Like many other health tech companies, the telehealth boom during the COVID-19 pandemic lit a fire under Teladoc's business.
The pandemic caused a massive acceleration of telehealth as consumers and providers sought ways to safely access and deliver healthcare while also decreasing the spread of the virus.
As it's been said, in a matter of months, virtual care went from a "nice-to-have" to a "must-have" for providers.
The virtual care giant saw its revenue double in 2020—from $553 million in 2019 to $1.1 billion—and virtual visits grew 158% as the company scaled up to meet rapidly growing demand.
Teladoc's 2021 revenue jumped 86%, hitting $2 billion, and it delivered 14.7 million virtual visits.
In the early days of the pandemic, Teladoc was a stock market darling. The company's shares soared 139% in 2020, according to data from S&P Global Market Intelligence.
But 2022 has been a different story, and it's clear the high times are over for public health tech companies. The stock market has tumbled, pushing it into bear territory amid high inflation and rising interest rates.
Teladoc's stock is down more than 63% this year—and 90% from its peak price in February 2021.
But if you pull back the lens from the past two years, Teladoc has been in the virtual care market for 20 years, long before having a Zoom call with your doctor became mainstream.
As virtual care evolves and becomes more integrated into healthcare, Teladoc executives are banking that the company has the scale, capabilities and depth of expertise to lead the sector.
"We've been working at this for a long time and we've learned a lot along the way," CEO Jason Gorevic told Fierce Healthcare in a recent interview. Gorevic, who has been with the company for 13 years, quipped, "I have the gray hairs and the scars to show for it."
"With 20 years of experience comes not only expertise but also scale and the capability to use that data to deliver a better overall integrated experience in a way that is much more proactive for the consumer," he said.
The virtual care market is now crowded with point solutions that focus on a particular condition or disease. Gorevic sees the future of virtual care moving to holistic, integrated solutions that combine services for episodic care, chronic condition management, behavioral health, complex care and primary care.
"Teladoc is very uniquely positioned to be able to deliver that," he said. "Clients and consumers are exhausted by point solutions that are limited in their scope and I would say limited in their long-term impact on the consumer."
In comments to investors during earnings calls, the company's management continues to insist that Teladoc's integrated virtual care technology helps it retain a moat over competitors and will give the virtual care giant a winning position in the market in the long run.
Teladoc now works with thousands of hospitals in 130 countries and many major health insurers.
"Only about 20% of organizations in the market have fully deployed holistic virtual care solutions, which opens the door for us to meet the needs that they're looking for, which is a single partner who can deliver a full-credit answer of virtual care for their population," Gorevic said.
He is bullish about Teladoc's long-term growth despite the current market volatility, the company's falling stock price and investor caution about the future of telehealth.
"We're still continuing to see substantial growth in terms of our volumes and our financial outlook. That's really based on the fact that, coming out of the pandemic, we've really changed the expectations of consumers, providers and payers, whether that's health plans or employers, with respect to the role of virtual care. We've changed the expectation from virtual care being limited and transactional to being holistic and longitudinal," he said.
Through organic development and M&A, Teladoc has developed what Gorevic refers to as "multidimensional" solutions that deliver a single virtual "front door" into the healthcare system.
In 2020, Teladoc acquired InTouch Health, a hospital-based telemedicine company and picked up BetterHelp, a direct-to-consumer behavioral health platform, back in 2015.
But the company's massive merger with Livongo has struggled.
Teladoc's inability to execute on the $18.5 billion acquisition of Livongo led to a $6.6 billion write-down in the first quarter of this year. Livongo's focus on chronic care was supposed to help Teladoc differentiate itself from a slew of competing telehealth services.
The company is not yet profitable and has sizeable losses. Teladoc reported a full-year loss of $429 million in 2021.
When the company reported first-quarter results in April, executives had to walk back the 2022 revenue guidance it had provided just three months earlier. Management cited higher advertising costs in direct-to-consumer mental health markets and a longer sales cycle in the chronic condition market for the weak sales outlook.
Instead of a range of $2.55 billion to $2.65 billion, the company now expects total revenue to land in a range between $2.4 billion and $2.5 billion.
Teladoc is facing a lawsuit alleging the company misled investors about the company’s business, operations and prospects as the virtual care company's stock price has plunged in the past year.
