Dive Brief:
- Teladoc Health raised its full-year revenue guidance during its second quarter earnings results, with executives noting enrollment growth in its integrated virtual care segment as employers and health plans look to consolidate vendors.
- The telehealth company beat Wall Street expectations with revenue of $652.4 million, an increase of 10% year over year. Teladoc is still operating at a loss, but its net loss declined to $65.2 million compared with $69.2 million last quarter and more than $3 billion last year.
- Teladoc stock rose 6% in trading after market close on Tuesday.
Dive Insight:
Teladoc is coming off a difficult year in 2022, when it posted a historic $13.7 billion net loss largely due to goodwill impairment charges linked to the declining value of its $18.5 billion Livongo acquisition from 2020.
But the virtual care giant has beat the Street's expectations and raised its revenue guidance for two quarters in a row. Company leaders argue its approach to “whole-person” telehealth — which includes primary care, chronic condition management and mental healthcare — sets it apart in a crowded field awash with virtual care vendors.
Revenue for Teladoc’s integrated care segment increased 5% year over year to $360.1 million in the second quarter. New enrollment in its chronic care program drove the segment’s revenue growth compared with Q1, CFO Mala Murthy said on the call. Chronic care program enrollment increased 7% year over year and 4% from the first quarter.
“[Teladoc] continues to be well-positioned as the industry leader, and though it may take time to see meaningful new client growth, it is encouraging the company can continue to grow within existing clients,” said TD Cowen analysts Charles Rhyee and Lucas Romanski.
The company’s direct-to-consumer mental health business, BetterHelp, also saw revenue growth in Q2, increasing 18% year over year to $292.4 million. The segment reported more stabilized customer acquisition costs, CEO Jason Gorevic said in an earnings call, which was a challenge for the mental health division last year with more teletherapy companies flooding the market.
“Consumer demand has proven resilient through the first half of the year, even with the financial pressures that many households are facing,” Gorevic said.
The company now projects it will bring in between $2.6 billion and $2.68 billion in revenue this year. Teladoc also revised its adjusted earnings before interest, taxes, depreciation and amortization outlook for 2023 to $300 million to $325 million.
Gorevic said the company’s enterprise customers are looking to consolidate vendors in an uncertain economic environment, but they’re still interested in telehealth options. And as virtual care startups face decreased access to capital, a more established player has an advantage, he said.
“They want a strong stable partner who can drive innovation and deliver real value over the long term. This means working with a partner that has a solid financial foundation,” he said.
Teladoc also highlighted new initiatives on its earnings call, including its upcoming expansion into GLP-1 drugs for weight loss and its AI clinical documentation partnership with Microsoft.
Employers and health plans want to meet demand for the pricey obesity drugs, and virtual care could help cut down costs of providing access to the medications, Gorevic said. The expanded partnership with Microsoft to use its clinical documentation tools could make visits more efficient and improve the quality of medical notes.
These new enterprises “entail opportunities for growth,” but they likely won't meaningfully contribute financially in the near-term, according to analysts Rhyee and Romanski.
