Teladoc (NYSE: TDOC) is working with a sense of “urgency” to restructure its underperforming mental health company BetterHelp, focusing on expanding insurance deals to revitalize the business.

This comes after a streak of disappointing earnings results. The company announced a net loss of $837.7 million, or $4.92 per share in its second-quarter earnings call.

“This is a company that is not yet delivering on its fullest potential,” Charles “Chuck” Divita III, Teladoc CEO, said on the call. “Since joining the company seven weeks ago, I’ve been evaluating together with the team, all aspects of our business, our strategic direction and priorities, our product offerings, in terms of current performance and market potential, the outlook for our business units, and where we can drive improved performance and long term shareholder value. We will be acting on opportunities accordingly.”

Teladoc named Divita CEO after longtime CEO Jason Gorevic stepped down in April. 

Divita highlighted that 92 million Americans have access to one or more of Teladoc’s products and “strong momentum” on the company’s push into international markets.

He then acknowledged BetterHelp’s struggles, calling it a “business in transition.” He reported that Teladoc is working urgently to acquire new customers while balancing scale, growth and financial performance.

BetterHelp has experienced turbulence since late 2023. The segment shows no signs of improvement, reporting second-quarter revenue of $265 million, a 9% year-over-year decrease.

Teladoc executives attributed much of the company’s financial struggles to rising customer acquisition rates, which have plagued BetterHelp for years.

Chief financial officer Mala Murthy attributed these rising costs, in part, to broader tailwinds in the consumer marketplace.

“BetterHelp growth is dependent on our ability to efficiently deploy marketing dollars to acquire new customers,” Murthy said. “While our spending is diversified across various channels, there is only so much incremental ad spend we can drive in a short period of time without further inflating our customer acquisition costs. At our scale and these elevated levels of customer acquisition costs, we are making a conscious decision not to chase efficient customer acquisition two points below an appropriate return.”

Divita charted a three-pronged course of action to rescue BetterHelp: accelerating international expansion, securing insurance coverage access in the U.S. and implementing continuous product improvements.

In April, Teladoc announced plans to expand its international efforts among English-speaking countries, including the U.K., Canada and Australia. The company is making progress on this goal, Murthy said, and is now furthering its international efforts by “judiciously” expanding into some non-English-speaking markets. 

“I think it’s important for us to balance the shorter term of how we stabilize what I call the US consumer business, the core business, with managing all of these pivots from a leadership perspective, from a bandwidth perspective of the management team at BetterHelp, as well as from an investment perspective,” Murthy said.

Traditionally, BetterHelp has stayed in the consumer behavioral health lane. The company is now pivoting to meet consumer demands for insurance coverage when accessing services.

This pivot will help address what Murthy said was the company’s number one reason for customer churn: affordability.

Teladoc plans to institute the “technical capabilities” to execute this shift by the end of 2024, including cementing contracts with payers. Insurance options will then roll out throughout 2025.

The company plans to control the parts of the insurance expansion that are “key to the experience” but will leverage third-party partners for other areas of the process.

While planning strategies to improve BetterHelp’s performance, Teladoc’s new CEO didn’t rule out selling the company.

“We’re primarily focused right now on managing through this transition period,” Divita said. “With that said, like any business, we’re going to continue to evaluate what we’re doing, where we’re operating, in a way that creates long-term share order value.”