Teladoc saw massive increases in total revenue, visits and paid membership in the first quarter of 2018. But the national telehealth company is still operating in the red.
Total revenue for the first quarter was $89.6 million, up 109% from the same period last year and beating expectations. Subscription access fees made up the bulk of those earnings at $71.7 million, while revenue from visits hit $17.9 million, according to a Securities and Exchange Commission filing Tuesday.
Likewise, total paid membership increased 41% compared to the same quarter last year. Total visits from paid membership reached 554,000, up from 385,000 last year. The quarter was buoyed by a strong flu season that drove 8,000 visits per day at its peak.
That offered a positive sign for the company’s technical infrastructure, which can handle “several times the volume we see today,” CEO Jason Gorevic said on a Tuesday earnings call.
But gains to membership didn't translate to profits. Teladoc reported a net loss of $23.9 million in the first quarter, up from $15.7 during the same time last year. Adjusted earnings before interest taxes and amortization (EBITA) came in at a loss of $1.4 million, although that compared favorably to the $9.1 million adjusted EBITA the company reported last year. Earnings per share were down 39 cents.
Part of that is attributed to higher operating expenses. In the first quarter alone, Teladoc spent $47 million on advertising and marketing, sales, and technology and development.
Executives and analysts were pleased with the results, however. Gorevic said the company “exceeded expectations for all key metrics.” Wells Fargo analysts said the company “seems to be executing extremely well,” and the business model could “drive 50x growth” over the next decade.
Gorevic touched briefly on the CVS-Aetna merger that could be a significant windfall for the company. Teladoc has contracts with both companies and Gorevic said the company has had “great discussions with them about how Teladoc can be part of a 'bricks and clicks' environment.”
“As you think about that becoming a more fluid experience that includes the benefit design, Teladoc plays really well in that environment and we see that being a benefit for us, but really a way to help to change the way healthcare is delivered,” he said.
Teladocs could also see some headwind later this year from a contract with Tricare that was delayed until the later in the year. Gorevic said the government wanted to take a more measured approach, adding “it has nothing to do with the VA that we’ve heard out from other players in the market,” a nod to the Cerner-Veterans Affairs contract that has been in limbo for months.