Teladoc Health’s third quarter numbers are in, kicking off the earnings season with results that were “mixed” enough to weigh down the broader digital health sector despite an 8% increase to top line revenue.
Here’s Teladoc’s Q3 at a glance:
- Total revenue up 8% to $660.2M
- Net loss of $57.1M (an improvement over -$73.5M in Q3 2022)
- Integrated Care segment revenue of $374.4M (up 9%)
- BetterHelp segment revenue of $285.8M (up 8%)
Everything seemed to be trending in the right direction, especially considering that US Integrated Care membership reached 90.2M (up 10% YoY), driven in part by Chronic Care Complete enrollment hitting 1.1M (up 13% YoY).
So why did TDOC stock continue its multi-year dive despite the positive metrics? Without wading too far into the Wall Street weeds, the headline grabber from the investor call was that CEO Jason Gorevic is “disappointed” with Teladoc’s current valuation, and is initiating a “comprehensive operational review” to boost its bottom line.
- The first component of the two-step overhaul involves a portfolio assessment geared toward sharpening Teladoc’s focus around solutions “prioritized in the direction of our integrated whole-person care strategy.”
- Second, Teladoc is pursuing a comprehensive review of its cost structure, meaning that it’s tightening its purse strings and prioritizing profitability over revenue growth.
While margin improvement and focused offerings seem like they would be music to investors’ ears, more cuts are clearly on the way, especially for service lines outside of “whole-person care.”
The Takeaway
One of Teladoc’s biggest advantages over point solution providers is its “whole-person care” bundling capabilities, and two-thirds of last year’s chronic care growth included bundles for multiple products like diabetes, hypertension, or weight management. That approach gives Teladoc a distinct edge with clients looking for an integrated platform, but right-sizing its offerings to fit the strategy means that some investors would rather avoid the short-term revenue pain even with long-term margin gain.
