Adam Vandervoort - Chief Legal Officer Jason Gorevic - President and CEO Mark Hirschhorn - COO and CFO

Lisa Gill - J.P. Morgan Sean Wieland - Piper Jaffray Jamie Stockton - Wells Fargo Sandy Draper - SunTrust Richard Close - Canaccord Genuity Ryan Daniels - William Blair Mohan Naidu - Oppenheimer Matt Hewitt - Craig-Hallum Capital Matthew Gillmor - Robert Baird Steven Wardell - Chardan Rohan Abrol - Keybanc Capital Markets Steven Halper - Cantor Fitzgerald Charles Rhyee - Cowen

Thank you, and good afternoon to everyone. We look forward to discussing our third quarter 2017 results with you today.

Joining me for Teladoc's conference call are Jason Gorevic, our President and Chief Executive Officer; and Mark Hirschhorn, our Chief Operating Officer and Chief Financial Officer. Today, after the market closed, we issued a press release announcing our third quarter 2017 results and filed our quarterly report on Form 10-Q.

The release and report are available on the Investor Relations section of teladoc.com. As a reminder, Teledoc intends to avail itself of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Certain statements made during this call will be forward-looking statements within the meaning of that law. These forward-looking statements are subject to risks, uncertainties and other factors that could cause Teledoc's actual results to defer materially from those expressed or implied by the forward-looking statements.

For additional information on the risks facing Teledoc, please refer to our filings with the SEC. We'll start today's call with brief prepared remarks followed by Q&A.

Today's call will also contain certain non-GAAP financial measures, which we believe are important in evaluating our performance. For more details on these measures, the most comparable GAAP measures and a reconciliation of the two, please refer to the press release posted on teladoc.com.

I now turn the call over to Jason.

Thanks, Adam. And thank you to everyone on the call for joining us this afternoon.

Teladoc reported another strong quarter after the market closed today. I'm very pleased with our results and the momentum we're seeing across the business.

Once again we met or exceeded our expectations on all our key metrics recording total revenue of nearly $69 million or growth of over 110%, adjusted EBITDA loss of $600,000, an improvement from a loss of approximately $9.3 million in the same period last year, paid membership of 22.6 million lives or growth of 33% over the prior year and finally visit volume of approximately 306,000 visits or growth of 51% representing a quarterly annualized utilization rate of approximately 6.2% or 84 basis point increase year-over-year reflecting the increasing adoption rates by our members resulting from the high impact of our member engagement strategies. Our core Teladoc business performed well in the quarter.

As we achieve the expected levels of utilization, continued success in penetrating the provider market and strong growth in our behavioral health business. For the remainder of 2017, we are going to share with you an organic growth rate executing Best Doctors.

But starting in 2018 and in connection with our successful integration efforts we will be reporting a single corporate wide growth rate. In the third quarter, our organic growth rate excluding Best Doctors was 45%.

Best Doctors, which as a reminder we acquired on July 14 of this year, performed very well in the third quarter on a standalone basis. And our integration efforts are progressing on or ahead of schedule.

We are already having an impact on the business and have recently launched a new member portal and mobile app for Best Doctors clients. We have integrated Best Doctors into the HealthiestYou products and we have launched an integrated mobile app with both Teladoc and Best Doctors features for those clients who have purchased both products.

This is a substantial step forward in realizing the vision of a comprehensive virtual care platform and clients are taking notice. I want to take a moment to recognize our employees who have locked arms across the organization to execute on the integration and work to make the vision of the combined company a reality.

This commitment is clearly paying dividends. The initial feedback we're receiving from our customers is extremely positive as they instantly recognize the value of the combined offering.

We're seeing promising signs of early cross selling and successful joint selling of the solutions. In fact, we have already cross sold or jointly sold Teladoc and Best Doctors products to accounts representing over 1 million members or several million dollars of annual revenue in just the first 90 days since we closed the acquisition.

As part of our commitment to realizing our vision of becoming a global virtual care delivery system spanning the full spectrum of both member and client healthcare needs and taking the next step in integrating the Best Doctors and Teladoc teams into one market defining organization, I am very pleased to announce the appointment of Peter McClennen former CEO of Best Doctors to the newly created position of President of Teladoc Inc. A tenured healthcare executive with deep experience as the CEO, President or COO of multiple healthcare IT companies, Peter has been incredibly effective in growing Best Doctors to its leading position in the expert second opinion market and has been instrumental in shaping our formational integration efforts to-date.

Peter will assume responsibility for all commercial operations globally, including sales, account management, product development, and strategy for all Teladoc markets and segments. We're looking forward to sharing more with you in regard to Best Doctors at our Investor Day on November 20 where we'll have Peter and many other members of our management team joining us for the day.

Before Mark digs into the numbers, I want to provide an update on our selling season so far. First, in the third quarter, we saw continued expansion of our relationships with both Aetna and United, growing out of new populations representing hundreds of thousands of new members in both of these large health plans.

