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Teladoc Health (TDOC) Down 1.5% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Teladoc (TDOC - Free Report) . Shares have lost about 1.5% 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 Health due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Teladoc Health Q4 Loss Narrows on Lower Expenses
Teladoc Health incurred a fourth-quarter 2023 adjusted loss of 17 cents per share, narrower than the Zacks Consensus Estimate of a loss of 22 cents per share and the year-ago quarter’s figure of a loss of $23.49 per share. The figure also came narrower than the management’s estimated range of a loss of 33-23 cents per share.
Operating revenues improved 4% year over year to $660.5 million (within management’s expected range of $658-$683 million). The top line missed the consensus mark by 1.5%.
The quarterly results were aided by a growing membership base within the Integrated Care segment. A significant decline in overall expenses along with improved access fees also contributed to the upside. However, the upside was partly offset by a decline in visits.
Quarterly Operational Update
Revenues from access fees (which accounted for 87% of total quarterly revenues) amounted to $573.9 million, which advanced 4% year over year in the fourth quarter. However, the metric fell short of the Zacks Consensus Estimate of $590 million and our estimate of $589.8 million.
Other revenues of $86.6 million grew 3% year over year and outpaced the consensus mark of $83 million and our estimate of $82.8 million.
On a geographical basis, revenues from the United States increased 2% year over year to $564.8 million in the quarter under review. U.S. revenues made up 86% of total revenues. However, the figure fell short of the Zacks Consensus Estimate of $581 million and our estimate of $580.7 million. Teladoc Health generated international revenues of $95.8 million, which advanced 15% year over year and surpassed the consensus mark of $92 million and our estimate of $91.9 million.
Adjusted EBITDA of $114.4 million climbed 22% year over year in the fourth quarter and remained within the management’s anticipated range of $107-$117 million. The metric beat our estimate of $111.4 million. The adjusted gross margin improved 30 basis points (bps) year over year to 70.7%.
Total expenses of Teladoc Health declined more than six-fold year over year to $695.6 million and also came lower than our estimate of $702.6 million. The significant year-over-year decline resulted from a fall in general and administrative costs, lower restructuring expenses and a goodwill impairment cost recorded in the year-ago quarter.
Segmental Update
The Integrated Care segment’s revenues grew 8% year over year to $384.4 million in the fourth quarter but missed the Zacks Consensus Estimate of $386 million and our estimate of $387.8 million. Adjusted EBITDA was $56 million, which climbed 28% year over year and came higher than our estimate of $45.8 million. Adjusted EBITDA margin improved 233 bps year over year to 14.6%.
The BetterHelp segment recorded revenues of $276.2 million in the quarter under review, which remained flat year over year and fell short of the consensus mark of $285 million and our estimate of $284.7 million. The unit’s adjusted EBITDA rose 11% year over year to $58.5 million but missed our estimate of $65.6 million. Adjusted EBITDA margin of 21.2% improved 210 bps year over year.
Visits & Memberships
Teladoc Health witnessed total visits of 4.4 million, which fell 8% year over year in the fourth quarter and lagged the Zacks Consensus Estimate of 5 million and our estimate of 4.7 million.
U.S. Integrated Care Members were 89.6 million as of Dec 31, 2023, which improved 8% year over year and came within the management projected range of 89-90 million. The figure matched our estimate.
Financial Update (as of Dec 31, 2023)
Teladoc Health exited the fourth quarter with cash and cash equivalents of $1.1 billion, which rose 22.4% from the 2022-end level. Total assets of $4.4 billion inched up 1.1% from the figure at 2022 end.
Debt amounted to $1.5 billion, up 0.2% from the figure as of Dec 31, 2022. Total stockholders’ equity of $2.3 billion inched up 0.8% from the 2022-end level.
Teladoc Health generated operating cash flows of $130.1 million in the fourth quarter, which surged 98.5% year over year. Free cash flows increased more than eight-fold year over year to $93.6 million. Capex was $36.5 million, which dropped 32.3% year over year in the quarter under review.
Update on Efficiency Program
Management anticipates net pre-tax expense reductions of around net $43 million in 2024 in relation to the comprehensive operational review of the business targeted at lowering costs and driving profits. Teladoc Health expects to incur pre-tax restructuring charges within $12-$16 million in 2024 as part of the efficiency program, out of which roughly $11 million is likely to occur in the first quarter of 2024.
1Q24 View
Teladoc Health projects total revenues between $630 million and $645 million. Adjusted EBITDA is estimated to lie between $52 million and $62 million. Net loss per share is anticipated to be in the band of 55-45 cents. U.S. Integrated Care Members are expected to stay within 89.5-90.5 million.
