Teladoc’s Q2 Brings $3.1B Livongo Write Down

Teladoc shareholders can’t seem to catch a break, with the company’s second quarter results sending its shares plummeting 20% on the back of a heavy earnings miss and weak guidance for the second half of the year.

The telehealth services provider reported 18% revenue growth to $592.4M for the period, but the headline grabber from the announcement was a $3B impairment charge on its Livongo acquisition that drove a total loss of $3.1B.

Teladoc CEO Jason Gorevic shared some upbeat growth metrics on the conference call with investors, but also called out a number of headwinds that make it difficult to predict near-term performance.

  • Chronic care membership came in higher than expected, while member utilization improved year-over-year.
  • Teladoc’s BetterHelp virtual therapy business grew revenue by 40%, but continued to be hindered by competitors sacrificing margin to gain market share
  • Primary360 has been “a significant bright spot” for commercial momentum, but heightened economic uncertainty is delaying the decision making process in the employer market.
  • Teladoc is taking a look at its cost structure to maintain profitability, and will begin marketing bundles of services to expand its revenue sources.

The Takeaway
Although the market didn’t exactly react kindly to the Livongo news, the write down appears to be more of a symptom of wider market trends than the business itself, and Teladoc’s recently launched Chronic Care Complete solution is poised to be a core pillar of its long-term growth strategy. The near-term looks like a different story, as Teladoc now expects its full-year revenue to be at the lower end of its $2.4B to $2.5B guidance.

Teladoc and Amazon Partner on Echo Voice Visits

Yesterday’s competitors are today’s collaborators, with Teladoc and Amazon inking a new partnership to bring voice-activated virtual visits to Alexa-equipped Echo devices.

  • “Alexa, I want to talk to a doctor” will now connect Echo users to a Teladoc call center to verify a patient’s medical history and health plan information ($0 if covered, or $75 direct-to-consumer). Within roughly 15 minutes, the patient will then get a call back from a Teladoc physician to treat mild needs such as colds, flus, or allergies.
  • The new service will initially be available in an audio-only format for supported devices such as the Echo Dot and Echo Show, but will add video functionality “soon” to make it easier to diagnose certain conditions.
  • The partnership greatly expands Teladoc’s consumer reach as part of its ongoing strategy to meet patients where they are. Amazon reports over 40M Alexa users in the US alone, and has delivered more than 200M Alexa-equipped devices globally.
  • This is the latest in a string of health-focused improvements to Amazon’s Alexa ecosystem, which have included capabilities for elder care coordination through Alexa Together, as well as medication management through the Care Hub… and those are happening outside of even bigger moves with Amazon Care.

Industry Impact

Despite the recent launch of Amazon’s own Amazon Care telehealth service, Teladoc’s virtual physician network is significantly larger, and this scale will be absolutely essential to keep up with what could be an insanely high call volume for the new service.

The Teladoc partnership marks Amazon’s first attempt at providing truly on-demand healthcare with Alexa devices, and if well executed, could go a long way towards breaking down barriers to care for many patients. Even though Amazon and Teladoc are now competing in the same arena, the collaboration shows that coordinated efforts are still on the table when there’s a clear benefit for both patients and the companies.

Teladoc Launches Chronic Care Complete

The big are getting bigger with the announcement that virtual care giant Teladoc Health is expanding its services with a “first-of-its kind” Chronic Care Complete solution targeted at the one in three US adults living with multiple chronic conditions.

  • Chronic Care Complete is now offered through the Teladoc Health app and provides a comprehensive experience that leverages connected monitoring devices in combination with personal coaches to help patients achieve health goals.
  • The program also provides access to physicians who can review medications or order labs as needed, as well as licensed therapists to provide mental health support for those dealing with difficult diagnoses.
  • Integrated proactive insights help Chronic Care Complete patients achieve better outcomes by applying personal health data and social determinants toward driving timely outreach.
  • According to Teladoc, chronic conditions such as diabetes, hypertension, and obesity account for 90% of all healthcare spending, driven in part by the confounding mental health challenges that are often ignored by other solutions but are a core component of Chronic Care Complete.

The Takeaway
Teladoc’s scale gives it unique positioning to address the intertwined physical and mental health challenges faced by polychronic patients. Chronic Care Complete is the latest in a string of new solutions launched following Teladoc’s 2020 merger with Livongo, each aiming to leverage this scale to provide better whole-person care, including the mental health offering MyStrength and the primary care service Primary360.

Teladoc Announces Q3 Earnings & Primary Care Plans

Teladoc recently announced its financial results for the third quarter of 2021, providing investors with an update on the company’s earnings, as well as giving insight into the future direction of its Primary360 virtual-first primary care offering.

  • Financial highlights included year-over-year revenue growth of 81% to $522m, driven by strength in its BetterHealth mental health unit, and a 37% increase in total visits as a result of steady adoption for Teladoc’s direct-to-consumer offerings.
  • Teladoc revealed on its investor call that it plans to begin taking on financial risk with its Primary360 solution in the future. The company is aiming to generate savings with its virtual-first program and will take on risk where it can have the most impact.
  • CEO Jason Gorevic said that the rollout of risk taking for Primary360 would develop in tiers, “from first clinical measures, to then risk corridors to, ultimately, full capitation.”
  • Primary360 was only recently made available to payors nationwide, but Teladoc stated that it is beginning talks with hospitals about white-labeling the service for them to use as their own digital front door.

Primary360 Strategy

Since Primary360 integrates a wide range of Teladoc products, the service generates significantly higher revenue per member than the company’s general medical and mental health solutions. 

Most health plans lack the network and provider base required to develop a nationwide virtual primary care solution in-house, but as telehealth demand rises and pressures them to begin offering the service, many are turning to options like Primary360 to meet the need.

If Teladoc can successfully meet this demand while taking on risk, it will be able to capture a larger share of any savings it generates, further improving the economics of the service.

Teladoc Virtual Primary Care Expands Nationwide

Teladoc Health is using its scale to reach the 80% of adults that “do not have a strong relationship with a primary care physician” by making its Primary360 solution available to US commercial health plans, employers, and other benefits sponsors.

Primary360 is a virtual primary care service that Teladoc has been piloting for the past two years. It is already being used by several large companies and will be available to Aetna members early next year.

  • Primary360 allows members to select a primary care provider and develop longitudinal relationships with physician-led care teams. Members receive personalized health plans through Teladoc’s virtual care offerings, and can get help navigating to in-person providers.
  • Data from the pilot shows that two-thirds of members previously lacked traditional primary care and that Primary360 helped members detect undiagnosed chronic diseases. One in four chronic conditions identified for members of the pilot were new diagnoses of common disorders such as diabetes and hypertension.
  • Half of Primary360 members enrolled in the pilot take advantage of at least one other Teladoc product, while nearly 30% use two additional connected services.

The Takeaway

Although Teladoc is positioning Primary360 mainly as a way to make primary care more accessible, it also serves as a way to bring in new business following slowing membership growth as the pandemic wanes. Teladoc is establishing Primary360 as a hub for its full suite of virtual solutions, giving more patients the ability to receive primary care while widening the patient funnel for its other offerings.

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-- The Digital Health Wire team