Teladoc Health Stock

Teladoc Health, Inc., together with its subsidiaries, operates as the global leader in whole person virtual care focused on forging a new healthcare experience with better convenience, outcomes and value around the world.

The company has developed and built upon its diverse capabilities over the course of more than 20 years, evolving its product and service portfolio from a suite of point solutions to a whole person offering. The company is creating a unified and personalized consumer experience, developing technologies to connect patients and extend the reach of care providers, delivering the highest standard of clinical quality at every touchpoint, and enhancing health decisions and outcomes with smart data and actionable insights.

The company has the largest breadth of integrated whole person products and services in the virtual care industry, enabling the company to treat the whole person, from mental healthcare to physical healthcare, and from acute episodic needs to chronic needs. The company offers a portfolio of services and solutions covering hundreds of medical subspecialties, bolstered by technology, artificial intelligence (AI), machine learning and human expertise to provide an effective care experience that people value and trust. By combining the latest in data science and analytics with an award-winning user experience through a set of highly flexible integrated technology platforms, the company completed approximately 18.4 million telehealth visits in 2023 through its business to business and direct-to-consumer (D2C) channels. The company provides access to healthcare through its portfolio of consumer brands 24 hours a day, 7 days a week, and 365 days a year.

Segments

The company operates through two operating segments, Teladoc Health Integrated Care (Integrated Care) and BetterHelp.

Integrated Care segment includes a suite of global virtual medical services including general medical, expert medical services, specialty medical, chronic condition management, mental health, and enabling technologies and enterprise telehealth solutions for hospitals and health systems. Services in this segment are distributed primarily on a business-to-business (B2B) basis.

BetterHelp segment primarily consists of the c company’s market leading D2C mental health platform. The online counseling and therapy services are provided via its network of over 40,000 licensed clinicians leveraging its platform for web, mobile app, phone, and text-based interactions.

As of December 31, 2023, approximately 90 million members in the United States (U.S.) had access to one or more of the company’s products and services. The customers of the company’s Integrated Care segment primarily consist of employers, health plans, hospitals and health systems, insurance and financial services companies (collectively Clients), as well as individual members who utilize its solutions. Clients and individual consumers purchase the company’s solutions to expand access to convenient, affordable, and high-quality healthcare to their constituents and to reduce their healthcare spending. The company’s solutions offer its Clients substantial savings opportunities and an attractive return on investment. As part of this segment, the company sells to its Clients on behalf of their beneficiaries, including employees and health plan members. In its various sales channels, a range of third parties, including health plans, pharmacy benefits managers, financial institutions, brokers, agents, benefits consultants, and resellers, sell its solutions to various end markets around the world. The company’s BetterHelp segment primarily sells directly to individual consumers.

For the year ended December 31, 2023, 88% of the company’s consolidated revenue was derived from access fees. To a lesser extent, the company generates revenue from visit fees as well as sales of hardware and other related services to hospital and health systems, which is reported in other revenue.

Teladoc Health Integrated Care

The company’s Integrated Care segment primarily generates revenue on a contractually recurring, access fee basis, typically on a per-member-per-month (PMPM) basis. In some cases, Clients pay monthly access fees based on a per-participant-per-month model, based on the number of actively enrolled members each month. This segment also generates revenue from health system and provider Clients related to the company’s licensed technology platform, primarily in the form of recurring access fee revenue, as well as from the sale and lease of devices, such as robots, carts, and tablets. Some of the company’s contracts place a portion of its fees at risk or provide for gain share opportunity based on achieving desired performance metrics, cost savings, and/or clinical outcomes improvements.

Access fees comprise the significant majority of the company’s Integrated Care segment revenue. The company also generates revenue on a per-telehealth visit basis through certain Clients with visit fee only arrangements. For certain Clients, the company also earns visit fees or per-case fees in combination with access fees.

