Dive Brief:
- Teladoc Health withdrew its financial outlook for the full year 2024 on Wednesday as the virtual care vendor faces declining profits in its direct-to-consumer mental health business BetterHelp.
- The company’s net loss swelled to $837.7 million in the second quarter compared to a loss of $65.2 million during the same period last year. The hit was inflated by a $790 million goodwill impairment charge linked to the worsening performance at BetterHelp.
- Teladoc is evaluating its strategic direction and product offerings, as well as “streamlining” the organization, according to new CEO Chuck Divita. “This is a company that is not yet delivering on its fullest potential,” he said on a Wednesday earnings call.
Dive Insight:
The financial results, which beat Wall Street expectations on earnings per share but missed on revenue, marked Teladoc’s first earnings report since former insurance executive Divita took the reins at the telehealth vendor in June.
The company’s previous chief executive Jason Gorevic, who held the role since 2009, stepped down in April — a leadership change analysts said was likely coming at the right time as Teladoc focuses on long-term profit growth.
Though the virtual care company experienced rapid expansion during the COVID-19 pandemic, Teladoc’s stock price has since sunk significantly.
It kicked off an operational review late last year to boost its bottom line, but the telehealth vendor still posted mixed results last quarter — dragged down by lagging growth in BetterHelp, once a boon for the business overall.
In the second quarter, the mental health segment faced more challenges, including heightened advertising costs, executives said. Paying users declined 14% in the three months ended June 30 compared to the same period in 2023, while segment revenue fell 9% to $265 million.
BetterHelp posted adjusted earnings before interest, taxes, depreciation and amortization of $25.5 million in the quarter, a 26% drop from the same time last year.
“If you think about the BetterHelp business and the fact that our revenues are lower and our adjusted EBITDA is lower than what we had expected, it’s not really a surprise that we do have to take the impairment,” chief financial officer Mala Murthy said on the company’s earnings call.
Executives said BetterHelp was “in transition,” and cited plans to improve the segment’s performance — including more international expansion with a focus on non-English speaking markets.
Before Teladoc withdrew its financial outlook, the company was expecting revenue between $2.6 and $2.7 billion for the year, with a net loss per share between $1.10 and $0.80.
The company also wants to accept insurance coverage for its services in the U.S. Affordability is one of the top reasons why customers either don’t enroll in or leave BetterHelp, Murthy said during the call.
Teladoc did see growth in its integrated care segment, which includes its business-to-business virtual care offerings. Revenue increased 5% to $377.4 million in the second quarter, while adjusted EBITDA increased 69% to $64 million.
Integrated care membership grew 8% from last year, while enrollment in Teladoc’s chronic condition management offerings increased 9%.
The company posted revenue of $642.4 million in the second quarter, down 2% from the same period last year.
