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Why Is Teladoc (TDOC) Up 16.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Teladoc (TDOC - Free Report) . Shares have added about 16.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Teladoc due for a pullback? 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 drivers.

Teladoc Incurs Narrower-Than-Expected Loss in Q2

Teladoc Inc. reported second-quarter 2018 loss of 37 cents per share, narrower than the Zacks Consensus Estimate of a loss of 38 cents. However, the figure was wider than the year-ago quarter’s loss of 28 cents per share.

Strong Operating Performance

The company’s revenues of $94.56 million for the quarter ended June 2018, surpassed the Zacks Consensus Estimate by 2.76% and soared 112% year over year. Advance Medical, acquired in June 2018, contributed 6.5% to the reported quarter’s revenues.

Revenues from subscription fees increased 113% year over year to $79.8 million. Subscription fees from the U.S. accounted for $65.1 million or 82% of total access fees, while international subscription fees accounted for the remaining 18% or $14.7 million. For the second quarter, subscription access fee revenues accounted for 84% of total revenues.

The company generated $12.9 million in visit fee revenues from general and medical visits, representing an increase of 81% year over year.

Gross margins declined to 71% from 78% in the year-ago quarter as a result of overall mix shift. The company indicated that mix shift in the company’s business specifically the strong behavioral health and Advance Medical’s results will lead to gross margins moderating to approximately 65% for the remainder of this year.

Strong visit volume of approximately 533,000 total visits in the quarter, represented growth of 72% year over year.

U.S. paid membership of 22.5 million members, grew 48% year over year and average per member per month was $1 compared with 63 cents for the comparable period last year, representing an increase of 58%.

U.S. paid members totaled 22.5 million members, an increase of 48% year over year.

Total operating expenses in the quarter came in at $77 million, representing a surge of 66% year over year.

Adjusted EBITDA came in at $2.7 million for the quarter, againstan adjusted

EBITDA loss of $5.1 million in the year-ago period.
The company ended the quarter with approximately $132 million in cash and short-term investment.

The company’s total debt, as of the end of the quarter, was $562.5 million.

Guidance Update

For the third quarter, the company expects total revenues of $106-$108 million and total adjusted EBITDA of $7-$9 million. It anticipates total U.S. paid membership of approximately 23 million to 23.5 million members, whileindividuals with visit fee only are expected between 9.6 million and 9.7 million individuals. The company projects total visits between 600,000 and 650,000. Net loss per share, based on 68.3 million weighted average shares outstanding, is expected to range from a loss of 37 cents to a loss of 39 cents per share.

Given the acquisition of Advance Medical, the company expects revenues between $405 million and $410 million and EBITDA loss between $36 million and $40 million. It anticipates adjusted positive EBITDA between $11 million and $13 million. It projects total U.S. paid membership of approximately 23 million to 24 million members, while visit fee only access will be available to approximately 10 million individuals. Total visits are expected in the band of 2.5-2.6 million visits and a net loss per share, based on 66 million weighted average shares outstanding, is expected to range from $1.48 to $1.52.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.85% due to these changes.

VGM Scores

Currently, Teladoc has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

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

The company's stock is suitable solely for growth based on our style scores.

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.




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