Teladoc announced Tuesday it expects first-quarter 2020 revenue to reach between $180 million and $181 million, beating its previous projections of quarterly revenue of between $169 million and $172 million.
With those new projections, the company's first-quarter 2020 revenue grew 40% compared to revenue of $129 million in the first quarter of 2019.
The Purchase, New York-based telehealth provider announced Tuesday its preliminary financial and operating results for its first quarter ended March 31. The company will hold a first-quarter earnings call April 29.
As a result of the global outbreak of COVID-19, the company has experienced an unprecedented surge in demand for virtual care, the company said.
The company's remote medical appointments have more than doubled in number since early March. Teladoc is now routinely providing more than 20,000 virtual medical visits per day in the U.S., more than twice the average daily volume of virtual visits during the first week of March.
Total visit volume is expected to exceed 1.8 million visits in the first quarter of 2020, representing growth of approximately 70% as compared to the first quarter of 2019.
Virtual care is playing a central role during this crisis when the traditional healthcare system is under intense pressure, Teladoc CEO Jason Gorevic said. "I am confident that role will only continue to expand.”
Teladoc executives said adjusted EBITDA for the first quarter is expected to be in the range of $10 million to $11 million, compared to $1.2 million in the first quarter of 2019.
The company has responded to rising demand with several initiatives, including streamlining the company’s provider onboarding process to rapidly expand new physician capacity, enhancing visit queue algorithms and temporarily increasing physician compensation in certain cases to ensure service to the company’s clients and members.
These efforts have combined to significantly expand the number of active providers while greatly enhancing the productivity of the company's existing network of physicians, Teladoc said.
Teladoc also reported additional expenses estimated at $4 million during the first quarter, associated with the company’s incremental investments in its physician network to expand capacity in response to the global outbreak of COVID-19.
The additional expenses are expected to impact reported gross margin and adjusted EBITDA margin during the quarter, the company said.
The ultimate impact of COVID-19, including the impact on the company’s volume growth and investments in its physician network, is highly uncertain and will depend on many factors including the length of time the pandemic continues, its impact on the global economy and its effect on the demand for the company’s services, company officials said.
An inflection point
Health technology companies that provide virtual care and digital health management are seeing a boost in sales during the pandemic.
Livongo, a chronic disease management company that has a strong focus on diabetes management, also recently announced better-than-expected preliminary first-quarter financial results. Livongo is benefiting from a push to stay home amid the coronavirus pandemic, analysts said.
During a conference call with analysts on Tuesday, Gorevic said the COVID-19 outbreak represents an inflection point in the adoption of virtual care.
"The role of virtual care has changed forever," he said.
With the rapid spread of the COVID-19 virus in the U.S. and physical distancing measures in place, consumer awareness of virtual care options has surged, Gorevic said.
"The acceptance, adoption and how consumers look at virtual care is significantly different. More than 60% of current Teladoc Health visits are with members who are new to virtual care," he said. The company is seeing the highest growth rate among young men ages 18 to 30, who previously hadn't adopted telehealth services.
"We're accessing new populations we hadn’t accessed before," he said.
Gorevic also said he has seen a shift in provider adoption of telehealth services.
"There are providers who, six months ago, were turning their heads away from telemedicine and are now looking to use to provide the technology platforms such that they can provide care using our technology," he said.
He added, "If there were ever a question as to whether virtual care is going to play a leading role in the healthcare landscape, I think that’s been answered."
Federal policymakers have opened up access to telehealth services during the COVID-19 outbreak. The Centers for Medicare & Medicaid Services has eliminated some of the barriers to telehealth reimbursement for Medicare patients.
The Department of Health and Human Services' Office for Civil Rights (OCR) also announced that during the coronavirus pandemic it will use discretion when enforcing HIPAA-compliance for telehealth communications tools. OCR said providers will temporarily be allowed to use applications such as Apple FaceTime, Facebook Messenger video chat, Google Hangouts video or Skype.
In response to a question from an analyst, Gorevic said he did not see these non-healthcare platforms as a disruption or a competitive threat to Teladoc's business.
"I applaud the regulatory changes in reaction to the crisis. I hope some of the regulatory changes will remain in the future. I think the lack of enforcement of HIPAA requirements is unlikely to remain in the future once we come out on the other side of this. We’re seeing physicians, health systems and medical groups embrace virtual care at a rate I've never seen before. Given our technology platform, between health systems and hospitals business and our InTouch Health business, we're best positioned to benefit from that trend," he said.