Q3 2024 Teladoc Health Inc Earnings Call
Hello and welcome to the teledog health vertical to 2024 at Lings School. My name is Alex and I will be coordinating from the called stay. If you'd like to ask a question once the presentation has finished, please press star, followed by one on the telephone keypad.
Speaker Change: Anna Handof your host Michael Minchak, Adam Vandervoort, Lately, please go ahead.
Speaker Change: Thank you and good afternoon. Today, after the market close, we issued a press release announcing our third quarter, 2024 financial results. This press release and the accompanying slide presentation are available in the investor relation section of the telodockhealth.com website.
Speaker Change: On this call to discuss the results of our Chuk Divita, Chief Executive Officer and Mala Murthy Chief Financial Officer.
Speaker Change: During this call, we will also discuss our outlook and our prepared remarks will be followed by a question and answer session.
Speaker Change: Please note that we will be discussing certain non-gap financial measures that we believe are important in evaluating teletochelles performance.
Speaker Change: Details on the relationship between these non-gap measures to the most comparable gap measures and reconciliation's thereof can be found in the pressure lease that is posted on our website.
Speaker Change: Also, please note that certain statements made during this call will be forward-looking statements as defined by the private securities litigation reform act of 1995.
Speaker Change: So, it's forward-looking statements are subject to risks, uncertainties, and other factors that could cause the actual results for telodock health to differ materially from those expressed or implied on this call.
Speaker Change: For additional information, please refer to our cautionary statement on our press release and our filings with the SEC, all of which are available on our website.
Speaker Change: I would now like to turn the call over to Chuck.
Chuck: Thanks Mike and good afternoon everyone.
Chuck: We're pleased with our results for the quarter, including delivering integrated care revenue, adjusted EBITDAQ and membership of Upguidants, as well as better help revenue in line with prior commentary.
Chuck: Malala provide more detail on our results at a moment. And before turning to Mala, I would like to share some additional thoughts on the business having wrapped up my first full quarter CEO.
Chuck: I believe in our potential. I see many strengths to build upon, including the company's market position and scale, assets, and talented employees. We're making a lot of changes and I want to think our employees for their dedication to serving our customers and how they're leaning in to move the business forward.
Chuck: As I mentioned in the second quarter call, I also see opportunities to strengthen performance and position the company for long-term success.
Chuck: We've been addressing this with urgency.
Chuck: including streamlining our leadership structure, rationalizing priorities and improving execution.
Chuck: The operational challenges experienced earlier in the year, which can have a lingering impact on the business, underscored the importance of making progress in this regard.
Chuck: Changes have also been made to how we manage the business to sharpen a market focus, accelerate product innovation, and pursue new ways to serve our customers' needs.
For example, in US integrated care, we brought together areas previously managed separately and combined them directly under a single business leadership structure.
Chuck: We've also brought in our clinical delivery capabilities, refined shared services, and more closely aligned investments and deliverables.
There's more work ahead of us, but we're already seeing positive impacts in terms of efficiency and effectiveness, and I'm confident that we're creating a stronger foundation for the future.
These actions are also important as we look at the dynamics within the markets we're serving.
In the US market, it's clear that continued high medical cost trends and other pressures are impacting our current and prospective customers.
and in turn, they're evaluating their strategies and expecting more value from the broader healthcare ecosystem, including from virtual care.
Through our leadership position in the U.S., we see an ability to further enhance our value proposition to support these evolving needs.
This includes generating greater value from our virtual visits and touchpoints, and deepening the impact of our chronic condition management services.
We see these areas as essential to unlocking our growth potential.
Chuck: As such, this will be a core priority in terms of strategic direction and investments we're making.
Chuck: Our International Integrated Care Business is well-positioned and continues to gain strong momentum through geographic expansion in market penetration and added services to existing customers.
We've had some important wins in several markets, including in Canada.
Chuck: We expect a further investment in our international integrated care business as a core priority as well to support our growth agenda.
Chuck: With respect to better help, our current focus is on running it effectively by balancing top line growth with profitability and evaluating initiatives aimed at generating greater value from the business.
Better help this become the largest, directed consumer virtual therapy business of its kind by addressing an unmet need and serves over 1,000,000 people per year and with a consumer net promoter score of over 70.
With that said, challenges remain, including declining revenues when compared to prior periods.
Solid Progress is being made towards stabilizing results in the U.S. and growing internationally.
Mala will comment more on that in a moment.
Better help is also making progress on an initiative to provide consumers with the ability to access their coverage benefits.
Cape of the oldy milestones are on track and exploratory discussions have begun with select health plans and other potential partners.
Chuck: As I mentioned in the second quarter call, a measure to approach is being taken with this initiative, and the primary focus remains on improving direct to consumer results.
Chuck: In closing, let me highlight some key things we're rallying around to drive the business going forward.
The first is customer's interest in it.
