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Six Takeaways From Teladoc’s Investor Day Presentations

Teladoc Investor Day 2021

What if you tried to impress investors through a series of presentations by company execs β€” and your stock tanked by nearly 15% over the next two days? That’s what happened to virtual care platform (VCP) company Teladoc last week. I’ll share six takeaways from Teladoc’s investor day presentations:

  1. Teladoc’s Vision as a Virtual Care Platform is Broad β€” VERY Broad
  2. “Whole-Person” Care Takes Center Stage
  3. Teladoc is Walking a Tightrope: Trying to Be Complementary vs. Competitive With Customers
  4. What Wasn’t Discussed β€” Uncertainties of “The Telemedicine Cliff”
  5. What Wasn’t Discussed β€” An App Store for the Teladoc Platform?
  6. Investors Weren’t Pleased

Here’s a link to Teladoc’s 121 slide deck presented to investors. My POV here is that of a strategic advisor with over 30 years diverse healthcare experience across 150+ companies β€” with a unique focus on platform strategy and business models.

Let’s take a look at each of the six points.

1) Teladoc’s Vision as a Virtual Care Platform is Broad β€” VERY Broad

To be more precise, Teladoc’s vision is as broad or broader than any other market player. CEO Jason Gorevic shared an expansive view of the potential for their platform in the future:

A colleague once asked me “What’s the end game for virtual care?” My reply was “There’s no end game in sight”. For the curious, TripleTree β€” a healthcare investment bank and principal investor β€” penned an extensive report and framework for the future of virtual healthcare.

By analogy, consider Amazon when it was founded in 1994 β€” it started as an online bookstore. Today its many businesses include online shopping for just about anything, cloud services, delivery, entertainment, payments, physical stores, and smart home devices. Amazon has deep ambitions in healthcare.

A defining feature of platform business models is the relative ease in which economies of scope facilitate expansion into adjacent or new markets. Who in 1994 could have foreseen what Amazon would become? Who today can foresee the 10 or 20 year potential of Teladoc or other VCPs?

2) “Whole-Person” Care Takes Center Stage

Teladoc has coined a “new category” to describe their clinical model: “whole-person” care. This phrase is used 24 times in their presentations. This diagram depicts Teladoc’s vision of whole-person care:

Since the term “whole person” is new, I suspect many will read between the lines and infer their own meaning. In describing whole-person care, local health system executives & their clinicians might ask: “Isn’t that what WE do?” More on this in the next takeaway point.

3) Teladoc is Walking a Tightrope: Trying to Be Complementary vs. Competitive With Customers

To their credit, Teladoc talked extensively about moving from being a vendor to a partner with their clients (e.g., slide 13). The term “partner” is used 18 times in their presentations.

Teladoc has a menagerie of clients and partners β€” health plans & government, global insurers & financial services, employers, hospital & health systems, direct to consumer (slide 27).

In healthcare, the animals in the menagerie don’t always get along with one another β€” there is conflict and competition.

In a recent article in Healthcare Innovation, my colleague Tom Wilson and I asked “Do Virtual Care Platforms Compete With Local Care Providers?” We answered: “It’s Complicated”. We discussed eight areas of “potential” competition: 1) Low Acuity/Episodic Care, 2) Virtual Primary Care, 3) Specialist Care, 4) Chronic Disease Management, 5) Second Opinions, 6) Specialized Populations/Conditions, 7) “Selling Ammunition to the Enemy”, and 8) Digital Front Door.

