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Teladoc sees light at the end of the 2023 tunnel

Illustration of a physician's hand holding a stethoscope coming out of a laptop screen.

Illustration: Gabriella Turrisi/Axios

After a rocky 2022, NYSE-traded Teladoc is financially stable enough to put some cash into its weight management and pre-diabetes businesses, CEO Jason Gorevic tells Axios.

Why it matters: Teladoc is the dominant player in the telehealth room with a market cap of $4.42 billion — a sizable edge over competitors including Hims and Hers at $2.4 billion and Amwell at less than $567 million.

Catch up quick: Teladoc's $18.5-billion acquisition of Livongo was a blight on its balance sheet that pushed it to a record net loss of $13.7 billion in 2022, but after first-quarter earnings yesterday, Gorevic maintains the telehealth giant is now positioned to reclaim its status as market leader.

By the numbers: Teladoc reported revenues of $629 million, an estimate-beating figure that represents an 11% rise year over year.

  • The company has $900 million in cash and short-term investments.
  • In Q1 '23, more than 80% of sales were multiproduct.
  • Its enterprise business grew 5%.

What's next: Gorevic expects the company to generate $100 million in free cash flow by the end of the year.

What they're saying: Given the inherent challenges built into a merger of the size and complexity of its Livongo purchase, analysts view some aspects of Teladoc's recent performance in a positive light.

  • For example, Teladoc's recent cost-reduction efforts appear to be paying off as the company's integrated care EBITDA rose to $35 million.
  • That "growth is excellent, especially since revenue for the segment was behind our estimate," BTIG equity research analyst David Larsen wrote in a note, adding, "We believe cost-reduction measures drove the earnings."
  • "TDOC is becoming an all-inclusive 1-stop shop," Larson added.
  • "This relative over-performance is a good indication that they've begun to focus on those markets where they can have meaningful impact profitably," Health Advances partner Greg Chittim tells Axios.

Yes, but: BetterHelp, Teladoc's virtual mental health service, saw EBITDA decline 41% year-over-year to $17.6 million — far below BTIG's $21.7 million estimate.

  • Such a miss is "surprising given that the segment's revenue beat our estimate," writes Larsen.
  • In addition, margin compression declined from 13.1% in Q1 '22 to 6.3% in Q1 '23 — another change that Larsen characterized as surprising, given Teladoc's insistence that ad costs are stable.

Our thought bubble: With less-than-sunny results for BetterHelp, we're wondering what happened to Amwell's rumored Talkspace takeover.

The bottom line: Teladoc's forward focus on weight management and pre-diabetes — two tenets of Livongo's offering — will likely make that weighty deal more immediately accretive.

Editor's note: This story has been corrected to note Teladoc lists on NYSE, not Nasdaq.

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