Dive Brief:

• Despite worries that demand for telehealth could fall as the U.S. emerges from the COVID-19 pandemic, virtual care giant Teladoc beat Wall Street expectations with its 2021 financial results, and issued strong future growth projections Tuesday.
• The New York-based vendor posted revenue of more than $2 billion in 2021, 86% higher than in 2020. Total visits were up 38% to 15.4 million, and Teladoc closed out the year with 53.6 million U.S. paid members, up just slightly from the year prior.
• However, market uncertainty and expected growth weighted in the back half of 2022 sent Teladoc's stock slumping in aftermarket trading Tuesday following the results.

Dive Insight:

Teladoc, the largest end-to-end telehealth vendor in the U.S. market, has benefited greatly from COVID-19 accelerating the use of virtual care services over the past two years. However, shares in publicly traded virtual care companies have struggled lately as market watchers air concerns about a potential telehealth bubble spurred by the pandemic, which could cause demand for digitally delivered care to flatline once COVID-19 cases decline.

Teladoc, which continued to exceed analysts expectations in the fourth quarter, gained from notable revenue growth and an uptick in visits last year. In 2022 forecasts the company said it expects to continue expanding even as COVID-19 becomes endemic.

Teladoc expects to bring in revenue between $2.55 billion and $2.65 billion in 2022, representing 28% growth at the midpoint; conduct between 18.5 million and 20 million visits; and close out the year with between 54 million and 56 million members.

The 2022 expectations were ahead of investor consensus. But lower-than-expected guidance for the first quarter implies that Teladoc expects revenue to ramp up in the second half of the year. There's some risk in that quarterly cadence, which likely contributed to the after-hours drop in company shares, analysts said.

"While we appreciate that the shares and expectations have come down in recent months, we believe there could be modest pressure as investors digest lower-than-expected profitability and implied ramp throughout," Jefferies analyst Glen Santengelo wrote in a note on the results.

Despite Teladoc's consistent revenue growth and rosy outlook, it has yet to turn a profit, and is currently facing a skeptical market.

From January 2020 to its peak in February 2021, Teladoc's stock rose 252%. However, all those gains were wiped out by the beginning of this year.

Virtual care players operate in a highly competitive, highly regulated landscape. As tech giants like Amazon and entrenched players alike ramp up their presence in virtual care, the future of much telehealth access and reimbursement is still being written. The modality's pandemic-era flexibilities provided by Congress are scheduled to end when the COVID-19 public health emergency does, currently expected in April.

But the end of the public health emergency won't have "any real impact on our outlook," CEO Jason Gorevic told investors Tuesday. He noted that most plans that waived telehealth copays have reverted back to charging copays for virtual visits, many states that had waived licensure requirements have reverted back to requiring them, and almost none of Teladoc's business is in traditional Medicare, so that program's temporary payment parity hasn't really affected revenue.

Teladoc, like its peers Amwell and Included Health, has been racing to build out its services to vie for clients looking for a one-stop shop for their virtual care needs. A key growth priority for Teladoc is to provide whole-person care, from physical to mental, chronic to complex and acute to episodic needs.

On the earnings call, management said that strategy was bearing fruit, as multiproduct sales made up 80% of full-year bookings. By comparison, in 2020, just half of Teladoc's new bookings were multiproduct.

Teladoc's mental health business has seen significant growth, including its direct-to-consumer BetterHelp business. Mental health visits more than doubled in each of the DTC and business-to-business channels in 2021, according to CFO Mala Murphy.

It's a valuable business. Members who use mental health, combined with another Teladoc service, such as general medical or dermatology, bring in 20% to 60% higher revenue on average than those who use mental health services alone, Gorevic said.

Expanding that segment to meet growing demand, along with increasing adoption of the virtual primary care product, Primary360, and enhancing chronic care capabilities, are strategic priorities for Teladoc, Gorevic said.

Teladoc now has over 50 clients live on Primary360, including several Fortune 500 employers.

And the vendor last week launched a Chronic Care Complete product line, bundling its diabetes, hypertension and pre-diabetes programs into one package for clients, including physician-based care, for a fixed per-participant per-month fee.

"It ends up being a very healthy revenue stream and really incents buyers to adopt a multi-condition approach, so I feel very optimistic that, that will be our lead chronic care program in the portfolio as we go through the 2022 selling season," Gorevic said.

Teladoc has also launched a chronic kidney disease product, and hinted it's exploring other conditions as well.

"I'm not going to sort of preannounce where we're going to go in our next set of chronic conditions. But what I can say is that our team is actively working on several expansion opportunities," Gorevic said.

In the fourth quarter, Teladoc brought in revenue of $554 million, up 45% year over year, driven by growth in visit fee revenues and other revenues, which are primarily comprised of hardware revenues from the InTouch hospital-facing business, SVB Leerink analyst Stephanie Davis said.

Total visits increased 41% to 4.4 million. After a long period of low overall transmission of infectious diseases due to social distancing and mask usage, Teladoc began to see infectious disease volumes rebound in the second half of last year, Murphy said. Specialty visit volume also jumped 50% in the quarter on a year-over-year basis.

Though Teladoc did not garner a profit in the quarter, the vendor significantly shrunk its net loss to just under $11 million, compared to a net loss of $394 million in the fourth quarter of 2020.