Teladoc Stock: Is This Beaten-Down Health-Tech Company a Buy?
19 August 2022 - 4:41PM
Finscreener.org
Telemedicine and virtual
healthcare were supposed to be the next big things in the medical
field as COVID-19 accelerated disruption in these verticals. New
York-based Teladoc (NYSE:
TDOC), a multinational
telemedicine, and virtual healthcare company, saw its stock soar
during the pandemic, but now it is trading below what it used to in
the pre-pandemic days.
TDOC stock surged from $83 in
January 2020 to $293 in February 2021. At the time of writing
shares of Teladoc are trading at $36.78.
Teladoc’s primary services
include telehealth, medical opinions, AI and analytics, telehealth
devices, and licensable platform services. The company’s solutions
cover non-urgent, episodic, chronic, and complicated medical
conditions, including diabetes, hypertension, chronic kidney
disease, and many more, and the services are provided under the
brand names Teladoc, Livongo, and BetterHelp.
Let’s see if it is a good time to
buy this beaten-down stock, or is there more pain
ahead?
How did Teladoc perform in Q2?
Teladoc’s last few quarters’ have
been given a thumbs down by investors. The worst part about
Teladoc’s financials this year was the
$6.6 billion non-cash goodwill
impairment charge booked
in the first quarter of the year.
It’s an accepted fact that the
$18.5 billion (mostly in stock) deal to acquire Livongo in 2020 was
not the best deal in terms of valuation. The new
$3 billion goodwill impairment
charge in the second
quarter has made the matters worse.
Teladoc’s Q2 revenue was up 18%
at $592.4 million, compared to $503 million in the year-ago period.
While sales grew for Teladoc in Q2, it was lower compared to the
25% growth experienced in the
March quarter
of 2022. And both these figures are
very low compared to the triple-digit growth Teladoc exhibited
during the pandemic.
The impairment loss inflated its
net loss, and the company ended up reporting a net loss per share
of $19.22 against the net loss per share of $0.86 booked in the
second quarter of last year. However, the total visits did increase
31% in the second quarter although this too is 40% lesser in
comparison to the same period a year ago.
The company said it is, “…
maintaining its previously issued revenue and adjusted EBITDA
outlook for the fiscal year ending December 31, 2022. However,
based on current trends in the market, management now expects
results to be toward the lower end of those
ranges.”
For full-year 2022, the company’s
guidance is revenue in the range of $2.4 billion to $2.5 billion
and EBITDA of -$41 million to $8 million.
Can TDOC stage a comeback by the end of
2022?
Many investors are of the opinion
that Teladoc might be just a pandemic stock. However, there is
still a lot of potential in this industry. According to
Fortune Business
Insights, the global
telemedicine market, which was valued at $41.63 billion back in
2019, is expected to grow to $396.76 billion by 2027, growing at a
CAGR of 25.8% between 2020 to 2027.
Teladoc is a leading player in
this segment, with its US memberships totaling more than 56
million. Its revenues are still growing, albeit at a slower rate.
About half of America’s population suffers from chronic diseases,
which will be a key driver for Teladoc over time.
Moreover, two-thirds of the
members using TeladocU+02019s Primary360 service, have not seen a
doctor in the previous two years. Teladoc also has the option of
increasing the number of paid members in the US and increasing its
revenue per member.
The stock is currently trading at
$37, and the average consensus target on the stock is $53.5, which
is a potential upside of around 39%. The company is still not
profitable, and the rough ride it is on can last for a while more
in the near future. Aggressive investors can look at adding this
stock to their portfolio if they are confident about Teladoc in the
long run.
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