Second, we continued to see strong sales activity in our provider segment. We now serve over 200 hospitals having added 20 in the third quarter alone.

Moreover, we have recently closed several new sales including Orlando Health System and Mercy, Iowa, with many additional large systems in our pipeline. I'm looking forward to hosting our first provider client summit later this month, where we anticipate a collaborative discussion about how we can bring new products and services to that segment.

And finally, our selling season for new employer in health plan business in 2018 is in full swing and comparing favorably to prior years. As I've mentioned previously, this selling season was unique with respect to the number of the large opportunities that we were pursuing, including both new Greenfield accounts as well as opportunities to win business that was previously with a competitor.

I'm pleased to say that we have successfully closed large accounts that fall into both of these categories. And I anticipate being able to provide more details on these wins at our Investor Day on November 20.

Our business is truly firing on all cylinders today, with a strong tailwind working in our favor. Teladoc is extremely well positioned as the only provider in the market who can credibly offer a comprehensive virtual care platform.

This is best exemplified by the number of broad strategic C-Suite discussions at large health plans focused on how Teladoc can help bring a true virtual health system to life for the plan and its members. Given the nature and tenor of these discussions, I'm extremely excited about what 2018 has in store for the company.

And with that I'll turn the call over to Mark to review our financial results from the quarter.

Thanks Jason and good afternoon everyone. As Jason mentioned, we are fortunate to see that there are multiple high growth channels within the business that continue to generate strong revenue growth.

In addition to our recent large accounts successes, our behavioral and small and midsize business channels are seeing great demand. We're now three-and-a-half months into the merger with Best Doctors and we remain on track with the launch of our integrated service delivery model that will commence rollout during the first week of December.

Nearly every aspect of the company will experience significant change that will enable us to support our businesses long-term growth objectives. As we've communicated during the past several months, we believe our increased investment and integration efforts will ultimately position us to accelerate Best Doctors' revenue growth that will approximate our corporate goals.

Onto the P&L and starting with the topline. Total revenue in the third quarter was 68.7 million.

That's an increase of 112% compared to a year ago. As a reminder, we closed the Best Doctors acquisition on July 14, so the results I'm reviewing today include two-and-a-half months' worth of Best Doctors' results.

On an organic basis, our revenue increased by 45% year-over-year. Our subscription access fee revenue of 59.8 million increased 115% compared to a year ago and included approximately $20 million from Best Doctors.

On an organic basis, subscription access fee revenue grew 44% year-over-year. Breaking out subscription fees between US and international, the US accounted for 51.6 million of the total and international generated the remaining $8.2 million.

With the inclusion of Best Doctors US and international results, subscription revenues accounted for 87% of total revenue for this quarter. We ended the quarter with 22.6 million paid members in the United States.

I want to mention that as of this quarter, we are refining our definition of members to include just US paid members that are associated with the PEPM or PMPM or paid US membership. This change now excludes 1.6 million formally included members from Amerigroup.

Amerigroup has historically paid Teladoc a flat fee for state by state coverage and this contract, which is not a material amount is expected to continuing into 2018. In 2018, we will also exclude the membership from the Blue Cross Blue Shield federal employee program and Aetna's fully insured population since they will not carry a PMPM.

We also exclude Best Doctors' international lives from our reporting. Our international business is distinctly different from our US business because our international clients purchase our services for their respective consumers to provide a market differentiating service as a complement to their core set of consumer service offerings.

We will continue to break out these international results and we believe this approach more appropriately reflects the fundamentals of our business and hopefully affords you better visibility into our global operations and enhances your ability to track our success. Our average per employee per month or PEPM was $0.91 compared to $0.61 last quarter and $0.55 a year ago.

Excluding the effects from Best Doctors our PEPM would have been $0.68 for the third quarter. This greater than 20% increase was achieved from a nearly equal contribution from three areas.

First, our behavioral revenue price increases. Second, we excluded the Amerigroup lives.

And last, product mix shift in the core Teladoc services, principally in the small business market with the visits included model. Now let me move on to utilization, we calculate utilization as total general medical visits divided by Teladoc paid US membership for those members that have access to our general medical services.

Teladoc completed 306,000 visits in the quarter 51% increase over the same period last year. This represents an annualized utilization rate of 6.2%, an 84 basis point increase over last year.

As we have often discussed, our Q3 utilization shares the distinction with Q2 of being the lowest period of utilization throughout the year. These visits generate our fee revenue which accounted for $8.9 million of revenue in the quarter.

General medical visits accounted for 6.8 million of the revenue, 49% increase compared to a year ago. Consistent with the product mix I just noted, this quarter's paid visits represented 51% of our total general medical visits.

Other specialty visits which is principally composed of Best Doctors' expert second opinions provided for health plan clients accounted for the remaining 2.1 million of visit revenue. Gross margins of 75.6% have as expected with the impact of Best Doctors operating a slightly lower margin as compared to the Teladoc core business moderated slightly from 77.5% last quarter and 78% a year ago as our revenue mix shifted.