The Integrated Care segment is expected to witness year-over-year revenue growth in the range of 5-7%, while adjusted EBITDA margin is likely to remain within 10.5-12%. Meanwhile, revenues in the BetterHelp segment are forecasted to decline within 3-6% and adjusted EBITDA margin is anticipated to be between 5.5-6.5%.
2024 Outlook Unveiled
Management estimates revenues to lie between $2.635 billion and $2.735 billion, the midpoint of which indicates a 3.2% improvement from the 2023 figure of $2.602 billion.
Adjusted EBITDA is anticipated within $350-$390 million, the midpoint of which implies a 12.8% rise from the 2023 figure of $328.1 million.
Net loss per share is projected to lie between $1.10 and 80 cents in 2024. A loss of $1.34 per share was reported in 2023. U.S. Integrated Care Members are expected to remain within 90-92 million.
Revenues in the Integrated Care segment are forecasted to witness low to mid-single-digit growth on a year-over-year basis, while the BetterHelp unit is expected to record flat to low-single-digit growth.
Adjusted EBITDA margin in the Integrated Care segment is estimated to expand in the range of 150-250 bps year over year in 2024, while it is expected to remain flat or witness a 50-bps increase or decrease from the 2023 reported figure.
Free cash flows are anticipated within $210-$240 million.
Three-Year View
Teladoc Health anticipates annual consolidated revenues to grow in the low to mid-single-digit. The metric is estimated to record increases in mid-single-digit and low single-digit, respectively, for the Integrated Care and BetterHelp units. Margin expansion is likely to witness an annual increase of 50-100 bps. Meanwhile, management targets to achieve an adjusted EBITDA of a minimum of $425 million in 2025, considering the cost actions related to the efficiency program.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Teladoc Health has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Teladoc Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Teladoc Health is part of the Zacks Medical Services industry. Over the past month, AMN Healthcare Services (AMN - Free Report) , a stock from the same industry, has gained 11.7%. The company reported its results for the quarter ended December 2023 more than a month ago.
AMN Healthcare reported revenues of $818.27 million in the last reported quarter, representing a year-over-year change of -27.3%. EPS of $1.32 for the same period compares with $2.48 a year ago.
AMN Healthcare is expected to post earnings of $0.94 per share for the current quarter, representing a year-over-year change of -62.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -7.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for AMN Healthcare. Also, the stock has a VGM Score of B.
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Teladoc Health (TDOC) Down 1.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Teladoc (TDOC - Free Report) . Shares have lost about 1.5% 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 Health due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Teladoc Health Q4 Loss Narrows on Lower Expenses
Teladoc Health incurred a fourth-quarter 2023 adjusted loss of 17 cents per share, narrower than the Zacks Consensus Estimate of a loss of 22 cents per share and the year-ago quarter’s figure of a loss of $23.49 per share. The figure also came narrower than the management’s estimated range of a loss of 33-23 cents per share.
Operating revenues improved 4% year over year to $660.5 million (within management’s expected range of $658-$683 million). The top line missed the consensus mark by 1.5%.
The quarterly results were aided by a growing membership base within the Integrated Care segment. A significant decline in overall expenses along with improved access fees also contributed to the upside. However, the upside was partly offset by a decline in visits.
Quarterly Operational Update
Revenues from access fees (which accounted for 87% of total quarterly revenues) amounted to $573.9 million, which advanced 4% year over year in the fourth quarter. However, the metric fell short of the Zacks Consensus Estimate of $590 million and our estimate of $589.8 million.
Other revenues of $86.6 million grew 3% year over year and outpaced the consensus mark of $83 million and our estimate of $82.8 million.
On a geographical basis, revenues from the United States increased 2% year over year to $564.8 million in the quarter under review. U.S. revenues made up 86% of total revenues. However, the figure fell short of the Zacks Consensus Estimate of $581 million and our estimate of $580.7 million. Teladoc Health generated international revenues of $95.8 million, which advanced 15% year over year and surpassed the consensus mark of $92 million and our estimate of $91.9 million.
Adjusted EBITDA of $114.4 million climbed 22% year over year in the fourth quarter and remained within the management’s anticipated range of $107-$117 million. The metric beat our estimate of $111.4 million. The adjusted gross margin improved 30 basis points (bps) year over year to 70.7%.
Total expenses of Teladoc Health declined more than six-fold year over year to $695.6 million and also came lower than our estimate of $702.6 million. The significant year-over-year decline resulted from a fall in general and administrative costs, lower restructuring expenses and a goodwill impairment cost recorded in the year-ago quarter.
