Shares of Teladoc Health Inc. fell after hours Tuesday after the telemedicine provider, known for its BetterHelp treatment platform, offered a largely negative forecast for the months ahead and warned that the market of virtual health services is becoming saturated.
In its earnings report on Tuesday, the TDOC company,
said it expects first-quarter sales of $630 million to $645 million, below FactSet analysts’ forecast of $673 million. He said he expects to lose 45 cents a share to 55 cents a share during the period, worse than analysts’ expectations for a loss of 41 cents a share.
For the full year, Teladoc expects sales of $2.64 billion to $2.74 billion, below analysts’ projections of $2.77 billion, and a per-share loss of 80 cents per share at 1, $10 per share, lower than expectations of $1.20 per share.
Teladoc shares fell 17.8% after the close. The stock surged during the pandemic as lockdown restrictions forced more people to interact online, but it has since slumped and the company is now trying to cut costs and boost profits.
“It’s important to remember that the majority of U.S. healthcare consumers today have access to virtual urgent care,” CEO Jason Gorevic said on the company’s earnings call Tuesday. “So it’s largely a replacement market at this point.”
“We have steadily gained share in this market and expect to continue to do so,” Gorevic continued. “But it’s fairly well penetrated, and as a result, we expect revenue growth from our virtual assistance products in the U.S. to be in the low single digits going forward. So, we see about 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 the demand for mental health services continues to be greater than the number of therapists able to handle it, and that Teladoc is looking to expand BetterHelp internationally.
But he noted that as the company tries to focus more on profits, the number of new users BetterHelp can attract is “somewhat limited” by what the company can spend to attract them. He said he believes the company could see revenue growth at BetterHelp “in the low single digits over the next three years, with opportunities for modest margin expansion.”
In the fourth quarter, BetterHelp’s revenue was “essentially stable” at $276.2 million, the company said.
Teladoc’s total revenue for the quarter increased 4% year over year to $660.5 million. Analysts polled by FactSet expected $670.8 million. Teladoc lost 17 cents per share in the period, not as bad as the 22 cents per share expected by analysts, and much narrower than losses in the same period a year earlier.
Teladoc shares are down 28.2% over the past 12 months.