Teladoc Health (TDOC) added ~14% on Thursday after its consensus-beating Q4 2025 results, while Bank of America upgraded the telehealth provider, citing the prospects of its mental health business, BetterHelp.
On Wednesday after the close, the New York-based health tech reported $642.3M in revenue, exceeding the consensus by $6.9M, as its Integrated Care segment generated $409.1M with ~5% YoY growth even as BetterHelp revenue fell ~7% YoY to $233.2M.
However, according to BofA analyst Allen Lutz, BetterHelp’s marketing intensity would decline, and its margins would improve as it transitions from a direct-to-consumer model to insurance coverage, a strategy followed by its rival Talkspace (TALK).
Lutz pointed out that Talkspace’s (TALK) EBITDA margins have improved to 11.5% at the midpoint of the 2026 outlook from (9%) in 2023 as it pivoted to insurance coverage from being a DTC platform.
“Assuming that BetterHelp can transition 50-60% of its revenue to insurance coverage by 2028 would support an enterprise value of $1.2B (at 2.5x revenue), more than TDOC’s entire valuation today before including Integrated Care and Livongo,” Lutz wrote.
He upgraded Teladoc (TDOC) to Buy from Neutral and reaffirmed his $7 price target on the stock.