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Teladoc Sees Increased Service Adoption, Expenses Stay High

ABCO TDOC

Trades from $3

On Aug 26, we published the updated research report on the nation’s leading telehealth service provider, Teladoc Inc. (TDOC - Free Report) .

Earlier this the month, the company’s second-quarter results reflected a loss of 38 cents per share, a penny narrower than the Zacks Consensus Estimate. The loss stemmed from an increase in the cost of advertising.

The company which went public last July with an IPO and got itself listed on the NYSE, is engaged in offering consumers virtual visits with physicians through voice or video. It connects patients with doctors via a phone or a video over a smartphone or computer.

Teladoc is seeing its business grow steadily with insurers and customers increasingly embracing telehealth. Higher adoption in the form of increased visits has led to revenue growth at a CAGR of 97% from 2013–2015. The second quarter of 2016 marked the fourteenth consecutive quarter in which the number of telehealth visits increased faster than its member base.

TELADOC INC Price and Consensus

TELADOC INC Price and Consensus | TELADOC INC Quote

The company also made some acquisitions recently which will help it to grow inorganically. It has completed four acquisitions – Stat Health Services Inc, Compile, Inc. “BetterHelp”, AmeriDoc and Consult A Doctor – since its inception that have expanded its distribution capabilities and broadened its service offering. Last month, Teladoc announced that it will acquire HealthiestYou, which is expected to extend its already substantial leadership position in the telehealth industry.

Nevertheless, Teladoc has incurred significant losses in each reporting cycle since 2013. These losses and accumulated deficit reflect substantial investments made by the company in winning new clients, building its proprietary network of healthcare providers and developing its technology platform. The company’s prior losses, combined with its expected future losses, have had and will continue to have an adverse effect on its stockholders’ equity and working capital.

The telehealth market is in an early stage of development, and Teladoc expects the industry to attract increased competition, which could come in the way of its success.

Teladoc carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are The Advisory Board Company (ABCO - Free Report) , AMN Healthcare Services, Inc. and Healthways, Inc. . While The Advisory Board Company sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy).

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