As the world deals with the COVID-19 pandemic, one trend that was already gaining steam is now experiencing even greater adoption: telemedicine and virtual healthcare. Patients leery of going to the doctor's office for fear of contracting the disease are increasingly turning to virtual office visits to bridge the gap.
One of the biggest beneficiaries of this trend has been Teladoc Health (TDOC 0.05%). Adoption of the virtual healthcare platform was already accelerating, driving the stock up more than 40%. And that was before the coronavirus really established a foothold in the U.S. Since mid-February, it's gained an additional 44% including today's jump, pushing the stock up more than 100% so far this year.
Teladoc reported preliminary results for the first quarter that far exceeded the company's already ambitious forecast. Let's look at the numbers and see what has investors so bullish.
Surging patient visits
One of the biggest indicators of the soaring adoption of Teladoc is the growing number of patient visits. The company is now routinely providing more than 20,000 virtual office visits per day, an increase of 100% compared with what was happening in early March. It's important to point out that before the surge, the company said it was already experiencing visit demand consistent with peak flu volumes.
Investors may recall that Teladoc reported daily virtual medical visits that increased 50% over a period of one week in early March, when visits grew to 15,000 per day. The latest figures show that usage has continued to accelerate in the four weeks since that report. Teladoc has been able to scale, after initially experiencing longer-than-usual wait times, with the majority of patients now waiting less than 15 minutes.
Another important metric shared by management is that more than 60% of current Teladoc Health visits are by users who are new to the platform, and are being seen for a wide range of conditions, including those who were concerned they had contracted COVID-19 and a host of other ailments. With many communities still restricted by stay-at-home orders, patients are seeking out telehealth as a way to avoid office visits to their healthcare professional for fear of contracting the coronavirus.
Teladoc estimates that total volume surpassed 1.8 million visits during the first quarter, an increase of 70% versus the prior-year period.
As part of its earnings preview, Teladoc updated the estimates for its first-quarter financial results. The company now expects revenue in a range of $180 million to $181 million, which would represent an increase of about 40% year over year at the midpoint of its guidance. This was up from the company's previous range of $169 million to $172 million, and well above Wall Street's recent expectations of $174 million.
Teladoc is now forecasting adjusted EBITDA between $10 million and $11 million, up nearly tenfold from the $1.2 million it delivered in the prior-year quarter, and largely unchanged from its previously forecast range of $9 million to $11 million. The company explained that it incurred additional expenses of roughly $4 million in incremental investment in its network in order to scale and accommodate the additional patient load. These investments better position Teladoc to handle future increases in demand.