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Teladoc’s stock dives after it forecasts slower growth in virtual healthcare

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Shares of Teladoc Health Inc. sank after hours Tuesday after the telehealth provider, known for its BetterHelp therapy platform, offered a largely downbeat forecast for the months ahead and warned that the market for virtual-healthcare services is getting saturated.

In its earnings report Tuesday, the company
TDOC,
-2.57%

said it expects first-quarter sales of $630 million to $645 million, below FactSet analyst forecasts of $673 million. It said it projects to lose 45 cents a share to 55 cents a share during the period, worse than analyst expectations for a loss of 41 cents a share.

For the full year, Teladoc is forecasting sales of $2.64 billion to $2.74 billion, below analyst projections of $2.77 billion, and a per-share loss of 80 cents a share to $1.10 a share, narrower than expectations for $1.20 a share.

Shares of Teladoc slid 18% after hours. The stock surged through the pandemic as lockdown restrictions forced more people to interact online, but has since fallen — and the company is now trying to cut costs and boost profits.

“It’s important to remember that most U.S. healthcare consumers have access to virtual urgent care today,” Chief Executive Jason Gorevic said on the company’s earnings call Tuesday. “So, it’s largely a replacement market at this point.”

“We’ve consistently taken share in this market and we expect to continue to do so,” Gorevic continued. “But it’s fairly well-penetrated and, accordingly, we anticipate revenue growth from our U.S. virtual-care products will be in the low-single digits going forward. So, think of roughly half of the integrated-care segment as stable but lower growth.”

The company’s integrated-care unit offers medical and mental-health services to employers, hospitals and health-plan providers. Its other segment, BetterHelp, connects patients with therapists online.

On the call, Gorevic said that demand for mental-health services continues to be larger than the number of therapists who can handle it, and that Teladoc is trying to expand BetterHelp internationally.

But he noted that as the company tries to focus more on profits, the number of new users that BetterHelp can attract is “gated somewhat” by what the company can spend to attract them. He said he believes the company could post revenue growth at BetterHelp “in the low-single-digit range over the next three years, with opportunities for modest margin expansion.”

In the fourth quarter, BetterHelp’s revenue was “essentially flat” at $276.2 million, the company said.

Teladoc’s total revenue for the quarter rose 4% year over year, to $660.5 million. Analysts polled by FactSet expected $670.8 million. Teladoc lost 17 cents a share for the period — not as bad as the 22 cents a share that analysts expected, and far narrower than its losses in the year-earlier period.

Shares of Teladoc are down 28.2% over the past 12 months.

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