Shares of telehealth giant Teladoc Health (TDOC 2.33%) have taken a beating in recent months, despite the company's continued growth beyond the height of the pandemic. In this segment of Backstage Pass, recorded on Dec. 1, Fool contributors Brian Feroldi and Brian Withers discuss.
Brian Feroldi: All right, moving on to Teladoc, ticker symbol T-D-O-C, a leading provider of telehealth solutions. Talk about another stock that's been under pressure for the better part of a year now. If you look at the company's results, there's far more good than there is bad. In the third quarter, total visits grew 37% to 3.9 million. Member utilization grew 713 basis points to 23.4%. Clearly people are becoming aware of their telehealth benefit, and they are taking advantage of it. On the downside, U.S. paid membership only grew 2% and visit-fee-only access in the U.S. only grew 8%, so not great there. However, financially the company's results were great. Access-fee revenue grew 99% -- that's the bulk of revenue -- to $452 million.
Visit-fee revenue grew 18% to $60 million. Add all that up and we had 81% revenue growth to $522 million that exceeded the high end of guidance. Equally as exciting to me, is this company's adjusted gross margin expanded 390 basis points to 67.6%. High revenue growth and expanding gross margins: an awesome combination. Less awesome is when expenses are growing even faster than revenue. This company's net loss more than doubled to $84 million. That's the bummer news. The more-positive news is almost all of that was stock-based compensation, which more than tripled during the quarter, and that was $72 million in stock-based compensation.
An adjusted basis, the company's cash burn was much lower. Now during the quarter, the company launched Primary360, which is a product that the management team is really excited about. It provides members who access this product with access to a virtual-care team that includes their primary care, integration with specialists, zero dollar co-pay, and unlimited messaging. This could be a wonderful tool for helping people that need primary-care access it. The company signed deals with HCSC; Blue Cross/Blue Shield; CVS Health, which owns Aetna; and Centene, and expects more deals to be on the way. A year ago, this company acquired Livongo Health in a megamerger. That merger seems to be going well. Enrollment in Livongo recently touched 725,000.
That was up 31%, and 24% of Teladoc's chronic care members are now enrolled in this program, up from 8% in the year-ago period. If you look at guidance for the quarter ahead, management is guiding for about 40% revenue growth for the upcoming quarter, total visits are raised to 14.5 [million] to 14.7 million. That's more than 700,000 more than they were expecting just 90 days ago. For 2022, management also said that they predict about $2.6 billion in revenue. That represents about 30% growth over the full year. So the numbers indicate that the company is doing pretty well. The stock heading in the opposite direction.
Brian Withers: Yeah. It sounds like there's a lot of things going right for Teladoc and sometimes, Brian, when we're investing for the long term, the business and the stock results don't necessarily reflect each other. What advice do you have for investors who are getting frustrated with the stock performance, but still think Teladoc is a good business.
Brian Feroldi: I would say study market history. I've been investing long enough to have seen this exact thing play out time and time again. One that comes to mind immediately is Activision Blizzard, which put up quarter after quarter after quarter after quarter of growth, growth, growth and the stock did nothing for like four years it felt like. Then finally, the market took notice of it, and the stock quadrupled within a matter of a year. Stocks like this are going to be rubber bands, they're just going to get stretched and stretched to a point.
Now, I have been very critical of Teladoc in the past, and I would still think there's reasons to be critical of this company. Primarily because their growth strategy has been growth by acquisition. Their revenue growth was 80%, but their organic-growth revenue rate was only about 36%, or somewhere around there. They're organically growing at a rapid clip, but growth by acquisition is a tricky strategy.
We've just seen companies that are exactly like this. Growth stocks that took off in 2020 have just been beaten to a pulp in 2021, and there could be more pain on the way. I mean, they still trade at very high valuations. If you're going to invest in telehealth companies like this that are in high-growth mode with uncertain futures, you just have to know that times like this are just going to happen.
Brian Withers: All right. Suck it up is what you're saying. [laughs]
Brian Feroldi: [laughs] What else can you do? Suck it up.
Brian Withers: Awesome.