Teladoc Health (TDOC) Q1 Loss Widens on Decline in Visits

Teladoc Health, Inc. TDOC incurred a first-quarter 2024 adjusted loss of 49 cents per share, wider than the Zacks Consensus Estimate of a loss of 47 cents and the year-ago quarter’s loss of 42 cents. The figure was also within management’s expectation of a loss of 55-45 cents.

Operating revenues amounted to $646.1 million, which grew 3% year over year and exceeded management’s expectation of $630-$645 million. The top line beat the consensus mark by 1.4%.

The quarterly results were hurt by lower visits, softer BetterHelp segment results and an elevated expense level. Nevertheless, the downside was partly offset by an expanding membership base in the Integrated Care segment and improved access fees.

Teladoc Health, Inc. Price, Consensus and EPS Surprise

 

Teladoc Health, Inc. Price, Consensus and EPS Surprise

Teladoc Health, Inc. price-consensus-eps-surprise-chart | Teladoc Health, Inc. Quote

Quarterly Operational Update

Revenues from access fees (which accounted for 86% of total quarterly revenues) inched up 1% year over year to $557.2 million in the quarter under review. The metric surpassed the Zacks Consensus Estimate of $555.2 million and our estimate of $556.4 million.

Other revenues of $89 million advanced 14% year over year and were higher than the Zacks Consensus Estimate of $82.3 million and our estimate of $78 million.

On a geographical basis, Teladoc Health generated $547.6 million in revenues from the United States, up 1% year over year, in the first quarter. U.S. revenues made up nearly 85% of total revenues. The metric beat the consensus mark and our estimate of $545.5 million. International revenues rose 13% year over year to $98.5 million and outpaced the consensus mark and our estimate of $88.9 million.  

Adjusted EBITDA climbed 20% year over year to $63.1 million, which crossed management’s anticipated range of $52-$62 million. The metric beat our estimate of $53.6 million. The adjusted gross margin of 69.9% improved 10 basis points (bps) year over year.

Total expenses increased 3.8% year over year to $733.3 million in the quarter, higher than our estimate of $711.2 million. The year-over-year rise resulted from higher advertising and marketing expenses, restructuring costs and amortization of intangible assets.

Segmental Update

The Integrated Care segment recorded revenues of $377.1 million, which advanced 8% year over year in the first quarter and surpassed the Zacks Consensus Estimate of $370.1 million as well as our estimate of $368.7 million. Adjusted EBITDA soared 36% year over year to $47.7 million, higher than the consensus mark of $40.3 million and our estimate of $38.9 million. Adjusted EBITDA margin of 12.6% improved 260 bps year over year.

The BetterHelp segment’s revenues declined 4% year over year to $269 million and outpaced the Zacks Consensus Estimate of $267.4 million and our estimate of $265.8 million. Adjusted EBITDA of $15.5 million fell 12% year over year but beat the consensus mark of $15.4 million and our estimate of $14.7 million. Adjusted EBITDA margin deteriorated 60 bps year over year to 5.7% in the quarter under review.

Visits & Memberships

Total visits of Teladoc Health were 4.6 million, which slipped 6% year over year and fell short of the Zacks Consensus Estimate of 5.1 million and our estimate of 5 million.

U.S. Integrated Care Members totaled 91.8 million as of Mar 31, 2024, which improved 8% year over year and exceeded the management projected range of 89.5-90.5 million. The metric beat the consensus mark of 89.9 million and our estimate of 89.6 million.

Financial Update (as of Mar 31, 2024)

Teladoc Health exited the first quarter with cash and cash equivalents of $1.1 billion, which slid 2.3% from the figure in 2023 end. Total assets of $4.3 billion fell 1.6% from the 2023-end level.

Debt amounted to $1.5 billion, which inched up marginally from the figure as of Dec 31, 2023. Total stockholders’ equity of $2.3 billion slid 1.6% from the 2023-end level.  

Net cash provided by operating activities amounted to $8.9 million, which dropped 32.2% year over year. Free cash outflows were $26.6 million in the quarter under review. Capex plunged 22.2% year over year to $35.5 million.

2Q24 View

Teladoc Health anticipates total revenues between $635 million and $660 million. Adjusted EBITDA is projected between $70 million and $80 million.

