Michael Minchak: Thank you, and good afternoon. Today, after the market close, we issued a press release announcing our Q3 2026 financial results. This press release and the accompanying slide presentation are available in the investor relations section of the teladochealth.com website. On this call to discuss the results will be Chuck Divita, Chief Executive Officer, and Mike Grasher, Chief Financial Officer. During this call, we will also discuss our outlook, and our prepared remarks will be followed by a question and answer session. Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating our performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website.
Michael Minchak: During this call, we will make forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, without limitation, statements regarding our financial and operational outlook, the timing, availability, market response, and performance of new products, including Teladoc One, expected BetterHelp insurance revenue and exit run rate, expected cash pay trends, provider network capacity, advertising and marketing spending and efficiency, the timing and impact of our BetterHelp insurance rollout, and the expected benefits of the actions we are taking. Such statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the cautionary statement in today's earnings release and the risk factors in our most recent Form 10-K and Form 10-Q, including risks relating specifically to each of our reporting segments.
Michael Minchak: I would now like to turn the call over to Chuck.
Chuck Divita: Thanks, Mike. This quarter reflected solid execution across the business and underlying traction on initiatives supporting our strategic priorities. There's more work ahead, but we're encouraged by the progress made in the quarter. Before I get started, I would like to welcome Mike Grasher, our new Chief Financial Officer, to the call. Mike joined in late August and brings over 12 years of CFO experience at both publicly traded and privately held companies. We're excited to have him on board, and you'll hear from Mike in a moment when he covers our Q3 results in more detail and our outlook. As we look at the business today, we remain highly focused on advancing the priorities we believe are most important to the long-term success of the company.
Chuck Divita: With respect to the Q3 results, consolidated revenue came in near the upper end of our guidance range and adjusted EBITDA above guidance, with both segments contributing to the quarter's performance. Integrated Care delivered revenue near the high end of the guidance range and adjusted EBITDA margin above guidance. BetterHelp's revenue was also in the upper end of the guidance range, driven by strong insurance revenue growth and better than anticipated cash pay performance. We do continue to expect ongoing challenges in cash pay going forward for the reasons we've spoken about previously. As we consider the market more broadly as a company, we continue to see opportunities for virtual care to play an increasing role in addressing key challenges in healthcare by helping address rising healthcare costs and affordability challenges through solutions designed to lower costs, increase access, and deliver outcomes.
Chuck Divita: By leveraging our services, clinical breadth, and technology to improve the health and wellbeing of people, including those impacted by chronic disease. By championing the importance of mental health to overall health and creating access to services at scale through both of our segments. By helping alleviate pressure on the healthcare delivery system, extending provider capacity, and deploying purpose-built technology to support virtual care. We believe we are well-positioned against this backdrop, and these themes underscore our organizational focus and the four key strategic priorities we are advancing to drive market differentiation and performance. I will touch on each priority and provide an update on progress since our last earnings call. Our first priority is enhancing our Integrated Care solutions for the US market to deliver greater value and impact for clients and the people we serve.
Chuck Divita: This has been a key driver of our innovation agenda, and in July, we announced Teladoc One, a first of its kind offering and comprehensive care model that goes beyond condition-specific programs to help detect health risk earlier, engage individuals more comprehensively, and scale outcomes across populations. The underlying care model is delivered through a multidisciplinary care team, complemented by adaptive AI-driven insights from our Pulse intelligence engine, and uniquely leverages our clinical breadth, technology, engagement, and support capabilities. During the quarter, we moved from announcement towards execution, including activating initial launch partners, beginning to engage patients in the new care model, and preparing for broader market availability in 2027. As with any new offering, we expect the pipeline and commercial momentum to build over time.
Chuck Divita: We are encouraged by the level of client engagement and member feedback on Teladoc One at this point, reinforcing our view that clients are looking for solutions that can deliver a more connected experience, address more care needs, and demonstrate greater accountability for outcomes and impact. We also continue to advance initiatives to increase consumer awareness of our services and make it easier for people to access them. This includes enhancements to our Teladoc Health app and digital experience, sunsetting legacy platforms, and expanding our presence with other consumer-facing organizations. The overarching goal is to broaden our reach and further support the ability for people to benefit from our services. Taken together, we believe these and other initiatives will further our ability to create greater value for clients and members and serve to further strengthen our competitive differentiation.
Chuck Divita: Another key priority is to build on our global position to serve unique market needs, including through our hybrid care models within Integrated Care that I have spoken about before. Hybrid care, which has been an important source of growth outside the US, supports local care delivery organizations by bringing virtual clinical services to physical care settings through our technology. We believe the market dynamics supporting the adoption of our hybrid care models in other countries are also increasingly prevalent with hospitals and health systems in the US, including healthcare workforce and capacity challenges, financial pressures, and the need to improve access for underserved and rural communities. As a result, we see an opportunity to leverage our experience in hybrid care within the US to support future growth.
Chuck Divita: To advance our position, last week, we completed the acquisition of Teledine Health, which provides virtual clinical services to US hospitals and health systems, including leveraging Teladoc's technology to deliver virtual services in physical settings. This acquisition expands our ability to provide services to this part of the healthcare market, in addition to the technology products we are offering them today. We are excited to work with the Teledine team in this more strategic manner as we build our hybrid care business in the US. We also continue to innovate the underlying technology utilized in this area. For example, earlier this month, we introduced new AI-powered capabilities integrated within our Solo platform that bring contact-free vital sign measurement and ambient clinical documentation directly into clinical workflows. These capabilities are designed to help reduce administrative burden, improve efficiency, and support patient care.
