Teladoc Losses Widen In 4Q; Shares Drop 6% After-Hours

Teladoc Health’s shares dropped 6.1% in extended-hours trading on Feb. 24 as the virtual healthcare provider’s 4Q net loss per share widened to $3.07 from a net loss per share of $0.26 in 4Q FY19.  Analysts were expecting a loss of $0.24 per share. Revenue for the quarter increased 145% year-on-year to $383.3 million, ahead of consensus estimates of $378.93 million.

Teladoc Health’s  (TDOC) CEO, Jason Gorevic said, “As virtual care shifted to become a consumer expectation in 2020, Teladoc Health not only met the rapidly growing demand, but we transformed our company to define a new category of whole-person virtual care. By accelerating our mission to transform the health care experience, we exceeded our fourth-quarter and full-year 2020 expectations and see strong momentum across our global business in 2021 as the market embraces the breadth and depth of our unique capabilities.”

In the fourth quarter, the jump in revenues for TDOC was driven by a 188% year-on-year rise in access fees revenues in the United States and an 82% year-on-year increase in revenues earned from visit fees in the US.

For 1Q FY21, TDOC expects revenues to be in the range of $445 million to $455 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $45 million and $48 million. For FY21, the company has forecasted revenues to range between $1.95 billion and $2 billion and adjusted EBITDA of between $255 million and $275 million. (See Teladoc Health stock analysis on TipRanks)

On Feb. 22, Jefferies analyst David Windley raised his price target to $264 from $205 and reiterated a Hold on the stock. Windley believes that there is an industry shift towards “true longitudinal virtual care” and TDOC is well-equipped to serve this need with a range of solutions and channel partners.

Windley said, “We estimate Adj. EBITDA margins to expand 230bps in FY21 (vs. mgt’s LT [long-term] target of 200-300bps/yr), and don’t think top line guidance will disappoint.”

“That said, utilization is a wild card this year, and Paid Membership is always difficult to handicap (though mgt’s bookings and pipeline commentary has been bullish). We expect BH [behavioural healthcare] growth to offset much slower growth in paid visits, which we estimate +3% YoY (which assumes +10.7M gross Paid Members),” Windley added.

The rest of the Street is cautiously optimistic on the stock with a Moderate Buy consensus rating based on 6 Buys and 9 Holds. The average analyst price target of $245.31 implies downside potential of around 4% to current levels.

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