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Teladoc (TDOC) Q1 Earnings Beat, 2021 Revenue Guidance Up

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Teladoc Health, Inc.  (TDOC - Free Report) reported first-quarter 2021 earnings of 13 cents per share, surpassing the Zacks Consensus Estimate by 122.81%. The bottom line also rebounded from the year-ago loss of 40 cents per share.

Teladoc Health, Inc. Price, Consensus and EPS Surprise Teladoc Health, Inc. Price, Consensus and EPS Surprise

Teladoc Health, Inc. price-consensus-eps-surprise-chart | Teladoc Health, Inc. Quote

Strong Operating Performance

The company’s operating revenues of $454 million (came in the management’s expected range of $445-$455 million) surpassed the Zacks Consensus Estimate by 0.35% and also surged 151% year over year. This upside can be attributed to a strong performance of its revenue components, namely access fees revenues and visit fee revenues.

Revenues from access fees (which comprised 85.5% of total revenues in the quarter) soared 183% year over year to $388.2 million. Within this, access fees of $350.1 million from the United States, which made up 90% of the total access fees, grew 225% year over year while international access fees accounted for the remaining 10% or $37.3 million (up 28%).

The increase in access fee revenues as a percentage of total revenue is primarily owing to the acquisition of Livongo and InTouch Health, both of which generate the majority of their revenues from subscription access fees.

The company generated $54.5 million in visit fee revenues from general and medical visits, which increased 24% year over year.

Adjusted gross margin expanded 780 basis points year over year to 67.8%, primarily attributable to the higher gross margin profile associated with Livongo revenues.

Total visits of 3.19 million (were higher than the projection of 2.9-3.1 million) rose 56% year over year, driven by a 69% and 8% increase in visits from United States and International segments, respectively.

Teladoc ended the quarter with U.S. paid membership of 51.5 million, up 20% year over year and  U.S. visit fee only access membership of 22 million (up 15%).

Total expenses rose to $538.3 million, up 167%, primarily due to general and administrative expenses, technology and development, cost of revenues, advertising and marketing, sales, acquisition and integration.

Adjusted EBITDA was $56.6 million, which soared more than 4 times from $10.7 million in the year-ago quarter. The metric surpassed management’s estimated range of $45-$48 million. 

Financial Update (as of Mar 31, 2021)

The company had $733.3 million as cash and cash equivalents, up 43% year over year.

Total debt was $1.35 million, dipping 1.9% from December 2020-end levels.

During the quarter, net cash used in operating activities of $18.1 million compared with cash used of $6.3 million in the first quarter of 2020.

Second-Quarter Guidance

The company anticipates revenues between $495 million and $505 million while adjusted EBITDA is estimated to be $61-$64 million.

Total visits are expected in the range of 3.2-3.4 million. The company projects total U.S. paid membership in the band of 52-54 million members. Visit-fee-only access is estimated to be available to 22-23 million individuals.

Updated 2021 Outlook

Following a strong first-quarter performance, the company raised its guidance for revenues and visits. The telehealth provider anticipates total revenues of $1.97-$2.02 billion (up from the previous estimate of $1.95-$2 billion), driven by strong growth in per member per month fees as well as higher expected utilizations, particularly among specialty visits.  Total adjusted EBITDA of $255-$275 million is estimated.

The company projects total visits between 12.5 million and 13.5 million (compared with the 12-13 million range anticipated earlier). Total U.S. paid membership is expected in the range of 52-54 million members and visit fee only access is projected to be available to 22-23 million individuals including 2-3 million individuals on a temporary basis.

Our Take

Teladoc has been a beneficiary of the shift of health care to virtual for a while now, driven by the COVID-19 pandemic. The company is witnessing huge adoption of its services across borders and demographics with millennials being the most comfortable cohort in opting for these online healthcare services.

Enrollment in chronic care programs as a percentage of recruitables remained strong throughout 2020 and into the first quarter. With more than 40% of adults in the United States living with multiple chronic conditions, the opportunity for the company to grow is significant. The company’s execution of its whole-person care strategy to address the full spectrum of consumer health needs rather than just one particular disease bodes well for the long haul.

Competition is heating up in the space with players like, Inc. (AMZN - Free Report) coming out with virtual care and recent IPOs of 1Life Healthcare, Inc. (ONEM - Free Report) and American Well Corporation (AMWL - Free Report) trying to expand their presence in the virtual healthcare space.

However, Teladoc with a comprehensive suite of virtual healthcare clinical services, global footprint covering clients, medical operations and members, unmatched breadth of solutions for clients served across all channels  and a highly scalable and secure API-driven technology platform provides it with an edge over other players.

Teladoc currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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