Good morning. My name is Lisa Gill, and I'm the healthcare services analyst with JP Morgan. It is with great pleasure this morning that we have with us Teladoc Health. Presenting for Teladoc Health will be CEO Jason Gorevic, and then for the Q&A session, CFO Mala Murthy will join me here at the table. With that, let me turn it over to Jason. Jason?
Thanks, Lisa, thanks everybody for joining us this morning. It's so nice to be back in sunny San Francisco. Really happy to be back in person after a bit of a hiatus. You know, as I think about the last three years, an awful lot has changed. You know, when we were here three years ago, we were pre-pandemic. Telehealth was something that some people knew about, people had engaged, but I would say, legitimately, people didn't really appreciate the scope and the scale of what telehealth could do. Virtual care now is expected to deliver on the full scope of a consumer's healthcare needs. At Teladoc Health, our mission is to empower all people everywhere to live their healthiest lives by transforming the healthcare experience. We do that through a comprehensive, broad, and deep telehealth platform.
Our virtual care platform now serves over 80 million people, and that platform enabled over 21 million visits just last year in 2022. Because of the fact that we deliver over a half a billion digital health interactions through 30,000 providers on our platform and deliver unmatched consumer experience with over a 60 Net Promoter Score, Teladoc Health is the number one brand in virtual care. It's not just the number one brand among consumers, it is also among health plans, hospitals and health systems, and both domestically and internationally. Through the last three years, a lot has changed. What hasn't changed is the financial strength of Teladoc Health.
You may have seen this morning we issued an 8-K that narrowed our guidance to the high end of our previous range with quarterly revenue, new revised guidance between $633 million and $640 million, meaning a full year revenue number of $2.403 billion - $2.41 billion. We also reiterated our previously announced adjusted EBITDA guidance of $88 million - $98 million for the quarter and $240 million - $250 million for the year. That constitutes a 400 basis point improvement in margins over the last three years. As we've gone through this transformation of what consumers expect and what Teladoc Health delivers, we've expanded our margin, created greater scale, and consistently now delivered positive operating cash flows with a strong balance sheet of over $900 million on the balance sheet. This is in stark contrast, and I get asked a lot about the competitive landscape.
This is in stark contrast to many of the small competitors out there, whether they are public or private, who lack the scale to be able to take advantage of this financial discipline and deliver strong financial results consistently. When I think about the last selling season, I, you may have heard me say at the end of the third quarter that the third quarter was a catch-up quarter when we talk about bookings. Bookings in the first half of the year had been slower due to a lot of the macro-environmental things that were going on and the fact that more and more, we're selling a more complex bundle of services that legitimately elongates the sales cycle. The third quarter was a strong quarter, and the fourth quarter came in just about exactly with our in line with our expectations.
We closed the year with bookings for the full year 2022, very similar to bookings for the full year 2021. I wanna highlight some of the ways that we grow and do it in the context of some of these new deals that we've put on the books over the course of 2022. In some cases, like with Centene, we're expanding the populations we serve with new products like our partnership around Primary360, and especially with respect to their exchange-based virtual first health plans. We piloted that program with them in 2022, and we've significantly expanded it going into 2023.
With some clients, like some of our Blue Cross Blue Shield partners, we're going in with the entire suite of our chronic care solutions, delivering on the promise of whole person virtual care and doing it in a way that meaningfully moves the needle on the full cardiometabolic suite of services that we offer, which delivers better clinical outcomes and lower costs for our partners and for their clients and members. We do that both with health plans as well as with large employers.
Southwest has been a client for almost a decade now, and they started with general medical services. Today, we've expanded to our entire suite of cardiometabolic chronic care solutions. That's a great example of our land and expand and how we continue to deliver more value for our clients. I'll talk in a little bit about a new product that we're bringing to market for hospitals and health systems, inpatient connected care, where we light up a hospital room and virtualize it so that a hospital can take better advantage of a scarce professional workforce. We all know that the hospitals are under pressure for the availability and the cost of clinical resources. We're delivering care and technology assets both domestically as well as internationally. Charité is a good example of that in Germany.
