Dive Brief:
- Teladoc reported better than expected revenue in the third quarter, on the back of its mental health business, BetterHelp, and issued moderate fourth-quarter guidance, leading some industry watchers to say the telehealth vendor is setting itself up for achievable growth after uncertainty contributed to stock losses this year.
- The third quarter results were welcomed by investors, as Teladoc’s stock jumped 10% in afterhours trading Wednesday.
- The Purchase, New York-based telehealth vendor also gave some cautious comments on growth in 2023, as macroeconomic headwinds like inflation could cause consumers to tighten their purse strings, affecting BetterHelp’s sales.
Dive Insight:
Teladoc, like other large virtual care peers, has pivoted away from pure-play telemedicine visits to a whole-person care strategy as pandemic-driven demand for virtually delivered care has slowed.
Investors weren’t pleased after Teladoc suggested it would hit the lower end of its 2022 outlook in the second quarter, sending its stock, which has slumped this year, further dropping in late July. The news also resulted in downgrades from Goldman Sachs and Needham.
The two-decade-old vendor further moderated its fourth-quarter and full-year outlook on Wednesday. But industry watchers seemed cheered by Teladoc setting up a feasible growth ramp coming out of its pandemic highs.
“Teladoc seems to be hitting its stride on its path to profitability and turning around the business,” said George Congdon, a senior analyst at Third Bridge, in emailed comments to Healthcare Dive.
Teladoc slightly narrowed its full-year guidance for revenue, adjusted earnings and total visits. The vendor expects to bring in between $2.395 billion and $2.41 billion in revenue in 2022; and report adjusted EBITDA of between $240 million and $250 million.
Teladoc also lowered its guidance for the fourth quarter. But “paradoxically, we view the guidance cut positively, as it sets up [Teladoc] for a more achievable 4Q ramp,” SVB Securities analyst Stephanie Davis wrote in a note on the results.
Teladoc reported revenue of $611.4 million in the third quarter, up 17% year over year. The topline, which came above analysts’ expectations, was largely driven by better per-member-per-month revenue from BetterHelp, and partially offset by the loss of one client at its Livongo chronic care business.
BetterHelp is steadily making up a larger portion of Teladoc’s revenue, growing 35% over the previous year and 7% sequentially, CFO Mala Murphy said.
The vendor reported a net loss of $73.5 million, slightly better than the $84.3 million loss notched at the same time last year.
Teladoc ended the quarter with 57.8 million U.S. members, up 10% year over year, and conducted 4.6 million visits in the quarter, up 14% year over year.
Teladoc’s deals pipeline was progressing more slowly than expected earlier this year, but the third quarter was “a catchup quarter when it comes to pipeline development,” CEO Jason Gorevic said. It was the biggest quarter of 2022 in terms of bookings, bringing Teladoc’s total year-to-date bookings roughly equivalent to where they were at the same time last year.
And Teladoc is closing “significantly larger” deals, Gorevic said. The company’s average deal size is two times larger than in the first two quarters of 2022, and 50% larger than the third quarter last year.
Teladoc will issue 2023 guidance in February, but management provided some commentary on the coming year, offering some caution that macro headwinds like inflation worsening could hurt its direct-to-consumer BetterHelp business.
