Teladoc Health is laying off 6% of its non-clinician workforce, 300 employees, according to an email from CEO Jason Gorevic sent to employees Wednesday.
Gorevic attributed the cutbacks to the elimination of redundant roles born out of mergers and a companywide restructuring aimed at increasing profitability, according to a copy of the email included in a filing (PDF) with the U.S. Securities and Exchange Commission (SEC).
Gorevic said more information about the new organizational structure would be shared directly with affected teams today. The telehealth giant acquired chronic care management company Livongo Health in 2020 for a whopping $18.5 billion.
“At this stage in both our evolution as an enterprise and given the challenged economic environment, we believe that balanced growth is the right step for us as a well-run company,” Gorevic wrote in the email to employees. “And so, after taking several non-people cost-saving actions, including ongoing real estate and systems consolidations, we concluded that today’s moves were necessary.”
The 8-K form submitted to the SEC also revealed that the company will be decreasing office space as a cost-saving measure. The company expects to incur $17 million in pretax charges related to the transition in the first quarter of 2023 and $8 million in the second quarter.
Teladoc foresees job cuts leading to a $6 million reduction in stock-based compensation also during the first quarter.
Impacted employees were offered enhanced severance, 2022 bonus payment and access to free therapy from the Teladoc-owned BetterHelp, the largest driver of the company’s growth.
The scaling back comes at the end of a rocky fiscal year for the 20-year-old telehealth provider. The company’s stock has fallen 64.4% in the last 12 months. The company's stock was priced at $26.81 midday Jan. 18, down from an all-time high of $296.66 a share in February 2021.
The company has delivered over half a billion digital health interactions through 30,000 providers.
Gorevic spoke at last week’s J.P. Morgan Healthcare Conference about the shift in telehealth’s security in the market as the pandemic wanes. He expressed confidence in the company’s position within the market.
“Many of the small competitors out there, whether they’re public or private, lack the scale to deliver strong financial results consistently,” Gorevic said. “There are a lot of virtual care companies out there that are more narrowly focused, smaller in scale and are nipping at the edges of single [software] solutions.”
Before the conference, the company announced a narrowing of its quarterly guidance to the higher end of its previous projection. The more optimistic projection was driven by Teladoc’s robust earnings from BetterHelp, bringing in a billion dollars in revenue.
In early January, Teladoc also revealed a new application to better integrate primary care and mental health services while developing its Spanish language offerings.
“This has been a methodical march to be able to expand the scope of our capabilities, the clinical programs that we deliver and therefore the value and impact we have for the clients who buy from us, the partners who work with us and the consumers that we serve,” Gorevic said. “And you can see in ‘23 and beyond, we're continuing this march to be able to deliver more value and make a bigger impact on health outcomes and on cost of care.”