Chuck Divita: Our third priority is leveraging our scaled position in mental health, in Integrated Care and BetterHelp, to address the unmet need and underlying demand for these services. With respect to BetterHelp, the business continues to undergo an important pivot towards more of an in-network model in the US, given ongoing pressure in the cash pay market. We believe expanding insurance access can help create a more durable position for BetterHelp over time. As discussed in the Q2 earnings call, we are executing important actions to lean into this insurance opportunity and scale that part of the business, including building on the national footprint we established during the Q2. These include initiatives to expand network capacity, evolve BetterHelp's advertising and marketing approach to increasingly reflect insurance objectives, and reduce near-term emphasis on non-US markets to realign resources.
Chuck Divita: While there is considerable work ahead, we are seeing constructive initial traction from these initiatives in terms of their intended impact. Insurance revenue for the quarter was $32 million, which exceeded the high end of the range of our expectations. Weekly insurance-covered sessions have continued to grow and recently achieved 27,000 sessions per week, representing an annualized insurance revenue run rate of over $140 million on that basis. This compares to the $110 million annualized revenue run rate from weekly sessions referenced in our Q2 earnings call. We also continue to see the scaling of insurance reflected in overall business metrics, including 36% of acquired US users in the Q3 coming from insurance, up approximately eight percentage points from the Q2. From a capacity perspective, over 3,000 therapists were added to the network during the quarter, bringing the aggregate number that had been credentialed to over 11,000.
Chuck Divita: While early, other metrics reflecting available capacity have generally trended positively since the Q2, including levels of capacity on a market and payer basis, as well as therapists active on the platform and those accepting new patients. We are also making improvements to our platform, including scheduling and matching capabilities, streamlining provider workflows, and new technology and AI-enabled tools to reduce administrative burden. In addition, local market dynamics are being continuously assessed and targeted adjustments made to support long-term network capacity and expansion, including respective therapist compensation models. As we saw in the Q3, BetterHelp continues to adapt its advertising and marketing approach to reflect insurance priorities.
Chuck Divita: And although cash pay performance was better than anticipated for the quarter, we expect ongoing pressure in the cash pay market, including as we further evolve BetterHelp's approach to advertising and marketing and continuing to lower overall spending levels going forward. This includes a further reduction in Q4. While we typically see reduced spending due to holiday advertising dynamics, we expect a more meaningful sequential quarterly reduction compared to prior years for the reasons I mentioned. And finally, our fourth strategic priority is driving operational excellence to more consistently deliver results, strengthen performance, and improve efficiency. We have made considerable progress on this priority over time, including streamlining the organization, managing our cost structure, improving the efficiency of our operations, and advancing technological capabilities.
Chuck Divita: For example, we have seen a 30% increase in member self-service interactions over the last year in the US for Integrated Care through AI-enabled digital experiences and other enhancements. And we are also leveraging AI-assisted quality assurance and operational controls to achieve high levels of accuracy for client configuration and onboarding, improving both efficiency and implementation quality. These and other initiatives are helping us deliver strong adjusted EBITDA margin despite the gross margin pressure we have seen over recent years. And we have also made progress in areas such as stock-based compensation, rationalizing CapEx, and improving other measures. As such, operational excellence will continue to be an area of focus for us.
Chuck Divita: As we look towards the remainder of 2026 and into next year, we see the healthcare environment remaining dynamic as health plans adjust to business uncertainties, regulatory changes, and medical cost drivers, employers grapple with rising healthcare costs and priorities to support their business objectives, and care delivery organizations address workforce needs, technology advancements, and other factors. And we continue to see these areas reflected in the current operating environment, the selling season, and conversations with clients, and how we are advancing our value proposition. And while decisions are still being made, overall bookings through Q3 have generally progressed in line with our expectations. We will continue to focus on pursuing the business opportunities ahead of us and navigating challenges to drive performance of the company. In Integrated Care, these include factors such as broader macroeconomic conditions, healthcare market trends, and the competitive environment.
Chuck Divita: And we believe our innovation agenda, including new offerings such as Teladoc One, our comprehensive approach to virtual care, the expansion of hybrid care models, and increasing the awareness, access, and usage of our services will contribute to our long-term market position. Within BetterHelp, we also continue to see opportunities in mental health given the unmet need and demand for these services. Growing in-network access remains our top priority in this segment, and we believe the initiatives we are advancing will support continued growth of the insurance business. And over time, BetterHelp's ability to offer consumers a choice of both insurance and cash pay in the US, together with the longer-term potential we see in non-US markets, will support our commitment to improving the durability of the business. With that overview, let me turn it over to Mike Rascher to go over our financial results. Mike?
Mike Grasher: Thanks, Chuck. I would like to start by saying that I am truly grateful and excited to be joining Teladoc at this pivotal time. I look forward to working with Chuck and the leadership team as a strategic thought partner. Together, we are focused on operational excellence, advancing our key initiatives, and delivering improved financial performance for shareholders. With that, let's move on to Q3 results. Consolidated revenue was $605 million, down 3.4% on a year-over-year basis, but towards the high end of our guidance range, as solid performance in Integrated Care and strong BetterHelp insurance growth was partially offset by ongoing headwinds in BetterHelp's cash pay revenue. Consolidated adjusted EBITDA of $79 million grew 13.5% from the prior year and was above the high end of our guidance range.
