Teladoc Health, a leading telehealth provider, is experiencing a significant drop in its share value as it anticipates sluggish expansion in the virtual healthcare market. The company’s forecast for the upcoming months is largely disappointing, with lower-than-expected sales projections and a warning that the market for virtual healthcare services is becoming saturated.
In its recent earnings report, Teladoc announced that it expects first-quarter sales of $630 million to $645 million, falling short of analyst forecasts. Additionally, the company projected a loss of 45 cents to 55 cents per share during this period, worse than expected. For the full year, Teladoc forecasts sales of $2.64 billion to $2.74 billion, below analyst projections of $2.77 billion, and a per-share loss of 80 cents to $1.10, narrower than expectations.
As a result of these disappointing figures, Teladoc’s shares plummeted by 17.8% after hours. This decline is a stark contrast to the stock’s surge during the pandemic when lockdown restrictions led to increased online interactions. Now, the company is focusing on cost-cutting measures and profit enhancement.
Teladoc’s Chief Executive, Jason Gorevic, highlighted that the virtual urgent care market has reached a point of saturation, as most U.S. healthcare consumers already have access to such services. While Teladoc has consistently gained market share, it anticipates low-single-digit revenue growth for its U.S. virtual care products in the future. Gorevic emphasized that roughly half of the integrated-care segment will remain stable but experience slower growth.
Teladoc operates in two segments: integrated care and BetterHelp. The integrated-care unit provides medical and mental-health services to employers, hospitals, and health-plan providers. BetterHelp, on the other hand, connects patients with therapists online. Gorevic acknowledged that demand for mental-health services surpasses the number of available therapists, and the company aims to expand BetterHelp internationally. However, the company’s focus on profitability limits its ability to attract new users, as it must carefully manage its expenses.
In the fourth quarter, BetterHelp’s revenue remained stagnant at $276.2 million. Teladoc’s total revenue for the quarter increased by 4% year over year, reaching $660.5 million, slightly below analysts’ expectations. The company posted a loss of 17 cents per share for the period, narrower than anticipated and an improvement from the previous year.
Teladoc’s shares have experienced a significant decline of 28.2% over the past 12 months. Despite the challenges faced by the company, Gorevic expressed optimism about BetterHelp’s revenue growth potential in the low-single-digit range over the next three years, with opportunities for modest margin expansion.
As Teladoc grapples with a saturated virtual healthcare market and the need to balance profitability with attracting new users, its future growth prospects remain uncertain. However, the company’s strong position in the telehealth industry and its efforts to expand internationally may present opportunities for recovery and further success.
