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Lack of advertising performance with BetterHelp undermines Teladoc's business outlook

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Teladoc (NYSE: TDOC) has blamed the disappointing financial results for some of BetterHelp’s advertising costs associated with customer acquisition.

Despite advertising issues, the company reported revenues from its digital mental health subsidiary, BetterHelp, increased 40% year-over-year in the second quarter of 2022. Its performance has reached the lower limit of Teladoc’s expectations.

Terradock CEO Jason Golevich said in a statement Wednesday that this could indicate consumers are tightening their belts.

“As inflation rises, consumer confidence has fallen to its lowest level in decades,” Golevich said.

Teladoc’s second-quarter revenue was $ 592.38 million, an increase of 17.7% over the previous year. Teladoc outperformed its second-quarter earnings forecast by $ 0.15 and earnings by $ 5.12 million, Gorevic said: [2022’s] Latter half. “

A second factor influencing Terradock’s year-end earnings forecast is a slower-than-expected transaction pace in the chronic care business.

Teladoc accused small digital health start-ups of low ad yields in two consecutive revenue calls.

“We still see small private competitors seeking low-value or no-return customer acquisition strategies to establish market share,” Golevich said. “I don’t think this is sustainable, but it’s hard to predict how long this dynamics will last.”

Gorevic emphasized that Teladoc’s leadership position in the D2C market and its size advantage will drive the company outperform the industry while driving a strong financial performance in the bear market.

As a result of lower-than-expected marketing yields, the company is cutting advertising costs.

“Ad spending in the fourth quarter will never be zero, but it will be a significant reduction due to the increased cost per ad impression,” Gorevic said.

Teladoc continues to use BetterHelp to drive a larger percentage of growth.

“Management acknowledged that lower yields on BetterHelp’s marketing spending, which is the majority of the mental health business that generates about one-third of revenue, was the main driver of guidance reductions, Still, it has led the business to grow by 35-40%. F22, “said an analyst note from investment banking and financial services company Jeffreys.

Despite competition in the field of digital behavioral health, Jeffreys’ memo highlighted a promising move in the market in favor of BetterHelp.

“Analysis of website traffic shows that, overall, BetterHelp has regained market share in recent months as Cerebral’s website traffic declined. [behavioral health] As a result of scrutinizing Cerebral’s prescribing practices, traffic is still declining, “the memo said. “This is encouraging, as TDOC should bring a short-term rise to TDOC as it regains market share. However, the largest player-wide website traffic for virtual behavioral health (including BetterHelp) is Please note that it has been relatively flat for the past year. “