Teladoc shares plunge after earnings report


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Teladoc shares plunge after earnings report

Teladoc Health lowered its full-year revenue guidance by $150 million, citing higher-than-expected ad spending and increased competition in mental health and chronic care markets.

The disclosure came as the telehealth company announced a sizable first-quarter loss Wednesday after the market closed. In after-hours trading, shares fell as much as 38% from the market close of $55.99 a share.

Teladoc said it expected to report annual revenue of $2.4 billion to $2.5 billion, down from a previous forecast of $2.55 billion to $2.65 billion. For the quarter, the company reported a net loss of $6.7 billion, compared with a loss of $199.6 million in the year-ago period.

The Purchase, New York-based company also adjusted its earnings before interest, taxes, depreciation and amortization to be in the range of a loss of between $7 million and $52 million, compared with a previous positive EBITDA forecast of $18 million to $48 million. The company's updated adjusted EBITDA for the year is expected to be $240 million to $265 million, down from its previous guidance of $330 million to $355 million.

The company revised its 2022 outlook in response to trends in its direct-to-consumer mental health and chronic condition markets.

On a call with investment analysts, CEO Jason Gorevic said most of the changed outlook can be attributed to the lower-than-expected growth in direct-to-consumer mental health.

Teladoc saw higher advertising costs in the direct-to-consumer mental health market, resulting in lower-than-expected yield on its marketing spend in that area during the past several weeks, Gorevic said. There's been a “notable increase” in ad rates for keywords associated with online therapy for ads on search engine results.

Gorevic said that “smaller, private competitors”—some of whom he accused of exploiting eased restrictions during the COVID-19 emergency that allow providers to prescribe controlled substances via telehealth—as driving the temporary rate increase.

“This dynamic is likely to persist at least throughout the remainder of this year … resulting in growth and margin contribution from BetterHelp that is below our expectation in February,” Gorevic said on the call. BetterHelp is Teladoc's direct-to-consumer mental health service.

Gorevic also cited a longer-than-expected sales cycle in the chronic condition market, as benefit managers are focused on return-to-office plans amid the COVID-19 pandemic. He said that's led to employers taking a longer time to make decisions about new benefits.

He also said clients have been approached by other companies that offer “point solutions” competing with Teladoc, creating “noise.”

Point solutions solve single problems or address a specific chronic condition.

“While in the near-term we expect this noise to persist we believe our broad, integrated approach to virtual and digital care delivery is a competitive advantage that positions Teladoc to be the long-term winner in the space,” Gorevic said.

Creating an integrated telehealth service across primary care, chronic care and mental health needs has been an area of focus for the company.

Teladoc declined to share with analysts revenue guidance beyond full-year 2022.

“We're evaluating whether there will be effects for our long-term revenue growth outlook,” Gorevic said.

Teladoc met its revenue guidance for the quarter, posting $565.4 million, a gain of 24.6% year-over-year. More than 85% of revenue, or $491.3 million, was from subscription access fees, a 28.6 % increase year-over year. Revenue from visit fees rose 12.3%, to $67.9 million. There were nearly 5.7 million visits on Teladoc's platform during the quarter, up 28.2%.

The average revenue per member in the U.S. was $2.52 for the quarter, compared with $2.09 in the year-ago period, the company said.

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