Teladoc Health stock dropped more 25% Wednesday, a day after the company’s latest quarterly earnings failed to meet investor expectations.
A decline in virtual doctor’s appointments nationwide in recent quarters is partly to blame for the Purchase, New York-based telehealth company’s slowing growth.
In a call with investors on Tuesday, Teladoc CEO Jason Gorevic described the the telehealth market as “fairly well-penetrated” and said revenue growth from the company’s U.S. virtual care products will be in the “low single-digits moving forward.”
In the three months ending Dec. 31, Teladoc’s revenue grew 4% year-over-year to $660.5 million. But that fell short of Wall Street estimates of $670.8 million, according to FactSet.
Revenue for its telehealth platform, Integrated Care, rose 8% to $384 million year-over-year to in the fourth quarter. Revenue for the company’s virtual therapy service BetterHelp remained flat at $276 million.
Teladoc anticipates its revenue in the first quarter of 2024 to reach between $630 million to $645 million, again failing to meet analysts expectations of $647 million.
Teladoc isn’t the only telehealth company starting to feel a drop in users as the COVID-19 pandemic recedes further into the rearview mirror. Its rival Amwell reported a 10% drop in revenue in the quarter ending Dec. 31 to $70 million, from $79 million in same quarter the prior year.
The decline of telehealth visits
Virtual doctor’s visits online have sharply declined since peaking during the pandemic, when many health providers turned to them amid social distancing protocols. Now it seems more patients prefer to have their medical needs met in person.
Telehealth visits plummeted 45.8% in the fourth quarter of 2022, to 41.5 million visits from 76.6 million in the second quarter of 2020, according to a data from the market research firm Trilliant Health.
More recent data from the Centers for Medicare and Medicaid Services shows that downward trend continued in 2023. Medicare beneficiaries who used at least one telehealth service fell 73% to 2.8 million in the second quarter of 2023, from a peak of 10.2 million during the same period in 2020.