What Is The Future of Teladoc Health?

Virtual healthcare services provider Teladoc Health, Inc. (NYSE:TDOC) grew to be very significant in 2021 when telehealth came to the forefront of people’s minds.

Telemedicine services were especially crucial then for patients who needed access to healthcare but couldn’t visit doctors face-to-face.

But the company’s fortunes changed drastically when Teladoc merged with Livongo, an expensive merger that catalyzed a rapid decline in shareholder value.

By 2022, Teladoc’s $13.7 billion loss was all the evidence needed to signal how detrimental the acquisition had been to the firm’s financials.

More recently, industry changes have revealed a bleak outlook for the telemedicine industry more broadly. Walmart (NYSE:WMT) and UnitedHealth (NYSE:UNH) are stopping their online health services citing lack of demand.

These moves from big companies signal warning signs to investors, and call into question whether the economics of telemedicine make sense. Teladoc’s share price has suffered under these woes, so what does the future hold?

Insider Selling In Droves

Recently, insiders were selling heavily, which worried investors. On May 2, Laizer Kornwasser, who is the President in charge of Enterprise Growth, sold 10,411 shares.

Vidya Raman-Tangella, an Officer, has continuously sold shares, including 3,691 a month ago, and 4,599 the month prior. In February, she also sold 4,128 shares.

Likewise, Michael Willem Waters, another officer of the company, offloaded 5,793 recently, and that followed a sale of 12,468 in the prior month, as well as 4,523 in mid-Q1.

Officer Kornwasser Laizer has also contributed to the trend of selling shares, with 10,411 sold last month, 18,349 in the prior month, and 7,882 back in February.

Concerns have been raised that these key insiders have an informational advantage and know the future is bleak, so are dumping shares now in anticipation of lower prices down the line.

How Has Teladoc Fared Recently?

In the first quarter of fiscal year 2024, Teladoc saw a small 2.7% increase in revenues versus last year, reaching $646.13 million. However, the increase was overshadowed by a higher rise in total expenses of 3.8% to $733.25 million. As a result, losses from operations grew by 13% from the previous year to $87.12 million.

The financial results of Teladoc showed a decline in various areas. Its total net loss and per share net loss increased by 18.3% and 16.7% compared to last year. The company announced a total net loss of $81.89 million and a per-share net loss amounting to $0.49 for the most recent quarter.

Cash inflows from operating activities fell significantly by 32.2% compared to last year, reaching $8.92 million. Cash from financing activities also went down by 47.8% versus the year prior and came to a total of $1.75 million.

As of March 31, 2024, Teladoc had $1.10 billion in cash and cash equivalents, a slight drop from the $1.12 billion recorded on December 31, 2023. Total assets went down to $4.32 billion from the earlier figure of $4.39 billion reported at the end of last year.

Overall, the financials revealed a difficult quarter for Teladoc with limited growth in earnings, increasing costs, and decreased profits. This might make investors worry about how good the company’s money situation is and if it can keep working like this.

Is Teladoc Lagging Behind?

Teladoc’s profitability figures are worrisome when viewed in absolute terms as well as compared to rivals. If we look at the EBITDA margin over the past 12 months, which is only 1.76%, it falls short when compared to the industry average of 5.47%.

On a price-to-book, price-to-sales and profitability basis, Teladoc compares poorly to peers.

In fact, even when you look to eclectic metrics like CAPEX/Sales ratio for that period, which comes in at 0.39% versus the industry standard of 3.77% you see Teladoc struggling to keep pace.

All told, these numbers show that Teladoc has difficulties making money and using funds well when compared to rivals. 

What Is The Future Of Teladoc Stock?

In spite of worsening financials, the future of Teladoc stock is bright according to 21 analysts who have a consensus price target of $16.71 per share.

If they are correct, Teladoc share price has upside potential of 67% from present levels. Interestingly, a 10-year discounted cash flow forecast is even more optimistic and predicts a rebound all the way to around $19 per share.

It’s clear that sentiment toward the company has dimmed over time. And undoubtedly, investing money into Teladoc needs to be carefully considered because of its latest troubles and the decline in its financials.

Although the company had been acquisitive, which initially broadened its reach and made the company a top provider of health care online, worries now persist about its future.

Predictions for Q2 are for a small drop in revenue compared to last year, amounting to $651.42 million, and an estimated loss per share of $0.37.

For Q3, a slight rise in revenue of 2.2% versus last year to $674.56 million is forecast in tandem with an expected loss per share of $0.21.

For the complete financial year that wraps up in December 2024, the consensus revenue expectation implies growth of 2.3% year-over-year to $2.66 billion. The company is expected to report a loss of $1.05 per share.

The company’s financial health has fared every worse and that’s largely been reflected in the share price, which has fallen by 59% over the past twelve months. This situation highlights the difficulties that Teladoc management is facing and gives investors reason for pause.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.