Teladoc (TDOC) Q2 Earnings to Gain From Coronavirus-Led Demand

Teladoc Health, Inc. TDOC is set to report second-quarter earnings on Jul 29.

The company is likely to report strong revenue outperformance for the second quarter, driven by broad-based momentum across the business and a sharp acceleration in visit volume growth.

Factors to Note

Teladoc Health emerged a clear winner from the pandemic-triggered lockdown and social distancing, which drove demand for remote monitoring of health. Therefore, the company is likely to have witnessed a  significant surge in virtual medical visits per day. The Zacks Consensus Estimate for total visits is pegged at 2.4 billion, implying a 164% rise from the prior-year reported figure.

The company has been playing a pivotal role since the global outbreak of COVID-19 and saw a substantial increase in inquiries from both the existing and new  clients. It is experiencing a higher level of interest from clients that may in turn, help expand its service offerings to new populations and add products during this hour of unprecedented crisis.

Requests from new clients are rising by the day as the coronavirus outbreak highlighted the value of access to a comprehensive virtual healthcare solution. During the first quarter alone, the company onboarded more than 6 million new paid members in the United States across government and commercial populations. It further anticipates onboarding of an additional 6-7 million new members during the second quarter, which will culminate in the strongest first half membership growth in the company’s history.

Teladoc Health made a remarkable progress in its platform through the prompt response from its efficient team members and physicians. The company actively responded to the surgeon demand by rapidly extending the capacity of its physician network including the onboarding of thousands of new providers, thus more than doubling the number of licensed physicians in its network.

The investments in business capacity made during March strengthened the company’s position to meet the buoyancy in demand from its existing as well as new members who are under the process of onboarding. Therefore, the company is likely to have seen membership growth in the to-be-reported quarter.

Teladoc  is also expected to have witnessed a spike in general medical visits in the quarter to be reported. Also, demand for specialist care including behavioral health and dermatology shot up immensely, reflecting the diverse nature of the need for care during these challenging time. The Zacks Consensus Estimate for revenues from visit is pegged at $55 million, implying a 189% rise from the prior-year reported figure.

Further, demand for the company’s direct-to-consumer mental health product BetterHelp is rapidly rising as conditions, like anxiety and depression are aggravated by the pangs of fear, isolation and loneliness during the ongoing pandemic. This increased utilization may continue benefiting the company throughout the year given recurrent uptake of mental health services. Based on this observation, behavioral health visits are expected to have bumped up during the to-be-reported quarter.

Company's Q2 Guidance

For the second quarter of 2020, the company expects total revenues of $215-$225 million, indicating growth of 65-73% from the prior-year quarter’s reported figure.

The company expects second-quarter EBITDA in the range of a negative $1 million to a positive $3 million, adjusted EBITDA of $20-$24 million and net loss per share between 28 cents and 23 cents, based on 74.6 million shares outstanding.

Bottom Line & Revenue Projections

The Zacks Consensus Estimate for Teladoc Health’s second-quarter loss of $1.15 per share indicates a 16.6% improvement  from the prior-year reported number. Likewise, the consensus estimate for sales of $851.16 million suggests a 53.83% jump from the year-ago reported figure.

Earnings Surprise History

The company boasts an attractive earnings surprise track. Its bottom line beat estimates in two of the last four quarters (and missed estimates in the remaining two), the average surprise being 1.73%. This is depicted in the chart below:

Teladoc Health, Inc. Price and EPS Surprise Teladoc Health, Inc. Price and EPS Surprise

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

What Our Model Says

Our proven model predicts an earnings beat for Teladoc Health this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Teladoc Health has an Earnings ESP of +20.51%. This is because the Most Accurate Estimate for the quarter is currently pegged at a loss of 19 cents, better than the Zacks Consensus Estimate of a loss of 23 cents per share. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Teladoc Health currently carries a Zacks Rank #3.

Other Stocks That Warrant a Look

Here are some other companies worth considering from the medical space as our model shows that these too have the right combination of elements to beat on earnings in the upcoming quarterly reports:

Pfizer Inc. PFE has an Earnings ESP of +7.03% and is a Zacks #3 Ranked player at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Community Health Systems, Inc. CYH has an Earnings ESP of +5.18% and a Zacks Rank of 3, currently.

Anthem Inc. ANTM has an Earnings ESP of +4.91% and a Zacks Rank #2, presently.

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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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