Dive Brief:
- Teladoc expects full-year 2022 results to come in at the lower end of its guidance, as rising economic uncertainty leads consumers to tighten their belts. The news, disclosed Wednesday along with the virtual care company’s second-quarter results, caused shares in Teladoc to fall 22% in premarket trading Thursday morning.
- The New York-based telehealth provider expects 2022 revenue between $2.4 billion and $2.5 billion, and EBITDA between $8 million and a loss of $41 million.
- Teladoc recorded a net loss of $3.1 billion in the second quarter, compared to a loss of $133.8 million the same time last year. The loss was driven by a goodwill impairment charge of $3 billion on top of the $6.6 billion that was itemized in the first quarter this year, which resulted in a record loss for the 20-year-old vendor at the time.
Dive Insight:
Teladoc beat Wall Street expectations for revenue in the second quarter, with a topline of $592 million, up 18% year over year. Chronic care membership came in higher than analysts expected, while member utilization improved year over year.
But “all eyes” are on the vendor’s guidance for the rest of the year, which implies a third-quarter miss and a steep ramp-up for earnings in the fourth quarter, SVB Securities analyst Stephanie Davis wrote in a note on the results.
Teladoc’s implied step-up in EBITDA margins “seems a lofty target given ongoing macro uncertainties and deal progression at a slower pace,” Davis said.
Teladoc CEO Jason Gorevic and CFO Mala Murphy outlined a number of headwinds for the remainder of the year in a call with investors Wednesday, though the executives noted Teladoc’s 2022 performance could be better than expected due to increased economic variability.
In the second quarter, Teladoc continued to see a decline in yield from marketing spend for its direct-to-consumer mental health business BetterHelp, a key growth area for the company that saw revenue increase 40% year over year. That yield decline could be indicative of consumers tightening their purse strings amid rising inflation, and — if it continues — could be a downside to BetterHelp, according to management.
“Although we do not see this as sustainable, it’s difficult to predict how long this could continue,” Gorevic said.
The potential for economic slowdown is also affecting employers, causing them to delay purchasing decisions as they look for ways to control costs.
As a result, deals are progressing more slowly than expected, though Gorevic noted Teladoc’s current pipeline is up 20% and the vendor had twice as many multimillion-dollar deals in the quarter compared to the same time last year.
“The pipeline I would say is very healthy … the challenge that we’re seeing is in these times of economic uncertainty all purchases are just getting a significantly higher level of scrutiny,” Gorevic said. “We’re seeing significant interest, we’re just seeing it significantly delayed.”
The weakening euro, which reached parity with the U.S. dollar earlier this month for the first time in two decades, could also create headwinds for Teladoc’s international business, Murphy said. International revenues make up more than a tenth of Teladoc’s overall revenue.
