Jan-Felix Schneider stirring the pot on Twitter.

Telehealth

Teladoc Reports Strong Q3 on BetterHelp Performance

Teladoc’s third quarter earnings report is in, and it’s looking like the company might finally be hitting its stride on its path toward profitability.

On its investor call, Teladoc told the only story that Wall Street wants to hear: cost management efforts and gross margins are both improving. The narrative helped push Teladoc’s stock up over 20% last week, although its $5B market cap still has a ways to go before getting back to its $45B peak.

Teladoc’s third quarter, by the numbers: 

• Revenue of $611.4M, up 17% year-over-year
• Net loss of $73.5M, earnings per share of -$0.45
• Gross margin of 69.6%
• Ended the quarter with 57.8M US members, up 10% year-over-year

CEO Jason Gorevic called out four main drivers behind Teladoc’s better than expected Q3 revenue, but its BetterHelp mental health business was definitely a standout.

• BetterHelp grew over 35% compared to Q3 2021 and it’s now hitting a run rate of $1B annually. 

• The direct-to-consumer mental health platform was specifically called out for contributing to Teladoc’s gross margin improvement, and its previously reported poor returns on advertising have begun to stabilize.

• The efficiency gains were primarily due to higher utilization of group therapy sessions and the pivot away from a purely contractor model toward a hybrid model with more full-time employees.

• Gorevic noted that next year’s outlook for BetterHelp depends in large part on macroeconomic conditions that could cause consumers to tighten their purse strings.

Other highlights from the quarter included 9% membership growth for Chronic Care Complete (now at 791k members), an expanded partnership with HCSC to bring Teladoc’s solution suite to employer groups, and high satisfaction among Primary360 users.

• It was interesting that Teladoc stuck to NPS scores and some general utilization stats when discussing Primary360, and it’s probably telling that the actual membership count wasn’t deemed noteworthy.

The Takeaway

By all accounts Teladoc delivered a solid third quarter, and the margin improvement stemming from BetterHelp was music to shareholders’ ears. Despite the strong report, Teladoc lowered its full-year guidance to ~$2.4B in revenue, but even that was taken as good news by investors who viewed it as setting up an achievable growth target.

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