Dive Brief:
- Teladoc's total visits more than tripled in the third quarter compared to the same time last year, to 2.84 million. That's slightly up from the second quarter this year, too — by about 3% — despite the absence of state lockdowns that contributed so heavily to telehealth volumes earlier this year.
- The Purchase, New York-based vendor reported revenue of $288.8 million in the quarter, up almost 110% year over year, beating Wall Street expectations. Total U.S. membership is now at 51.5 million, unchanged from the second quarter.
- Teladoc again raised full-year expectations on the results, after hiking outlook in the first and second quarters, too. The vendor expects revenue between $1.005 billion to $1.015 billion and total visits between 10.4 million and 10.6 million. That's compared to just $533 million in revenue and 4.1 million total visits last year.
Dive Insight:
The steady uptick in use described in financial results released aftermarket Wednesday, even as COVID-19 cases fluctuate, could ease fears of a pandemic-spurred telemedicine bubble in the U.S. Virtual care use surged early in the second quarter, then began to dampen somewhat as more patients returned to in-person care for non-emergent needs.
But indicators suggest the coronavirus is already worsening in the fall, which may bode well for telemedicine providers — especially those with a foothold in mental and behavioral healthcare, as conditions like depression and anxiety are exacerbated by living long-term with COVID-19.
Teladoc's performance in the third quarter was "robust overall but mixed in the details," Jefferies analyst David Windley wrote in a Thursday note. Membership growth was underwhelming, and Teladoc's mental and behavioral health business, BetterHelp, likely drove much of the revenue.
"In our view, the 'COVID boost' that telemedicine enjoyed in spring, is now being followed by a strengthening (and perhaps more durable) demand for Behavioral care," Windley said.
Utilization of mental health services has continued to grow in each subsequent month of the year, CEO Jason Gorevic said on a Wednesday earnings call, noting it's a growth area.
Teladoc's revenue continues to lean most heavily on U.S. subscriptions paid by insurers and employers. Revenue from such subscriptions was $194.6 million, more than double the third quarter last year. U.S. paid visits made up $35.1 million in revenue, up 148% year over year, while revenue from per-visit fees, paid either by insurers or directly by patients, was almost $15.9 million, up about 270% year over year.
Visit fees were light, analysts noted, with visit fee revenues falling 14.4% compared to the second quarter this year. Of the 2.84 million visits in the quarter, Teladoc got per-visit fees for just about a third — 33% — of them.
The other 67% came from behavioral health, subscriptions and international visits. That 33% compares to 41% in 2019 and 40% in the second quarter this year, and "marks a low," Windley said.
However, analysts noted membership paid utilization was better than expected.
Teladoc's hospital and health system channel, including InTouch Health, a provider-focused vendor Teladoc bought this year, also saw growth, Gorevic said. Teladoc and InTouch have already completed more than a dozen cross-sales since the deal closed in July, and the company notched a major new client in the quarter in academic medical giant Johns Hopkins.
In the fourth quarter this year, Teladoc expects total visits to be between 2.8 million and 3 million, sequentially flat to slightly up amid expected continued momentum, but a weaker-than-normal flu season. That's "baking in some conservatism," SVB Leerink analyst Stephanie Davis said in a note.
Expenses soared in the quarter to $308.5 million, up about 95% from the same time last year.
Teladoc, which went public in 2015, still isn't profitable. The vendor reported a loss of $35.9 million in the quarter, compared to a loss of $20.3 million same time last year. About $16 million of the loss was due to transaction costs from acquiring chronic care management company Livongo, still ongoing, while another $9.2 million was related acquiring InTouch.
Teladoc announced it was buying Livongo for $18.5 billion in August in the digital health sector's first megadeal. The two had their first cross-sale to Guidewell Health, a mutual insurance holding company, in mid-October. Teladoc executives called out another cross sale to a major Teladoc employer client on Wednesday, though they didn't mention details.
Shareholders of Teladoc and Livongo will vote on the proposed merger of the two companies Thursday. The deal is expected to close by the end of the year.
Teladoc projects bookings would double in the fourth quarter compared to the third, based on its existing and late stage pipeline. At this point, about two-thirds of sales are multiproduct, usually including behavioral health and dermatology, along with more general medical services, Gorevic said.
Teladoc's stock is up by more than 165% year to date, but dipped slightly in aftermarket trading Wednesday on the results.