Teladoc reported a strong first quarter, driven by both strong sales on the company's part and some favorable regulatory shifts and legal rulings.
During the quarter, Teladoc pulled in $26.9 million in revenue, up 63 percent from Q1 2015. Of that total, $20.7 million was from subscription fees and $6.2 million was from visit fees. This year visit fees are made up a larger piece of the pie than last. Teladoc completed 239,942 visits in Q1, up 61 percent from the 148,696 visits conducted in Q1 2015. The company also added 2.9 million new members during the quarter.
"The first quarter is always an important quarter for us as we add a large bolus of new membership," Teladoc CEO Jason Gorevic said on the company's investor call. "We saw excellent results and remain excited about several things. The Teladoc platform is strong, scalable and every quarter we're extending our lead on the competition. Our engagement campaigns continue to be highly effective and are driving utilization, regulatory changes are occurring in line with or faster than our expectations, and we anticipate significant new business opportunities over the next several years."
On the regulatory side, Gorevic mentioned the affect that the new CMS Managed Care Final Rule will have on telehealth, as well as progress in various state legislatures.
"I’m happy to report that the laws on the books in many states, which were drafted before telehealth was in existence after all, are evolving with our industry," he said. "Ohio, Indiana, Missouri, Michigan, Iowa, Connecticut, Louisiana, Virginia, South Carolina, Delaware, West Virginia and Alaska have all adopted, within the last 12 months, or appear to be on the verge of adopting new laws or rules that clearly recognize the benefits of telehealth and remove unnecessary regulatory burdens. And we believe other states will follow."
In the past few weeks, Teladoc has announced some new customers including Willis Towers Watson, health benefits platform HealthX, and Mercer, which renewed its relationship with Teladoc at the end of April.
This time around, Gorevic didn't mention Teladoc's most well-known legal battle, the ongoing struggle with the Texas State Medical Board. But he did give an update on the company's patent case against American Well, reporting that the USPTO has now agreed to review all three of the American Well patents that Teladoc has challenged as being overly broad. If Teladoc prevails in the USPTO case, it will render American Well's suit against them in Massachussets District Court void. The first of those decisions is expected in September.
During the Q&A, Gorevic also rather pointedly addressed the controversy over telehealth payment models that played out last year when Teladoc lost part of a Highmark contract to American Well and Doctor on Demand. At the time, Doctor on Demand CEO Adam Jackson took the opportunity to declare war on per-member-per-month pricing, saying "One thing will certainly be true in the telemedicine market in the next 12 to 18 months: No one will be charging a per-market per-month [PRPM] fee. We’re basically forcing it out of the market."
Gorevic thinks that the events of the quarter, including Jackson's ousting as CEO, rebut that claim.
"We added almost a thousand new clients in the first quarter, all of them paying a PMPM and what we continue to see, quite frankly, is that our competitors who don’t charge PMPM, ... they are having significant challenges operationally and with respect to driving utilization," he said. "You've seen turnover in the management of those firms especially those that were out there with a free model. And so Doctor on Demand was out there, crying about or screaming about the demise of the PMPM model, and as you probably saw on their recent announcement, they replaced their leadership. So that’s consistent with the feedback that we’ve been getting about some of the challenges that those other companies are having."