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Teladoc (TDOC) Plunges 40.3% Since Q1 Earnings Beat: Here's Why

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Teladoc Health, Inc.’s (TDOC - Free Report) shares have declined 40.3% since it reported first-quarter 2022 results on Apr 27, 2022. Even though TDOC reported an earnings beat, management scaled down some major full-year guidances. Investors might not have liked the fact that TDOC expects its adjusted EBITDA to decline and net loss to surge, while total visits are likely to grow. Also, TDOC received a series of downgrades from various analysts.

Q1 Results

Teladoc reported first-quarter 2022 adjusted loss of 47 cents per share, narrower than the Zacks Consensus Estimate of a loss of 55 cents. However, TDOC delivered adjusted earnings per share of 13 cents a year ago.

TDOC’s operating revenues of $565.4 million (almost in line with the lower end of management’s expected range of $565-$571 million) missed the Zacks Consensus Estimate of $571 million. The top line improved from $453.7 million in the year-ago quarter.

The better-than-expected first-quarter earnings were supported by increased visits and memberships as well as higher utilization. Solid contribution from access and visit fees benefited the results. The positives were partially offset by a rise in expenses due to massive impairment charges.

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

Operational Update

Revenues from access fees (which comprised 86.9% of total revenues) increased 29% year over year to $491.3 million. Within this, access fees from the United States jumped 29% year over year to $421.1 million and accounted for 85.7% of total access fees. International access fees made up the remaining 14.3% and amounted to $70.2 million (up 29% year over year).

TDOC generated $67.9 million of visit fee revenues (up 12% year over year) in the quarter under review. While visit fee revenues from the United States advanced 13% year over year to $64.5 million, revenues from international visits totaled $3.5 million (up 2%).

Adjusted EBITDA declined to $54.5 million from $56.6 million a year ago and was within the management’s projected range of $51-$55 million.

Adjusted gross margin fell 90 basis points year over year to 66.9% for the first quarter.

Total expenses surged to $7,234.7 million from $538.4 million a year ago, primarily due to goodwill impairment charges of $6,600 million in the first quarter. Teladoc also witnessed higher cost of revenues, advertising and marketing, and technology and development expenses, partially offset by lower expenses related to sales, and general and administrative.

Visits & Memberships

Total visits of 4.5 million (match the higher end of the expectation of 4.3-4.5 million) improved 35% year over year on account of 39% and 25% increase in visits from the United States and International segments, respectively.

Teladoc ended the quarter with U.S. paid membership of 54.3 million, which rose 5% year over year. U.S. visit fee-only access membership climbed 14% year over year to 25.2 million at the first-quarter-end.

Utilization (the ratio of visits to total U.S. paid members) increased 593 bps year over year to 23.4%.

Financial Update (as of Mar 31, 2022)

Teladoc exited the first quarter with cash and cash equivalents of $836.4 million, which decreased from $893.5 million at 2021 end.

Total debt was $1.5 billion, which increased from the 2021-end figure of $1.2 billion.

In the first quarter, net operating cash outflow amounted to $31.7 million, which deteriorated from $18 million a year ago.

Guidance

Second Quarter

For second-quarter 2022, TDOC expects total revenues of $580-$600 million and adjusted EBITDA within $39-$49 million. Teladoc projects total visits between 4.4 million and 4.6 million. Net loss per share is expected within 60-72 cents.

2022

For the full year, revenues are anticipated between $2.40 billion and $2.50 billion, lower than previous guidance of $2.55 billion and $2.65 billion. The new guidance is still higher than the 2021 level of $2 billion.

Adjusted EBITDA is now estimated to be $240-$265 million, lower than the previous expectation of $330-$355 million and down from the 2021 figure of $267.8 million. Its bet on mental health service BetterHelp is likely to generate lower yield this year.

Teladoc projects total visits in the band of 18.5-19.5 million, tightened from the previous guidance of 18.5-20 million (still indicating a rise from the 2021 level of 15.4 million).

Total U.S. paid membership is expected between 54 million and 56 million members (suggesting growth from the 2021 level of 53.6 million). U.S. visit fee-only access is now projected to be available to around 25 million individuals (compared with the 2021 figure of 24.2 million).

Net loss per share is now expected to be $43-$43.5, wider than the previous estimate of $1.40-$1.60. The same also indicates deterioration from the 2021 loss figure of $2.73 per share.

Companies Expected to Beat Estimates

While Teladoc, which currently carries a Zacks Rank #3 (Hold), beat on earnings this time around, here are some other companies from the Medical space that are also worth considering with the right combination of elements to beat on earnings this season:

Angion Biomedica Corp. (ANGN - Free Report) has an Earnings ESP of +26.44% and a Zacks Rank #2 (Buy) at present.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Angion Biomedica’s bottom line for the to-be-reported quarter indicates a 53.2% rise from the year-ago quarter’s reported figure.

ANGN’s earnings beat estimates in three of the last four quarters and missed the mark once, the average surprise being 47.5%.

Aptinyx Inc. (APTX - Free Report) currently has an Earnings ESP of +14.75% and a Zacks Rank of 3.

The Zacks Consensus Estimate for Aptinyx’s bottom line for the to-be-reported quarter has improved 11.4% in the past 60 days.

APTX’s earnings beat estimates in two of the last four quarters and missed the mark twice.

Ascendis Pharma A/S (ASND - Free Report) has an Earnings ESP of +17.62% and is a Zacks #3 Ranked player, presently.

The earnings estimate for Ascendis Pharma’s bottom line for the to-be-reported quarter has witnessed three upward estimate revisions in the past 60 days against one movement in the opposite direction.

ASND’s earnings beat estimates in three of the last four quarters and missed the mark once, the average surprise being 18.1%.

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