TDOC: Teladoc Stock Crashes Post Q1 Earnings
28 Abril 2022 - 06:15AM
Finscreener.org
Shares of
health-tech company
Teladoc Health (NYSE:
TDOC) have slumped over
35% in pre-market trading today. Teladoc announced its Q1 earnings
on April 27 after market hours and reported revenue of $565.4
million and an adjusted loss per share of $0.47. Analysts
forecast
Teladoc to report revenue of
$568.8 million and adjusted loss per share of $0.56 in Q1 of
2022.
In the year-ago period, Teladoc’s
revenue stood at $453.6 million while the loss per share was $1.31.
Investors were spooked after the company forecast sales between
$2.4 billion and $2.5 billion in 2022, compared to consensus
forecasts of $2.58 billion.
At the time of writing, TDOC
stock has slumped 88% from all-time highs, burning significant
wealth in the process.
What impacted Teladoc in Q1 of 2022?
Another reason for Teladoc’s
pre-market crash is the $6.7 billion goodwill impairment charge
reported by the company, which works out to $41.58 per share. The
goodwill write-down is likely to be associated with Teladoc’s
acquisition of Livongo Health in 2020 which now seems extremely
overvalued.
However, Teladoc’s chief
financial officer Mala Murthy
explained, “The goodwill impairment was triggered by the
sustained decline in Teladoc Health share price, with the valuation
and size of the impairment charge driven by a combination of recent
market-based factors, such as an increased discount rate and the
decreased market multiples for a relevant peer group of high-growth
digital healthcare companies.”
Teladoc ended Q1 with 54.3
million paid members, an increase of 680,000 members on a
sequential basis. The total number of its unique members enrolled
in more than one chronic care program stood at 731,000, an increase
of 78,000 year over year. The company confirmed that 27% of its
chronic care members are enrolled in more than one program, up from
15% in the year-ago period. So, the total chronic care program
enrollment surged to 900,000, increasing 19% year over
year.
The average monthly revenue per
member grew by 21% to $2.52 in Q1 of 2022. Further, visit fee sales
for Q1 rose by 12% year over year to $68 million. Teladoc stated it
provided 4.5 million visits through its network of clinicians, an
increase of 35%.
In Q1 of 2022, Teladoc reported
adjusted EBITDA of $54.5 million, compared to $56.5 million in the
prior-year quarter. However, adjusted EBITDA in Q1 of 2021 was
positively impacted by a $6.9 million benefit related to purchase
accounting adjustments.
Teladoc claimed it ramped-up ad
spending which resulted in lower margins in Q1 as it took advantage
of lower media pricing following the holiday season.
What next for TDOC stock and investors?
As seen above, Teladoc estimates
for revenue in 2022 were lower than consensus. However, the company
stated it continues to see sustainable growth across its product
portfolio. It revised the outlook for the year to reflect dynamics
experienced in the direct-to-consumer mental health and chronic
condition markets.
In the D2C mental health market,
higher ad spend generated lower-than-expected yield while the
chronic condition market is wrestling with an elongated sales
cycle.
TDOC stock is valued at a market
cap of $5.6 billion, which suggests its forward price to sales
multiple is quite reasonable around 2x. The company is poised to
grow revenue at an annual rate of over 20% in each of the next two
years making it attractive to growth and contrarian
investors.
Further, Wall Street expects TDOC
loss per share to narrow from $2.73 in 2021 to $1.05 in
2023.
While the global telehealth
market is estimated to expand at a CAGR of 19% to $225 billion
through 2025, Teladoc will face competition from legacy players
such as UnitedHealth (NYSE:
UNH) and Cigna (NYSE:
CI).
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