During the 38th annual J.P. Morgan Healthcare Conference in San Francisco on Monday, Teladoc Health CEO Jason Gorevic reported the company had a "record" fourth quarter in 2019, beating revenue expectations.
Teladoc expects fourth-quarter 2019 top-line revenue to be between $155 million to $156 million, exceeding its fourth-quarter revenue guidance of $149 million to $153 million. The company also expects full-year 2019 revenue between $552 million to $553 million, which significantly exceeds the top end of its full-year guidance of $546 million to $550 million.
One-third of that revenue growth comes from increased visit revenue, and the remaining two-thirds comes from subscription revenue, Gorevic said. Subscription revenue in 2019 was strong across all customer channels, with substantial growth in the direct-to-consumer channel, he said.
"We beat expectations, both internally and externally, on all of the key top-line metrics. In particular, on the heels of a strong flu season, our visit volume was above the high end of our guidance. We will come in at over 1.2 million visits for the quarter and 4.1 million virtual care visits for the year," Gorevic said.
Gorevic also announced that the company expanded its relationship with insurer Aetna. "We look forward to bigger strategic opportunities with them as a client," he said.
Teladoc shares jumped 13% on Monday. Teladoc is up about 63% over the last 12 months, according to MarketWatch.
In advance of the JPM conference on Sunday, Teladoc announced big news with plans to acquire InTouch Health in a $600 million deal. Santa Barbara, California-based InTouch Health is a leading provider of enterprise telehealth solutions for hospitals and health systems.
The acquisition positions Teladoc as the partner of choice for health systems seeking a single solution for their entire virtual care strategy, Gorevic said.
"With the addition of InTouch, we are by far the leader at every front door and entry point into the healthcare system," he said.
InTouch Health is expected to generate 2019 revenues of approximately $80 million, growing about 35% versus the prior year. About 70% of InTouch's revenue is recurring revenue, Gorevic said.
InTouch Health supports more than 3,600 care locations around the world, including many of the top 20 U.S. health systems. The company also supports 40-plus clinical use cases through its virtual care platform.
About 30% of InTouch's business in 2019 was selling hardware and devices to facilitate virtual care in hospital emergency rooms, intensive care units and ambulances. The remainder of the company's business comes from software products.
"By putting the two together, we cover the full spectrum of clinical acuity and every entry point and location in the healthcare system," Gorevic said.
Analysts praised the deal, which broadens Teladoc’s offerings. “We view the acquisition positively from a strategic perspective, as it expands TDOC’s offerings across care settings and enhances its platform,” wrote Cantor Fitzgerald analyst Steven Halper in a note out Sunday, MarketWatch reported.
Arielle Trzcinski, a senior analyst with market research firm Forrester, told FierceHealthcare via email that the acquisition brings together companies with complementary strengths that "will make them a formidable force in the market for other solutions including American Well, Bright.md., and 98point6."
"As we see more health insurance companies, like Humana, partner with virtual care providers to create more innovative benefit options like ‘On Hand', a partnership with Doctor on Demand, for fully virtual primary care, this makes Teledoc an attractive option for more insurance providers looking to compete by offering more customer-focused benefits," Trzcinski said.
Gorevic contends that ongoing market trends such as the move to value-based reimbursement, bundled payments and provider-payer partnerships all point to the virtualization of more healthcare service lines. Trzcinski agrees, noting that virtual care is a strategic component for health systems looking to shift more revenue from fee-for-service to value-based care arrangements and take on downside risk.
Demographic trends also could drive further growth in telehealth services, she said. With an aging population, virtual care offers a way to reach patients that may have mobility issues or limited access to transportation and helps combat loneliness by providing a way to connect
2020 will be the inflection point for virtual care, with expectations for more than 36 million visits this year, Trzcinski said. "We expect one in every 11 mental health visits will be delivered virtually."
Gorevic said Teladoc has a "massive" expansion opportunity within its existing customers. Fifty-four million people currently have access to Teladoc's platform. "Without adding a new logo, I can add another 75 million people to the platform just in the U.S.," he said.