Mike Grasher: Consolidated adjusted EBITDA margins increased approximately 200 basis points from the prior year to 13.1%, largely due to approximately 180 basis points of margin improvement in Integrated Care. Net loss per share was $0.15, comparing favorably to the $0.28 per share loss in the prior year period. 2026 results included the following pre-tax impacts: amortization of intangible assets of $0.49 per share, stock-based compensation expense of $0.06 per share, and restructuring costs of $0.02 per share. Free cash flow was $76 million in Q3, bringing year-to-date free cash flow to $85 million. We continue to have a strong liquidity position as we ended the quarter with $850 million in cash and cash equivalents, up $76 million sequentially.
Mike Grasher: Our leverage ratio continues to improve as net debt to trailing adjusted EBITDA declines to 0.5 times at quarter end, compared to 1 time in the year ago quarter. Looking at the segments, Integrated Care revenue was $398 million, above the midpoint of the guidance range, boosted by better-than-expected chronic care performance. Year-over-year growth of 2.3% reflected continued strong international performance, which grew double digits, as well as growth in chronic care and visits revenue, which was partially offset by lower subscription revenue. M&A completed in the previous four quarters provided a roughly 30 basis point tailwind to segment growth in the quarter. US Integrated Care membership ended the quarter at 100.1 million members in the upper half of our guidance range.
Mike Grasher: Total chronic care program enrollment grew 15% on a year-over-year basis and was up 6% sequentially, reaching 1.34 million at quarter end, driven by adoption of our bundled solutions and improvements to our member engagement strategies. Integrated Care adjusted EBITDA was $75 million, up 13.3% over the prior year. Adjusted EBITDA margin of 18.8% came in well above the high end of our guidance range and increased by approximately 180 basis points year-over-year. Importantly, margin expansion occurred despite the ongoing mix shift toward visit-based arrangements, reflecting continued progress on productivity initiatives and disciplined expense management. BetterHelp segment revenue was $207 million in the quarter, reflecting a 12.8% decline from the prior year, still near the upper end of our guidance range, with upside in both cash pay and insurance. The year-over-year decline reflected lower cash pay revenue versus the year ago period in both the US and non-US markets.
Mike Grasher: Insurance revenue of $32 million exceeded the high end of the expectation discussed on our Q2 call and represented a $10 million sequential increase, reflecting continued demand and progress expanding capacity across the network. Average total paying users for BetterHelp of 336,000 declined 12% year-over-year and 3% sequentially, as the expected reduction in cash pay users was partly offset by strong growth in insurance users. BetterHelp adjusted EBITDA was $4 million in the quarter, representing a margin of 2.2%, near the high end of the guidance range and up 55 bps versus the prior year period. Mix driven gross margin pressure and investments to support the scaling of insurance were more than offset by a 27% year-over-year reduction in advertising and marketing spend. Turning to guidance. On a consolidated basis, we now expect 2026 revenue of $2.39 billion to $2.44 billion.
Mike Grasher: This represents a $13 million increase at the midpoint versus the prior range, driven largely by the updated BetterHelp outlook. We expect adjusted EBITDA of $277 million to $303 million, up $3 million at the midpoint versus our prior range, and representing approximately 90 bps of margin expansion versus 2025. We have narrowed the range for free cash flow, which is now expected to be $135 million to $165 million with the midpoint unchanged. We continue to expect stock-based compensation expense to be below $50 million in 2026, representing a decline of more than 35% from the prior year. The full year net loss per share range has been narrowed to a loss of $0.95 per share to a loss of $0.75 per share, with the midpoint improving modestly.
Mike Grasher: Please note that our cash flow and net loss per share guidance ranges do not incorporate any potential impact from changes to our current debt structure. For the Q4, we expect consolidated revenue in the range of $569 million to $615 million and adjusted EBITDA of $74 million to $100 million. Moving to the segments. For Integrated Care, we now expect 2026 revenue growth of 1.1% to 2.1%, with the midpoint remaining constant with the prior guidance range. We are raising our 2026 adjusted EBITDA margin range to 16% to 16.6%, up approximately 30 bps at the midpoint versus our prior guidance range and representing approximately 115 bps of the year-over-year growth. For the Q4, we anticipate Integrated Care revenue to be flat to up 3.8% versus the prior year.
Mike Grasher: Q4 adjusted EBITDA margin is expected to be in the range of 14.5% to 16.8%, with adjusted EBITDA dollars essentially flat at the midpoint versus the prior year. Given Integrated Care's strong adjusted EBITDA outperformance in the Q3, we now plan to make measured incremental investments into strategic growth initiatives during the Q4. Moving to the BetterHelp segment. Following the outperformance in the Q3 relative to the guidance midpoint, we now expect 2026 revenue to decline 16.1% to 12.9% versus 2025. The year-over-year comparison reflects continued headwinds in US cash pay and to a lesser extent in non-US markets, partly offset by growth in insurance revenue. We remain encouraged by the ongoing progress in insurance and expect to generate insurance revenue of $99 million to $105 million in 2026, with the midpoint of the range increasing by approximately $4 million.
