Teladoc Health 'significantly' raises revenue, visits projections after busy Q1

The company fielded a major spike in demand and now paints a rosy long-term picture for its telehealth business, although its poor EPS disappointed some investors.
By Dave Muoio
03:52 pm
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When Teladoc Health wrapped up its last earnings call in February, the virtual-care company gave its revenue projections a modest bump and said that it was keeping an eye on COVID-19 cases in the event that it would need to scale the capacity of its telehealth network.

Three months later, and Teladoc CEO Jason Gorevic is sharing news of the company's "remarkable growth" across revenue, visit volume, service offerings and new client partnerships to those listening in on the company's Q1 2020 earnings call. Of note, he highlighted a March effort that added thousands of new providers to its physician network and allowed Teladoc to meet increasing demand across the country.

"Requests from new potential clients are increasing as the outbreak of COVID-19 has highlighted the value of access to a comprehensive virtual healthcare solution," he said on yesterday's investors call. "During the first quarter alone, we onboarded over 6 million new paid members in the U.S. across government and commercial populations. And we anticipate onboarding an additional 6 million to 7 million new members during the second quarter, culminating in the strongest first-half membership growth in company history."

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But while Teladoc's first quarter exceeded revenue expectations, the company's stock took a light hit on the markets due to worse than expected earnings per share (EPS).

TOPLINE

Teladoc's Q1 year-over-year revenue grew 41% from $128.6 million in 2019 to $180.8 million in 2020, comfortably topping the company's February projection of $169 million to $172 million.

Total visits during the same periods rose 92%, from 1,063,000 to 2,045,000, an increase largely driven by domestic visit numbers. The company had projected somewhere between 1.4 million and 1.6 million total visits at the beginning of the quarter.

Utilization of the service among paid members increased from 11% to 13.36% year-over-year, although the company noted that it would have been as high as 17.9% if not for the onboarding of a large health plan population over the course of the year.

The company continues to operate at a loss, this time to the tune of $29.6 million for the quarter (compared to $30.2 million in Q1 2019). EPS came in at –$0.40, not quite hitting the –$0.37 to –$0.34 range it projected in February.

ON THE RECORD

"We are playing a critical role during the global outbreak of COVID-19 and [have] seen a significant increase in inquiries from both existing and new potential clients. Our clients are turning to us to expand our service offering to new populations and add new products during this time of need," Gorevic said. "The investments in capacity made during the month of March have positioned us to meet the increased demand from existing members as well as the new members we are in the process of onboarding."

LOOKING AHEAD

In light of the COVID-19 trends, Gorevic said that the company is "significantly raising" its projections for the next quarter and full year. Still, he preceded the projections report by stressing industry-wide uncertainty. Although the company generally expects revenue and call volume to remain higher than pre-COVID-19 levels, the gradual decline of stay-at-home orders and low copays will likely see many of the company's new patients return to traditional healthcare providers.

With that in mind, Teladoc is expecting Q2's total revenue to fall between $215 million and $225 million, with total visits in the range of 2.3 million to 2.4 million. EPS are projected to be between –$0.28 and –$0.23.

For the year, total revenue is projected to sit between $800 million and $825 million. The company is anticipating 8 million to 9 million total visits, and an EPS of –$1.27 to –$1.13.

LOOKING BACK

Prior to COVID-19's high demand, Teladoc was already anticipating a strong 2020. Part of this was due to the company's diversifying its offerings for enterprise customers, such as its InTouch Health acquisition, and an early bump in visits driven by the winter's severe flu season.

As for 2019, the company reported a 32% year-over-year increase in full-year revenue, which totaled $553.3 million, and a 57% increase in visit volume, which totaled 4.1 million.

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