Teladoc Health is off to a stronger start in 2023, bolstered by growth in its direct-to-consumer and enterprise segments.
The Purchase, New York-based telehealth company posted a first-quarter net loss of $69.2 million, or 42 cents per share, compared with a net loss of $6.6 billion, or $41.58 per share, in the year-ago period. Revenue increased 11% year-over-year to $629.2 million, from $565.4 million.
Teladoc reported earnings after the market's close Wednesday. Shares were up 5% in after-hours trading.
Here are five takeaways from the company's first-quarter financials.
1. Goodwill impairment charges were absent.
Goodwill impairment charges—when a business writes off assets whose value has dropped significantly—from Teladoc's $18 billion acquisition of Livongo in 2020 represented the biggest drag on the company's 2022 financials. Last year, Teladoc recorded $13.4 billion in non-cash goodwill impairment charges related to the acquisition. There were no such charges in the first quarter of 2023. In an interview, Chief Financial Officer Mala Murthy declined to say whether there would be any more goodwill charges related to the acquisition.
2. BetterHelp got a boost from stabilized ad costs.
Despite inflationary headwinds, Teladoc’s direct-to-consumer mental health product BetterHelp saw a 22% increase in paying users, from 382,000 in the first quarter of 2022 to 467,000 in 2023. It also saw a 21% year-over-year increase in revenue, to $279.3 million.
Direct-to-consumer telehealth can be a pricey and low-margin business. But advertising prices have stabilized and as a result, the company has ramped up investments in customer acquisition, CEO Jason Gorevic said in an interview. Teladoc’s advertising costs were $176.7 million in the quarter, compared with $133.6 million in the year-ago period.
Gorevic said the company’s $300 monthly charge for BetterHelp compares favorably with the cost of traditional therapy.
“We haven't seen any evidence of the consumer pulling back on their spend and viewing it as a discretionary item,” he said.
The Federal Trade Commission fined BetterHelp $7.8 million in March for allegedly sharing the personal health information of millions of consumers with advertisers like Facebook, Snapchat, Criteo and Pinterest during a seven-year period. In a March statement, the company said its data practices echoed those of many of its peers.
3. Enterprise saw a minor increase in revenue.
Teladoc’s enterprise business segment, which it sells to employers, health plans and health systems, saw a 5% increase in revenue, from $332.3 million in the first quarter of 2022 to $349.9 million this year. Teladoc offers primary care, mental health and chronic care management services to employer customers across a single app, which it launched in January. Gorevic said the company’s suite of offerings makes it attractive to enterprise customers.
4. Teladoc is entering the weight-loss space.
Teladoc announced last week at the Healthcare Information and Management Systems Society conference it was going to offer weight-management services to members in its diabetes and hypertension programs. Gorevic said the company will apply “evidence-based guidelines” when prescribing therapies, which could include injectable glucagon-like peptide (GLP-1) agonist medications such as Ozempic and Wegovy.
The company is entering the weight-loss space as Ozempic and Wegovy surge in popularity. Gorevic said the decision to add the service was part of Teladoc’s long-term plan and not a response to the attention the drugs are getting.
5. The company is sizing up the competitive landscape.
Teladoc has done its fair share of cost-cutting, including laying off 300 employees in January. And while the company is still in the red, Murthy said leadership feels good about the company's financial position after these measures.
“We're in an extremely strong financial position with almost $900 million in cash and short-term investments on the balance sheet,” Gorevic said. “When you compare that to a lot of the smaller venture-backed companies that are going to have to go back to the markets and raise capital in this environment, it just puts us in an incredibly strong position.”
This could lead to potential acquisitions of companies offering digital health solutions that tackle other conditions, Gorevic said.
“We’re starting to see the pressure on some of those smaller venture-backed companies since the cost of capital has increased substantially,” he said.