When we think about and I hear a lot about whole person care. There are a lot of companies out there talking about whole person care. When we think about whole person care, we really mean that you have to have the entire full credit answer. From a consumer's perspective, you have to have everything from primary care to acute care, everything from chronic condition management to specialty care, and you have to take care of both the mental and physical health of a consumer because they are intricately intertwined. The green bubbles here represent the capabilities that are necessary to do that at scale. If you can't engage a consumer population, you can't drive meaningful behavior change, and therefore you can't drive better outcomes. If you don't have an integrated experience, then it's a disjointed set of capabilities and clinical programs. That's not whole person care.
I can confidently say that we're the only one who has the set of capabilities, the integrated consumer experience, and does it at significant scale. When we look at what are the proof points of that, the proof points are in what are our clients buying from us and what are our consumers using. When I look back at 2017, fewer than 10% of our population had access to more than one of our products. Today, over 50% of the population we serve, remember that's 80 million people, over 50% of them have access to more than one of our products. When I look at chronic care programs, just in 2019, we were at 3% of people using more than one of our chronic condition management programs.
Today, we're at about 28% of people engaging with more than one of our chronic care management programs. In a couple of slides, I'll show you what the impact of that is on clinical outcomes. Now, this has been a journey, right? I've been in this in this role for 13 years, and over the course of that time, our vision hasn't changed. The mission to deliver on whole person care hasn't changed. What has changed is the scope of our offering. This has been a methodical march to be able to expand the scope of our capabilities, the clinical programs that we deliver, and therefore the value and impact we have for the clients who buy from us, the partners who work with us, and the consumers that we serve.
You can see in 2023 and beyond, we're continuing this march to be able to deliver more value and make a bigger impact on health outcomes and on cost of care. We wanna partner with health plans and with employers to deliver better care. We also recognize that the health systems can't be ignored in this effort. We engage both on the health system and delivery side of the market, as well as on the plan sponsor side, such that we can bring a fully integrated set of capabilities that works with the entire healthcare system, not against it. I wanna highlight just three of these innovations that we've brought to market over the last, probably nine months now.
First, just last week, we announced the delivery of our unified One App, a single app that gives the consumer access to all of our clinical programs and all of their clinical data in a unified experience under one Teladoc Health brand. That brings together both mental and physical care, both chronic and acute and episodic, as well as a longitudinal relationship where one exists with either a specialist for chronic care management or with a primary care physician under our Primary360 program. We've been talking about whole person care for a couple of years now. This is where it all comes to life in a single experience for the consumer, and most importantly, it delivers better clinical outcomes because it's all together in one experience. Last year, we launched Chronic Care Complete.
Chronic Care Complete takes the legacy Livongo capabilities, devices which sit on top of robust data science and deliver digital interactions with the consumer to change behavior and improve clinical outcomes, and we put that together with the Teladoc Health virtual care delivered by physicians. Now when someone has an exacerbation or needs medications titrated, there's a physician there working with all of our digital assets to deliver a better experience, but most importantly, better clinical care that drives better outcomes. Lastly, I mentioned our inpatient connected care. This enables a health system to take their nursing workforce and make them virtually enabled into every bed and every room in a hospital. Where hospitals are under pressure and health systems are under pressure for a more expensive and scarce workforce, this enables them to get better productivity and better leverage that workforce.
The investments that we're making, we've been talking about the fact that over the last couple of years, they've been heavy investment years. Those investments are necessary to be able to deliver whole person care in a comprehensive manner and do it at scale. On the bottom, the bottom row here, you see all the capabilities, technical capabilities, logistical capabilities, quality of care delivery capabilities that enable the delivery of the care at scale in a comprehensive manner. These things may not seem sexy, but they are absolutely required. They are a prerequisite to be able to deliver whole person virtual care at scale. On the top, the top row is what the consumer sees. It's what the consumer experiences.