Mike Grasher: The increase in insurance revenue expectations reflects continued progress across user acquisition, therapist capacity, and session growth. We expect BetterHelp adjusted EBITDA margin of 2.7% to 4.3% for the full year, with the midpoint down approximately 30 basis points versus our prior guidance and down approximately 90 basis points versus the prior year, reflecting the impact of revenue mix, investments to support the scaling of insurance, and a reduction in advertising and marketing expense in the mid-20% range versus 2025 levels. For Q4, we expect BetterHelp segment revenue to be down 31.5% to down 18.5%, with insurance revenue expected to be in the range of $32 million to $38 million. We anticipate adjusted EBITDA margin of 9.2% to 15.1%.
Mike Grasher: Recall that Q4 is impacted by unique seasonal factors, including a moderation in session utilization as well as holiday ad pricing dynamics that lead us to pull back on our advertising and marketing spend, as it is less efficient during this period. As Chuck mentioned, we expect a more meaningful sequential quarterly reduction this year compared to prior years. As would typically be the case, we intend to provide formal consolidated and segment guidance for next year during our Q4 earnings call. However, since there are several important moving parts to the BetterHelp transition we are executing, we thought it would be helpful to provide some directional commentary on BetterHelp as we think about 2027 in the context of what we are seeing in the business today.
Mike Grasher: With respect to insurance, as we continue to execute on increasing provider capacity, improving therapist engagement, and growing utilization of BetterHelp services, we expect continued growth in 2027. We look to build on the insurance momentum we are currently seeing with a goal of sequential quarterly improvement over the course of 2027 and a goal of achieving an annualized revenue run rate of at least $200 million as we exit 2027. Regarding cash pay, we expect a continued challenging environment in 2027 as BetterHelp continues to evolve its advertising and marketing approach, including lower overall spending levels, as we spoke about earlier. Note that in Q3 2026, the first full quarter since we began implementing the additional actions to pivot the business, BetterHelp's advertising and marketing spend declined by 27% from the prior year's quarter.
Mike Grasher: Looking at 2027, we would expect a similar level of spending to decline in the mid to high 20% range for the full year of 2027 with these actions more fully underway for the year. Given the correlation we've seen between advertising spending and cash pay user acquisition, we would anticipate these changes to impact BetterHelp's revenues, excluding insurance, generally in a similar corresponding manner. Turning to our balance sheet, we remain focused on maintaining financial flexibility while strengthening our capital structure. We currently intend to address the June 2027 maturity of the $1 billion in convertible notes through a two-phase approach subject to market conditions. The first phase would potentially involve repurchasing a substantial portion of the outstanding notes using a combination of available cash and proceeds from more traditional debt financing, potentially before year-end.
Mike Grasher: We would then expect to repay the remaining balance with cash at maturity in June 2027. Following the June 2027 maturity, we expect to have a meaningfully lower gross debt position. As you have heard from us over the course of this call, while there is more work ahead, this was a solid quarter driven by execution and continued progress across our key strategic priorities. With that, I will turn it back over to Chuck.
Chuck Divita: Thanks, Mike. Our overarching objective is to be the most trusted leader in virtual care, creating value for our clients around the world and delivering outcomes that matter to patients, clients, and other stakeholders. We believe virtual care is a catalyst for better health, and we intend to build on our strengths as we move forward. Our organizational focus and strategic priorities are aimed at driving performance and advancing our position, impact, and differentiation within a broader healthcare industry that faces ongoing challenges, and to play a constructive and increasing role in addressing them. It is why we have leaned into product innovation, expanded our care models, and invested in our technology, and why we are also highly focused on scaling insurance access at BetterHelp and pivoting its business model. This orientation will continue to guide our investments and business execution. With that, we are now ready for questions. Operator?
Operator: We will now begin the question and answer session. Please limit yourself to one question per person. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Allen Lutz of Bank of America. Allen, your line is open.
Allen Lutz: Good afternoon, and thanks for taking the questions. I appreciate all the color so far. Wanted to talk a little bit, Chuck, about the BetterHelp transition here. You mentioned 11,000 therapists in total taking insurance to date. You onboarded, it appears about 3,000 this quarter. That is more than the 2,000 you added last quarter and the 1,500 in the quarter before that. Can you talk about what you are learning there and why the therapists that you are getting each quarter is increasing? Are you getting any scale benefits there? I would love to hear where you are having success, where you have some work to do there, and how to think about the trajectory of those therapists taking insurance over the next couple quarters. Thank you.
Chuck Divita: Yeah. Thanks, Allen. Appreciate the questions there. Yeah, we have been very encouraged by the progress we are making in insurance. I think the team is doing a great job in terms of accelerating our ability to credential and onboard therapists. We are, I think, getting some scale benefit there. There is a number of actions that we are doing now that we have this national footprint that we established in Q2 that are also helping us. There is a number of things that the team is going after in terms of not just adding therapists to the network, which is important, but also making sure that we have an increase in active therapists on the platform, therapists that are accepting new patients, looking at capacity on both a market basis as well as a payer basis. There is a number of things that go into that.
Chuck Divita: We are making some really good progress, as you noted. We are taking a look at a number of things. Certainly compensation programs, thinking about how do we evolve those programs to reflect local market conditions and create some more predictability in terms of compensation for therapists, really ultimately gaining more of their roster and more consistency in that. We are also making a lot of investments and changes to the platform itself, looking at ways that we can increase efficiency, both for the therapist as well as the patient, and just ways to reduce the administrative burden and make it really easy to do business with us in this area. We are going to continue to do that. We have been excited about the progress so far, and we are going to keep it up.
