Teladoc narrows loss in Q3 and YTD, grows revenue, adjusted profits…but stock sinks?

October 27, 2023 | by

Teladoc seemingly can’t get any respect from Mr. Market. 2023 seems to be a waypoint in the company’s recovery after their disastrous 2022 (TTA 4 May 22, 23 Feb). Focusing on operational efficiencies since then, Teladoc posted some decent numbers compared to 2022 in their Q3 report:

  • Q3 revenue increased 8% to $660.2 million; nine-month revenue increased 10% to $1,941.9 million
  • Q3 net loss went down 10 cents per share to a total of $57.1 million, or $0.35 per share. Nine-month net loss was $191.5 million, or $1.17 per share (2022’s was $61.09)
  • Adjusted EBITDA in Q3 increased 73% to $88.8 million; nine-month EBITDA increased 40% to $213.7 million
  • Finally, cash flow from operations was $105.6 million in Q3, a 68% increase. For the nine months, $219.9 million, up 77%.

Yet the share price has taken a tumble from July’s end above $29, closing today at $16.09.

This Editor is no stock picker, but informed heads think that CEO Jason Gorevic has emphasized operational efficiencies over sales and profitable revenue growth. Yet EBITDA is booming with a 2023 guidance of $320-330 million. Amazon’s aggressiveness in taking over virtual care is much on the minds of these ‘informed heads’. In this context, too much pullback on sales and growth is not a positive sign of Teladoc’s long-term future, an indication that Mr. Gorevic, now trimmed, needs to trim his sails to the now-prevailing winds to increase share value. The much-touted BetterHelp in telemental health is not quite panning out with flat revenue and wobbly EBITDA. There’s such a thing as depending on one part of the business, with the rest going too lean and not having capacity, walking away from growth while the competition picks off your business. Seeking Alpha

Is Amazon a chimera of blue smoke and mirrors? The comparison with Amazon is despite their being a target of the Federal Trade Commission (FTC) on monopoly and anticompetitive charges (see the FTC release and the Vox discussion on why the US government wants to break up Amazon). More pain points are AWS’ slowing growth and emerging difficulties (ahem) in implementing their healthcare strategy with One Medical and Amazon Clinic, which this Editor has previously noted. What we view as a juggernaut is facing more than their share of distractions and changing circumstance. Even Jeff Bezos is pulling back his support of the Washington Post. (Need we remind our Readers that 2024 is a general election, and Amazon Hater Senator Elizabeth Warren is up for reelection?)

Amazon Clinic announces 50-state rollout 1 August. Were the privacy issues fixed?

August 1, 2023 | by | 2 Comments

At least the disclaimers are new and improved. Amazon today, on its news page, announced that Amazon Clinic was being rolled out to all 50 US states from the previous 33. You will be paying in cash (no insurance accepted) for services, which now include live 24/7 telehealth (via two ‘white-labels’, Wheel and SteadyMD) in addition to asynchronous (messaging) telehealth, for treatment of about 30 common mild and chronic conditions such as rosacea, gout, eczema, UTIs, and the ever-popular erectile dysfunction and hair loss. Access is provided through the Clinic website or the Amazon app. Providers set fees on a one-time and ongoing basis. Prescriptions can be filled individually or through Amazon Pharmacy. The service is not available to those below 18 or above 64, which is a mystery as those 65+ are perfectly capable of paying in cash and suffer from the same maladies. (Age discrimination, anyone?)

As to the reported delay from 27 June on the service expansion [TTA 27 June], an Amazon spokesperson denied that privacy concerns expressed by two US senators (Warren and Welch) and in the Washington Post had any effect and in fact, denied that there was any delay.  FierceHealthcare.

It is unknown whether Amazon replied to the senators’ letter that cited where consumer information went, that it may be redisclosed, and denial of service (inability to complete registration) if a user during registration did not agree to waive HIPAA and give Amazon access to the patient’s personal information file.

