Teladoc Health’s BetterHelp business experienced a significant shift toward insurance-covered therapy during the second quarter of 2026, but insufficient provider capacity prevented the company from fully converting the increased demand into sessions and revenue.
BetterHelp revenue declined 12% to $212.6 million from $240.4 million, as rapid growth in insurance-covered services failed to offset a steep decline in customers paying directly for care.
Insurance-covered services generated $21.8 million in revenue, compared with only $2.1 million during the prior-year quarter.
This represented an increase of more than tenfold and demonstrated strong consumer demand for using health insurance to access BetterHelp’s therapy and psychiatry services.
However, BetterHelp’s Consumer and Other revenue, which primarily includes customers paying directly out of pocket, declined 20% to $190.9 million from $238.3 million.
Teladoc said pressure on cash-pay revenue accelerated during late May and June, exceeding the assumptions included in its previous outlook.
At the same time, demand for insurance-covered services was stronger than expected and exceeded the availability of providers in certain states and insurance networks.
The shortage limited BetterHelp’s ability to match customers with therapists, schedule appointments, and convert demand into completed sessions and revenue.
Teladoc accelerated BetterHelp’s nationwide insurance rollout ahead of schedule in response to the demand.
Management continues to expect 2026 insurance revenue within its previously announced range, but lowered its overall BetterHelp revenue outlook to reflect a faster decline in cash-pay activity and the company’s increased prioritization of insured customers.
The change represents a major evolution in BetterHelp’s business model. The platform historically depended primarily on consumers paying for subscriptions or therapy sessions directly, while insurance-covered services now represent a rapidly growing alternative.
Insurance could improve affordability and expand BetterHelp’s addressable market, but it also introduces operational requirements involving therapist credentialing, payer enrollment, eligibility verification, claims processing, reimbursement, and provider availability.
The transition significantly affected BetterHelp’s profitability during the quarter.
Segment adjusted EBITDA plunged 96% to approximately $471,000 from $11.9 million. Adjusted EBITDA margin contracted to 0.2% from 4.9%.
For the first six months of 2026, BetterHelp adjusted EBITDA declined 88% to $2.4 million from $19.6 million. Its first-half adjusted EBITDA margin fell to 0.5% from 4.1%.
BetterHelp paying users declined 11% to an average of approximately 346,000 during the quarter. For the first half, average paying users decreased 10% to approximately 353,000.
The user metric includes both customers paying directly and customers using insurance, indicating that increased insured demand has not yet fully replaced the loss of cash-pay customers.
Teladoc expects BetterHelp’s full-year revenue to decline between 12.7% and 19%, with an adjusted EBITDA margin of between 3% and 4.6%.
The third-quarter outlook calls for BetterHelp revenue to decline between 12.3% and 24.2%. Adjusted EBITDA margin is expected to range from only 0.5% to 2.5%.
The guidance suggests that BetterHelp’s transition toward insurance will remain a near-term drag before additional provider capacity and insurance workflows can support more meaningful revenue.
Integrated Care continued to offset part of BetterHelp’s weakness.
Integrated Care revenue increased 1% to $394.3 million, while adjusted EBITDA increased 14% to $65.2 million. The segment’s adjusted EBITDA margin expanded 180 basis points to 16.5%.
U.S. Integrated Care membership declined 2% to 100.3 million, but chronic-care program enrollment increased 14% to approximately 1.27 million.
Average monthly revenue per U.S. Integrated Care member increased 3% to $1.31, indicating that Teladoc generated more revenue from each member despite the lower membership count.
Teladoc also launched Teladoc One, a connected-care model designed to combine services and create a more unified experience for employers, health plans, and members.
Companywide revenue declined 4% to $606.9 million from $631.9 million. Adjusted EBITDA fell 5% to $65.7 million.
Access-fee revenue declined 9% to $474.2 million, while other revenue increased 23% to $132.7 million.
U.S. revenue fell 6% to $487.4 million, while international revenue increased 7% to $119.6 million.
The Integrated Care adjusted EBITDA increase of $7.8 million was more than offset by BetterHelp’s $11.4 million decline.
Teladoc reported a net loss of $38.9 million, or $0.21 per share, compared with a loss of $32.7 million, or $0.19 per share, during the prior-year quarter.
The latest quarter included $88.4 million of intangible-asset amortization and $9.3 million of stock-based compensation.
Operating performance improved despite the wider net loss. Teladoc’s operating loss narrowed to $37.1 million from $54.4 million as the company reduced several expense categories.
Advertising and marketing expense declined approximately 14% to $143.4 million. Technology and development expense fell approximately 9% to $62.9 million, while general and administrative expense declined to $104 million.
Stock-based compensation expense fell approximately 58% to $9.3 million from $22.3 million.
Cash generation weakened during the quarter.
Operating cash flow declined to $64.7 million from $91.4 million, while free cash flow fell to $35.7 million from $61.2 million.
First-half free cash flow declined to $9.4 million from $45.5 million. Teladoc continues to forecast between $130 million and $170 million of free cash flow for the full year, requiring substantially stronger cash generation during the second half.
Teladoc ended June with $774.3 million in cash and cash equivalents.
The company also reported $996.7 million of convertible senior notes as a current liability, compared with their classification as long-term debt at the end of 2025.
For full-year 2026, Teladoc expects revenue of between $2.36 billion and $2.45 billion, adjusted EBITDA of between $271 million and $303 million, and a net loss of between $0.75 and $1 per share.
The central question for BetterHelp is whether Teladoc can build provider capacity and insurance infrastructure quickly enough to capture the demand that is already emerging.
The insurance model may eventually provide a more durable growth platform than direct consumer subscriptions, but the second-quarter results show that the transition is currently reducing revenue and nearly eliminating BetterHelp’s adjusted profit.
KEY QUOTES:
“We saw stronger than anticipated demand for insurance covered services that outpaced available provider capacity.”
Chuck Divita, Chief Executive Officer Of Teladoc Health