Operator: Our next question comes from the line of Richard Close with Canaccord Genuity. Richard, your line is open.
Richard Close: Yeah. Good afternoon. Thanks for the questions. Michael, welcome to Teladoc. I guess, Chuck or Michael, with respect to cash pay, I think you said in Q3 it was better than expected, and I was curious if you could give some comments around why you think that did better. With respect to Q4 and the guidance there, appreciate the comments, but I am curious, with the BetterHelp guidance, how much of it do you think is your proactive actions in terms of trying to pivot the business versus maybe some other external factors like the current economic environment or anything like that? Just curious your thoughts.
Chuck Divita: Yeah. Thanks, Richard. I think we were gratified in the Q3 results in terms of the cash pay performing better than we had anticipated, notwithstanding the pressures that are there. I think the team has done a nice job of implementing the actions we talked about in the Q2 and really looking to balance our approach to balance the demand for insurance in terms of capacity, but also manage the cash pay side. We saw a bit favorable customer acquisition costs, some improvements in a few metrics. But again, I think we just do want to reinforce that there's continued downward pressure on the cash pay. But better than we anticipated in the Q3. When you look at the Q4, as you know, we have more uncertainty in the Q4 with respect to the holiday advertising and dynamics that are there.
Chuck Divita: We do expect a more sequential decline in advertising in the Q4 for the reasons we mentioned. And we have this 50-state presence, and insurance presence out there as well. So we're taking a look at all of those factors in terms of that guidance. I would say that the more meaningful part of your question and the answer here is that reduction in ad spending, given the correlation that we've historically seen with the level of ad spending relative to cash pay user acquisition, our reduction in advertising in the Q4 is a major driver there. And then, of course, there's additional uncertainties. This is sort of new territory for us in terms of the scale of what we have insurance now, and we've been building it.
Chuck Divita: Last year's Q4 was about $7 million in revenues for insurance and a smaller portion of the book, and it's growing. So we want to see how all that plays out in the Q4. We've kind of taken all that into account in how we thought about guidance.
Mike Grasher: Thank you.
Operator: Our next question comes from the line of Lisa Gill with JPMorgan. Lisa, your line is open.
Lisa Gill: Thanks very much. Good afternoon. Chuck, I want to go back to your comments around the selling season. I love to ask this on the Q3 call. You talked about bookings through Q3 in line, but I just want to better understand when I think about Integrated Care for 2027. I guess a couple of things. One, when you think about those bookings, what are your clients buying, whether you think about health plans or employers for 2027, and how do I think about Teladoc One? I know that the launch will come in 2027. How meaningful can that be, and how big of part of the conversation is that as we think about the 2027 selling season?
Chuck Divita: Yeah. Thanks, Lisa. I think, first of all, as we've talked about before, I see the operating environment really in line with the comments that I made earlier, as well as last few quarters, and really seeing the challenges in the health plan market, as they navigate through a number of aspects of their business. Employers, of course, looking at those high and rising costs and how they're evaluating their programs. So that environment continues to be out there. I think for us, what's been exciting is being able to describe the innovation agenda we have and how our value proposition is evolving and how we can serve them more comprehensively to help them address things across broader populations. And I think that's allowed us the opportunity to talk about things a bit more strategically in terms of the value and benefits of working with us.
Chuck Divita: All of that has played into the selling season. Those are showing up in our client conversations and, of course, the activity. I think more broadly, that sort of overall environment, we're seeing it show up in the selling season. Like I said, bookings are generally in line with where we expect it to be, and they're really looking for things that drive outcomes, that they can see demonstrated ROI, that we can handle things more comprehensively, that we can reduce fragmentation, which is significantly out there in terms of all the different point solutions. And really why, to your point, we've leaned into innovation, including Teladoc One, which is a really, I think, a new and exciting model for us in terms of the ability to us to bring our comprehensive model to the market.
Chuck Divita: Not focused on a singular, fragmented product category or a singular condition, but looking more holistically at what the care needs are. As I mentioned in my prepared remarks, we have moved from announcement to execution. We have got initial launch partners. We are starting to engage patients in the new model, and those are giving us additional data points and proof points as we talk to clients. Of course, we will have Teladoc One more broadly available for 2027. There is a normal commercial motion in terms of the selling cycle to get those things to market. We do expect to see some benefit in 2027 from Teladoc One, and of course, building further in 2028, given the selling cycle.
Operator: Our next question comes from the line of Sarah James with Cantor Fitzgerald. Sarah, your line is open.
Sarah James: Thank you. I wanted to dig in a little bit more on the bridge for Integrated Care EBITDA margins. You guys obviously did very well in Q3, and that you said it gave you an opportunity to make some incremental investments. As I think about bridging Q3 to Q4, you have got about 315 bps of pressure. I know last year's flu was 110 sequentially. I am just wondering, how does that amount compare to what you have baked in this year versus how much is the incremental investments? Do those investments carry into 2027? Thanks.
Chuck Divita: Yeah, I will make some comments and then see if Mike wants to add anything. We did outperform in the third quarter, as you mentioned, in Integrated Care, and as we thought about the fourth quarter and the full year, we maintained the full year, generally where it was. There are a number of moving parts in the fourth quarter, various puts and takes that overall sort of tend to offset each other. But we have got some FX pressures given where the currency markets have gone. We have thought about that. Of course, infectious disease and flu season, like you referenced, generally, we have assumed that that is similar to what we saw in 2025. We also baked in whatever additional benefit we get from that small acquisition I mentioned in my comments. Really do not see that as a material driver in the fourth quarter.
