Jarrard Chairman David Jarrard

Telehealth

Teladoc’s Mixed Q3, Starts Operational Review

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.

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The Wire

• Primary Care Slowdown: Americans’ appetite for preventative care still hasn’t returned to pre-pandemic levels, with a new Trilliant Health analysis showing that primary care visits continued their slowdown with a 6% decline between 2021 and 2022. Over the same time period, urgent care visits spiked 14%, while trips to the ED saw a 3% uptick. Trilliant cautioned that the waning demand could hurt a variety of industry stakeholders, particularly providers and device manufacturers.

• FDA Revs Up AI Clearances: The FDA’s annual Healthcare AI Report had medtech social media buzzing this week, revealing that 692 AI-enabled devices have landed FDA clearance as of July. This year alone saw 108 of those approvals, putting 2023 AI clearances on pace to jump more than 30% year-over-year. Notable additions to the list include a trio of Apple Watch apps that track tremors and dyskinesia associated with Parkinson’s, a milestone that’s been nearly a decade in the making.

• The AI Revolution in Medicine: Along the same vein, a new article in Nature explored how AI is revolutionizing medicine, and how emerging generalist models might overcome the limitations of first-generation machine-learning tools for clinical use. On top of the promise of generalist AI, the author also sees foundation models as a possible leap forward in algorithm training. That said, the story concludes that despite its potential, AI is still (currently) no match for humans in leading clinical use cases like radiology.

• PicnicHealth Acquires AllStripes: PicnicHealth acquired fellow patient evidence generation company AllStripes for an undisclosed sum as it moves deeper into the rare disease segment. PicnicHealth engages directly with patients to collect clinical data and patient-reported outcomes, bypassing traditional site-based evidence gathering for life science research. AllStripes applies a similar strategy on the rare disease side, so PicnicHealth is gaining strong relationships with hard-to-reach patient communities that are already familiar with the approach.

• DiMe Dementia Product Library: DiMe put out another amazing public resource cataloging the extensive list of 175+ digital measurement products for monitoring Alzheimer’s Disease and related dementias. The Library of Digital Measurement Products is an easy-to-browse Airtable that researchers and clinicians can use to assess the wide range of options available to monitor patients with dementia, with evidence included to compare each technology and help speed up research.

• Harmonic Health Launch: In other dementia-care news, Harmonic Health is launching to bring integrated medical, behavioral, and social treatments to patients facing cognitive decline. Harmonic is the latest startup to emerge from Redesign Health, and its debut is accompanied by a partnership with Stoney Batter Family Medicine, a medical practice serving over 24k patients. Stoney Batter will be piloting Harmonic’s complete tech-enabled dementia-care platform, which appears to be one of the more robust solutions available.

• eClinicalWorks Adds Sunoh.ai: eClinicalWorks is up and running with Sunoh.ai ambient clinical documentation courtesy of healow (eCW’s in-house patient engagement arm). In a separate but very much related press release, eCW announced that it expects to hit $900M in revenue this year (vs. $800M in 2022), and will funnel a healthy portion of that toward further AI investment. Focus areas mentioned specifically were generative AI integrations, an AI-based image model for document management, and RCM improvement.

• GLP-1’s Severe GI Implications: A study out of the University of British Columbia threw a wet blanket on the GLP-1 craze, finding that patients taking the medications are at an increased risk for severe gastrointestinal problems. In a cohort study that included 4,144 liraglutide and 613 semaglutide users (two main GLP-1 agonists), both drugs had a higher likelihood of causing stomach paralysis, pancreatitis, and bowel obstruction than patients using bupropion-naltrexone, a non-GLP-1 weight loss medication.

• HEP Advice for Strategics: Health Enterprise Partners shared the slide deck it used during its fantastic HLTH presentation on strategic healthcare funds, unpacking survey results from a blue-ribbon panel of investment leaders to understand their goals, approaches, and strategy trade offs. If you’re at a provider org making strategic investments then this is 44 slides of solid gold, but it also includes some great general insight into the pros and cons between accelerators, innovation centers, and direct investments.

• So Far, So Good With Xenotransplant: One month after receiving a genetically modified pig heart, 58-year-old Larry Faucette’s new ticker is still ticking, and showing no evidence of infection or rejection. Faucette is the second person to receive a pig heart, and the new organ is genetically modified to avoid infection or immune system rejection that might have contributed to the previous fatal result. The care team is withdrawing all drugs that supported Faucette’s heart, which is now “doing everything on its own.”

• Harman Debuts HealthGPT: Samsung subsidiary Harman is the latest entrant to the large language model Grand Prix after unveiling HealthGPT, a private model “fine tuned on healthcare-specific datasets such as clinical trial data and medical records.” Although they get bonus points for branding that bears resemblance to the world’s most popular LLM, Harman hasn’t published any hard numbers on HealthGPT’s performance, and didn’t provide much detail into a future roadmap or commercial launch date.

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