When we talk about a stepped care model, it's the ability for the consumer to experience digital interactions when that's appropriate and sufficient, and interact with a highly trained, highly specialized physician when that's really necessary. It enables us to leverage technology and also human resources to be able to make the biggest impact and deliver the most efficient and most appropriate care to the consumer. Last year, we announced last mile integration, where we now are able to have pharmaceuticals delivered directly to the consumer's home. Of course, if you have a virtual care environment, you don't wanna then have to have someone make a trip to the pharmacy, right? We wanna make sure we can deliver that to the home. We also have enabled now in-home lab testing for similar reasons, right?
All of this should come to the consumer just like every part of everything else we do in our lives. This year, we're partnering with health plans to close gaps in care, using data better to be able to close gaps in care. You'll see some of those results when I talk about our Primary360 and some of the clinical performance around our Primary360 product. All of this is in service of delivering more value, right? The features are only features, but they only really are meaningful if they move the needle on clinical outcomes, cost of care, and consumer experience. I mentioned the expansion of our multi-product sales and our multi-product utilization. Let's go one level deeper into what that means in terms of clinical outcomes.
When someone has more than one engages with more than one of our chronic condition management programs, they're checking their blood glucose more than twice as much, right? We know that when we engage someone with multiple programs, they're going to be a more engaged and more active member of changing their behavior. They can only measure that if they're actually checking their devices. We know that that's a mechanism to be able to get people to live healthier lives and take a more active role for themselves. This is in stark contrast to single point solutions that are in the market. Similarly, the more programs someone has access to, the more engaged they are, and the more they impact their hemoglobin A1c levels. You can see how that makes a bigger impact every additional program that they engage with.
Lastly, mental health is a critical component of helping someone manage their chronic conditions. You can see that they achieve almost a 2% increase in weight loss when they engage with our mental health programs, and a significantly larger impact on their A1c levels when they engage with our mental health programs. Delivering great healthcare isn't just about the physical, it has to incorporate the mental health components of it. I said I'd go deeper. When we started talking a little more than one year ago about Primary360, we said it was gonna take us a little bit of time and a little bit of experience and some scale to be able to really demonstrate what the results are. Here are some of those results.
We're getting greater engagement from those who have been disenfranchised by the healthcare system. 65% of the people who engage with Primary360 say that they didn't have a primary care physician. Once you engage people, you can then engage with them on better prevention. 20% of the women who came to us were in need of a pap smear. They were overdue for their preventive screening, and we were able to get them in and get that scheduled. 31% were due for a colonoscopy, and we were able to get that scheduled and get them the preventive care that they need. Preventive care leads to earlier detection.
37% of the people who are being treated for diabetes under our Primary360 product, are newly diagnosed diabetics, and 25% of those dealing with hypertension are newly diagnosed by Primary360. These are people who would have gone undetected. Remember, they didn't have a primary care physician and would have led to exacerbations, more cost to the system, and worse outcomes. The clinical impact is significant. 56% of those presenting with high blood pressure have lowered their blood pressure, and more than 50% have used more than one Teladoc Health service. The benefit of multi-pronged holistic whole person care is real, and the consumers feel it with over 70 Net Promoter Score from our Primary360 program. Finally, I wanna turn to our BetterHelp direct to consumer mental health business.
There's been a lot of questions and a lot of talk about BetterHelp, and I think it's because it's been so successful, right? We just announced as part of our 8-K this morning that BetterHelp did over $1 billion in revenue in 2022. That's staggering growth. Over 1 million people received therapy over the course of 2022 from BetterHelp, with nearly 50 million interactions with therapists and over 25,000 therapists on the platform. This is incredible scale and incredible impact. More than 50% of people in this country who are in need of mental health don't get it. BetterHelp is a better modality, it's more accessible, and it breaks down barriers to getting care that people need. It's a business that benefits from scale.
More data, more innovation leads to better matching between a therapist and a consumer, which we know drives better outcomes and stickier relationships. Better engagement leads to better retention, and there's a brand halo to this. BetterHelp is by far the leading consumer mental health brand in virtual therapy. Beyond all of that, it gets to what's really the impact. We get all kinds of questions about, "Well, what's the conversion rate? How good is this? How efficient is this business?" 88% of members who have a first therapy session stick with it after that first therapy session. 2/3 of patients report clinically significant improvement in their anxiety or depression using the GAD-7 or the PHQ-9 as the measure, which are industry standard measurement tools for depression and anxiety. We deliver a great consumer experience with NPS over 70.
