Teladoc stock: Investors press the sell button

Last Updated: 23. Februar 2024By

Highly praised and deeply fallen. This applies to the Teladoc stock like the proverbial fist on the eye. From 2016 until the peak of the Corona crisis in 2021, the stock knew no bounds. The shares literally exploded from around $10 to up to $300. But since then, it has been going downhill. The combination of significantly declining growth coupled with high losses fueled the downward trend, which the just released business figures could not stop. On the contrary: the stock dropped a quarter in the last two trading days and is now trading at $15.27, a light-year (94%) below the old record high.

Teladoc Health – pioneer in virtual doctor visits The US company, as a pioneer and market leader in so-called telemedicine, offers patients 24-hour access to medical advice from state-licensed doctors. The advice is provided by a network of thousands of doctors, mainly via video chat from a PC, tablet, or smartphone from the comfort of their own home. This is cost-effective, saves a lot of time, and is guaranteed to be virus-free. This made Teladoc one of the biggest beneficiaries of the Corona pandemic and the long-overdue digitalization of the healthcare sector.

The service and solution portfolio covers various medical needs: from non-urgent, one-time virtual doctor visits for flu and infections to chronic, complicated conditions such as cancer and heart problems.

In the B2B sector, Teladoc Health works with numerous customers from the healthcare sector to offer the services to end customers through partners. Customers include hospitals and other players in the healthcare system, insurance companies, and financial service providers who can reduce their costs with the help of Teladoc Health’s offerings. Patients are directly addressed through their own brands such as BetterHelp and other brand partnerships.

Merger with Livongo expands product range In 2020, Teladoc acquired Livongo Health for $18.5 billion. While Teladoc focuses more on virtual doctor visits, Livongo focuses on self-help for people with chronic diseases. Livongo has developed a digital health platform for consumers that provides solutions for diabetes, high blood pressure, and the treatment of obesity.

The core business is coaching diabetes patients in their daily lives. The company provides members with, among other things, networked blood sugar meters. Livongo collects health data in the cloud and evaluates it with AI-supported algorithms. Patients then receive advice on their daily behavior and preventing or, if necessary, treating acute symptoms.

Teladoc with weak growth in the final quarter Teladoc disappointed in the final quarter: Revenue increased by only 3.6% year-on-year to $660.5 million, missing the consensus estimate by $10.5 million. 85% of revenues were generated in the USA.

Revenue from the Integrated Care segment (virtual medical healthcare services) contributed $384 million to total revenue. In the BetterHelp segment (primarily from the Direct-to-Consumer (D2C) platform for mental health), $276 million was generated.

Loss lower than expected Adjusted earnings before interest, taxes, and depreciation and amortization (EBITDA) were $114.4 million, up from $94.0 million in the previous year’s fourth quarter. The bottom line was a net loss of $28.8 million. The loss per share was accordingly 17 cents, while analysts had expected a loss of 24 cents per share.

Medium-term forecast does not excite investors The company expects net pre-tax cost savings of approximately $43 million or $85 million on an annual basis in 2024. For the full year 2024, the company is targeting revenues of $2.635 to $2.735 billion. At the same time, adjusted EBITDA is expected to be between $350 and $390 million.

Over the next three years, the Group’s management is aiming for annual revenue growth in the low to mid-single-digit range. At the same time, margins are expected to increase by 50 to 100 basis points annually, and adjusted EBITDA of at least $425 million is expected for the full year 2025.

Investors do not seem to be satisfied with the prospects. In yesterday’s afternoon trading, the stock was down 2.5% in an otherwise strong market environment.