Chuck: We operate in complex and evolving markets, and it's essential to understand the unique needs of our customers, and in turn, be able to consistently deliver solutions that demonstrate value and support their objectives.
Second, we intend to further leverage technology to drive greater scale and differentiation, and to deliver a more integrated experience for members and providers.
Chuck: We will focus our technology investments against key business priorities and balance overall spend with benefit realization objectives.
Chuck: Third, clinical excellence will continue to be a core pillar in what we do and how we differentiate our solutions in the market.
We will build on a strong track record that we already established as a company to further inform our product roadmap and how we enable and deliver services and generate results for our customers and patients.
and Fourth, we're embracing a high performance culture.
One that has advised action on collaboration and on innovation, all in the pursuit of serving our customers and driving long-term shareholder value.
We're going through a lot of changes as a company and as an industry and culture will play a critical role in shaping our future.
Chuck: We're already taking actions in support of these areas and the priorities I outlined earlier.
Chuck: As we close out the year and move into 2025, we'll remain focused on our financial performance, while also making investments to strengthen our position and ability to unlock future growth potential.
I'm gratified by the progress we're making and with our overall results for the quarter and with that I'll turn it over to Mala.
Thank you, Chuck, and good afternoon, everyone.
Third quarter consolidated revenue of $641 million, decreased 3% year of year.
Third Quarter adjusted EBITDA was 83.3 million dollars, down 6% your earlier and represented a margin of 13%.
Consolidated Net Lost Pershare in the third quarter with 19 cents, compared to a net loss per share of 35 cents in the third quarter of 2023.
Net loss per share in the third quarter included amortization of acquired intangible of 30 cents per share pre-tax.
and Stock Base Compensation Expense of 20 cents per share pre-tax.
Additionally, during the quarter, we also recorded a $3.6 million charge or two cents for share pre-tax.
Chuck: Related to sever's costs as well as least termination costs as we continue to act upon expense efficiency opportunities.
Chuck: Third quarter Fee cash flow was $79 million, up approximately 16% on a year of a year basis.
We ended the quarter with over $1.2 billion in cash and cash equivalent on the balance sheet.
Turning to our segment result.
Integrated Care Segment Revenue of $384 million increased 2.5% over the prior year period and was above the top end of our guidance range.
During the quarter, we benefited from the resolution of a prior period billing adjustment with a large client.
Chuck: which added roughly 115 pieces points to revenue growth.
Our virtual care business saw strong growth in this ad revenue, as increased membership drove additional
U.S. Integrated Care Segment Membership at Quarterand was 93.9 million members above the high end of our guidance range.
Increasing by 4% year over year and by approximately 1.5 million members sequentially.
Chuck: Chronicare ended the quarter with total program enrollment of 1.18 million. Up approximately 5% year and up slightly sequentially driven by enrollment from both existing and new clients.
Our International Integrated Care Operations continue to show strong momentum, with revenue growth in the high teams on a constant currency basis.
We are seeing continued success in winning large B2B clients.
Moving into adjacent verticals that we believe will deliver new opportunities for growth.
Average integrated care revenue per US member of $1.36 was flat sequentially and down by 5 cents versus the 5 years third quarter.
Chuck: As we have previously discussed, this dynamic is largely mixed driven, as a result of onboarding a sizable amount of new members in our general medical product.
These members typically contribute less to our average revenue per member initially, although we see opportunities to cross-sell additional products into those customers through a
Third Portrait Integrated Care Adjusted Evidda was $68 million and 8% increase over the third quarter of 2023.
Adjust the diva down margin of 17.7% was well above our guidance range of 14.5 to 16%. And represented growth of 96 basis points over the third quarter of 2023.
Chuck: We saw approximately 170 basis points of benefit to a jealousy-de-be-dum margins from the previously discussed revenue adjustment, as well as some favourability from off-extiming.
Turning to the Better Health Fettment, third quarter revenue of $257 million was down 10% versus the prior year.
and consistent with the baseline we have previously communicated.
Chuck: While there has been some variability across our channel, overall customer acquisition costs in the third quarter have remained relatively stable, albeit at elevated levels.
Revenue declined approximately 3% versus the second quarter
Chuck: Average paying users declined by 2% sequentially and were down 13% versus the prior year.
Chuck: The decline in revenue and average pain users in the third quarter was a result of fewer gross users added to the platform. As we again made a deliberate decision to refrain from pursuing inefficient member-based growth.
Importantly, average revenue per user, churn rates, and member attention have all been fairly stable or the course of 2024.
Chuck: We started to see some early signs of stability in the paying user count, with slightly positive momentum in the third quarter.
As a monthly user count at the end of September was modestly about that at the end of the month of June.
Chuck: Better help adjust the diva-dough with $15.2 million in the third quarter, down from $26 million in the prior year, and $25.5 million in the second quarter of 2024.
I Justin E. Veda, Margin of 5.9% decreased approximately 320 basis points versus the prior year and was down from 9.6% in the second quarter.