Net loss per share is anticipated to be 45-35 cents. U.S. Integrated Care Members are likely to be 92-93 million.

Revenues in the Integrated Care segment are forecasted to witness 2-5% year-over-year growth while the unit’s adjusted EBITDA margin is anticipated to remain within 12-14%. On the other hand, the BetterHelp segment’s revenues are projected to decline in the range of 4-8% and adjusted EBITDA margin is expected between 9% and 10%.

2024 Outlook Unveiled

Management reiterated its full-year guidance for most metrics barring U.S. Integrated Care Members.

Revenues are estimated to lie between $2.635 billion and $2.735 billion, the midpoint of which indicates a 3.2% improvement from the 2023 reported figure.

Adjusted EBITDA is anticipated within $350-$390 million, the midpoint of which suggests 12.8% growth from the 2023 figure.

Net loss per share is projected to lie between $1.10 and 80 cents in 2024. A loss of $1.34 per share was incurred in 2023.

U.S. Integrated Care Members are expected to remain within 92-94 million, up from the previous view of 90-92 million. The updated guidance suggests 3-5% growth from the 2023 figure.  

Revenues in the Integrated Care segment are forecasted to witness low to mid-single-digit growth on a year-over-year basis. 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. The metric is expected to remain flat or witness a 50 bps increase or decrease from the 2023 reported figure for the BetterHelp unit.

Net cash provided by operating activities are anticipated within $354-$374 million. Free cash flows are estimated to lie between $210 million and $240 million.

Three-Year View Reaffirmed

Teladoc Health projects 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.

Zacks Rank

Teladoc Health currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the Medical sector players that have reported first-quarter 2024 results so far, the bottom-line results of HCA Healthcare, Inc. HCA, Centene Corporation CNC and Encompass Health Corporation EHC beat the Zacks Consensus Estimate.

HCA Healthcare reported first-quarter 2024 adjusted earnings per share (EPS) of $5.36, which beat the Zacks Consensus Estimate by 7%. The bottom line improved 8.7% year over year. Revenues amounted to $17.3 billion, which improved 11.2% year over year in the quarter under review. The top line outpaced the consensus mark by 2.9%.

Same-facility equivalent admissions advanced 5.2% year over year while same-facility admissions grew 6.2% year over year. Same-facility revenue per equivalent admission rose 3.5% year over year. Same-facility inpatient surgeries grew 1.7% year over year. Same-facility outpatient surgeries declined 2.1% year over year. Same-facility emergency room visits advanced 7.2% year over year in the first quarter. Adjusted EBITDA improved 5.7% year over year to $3.4 billion. HCA operated 188 hospitals and roughly 2,400 ambulatory sites of care across 20 states and the United Kingdom as of Mar 31, 2024.

Centene recorded first-quarter 2024 adjusted EPS of $2.26, which outpaced the Zacks Consensus Estimate by 8.1%. The bottom line improved 7.1% year over year. Revenues advanced 3.9% year over year to $40.4 billion. The top line beat the consensus mark by 11%. Revenues from Medicaid amounted to $21.5 billion, which slipped 3% year over year in the quarter under review, while Medicare revenues inched up 1% year over year to $5.9 billion.

Additionally, commercial revenues of $7.8 billion climbed 48% year over year. Premiums of CNC rose 5% year over year to $35.5 billion. Service revenues of $808 million declined 28.3% year over year. As of Mar 31, 2024, total membership was 28.4 million, which dipped marginally year over year. Adjusted net earnings grew 4.1% year over year to $1.22 billion.

Encompass Health reported first-quarter 2024 adjusted EPS of $1.12, which outpaced the Zacks Consensus Estimate by 20.4%. The bottom line rose 27.3% year over year. Net operating revenues amounted to $1.3 billion, which advanced 13.4% year over year in the quarter under review. The top line beat the consensus mark by 3.6%.

EHC’s net patient revenue per discharge grew 2.8% year over year in the first quarter. Total discharges of 61.1 million improved 10% year over year.  Net and comprehensive income of $138.8 million grew 22.5% year over year in the quarter under review. Adjusted EBITDA advanced 19.2% year over year to $273 million. EHC added 51 beds to its existing hospitals in the first quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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