Teladoc’s push into chronic disease management, which CEO Jason Gorevic gamely said would land by the end of 2016 at the ATA conference this year, has been delayed, he said on the company’s Q2 call yesterday.
“Based on the strong positive feedback from … clients regarding our behavioral health product in particular, we have decided to further invest our resources in behavioral health and in the HealthiestYou product integration, rather than expanding into additional specialties such as diabetes, for the remainder of this year,” he said. “We think that this strategic allocation of resources will maximize the value for our customers and the return for our investors.”
Overall, Teladoc saw revenue below expectations this quarter, due to unexpected advertising costs associated with their direct to consumer behavioral health rollout, but still had a strong quarter with reduced losses compared to Q1.
“The primary reason for the revenue shortfall was the cost of advertising in our direct-to-consumer behavioral health business,” Gorevic said on the call. “This advertising was more expensive in the second quarter on a per-unit basis or a per-ad basis, and because we have fixed advertising spend in any given quarter, we placed fewer ads than in past quarters. Ultimately, this led to lower yields per dollar spent. We’ve adjusted our advertising strategies and diversified our consumer engagement efforts, in order to address this issue going forward.”
Second quarter revenue came out to $26.5 million, a 45 percent increase year over year. As of Q1, the company had projected revenue in the range of $27.5 million to $28.5 million. Eighty-one percent of that revenue came from subscription fees, driven by a 34 percent increased in membership. Teladoc now has 15.4 million members.
The company is continuing to reduce it’s losses with the goal of breaking even by the end of 2017. Net loss this quarter was $14.9 million, compared to $17.1 million the previous year. The company conducted just under 200,000 visits this quarter, a year-over-year increase of 59 percent.
The quarter saw a number of customer additions. On the call, Gorevic mentioned Tenet Healthcare in Texas, Silver Cross Hospital in Chicago, and CareCentrix, a home healthcare provider. New employer customers included Progressive Insurance, the National Rural Electric Cooperative, Greyhound Lines, and New Era.
Teladoc’s acquisition of HealthiestYou also yielded 300,000 new members.
“As you may recall, HealthiestYou had previously outsourced the delivery of their telehealth visits to one of our competitors. Following our close, we successfully transitioned the entire HealthiestYou volume to the Teladoc platform. Because of the scalable Teladoc infrastructure, we were able to absorb this additional 8 percent in visit volume and 10 percent in call volume, without adding any personnel or infrastructure. This is a true testament to the leverage that we get at this scale.”
On the Q&A, Gorevic also discussed the ways HealthiestYou’s engagement platform will be introduced to more and more Teladoc customers.
“We’ve started exposing our existing clients to the HealthiestYou functionality, and we have a long list of clients who are asking for those capabilities,” he said. “I think the breadth of technologies and consumer engagement tools that HealthiestYou has assembled, really resonates with clients. And so, we are sort of taking this approach of: first order of business is to make sure that we have our whole team in the under-1,000 market selling the HealthiestYou product. Second, looking to upsell that product to our existing customer base in the small end of the market. And third, to bring those capabilities to our larger enterprise clients.”
The one topic that didn’t come up at all on this call was Teladoc’s legal entanglements, either its patent fight with rival American Well or its high-profile antitrust suit against the Texas Medical Board.