Factor is driving the decline, include the impact of law-revenue disorder, coupled with some additional add-spend in particular in the international markets at a favorable return, which helped drive the stability in a monthly user account.
Now, let me turn to guidance.
For the fourth quarter, we expect integrated care sediment revenue to be flat to up to 0.5%.
We expect a Jossid Eva Domlargen between 12.25% and 13.75%.
The Lower Suppression margin in 4Q reflects our strong third quarter margin, as well as incremental investments we plan to make in the fourth quarter to advance the priorities Chuck had discussed earlier.
Chuck: Weeks that these incremental investments to drive are roughly 125 basis point headwind to adjust the deeper down margin in the fourth quarter.
Our Ford Quarter Guidance implies full-year integrated care revenue growth in the low to mid-single-digit range, which has remained unchanged over the course of 2024.
Based on the performance today and fourth quarter outlook.
Fully our Adjusted Evident Margin is now expected to be in the range of 14.9% to 15.3%.
with the midpoint in line with the midpoint of our initial guidance provided in February.
At the midpoint of this range, a just $80 would be up approximately 20% in 2024 versus 2020-3.
In addition, with third quarter coming in about guidance, we are raising our U.S. integrated care member guidance range. And now expect to end the year at 93.5 to 94.5 million members.
For Better Help, while we are encouraged by the improved stability seen in the third quarter, based on the factors mentioned in the second quarter, we are not reinstating formal segment revenue or adjusted EBITDA guidance for the fourth quarter of full year.
Therefore, to help level set from a model extent point, we offer the following three points.
Chuck: First.
The election season has led to some uncertainty, although as the approach November, this is not had a significant impact at this stage.
However, the holiday season does present an additional area of uncertainty.
Second, as we had discussed on the second quarter call, it cost more acquisition costs remain at current levels, we would expect second half revenue to be down low double digits.
We anticipate the year overyear decline in the fourth quarter to be generally consistent with the third quarter.
and Thirds, while we historically have seen a sizable sequential step up in adjusted even the dollar's and margins in the fourth quarter versus the third quarter.
We have already been cutting back on US ads then thus far in 2024, while we are also investing incrementally across our international business in better health.
and therefore the sequential decline and aspect from the third to the fourth quarter will be less significant this year.
which we expect would lead to a much smaller step up in 4th quarter of Justinipida.
Chuck: Based on our decision to not reinstate formal guidance for the better health segment, we are therefore not offering guidance for consolidated revenue, adjusted even their net loss per share, or free cash flow for the fourth quarter or full year 2024.
As we look ahead, we wanted to provide you some color on the trends we are seeing in the business that are shaping the 2025 Alplog.
First, within the integrated care segment
The selling season in the U.S extends through the fourth quarter and we continue to aggressively work our pipeline.
Our attention rate remains above 90%.
but is down slightly versus prior years.
Boking's are tracking lower than this point in the prior year, which we believe reflects a challenging backdrop more broadly, including with respect to health plans due to various markets development.
That said, we believe contribution from new and existing customers will need to increase within membership and visit volumes.
Our International Integrated Care Business has delivered steady and predictable results over the past few years, outpacing overall segment revenue growth.
and we expect strong growth to continue next year.
Take it together, these factors could lead to 2025's full-year revenue growth. That is approximately consistent with the Ranger Growth we are projecting in the fourth quarter of 2024.
Turning to Margin.
Our 2024 guidance implies strong margin expansion.
We have realized benefits from ongoing progress we are making against cost savings and productivity initiatives and expect benefits to continue to accrue next year.
We view 2025 as being an important repositioning year for the company. As we execute against strategic initiatives aimed at strengthening our business and aligned with the priorities that Chuck has laid out earlier.
Actions we are taking to position the company for long-term success will require incremental investments as we build out various products and capabilities.
Chuck: These will help enhance our value proposition and more effectively support client objectives as we adapt to evolving market demands and pricing dynamics in the core virtual care business.
We expect these investments to ultimately unlock growth opportunities into the future and position the company to deliver sustainable, improved performance.
Chuck: Importantly, we remain committed to managing the business to an appropriate level of performance and in ever to maintain a just a deep-a-dumb margins in 2025, generally in line with 2024 levels.
Next, better help continue to be a business and transition.
We faced tough year over your comps in 2025, resulting from decline in pain, users in our existing business over the course of 2024 due to higher customer acquisition costs.
which we expect to remain elevated in 2025 and steady with current levels.
Traction from our various initiatives including insurance acceptance.
Chuck: for the International Expansion and Project Enhancedance should contribute incrementally.
helping to ameliorate headwence in the existing business and leading to greater stability in revenue on a quarter of a quarter basis as we progress over the course of the fiscal year.
Chuck: Our focus will be on prudently managing the top and bottom lines, and we won't pursue inefficient growth in our user base to ensure margin stability going forward.
