system and app.
The myStrength service, a key part of Teladoc’s mental health offerings, was acquired through Teladoc’s $18.5 billion acquisition of Livongo in October 2020. This acquisition further solidified Teladoc’s position in the behavioral health space, and the company now pitches its mental health services as part of an integrated care approach that it sells to health plans and employers. Divita emphasized that Teladoc’s focus going forward is on expanding mental health services within this segment, a strategy he believes will continue to drive growth.
BetterHelp Faces Declining Performance
In stark contrast, BetterHelp, Teladoc’s consumer-facing platform, is experiencing a significant decline in its financial performance. The platform’s 2024 revenue totaled $249.8 million, marking a 9.5% drop compared to the previous year. Additionally, BetterHelp reported an adjusted loss of $77.8 million, a 43% increase in losses compared to 2023. The platform’s adjusted earnings margin also fell to 7.5%, down from 12% in 2023.
BetterHelp’s declining performance is a point of concern for Teladoc, especially as the company continues to work on improving its customer acquisition costs, conversion, and retention in the U.S. market. At the same time, Teladoc is pushing to expand BetterHelp’s reach internationally. Currently, 20% of BetterHelp’s revenue comes from international markets, and the company has started its expansion into non-English-speaking countries, including France and several European nations, with plans to enter additional markets in 2025. However, this international push is contributing to a decrease in revenue per paying user, as initial pricing in European markets is lower than in the U.S.
Shifting Strategy: Moving Toward Payer Contracts
A significant part of Teladoc’s strategy involves shifting its focus from a purely direct-to-consumer (D2C) model to working with payers—health plans, insurance companies, and employers—to offer BetterHelp’s services through in-network contracts. However, this shift has been slower than expected. Mala Murthy, Teladoc’s CFO, pointed out that while the company has developed the infrastructure to support in-network contracts, it doesn’t expect significant benefits from these efforts in 2025.
The move to in-network contracting, despite its promise, has not been as fast as anticipated. Teladoc’s other digital behavioral health competitors, especially those in Integrated Care, have adopted similar models, but BetterHelp’s delay in pivoting has created some distance between it and its peers. Analysts on the earnings call expressed curiosity about why Teladoc wasn’t accelerating its move to payer contracting, especially considering the success of its Integrated Care offerings.
The Future of Teladoc’s Mental Health Division
Teladoc’s Integrated Care division continues to outperform BetterHelp in terms of growth and profitability, suggesting that the company’s B2B strategy may be the future of its mental health business. By combining mental health services with broader healthcare offerings, such as digital tools and coaching, Teladoc has been able to provide a more holistic approach to mental health care that resonates with employers and health plans. This model, which also offers step-care solutions through services like myStrength, positions Teladoc as a leader in the B2B mental health space.
At the same time, BetterHelp’s troubles underline the challenges of operating a purely consumer-facing model in the highly competitive telehealth industry. The decline in revenue and the increasing costs of customer acquisition raise questions about the long-term sustainability of BetterHelp’s current approach, especially as international expansion and in-network contracting are still in the early stages.
In conclusion, while Teladoc’s Integrated Care division seems poised for continued success in the mental health space, the company will need to adapt its approach with BetterHelp to regain traction in the consumer market. The B2B model, with its focus on integrating mental health services into broader care solutions, may hold the key to Teladoc’s future growth and success in the mental health sector.
