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Teladoc (TDOC) Down 10.3% Despite Q2 Earnings & Sales Beat

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Teladoc Health, Inc. (TDOC - Free Report) shares fell 10.3% since it reported second-quarter earnings on Jul 27, 2022. Management scaled down some major full-year guidance. Investors might not have liked the fact that TDOC expects its adjusted EBITDA to decline and net loss to surge, while membership is likely to grow.

Teladoc reported a second-quarter 2022 adjusted loss of 44 cents per share, narrower than the Zacks Consensus Estimate of a loss of 71 cents. TDOC delivered an adjusted loss per share of 86 cents a year ago.

TDOC’s operating revenues of $592.4 million (within the management’s expected range of $580-$600 million) beat the Zacks Consensus Estimate of $587 million. The top line improved from $503.1 million in the year-ago quarter.

The strong second-quarter results 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 87.6% of total revenues) increased 20% year over year to $518.7 million. Accessfees from the United States jumped 21% year over year to $450.4 million and accounted for 86.8% of total access fees. International access fees made up the remaining 13.2% and amounted to $68.3 million (up 15% year over year).

TDOC generated $66.7 million of visit fee revenues (up 7% year over year) in the quarter under review. While visit fee revenues from the United States advanced 9% year over year to $64.2 million, revenues from international visits totaled $2.5 million (down 18%).

Adjusted EBITDA declined to $46.7 million from $66.8 million a year ago and was within the management’s projected range of $39-$49 million.

Adjusted gross margin rose 110 basis points year over year to 69.2% for the second quarter.

Total expenses surged to $3,688.9 million from $582.1 million a year ago, primarily due to goodwill impairment charges of $3,030 million in the second quarter. Teladoc also witnessed higher costs of revenues, advertising and marketing, and depreciation and amortization, partially offset by lower expenses related to sales, general and administrative.

Visits & Memberships

Total visits of 4.7 million (surpassing the expectation of 4.4-4.6 million) improved 28% year over year on account of a 32% and 14% increase in visits from the United States and International segments, respectively.

Teladoc ended the quarter with U.S. paid memberships of 56.6 million, which rose 9% year over year. U.S. visit fee-only access membership climbed 9% year over year to 24 million at the second-quarter end.

Utilization (the ratio of visits to total U.S. paid members) increased 492 bps year over year to 24%. Average U.S. revenue per member improved 13% year over year to $2.60.

Financial Update (as of Jun 30, 2022)

Teladoc exited the second quarter with cash and cash equivalents of $881.2 million, which decreased from $893.5 million at 2021 end. Total assets of $8,102.8 million at the second-quarter end plunged from $17,734.6 million.

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

In the first half of 2022, net operating cash outflow amounted to $60.7 million, which deteriorated from $34.2 million a year ago.

Guidance

Third Quarter

For third-quarter 2022, TDOC expects total revenues of $600-$620 million and adjusted EBITDA within $35-$45 million. Teladoc projects total visits between 4.8 million and 5 million. Net loss per share is expected within 60-85 cents. Total U.S. paid membership is expected within 55.5-56.5 million.

2022

For the full year, revenues are anticipated between $2,400 million and $2,500 million. The guidance is higher than the 2021 level of $2 billion.

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

Teladoc projects total visits in the band of 18.8-19.3 million, tightened from the previous guidance of 18.5-19.5 million (still indicating a rise from the 2021 level of 15.4 million).

Total U.S. paid membership is now expected between 55 million and 56.5 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 24 million individuals (compared with the 2021 figure of 24.2 million).

Net loss per share is now expected to be $61-$62, wider than the previous estimate of $43-$43.5. The same also indicates deterioration from the 2021 loss figure of $2.73 per share.

Zacks Rank & Other Key Picks

Teladoc currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader medicalspace are Molina Healthcare, Inc. (MOH - Free Report) , Elevance Health Inc. (ELV - Free Report) and Agenus Inc. (AGEN - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Molina Healthcare’s 2022 bottom line indicates a 29.6% increase from the prior year’s reported number. MOH beat earnings estimates in each of the past four quarters, with the average being 3.2%.

The Zacks Consensus Estimate for Elevance’s 2022 bottom line indicates 10.4% year-over-year growth. ELV beat earnings estimates in each of the past four quarters, with the average being 4.3%.

The Zacks Consensus Estimate for Agenus’ 2023 bottom line indicates a 28.1% year-over-year improvement. AGEN beat earnings estimates twice in the past four quarters and missed on the other two occasions.