Finally, I wanted to wrap up with some quick thoughts on capital allocation
Chuck: We have a high degree of financial flexibility with over $1.2 billion in cash and cash equivalence on the balance sheet as of the end of the third quarter.
With respect to the convertible bond coming due in June 2025, we currently anticipate retiring that with cash on hand at maturity.
Chuck: We are still formulating our outlook for 2021, including investments targeted to strengthen and differentiate our position.
Chuck: We believe our strong cash position, cash flow generation, and business position provides us with optionality in the future.
With that, I will turn the call back to Chuck.
Thanks, Mala. Looking ahead, we will continue to evaluate all aspects of our business and move with urgency on opportunities to drive higher levels of performance and position the company for long term success.
Chuck: Revenue growth, profitability, cash flow generation, and maintaining a strong balance sheet are key priorities as we make moves to advance our strategy.
We are committed to business success and shareholder value creation.
I look forward to sharing further details on our ongoing progress in the coming months. With that, we will open it up for questions. Operator.
Thank you. Thank you, the light has to ask you a question. Please press the Flusby 1 on the Tf. PAD.
Please limit yourselves to just one question. Thank you.
Arthur's question for today comes from a Stephanie Davis or Farclete. You'll like it so open, please go ahead.
Hey guys, congratulations to the quarter and thank you for taking my question. I was hoping that we could dig in a little bit more on that better help feed for service transition.
How was the back end transition? How long do you think payer contracting will take? And just giving you a lot of these payer relationships and emigrated care, how do you had me early conversations with payer clients about how the transition is your planning out?
Yes, thanks for the question. I think first of all, just one underscore.
the importance of us maintaining our focus on it as a consumer-oriented business model.
I think we are very focused on managing the top line.
and the profitability of the business making sure we have the U.S. business stabilized and so forth. So I just want to make sure that that is underscored as a priority. With respect to the initiative to create an ability for consumers to access their benefit coverage.
Chuck: That's progressing.
Chuck: Many of the internal capabilities that are needed are on target. We are, as I mentioned in the last quarter, doing that both internally as well as through partnerships to progress there. And we have already started some discussions with select health plans as well as other partners to advance that. So yeah, that's progressing along. But again, we're going to take a measure to approach with that initiative and make sure that as we make investments and roll that out, that they're, that they're, we're being very methodical on that.
and just stood on that and I follow up just a quick one I have to ask because I just came from the health conference.
You know, we see a lot of players saying they're looking to disrupt what you guys are doing in virtual care. We heard a lot about clients pushing back on PMPM.
Chuck: but we continue to gain a market share and lives and integrate care. So I just kind of love to hear what your things on the ground and how you're navigating that.
Well, look, I think just a few things I would touch on. The virtual visit business has been widely adopted now. If you look at how many people have access.
Chuck: to those services, whether through companies like ours and others, whether through brick and mortar, so it's pretty widely available.
I think one of the things that's important though is we operate at such scale.
in terms of the ability to deliver and deploy that to match people with providers and be able to do that within a certain timeframe, meeting the right requirements.
and that's difficult to match. And I think that that's recognized in the market.
Chuck: and that's why you continue to see our membership grow. So we understand that it's a competitive space, but we believe that our value proposition still remains strong there. I would also ask that, me, this is where the fact that we are adding members at the rate that we are doing this quarter with another.
Strong Quarter of Membership Growth, we have added 3.7 million lives year over a year and one and a half million sequentially.
Chuck: That essentially is the fuel for our land and expense strategy, which essentially we get these lives and members on our platform, and it allows a fertile ground to cross-sell additional products over time.
Love seeing it, look on third and more. Thank you guys.
Speaker Change: Thank you. Our next question comes from at Lisa Gille with JP Morgan. Your lunch now open. Please go ahead.
and thanks very much. Good afternoon. I just really want to follow up on some of the comments that you made on the 2025 filling season. So, if you think about today and the visibility you have going into 25, I think Mala made a couple of comments, one that you expected revenue growth to be cylinder to the fourth quarter, which would be flat to 2.5%. Which is below your total 20, 24 guidance. So, I'm just curious on a few things. One, you talked about retention, still above 90%, but that's lower than what you've seen historically. So, where are you losing business to and then secondly, how do I think about that land and expand?
Chuck: Opportunity, Woodshire Expectation around Membership Growth based on what you've seen thus far for the 2025 selling season. And then lastly, you also took about booking, speaking, a little bit lower. Is that specific to chronic care? Or is there something else that we should be thinking about when we think about the 2025 selling season?
Yeah, well I'll make some comments and then have Mala jump in. I think first of all, the team is very active and evaluating opportunities to close out the year strong.
Chuck: Most of the channels that we have are in line with prior levels at this point in terms of booking.
We were seeing, I would say the most head when is in the health plant space. And I think as you know, well, there are several things that are playing out there. And as companies adjust their strategies to the changing market, I would say the health plans are very adaptant navigating through that. And that will settle in, but certainly can have some pressure in the near term as...