Access fees are paid by the company’s Clients on behalf of their employees, dependents, policy holders, card holders, beneficiaries, clinicians, or as is the case with certain of its subscribers, fees are paid by its members themselves. Visit fees for general medical and specialty visits are typically paid by Clients and/or members.

BetterHelp

In its BetterHelp segment, the company primarily generates revenue from paying users who pay a fee, most commonly monthly, to access its network of therapists and psychiatrists, as well as to use its BetterSleep app designed to help people improve their sleep quality and overall well-being.

The Teladoc Health Brand Portfolio

The company’s Teladoc Health family of brands – which include, among others, Teladoc and BetterHelp, deliver access to advice and resolution for a broad array of healthcare needs, in intuitive, award-winning experiences designed to meet the expectations of today’s consumers, from children to the senior population. The most common way for individuals to engage with the company’s services is by using a mobile device, reflecting the growing consumer adoption of mobile technology and applications in managing their health.

Growth Strategies

The key elements of the company’s strategy are to enable a virtual first strategy for consumer healthcare access; expand its suite of services to address unmet needs; increase engagement and long-term relationships with its members by driving expanded access and enhanced touch points; expand penetration of its suite of services among existing clients; leverage existing distribution channels and expand penetration of global markets; drive direct-to-consumer channel growth; and expand through focused investments and acquisitions.

Sales and Marketing

The company sells its Integrated Care services principally through its direct sales organization. The company’s direct sales team comprises enterprise focused sales professionals, who are supported by a sales operations staff, including product technology experts, lead generation professionals, and sales data experts. The company maintains relationships with key industry participants including benefit consultants, brokers, group purchasing organizations, health plans, and hospital partners.

The company generates Client leads, accelerate sales opportunities, and build brand awareness through its marketing programs. The company’s marketing programs target human resource, benefits, and finance executives in addition to technology and health professionals, senior business leaders, and healthcare channel partners. The company’s principal marketing programs include use of its website to provide information about the company and its solutions, as well as learning opportunities for potential members; integrated marketing campaigns; and participation in industry events, trade shows, and conferences.

The company sells its BetterHelp services principally by marketing its solution directly to potential users. The company also relies on relationships with a wide variety of third parties, including Internet search providers, such as Google, social networking platforms such as Facebook, internet advertising networks, co-registration partners, retailers, distributors, television advertising agencies, and direct marketers, to source new users and to promote or distribute its services and products.

Competition

Teladoc Health Integrated Care

Competitors in the telehealth and expert medical services market include MDLive, Inc. (owned by Cigna), American Well Corporation, Included Health, and Accolade, Inc., among other participants. In the digital chronic condition management market, competitors include Omada Health, Inc., Virta Health Corp., and other participants. In the market for technology solutions for hospitals and health systems, competitors include American Well Corporation and MDLive, Inc., as well as smaller technology providers. The company also faces competition from large, well-financed health plans that in some cases have developed their own virtual care, expert medical service or chronic condition management tools, as well as large technology and retail companies, such as Amazon and Walmart, which have developed or acquired their own virtual care solutions.

BetterHelp

In the D2C mental health and other wellness services markets, competitors include a variety of smaller direct-to-consumer platforms, including Talkspace and Calm.

Teladoc Health Medical Group, P.A.

The company provides business support and administrative services pursuant to a services agreement with its affiliated clinical entities, including Teladoc Health Medical Group, P.A., which operate its Integrated Care telehealth provider network.

Under the services agreement with THMG, the company has agreed to serve, on an exclusive basis, as manager and administrator of THMG’s non-clinical functions and services related to the provision of the telehealth services by providers employed by or under contract with THMG. The non-clinical functions and services the company provides under the services agreement primarily include member management services, such as maintaining network operations centers for its members to request a visit with THMG’s providers, member billing and collection administration, and maintenance and storage of member medical records. THMG has agreed to provide its members, through its providers, access to telehealth services and recommended treatment 24 hours per day, 365 days per year. The services agreement also requires THMG to maintain the state licensure and other credentialing requirements of its providers. The services agreement has a 20-year term unless earlier terminated upon mutual agreement of the parties or unilaterally by a party following the commencement of bankruptcy or liquidation proceeds by the non-terminating party, a material breach of the services agreement by the non-terminating party, or a governmental or judicial termination order related to the services agreement.