Looking at the news, website and privacy disclosures, there are multiple disclaimers wherever one looks that seem to address these concerns.  On the news release, there is a link labeled Read more about how privacy is built into Amazon Clinic’s core. Excerpts below (main points in red):

We do not sell customer information.

Amazon doesn’t sell customers’ personal information. Amazon Clinic also doesn’t use a customer’s personal health information to market or advertise other products in the Amazon.com store.

We ask for HIPAA authorization to make things easier for customers.
One of the complaints we hear a lot about traditional health care is how many times customers are asked to fill out forms over and over again. To solve this problem, Amazon Clinic asks customers for permission (through the HIPAA authorization) to allow us to save their information and patient records if their health care provider leaves Amazon Clinic. This supports continuity of care and makes it easier for customers to work with different provider groups, because they won’t have to fill out the same form multiple times or lose access to their visit history. Customers have the option to accept or decline the HIPAA authorization before getting treatment—customers who decline can still receive care from Amazon Clinic.

Privacy disclosure on the Amazon Clinic site is the same in consumer-oriented language and with a revocation notice:

What we do (and don’t do) with your information
We use your information to make your healthcare experience easier. We send it to your healthcare providers and pharmacies when you’re being treated, and we save it so you won’t have to fill out the same forms over and over again—even if your healthcare provider were to leave Amazon Clinic. We’ll never sell your information to anyone and we don’t use your personal health information to market or advertise other products available on Amazon.com.
We respect your preferences
If you don’t want us to save your health information, you can still get care through Amazon Clinic. However, you should know that if the healthcare provider(s) you’ve used leave Amazon, we’ll be required by law to delete your health information and you’ll have to re-enter it if you visit us again.
You can change your mind
If you give us permission to save your health information, then change your mind, that’s OK. To revoke your HIPAA Authorization, just email your request to clinic.privacy@amazon.clinic. Make sure to include your name, date of birth, address, and phone number, or download the HIPAA revocation form, fill it out, and send it as an attachment to your email.

Unless this is not operating reality, Amazon may have come to its senses and installed proper guardrails on this service. Amazon is making a massive bet on healthcare by building Clinic, Amazon Pharmacy, and paying $3.9 billion for One Medical which is currently unprofitable. They are betting that to their captive audience, basic healthcare can be delivered like merchandise and that more complex primary care can be folded into the Amazon continuum. In Amazon Clinic, it’s betting that it can one-up established players like Ro and Hims as well as Teladoc and Amwell.

A hard look at Amazon reveals that the strategy compensates for losses in other areas, such as their basic businesses with layoffs of 27,000, including Amazon Pharmacy and the Washington Post, and shuttering Amazon Care last year. Technology hasn’t been much of a winner, with Halo terminated yesterday and with privacy concerns (again) around Alexa, Kindle, and Ring security cameras. AWS is no longer the cash cow mooing in the meadow that subsidizes various ventures, with growth down by half and plenty of competition [TTA 16 June]. Amazon has few friends in DC, not even at the Washington Post. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) have held up their $1.7 billion buy of iRobot for one year as of this month, and are still scrutinizing One Medical.

If the guardrails are made of Silly Putty and there are consumer complaints, Senator Warren, who has a long history of sparring with Amazon, will be issuing more letters. She will huddle with FTC and DOJ, where there’s a dartboard with Amazon’s name on it. Note to Amazon: Senator Warren is up for reelection in 2024, and she needs a high-profile issue.