These are the hallmarks of a business that has grown, but has also leveraged data and scale and experience and innovation to continue to improve. As I wrap up, and I think I'm a minute and a half over time, and we go into Q&A, I guess I just wanna reiterate that there are a lot of virtual care companies out there who are narrower, who lack scale, who are nipping at the edges with single point solutions, but there's really only one virtual care leader that's operating its at scale and delivering on the promise of whole person virtual care.
Great. Thank you for all the comments, Jason. Let's start with, you know, obviously, you talked about where we're gonna end 2022 and really shift the focus now to beyond 2022. I know you're not giving guidance for 2023 at this point, and we do have to wait for the fourth quarter for that. How do I think about the underlying business and what's really changed post-pandemic, and how do we think about your business model going forward?
Yeah. Thanks, Lisa, thanks again for having us. We really appreciate it. You know, I think the biggest difference post-pandemic is consumer expectations, right? Consumers have gone from thinking about virtual care for limited episodic capabilities to really looking to longitudinal relationships, holistic relationships that are more than virtual urgent care, right, and that take care of them regardless of what they need, but also are integrated with the physical delivery system. As I look toward 2023 and beyond, that's what we're seeing from buyers.
Right.
Right? Buyers. We go out and do a lot of buyer research, right? Among health plans, among large employers. What we find is, whereas pre-pandemic, the majority of buyers were looking for individual point solutions, we're now at the stage where it's 50/50. 50% of buyers say, "I'm looking for best of breed individual points, and I'll do the integration of them." The other 50% are saying, "I'm tired of all that." Right? "I'm sick of doing the integration myself, and I realized that unintegrated point solutions don't deliver on the full capability." I think that's why 75% of our sales last year were multi-product sales.
You know, I appreciate the numbers around BetterHelp, and I think for those of you in the room that follow Teladoc, that's been really the pressure point for 2022. As we thought about the fourth quarter and where the numbers have come out, maybe just help people to understand how you're thinking about the BetterHelp business. Does it fit within Teladoc overall and longer term? Secondly, you know, Mala, I heard you talk about the fact we're going to have more visibility into BetterHelp going forward. So what are some of the metrics that we'll see? Will you see this broken down specifically where we think about sales and margins, et cetera, on a go-forward basis?
Yeah. You know, if I think about the BetterHelp business, certainly if I think about 4Q, we talked about the 8-K revenue today. We talked about it being about $1 billion in revenue for the full year. Listen, this is a business that has scaled very significantly. What is important as we think about this business also is that it has done so with strong margins. And, you know, we've talked as we have gone through the year about the pressures on ad spend, et cetera, in the marketplace. Certainly, there has been an explosion of capital going into overall digital health, but certainly in the mental health space. Several of the companies who have operated in this space certainly have plowed a lot of capital into ad spend.
Listen, we've also seen some bad actors in this space who have taken advantage of the suspension and regulations, to sort of aggressively promote controlled substances. That is not what we do. What we have always said is, the way we approach this business is in a way that we will drive sustainable revenue growth and at attractive margins, and we do so taking advantage of our scale, our experience, and importantly, as Jason talked about, our high quality standards. If I think about this business going forward, certainly it will.
The right way to think about it is balancing our revenue growth with profitability. As you said, you know, we will provide more transparency on a quarterly basis, as we move forward. You know, we are going to give you more color on the exact metrics that we will disclose when we talk about in February when we do our earnings.
Does it make sense, I mean, just given the valuations of some of the other companies out there, would there be a value creation opportunity to not have BetterHelp as part of Teladoc? Does it make sense for this to still be a component of Teladoc when we think about the consumer?
Yeah. We do the analysis all the time in all the parts of our business, right? It's part of being good stewards of capital. We get a lot of benefits from the synergies between the two parts of the business, the direct-to-consumer business and the B2B business. Just some examples. You know, BetterHelp developed a very, very sophisticated matching algorithm for matching a consumer with a therapist that's based on just years and reams of data, and we did it using a machine learning algorithm or set of capabilities to deliver this algorithm. We apply that now against the B2B side of our business to deliver better mental health outcomes because of better matches.