Chuck: would say generally speaking a pretty significant delta thing going on there and I would expect that to continue into 2025.
Trends in terms of rising medical costs, other pressures.
are sort of tailwinds for businesses like ours, but that also means that there might be some headwinds in the near term here. So I think that's really where we're mostly seeing it. The other comment I would make in terms of most of our, at least the majority of our bookings and pipeline are in the CCM space. So I think that carries over with that comment as well, Mala.
Yeah, thanks, Chuck. We saw what I would add is first of all, we are, I would say, still.
in the midst of the heavy part of our selling season. So we have a little more wood to chop from a time perspective and we continue to have productive conversations with our clients.
We wanted to sort of give you all of you on what are the trends and the dynamics that we are seeing thus far.
Speaker Change: and you know how to set us up for at least preliminarily for revenue growth. Next year you mentioned a zero to two and a half percent in integrated care.
Speaker Change: I would say just a couple of other things, you know, it is certainly chronic care is the proponderance of our overall booking, so to the extent that we are seeing the transbear seeing it certainly is inclusive of chronic care.
and you know the last thing I would say is when we think about our revenue growth.
I just remind you all, certainly Bukings is important and we have other levers to grow revenue and we with under-check leadership and with the investments we are making.
are leaning on all of those levers, those include driving greater enrollment.
It includes certainly more visit volume and this is where the point that Chuck made around increasing the value for every visit in every interaction really does matter. Certainly looking at...
Pricing surgically, all of those are diverse that we would use when we think about growing revenue next year.
Okay, great. Thanks for the comments.
Thank you. I'll make a question, it comes from a Jessica Tessan of Piper Samler. Your line is now open. Please go ahead.
Jessica Tessan: Hi guys, thank you for the question. I was something to just understand as you all am engaged payers around coverage for better health, how is the competitive landscape developing? Are payers content to have maybe one virtual behavioral health partner do they want to broaden that work as possible? Are they aggressively negotiating teacher service race?
and just any nuances you call up between commercial and Medicare Advantage. And then just I'm curious about the S.T.A. burden on Teledok in a payer.
and the sponsored arrangement. Just because I would imagine tell it off me, spend some extent to generate utilization and fee for service rates. So just how should we think about the SGA burden on you all as you migrate this to a pay or pay model? Thanks.
Yeah, and again, I'll underscore a point I made earlier. The predominance of the business at BetterHelp is going to be consumer. It's a consumer driven model. It's where their strengths are. It's where a great business has been created there. So that is going to be the main focus here.
What we're trying to do is explore
of those consumers that are wanting to engage with better help.
and want to access benefit coverage. How do we most effectively do that? So it's a little bit a different angle on the challenge. That's why we're being very methodical in terms of how we're rolling it out.
So that we can identify those areas where we can do that. Now there are definitely capability capabilities that are needed to do that, and that's why we're approaching it. I think in a pretty smart way, and I'm a theoretical way to develop the capabilities we need internally to make the experience right and work with others.
Speaker Change: to bring the capabilities to bear. So, you know, I think that we are being methodical about it.
and we are going to be primarily a direct consumer model for the foreseeable future. And what I would add, Jessica, is the way we are approaching this certainly methodically, you know, the investments that we are making for the back end capabilities that Chuck has referenced in his prepared remarks and just now.
You know, we are going to do that methodically over time.
Speaker Change: you know.
Seeing the progress that we are making in the market, we certainly are having conversations with parents.
We are absolutely leveraging the relationships that we have already on our B2B side.
Speaker Change: and the last one I'll make is, you know, when you think about SGNA for this, aside from the investment for capabilities.
The way we approach think about this is...
We are spending advertising and marketing spend to bring consumers in, right?
This is a way for us to actually get more consumers in because we offer them another choice
Speaker Change: to essentially take advantage of the better help platform and product. So think of it as a way for us to leverage the marketing spend we have across consumers using it a different way.
Speaker Change: Thought I thank you.
Thank you. Our next question comes from Michael Charny of Lering Partners. You like this open? Please go ahead.
Good evening, and thanks for taking the question. I'll just stick with one here.
Yeah, Chuck Mali, you talked about some of these investments you're making in terms of reposition the business for growth. As you think about the measurement period during 25, how are you going to judge the success or lack thereof of these investments as we think about, I'm not trying to get into a long-term guidance.
Discussion, but the philosophical approach towards this reinvesting repetition of business and where your signposts are to see if the investments you're making are leading to the return that you want or not.
Speaker Change: Yeah, great question.
So every year we go through as a leadership team.
of Fairly Detailed, Excessive Exercise.
Speaker Change: to really think about our overall capital allocation.
and making sure that it does two things. One, it aligns against strategic priorities, both mirror and long term. And second, we look at balancing the investment and the level of investment.
Speaker Change: with both the timing and the amount of the returns. Right? When will we expect to see the benefits over time?
You know, we are going through that planning process as we speak to look at both the near-term and the longer-term. And we are going through the exercise of sort of...
