November 1, 2021 - Teladoc plans to take on financial risk with its virtual primary care offering as it looks to expand that program to more payers and hospitals. During the company's third-quarter earnings call last week, Teladoc CEO Jason Gorevic said the company will take on degrees of risk, from clinical measures of care to risk corridors to, ultimately, full capitation.
"I do see us taking risk, and I think we'll step into that," Gorevic said.
He said Teladoc made substantial commercial progress with its Primary360 product, which represents a key pillar of the company's whole-person care strategy.
Earlier this month, Teladoc announced it was taking its primary care pilot nationwide, expanding it to commercial health plans, employers and other payers. The program will now be available through CVS-owned insurer Aetna for self-insured employers and Centene's virtual-first health plans on the healthcare exchanges, beginning with four states in 2022.
Teladoc Chief Financial Officer Mala Murthy said during the call that taking on financial risk through value-based care and payment models with its primary care program represents an opportunity to expand its revenue per member.
The company also is beginning to talk with health systems to use its Primary360 offering as a white-labeled "virtual front door" to care for their populations, Murthy said.
Gorevic believes Teladoc's whole-person care portfolio and integrated care platform differentiates the telehealth provider from other companies in the virtual care market.
Virtual primary care has become a red-hot sector as startups like One Medical, Oak Street Health, Privia Health and Forward also are looking to shake up the $260 billion market.
There are also high-profile deals in the market. Health benefits platform Accolade plans to acquire virtual primary care company PlushCare for $450 million. And payers are jumping into the market as well with UnitedHealth and Cigna are launching or growing virtual-first primary care services.
Gorevic waved off competition from health plans, saying relatively few have the capability and the provider networks to roll out a nationwide service.
"We see a benefit to some of the big plans making announcements about virtual-first plans because local plans, quite frankly, have to respond. And so, we're seeing that as a catalyst for activity—RFP activity with our Primary360 product, new pipeline opportunities and a sense of urgency from multiple plans across the country in response to that," he told investors.
Teladoc shares fell Thursday morning but then reversed to surge higher after the company announced better-than-expected third-quarter financial results. The company's shares were up 9% by market close Friday.
Third-quarter financial results
Revenue in the third quarter grew 81% year over year to $522 million from $289 million a year ago. That was ahead of Wall Street analysts' projection for $517 million, according to analysts surveyed by Zacks Investment Research. Excluding revenue from acquisitions, the company saw organic revenue growth of 32%, Murthy said.
Total U.S. revenue for the quarter was $483 million, representing growth of 89% over the prior year's quarter. Total international revenue of $39 million increased 17% over the prior year, including organic revenue growth of 32%, which excludes revenue from acquisitions completed over the past year, Murthy said.
That performance is driving the company's 2021 revenue outlook increase to between $2.02 billion and $2.03 billion, up 85% compared to 2020 revenue.
Based on the company's continued strong growth and its leading position in the business-to-business and direct-to-consumer channels, Teladoc is anticipating that 2022 revenue will reach $2.6 billion, Gorevic said.
The Purchase, New York-based company has yet to turn a profit and reported a loss of $84.3 million in its third quarter. On a per-share basis, Teladoc had a loss of 53 cents during the third quarter.
Losses widened considerably from a year ago when the company reported a loss of $36 million, or 43 cents a share, for the third quarter of 2020. The wider net loss was primarily attributable to increased stock-based compensation and amortization of acquired intangibles, according to Murthy.
But the results surpassed Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for a loss of 70 cents per share.
Total third-quarter telehealth visits topped 3.9 million, up 37% higher than the third quarter in 2020. During the third quarter of 2020, Teladoc saw 2.8 million visits.
The strong utilization increases even as pandemic restrictions continue to ease and vaccination rates improve, Gorevic said.
The growth in telehealth visits was primarily driven by virtual care visits for noninfectious diseases and specialty care.
"Growth in mental health visits in particular, continues to outperform across the direct-to-consumer, employer and health plan populations," he said.
The telehealth provider is now on track to provide more than 14 million visits for the year, Gorevic said.
During the quarter, access fee revenue jumped 99% year over year to $452 million and represented 87% of total revenue, up from 78% in the prior year's quarter. The increase in access fee revenue as a percentage of total revenue is primarily due to the acquisition of Livongo, completed in October 2020, and growth in direct-to-consumer mental health, which is sold on a subscription basis, Murthy said.
Visit fee revenue for the third quarter of $60 million increased 18% year over year.
Teladoc ended the quarter with U.S. paid membership of 52.5 million members, an increase of 500,000 members sequentially over the prior quarter.
Consumers with visit fee-only access came to $23.6 million at the end of the third quarter. Total unique members enrolled in one or more of our chronic care programs was 725,000 members as of the third quarter, a 31% increase over the 553,000 unique members as of the prior year's quarter.
Average revenue per member per month was $2.57 in the third quarter, up from $1.18 in the prior year's quarter and $2.47 in the second quarter of 2021.
The primary driver of the sequential increase in revenue per member was growth in direct-to-consumer mental health revenue, Murthy said.
Adjusted EBITDA was $67.4 million in the third quarter compared to $39.5 million in the prior year's quarter. Murthy said better-than-expected adjusted EBITDA in the quarter was driven in part by a slower ramp-up in technology and development spending versus plans.
For the fourth quarter of 2021, Teladoc expects revenue of $536 million to $546 million, representing growth of 40% to 42% over the prior year's quarter. The company expects total paid membership in the range of 52.5 million to 53.5 million and anticipates total visits during the fourth quarter of between 3.9 million and 4.1 million visits, which represents year-over-year growth of 32% to 39%.
For the full year, Teladoc is projecting adjusted EBITDA in the range of $260 million to $265 million and anticipates total visits in 2021 between 14.5 million and 14.7 million visits, representing growth of 37% to 39% over the prior year.
Teladoc also expects a full-year loss of $3.40 to $3.20 per share.
By: Heather Landi
Posted on FierceHealthcare.com
Alpha Medical Group, LLC
477 Main Street
Monroe, CT 06468
Toll Free: 800.584.5001
Alpha Medical Group delivers accurate, hassle-free healthcare recruitment solutions. Our unique search methodology, proprietary custom-designed software and high performing team members strive to ensure that the highest quality of service is provided to our clients.
We are focused on finding the right job for you!
|About Alpha Medical|
|For Advanced Practitioners|
|Paying it Forward|
|Join Our Team|
all materials ©2021 Alpha Medical Group
website by humanitects