This is consistent with our long-term view as to how our margin profile would change over the next several years. Total operating expenses were $67 million in the quarter.

Sequentially, this represents a 44% increase and a year-over-year increase of 56%. The approximate $21 million increase in costs from Q2 to Q3 of this year was driven primarily by $11.7 million of Best Doctors' operating expenses and $6.4 million of acquisition and integration related expenses.

Adjusted EBITDA continued to improve, coming at a loss of $600,000 compared to a loss of $9.3 million in the third quarter of 2016. Consistent with our prior comments, we were very close to achieving an adjusted EBITDA breakeven for the third quarter and we fully expect to achieve positive adjusted EBITDA in this fourth quarter of 2017.

Net loss in the quarter was $31.3 million compared to a loss of $29.8 million in the same period last year. Net loss per share was $0.55 compared to a net loss of $0.65 in the same period last year.

While our comparable quarter's loss was similar, the decrease in net loss per share was due to the changes to our weighted average common shares outstanding, which increased to 56.5 million shares in this period compared to 45.9 million shares in the same period last year reflecting an increase of approximately 11 million shares, which includes the issuance of 7.9 million shares from our follow-on offering in January in addition to be approximately 1.9 million shares issued in July of this year in connection with the Best Doctor's acquisition. Turning to our balance sheet, we ended the quarter with over $170 million in cash and short-term investments.

Our total debt at the end of the quarter was approximately 450 million. Now, I would like to provide our outlook for the fourth quarter of this year.

We now expect total revenue of between $75 million and $77 million. EBITDA loss between $8 million and $9 million, positive adjusted EBITDA between $1 million and $2 million.

Total paid membership of approximately 22.6 to 23 million members. Total visits between 400,000 and 450,000 visits.

And a net loss per share based on 57.1 million weighted average shares outstanding is expected to range from a loss of $0.41 to a loss of $0.43. We've also updated our outlook for the full-year 2017 from our most recent Q2 2017 guidance.

And we now expect total revenue between $231 million and $233 million, a change from the previous estimate of total revenue of $230 million to $235 million. EBITDA loss between $48 million and $49 million, a change from the previous estimate of a loss between $46 million to $48 million.

An adjusted EBITDA loss between $14 million and $15 million, which is a change from the previous estimate of an adjusted EBITDA loss between $15 million to $17 million. Total membership of approximately 22.6 million to 23 million members reflecting 100,000 member increase to the low end of the previously provided range.

Total visits between 1.4 million and 1.45 million, no change from the prior 2Q guidance. And net loss per share based on 55.1 million weighted average shares outstanding is expected to range from a loss of a $1.56 to a loss of $1.58, a change from the previous estimate of a range of loss from $1.52 to $1.55 per share.

As our guidance indicates, we are on track to meet the goal we stated on our IPO Roadshow over two years ago of achieving positive adjusted EBITDA in the fourth quarter of 2017. I'm incredibly pleased with the tremendous efforts of our entire organization that have helped us to get to where we are today.

Finally, I just want to remind everyone that we will be hosting our inaugural Investor Day in New York City on November 20, where we intend to feature several of our colleagues and clients in our presentation of 2018 products, strategy and commercial initiatives for the year. Please visit our website, where we have included all of the relevant details.

With that let's open the call to questions. Operator?

Jason or Mark, can you maybe just walk us through how the new Aetna contract works. So obviously moving away from PMPM, but if I remember correctly there's some shared savings component to it.

So, first if you can help us to understand how that works. And then secondly, Jason as you've been going through the selling season, are you starting to see where other health plans are interested and a different type relationship going into 2018 or do you think that this is really unique to a big player like in Aetna and FEP.

Yeah, thanks Lisa. So let me start with the Aetna contract.

First I just want to remind you that the change to the Aetna contract is only for their fully insured membership, which is about half of the business that we have with them. So we have about give or take 8.5 million members with Aetna, about 4 million are in the fully insured population and that's the one that we extended the contract and revised the terms.

The self-insured population stays the same. With respect to the fully insured, we'd a few goals from the renewal process.

Our first goal was obviously to extend the agreement. Second goal was to roll out additional products and services into that population.

And we did that as we have now rolled out behavioral health and dermatology for that population. And the third was to make sure that we align ourselves with Aetna's needs and interests, and provide us with ample incentive quite frankly to expand the utilization.

And so the new structure does have Aetna paying us a share of savings in addition to the visit fee. So on a total basis, our revenue per visit ends up being almost four times what it was previously, which means that we have significantly more upside in the Aetna contract as we drive higher utilization.

So that really aligns our interest with Aetna's interest. We're very pleased with how that turned out and we think that we're aligned and our revenue opportunity significantly increases over time with them.

Just to understand that can we talk about the shared savings. So is it, okay, this population previously had used the emergency room and that cost us 300 and Teladoc is 50 and so we're going to share in some component of the 250, is that how the shared savings work.

I'm just trying to understand kind of the mechanics of what they're looking at when you're thinking about shared savings.

