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Teladoc (TDOC) Falls 8.1% Despite Upbeat Revenue Guidance

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Teladoc Health, Inc. (TDOC - Free Report) tumbled 8.1% yesterday, after it provided revenue forecasts in the Investor Day presentation. Despite providing somewhat upbeat guidance, investors were far from being impressed.

Growth Estimates

For 2021, the telehealth company keeps anticipating revenues between $2.015 billion and $2.025 billion. The mid-point of the guided range indicates an 84.8% year-over-year increase. Next year, Teladoc expects the top line to reach $2.6 billion, marginally higher than the Zacks Consensus Estimate of $2.57 billion. Further, the figure is expected to rise to more than $4 billion in 2024. This indicates a 25-30% CAGR from the estimated 2021 level.

The company reiterated its 2021 adjusted EBITDA guidance of $260-$265 million, whose mid-point indicates a jump from the 2020 level of $127 million. During the first nine months of 2021, operating cash flow amounted to $111 million, showing a massive improvement from 2020 cash outflow of $54 million. The figures are expected to rise in the near future.

Let’s delve deeper.

Contribution to Growth

Teladoc expects mental health care to be the primary driver of 2021 revenues, accounting for almost 40% of the total top line. During the 2021-2024 period, mental health care is expected to witness a 30-40% CAGR. In 2021, chronic condition care is likely to account for 25% of the revenue mix, which is likely to witness a 25-35% CAGR over the 2021-2024 period.

Virtual medical care is anticipated to contribute 35% to 2021’s total revenues. TDOC expects it to witness a 10-20% CAGR from 2021 to 2024. Overall, owing to the growth drives, the top line will likely witness a 25-30% CAGR in the next three years, which will be fueled by an increase in revenue per member. Teladoc is going after a $261-billion U.S. total addressable market.

Final Thoughts

The company’s focus on rapid revenue growth is commendable. Yet, its bottom line is expected to remain in the negative territory, primarily due to rising costs. Teladoc has incurred significant loss in each period since its inception, resulting in a huge accumulated deficit. Net loss per share for 2021 is now expected to be $3.20-$3.40, narrower than the prior forecast of a loss of $3.35-$3.60. The Zacks Consensus Estimate for 2022 earnings per share is pegged at a loss of $1.47.

Although investors might be worried that the company is incurring losses, the amount is likely to be narrower. As such, it is to be seen whether higher revenues in the coming years may offset increasing expenses and lead to profits. 

Price Performance

Teladoc has decreased 12.3% in the past six months compared with the 36.9% decline of the industry.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the medical services space include Co-Diagnostics, Inc. (CODX - Free Report) , DocGo Inc. (DCGO - Free Report) and Harrow Health, Inc. (HROW - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Co-Diagnostics’ bottom line for 2021 has witnessed one upward estimate revision in the past 30 days and no movement in the opposite direction. During this time period, its earnings estimates have risen 17.9%. CODX beat earnings estimates thrice in the last four quarters and missed once, with an average surprise of 35.6%.

The Salt Lake City, UT-based molecular diagnostics company provides a wide range of testing services to customers. Its joint venture CoSara in India is likely to have boosted its addressable market size. Also, Co-Diagnostics’ Logix Smart™ ABC test received a green signal from the Mexican watchdogs. Deals like these will keep pushing its client base around the world.

DocGo’s bottom line for 2021 has witnessed one upward estimate revision in the past 30 days and no movement in the opposite direction. During this time period, its earnings estimates have risen 57.1%. Next year, DocGo’s earnings per share are likely to witness a massive 700% increase.

Headquartered in New York, DocGo is a mobile health and medical transportation services provider. In the United States, the company has major footprint in 26 states. Also, it has a major presence in the U.K. market. DocGo’s recently launched COVID-19 testing services, in compliance with the Occupational Safety and Health Administration, is seen as a major growth driver. The new rule is expected to impact 84 million employees.

Harrow Health’s bottom line for 2021 is expected to jump 346.2% year over year. It has witnessed one upward estimate revision in the past 30 days and no movement in the opposite direction. HROW beat earnings estimates thrice in the past four quarters and missed once, with an average surprise of 38%.

Based in San Diego, CA, Harrow Health is an ophthalmic-focused healthcare firm. Its recent acquisitions of ophthalmic surgical drug candidates from Sintetica and Wakamoto Pharmaceutical are major positives. Moves like these will likely boost Harrow Health’s commercial success in U.S. and Canadian markets.