Chuck Divita: So all in, we felt good about the full year guidance and maintained it, given those various moving parts. I do not know, Mike, if you want to add anything to that further.
Mike Grasher: No, I think that the Q3 results, really Q3 was dynamic and that there was that little upside to revenue. There was OpEx coming in lower. So it really all kind of came together for Q3, and I think you are seeing part of that as well.
Chuck Divita: Yep. Then, as I think we mentioned earlier, taking the opportunity to invest in some additional growth opportunities we are looking for in 2027, given the outperformance in the Q3.
Sarah James: Thank you.
Operator: Our next question comes from the line of Jessica Tassan with Piper Sandler. Jessica, your line is open.
Jessica Tassan: Hi, guys. Thank you very much for the question. Congrats on the solid results and nice to meet you, Mike. We appreciate the update on the BetterHelp insurance paid volume and annualized revenue run rate. Curious to know, is that approximately $100 per insurance paid visit, a stable level heading into 2027? Is the insurance mix mostly larger payers, and should we be confident that that is a solid rate going forward? Can you comment at all on the SG&A burden of the insurance paid business? Curious just to understand the process update there. Are you still drawing in members through DTC channels, and converting them to insurance paid at the point of sale? What are the derivative implications of the pullback in DTC, SG&A on insurance covered volume in Q4 and 2027? Thank you.
Chuck Divita: I think we have continued to show that sort of run rate metric and the weekly sessions and all that to give a sense to you all about the progress we are making and the growth that is going on there. Obviously, the reimbursements are going to vary depending on the market, the payer, and the mix of sessions and types of sessions and things like that. But I think if you look over the last few quarters where we have given that statistic, it has been relatively consistent. I think I would answer it that way. We are continuing to activate the full funnel, in terms of BetterHelp, to be able to generate awareness, activation, demand, for services for those that want to use BetterHelp.
Chuck Divita: I think since we moved to the national footprint during Q2, we really needed to modify our approach to advertising and marketing given the preference that people have to use their insurance. That is why we have been able to bring advertising down, continue to activate the funnel, and generate growth in insurance. From an SG&A perspective, we are making investments there to scale credentialing, as we talked about earlier. Scale the operations, make sure that we have got the right infrastructure to support the insurance. We do believe that over time, the scaling of insurance will give us the opportunity to create some operating leverage in benefits of what we are doing. And then, of course, balancing the cash pay and the insurance business, to create overall operating leverage for the company.
Jessica Tassan: Thank you. That is helpful. My quick follow-up is just can you help us understand what you are referring to when you talk about hybrid care? Is that the InTouch Health business? Can you maybe help us understand or size that hybrid care business? We have been modeling InTouch flat at about $100 million of revenue for the last several years. Just interested to know, is that the correct ballpark or is the business significantly larger than maybe we had appreciated? Thank you.
Chuck Divita: Yeah. I would answer it this way. I do not want to get into the specifics around the revenue from a particular offering, but the historical part of that business was the acquisition of InTouch, for those that want to understand that term. We have been able to continue to innovate those devices and software over time. What we have done outside the US, I think very effectively, is take that technology and work with care delivery organizations in a number of countries to bring virtual services with that technology. Whereas in the US, the current business and the historic business was really a technology product that was being sold in the hospital and health systems, not the services piece. Whereas in other countries, we are doing both in what we have termed hybrid care in that environment.
Chuck Divita: Bringing virtual services with our technology into a physical care setting in places like Canada and France and Australia and other places. In the US, though, it has really been technology. What we are looking to do and what we are excited about with this bringing Teledine to the company is this is a company that we have worked with for a long time, that has used our technology and really commercialized the services part of the equation using our technology. So it is a company we are very familiar with. A lot of trust, a lot of tracks that have been laid in terms of using our technology and supporting use cases to those health systems.
Chuck Divita: We think bringing that expertise we have in non-US markets, which is considerable and been a nice source of growth for us, bringing that expertise combined with our technology and Teledine services together to really go after that market opportunity in 2027.
Jessica Tassan: Thank you.
Operator: Our next question comes from the line of George Hill with Deutsche Bank. George, your line is open.
[Analyst] (Deutsche Bank): Hi, it is Maxion for George. Thanks for taking the questions and giving the additional color on 2027. Regarding the $200 million insurance exit run rate target for next year, could you talk about how much visibility you have into that growth today? How much is driven by ramping utilization within our existing payer relationships versus new payer opportunities? For the provider capacity expansion, could you just talk about how the sales pipeline is shaping for next year? Thank you.
Chuck Divita: I would say we provided that because we have a number of moving parts at BetterHelp, and we just want to try to give some directional commentary in terms of how we are thinking about 2027, and how we are seeing the business today. We are already seeing 27,000 visits a week, as I referenced earlier. A significant run rate of $140 million. We are going to exit this year at that level as well. Our goal is to have sequential growth each quarter and, of course, exit with at least $200 million or more like we referenced. So we have got good line of sight in terms of the plan to execute against that. We have got really good momentum that we have seen in insurance to expand capacity, really evaluate the demand equation. Of course, the payer contracts that we have over 150 million lives in our current payer contracts.
Chuck Divita: So we have got plenty of room to activate the strategy. Again, there is execution in front of us, so it is directional, but that is how we are feeling about it.