Segmental Update
The Integrated Care segment’s revenues grew 8% year over year to $384.4 million in the fourth quarter but missed the Zacks Consensus Estimate of $386 million and our estimate of $387.8 million. Adjusted EBITDA was $56 million, which climbed 28% year over year and came higher than our estimate of $45.8 million. Adjusted EBITDA margin improved 233 bps year over year to 14.6%.
The BetterHelp segment recorded revenues of $276.2 million in the quarter under review, which remained flat year over year and fell short of the consensus mark of $285 million and our estimate of $284.7 million. The unit’s adjusted EBITDA rose 11% year over year to $58.5 million but missed our estimate of $65.6 million. Adjusted EBITDA margin of 21.2% improved 210 bps year over year.
Visits & Memberships
Teladoc Health witnessed total visits of 4.4 million, which fell 8% year over year in the fourth quarter and lagged the Zacks Consensus Estimate of 5 million and our estimate of 4.7 million.
U.S. Integrated Care Members were 89.6 million as of Dec 31, 2023, which improved 8% year over year and came within the management projected range of 89-90 million. The figure matched our estimate.
Financial Update (as of Dec 31, 2023)
Teladoc Health exited the fourth quarter with cash and cash equivalents of $1.1 billion, which rose 22.4% from the 2022-end level. Total assets of $4.4 billion inched up 1.1% from the figure at 2022 end.
Debt amounted to $1.5 billion, up 0.2% from the figure as of Dec 31, 2022. Total stockholders’ equity of $2.3 billion inched up 0.8% from the 2022-end level.
Teladoc Health generated operating cash flows of $130.1 million in the fourth quarter, which surged 98.5% year over year. Free cash flows increased more than eight-fold year over year to $93.6 million. Capex was $36.5 million, which dropped 32.3% year over year in the quarter under review.
Update on Efficiency Program
Management anticipates net pre-tax expense reductions of around net $43 million in 2024 in relation to the comprehensive operational review of the business targeted at lowering costs and driving profits. Teladoc Health expects to incur pre-tax restructuring charges within $12-$16 million in 2024 as part of the efficiency program, out of which roughly $11 million is likely to occur in the first quarter of 2024.
1Q24 View
Teladoc Health projects total revenues between $630 million and $645 million. Adjusted EBITDA is estimated to lie between $52 million and $62 million. Net loss per share is anticipated to be in the band of 55-45 cents. U.S. Integrated Care Members are expected to stay within 89.5-90.5 million.
The Integrated Care segment is expected to witness year-over-year revenue growth in the range of 5-7%, while adjusted EBITDA margin is likely to remain within 10.5-12%. Meanwhile, revenues in the BetterHelp segment are forecasted to decline within 3-6% and adjusted EBITDA margin is anticipated to be between 5.5-6.5%.
2024 Outlook Unveiled
Management estimates revenues to lie between $2.635 billion and $2.735 billion, the midpoint of which indicates a 3.2% improvement from the 2023 figure of $2.602 billion.
Adjusted EBITDA is anticipated within $350-$390 million, the midpoint of which implies a 12.8% rise from the 2023 figure of $328.1 million.
Net loss per share is projected to lie between $1.10 and 80 cents in 2024. A loss of $1.34 per share was reported in 2023. U.S. Integrated Care Members are expected to remain within 90-92 million.
Revenues in the Integrated Care segment are forecasted to witness low to mid-single-digit growth on a year-over-year basis, while the BetterHelp unit is expected to record flat to low-single-digit growth.
Adjusted EBITDA margin in the Integrated Care segment is estimated to expand in the range of 150-250 bps year over year in 2024, while it is expected to remain flat or witness a 50-bps increase or decrease from the 2023 reported figure.
Free cash flows are anticipated within $210-$240 million.
Three-Year View
Teladoc Health anticipates annual consolidated revenues to grow in the low to mid-single-digit. The metric is estimated to record increases in mid-single-digit and low single-digit, respectively, for the Integrated Care and BetterHelp units. Margin expansion is likely to witness an annual increase of 50-100 bps. Meanwhile, management targets to achieve an adjusted EBITDA of a minimum of $425 million in 2025, considering the cost actions related to the efficiency program.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Teladoc Health has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Teladoc Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Teladoc Health is part of the Zacks Medical Services industry. Over the past month, AMN Healthcare Services (AMN - Free Report) , a stock from the same industry, has gained 11.7%. The company reported its results for the quarter ended December 2023 more than a month ago.
AMN Healthcare reported revenues of $818.27 million in the last reported quarter, representing a year-over-year change of -27.3%. EPS of $1.32 for the same period compares with $2.48 a year ago.
AMN Healthcare is expected to post earnings of $0.94 per share for the current quarter, representing a year-over-year change of -62.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -7.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for AMN Healthcare. Also, the stock has a VGM Score of B.