Key takeaways
- Use contribution margin, not revenue, when computing LTV. Revenue-based LTV in telehealth is close to fiction.
- The SaaS 3:1 LTV to CAC rule assumes near-zero marginal cost. Telehealth has cost in every month.
- Payback period is the more useful number because it tells you how fast you can reinvest.
- A percentage-based platform fee reduces contribution margin permanently, which lowers the CAC you can afford.
- Retention curves differ enormously by category, so a blended LTV across verticals hides the business.
Why the software benchmark does not transfer
The familiar 3:1 LTV to CAC guideline comes from software, where serving an additional month of an existing customer costs almost nothing. Nearly all revenue after acquisition is contribution.
Telehealth does not work that way. Every month a patient stays, you incur medication cost, fulfillment cost, clinical review cost, payment processing and often per-order platform fees. A patient paying $249 a month is not delivering $249 of contribution.
Applying a software ratio to a revenue-based LTV therefore overstates how much you can afford to spend on acquisition, sometimes by a very large factor.
Compute LTV on contribution
The version that is actually decision-useful is contribution margin per patient per month, multiplied by expected retained months.
Contribution is retail price minus medication and fulfillment, minus the platform's variable take, minus payment processing, minus per-order fees. What remains is what a retained month is genuinely worth to you.
- Start from gross patient billings, not from a plan price you rarely collect in full.
- Subtract medication and fulfillment at your actual landed cost.
- Subtract the platform's variable component, whether that is a transaction fee or a percentage of billings.
- Subtract processing and any per-order support surcharge.
- Multiply by realistic retained months for that specific category, not a blended number.
Payback period is the number to run on
Ratios are comparative; payback is operational. If a patient pays back acquisition cost in two months, you can recycle capital into acquisition six times a year. At five months, you can do it twice.
For a capital-constrained operator, that difference determines growth rate more directly than any ratio does. It is also far harder to fool yourself with, because it depends on near-term cash rather than on a retention assumption stretching years into the future.
Category changes everything
Blending LTV across a portfolio produces a number that describes no actual business you operate.
Hair loss has a long retention curve but low monthly contribution and a slow proof cycle, so payback is long and churn clusters at month four. GLP-1 has high monthly contribution and strong retention but real medication cost. Sexual health has low touch and infrequent reorders. Menopause has the longest retention of any category and comparatively light operational cost.
Compute these separately or you will fund the wrong one.
Your platform fee is inside the ratio
This is the part most operators leave out of the model entirely. The platform's variable take reduces contribution margin in every retained month, which reduces LTV, which reduces the CAC you can afford, which reduces how aggressively you can bid.
A percentage of billings does this permanently and proportionally. A flat fee with a falling transaction rate does the opposite: contribution per patient improves as you scale, which raises the CAC you can afford at exactly the point you want to spend more.
Two brands with identical products and identical retention can have materially different affordable CAC purely because of platform structure.
A fee structure that improves your affordable CAC
PharmaBro's transaction fee falls from 3% to 2% to 1.5% as you scale, and there is no revenue share and no medication markup, so contribution margin per patient improves with volume rather than staying flat.
Analytics report retention, LTV and contribution by treatment line and by cohort, so you can compute these per category rather than blending them into a number that describes nothing.
Conclusion
The mistake is not using LTV and CAC. It is importing a benchmark from a business model with different marginal economics.
Compute LTV on contribution, per category, and run on payback period rather than on a ratio. Then check what your platform's fee structure is doing to the contribution line, because it is quietly setting your maximum bid.
Frequently asked questions
What is a good LTV to CAC ratio in telehealth?
There is no single number, and the imported 3:1 software benchmark is misleading because it assumes near-zero marginal cost. Compute LTV on contribution margin rather than revenue, then judge against payback period, which is a more actionable constraint for a capital-constrained operator.
Should I use gross revenue or contribution margin for LTV?
Contribution margin, always. Revenue-based LTV in telehealth ignores medication, fulfillment, clinical and processing cost that recurs every month, and it will substantially overstate the acquisition cost you can afford.
How does platform pricing affect CAC?
Directly. The platform's variable take reduces contribution in every retained month, which lowers LTV and therefore the CAC you can afford. A falling transaction fee improves affordable CAC as you scale; a fixed percentage of billings does not.
Tobias LundHead of Growth
Came from performance marketing on the brand side. Now spends his time explaining why blended CAC is the only acquisition number that does not lie to you.