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Teladoc Inc. (TDOC - Free Report) , a premier telehealth services provider, is expanding its business in the booming telehealth services industry. Increased adoption of the company’s services has led to growth in memberships and visits. This in turn has been generating substantial revenues. The company’s revenues have increased at a CAGR of 80% from 2013-2016. The trend was maintained in the first nine months of 2017.

Further, Teladoc commands the underpenetrated and growing market space with nearly 75% market share.

The company is witnessing growth in its client roster due to the addition of new clients across multiple market segments. The company’s emphasis on increasing value-add clients through product innovation is likely to help it retain customers. It also focuses on expanding its client base by penetrating underserved segments such as provider market, and small and mid-sized employers. Revenues from clients increased 82% in the first nine months of 2017. Going forward, these initiatives are expected to help in adding its client base, thereby leading to top-line growth.

The company’s efforts to achieve growth via acquisitions also remains noteworthy. Since its inception in 2002, the company has completed multiple acquisitions which have expanded its distribution capabilities and broadened its service offerings. Some of the notable deals include the acquisition of HealthiestYou (completed in 2016), and Best Doctors (completed in July).

Its superior performance is reflected in its share price which has returned 71.5% year to date outperforming the industry’s 0.5% dip.

 

 

The company’s 2017 guidance is also impressive. Teladoc expects revenues of $231-$233 million (versus the old estimate of $230-$235 million), up 88% year over year, calculated at mid point); adjusted EBIDTA of a loss of $14-$15 million (old range of $15-$17 million). Alongside, total membership expectation of 22.6-23 million (versus the previous estimate of 22.5-23 million), points to year-over-year growth of nearly 30%. In addition, total visits between 1.4 million and 1.45 million (up 50% year over year) remain unchanged.

These projections clearly reflect that the company should soon breakeven and start reporting profitable results.

Zacks Rank & Key Picks

Teladoc currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are Tivity Health, Inc. (TVTY - Free Report) , PRA Health Sciences, Inc. (PRAH - Free Report) and CareDx, Inc. (CDNA - Free Report) . All three companies carry a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Tivity Health beat the Zacks Consensus Estimates in each of the trailing four quarters with an average positive surprise of 17.2%.

PRA Health Sciences surpassed the Zacks Consensus Estimates in the trailing four quarters with an average positive surprise of 6.9%.

CareDx surpassed bottom line estimates in the last quarter by 11.8%.

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