Here’s a partial list of Teladoc slide headlines that “might” be alarming to local health systems and clinicians:

  • Teladoc Health’s approach to whole-person virtual care addresses the shortcomings of the physical delivery system (slide 14)
  • Our North Star: The First Place Consumers Turn To for All Healthcare Needs (slide 15)
  • Teladoc as the “Digital Front Door” (slide 17)
  • Consistently Expanding Penetration within Health Plans (slide 32)
  • Delivering a Reimagined Model for Primary Care (slide 44)
  • Primary360 Acts as Gateway to Full Range of Services (slide 46)
  • Primary360 is a Better Way to Deliver Primary Care (slide 47)
  • Teladoc is the Only Company that Can Deliver Integrated Primary Care Across the Care Continuum at Scale (slide 48)
  • Expansion Opportunities in Chronic Care (slide 57)

Extending the “walking the tightrope” metaphor, Teladoc’s tightrope will only become narrower and will be raised higher over time. Teladoc is projecting to do 18 million virtual visits in 2021. That’s a drop in the bucket when weighed against approximately 1 billion MD visits in the U.S.Β  Local health systems and clinicians likely don’t yet notice any loss of business.

For B2C platforms, individual customers have virtually no ability to influence objectionable platform practices.

For B2B platforms, the situation is different β€” many individual customers have scale and resources. Health system providers already are learning the lessons of banding together collectively. For example, Truveta is a shared data collaborative among 20 health systems; Graphite Health is an interoperable health utility platform founded by 3 health systems.

4) What Wasn’t Discussed β€” Uncertainties of “The Telemedicine Cliff”

When COVID-19 hit, the federal government, states, and health plans immediately relaxed reimbursement and regulatory requirements for telehealth services. These relaxations mostly are set to expire when the COVID-19 public health emergency (PHE) ends. The “Telemedicine Cliff” refers to the risk and uncertainty of PHE reimbursement and regulatory relaxations reverting to pre-COVID-19 restrictions.

Foley and Lardner attorneys Thomas B. Ferrante and Jana L. Kolarik listed some of the specific elements of the Telemedicine Cliff:

  • Medicare, Medicaid and health plan reimbursement levels for services
  • Flexibilities for removing geographic restrictions
  • Allowing the location of the patient (including the patient’s home) to be an originating site
  • Flexibilities relating to HIPAA and technology/security requirements
  • Temporary suspensions of medical licensing requirements

The COVID-19 pandemic solved a huge problem for VCPs β€” the universal chicken-egg problem for platforms. Which comes first β€” the supply side or the demand side?

COVID-19 simultaneously created demand and supply for telehealth services. Patients (the demand side) were fearful of visiting clinician offices or hospitals for fear of catching the virus; overnight they were demanding virtual visits. Clinicians (the supply side) needed to provide safe visits; overnight they began providing virtual visits.

“Prior to the COVID-19 pandemic hitting, just 39% of hospitals and health systems were using or planning telehealth offerings; as a result of the pandemic, 53% added telehealth to their roadmap, according to new HIMSS Media research. Now, telehealth is in the top three focus areas (92%), the research shows.” Healthcare IT News; November 15, 2021

While no one is suggesting that telehealth visit volumes will revert to pre-COVID-19 levels, there’s still huge uncertainty around future levels of patient demand and provider willingness to provide supply.

5) What Wasn’t Discussed β€” An App Store for the Teladoc Platform?

Teladoc had no discussion about an app store for their platform. For ambitious platforms, development of an app store is a key strategic move to add capabilities to a platform β€” think 3+ million apps in the Google Play app store and 2+ million apps in Apple’s App Store.

This is particularly eye-catching in light of competitor Amwell developing an app store in its new Converge platform.

6) Investors Weren’t Pleased

Teladoc presented strong growth projections to support their broad vision β€” a compound annual growth rate of 25-30% (slide 23).

On November 18 and 19, the Teladoc stock price dropped by 14.6%. Why? This isn’t clear.

Motley Fool analyst Daniel Sparks offered one possible explanation: “While the metrics provided were largely in line (and in some cases even better) than current analyst estimates, investors may have been hoping for a more exciting outlook from management.”

As of the end of September, the company has $826 million of cash and marketable securities on its balance sheet. Teladoc has a lot of runway left to achieve its broad vision.

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