Operator: Our next question comes from the line of Jailendra Singh with Truist Securities. Jailendra, your line is open.
Jailendra Singh: Thank you, and thanks for taking my questions. I want to stick with BetterHelp. Just a quick clarification there first. If I take all your comments and put the pieces together, is the message that BetterHelp revenue will still decline next year, but probably exit the year growing year-over-year on top line? Then on margin side, clearly you would have lower margin insurance mix change, but then your reduction in advertising spend
Jailendra Singh: Do those things offset each other and you see some EBITDA margin expansion next year? Just help us frame directionally how should we think about those two things.
Chuck Divita: Yeah. I think the first thing I would say is, as you would expect, we are going to provide full 2027 guidance in Q4. The reason for us making some comments here is because we know there are so many moving parts coming out of Q2, and the actions we are undertaking. Really, there are a couple of key pieces there. Obviously, cash pay and insurance, which is why we have made sure we talked about those directionally. With cash pay, we are going to continue to focus on insurance, growing insurance, and evolving that advertising approach. We are going to see where cash pay goes with that.
Chuck Divita: Given what we are seeing in Q3, really our first full quarter of these additional actions, we wanted to give that data point and reference it in terms of what cash pay might look like as we go into 2027, because we will see lower advertising expenditures for the reasons I have already covered. I think that is all where I will leave it at that in terms of where we think cash pay might go. Again, we will cover full guidance in 2027. With insurance, we are very focused on scaling it, increasing capacity, making sure that we are leveraging this national footprint that we created in Q2. That is why we wanted to make sure we provided some commentary around that. I do not want to get beyond that at this point.
Chuck Divita: From a margin perspective, as we talked about earlier, the insurance business, we do expect lower gross margin than what we have seen in cash pay. Of course, cash pay margin is high because of the level of advertising that you have to do to activate that cash pay market, given the churn dynamics there. We are going to do what we have been doing, Jailendra, which is focus on balancing the top line and the bottom line as we execute this important pivot.
Jailendra Singh: Great. Thanks, Chuck.
Operator: Our next question comes from the line of Elizabeth Anderson with Evercore. Elizabeth, your line is open.
Elizabeth Anderson: Hi, guys. Thanks so much for the question, and Mike, welcome and congrats on your new role. As we talk about the growth of the insurance business in BetterHelp, if we think about the growth, you have obviously done a great job, Chuck, talking us through the components in terms of selling to national plans in the selling season. Once you get them onboarded, can you talk us through some of the learnings in terms of converting those lives into actual completed sessions, and any sort of continued bottlenecks on the therapist network side as you continue to scale that? Thank you very much.
Chuck Divita: Yeah. Thank you for that. Yeah. I think with BetterHelp, think about the insurance business really as an in-network model, meaning we are a provider in those payer networks. So getting those lives under contract, the 150 million-plus that I referenced, is sort of the first point. The second is how you make aware people that have mental health needs and want to use those kinds of virtual services, aware that BetterHelp is in network with those payers. Third is really creating that awareness through the strong brand recognition and the customer acquisition channels that we built at BetterHelp over time through the consumer lens. So all of that is coming into play in terms of responding to your question.
Chuck Divita: As we create that awareness and people have a need, and they want to utilize BetterHelp services, they want to use their insurance, then they come through the funnel, and they will be matched with a therapist. Then, of course, until they are seen, that session becomes our revenue, when that session occurs, and then obviously recurring sessions. So all of those things have to come into play. From a therapist capacity standpoint, as I have touched on, really looking at our platform, which has historically been built to optimize for cash pay. Now we are making a number of advancements to really optimize as much as we can for insurance in terms of creating a more efficient model for them, a more predictable model for them. So all those things are coming into play.
Chuck Divita: And then the last point I would make to your question is, as we look at what we need capacity-wise, it is important to look at it on a local level, too, on a market basis as well as payers. That is why we are very focused on not just the number of membership that we have under contract, but this credentialing process. As I have mentioned before, we have delegated credentialing in place with a number of plans, and we are continuing to explore NCQA accreditation for delegated credentialing so that we can go to other payers and see if we can get delegated credentialing arrangements with them, where we do a lot of the heavy lifting, and then ultimately get them enrolled in the plan. Hopefully that was responsive to your question.
Elizabeth Anderson: Yes. Thank you so much.
Operator: Our next question comes from the line of Charles Rhyee with TD Cowen. Charles, your line is open.
Charles Rhyee: Yeah. Thanks for taking the question. Chuck, obviously we are shifting away from the cash pay market. I guess two questions regarding that. First, can you talk a little bit about when you say there is differences in the way you market for insurance priorities versus cash pay, if possible to give some examples, like what that means and what that looks like in practice? Then secondly, as you shift away from cash pay and others in the space have done that as well, what does that say about the cash pay market overall? For patients or for folks that are looking for therapy, the cash pay market at one time, that is where a lot of people sourced it. But if providers like yourselves are leaving this market, what do you think that market looks like in a few years?
Charles Rhyee: What is it about this market that just makes it really difficult to scale in a sustainable way? Do you think that might change in the future?
Chuck Divita: Yeah, great questions. First, with respect to the marketing difference, up until Q2, well, first of all, prior to insurance, BetterHelp was all a consumer marketing engine. So it was national strategies, national campaigns, value proposition, and so forth. Then as we entered insurance, each state, because we needed to make sure that we could only talk about insurance relative to what was available in that market, we had to tailor our marketing based on the states that were operational. As that continued to scale, we saw ourselves having the ability to create some efficiencies by going to a national footprint.