Similarly, because BetterHelp is a direct-to-consumer marketing engine in order to attract new clients, we've developed things like media mix optimization algorithms that we also apply against the B2B side of our business to be able to do better consumer engagement, and we've always said that part of our value proposition to B2B buyers is that we get greater engagement than any of our competitors. There are significant benefits. Similarly, we have used some of our learnings out of the B2B side, where we get more pressure from our health plans and employers to deliver on higher quality standards, and we've applied those against BetterHelp in a direct-to-consumer environment. It may not be quite as evident, but there are significant synergies from the combination of the two.
We've been writing a weekly piece on flu. I know that years ago, when your company was much smaller, flu made a big difference, right? It could be a big swing factor. It would introduce people to a tele benefit during that period of time and maybe use it again. My understanding is it's not as big a deal these days, but was there a benefit in the fourth quarter around flu?
If you think about visitor revenue overall, for our business, you know, it's about 10% of our overall revenue, and flu is a subset of that. If you think about the impact of flu on our Q4, you know, it's approximately $2 million. Again, if you think about it in the scheme of the overall revenue we have, compared to a few years ago, we are so diversified, compared to what we were a few years ago. Flu is a small portion of visit revenue, which in turn is only about 10% of our overall revenue.
Does it still introduce the idea of telehealth or did the pandemic do all that for us, Jason?
I think we're past the point of awareness, right? We don't have to build awareness in telehealth anymore. Historically, pre-pandemic, the flu would help to do that.
Right.
Now it's more about sort of expansion and educating consumers on the full scope of what they can get from virtual care, right? The full scope of being able to take care of chronic conditions, being able to get longitudinal primary care, being able to get integrated mental health into those programs. I don't think it really has, y ou know, maybe it does a little bit around the edges to engage a consumer. They have a great experience.
Right.
They're willing to come back for more. I do think once we bring more people onto our single unified app, that will expose them to the full breadth of our services. More in the top of the funnel, if you will have a downstream impact on all of those other services.
As we think about 2023, it's been interesting I think for all of us in the room to watch what's happened with employment trends, much stronger than anticipated. As we think about the macro background, and we think about, especially a, you know, direct-to-consumer product like BetterHelp, how do we think about how that can fare? Because it wasn't around back in 2008, 2009.
You wanted me to.
Go ahead.
If we think about the overall macro trends, you know, the first thing I would say is parts of our business were a lot more sub-scale or not even developed in, you know, the OA cycle, for example. Let's first start with that as a caveat. If I think about the various dynamics playing out, Lisa, let's start with the BetterHelp part of the business, right? It's interesting. There are a couple of different, somewhat opposing dynamics at play. If you think about, say, inflation staying high or macro uncertainty generally impacting consumer sentiment, making them feel more uncertain, that certainly may have an impact on them availing themselves of BetterHelp, because as we have talked about, you know, it is an expensive product.
It's one of the more expensive products that's not in a box that you can buy online, as we say. You know, opposing that, Jason talked about it in his remarks, you know, if there is a recession and material job loss and people lose their employer-sponsored coverage, they can absolutely avail themselves of BetterHelp, you know, which is going to be less expensive than traditional brick-and-mortar. You have a couple of opposing forces at play. Somewhat similarly on the B2B side as well, Lisa, we have talked as we have gone through this year about the macro uncertainty certainly playing on employers' minds, benefits managers being distracted, right? They have a lot to sort through.
Therefore, even as we are confident about the value we deliver to them and the ROIs, it may be challenging for them to add on additional programs. That said, though, given their cost inflation and given especially the medical cost inflation, that would be a perfect opportunity for us to be able to sell in the value we deliver and, you know, how we can help them in terms of cost savings.
Jason, you've talked in the past on chronic care and have talked about a pilot program that you had with Blue Cross Blue Shield in 2021. Maybe if you can just walk us through kind of where it is today. Many in this room and other places are talking about value-based care and what does value-based care actually really mean when we think about this, and what is the role that Teladoc can play as we think about that future?
