- Teladoc beat Wall Street fourth-quarter expectations for earnings and revenue, though the virtual care powerhouse issued a softer outlook for 2021 suggesting COVID-19 tailwinds spurring historic telehealth use last year could slow in 2021.
- Shares were down 7% in morning trading Thursday. The Purchase, New York-based vendor's guidance could reflect management conservatism or the increasingly saturated virtual care market, analysts said.
- Teladoc expects to bring in between $1.95 billion and $2 billion in revenue this year, representing roughly 80% year-over-year growth at the midpoint, notably lower than the 98% year-over-year 2020 growth. Similarly, Teladoc expects to have total U.S. membership between 52 million and 54 million people at the end of 2021, up just marginally from the 51.8 million members it recorded at the end of 2020.
Teladoc has seen snowballing growth during the pandemic, setting record visits and almost doubling its revenue last year while integrating two major acquisitions, of provider telehealth business InTouch and chronic care giant Livongo. Full-year 2020 revenue ticked in at $1.09 billion, while total visits increased 156% year over year to 10.6 million.
Still, Teladoc has yet to be profitable, reporting a net loss of $485.1 million, almost five times higher than its loss the year prior.
Some skeptics question whether the company will continue to deliver gains once patients become entirely comfortable seeing their doctors in person again and could see that doubt reflected in the 2021 guidance. The consensus estimate calculated from Wall Street analysts by eTrade is that its stock will fall more than 15% over the next 12 months.
"Why the softer guide?" asked Jefferies analyst David Windley in a note on the results, highlighting the paid membership depression. "The obvious, valid reason is that [Teladoc] has added 19M Paid Members since 2018" and "COVID probably pulled some forward out of '21. That said, we also think the recent industry evolution towards longitudinal models is prompting MCOs to pause and evaluate approaches, and this wrinkle could take a while to iron out."
Teladoc management said they were confident in long-term growth, especially spurred by new products and interest in specialty areas like mental health, chronic care management and virtual primary care, though membership growth could temper this year.
"We've had to sort of refill the pipeline, if you will, after just an explosive year last year. So we take a conservative view of membership growth," Teladoc CEO Jason Gorevic said on an investor call.
BetterHelp, Teladoc's direct-to-consumer mental health business, saw its revenue triple in 2020 and accounted for about half of Teladoc's year-over-year growth — management's "ace in the hole when it came to walloping expectations," Windley said. Teladoc thinks BetterHelp can grow another 50% in 2021, with traffic remaining extremely high even as core Teladoc visits normalize.
Teladoc bought Livongo for $18.5 billion last year and quickly pivoted to sell its combined products to clients. Despite it still being early days, the vendor is seeing strong traction in peddling the integrated product, having signed over a dozen new cross-sales since the transaction closed in October, according to Gorevic.
Teladoc is currently working on a new integrated behavioral health product combining Livongo's digital mental health platform with Teladoc's clinician network and expects to launch it by the end of this year. The vendor has also been piloting a virtual primary care model, called Primary360, and has a pipeline of more than 100 opportunities ranging from large employers to major payers, Gorevic said.
Teladoc, which relies most heavily on U.S. subscriptions paid by insurers and employers, reported revenue of $383.3 million in the fourth quarter, up almost 145% year over year. Total visits of 3 million were up 139% year over year.