Yeah so that's exactly, we went through an analysis with Aetna, with their medical economics group. We agreed on what the total savings per visit that's generated for Aetna.

And then we agreed on how much Aetna would pay us in addition to the per visit fee on a per visit basis. So it's a fixed amount, we don't have to go back and recalculate at the end of the relationship or the end of the year, what the measured savings was we know exactly what we're getting from Aetna on a per visit basis.

And so when I say that the total revenue we're getting per visit is almost four times what it was previously. That includes the $40 per visit we're getting as part of the benefit plan plus the per savings payment we're getting or per visit savings payment we're getting from Aetna.

And then, as far as this year's selling, outside of the full risk business here with Aetna as well as the new FEP relationship, are you seeing any others that are interested in moving away from this per member per month type of relationship on the paid member side.

So what we're seeing is that our pricing is very much segment specific. So our entire employer book of business is still on a PEPM basis and all new accounts that are coming on in the employer space are on PEPM plus per visit fee or higher PEPM with the visits included model.

Our health plans the vast majority are coming on in our traditional sort of fixed PMPM plus per visit fee. We are starting to do on a more frequent basis although still as a small minority of our total contracts situations where we do a lower PMPM to start plus per visit fee and the PMPM increases as we drive higher utilization.

We successfully did that with a large West Coast Blue Cross Blue Shield plan, significantly increased the utilization. And as a result increased our PMPM fees.

And so we're starting to see some of those and where we feel like we can get good information and good cooperation from the plan on engaging the membership we're more than happy to do that because we think again it aligns our incentives gives us more upside. And then there are very few but a few cases where we have large opportunities that lend themselves to more creative arrangements like the FEP population or the Aetna population.

And as long as those meet our hurdle rates and give us good insight and predictability into revenue, we're happy to do that. And I think we'll talk more about that as we give some insight into what the selling season looks like in later this month on November 20 at our Investor Day.

I'm looking forward to the Investor Day and if I could just ask one other question. And that would be, Jason, I think the way you're talking about this virtual care platform and what you've been able to do via acquisitions whether it's Best Doctors or HealthiestYou, we think about dermatology, behavioral health.

Are there any other verticals that you think you need to add via acquisition or do you think, okay, we have the pieces that we need today and we'll primarily grow organically.

Right now we're very focused on the successful integration of Best Doctors and rolling out an integrated platform that ranges from sort of episodic urgent care all the way up through more catastrophic or complex conditions. And does that with a single front end that's intuitive for the consumer.

Once we execute on that and bring that to market. Number one that will be completely differentiated in the market relative to anything else that's out there.

And number two at that point we'll start to look at where it makes sense for us to add additional clinical capabilities and programs either through in-house development, through partnership or potentially through further acquisitions. But we would do that out in the future once we bring this to market and execute on the successful integration of the companies.

My question is on Best Doctors, you said that you've sold to some accounts worth more than a million members. Can you maybe unpack that a little bit on how that conversation is going.

And then specifically when you do cross-sell Best Doctors into an existing customer, how does the math - what's the math on the uplift on the revenue of that customer.

So I'll go through adding a little more color on the cases that we've sold either cross-sell and joint-sell and then Mark can go through the math on sort of a unit basis. The nice thing is we're seeing sort of all three of the things that we would have hoped for.

One is selling Best Doctors into existing Teladoc clients. And we've done that for the small employer market alongside or integrated into HealthiestYou.

We've done it in the large employer market both where we're selling second opinion services for the first time that the client is buying them as well as displacing competitors who were in Teladoc accounts, but the account had a different second opinion service. And then on the end we are actively in discussions with a number of our health plans to put Best Doctors through their ASO channel into their large employer self-insured clients.

On the other side we're being successful in selling Teladoc into Best Doctors clients. And then the third one is we have some significant successes in selling a joint product to clients you didn't have either Teladoc or Best Doctors, but we're running processes either in one or both of the areas and have signed up to buy both products side by side.

And as I said we've now brought to market an integrated app, so there's a common front end for the consumer.

And John I would just add that based on the respective channel, we're seeing pricing from a couple of dollars, up to many dollars for those clients that are sold through the small and medium size business channels. So we've been active in quoting accounts with 50,000 and greater employees as well as introducing the service to health plans with hundreds of thousands of members.

And we've been actively selling on a day to day basis into small and medium sized businesses that are closer to a couple of hundred employees with a combined service on either HealthiestYou and Best Doctors core services or the Teladoc core service added to the Best Doctors services.

So what I was trying to get at, is if I'm a Teladoc, let's say I'm Teladoc employer customer and I add Best Doctors to my existing terms of my contracts. Can you give me a sense for what that lift is to you?

You can think of a traditional client with approximately 5,000 lives, paying Teladoc somewhere in the range of let's say $2 per employee per month. And they would likely be at the $3.50 range with the uplift from the Best Doctors additional services.

