Teladoc Health trimmed its 2026 revenue outlook as its virtual behavioral health unit, BetterHelp, faces revenue pressure with consumer demand for insurance-covered services outpacing clinical capacity.
Teladoc shares fell more than 27% on Thursday following the company's release of its second-quarter financial performance report on Wednesday.
The company is shifting from subscription to visit-based revenue models, while also transitioning its virtual mental health business to accept insurance, moving from a cash-pay model to an in-network, insurance-covered model. The company is making "considerable progress" in building the insurance offering, including establishing a baseline national footprint a year after launching its first state, Teladoc Health CEO Chuck Divita told analysts and investors on a call Wednesday.
"We have contracted for over $150 million in-network lives and credentialed more than 8,000 mental health professionals for the network at this point," he said.
"Insurance coverage sessions have grown substantially over the rollout, with over 20,000 sessions completed last week alone, representing an estimated annualized revenue run rate on that basis of over $110 million, up from over at $75 million at the time of our first quarter earnings call, and more than double the level from the fourth quarter 2025 earnings call held in February," he said.
The company accelerated its nationwide commercial insurance rollout for the BetterHelp mental health segment ahead of plan, executives said. The company is now live with a national insurance-covered network. But weakness in BetterHelp’s cash pay business weighed on overall business performance, slowing down the pace of the company’s broader turnaround.
During the early part of the second quarter, through mid-May, insurance user gains largely offset declines in U.S. cash pay users, Divita said.
In the back half of the quarter, however, consumer demand for insurance versus cash pay increased faster than expected, Divita said. Consumer demand for insurance-covered mental health services is as high as 70% to 80% in some markets, he said.
"While insurance provider capacity continued to increase, it did not expand at the same pace as the increase in demand," Divita said. "As a result, cash pay revenue declined faster than anticipated, while insurance revenue could not increase at a level sufficient to offset the cash pay decline," he said.
During the second quarter, BetterHelp revenue decreased 12% year-over-year to $213 million. Insurance revenue, however, was near the high end of management's expectation at $22 million during Q2, up approximately $9 million sequentially.
Teladoc now projects BetterHelp revenue to be down 12.7% to 19% for the full year compared to 2025, coming in between $770 million to $830 million, reflecting a greater decline in cash pay revenue. The company reaffirmed that it expects insurance revenue of $90 million to $105 million in 2026.
Average paying users in total declined 11% from the prior year's quarter to 346,000, and were down 4% sequentially, while insurance users increased by over 70% sequentially, reflecting a growing part of BetterHelp's business, Divita said.
Overall, Teladoc's second-quarter revenue decreased 4% to $607 million from $632 million during the same period a year ago. The company also reported a net loss of $38.9 million, or $0.21 per share. During the same period a year ago, Teladoc reported a net loss of $32.6 million.
The company also reported second quarter 2026 adjusted EBITDA of $65.7 million, down 5% year-over-year.
Based on the pressure on its cash pay revenue in its BetterHelp segment, Teladoc softened its outlook for 2026, expecting revenue of $2.36 billion to $2.45 billion, below its previous estimate of $2.48 billion to $2.58 billion. The company forecasts adjusted EBITDA of $271 million to $303 million, up slightly at the midpoint versus the prior range.
Teladoc's Q2 revenue missed Wall Street analysts' target of $615.4 million, while the company's loss per share slightly beat the Street's expectations.
With the mixed results during the quarter and the softened outlook, William Blair analyst Ryan Daniels said in an analyst note that Teladoc remains in a transitional period, "navigating slower growth and a difficult end-market with an increased
emphasis on profitability, product enhancements, and capital deployment into new growth avenues."
"Looking forward, we anticipate a sharper operating focus, particularly within BetterHelp, which could help continue to stabilize the stock and unlock value through strategic actions, such as focusing more on international markets and moving BetterHelp toward a stronger B2B operating model," Daniels wrote.
BetterHelp’s transition toward greater in-network coverage is progressing favorably and represents "a critical step in stabilizing the business," Daniels, group head of healthcare technology and services at William Blair, wrote. "We were encouraged by BetterHelp’s commercial segment outperforming the midpoint of expectations in the second quarter, even as the legacy DTC model remains under pressure," Daniels wrote.
While Teladoc's mental health business faces headwinds, the company's integrated care segment is growing steadily, helping to stabilize the overall business. The company is making significant investments in its enterprise B2B segment including the recent launch of Teladoc One. The new virtual care model for employers and health plans is designed to offer a more coordinated, personalized approach for members, while tying payment to clinical and financial outcomes.
Divita also touted Teladoc Health Pulse, the company's new intelligence engine, that brings together "unique multidimensional data and advanced AI models to power clinical insights, guide targeted actions, optimize experiences, and surface insights and other actionable information directly at the point of care for appropriate action" by clinical teams.
"Healthcare continues to be significantly impacted by rising costs, burden of chronic illness, access issues, and other concerns, and we believe our scale, clinical approach, and extensive platform position us well against this market backdrop," Divita said. "We've been accelerating innovation in our products, services, and capabilities to further capitalize on our strengths, lean into this market opportunity, and deliver greater value to our clients."
During Q2, the integrated care segment brought in revenue of $394 million, up 1% year-over-year. The segment's adjusted EBITDA increased 13.6% from a year earlier to $65 million. "Adjusted EBITDA performance was driven by the revenue upside versus our midpoint, as well as disciplined cost management, which more than offset mix-related gross margin pressure from the shift to visit-based arrangements," Divita said.
Teladoc expects 2026 revenue growth of 0.8% to 2.4% for the integrated care business.
The company ended the quarter with 100.3 million U.S. integrated care members, slightly above the high end of its guidance range. Teladoc modestly raised its full year outlook by roughly 1 million lives at the midpoint based on results seen thus far, Divita said.
"We have made meaningful progress on key initiatives that support our strategic priorities. While there is more work ahead, the team remains focused on disciplined execution and delivering results with urgency. We remain confident in our strategy, and we are taking deliberate actions that we believe will strengthen the durability of our business, improve long-term performance, and create sustainable value for shareholders," Divita said.
Teladoc also reported access fees revenue decreased 9% to $474 million while other revenue increased 23% to $133 million. U.S. revenue decreased 6% to $487 million while international revenue increased 7% to $120 million.