Looking at it, these are the priorities that Chuck talked about in his prepared remarks. Ultimately, what I would say might be that it will translate into both financial metrics and, importantly, operating metrics.
Speaker Change: Right, so how do these investments?
Improve and Fethor Health Hospital, a additional revenue growth over time.
But also, how does this help from CCM conversion? We have a broad base of recruitables as being engaged and contracted with our clients. How do we get greater conversion of that which we'll translate into enrollment gains as an example?
Speaker Change: So that's the planning exercise that we are going through. We aren't done yet. You know, it is.
Speaker Change: the usual process that we are in the midst of. But I would expect that that is what all of this planning will result in, a set of both financial, but much more importantly, operating metrics that gives us confidence in the financial outcomes.
Thank you. Our next question comes from a show on the German of RBC Capital Markets. Your line is out open, please go ahead.
Yep, thanks. So on better help, Mala, you mentioned Team User Count. It shows some fun to stabilize me with a September counter, I think you said in line with where it was.
at June. Is there any more color you can show on what was helping drive that trend reversal over the quarter was that mostly from higher new user ads or didn't even see any improvements and retention or turn.
and another some seasonal dynamic that you're in, but anything else that kind of gives you confidence we could continue to see that metric now remain stable.
Speaker Change: Yeah.
Speaker Change: Thanks Sean, just a little bit of...
and Double Click into that. So, one, we certainly are as we have spoken of.
Speaker Change: Making International Priority for me that are helped for effective. You know, we have talked about incremental ads then internationally.
That is certainly a driver in us getting new user additions to the platform, which is the driver of stabilizing user count at the end of the quarter vis-a-vis in September versus June.
We are also seeing the remaining operating metrics whether it be retention, charm, et cetera.
Speaker Change: Largely stable as we have gone through 2020-24. So it really is the user growth that is being helped by the investments that we are making.
Now, the one thing that I would also just remind you all is...
Speaker Change: Q4 is certainly one quarter from a seasonal perspective where
We do judiciously modulate our ad spend just because we have typically seen seasonally higher CPAs and ad spend in in the fourth quarter.
So, you know, we said in our prepared remarks that we will pull back on our abspend in the fourth quarter relative to the third quarter, just not as sharply as we have done in prior years.
Speaker Change: Sorry, in prior quarters because we have been relatively disciplined as we have gone through this year in the other quarters from an as-bent perspective.
What I will say is when we do pull back on Atts Bend as we do in the fourth quarter, that certainly has an impact on four Cuba, it will also, as always, have some impact as we roll into Q1 of next year. That is a very typical pattern that we see at Bend vs. Member Count.
and as we again go through the year next year, even with the assumption that the CAD pricing level, they elevated, we are assuming they say stable at elevated level, we will see stabilisation as we go through the year next year.
Speaker Change: Thanks for the detail.
Speaker Change: Thank you. Our next question comes from a Sarah James of Cantholoset's Derell. Your line shall open. Please go ahead.
Thank you.
I was hoping that you could help us with a few of the moving pieces as we think about the jumping off point from 4Q So how much of the 125 basis points in investment spend is something that would continue going forward? Should we think about a benefit from add spend just moving out of an election quarter and election year?
Speaker Change: and then all of the pricing strategy and mix shifts I used to both to maybe to help us with what is a clean jumping off point and what is the orders of magnitude of how influential these pieces are? I'm getting to your guide of flat margins in 25.
Sarah, I would say, look, those are details that be certainly will provide when we come out with more detailed guidance for 2025 in February.
Speaker Change: Um...
I would say we have given you all enough of a zip code for Leer next year as we think about.
Both Revenue Growth and Adjusted EBidum Margin for Integrated Care. And you know we have given you some color for how we expect the better health business to roll to next year.
Speaker Change: I'm going to leave it to that for now. I will certainly happy to answer questions and post this call.
Speaker Change: [inaudible]
Speaker Change: The End
Speaker Change: i
High speaker team, Kni Heras.
The End
Vinnie Vierras: Vinnie Vierras.
Oh yeah, we can hear you now, sorry.
Speaker Change: [inaudible]
Thank you, and thanks for taking my questions. I want to go back to 20, 25 comments about growth of flat up.
2.5 for Integrate Care segment. Does that comment as to you and the selling season down year over year like you're trending at this point or either assumption built in in terms some some acceleration as we close the year and related to the comment as you're calling our growth in membership and visit volumes but are you seeing any offset from product mix for any pricing headbands which would cause those favorable trends to result in flat to slightly the upgrade.
Yeah, I'm yelling the first of all, can you hear us?
Yes, that we can. Great, great. So, um...
So to part and the first is, we are seeing as we set in our prepared remarks.
Speaker Change: and a decline in absolute bookings on a year over your basis.
