It has been about a month since the last earnings report for Teladoc (TDOC Quick QuoteTDOC - Free Report) . Shares have lost about 11.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Teladoc due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Teladoc Health Beats Q4 Earnings Estimates

Teladoc reported fourth-quarter 2022 adjusted loss of 23 cents per share, narrower than the Zacks Consensus Estimate of a loss of 27 cents but wider than our estimate of 15 cents. Teladoc had delivered an adjusted loss per share of 7 cents a year ago. The quarterly results suffered from an elevated expense level, partly offset by strong growth in access fees and visits.

Operating revenues improved 15% year over year to $637.7 million (within the management’s expected range of $625-$640 million). The top line outpaced the consensus mark by a whisker and our estimate of $627.4 million.

Operational Update

Revenues from Access Fees (which comprised 86.8% of total quarterly revenues) amounted to $553.7 million, which advanced 16% year over year in the quarter under review. The figure matched the consensus mark but surpassed our estimate of $550.7 million.

Visit fee revenues, which were earlier reported separately, are now combined with the other revenue component. Teladoc generated $84 million of other revenues, which rose 10% year over year.

On a geographical basis, revenues from the United States grew 15% year over year to $554.4 million and accounted for 86.9% of total revenues. International revenues improved 17% year over year to $83.3 million in the fourth quarter.

Adjusted EBITDA of $94.1 million jumped 22% year over year. The figure was well within management’s view of $88-$98 million and also came above our estimate of $93.5 million.

The adjusted gross margin of Teladoc Health improved 200 basis points (bps) year over year to 70.4% in the quarter under review.

Total expenses of $4,453.3 million increased more than seven-fold year over year due to increased costs of revenues as well as expenses related to advertising and marketing, technology and development, general and administrative and, depreciation and amortization.

Segmental Update

In the fourth quarter of 2022, Teladoc Health unveiled two segments namely Teladoc Health Integrated Care (“Integrated Care”) and BetterHelp. The first segment encompasses a portfolio of global virtual medical services consisting of general medical, expert medical services, specialty medical, chronic condition management and mental health. The unit is also entrusted with extending technologies and enterprise telehealth solutions for hospitals and health systems. The BetterHelp segment provides virtual therapy and other wellness services throughout the globe.

In the quarter under review, Teladoc reported revenues of $357.1 million in its Integrated Care segment. The figure grew 6% year over year. BetterHelp segment’s revenues of $277 million climbed 29% year over year. Adjusted EBITDA of Integrated Care and BetterHelp amounted to $44 million and $53 million, respectively, denoting increases of 33.3% and 23.3% from their corresponding prior-year quarter’s reported figures.

Visits & Memberships

Total visits came in at 4.8 million (within the expectation of 4.7-4.9 million), which advanced 8% year over year in the fourth quarter.

U.S. Integrated Care Members witnessed an uptick of 7% on a year-over-year basis to 83.3 million as of Dec 31, 2022.

Financial Update (as of Dec 31, 2022)

Teladoc Health exited the fourth quarter with cash and cash equivalents of $918.2 million, which advanced 2.8% from the 2021-end level. Total assets of $4,345.4 million declined more than four-fold from the figure in 2021 end.

Debt amounted to $1,535.3 million, up 25.3% from the figure as of Dec 31, 2021.  Total stockholders’ equity declined nearly seven-fold from the 2021-end level to $2,307.7 million.  

In the quarter under review, net operating cash flow decreased 21.2% year over year to $65.5 million, Free cash flows were recorded at $11.7 million, which declined more than five-fold year over year.

Guidance

Q1

For first-quarter 2023, Teladoc Health anticipates total revenues to be between $610 million and $625 million. Adjusted EBITDA is estimated within $42-$50 million. Net loss per share is expected within 45-55 cents. U.S. Integrated Care Members are forecasted to stay in the 84-85 million range.

Full Year

For 2023, revenues are estimated to be between $2,550 million and $2,675 million, the mid-point of which indicates an improvement of 8.5% from the 2022 figure of $2,406.8 million.

Adjusted EBITDA is anticipated to be in the range of $275-$325 million, the mid-point of which suggests 21.7% growth from the 2022 figure of $246.5 million.

Net loss per share is predicted within $1.25-$1.75. U.S. Integrated Care Members are expected in the 84-86 million band.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -24.83% due to these changes.

VGM Scores

Currently, Teladoc has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Teladoc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.