Gorevic did not address the investor lawsuit.
He did acknowledge that dynamics and macro factors in today's financial markets are out of the company's control. "Whether you're talking about interest rates, inflationary risks, global geopolitical unrest—all of those things impact the financial markets and they impact investor sentiment," he said.
Teladoc is projecting to grow its BetterHelp business in the "high 30% range," and chronic care solutions are expected to grow by double digits in 2022, he said. "We're still projecting 20% growth in 2022, which I think is impressive in any environment and is certainly even more so in this environment."
He added, "We think that those are both strong, although not where we had hoped when we gave our guidance at the end of February."
Teladoc is investing "more than ever" in innovation to integrate products and services into one holistic solution and to leverage the underlying data to deliver better outcomes for consumers, according to Gorevic.
Eighty percent of Teladoc's sales are multi-product sales, according to the company. "The days of an organization whether it's a health plan or an employer looking for one-dimensional products are over, I think, and more and more clients are coming to us for where we have a unique advantage, which is that broad set of clinical capabilities."
Virtual care competition heats up
As the virtual care market has exploded, Teladoc is up against other large telehealth players like Amwell (formerly American Well) and Doctor on Demand. But, smaller, venture-capital-backed startups also have made inroads into telehealth and digital health.
The company is feeling pressure in the direct-to-consumer mental health space in particular where competition is now rampant with well-capitalized startups like Cerebral, Lyra, Talkspace and Ginger, among others.
Increased competition in the telehealth market means competitors are spending heavily on marketing to attract customers, Gorevic said during a recent earnings call.
"One example of this is paid search advertising, where we've seen a notable increase in rates for keywords associated with online therapy. We believe the biggest driver of this dynamic is smaller private competitors pursuing what we think are low- or no-return customer acquisition strategies in an attempt to establish market share," he said.
Gorevic called these strategies "unsustainable" in the long term.
He also said that some of those same providers are "exploiting" the temporary suspension of certain regulations associated with the national health emergency concerning the prescription of controlled substances.
He insists that Teladoc has the scale and experience to beat out smaller, well-funded competitors in the market.
"It's really hard for a small company, no matter how much investment dollars they get, to create that multi-dimensional, holistic solution that strikes across all of the clinical dimensions of a consumer's needs," he said, adding that Teladoc has a set of expertise that is "hard to build" and takes a long time to institutionalize in a way that is "replicable and deliverable at scale."
Gorevic also has brushed off investor concerns about competition from big tech players like Amazon and Microsoft.
"I see big tech as partners, distribution channels and co-collaborators more than I do competitors. We have great partnerships, both with Microsoft and Amazon."
He added, "I think big tech is going to do what big tech does best and for each one of them that's a little bit different. We've been at this for 20 years. This isn't a corner of the desk activity for us. I don't think healthcare lends itself to being kind of a sideshow. It has to be front and center in order to do it well because it's so complex."
Ramping up focus on virtual primary care
Teladoc executives tout the rollout of the Primary360 virtual primary care service as one area of innovation and a key pillar of the company's whole-person care strategy. Last fall, the company took its primary care pilot nationwide, expanding it to commercial health plans, employers and other payers.
Teladoc also plans to take on degrees of risk with its primary care offering, from clinical measures of care to risk corridors to, ultimately, full capitation.
"As we march toward taking more financial risks, we're more accountable and we have the opportunity to gain more value and really move the needle on clinical outcomes and cost of care," Gorevic said.
Teladoc is seeing "tremendous growth" in its primary care service as health plans and large employers roll out virtual-first health plans.
Through its Primary360 service, the company is reaching patients who have been disenfranchised and underserved by the healthcare system, Gorevic said.
More than half of Teladoc's Primary360 members are using at least two or more of the company's clinical programs and about a quarter of those people being treated for either diabetes or hypertension are newly diagnosed.
"We're expanding access to care and engagement with those populations who have been disconnected from the healthcare system. About 59% of the people who engage with Primary360 haven't seen a doctor in the last two years. We are able to expand access to care and engage people who haven't been actively managing their health," he said.
He added, "We're leading into deeper relationships with our clients where we align our incentives. We share in financial outcomes and we take on a bigger portion of healthcare economics because we're able to make a bigger impact on the clinical outcomes of a population."