Teladoc Buys UpLift With Eye on Benefits Coverage Model for Mental Health
The leaders of Teladoc Health Inc. have acquired virtual mental health venture Uplift Health Technologies Inc. for $30 million as they look to expand the benefits coverage opportunities for the Purchase, New York-based company’s mental health customers.
Founded in 2020 and based in Tampa, UpLift has built a network of more than 1,500 mental health professionals and signed agreements with insurance companies—Anthem, Cigna, UnitedHealthcare and Florida Blue among them—that cover more than 100 million lives. The company last year completed about 114,000 patient sessions and generated roughly $15 million in revenue. But because founder and CEO Kyle Talcott and his team were still investing heavily in building up the company’s infrastructure, its adjusted EBITDA loss was about $6 million.
Teladoc CFO Mala Murthy said on an April 30 conference call that her team plans to continue that scaling work “at an appropriate pace” while it integrates UpLift with Teladoc’s BetterHelp division, which has a strong direct-to-consumer focus. Users coming to UpLift via BetterHelp, she said, should produce a $10 million revenue ramp by year’s end—albeit at lower margins than BetterHelp’s cash-pay model.
“However, we expect higher conversion rates to lead to an increase in users and visit volumes and higher gross profit dollars should more than offset the lower gross margin profile for benefits coverage,” Murthy told analysts. “We expect to achieve this increase by leveraging existing advertising and marketing spend and activation expertise.”
Offsetting the expected revenue growth this year will be investments in provider recruitment, credentialing, support functions and technology, Murthy said. Those will take between $10 million and $15 million off BetterHelp’s adjusted EBITDA for the year. (Over the past four quarters, BetterHelp’s adjusted EBITDA totaled $70 million.)
UpLift checks a box CEO Chuck Divita said last summer—shortly after stepping into the role—was important to him: Converting BetterHelp’s success in the direct-to-consumer space into solid scale in the insurance arena. Teladoc has been building out its operational and technological systems to do that and Divita said he was “at the finish line” in talks with several payers recently but hit the pause button to finish the UpLift deal.
“This as an opportunity to accelerate,” Divita said of UpLift. “We [have] 35,000 therapists in the network. We believe there are extensive numbers in there that would be interested and meet the requirements for payer coverage and that’s what we’re going to activate over time.”
The acquisition of UpLift— the price Teladoc has paid for the business could grow to $45 million over time if it meets certain performance targets—comes on the heels of Teladoc executives closing on their purchase of Catapult Health for $65 million. That acquisition adds scale to Teladoc’s virtual preventive care business and is expected to funnel growth into the company’s diabetes, hypertension, pre-diabetes and weight management programs.
Shares of Teladoc (Ticker: TDOC) were down more than 7% to $6.66 in early-afternoon trading May 1. Over the past six months, they have lost more than 25% of their value, which has cut the company’s market capitalization to about $1.2 billion.