We're leaning heavily into value-based care. I know it's probably an overused term, you're right. For us, value-based care really means being paid for either, the clinical quality and clinical outcomes that we deliver or the cost impact that we have or both, right?
Yeah.
Sort of full stop. In this case, this pilot we did with a Blue Cross Blue Shield plan said, "Here, we're gonna take a fixed per member per month or per subscriber per month fee for some of our chronic care programs. We want you to measure the cost of those populations that we serve and that we engage with, we wanna share in the savings that we generate." The client did their own actuarial team, did the analysis. They measured the impact. We were significantly less expensive, meaning we drove cost savings relative to the benchmark population that significantly exceeded their expectations. We were able to achieve a share of savings bonus.
This was a small pilot, so it wasn't material in our overall financials, but I think the benefit there is that, number one, we were able to get this bonus, but more importantly, the Blue Cross Blue Shield plan accelerated their rollout of these programs because of the impact that we had had on this population and the demonstrated value that we were bringing. We see ourselves continuing down that path with multiple payers going forward. We see others who are more focused on clinical outcomes, and so we're willing to put our fees at risk for achieving real outcomes and movement of the needle in terms of someone's A1c or their blood pressure or weight loss. We want to be held accountable for delivering real value.
We're in market now with a client where we have a Primary360 population. We get paid a specific per member per month fee, and we share in the savings we generate, or if there's a cost overage relative to benchmark population, we share in that as well. We have a ceiling on. It's a 50/50 split with us and the plan, so we're mutually motivated to drive better results. We have a cap on what our revenue can be in terms of a bonus. We have a floor in terms of the downside, so we know exactly what our exposure is. We wanna be holding hands with our partners to deliver better care and lower cost and do it in a way where our incentives are aligned.
When we think about the biggest opportunities going forward, when we think about both value-based care, I think the example you just gave is some level of primary care capitation within Primary360. Is that a bigger opportunity? Is chronic care a bigger opportunity for you longer term? As I think about the customer you're gonna be most focused on in these areas, is this the self-funded employer, or is this the managed care plan?
I think the answer is yes, right? When we do, for example, kind of a primary care capitation with an upside downside risk corridor, we want to bundle in our chronic care management programs because that's how we're gonna have the biggest impact on cost and outcomes. We're bringing all of those together, and I think the true answer is where we are gonna make the biggest impact is where we bring all of those capabilities together for a given population. It's not to say we won't sell chronic care, either diabetes as a standalone product or a full cardiometabolic suite without primary care and, you know, take some level of risk on that. I think where we're gonna have the biggest impact is when we bring all of those capabilities to bear.
We're seeing significant interest both from the plans as well as from large employers, and even in some cases, the large employers who are self-funded, pushing their health plans-
Right. To do the-
to do this and make our products and services available through the plan.
You know, I think post-pandemic, you know, it's been a rough time for Teladoc, and I think that, you know, you guys have stayed focused on delivering on the numbers, getting people refocused on the areas, getting more visibility. We're all looking forward to that on BetterHelp. Jason, we're sitting here together at 9:00 A.M. on Monday a year from now. What do you hope that investors will better appreciate about Teladoc than they do today?
I think my hope is maybe three things. They better understand the components of our business and appreciate how each one of those components contributes to the overall performance. Second, they really see us differentiating ourselves in terms of delivering on the promise of whole person care in a way that is broader and at a scale that nobody else really can match. Third, is that we get appreciation for the financial performance of the business, which I believe is really differentiated in this sector.
Yeah. I think sometimes when we talk to investors, they don't realize that you are cash flow positive.
Indeed. You know, if you think about the strength of our balance sheet, the fact that we have $900 million on our balance sheet, the fact that we are operating cash flow positive, and, you know, we will continue to make progress on that. These are absolutely, it allows us to invest in our business. You know, the innovation slide that Jason talked about, you know, that is something that we are building and using the strength of our P&L and the strength of our balance sheet to help drive. That is absolutely a differentiator for us.
Great. Well, we're out of time. Thank you so much for joining us, everyone, and thank you, Jason and Mala.
Thank you.
Thanks, Lisa.