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Teladoc CEO departure adds to rising telehealth scrutiny

Illustration of a smart phone on a table top next to a coffee and laptop – on the screen of the phone is a brightly lit app with a red medical cross symbol and a notification exclamation symbol dot in its corner

Illustration: Annelise Capossela/Axios

Teladoc CEO Jason Gorevic is out at the telehealth giant amid increasing scrutiny of generalist telehealth players.

Why it matters: The change comes as eyes turn to the poor performance of generalist telehealth businesses, including Amwell, whose stock reached a historic low this week following an Axios investigation.

What's happening: In a note circulated Friday, Teladoc (NYSE: TDOC) announced Gorevic was out "effective immediately" and was being replaced by CFO Mala Murthy, who is now acting CEO, while they search for a permanent replacement.

  • TDOC shares remained mostly flat in premarket trading Friday, but have fallen about 34% year-to-date.
  • The stock has plummeted 95% from a February 2021 high of $295 to about $14 Friday.

What they're saying: Analysts were surprised by the immediacy of the move, with firms including Leerink and BTIG suggesting TDOC's financial woes pushed the company towards what they see as a largely rational leadership change.

  • "Given the underperformance a management change is likely warranted, especially with a reboot that may simply need a new set of leadership hands to execute on," wrote Leerink analysts including Michael Cherny.
  • "This news comes as a bit of a surprise ... given the immediacy of the departure though we are encouraged that Mala ... is able to step in to ensure a smooth transition," wrote Evercore ISI analysts including Elizabeth Anderson.
  • "Given the very significant slow-down that TDOC has faced over the past few years, this announcement is not entirely surprising," say BTIG analysts including David Larsen.

Zoom in: TDOC has seen a slowdown in revenue growth, in particular tied to its acquisition of behavioral health player BetterHelp, creating "near-term financial uncertainty," per Leerink.

  • In 2024, BTIG analysts predict "just +3%" year-over-year revenue growth.

In a note to TDOC employees viewed by Axios, acting CEO Murthy will focus "on ensuring that our company continues to operate effectively and delivers on our commitments to clients and members."

Flashback: Before joining Teladoc, Murthy was the SVP and CFO of global commercial services at American Express, and prior to that, the VP of financial planning at PepsiCo. She has served as Teladoc's CFO since June 2019.

The other side: Despite these challenges, analysts view TDOC as having built a business plan that could succeed, should its leaders shore up its strengths and adapt adequately to compete with rivals.

  • "With the Livongo acquisition, TDOC has created a very thorough and effective 'virtual care channel' that in our view can be used as the first line of defense with respect to member and consumer health care spending,' BTIG notes.

The takeaway: COVID was a boon for telehealth at large, but competing telehealth tools have proliferated at a breakneck pace, complicating a once-clear path to success for companies such as TDOC and AMWL.

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