How about a bigger picture question this, opioid problem that we have, Telehealth is getting a lot of air time in that. I was wondering if you guys have a strategy around that or any commentary that you have on that opportunity.

So I think from a big picture perspective, certainly very pleased to see Telehealth getting more recognition and support in Washington. We see that happening both in Congress as well as at CMS.

So I think that that bodes very well for our future and for Telehealth's role in the overall health care system. With respect to the opioid crisis, obviously this is a very significant issue and it's a complex one.

We are looking at possibilities there, we don't currently have a program. There are some complexities relative to the treatment of that condition and doing that in a remote environment.

So no big announcement for me here on a program focused on that. But as this continues to get significant attention we make sure that we're following and if we see an opportunity to roll something out into market then we'll certainly take advantage of that.

I guess maybe, Mark, the Best Doctors revenue during the quarter, I thought you guys are going to be like 22 million and it sounds like it came in closer to 20. Is that right, is there kind of any color on that.

You know any thoughts on the contribution in Q4 and how that plays into what your new revenue guidance is.

Jamie, we finished up a 21.8 million, so the 22 million is appropriate for the expectation for what was deliberate in the third quarter. Recall that the quarter was short by two weeks as we closed on that transaction in mid July.

So they're tracking and trending above what we had expected when we presented this transaction to our board. And the underlying valuation that we used was obviously dependent upon their projections.

We're extremely pleased with both their topline and especially their bottom line. So that's why we've got some - we've got some good Q4 expectations and a run rate coming into next year with even better contribution on the bottom line.

The core business seems like we saw a decent acceleration sequentially in the organic growth rate. I guess the question there is what drove it, is this even more traction with better health business or is there something else going on.

Yes, you're right we did have great organic growth 45% quarter over quarter. There was a, I'd suggest equal contribution two areas, the behavioral health entity is now contributing in excess of $25 million annually.

You recall that was about $12 million last year and they are likely going to again grow in excess of 50% likely will achieve numbers potentially at the 75% growth rate going into 2018. Additionally, we did have obviously good volume coming in at the beginning of the year that was at slightly higher PEPM rates, we had that sort of nickel.

If you think of the PEPM growth over the quarters, we spoke about what it was with the impact of eliminating that Amerigroup lives, but if you look at it on a same store basis, Q3 of '16 was $0.49, all quarters of '17 exceeded $0.50 and in Q3 of this year, we were at $0.53. So that organic growth - that 45% organic growth really came from those two components.

First, just a quick housekeeping item. On the international figures you gave, Mark, all of that is from Best Doctors, is that correct?

Is there any core Teladoc that's international? I just want to make sure I've got that right?

No, you're correct, Sandy. That is all Best Doctors' revenue from clients such as Great-West, Sun Life, MLC, RBC, these are all extremely large insurance and financial services companies.

And then following up on the Aetna contract, make sure I understand that with their fully insured, are you guys now automatically in all of that or is it - and is Aetna bidding that out to everybody or can people - that someone's on the fully insured side with Aetna, can they elect not to take down the Teladoc services.

We roll out segment by segment or market by market in the fully insured business. So they're not bidding it out.

We are their telehealth provider of choice. But you have market leaders for each one of their markets and segments who make the decision about when to roll it out.

So as I mentioned in the prepared remarks, we did roll out to a new population, a student population over the course of the quarter. That was an expansion of our service or of the population that were being provided to or looking at several other additional markets to roll out to that will again then have access to the Teladoc service as part of their overall benefits package.

And just final question, as we continue to see more momentum building for you guys in the whole telehealth market, are you finding any challenges in terms of finding doctors and I can't remember if you've given us a recent number of doctors that are certified on the Teladoc network and just trying to think about what type of growth that needs to do in order to keep supporting the top line growth you guys are doing?

It's a good question. We haven't given one in probably a couple of quarters.

It's probably a metric that we can look at providing on November 20. We're not however having a challenge with bringing doctors on.

In fact, I was on the phone today with the person who leads our recruiting efforts and we just credential - the couple of hundred physicians into the network as we are now ramping into the busier season with cold and flu season. So we don't see that as a significant constraining factor for us.

We continue to have strong capacity and strong response times as volume increases as we head into cold and flu season.

Guys, I was wondering if you could give us a little bit of, I guess, comfort with respect to the visit - guidance for the year. I know you maintain that.

Obviously, there's been rampant pressure across the industry with respect to volumes and I understand obviously telemedicine, there's a shift towards telemedicine, but what gives you the confidence in the 400,000 to 450,000 I guess target for the fourth quarter.

It's Mark. So to date, we've completed over 1.1 million visits and had we seen a much earlier increase in flu type visits, we likely would have reassessed our earlier communicated figures and the targets that are out there today to have lifted that, but we're comfortable with - and we have visibility into where we are today to the extent that those numbers should come to fruition.

We saw one of our highest days of the year this past Monday and we're comfortable based on providing 10 years - in excess of ten years of these virtual visits in tracking that and based where our membership is today, we should achieve that number within that range.

