CEO says layoffs 'a difficult but necessary step' to reduce workforce redundancies and 'transition to more balanced growth of revenue and profitability.'
Telehealth provider Teladoc Health, Inc. says it will cut about 6% of its nonclinical workforce — roughly 300 jobs – as part of a cost-cutting and restructuring plan.
In a letter this week to employees, Teladoc CEO Jason Gorevic, calls the move "a difficult but necessary step" to reduce redundancies in the workforce brought on by recent mergers and "transition to more balanced growth of revenue and profitability."
"At this stage in both our evolution as an enterprise and given the challenged economic environment, we believe that balanced growth is the right step for us as a well-run company," Gorevic says. "And so, after taking several non-people cost-saving actions, including ongoing real estate and systems consolidations, we concluded that today's moves were necessary."
"As some team members leave, we will also be making changes to our organizational structure to streamline our work and best capture the opportunities ahead," Gorevic says, including a "further review of our real estate footprint and return on vendor investments."
In an 8-K filing with the Securities and Exchange Commission, Purchase, New York-based Teledoc says it "incurred approximately $4.4 million in pre-tax charges in Q4 2022, including about $2 million in costs related to employee transition, severance payments, employee benefits, and related costs, and approximately $2.4 million in exit costs associated with the office space reductions.
Under its restructuring plan, Teledoc says it anticipates "approximately $17 million in pre-tax charges in 2023, consisting of $9 million for employee transition, severance payments, employee benefits, and related costs expected to be realized in Q1 2023, and $8 million of exit costs associated with office space reductions expected to occur by Q2 2023."
From its pre-tax charges in 2023, Teledoc expects to incur about $10 million in expenditures related to the layoffs, and a $6 million reduction in stock-based compensation in Q1 2023 from forfeited stock awards.
In his letter to employees, Gorevic says the layoffs "put our company on an improved path to profitability and necessitates our collective focus on our commercial business priorities - Primary 360, chronic care management, mental health and delivering true whole person care – along with continued growth in our BetterHelp consumer brand."
"We know that more than half our commercial buyers want the integrated, whole person strategy that we offer, and delivering value across our businesses is of even greater importance in this economy," he says. "At the same time, we will continue to make significant innovation investments to ensure that our whole person offering is seamless and comprehensive."
"These actions put us on an even stronger financial footing at a time when many of our competitors are questioning their ability to keep their doors open."
The laid-off employees will get: a severance package payout based on years of service and grade level; bonus payments for 2022; subsidized COBRA benefits; access to free therapy from Teledoc's in-house BetterHelp; and job search support.
In his letter to employees, Gorevic concedes that he doesn't know if this week's action "is the beginning of ongoing layoffs or the precursor to further disruption in our company."
"What I can promise you is that today's actions were based on our best assessment of our current business needs, with the sole intent of putting us on a better path to top and bottom-line growth," he says.
“These actions put us on an even stronger financial footing at a time when many of our competitors are questioning their ability to keep their doors open.”
Jason Gorevic, CEO, Teledoc Health
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
In a letter to employees, CEO Jason Gorevic says the laoyffs 'put our company on an improved path to profitability and necessitates our collective focus on our commercial business priorities.'
However, Gorevic concedes that he doesn't know if this week's action 'is the beginning of ongoing layoffs or the precursor to further disruption in our company.'