Dive Brief:
- Teladoc beat Wall Street expectations in the first quarter and raised its 2023 guidance as a result, with management citing growing demand for chronic care offerings among employers and health plans.
- Teladoc’s revenue grew 11% year over year to $629 million in the first quarter, the company reported aftermarket Wednesday. Despite inflationary headwinds, direct-to-consumer mental health business BetterHelp’s revenue grew 21% year over year to $279 million. BetterHelp had almost half a million users in the quarter.
- Teladoc’s stock was up 7% in Thursday trading following the results.
Dive Insight:
Teladoc has sought to differentiate itself from other telehealth companies by stressing its whole-person care offerings as it looks to stay competitive in a market cluttered with point solutions.
The New York-based vendor’s enterprise business, which sells to employers and health plans, reported revenue of almost $350 million, up 5% year over year, in the quarter.
In January, Teladoc launched an integrated app for access to its primary care, mental health and chronic care management services for its employer customers.
Roughly a third of Teladoc’s chronic care patients use more than one offering, with that number expected to grow, executives said on a Wednesday call with investors.
Teladoc recently expanded a condition management program to prediabetes and weight management, as demand surges in the U.S. for weight loss drugs. The offering includes nutrition counseling, mental healthcare, health coaching and prescription drugs, including GLP-1s like Ozempic.
The range of services is a differentiator for Teladoc in the GLP-1 market, given its greater depth and breadth of chronic care products along with its 84 million integrated care members, SVB Securities analyst Stephanie Davis said in a note on the quarter.
The prediabetes and weight management programs are not expected to meaningfully contribute to Teladoc’s 2023 results, given they won’t launch until the third quarter. However, “positive early selling season commentary suggests this contribution would materialize in FY24,” Davis said.
Teladoc’s BetterHelp business results exceeded analysts’ expectations, which allowed Teladoc to spend more on advertising and drive greater membership growth, according to analysts.
Marketing spend, which was a headwind for Teladoc in the past few quarters, has stabilized, according to William Blair analyst Ryan Daniels.
However, “management has also noted that the BetterHelp business is inherently tied to consumer spending (and the overall health of the consumer), so we remain somewhat cautious on the segment’s growth outlook through 2023 — given the current macroeconomic environment,” Daniels said.
Teladoc continues to operate at a loss, posting a net loss of $69.2 million in the quarter. That’s compared to a net loss of $6.7 billion a year earlier when the vendor notched a significant impairment charge off its $18 billion acquisition of chronic care company Livongo.
Last year, Teladoc reported a total of $13.4 billion in non-cash goodwill impairment charges from the acquisition.
On the call with investors, management reiterated their focus on cost containment. Teladoc laid off 300 employees in January in a bid to lower operating costs.
Despite cost containment needs, Credit Suisse analysts said the first quarter represented a “sold start” to 2023.
“While it is only one quarter, the results give us greater confidence that [Teladoc] may perform better than expected in 2023,” they wrote in a note on the quarter.
Teladoc now expects to bring in revenue of between $2.58 billion to $2.68 billion in 2023. The new guidance represents between 7% and 11% growth compared to 2022, versus the prior 6% to 11% range.
