After a busy year which saw record numbers of patients turning to virtual visits, Teladoc faces a big question: will it be able to keep up the pace?
The New York-based telehealth company nearly doubled its revenue last year, bringing in a total of $1 billion. More health plans covered its services, as its paid membership increased 41% to 51.8 million members in 2020. Another 21 million people paid fees to access telehealth visits.
In total, it provided more than 12.7 million visits on its platform last year, a staggering 206% increase from 2019.
But as many clinics return to in-person visits, and other companies launch their own telehealth platforms, Teladoc also faces more competition.
Here are four takeaways from the company’s recent earnings report:
After a year of big growth, membership and visit projections flatten
Looking back at its stunning growth last year, Teladoc tempered expectations for its membership and total visits going into 2021.
The company forecast it would have 52 to 54 million paid members at the end of the year, a much smaller increase than it saw last year. It also expects total visits of 12 million to 13 million — about the same number as in 2020.
While these forecasts sent its stock tumbling 9% on Thursday, Teladoc still shared plans for long-term growth, including a primary care pilot and its recent acquisition of Livongo. It also said its membership opportunity is 50% larger than it was at the same time last year.
Analysts also pointed to these opportunities.
“Importantly, while membership guidance was below our forecast, we believe the company is being conservative at this early stage, and note that the initial 2021 revenue guidance still exceeded consensus expectations as we point to a diversified growth model,” Lisa Gill, head of U.S. healthcare technology and distribution equity research for J.P. Morgan, wrote in a research note.
She added that more employers and health plans will view telehealth as an “essential component,” creating an opportunity for additional member growth over time.
Teladoc tests primary care pilot
One effect of the pandemic was that people began thinking about telehealth as more than just an urgent care visit. As insurance companies test new plans built around virtual primary care, Teladoc is also piloting a primary care service.
Called Primary360, it involves connecting patients with a virtual care team, including a primary care physician, nurse, and care coordinator. Teladoc said multiple new partners launched pilots of the plan last month, and although it didn’t name them, Aetna appears to be one of them.
In the future, Teladoc plans to add more quality metrics for its virtual primary care plans, as it seeks the ultimate goal of striking risk-sharing agreements with insurers.
In its first pilot of the program, launched in mid-2020, 40% of hypertension diagnoses and 25% of diabetes diagnoses made by clinicians in the program were first-time diagnoses.
“This allows our clinicians and members to begin addressing the progression of disease and creates an opportunity for us to introduce the Livongo capabilities to those consumers early in their journey, which will ultimately drive better outcomes for consumers and lower the overall cost of care,” Gorevic said in a Wednesday investor call.
Speaking of Livongo…
Teladoc acquired the digital health company last year in a deal that valued Livongo at $18.5 billion. That culminated in roughly $88 million in integration-related costs and $331.7 million in accelerated stock award costs related to the merger in 2020.
The companies expected to see roughly $100 million in synergies from the deal in year two, and $500 million by 2025, largely driven by selling into each other’s respective customer bases.
So far, Teladoc and Livongo have made more than a dozen cross sales, Gorevic said, and he expects that opportunity to grow going into 2022.
“I was just talking to a regional Blues plan who I believe we will take away from a competitor who has a much narrower set of products and can’t compete in the evolving landscape and sort of the new paradigm that we’ve created,” he added.
Specialty visits — particularly behavioral health — increased significantly
Like its other industry peers, Teladoc saw a surge in demand for behavioral health visits, which were up 500% last year. Demand for other specialty visits also increased, CFO Mala Murthy said.
Gorevic added that he sees an opportunity to build out a behavioral health product that combines Livongo’s MyStrength platform, which offers self-directed cognitive behavioral therapy modules, with access to virtual visits through Teladoc.
“We are already seeing tremendous excitement from clients globally for this next-generation behavioral health offering and expect to launch it more broadly in the market by the end of the year,” he said.
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