Telehealth giant Teladoc started off the first three quarters of 2023 in much better shape than a year ago when a $6.6 billion impairment charge dragged down its financials.
The virtual care company pulled in $629 million in revenue in the first quarter, up 11% from $565 million in the first quarter of 2022, executives reported during its first-quarter earnings call Wednesday.
Teladoc also reported a net loss for the quarter of $69.2 million, or a loss of 42 cents per share, compared to a loss of $6.7 billion, or a loss of $41.58 per share, during the same period last year. Both results beat Wall Street estimates.
The company's losses in the first quarter included $46 million in stock-based compensation expenses, $8.1 million in restructuring costs, primarily related to severance, and amortization of acquired intangibles of $50.3 million, Teladoc's chief financial officer Mala Murthy said during the earnings call.
The company's stock saw a 5% jump in after-hours trading Wednesday.
Teladoc's BetterHelp direct-to-consumer segment saw a 21% revenue bump, bringing in $279 million during the quarter.
"Our BetterHelp segment continued to see strong demand in the first quarter, as the quality and convenience and affordability offered by our direct-to-consumer mental health service resonates in the marketplace," Teladoc CEO Jason Gorevic told investors during the earnings call. The double-digit revenue growth was driven by new member growth, he noted.
"Customer acquisition trends have remained stable year-to-date, resulting in solid margin pull-through in what is typically our seasonally weakest quarter. We feel confident in our expectation for a strong and consistent sequential margin improvement in our BetterHelp business throughout the course of 2023," he said.
Teladoc's access fee revenue grew 12% to reach $551 million in the first quarter. U.S. revenues grew 10% to $541.7 million, and international revenues grew 18% to $88 million.
The company's integrated care segment, its virtual care business aimed at health plans, employers and health systems, brought in $350 million, up 5% from last year.
During the quarter, Teladoc reported 4.9 million telehealth visits, up 8% from the first quarter of 2022. Integrated care membership in the U.S. grew 7% to 85 million, and chronic care program enrollment totaled 1 million members, up 13% from a year ago. The number of BetterHelp paying users jumped 22% to 467,000.
Earlier this year, Teladoc rolled out a new mobile app that integrates services for primary care, mental health and chronic condition management in one place. Two years after it acquired chronic condition management company Livongo, Teladoc revamped its app to offer a fully integrated healthcare experience that enables "personalized whole-person care," executives said at the time.
Teladoc has been in the virtual care market for 20 years, long before having a Zoom call with your doctor became mainstream, and now faces an increasingly competitive and crowded telehealth market.
The virtual care platform now serves 80 million people, resulting in 21 million visits and half a billion digital health interactions with 30,000 providers in 2022, Gorevic said during the J.P. Morgan Healthcare Conference back in January.
But the company continues to face headwinds. It reported a historic loss of $13.7 billion in 2022, mostly from a write-off related to the plummeting value of its Livongo acquisition. Teladoc was hit with noncash goodwill impairment charges of $13.4 billion in 2022 to write down the value of its Livongo acquisition in 2020.
It laid off 6% of its non-clinician workforce, 300 employees, back in January. Executives attributed the cutbacks to the elimination of redundant roles born out of mergers and a companywide restructuring aimed at increasing profitability.
The Federal Trade Commission also recently fined BetterHelp $7.8 million for allegedly sharing consumers’ health data with companies like Facebook and Snapchat for advertising purposes.
Focused on more integrated virtual care offerings
As virtual care evolves and becomes more integrated into healthcare, Teladoc executives are banking that the company has the scale and capabilities to lead the sector at a time when many smaller companies are offering point solutions.
"During the quarter, we've remained focused on expanding our leadership position in 'whole-person' virtual care, including advancing Primary360, our virtual primary care offering, and I'm pleased with the significant progress we've made," Gorevic said during Wednesday's earnings call.
He highlighted the results of a new clinical study supporting the benefits of "whole-person" chronic care. The study indicated that individuals who are initially enrolled in one of Teladoc's standalone diabetes, hypertension or weight management digital programs experienced a significant improvement in those underlying conditions when they added one or more of our other chronic care programs, he said.
He noted, "These data points represent another reminder of why we're investing in our 'whole-person' offering and they come at a time when the marketplace is increasingly focused on demonstrated outcomes for employers and health plans."
With regards to growth in its BetterHelp mental health segment, Gorevic noted that the program's $300 monthly charge is "significantly less expensive than paying out-of-pocket for traditional therapy."
"On the one hand, certainly if the consumer is feeling pinched due to job cuts or inflation, then a $300 monthly subscription can be a significant expense. On the other hand, those kinds of situations increase the need for therapy and mental health care. And BetterHelp is, in many cases, a less expensive alternative. We haven't seen significant change in consumer behavior," Gorevic told investors.
The company also recently expanded its provider-based care programs for employers to encompass weight management and diabetes prevention as the demand for weight loss drugs like GLP-1 drugs surges. Those programs will become available later this year.
"With the addition of these programs for weight management and pre-diabetes, we're now offering integrated virtual and digital programs across all our key chronic condition programs, ensuring that our members receive the comprehensive support that addresses the full scope of their needs," Gorevic said.
Teladoc's CEO also called attention to the telehealth company's financial position as, in contrast, startups in the venture-backed digital healthcare space face uncertainty in the wake of the Silicon Valley Bank collapse and a turbulent market.
"We're continuing to invest in innovation, while providing hig-quality healthcare solutions while generating positive free cash flow. Over the last 12 months, we've generated over $230 million in operating cash flow and nearly $50 million in free cash flow. We have nearly $900 million of cash on the balance sheet and expect to deliver over $100 million of free cash flow in 2023," he said.
Teladoc raised the low end of its 2023 revenue guidance. The company projects full-year revenue to be in the range of $2.57 billion to $2.67 billion, an increase of $25 million at the low end representing revenue growth of 7% to 11%, Murthy said. The outlook includes mid- to high-single digit percentage growth in Teladoc's integrated care segments and low double-digit to mid-teens percentage growth in the BetterHelp segment.
For the second quarter, the company projects revenue to be in the range of $635 million to $660 million, representing growth of 7% to 11%.
Teladoc also forecasts loss per share for the year to be in the range of a loss of $1.25 to a loss of $1.70 per share.