Lewisville-based Teladoc barely missed its earning projections in the third quarter of 2016, but continued its trend of posting increases in year-over-year revenue, subscriptions, and visits.
The telemedicine provider recorded $32.4 million in revenue for the quarter, an increase of 62 percent compared to the same period in 2015. As is standard with the company, the revenue was primarily made up of subscription access fees ($27.8 million, up from $17 million in 2015) and visit fees ($4.6 million, up from $3 million). Teladoc provides a platform for board-certified physicians to log in and offer consultations for low acuity conditions. It offers its full suite of services—telephone consult, phone call with high-definition photos, and streaming video—in every state but Texas and Arkansas. It recently expanded into behavioral services, as well. The company’s business model is built on subscriptions with employers and insurance plans.
Teladoc is operating at a higher net loss than last year ($29.8 million compared to $13.2 million) as a result of its purchase of mid-market telehealth provider HealthiestYou and its July refinancing, which ding the company for just under $15 million. In an earnings call with investors last week, CEO Jason Gorevic said that Teladoc remains on track to break even by the end of next year.
Gorevic praised the quarter and said it had made “notable progress” with UnitedHealthcare to come onboard as a partner. Gorevic said that 200,000 of the company’s new members came from United, many of whom are college-aged. In addition, Teladoc was selected as the American Hospital Association’s exclusively endorsed telemedicine platform, which syncs up with the company’s recent goal to partner with health systems. It recently inked a deal with the largest hospital system in Indiana, Parkview, as well as Thomas Jefferson University Hospital in Philadelphia. And it’s agreed to a pilot program with AARP, offering telemedicine services to elderly home-health patients when their caregiver is unavailable.
In January, new partnerships will launch with Abbott Labs, Fannie Mae, Fox Entertainment, L3 Communications, Phillips 66, Avis Budget Group, and Memorial Sloan-Kettering.
“As we review the pipeline of sold and high probability accounts, we continue to track above where we were at this time last year and I’m very pleased with the team’s progress,” Gorevic said.
He also offered an update in the company’s ongoing legal battle with the Texas Medical Board, which attempted to pass a rule mandating a face-to-face visit prior to any telemedicine consult. Teladoc sued last year, alleging an antitrust violation—that the physician-heavy medical board had passed the rule to preserve doctor income rather than patient safety. The court ruled in favor of Teladoc in May 2015, but the TMB filed a motion to dismiss, which the court denied. The TMB appealed that to the U.S. Court of Appeals for the Fifth Circuit in New Orleans, but Teladoc secured more than a dozen amicus briefs from heavy hitters like the Federal Trade Commission, the U.S. Department of Justice, and the Cato Institute. In the call, Gorevic says that the TMB withdrew that appeal and that Teladoc’s challenge would continue in trial court, likely in a year or so.
“TMB notified us that it was going to voluntarily withdraw its appeal. This is a very, very unusual circumstance and the only reason that we can figure is that the TMB concluded that the Fifth Circuit was likely to rule against it and wanted to avoid a ninth loss in Court to Teladoc,” he said in the call.