While profits have been elusive for telehealth company Teladoc, CEO Jason Gorevic said during a call with analysts Wednesday the company expects to be cash flow positive for the first time later this year.
Among the positive signs the company was able to give as it reported its 2018 fourth-quarter and full-year results, Teledoc said it saw revenue grow 79% for the year to $417.9 million. Meanwhile, total visits were up 80% to 2.6 million in 2018, and the company also reduced its losses.
Teladoc outperformed its own guidance for the fourth quarter in 2018 and the full year, as it posted fourth-quarter revenue of $122.7 million, up 59% compared to a year ago. The company had projected the fourth quarter to be in the range of $119 to $121 million, and 2018 revenue has been projected between $414 to $416 million.
The company reported positive full-year adjusted earnings before interest taxes and amortization (EBITA) for the first year in 2018, ending the year at $13.4 million. It is projecting 2019 first-quarter revenue to be $126 million to $129 million, and full-year revenue to be in the range of $535 to $545 million.
The company’s earnings report was the first one released since its CFO and COO Mark Hirschhorn resigned in mid-December amid allegations that he fed stock tips to a company employee he was having an affair with.
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Gorevic said the company had an “exceptional” 2018 with solid performance across key financial and operational metrics.
“We are excited by the continued acceleration of consumer adoption of virtual care, and Teladoc is at the forefront of that movement. We have established ourselves as the industry leader, and we were the provider with the most downloaded app in the telehealth category,” he said.
However, Teladoc has yet to turn a profit and still has sizeable net losses—$24 million for the fourth quarter and $97.1 million for the full year. The company forecasted that losses are expected to steepen in 2019, with a net loss per share to be between $0.44 and $0.46 for the first quarter and between $1.52 and $1.66 for 2019. In 2018, net loss per share was $1.47, an improvement from 2017’s net loss per share of $1.93.
Gorevic said the company’s 2019 outlook is based on the company’s diversified distribution channels and the impact of a more moderate flu season, compared to an intense flu season a year ago. Last year, Teladoc attributed a spike in virtual care visits to 2018’s historic flu season.
The company continues to consolidate its share of the telehealth market with the acquisition of Spain-based Advance Medical last year. That deal helps the company expand its presence in the global marketplace as Advance Medical has eight locations around the world. And, in fact, international subscription fees grew to $73.7 million in 2018, an increase of 302%. The company’s performance in international markets in 2018 exceeded expectation, Gorevic said.
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Teladoc’s total virtual care visits increased 80% in 2018 to 2.6 million, compared to 1.5 million visits in 2017. Revenue from subscription fees in the fourth quarter increased 55% compared to a year ago and increased 41% for the full year. The company ended the year with 22.8 million paid members, up 16% compared to 2017.
The company plans to make strategic investments in 2019 to support its growth as virtual care overall is poised for continued growth buoyed by regulatory and market changes.
“We are preparing to take advantage of the opportunity of the Medicare Advantage in 2020 plan year, investing ahead of the additional business we expect to onboard this year from large health plan clients,” Gorevic said. The Bipartisan Budget Act that passed in January 2018 expands telehealth coverage for Medicare Advantage plans beginning in 2020.
Last year, the company formed a partnership with CVS Health to leverage its technology platform for virtual care visits at CVS MinuteClinic locations. The Department of Defense’s Tricare also rolled out a limited launch of the Teladoc offering in December, and Gorevic said it would be up to the government on the timing of expanding that program out.
The company also is developing a platform to provide a cross-border U.S.-Canada telehealth service, what Gorevic called the “first of its kind.”