Richard, the other thing I guess I'd add to that is that we are now in the midst of our fall communications campaign, which is a multi-channel communications effort in order to drive awareness and utilization and the early results are very strong and so we're comfortable that the modeling we've done around that and the yields we get from those efforts will drive the results that we've projected.

You had mentioned United earlier in some of the commentary with respect to Aetna and continuing to add individuals there, can you talk a little bit about where you started with United, where you are today and how you view the opportunities going forward?

Sure. We're very pleased with that relationship and how it continues to evolve.

We did roll out to some new populations, both in the government programs for them as well as in the commercial sector. We are also in discussions with them about some additional populations as we look into 2018 and about how we can bring some additional products and services to bear for them.

So we feel very good about it, we're well over 1 million members now from the United family of products and markets. And we have high expectations for 2018.

And final question is housekeeping, Mark. In terms of talking about the membership base, I just wanted to be clear, you, I guess, raised the bottom end a little bit on that, but with all the puts and takes you mentioned, Amerigroup coming out.

Can you just go over that again, so everyone's clear on that?

Sure. Richard, we excluded about 1.6 million members that are in a number of states that Amerigroup has had under contract with us for many, many years, probably around 10 years.

That contract continues, but they pay us a flat fee per state. Their membership hasn't changed that much and their utilization is extremely low.

We have not had opportunities with Amerigroup to initiate any internal or any other program - any programs with them to generate additional utilization. So we feel that by including those numbers, it's somewhat dilutive and doesn't give a clear picture as to the increasing utilization over the rest of the population.

And again that contract stays in force. While it's an insignificant financial contract, we'll continue to service those members in '18 and beyond

So you're saying you pulled those members out of your new guidance on members?

That's correct.

Okay. So you would have raised your membership based on the previous way you looked at it?

Sure. If we had not taken on both the US paid membership from Best Doctors and excluded the Amerigroup lives, we'd still have a net increase in contribution, but between quarters two and three and sequentially, that membership was essentially flat.

As to be expected since, we barely add lives other than health planned lives if they land in the middle of the year in that six month period.

Jason, a follow-up for you on the new Aetna agreement. I'm curious with the incentives you have to markedly increase the long term value of relationship there.

If you've also gotten more commitment from them to enable you to market it more effectively, things like email addresses or ability to contact the membership base more actively going forward.

Yeah. It's a great question and the answer is yes.

As part of our agreeing to the new structure, we have gotten access to significantly more data that enables us to more effectively target that population and get greater yield out of our communications efforts. So that was a part of the agreement and puts us in a place where we feel confident about the ability to drive higher utilization and realize the upside of that contract.

And then based on the current contract terms and utilization, should we think of this about coming out of the box in the first quarter as maybe dilutive to revenue, but for the full year neutral or accretive as you drive that utilization or just how should we think about the step function there and run rate revenue for Aetna '17 versus '18 and then how it might see a cadence change throughout the year.

Ryan, it's Mark. We would expect the revenues to be either neutral or slightly stronger than what we saw in 2017.

It might be lumpy as a result of the fact it's going to follow our traditionally heavier seasons, quarter one and quarter four. And quite frankly, we'll see and we expect to see an increase quarter-over-quarter from 18 to 17 in Q1 and we'll likely see that drop in Q2 and 3 and it will be hopefully a strong quarter end in Q4 of '18 and run rate revenue should be significantly greater.

And then last question I'll hop off, just on the 2018 selling season, you mentioned that it's trending favorably versus the year ago. I'm curious how far along in the season are you with only two months left or maybe asked differently how high is your visibility into 2018 membership, not asking for guidance, but just level of visibility today and how does that contrast the past years?

Thanks.

Yeah. Ryan, we were looking at that just over the last week or so and we figure we're at about 90% visibility into our 2018 revenue, which is slightly higher than we were at this time last year.

We feel pretty good about where the selling season is. We're still seeing a lot of business come in and in fact that reflects the strength of our small and mid-size employer market efforts, mostly focused on the HealthiestYou product, but also through some of our reseller channel.

So we feel very, very good about that and again at about 90% visibility, we're very pleased with how the selling season is shaping up.

Jason, one more on Aetna recent contract. Now that you have access to the members, can run direct campaigns, is there anything unique in these members that can prohibit you from getting to the current book rate of 6% utilization and also are there integral targets that you can share about how you expect utilization grow.

So I won't share what our own internal targets are. But I will say that with the additional data, we do feel good about our ability to increase the utilization rate.

I mentioned earlier that we have a West Coast Blue plan who we put not exactly the same structure in place, but a similar incentive for us to drive higher utilization and we've been able to increase utilization '17 over '16 sixteen by about 50%. So we feel good about our ability to replicate that and maybe even do a little better.

Having said that, I wouldn't set expectations around 6%. It's always harder to reach a fully insured population and get them motivated to engage than it is an employer population because people are less tuned in to their health plans than they are to their employers.

