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Teladoc Health on Wednesday reported a steep loss in the second quarter, thanks to a $790 million impairment charge related to its mental health business BetterHelp.
The telehealth giant withdrew its 2024 financial guidance, last affirmed in late April. It also scrapped the three-year revenue outlook that it introduced in February.
Shares of the company were down 14% to a new low of around $8 per share in after-hours trading.
Telehealth businesses have struggled to sustain the success they had during the COVID-19 pandemic, and Teladoc is no exception. The company’s longtime CEO Jason Gorevic stepped down in April after 15 years. It cut workers earlier this year, Endpoints News first reported. UnitedHealth’s Optum shut down its telehealth business this spring, and Walmart sold off its virtual care business after ending its healthcare venture.
Chuck DivitaTeladoc hired former insurance executive Chuck Divita in June to replace Gorevic and turn the company around. Analysts were hopeful that Divita, a former executive at health insurance companies, could drive more growth by helping Teladoc sell to more health plans.
But it’s the direct-to-consumer mental health business that’s been the biggest problem. The number of paying BetterHelp users fell 14% this quarter compared to the same period last year, while membership in other parts of Teladoc’s business grew. Teladoc has been spending less on expensive ads to attract users, and consumers have been spending less in general, Chief Financial Officer Mala Murthy said on Wednesday’s earnings call.
An equity analyst on the call asked if Teladoc would be better off selling BetterHelp, but Divita said the business “is an important part of the company.”
“We see BetterHelp as a business in transition,” he said.
Teladoc plans to help BetterHelp by getting insurers to cover its services and bringing it to more international customers, he said.
Across the company, Teladoc’s revenue slipped 2% in the quarter to $642.4 million. It recorded a net loss of $837.7 million, compared with a loss of $65.2 million in the second quarter of 2023.