Teladoc Reports Q3 Losses, Announces Plans To Raise Visit Fees


Teladoc reports its third-quarter results: Revenue increased 83 percent to $20 million. Visit fees paid directly by consumers accounted for $3 million of the company’s earnings, while $17 million came from subscription fees paid by employers, payers, and other enterprise clients. Growth across both revenue streams contributed to the overall revenue increase, with a 122-percent increase in visit fee revenue, and a 78-percent increase in subscription fee revenue. Despite the impressive quarterly growth, Teladoc is still operating in the red, recording a net operating loss of $13.2 million for the quarter.

Now in its 13th year of operation, Teladoc is the largest telehealth vendor in the US. The company processes around 40,000 online consultations per month, monetizing this traffic through direct consumer payments and contracts with clients that are structured around per-member, per-month fees, or PMPM fees. Teladoc looks at PMPM fees as a core metric of its financial success. CEO Jason Gorevic noted on its investor call, “Our third-quarter results show solid growth across all of our metrics…. Importantly, our PMPM fees increased both sequentially and year over year.”

As telehealth matures as an industry, contracting norms are beginning to take shape and PMPM fees appear to be the first vendor-friendly contracting practice to divide the industry. While Teladoc charges its enterprise clients a PMPM fee regardless of how often its services are utilized, competitors like Doctor on Demand forgo this fee, charging enterprise clients only when patients actually use their service. Forgoing PMPM fees incentivizes vendors to engage with the patient population or employee base more meaningfully to increase utilization rates.

While it’s still too early to say for certain that PMPM fees are having an impact on sales opportunities, the evidence is beginning to mount. Teladoc lost its largest customer, Highmark Blue Cross Blue Shield, earlier this month to rival telehealth vendors Doctor on Demand and American Well. Doctor on Demand does not charge a PMPM fee at all, while American Well charges a significantly smaller one.  At the time of the loss, the Wall Street Journal covered the emerging trend away from PMPM fees in the telehealth sector, arguing that Teladoc’s path to profitability will likely be hindered now that vendors offering no-fee alternatives have entered the market.


In response to shifting market pressures, Teladoc announced during its earnings call that it would be increasing its visit fee from $40 to $45, starting January 1. Stock prices fell 10 percent throughout trading Tuesday, after dropping 20 percent in early October on news of its Highmark loss. The chart above compares share prices of Teladoc (blue) and the S&P 500 (red) over the past three months. Overall, stock prices are down nearly 50 percent in that timeframe.

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