And so, I want to - I don't want to set your expectations that we're going to get to 6% on that population, but I do feel very good about us increasing the utilization substantially.

A couple of numbers questions, Mark. On Q4, I think Jamie asked you this, but I just wanted to get some clarity.

Are you still expecting $25 million to $26 million for Q4 from Best Doctors?

Yeah. We didn't break out the exact number, but Mo, we did approximately 22 million for the reduced quarter, the third quarter, so you should expect to see the jump for the additional two weeks and clearly a little bit greater impact from more volume.

And there is no seasonality in Best Doctors, right?

There is little seasonality compared to traditional Teladoc, that's correct. There's obviously the seasonality that comes about as a result of new contracts commencing in Q1, but beyond that, there's nothing aligned to what we experience when we see heavier cold and flu seasons.

One last one, going back to the membership and how that's going to change into '18, can you provide us a net number if you exclude right now all the non-paying members out of the 22.6 million members?

Well everybody today is paying in that 22.6. You should think about those 4 million members from Aetna fully insured that will transition to the different construct of the medical cost savings or share of savings in 2018 and then obviously we'll be adding those millions of members that will not go into our calculation for the FTP membership.

That's the only two entities that I can identify now.

Just a couple for me. First up, with the FEP relationship and I apologize if I missed this, but given that the change in how that contract is structured, how do you intend to drive utilization with that group and who is going to be footing the bill for the education of the employees?

So, Matt, that's a new contract. So it's not really a change.

It's a de novo relationship that will start in January of '18. The structure of that relationship is such that the FEP organization, through the Blue Cross Blue Shield Association, is responsible for communications unless they employ us and pay us an incremental fee to perform those services for them.

So, it's a contract that has a significantly lower cost basis to us, because we're not footing the bill for communications or welcome kits or things like that. And then, the opportunity there of course is to work with the FEP organization as well as the 38 member plants who serve those populations in order to help them promote the service.

We do that by the base contract on more of a consultative basis and they have the option of purchasing engagement strategies and services from us. The other benefit of that contract, just to say, is that it gives us a foothold in all of those 38 member plans and we've already won business as a result of the FEP selection of Teladoc.

And when I say we won business, it's with Blue plants who were not previously working with us, but piggybacked on the FEP RFP process and those contracts have been closed at our more traditional PEPM plus visit fee structure.

One more question, you mentioned early on that you guys are becoming a little bit more creative in some of the bidding processes and I'm wondering if that's being driven by the costumer or by your desire to maybe expand markets or is it due to competitive pressures?

Yeah. Matt, it's certainly not a reaction to the competitive environment and to be honest, we've, I think, done a very good job of differentiating ourselves in the market as we're now really selling something very different from anybody else.

It is more about us getting more sophisticated in understanding our business, understanding the levers of growth and how we can align ourselves with our clients in a way that maybe takes a little bit of risk off of the client, gives us more upside and in response to what we've heard from our clients, in terms of their interests and goals, be able to deliver something that meets those goals. So yeah, I think two or three years ago, we wouldn't have felt comfortable because we didn't have as sophisticated analyses into the data and the performance of our markets and our ability to drive utilization using digital channels that are much more efficient and much more targeted and effective as we do today.

And so as our business gets more sophisticated and our ability to predict that utilization gets more sophisticated, we feel comfortable doing things that align everybody's interests and give us better upside.

Just one more for me. On the provider segment, you had mentioned that the growth there has been very strong.

So just wanted to get an update in terms of what you're seeing from a product demand standpoint and how you see that market evolving? Are health systems more focused on outreach to patients in their markets or more focused on leveraging specialist, both in and outside their networks to provide better coverage?

Yeah. It's a really diverse set of use cases and priorities for the health systems.

In our employer markets and our health plan markets, they're much more consistent and it's a much narrower set. With hospital systems, they are very diverse.

Some of them are looking for referrals and driving increased patient populations and patient acquisition strategies, some of them are looking at financial risk management as they take risk for the populations and therefore more efficient delivery of care and less leakage outside of their systems. Some of them are very focused on readmission avoidance and using telehealth to do follow up care.

We do have some of them using the platform for specialty consultations within their systems and then of course many of them are looking at their own population, their own employee population as an expensive healthcare cost and therefore they look at us more like an employer does. So I can't give you a single use case, because it's a pretty diverse set and I think our sales organization in that segment is very, very good at understanding the needs and priorities of the client and helping to tailor a solution to their needs.

So how do you drive engagement with health plan members as compared to the way that you drive it with employers? And relatedly, do health plans give you access to select system members the way that a typical employer would.

It's different from health plan to health plan. They're not uniform.

Our efforts are frequently similar for the health plans versus the employers, although, many times, we're doing more in concert with the employer then we can do with the health plan. So, obviously things like on site, being on site, helping to facilitate employee to employee, peer, word of mouth and referrals are things that are much more easily done in an employer environment than they are in a health plan environment, but we are able to do very effective digital targeting among our health plan members and of course we can be incorporated into the health plan's communications to their membership, whether that's in their overall benefits information through their digital channels on EOBs or other things and we use all of those channels among our various health plan customers.