Chuck Divita: Now we can advertise and we can talk about, "Hey, BetterHelp accepts insurance." So we get some synergies there, as well as the marketing message, where others that have already gone down this path previously were able to say that they accept insurance and so forth. So that has been key, as well as just lowering the overall advertising expenditures so that we can more connect the demand generation to the capacity we have. So it is the marketing strategies as well as the overall advertising levels that come into play there. In terms of cash pay, I think BetterHelp was a small acquisition. It grew significantly, and a lot of that was because it had a great consumer orientation and a value prop. But also, historically, there was a very difficult place for payers in terms of mental health capacity and access on the network.
Chuck Divita: So this consumer-oriented model was able to meet a need at that time when there was less network access coverage. Of course, that has evolved a bit since post-pandemic, and others have sort of moved in that space. So the market has evolved a bit in terms of creating capacity from an insurance perspective for mental health services. I would also say that, if you look at BetterHelp, we are essentially asking someone to pay out of pocket in the cash pay environment, the equivalent of a car payment, if you think about it. So the consumer pressures, the cost, and the fact that we can start to create insurance availability from an affordability standpoint is key.
Chuck Divita: And then I think the last part is, as we have talked about, we think it is important for BetterHelp in the US to be able to offer both insurance at scale and a cash pay option because there are going to be people that either are not in-network and want to use BetterHelp, that because of stigma, or other reasons, do not want to access their insurance. I do believe there is going to continue to be a cash pay market for these services. It is just given the level of preference we are seeing, the affordability challenges, and so forth, we just feel like moving this business much more into an in-network model, is a more durable position, notwithstanding the fact that I see us offering both cash pay and insurance, depending on where the market heads.
Charles Rhyee: That is helpful. Appreciate it. Thank you.
Operator: Our next question comes from the line of Ryan Daniels with William Blair. Ryan, your line is open.
Ryan Daniels: Yeah, guys. Thanks for taking the question. I want to continue with one on BetterHelp and maybe a little bit more strategic. I am curious how you think about the potential to refer internally. If we look to something like Teladoc One and using Health Pulse, I think there is probably an ability to identify individuals that have a need for behavioral care that are in your Integrated Care or Teladoc One model. How are you thinking about leveraging that to make warm handoffs to the insured BetterHelp model, and do you envision that being a big growth driver in the future? Thanks.
Chuck Divita: It's a great question. I think if you look at Integrated Care, we have a pretty scaled mental health capability inside Integrated Care, therapy, and psychiatry. Really, the approach there is, to your point, looking at things more holistically for the patient in terms of cross-physical and mental health in chronic care programs and in other kinds of access. That's been an important part of Integrated Care and will continue to be because of the overall physical health, mental health aspect. To your point, the BetterHelp segment has got a strong capability in terms of focusing on mental health, and making this pivot to insurance to create a more durable model, and we've got them heads down focused on that. Now, I think over the longer term, as we think about where we want to take mental health more broadly, it opens up other kinds of possibilities.
Chuck Divita: But I don't want to get ahead of us. I think focusing on execution, the priorities we've talked about, I think it's really important for BetterHelp to continue to scale that, continue on the Integrated Care side to care for people more holistically, and then explore those types of synergies down the line to your point.
Ryan Daniels: Okay. Thanks, guys.
Operator: Our next question comes from the line of Scott Schoenhaus with KeyBanc Capital Markets. Scott, your line is open.
Scott Schoenhaus: Hey, team, thanks for taking my question. I am going to go back to Teladoc One here. You rolled it out initially in September here with some in the pilot stage. Just wondering about the incremental revenue opportunity and how we should be thinking about it, what you are seeing now in terms of outcome-based fees versus your traditional visit-based fees. What are you seeing that ramp into as you head into the selling season? Are these new employer customers that are interested in this, or are these more legacy customers that you are trying to convert to Teladoc One? Thanks.
Chuck Divita: Yeah, thanks. I think first of all, at a sort of overall level, what Teladoc One represents is really a culmination of a lot of work to get us in a position, having this extensive virtual care capability from a clinical breadth standpoint, the technology, all the things behind it, and the ability to care for patients more holistically. I think historically and currently, companies like us have gone to market focused on conditions and certain products, and depending on whether a client has acquired multiple products from Teladoc, determines what level of support and engagement that we can do with a member, of course, in terms of what we are contracted to do.
Chuck Divita: Whereas Teladoc One really brings the full breadth of what we can do to the individual, and that is a real difference in terms of both our differentiation in the market as well as how we are coming to market. That also gives us the ability over time to serve broader populations than a particular condition or those kinds of things because the needs change and people are more than just a condition. They have more care needs. So I think from an overall perspective, that is how we are looking at Teladoc One. We have got the initial launch partners underway, like I mentioned, starting to engage with patients, getting really good early feedback on that. We are starting to have those conversations with clients and then for more broader availability in 2027.
Chuck Divita: But given the selling cycle process and dynamics, we would expect to see some impact on 2027, and 2027 selling for 2028. We are excited to bring it to market. We believe we are going to have some impact on 2027 with Teladoc One, both in terms of current clients, from a retention standpoint and as a value proposition standpoint. We believe over time, continue to grow the client base, in this new offering.
Scott Schoenhaus: Thank you.
Operator: We have reached the end of our Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.
