The news: Telehealth giant Teladoc got slapped with a lawsuit alleging it misled investors about “unrealistic” financial expectations for 2022.
How we got here: Teladoc attributes its Q1 loss to high advertising costs and smaller competitors eating up market share.
During Teladoc’s April earnings call, CEO Jason Gorevic said around three-quarters of the revenue outlook decrease was related to Teladoc’s BetterHelp business, which sucked in higher marketing spend but lower-than-expected returns on it.
The larger trend: Telehealth use is declining overall, which likely won't change as COVID-19 becomes less of an emergency.
US adults’ telehealth use (measured by medical claim lines) decreased 6.1% in March alone, per nonprofit Fair Health. Researchers attributed the drop in telehealth adoption to the reduction of COVID-19 cases during that month. That could have led more people to tap in-person healthcare visits.
What's next? Increased competition from giants like Optum could make it difficult for Teladoc to land back in the good graces of investors. Especially as telehealth use wanes across the US.
Unlike when it first merged with Livongo, Teladoc is no longer the only telehealth giant out there.
Plus, last year, Doctor on Demand merged with Grand Rounds to form a multibillion-dollar telehealth giant, Included Health.