Short takes and updates: FTC may not be done with CVS-Oak Street, VistA moves to cloud–why?, Oracle Cerner lays off 10%. at least

March 24, 2023 | by

The CVS-Oak Street Health buy may be finalized on paper for $10.6 billion, but it’s not a done deal. While the papers are signed and the preparations may be underway for a closing at the end of the year, it’s still subject to Federal and state approvals [TTA 9 Feb]. This week, Senator Elizabeth Warren, a one-time presidential candidate who cherishes her bully pulpit as a member of two finance committees (but chair of none), sent a letter (office release) to the Federal Trade Commission (FTC) to “carefully scrutinize” the deal.  In addition, she urges FTC to “retrospectively review similarly consummated deals and challenge in court any mergers that have reduced competition in violation of antitrust laws”. FTC is a prime candidate for a nudge because their newly activist stance needs little encouragement for the commissioners to pull out the cudgels.

CVS may very well find itself challenged as well by the Department of Justice (DOJ)–a more complicated action since it requires preparing a case, going to Federal Court, filing papers, and convincing a judge that it involves true antitrust issues worthy of further examination. CVS  may well be spending time in Federal and state courts before the closing, and likely expects it. Even so, DOJ appears to be positioned on the sidelines. There is a memorandum of understanding between DOJ and Health and Human Services sharing concerns about antitrust.  DOJ may also be tired of complicated, labor-intensive suits like UnitedHealth Group and Change Healthcare that wound up in favor of the defendants and with egg on DOJ’s face [TTA 23 Mar]. Unlike DOJ, FTC has more latitude and they have been using it. Thus Sen. Warren’s appeal is a strategic one. FierceHealthcare

Yet where does it end? Horizontal integration or consolidation–businesses buying similar businesses–has obvious limits. But vertical integration–owning part or all of the care continuum or means of production–is less obvious. It can make healthcare more available and effective. But it may reduce competitive opportunity and create a ‘one or none’ business model. That is where the Feds tend to step in unless it’s a bank (of late). 

VistA’s new tune is ‘I’m Still Here’–in the cloud. Yes, VistA, facing phase-out at the VA, is moving its system to the cloud, and has major reasons why. Reginald Cummings, the deputy chief information officer for VA’s infrastructure operations,  explained during a panel discussion of the Association for Federal IRM (AFFIRM) that the ‘lift and shift’ (the hip IT term for this) was done for two things: to move it away from being multiple systems running at each facility, and to ‘containerize’ it,  packaging the application together with the resources it needs to operate, such as the operating system itself, the storage and interfaces. This improves security and portability. The real news is that VA is now admitting that it will take years to transition to Oracle Cerner. According to Daniel McCune, a VA software executive, VA may need VistA for another 10 years. (Perhaps 15?) Supposedly, this isn’t modernization…but it does keep a legacy system running indefinitely, like the Energizer Bunny, which would 1) suit many at VA, and 2) perhaps avoid dealing with the Oracle Cerner issues. No mention is made in the article if this makes transitioning to Oracle Cerner easier, which this Editor finds odd. The chair of the panel discussion, Tom Temin, is also the article author on Federal News Network. As some of our international Readers know, VistA is used in countries such as India as open-source software (WorldVista.org).

And speaking of Oracle Cerner, the layoffs are on. Rumors have it as high as 10% of Oracle Cerner’s global workforce of about 28,000. It is surmised that at Cerner’s former HQ sites in Kansas City, the layoffs may be several hundred, though no WARN notices for group layoffs have been filed with Missouri. These notices are required when layoffs are at least 50-499 employees if they represent at least 33% of the total active workforce, excluding any part-time employees; or 500 or more employees (excluding any part-time employees) in which case the 33% does not apply. (DOL WARN Act guide) The Cerner workforce in the KC area was about 12,000 at one point. Severance packages were reported to be four weeks plus one week per year of service.

In addition, Oracle employees who were working from an Oracle office but transitioned to remote work during the pandemic must return to in-office work at their previous campus. They will be notified by managers in the next 30 days whether they will be full time in office, ‘flex’ or hybrid without an assigned space, or continuing as remote. Perhaps this is why WARN notices were not filed. Many workers moved out of area, and refusal to return to office can be called quitting. HISTalk, Becker’s