Seasonality

The company’s business has historically been subject to seasonality. In its Integrated Care segment, a concentration of the company’s new Client contracts have an effective date of January 1 as a result of many Clients’ introduction of new services at the start of each calendar year. Therefore, while membership increases, utilization and enrollment rates are dampened until service delivery ramps up over the course of the year. In addition, as a result of seasonal cold and flu trends, the company historically have experienced its highest level of visit and other fee revenue during the first and fourth quarters of each year (year ended December 31, 2023).

Due to the higher cost of customer acquisition during the end-of-year holiday season, the company’s BetterHelp segment has historically reduced marketing activity during the fourth quarter. As a result of this dynamic, it has typically experienced fewer new member additions and the strongest operating income performance in the fourth quarter. Conversely, as marketing activity typically resumes at the start of the year, the company typically experiences the weakest operating income performance during the first quarter as new customer acquisition and revenue growth lags marketing spend.

Research and Development

For the year ended December 31, 2023, the company’s research and development costs included $124.6 million.

Regulatory Environment

The company is subject to the federal self-referral prohibitions, commonly known as the Stark Law. The company is also subject to the federal Anti-Kickback Statute. The company is also subject to EU laws on data export, as it may transfer personal data from the EU to other jurisdictions, in particular the U.S. These obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other requirements or its practices. In addition, these rules are constantly under scrutiny. For example, following a decision of the Court of Justice of the EU in October 2015 (commonly referred to as the Schrems I), transferring personal data to U.S. companies that had certified as members of the U.S. Safe Harbor Scheme was declared invalid. In July 2016, the European Commission adopted the U.S.-EU Privacy Shield Framework which replaced the Safe Harbor Scheme. However, the U.S.-EU Privacy Shield Framework was also declared invalid by the Court of Justice of the EU in July 2020 (commonly referred to as Schrems II). While Schrems II affirmed the validity of corporate binding rules and standard contractual clauses as legal bases to transfer EU data to the U.S., it also put into place stricter requirements for transfers based on standard contractual clauses. In July 2023, to replace the U.S.-EU Privacy Shield, the EU and U.S. developed and entered into force the EU-U.S. Data Privacy Framework, the UK Extension for the EU-U.S. Data Privacy Framework, and the Swiss-U.S. Data Privacy Framework (collectively Data Privacy Frameworks). The Data Privacy Frameworks allow U.S. entities to self-certify compliance after which data transfers to the U.S. entity are permitted.

Where state laws are more protective than HIPAA or apply more broadly than HIPAA, or apply to different personal information than HIPAA, the company must comply with the state laws it is subject to in addition to HIPAA.

In addition, the expansion of its operations into foreign countries increases its exposure to the anti-bribery, anti-corruption, and anti-money laundering provisions of U.S. law, including the U.S. Foreign Corrupt Practices Act of 1977 (the FCPA), and corresponding foreign laws, including the U.K. Bribery Act 2010 (the U.K. Bribery Act).

The company is also subject to applicable anti-corruption laws of the jurisdictions in which it operates. Violations of the FCPA and other anti-corruption laws may result in severe criminal and civil sanctions as well as other penalties, and the SEC and the DOJ have increased their enforcement activities with respect to the FCPA. The U.K. Bribery Act is an anti-corruption law that is broader in scope than the FCPA and applies to all companies with a nexus to the United Kingdom. The company is subject to regulation by the U.S. Treasury’s Office of Foreign Assets Control (OFAC).

History

The company was founded in 2002. It was incorporated in the state of Texas in 2002 and changed its state of incorporation to the state of Delaware in 2008. The company was formerly known as Teladoc, Inc., and changed its name to Teladoc Health, Inc. in 2018.