Dive Brief:
- Teladoc significantly raised its full-year guidance on Wednesday despite skating underneath Wall Street expectations on earnings for the first quarter. Revenue of $180.8 million, up 41% year over year, was in-line with forecasts.
- Teladoc upped its revenue expectations for 2020 by $100 million from its prior range, now predicting a topline between $800 million and $825 million. The outlook calls for Teladoc to more than double its full-year visit volumes: The company expects between 8 million and 9 million visits compared to 4.1 million in 2019.
- The Purchase, New York-based telehealth vendor saw visits almost double to 2 million in the quarter ended March 31 as the novel coronavirus pandemic continues to drive virtual care awareness and adoption.
Dive Insight:
Teladoc's full-year guidance is much higher than previously forecast. That's significant as the 18-year-old vendor is known for being conservative with its outlook, analysts say. The expected results don't factor in the virus reemerging in the fall, which could result in higher-than-expected volume and revenue for 2020, especially if it coincides with the flu season.
"Our confidence is very, very strong relative to the post-COVID utilization rates," Teladoc CEO Jason Gorevic said on a call with investors Wednesday.
The coronavirus pandemic has spurred an unprecedented shift in healthcare delivery, greatly accelerating telehealth adoption in the U.S. The digital platforms enable patients to receive medical advice and treatment without the potential for virus transmission, while freeing up hospital capacity to respond to the virulent outbreak.
Facing mounting consumer demand, vendors have raced to hire doctors. Teladoc has onboarded thousands of new providers since March, more than doubling the size of its licensed physician network.
"As the biggest beneficiary of COVID-19 in our coverage universe, TDOC is a sleep-easy name set apart from peers in a potentially rocky earnings season," SVB Leerink analysts said in a note.
Teladoc relies heavily on U.S. subscriptions paid by insurers, although it does get revenue from per-visit fees paid either by insurers or patients themselves. Of the 2 million quarterly visits, 1.4 million were from those subscriptions, while 227,000 were visit fee only in the U.S.
Teladoc closed out the quarter at 43 million members, up 61% year over year, including roughly half a million Medicare Advantage members. The company expects to end 2020 with at least 50 million members — 13.3 million more than 2019.
In the U.S., revenue from visit fees more than tripled in the quarter to $12.6 million, while paid visit revenue jumped 69% to $30.9 million. Subscription access fee revenue grew 33% to $107.9 million.
The majority of activity took place in the second half of the quarter, as visit volume accelerated significantly in March as the coronavirus increased in intensity, executives said. Teladoc added more than 6 million new members in the quarter across its government and commercial payer clients, and anticipates bringing on another 6 million to 7 million in the second quarter.
Over 60% of the visits were from new users, a positive sign for the vendor as patients who've used telehealth once are much more likely to do so again. General medical visit growth was outpaced by growth in specialist visits, including behavioral health and dermatology visits, which tripled in the quarter. Teladoc leadership was particularly encouraged by the growth in behavioral health visits, as they have high repeat usage and potential to drive visit volume throughout the year.
The coronavirus is acting as a tailwind for vendors like Teladoc, AmWell and Doctor on Demand as public and private payers expand reimbursement. Most large health insurers, including UnitedHealthcare, Anthem, Aetna and Cigna, have waived cost-sharing for telehealth COVID-19 testing and treatment.
And in March, the Trump administration expanded traditional fee-for-service Medicare to cover telemedicine for its almost 45 million beneficiaries, which has benefited Teladoc's provider business, executives said. Teladoc contracts with roughly 450 hospitals and health systems, including 30 of the 50 largest U.S. health systems like HCA and Kaiser Permanente.
But Teladoc, which went public in 2015, has yet to turn a profit for its shareholders. The vendor reported a loss of $29.6 million in the first quarter, compared to a loss of $30.2 million a year earlier. Operating expenses tallied $201.8 million compared to just $151.5 million same time last year as Teladoc increased marketing, invested in its platforms, brought on more employees and upped physician salaries.
Executives said they expect visit volume to ease in the second half of the year as states lift shelter in place orders and temporary payer coverage times out, though those tailwinds will be offset by increased consumer awareness and repeat users.
"If I look out five years, I would say virtual care becomes ubiquitous," Gorevic said. "And that offers tremendous opportunities for us."