And is it still the case that you generally seek to do contracts around a managed care organization self-insured book of business and not yet fully insured?

No. We target both of those populations.

So, I talked about Aetna earlier. That's about 50% self-insured membership, 50% fully insured membership.

And we work with plans across the country just like that.

Jason, just a couple of quick ones from me. I believe in 2Q, you had given some breakdown with respect to the kind of mobile app/website versus landline breakdown.

I think you had a 55/45 respectively. Any updates of those numbers, gradual or not?

Pretty similar results in the third quarter to the second quarter. Maybe a point additional swing form offline to online to digital channels, but pretty similar results.

And then I believe you had also commented on existing better health subscribers, I think it was roughly 15000 as of 2Q. Any update to that number?

No, it's about the same today.

And I guess finally more thematically, given the potential CVS Aetna tie up, any kind of vision as to what that could foretell for Teladoc strategy wise, perhaps more monitoring services within a mini clinic or whatever it may look like.

We have very good relationships with both CVS and obviously with Aetna and we are actively talking to CVS about expanding that relationship and so I feel very good about our position there and think that if that were to come to pass, it would only be positive for us.

I actually have two questions. So when you exclude the membership relating to the Federal employees plan and the Aetna fully insured book as well as Amerigroup, is there going to be another revenue item to reflect the revenue that you're earning from those contracts?

If not, where is it going to go?

Yeah. The revenue from those contracts Steve will go in to visit revenue.

Even on the shared savings arrangements?

Principally on the shared savings, because those are based only on completed visits.

Okay. And then the other question is when you look at the full year guidance, you obviously tighten the range with the high-end coming down a bit.

What didn't materialize that you might have suggested you would have gotten to that higher and? Or is it - or you just bring that in just because it's the fourth quarter and you have really good visibility at this point with two months to go?

Well, I've actually only got one month to go, because I've built November already Steve and the reality is, we set these numbers at the beginning of the year and bringing it down by $2 million to maybe again with enhanced visibility that's where we're feeling comfortable. It's an insignificant change in our mind, since we've still achieved again nearly 50% organic growth for the year.

Actually it's Charles for Samantha. Just first a quick clarification around - the question around the opioids.

If I'm not mistaken, you can't get prescribed class 2 drugs through telehealth. Is that correct?

Yeah. We don't prescribe or we don't permit our physicians to prescribe any scheduled drugs.

So when I said that there are some complexities relative to the treatment of opioid oriented conditions or addiction, specific to telehealth, that's what I was referring to.

Second, just a quick question on the prior question on CVS. Can you remind us what the current relationship you have with CVS?

I recall you guys putting a release or CVS maybe did, maybe looking from pilots, just trying to get an update there, like, is there an official relationship that you guys have in terms of contractually or is that we've still kind of been in sort of a continuous pilot phase, just curious.

Well, we have a contractual relationship that started with the pilot. We also served their employees with our traditional Teladoc service for their employee base.

And we're, I would say, actively exploring expansion of our relationship.

And then lastly around utilization and as we think on to the future, Jason, if I remember I think in the past, you guys have talked about sort of your typical commercial clients, utilizations were sort of low mid-single digits, it kind of goes up year two. And then - and can take a kind of a big jump in year three.

And if I look back - if I look at the P&L or sort of the membership growth over the last several years, it looks like some pickups in the last couple of years. Should we start to think about modeling that in where we're going to get to kind of steeper part of a utilization ramp as we get your older customers kind of maturing into that year three and is that - should we think about 2018 and I know it's a little earlier, but is that a 2018 event or should we think of that as more of a 2019 event?

Yeah. So there is no question that we do see the benefit of that, but as you say, it's dampened by the membership increases that we see across the book of business.

And so many millions of lives that we bring on in year one and therefore have lower utilization levels. As the book matures, you'll see that more.

I think you'll start to see a little bit of that in '18 and a lot more of it in '19. If you look at how many members we added, this year, it's certainly - that's a significant dampening effect on that inflection.

And I guess last question for me, on the provider business, can you give us sort of your thoughts on this and particularly obviously a lot of positive news coming out of Washington. It looks like Medicare is beginning to move here.

You have expected decisions in MedPAC coming, how much would you obviously handicapped the lack of Medicare reimbursement has limited growth in the provider segment versus, let's say, the employer segment and would you expect that to change.

I would be reluctant to give you a percentage or try to approximate how much that has dampened the growth from the provider segment. I will say that I think as we look at the chronic act that seems to be gaining traction through Congress and the likely impact of that that's probably a 2019 impact because the language that's in there enables health plans or MA plans to put in telehealth as part of their bids in the 2018 bidding season for '19.

And '19 for '20 really. So it's out there in the future.

I do think that it will be positive, but I guess the other thing I'd say is we try really hard not to put any of that stuff that's more binary and out of our control into our forecasts and projections.