The virtual mental health space is booming — but not everyone is taking the same route to capture market share. Teladoc Health’s (NYSE: TDOC) subsidiary BetterHelp has made a deliberate choice to continue focusing heavily on the BetterHelp direct-to-consumer mental health marketplace, even as many competitors pivot toward business-to-business (B2B) models. This strategy reflects both BetterHelp’s confidence in its scale and its view of evolving consumer and employer mental health needs.
In this post, we’ll explore why BetterHelp is doubling down on its direct-to-consumer mental health approach, how it leverages advanced technology, what challenges it faces amid shifting economic conditions, and why international expansion is on the horizon.
The Virtual Mental Health Market: Two Paths Emerging
BetterHelp’s main competitor, Talkspace (NASDAQ: TALK), has shifted away from the BetterHelp direct-to-consumer mental health marketplace over the last two years to focus primarily on enterprise clients — selling mental health services to employers and health plans. Headspace Health, another player in the space, has also emphasized B2B offerings, providing mental wellness solutions to organizations instead of individual consumers.
This contrast is striking. While Talkspace and others are prioritizing the stability and scale of B2B contracts, BetterHelp is doubling down on the consumer-facing side of the market.
Teladoc’s CFO Mala Murthy explained the company’s stance at the TD Cowen Annual Health Care Conference:
“BetterHelp right now still has room to grow on the BetterHelp direct-to-consumer mental health side. We have scale. I would expect us to continue to grow and drive efficient returns and cash flows for that business. We don’t have any immediate plans, like a number of our much smaller competitors have done in recent times, to pivot away from B2C to B2B because they weren’t able to get to scale as they competed with BetterHelp.”
This statement highlights BetterHelp’s competitive advantage — its scale. With a massive user base and growing brand recognition, BetterHelp can afford to maintain and nurture its consumer market presence while others pivot to different business models out of necessity.
Synergies Between Direct-to-Consumer and B2B: The Best of Both Worlds?
Though BetterHelp continues to grow its BetterHelp direct-to-consumer mental health business, Teladoc is also exploring ways to integrate these capabilities with its B2B mental health offerings.
At the J.P. Morgan Healthcare Conference, Teladoc’s CEO Jason Gorevic discussed how the company is marketing BetterHelp to employers, expanding its reach within the enterprise segment by leveraging the BetterHelp direct-to-consumer mental health platform.
Mala Murthy elaborated on the synergies between the two models:
“BetterHelp has done an incredible job in mining data, AI, machine learning, and large language modeling as we think about matching consumers with therapists. Those are things that we absolutely are leveraging on the B2B side of the house as well.”
These advanced technologies allow BetterHelp to provide personalized therapy matching, optimizing the consumer experience by connecting individuals with the most suitable therapists efficiently. Bringing these capabilities to the B2B side means employers and insurers can also benefit from smarter, data-driven mental health solutions for their workforce.
Slowing Growth and Market Maturity
BetterHelp has experienced explosive growth since its early days. Just a few years ago, it generated less than $100 million in revenue annually — but today it is expected to bring in around $1 billion per year, making it the largest player in the BetterHelp direct-to-consumer mental health space.
That growth is now stabilizing. Teladoc executives forecast a 3% to 6% decline in BetterHelp revenue for the first quarter of 2024 and expect flat revenue for the entire year. This signals a maturing market and a slowing growth phase after years of rapid expansion.
This natural slowdown is partly due to BetterHelp’s current market penetration and the macroeconomic environment. As a D2C business, BetterHelp’s revenue depends heavily on consumer spending willingness.
Murthy commented on this dynamic:
“BetterHelp has never experienced a true recession. If consumers are feeling pinched in their wallets, there might be some reluctance to spend the $200 to $300 that they spend on this product. On the other hand, a potential tailwind could be that in a recession, if they lose employer-sponsored coverage, they might be willing to pay cash out of pocket for a BetterHelp product, which is cheaper than brick-and-mortar therapy.”
In other words, economic downturns create a mixed picture: some consumers might cut back on discretionary spending, but others may turn to affordable virtual therapy as a replacement for more expensive, in-person options.
The Global Opportunity: Beyond English-Speaking Countries
While BetterHelp’s U.S. business is dominant, about 15% of its revenue already comes from international markets such as Canada, the U.K., and Australia. Recognizing that mental health challenges are global and not confined to English-speaking countries, BetterHelp plans to continue expanding its international footprint.
Murthy explained the company’s approach:
“Over time, we will test and learn our way into additional markets. Mental health is a global problem. So to the extent that we find other markets where we have an efficient deployment, we certainly are looking to expand.”
Importantly, the company has found that the return on investment in international markets is roughly on par with the U.S., reinforcing the business case for continued geographic growth.
What This Means for Consumers and Employers
For consumers, BetterHelp’s continued focus on the BetterHelp direct-to-consumer mental health market means easier access to mental health support without going through insurance or employer programs. The convenience and affordability of virtual therapy are key drivers for many users, and BetterHelp’s scale allows it to offer a broad selection of therapists and innovative AI-driven matching tools.
For employers, Teladoc’s integration of BetterHelp into its B2B offerings means access to a more comprehensive mental health portfolio. Employers seeking to support workforce wellbeing can benefit from both traditional teletherapy services and BetterHelp’s consumer-optimized platform, potentially improving engagement and outcomes.
Looking Ahead
BetterHelp’s strategy highlights how a virtual mental health company can maintain a strong BetterHelp direct-to-consumer mental health presence while also tapping into enterprise opportunities. Its leadership in AI-powered therapy matching and data analytics creates a competitive moat, and international expansion opens new growth avenues.
While the macroeconomic environment introduces uncertainties, BetterHelp’s scale and diversified business model position it well to navigate the challenges ahead. The company’s approach reflects a nuanced understanding that mental health care requires flexibility to serve both individual consumers and large organizations.
As virtual care continues to reshape the mental health landscape, BetterHelp’s bold bet on the BetterHelp direct-to-consumer mental health market — coupled with smart B2B integrations and global ambitions — makes it a standout player to watch.