As we stand at this point in the selling season, relative to at about the same point last year. Now, as we also said, there is still time left in the year and we are continuing to aggressively pursue all the opportunities that are in our pipeline with obviously an intent.
to convert as much of the pipeline to bookings. We thought it would be important to give you all at least some early flavor for where our bookings are coming through and therefore how that might show up in our integrated care revenue world next year.
Speaker Change: The second thing I would say is in terms of your question around membership and visits. It is absolutely true that with the increase in membership that we are seeing, we certainly are seeing robust visit revenue growth.
and that has been factored in as has the booking challenges that we are having. They've both been factored into the flat to 2.5%
Range that we are seeing right now for integrated care next year. You know, just to put a final point on visit revenue, we certainly, if you look at the third quarter of this year.
Visit Revenue has been in, you know, up solidly both from a volume perspective as well as a revenue perspective on integrated care, on the integrated care side, suddenly fueled by the membership gains that we have had. And that I would expect that to continue next year and that's been Saturday.
Speaker Change: Thank you.
Thank you. Our next question that comes from a Richard Close of Canada Code.
Galon, it's out open, please go ahead.
Richard Close: Great, thank you for the questions. Chop, can you talk a little bit more about improving the products that you call out?
I guess Mala also called out the evolving market demand. Is there anything specific that you need to do on the product for an improved retention with clients or sign new business? I just curious anything specific there.
Speaker Change: Yeah, I think there's a few things I would point out. One is, you know, in some of these investments we're speaking of, as well as, you know, I alluded to in my prepared remarks about improving the performance management of these things is, you know, we've sold and have a lot of business in house today.
and what we want to make sure is that we are generating appropriate performance out of what we have today. So for example, making sure we're activating visits appropriately with the broad reach that we have. That we are enrolling and activating and retaining.
Speaker Change: chronic condition management members.
So a lot of the things that we're doing are actually going to be improving our ability to drive more consistent performance and I believe even better performance going forward even though we do a good job There's a lot of recruitables out there for us to activate and we're working on strategies right now to do that. So I think that coupled with what I would say more normal product features and enhancements
depending on which product as well as how they work and a more integrated fashion together.
and that's an area of focus and I think that makes some good progress there. That would also say in terms of the comment around making visits more valuable.
Speaker Change: I think over time.
Again, back to the comments I made earlier around sort of the broader adoption already, a virtual visits. Is how do we make those visits more impactful to the patient? And how do we make those visits more impactful for the client that's enabling that access?
You know, the health plans have certain objectives and strategies that they are trying to get everyone into the liver system.
to line up to support. And we are part of that delivery system and we should be over time be able to activate the consistent with their strategies that creates value.
and the C-25, there are capabilities that we are building that will be in place for 2025 that will put more information at the point of care and allow us to activate against that. It's a little bit longer of a journey, but not that far along in terms of when we'll start to see some benefit of that. So I think there's many things that we're focused on, including as we close out the year to make sure that even with the information we've shared around 2025 bookings and retention, and we're certainly not stopping there, and we're certainly working on things to impact 2025.
Speaker Change: Okay, thank you.
Thank you. Our next question comes from a Glennet Sandhan, July or Jeffries. You'll find it so open, please go ahead.
Oh yeah thanks for taking my questions. Chuck I just wanted to follow up. I mean when we talk about the selling season it sounds like retention is a little bit lower, booking is a little bit lower.
Speaker Change: and you're making some investments in maybe positioning 25 as a transition year. You've been on board now for almost five months and I'm just calling you sort of laid out some pretty broad based things. But what I got from trying to really understand, maybe you can elaborate a little bit more clearly, is what you're doing that you think is meaningfully different than your predecessor. Because it kind of sounds like...
Speaker Change: You know, the board and the senior manager believe you have the right assets and strategy, maybe it's just an operational issue and maybe some of these investments will fix some of those operations. This is just not clear to me, I guess, what's meaningfully different. So any sort of elaboration of clarity would be helpful. Thanks.
Yeah, I'll give you some examples.
Speaker Change: Alright.
One of the first observations I had coming in is an area where I think we were styming innovation and we were impacting our performance and you know beyond what would happen earlier in the year which you know has had an impact on retention. So that's been discussed before. But I'll give you a change of example. When you look at the responsibilities around market requirements.
Product Development, Delivery of the solution in terms of day-to-day and managing performance against that. Those all were in four separate leaders.
and when you click down below that.
Multiple of areas that are accountability for pieces in parts of delivering what we deliver.
We have now brought that under a singular structure. We've been able to generate a-
and millions of dollars of annual savings as a result of those moves.
and Spatup are affected this and you've seen that come through in our results this court. So there are a number of tangible things that we are doing in that regard. Some of the capabilities that I've been talking about, they don't exist at the company today and didn't exist, but they will enable us to take advantage of the business that we've already sold. So there's a number of things that we have done over the last several months.
and I think have already demonstrated some effectiveness in our results as well as position as better for the future.
Okay, thanks for the comments.
Speaker Change: Thank you.
