Teladoc Health stuck to its game plan in the second quarter and first half of 2019, the company reported last week in its earnings call.
Total revenue, membership and service utilization are each trending upward while the telehealth company’s international and strategic investments appear to be taking hold. However, the company still has yet to turn a profit, although it is aiming to be cash flow positive over the course of the full year.
“I couldn't be more pleased about our momentum across the full breadth of our business,” Jason Gorevic, CEO of Teladoc Health, said during the call. “Clients globally see increasing value as utilization continues to grow across channels, and populations increasingly embrace the strategic value Teladoc Health's unique offering can provide. Looking to the back half of the year, we remain confident in our ability to deliver within our range, with this broad-based strength serving to buffer any new learnings as we implement large complex health plan business.”
Teladoc reported $130.3 total revenue in the second quarter of 2019. This was a 38% increase over the same quarter’s revenue in 2018, which the company further broke down as 24% organic growth when excluding that generated by the 2018 acquisition of Advance Medical. Total revenue for the first half of 2019 was $258.8 million, representing a similar year over year growth of 41% (23% organic).
The company’s membership grew by 4.3 million since this time last year, while total visits increased from 533,000 in Q2 2018 to 908,000 in Q2 2019 (70% increase, 46% organic). Moreover, 244,000 of those visits were international, and 54,000 came from those with visit-fee-only access.
Teladoc’s net loss of the quarter was $29.3 million, compared to $25.1 million in the previous year’s quarter. Operating expenses increased 30% from $85 million to $110.7 million during the same periods. Gross margin dipped to 68 percent compared to Q2 2018’s 70.7%, which the company partially attributed to the Advance Medical product.
WHY IT MATTERS
Teladoc managed to stick to it’s broader growth plan while undergoing some noteworthy transitions.
The first among these was the appointment of new executives in the wake of former VP, COO and CFO Mark Hirschhorn’s resignation. He was replaced in late June by new CFO Mala Murthy and, as of just last week, COO David Sides.
“Our search process to fill both of these roles was a thorough one, as we held our standards high for both the right functional capabilities as well as the appropriate mission-oriented cultural fit,” Gorevic said.
Meanwhile, the telehealth company has also been laying the groundwork for new business with a couple of key investments and partnerships. These include the company’s recent product launch within Canada, integration with United’s Medicare business, the continued expansion of MinuteClinic Video Visits through the CVS Pharmacy App, and its strategic investment in digital chronic condition management startup Vida Health.
“As we identified Vida as a potential partner and got to know them through this process, it became clear that their multi-condition coach-led model and overlapping key client base made them the right partner to enable us to deliver on our long-term strategic plan to offer chronic care solutions to our members,” Gorevic said. “In 2020, we will deliver an integrated virtual care experience across platforms supporting acute complex and chronic care needs and addressing the mental health and physical health challenges that often go hand in hand.”
And of course, Teladoc’s rising membership and utilization also serves as loose indicator of broader growth within the telehealth market.
THE LARGER TREND
Teladoc signaled its goals of continued growth and a positive cash flow earlier this year when wrapping up its 2018 earnings. What’s more, the global focus kickstarted with last year’s acquisitions of Advanced Medical and Best Doctors gained another boost in March when the company made another purchase: Paris, France-based MédecinDirect, which provides confidential medical consultations via phone and internet.