Yeah, thanks for watching, I want to have a talk about
Speaker Change: sort of what you're seeing in terms of utilization within the integrated care segment. You know, I think you'd be doing civil math. It looks like...
Speaker Change: and the utilization.
As a percent of total members it is down, so every year. I think maybe how much of that is just you have just a lot of new members coming on board.
and that's what it's sort of that kind of penetration maybe a same store basis look like.
in a four-hour client that had been home to platform four over a year and now that's trending and I guess that's relieved that is...
Speaker Change: and you know, to accept that you talked to the pass about driving more valuable experience. You know, how does show up in the numbers here in the middle of the lab, where the progress is there. Thanks.
Speaker Change: Yeah, Charles, I was sort of a dress it in a couple of different pieces.
and Super Super All.
Speaker Change: Going back to question on visits and utilization.
Speaker Change: A few things, right? First, let's talk about a number of visits and sort of the utilization metric, and equally importantly, talk about what that occurs in terms of revenue, because they are both important.
And what I would say to you is certainly you, you said it yourself when you are adding the number of members that we have done at the pace we have done over the past.
Several quarters.
Speaker Change: Certainly the engagement and the utilization metrics will take a little bit of time for us to fully unfurl across the new member base. What I am seeing in the results is...
Speaker Change: that we are seeing strong visit volume growth.
And importantly, we are seeing strong robust visit revenue growth.
Speaker Change: and that is certainly both the impact of the volume growth and the fact that we are seeing strength.
in a creative visit volume, such as on the mental health side, certainly seeing visit growth on primary 360. So we are seeing broad-based visit volume growth and that is certainly turning into stronger visit revenue growth.
So that is something that we will, as I said in my answer to Jelene's question.
Speaker Change: Certainly something that we are I expect.
Speaker Change: for us to continue to invest in and I'm looking forward to seeing continued growth.
in that and, you know, how continue to see visits, certainly an engagement improve across the broader member population that we have now.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Alan Latz of Bank of America. Your line is now open. Please go ahead.
Good afternoon and thanks for taking the questions. I want to follow up on Glenn's question and it's one for you Chuck. Obviously you're making some investments in 4Q and that's going to continue in the 2021.
If we take a step back here and look at Caledock today, there's about 425 million 450 million being spent today on tech development and capitalized software, which I would assume has to be larger than some of your, you know, the majority of your peers.
is that the right amount for teledoctor spending on an annual basis? And then as you've outlined some of the ways you're going to be evolving some of that spend, can you talk about maybe what percent of that spend is going to be redirected? I'm just trying to get a sense of how much of the capital deployment is going to evolve over, let's say, the next year, too.
Speaker Change: Yeah, thanks for the question.
Well my view is that we already are spending enough money on on not
Speaker Change: That that space.
Speaker Change: So what we're looking at doing, we've been doing this pretty aggressively over the last several months is we're called rationalizing that portfolio, making sure it's aligned to the objectives and apparatus we have so that we can do both. We can bring that overall spend down over time and we can free up capacity to invest in some capabilities that are going to important to our future. So I would agree with you that that's an area that's been continued focus. Now I will say that the companies make good progress.
Speaker Change: over the last couple of years.
Speaker Change: and Managing that Spend, I think that's come down, the total T&D's come down. I would expect that you would see us continue with that. And that's really the mode we're operating in, which is...
How do we create efficiencies so that we can create capacity to do both deliver a solid financial performance for the company and make investments for the future and that's the mindset and that's what we've been able to do.
Speaker Change: Appreciate the color. Thanks.
Thank you. I'm next question, come from Elizabeth Anderson of Evoical ISI. Good night and I'll open. Please go ahead.
Hi guys, this is Samantha Toulon for Lizzet Anderson. I just made a little bit more of a technical question and it looks like you guys have pretty big step up in GNA in the quarter. Should we view this as more of a normalized baseline and then maybe perhaps a little bit from the portion of that 125 basis point?
Investment Integrated Care, or something to call out for our Matt Step Up.
Speaker Change: So, some of your this is, I would say that...
We had a few one-off investments that we put into the fourth quarter as we talked about. And so I would say, take that as a one-time, not as something that you would expect to continue on from a wrong rate perspective.
Speaker Change: Look, as we think about 2025 and our overall expense base across the company.
Speaker Change: We will certainly be...
Speaker Change: Paying close attention to what is our expense based relative to our revenue growth, both on an integrated care side as well as...
The Better Health Side. In our prepared comments, we have made plenty of comments around managing the business effectively paying attention to both the top and the bottom line continuing to focus on financial returns across the business.
So I expect that as we finish our planning processes, we will certainly pay attention to every aspect of our invest in our Bayes expense base across all of the PNL line items.
Speaker Change: God, thank you.
Speaker Change: Thank you. We will take note of the questions for today, so that concludes today's conference cool. Thank you all for joining. You may now disconnect your lines.
Speaker Change: [inaudible]