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Teladoc Health (TDOC) Q3 Loss Narrows on Integrated Care Strength
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Teladoc Health, Inc. (TDOC - Free Report) incurred third-quarter 2023 adjusted loss of 35 cents per share, narrower than the Zacks Consensus Estimate of a loss of 37 cents per share and the prior-year quarter’s figure of a loss of 45 cents per share. The figure also came narrower than the management’s projected range of a loss of 50-40 cents per share
Operating revenues of $660.2 million rose 8% year over year (within management’s expected range of $650-$675 million). Yet, the top line fell short of the consensus mark by a whisker.
The quarterly results benefited on the back of improved access fees as well as solid contributions by the Integrated Care and BetterHelp segments. An expanding membership base within the Integrated Care unit contributed to the quarterly results. However, the upside was partly offset by a decline in visits and escalating expenses, related to higher advertising and marketing costs.
Teladoc Health, Inc. Price, Consensus and EPS Surprise
Revenues from access fees (which comprised 88.2% of total quarterly revenues) improved 8% year over year to $582.1 million in the third quarter. The figure surpassed the Zacks Consensus Estimate of $576 million and our estimate of $575.6 million.
Teladoc Health reported other revenues of $78.2 million, which advanced 10% year over year but missed the consensus mark of $80 million as well as our estimate of $80.5 million.
On a geographical basis, revenues from the United States amounted to $569.3 million, which accounted for 86.2% of total revenues. The figure grew 7% year over year and beat the Zacks Consensus Estimate of $568 million as well as our estimate of $568.3 million. International revenues of $90.9 million climbed 17% year over year in the quarter under review and came higher than the consensus mark of $88 million as well as our estimate of $87.8 million.
Adjusted EBITDA soared 73% year over year to $88.8 million (exceeding the management’s projected range of $72-$82 million), higher than our estimate of $78.9 million.
The adjusted gross margin of 71.8% improved 220 basis points year over year in the quarter under review.
TDOC’s total expenses of $725 million increased 6.1% year over year due to higher advertising and marketing expenses, general and administrative costs as well as acquisition, integration and transformation expenses. The figure came higher than our estimate of $718.7 million.
Segmental Update
The Integrated Care segment generated revenues of $374.4 million, which rose 9% year over year in the third quarter and outpaced the Zacks Consensus Estimate of $371 million as well as our estimate of $369.9 million. The unit’s adjusted EBITDA surged 62% year over year to $62.8 million, higher than our estimate of $44.7 million. Adjusted EBITDA margin was 16.8%.
The BetterHelp segment’s revenues advanced 8% year over year to $285.8 million in the quarter under review. However, the figure missed the consensus mark of $291 million as well as our estimate of $286.2 million. The unit’s adjusted EBITDA of $26 million more than doubled year over year but lagged our estimate of $34.2 million. Adjusted EBITDA margin was 9.1%.
Visits & Memberships
Total visits declined 4% year over year to 4.4 million in the third quarter and missed our estimate of 4.8 million.
U.S. Integrated Care Members were 90.2 million as of Sep 30, 2023, which exceeded the management expectation of around 86 million. The figure improved 10% year over year and surpassed our estimate of 86.1 million.
Financial Update (as of Sep 30, 2023)
Teladoc Health exited the third quarter with cash and cash equivalents of $1,030.5 million, which grew 12.2% from the figure at 2022 end. Total assets of $4,328 million dipped 0.4% from the 2022-end level.
Debt amounted to $1,537.8 million, which inched up 0.2% from the figure as of Dec 31, 2022. Total stockholders’ equity of $2,294.1 million decreased 0.6% from the 2022-end level.
TDOC generated operating cash flows of $105.6 million in the third quarter, which soared 67.6% year over year. Free cash flows were recorded at $68 million, which increased more than three-fold year over year. Capex were $37.6 million in the quarter under review, which fell 13% year over year.
4Q23 View
Teladoc Health projects total revenues to be within $658 million and $683 million in the fourth quarter of 2023. Adjusted EBITDA is anticipated to be in the range of $107-$117 million. Net loss per share is estimated to be in the band of 33-23 cents. U.S. Integrated Care Members are forecasted to stay within 89-90 million.
2023 Outlook Revised
Management anticipates revenues to lie within $2,600 million and $2,625 million for 2023, down from the prior guidance of $2,600-$2,675 million. The midpoint of the revised guidance implies a rise of 8.5% from the 2022 figure.
Adjusted EBITDA is estimated to be within $320-$330 million, up from the previous outlook of $300-$325 million. The midpoint of the updated outlook suggests 31.8% growth from the 2022 figure.
Net loss per share is projected to lie in the band of $1.50-$1.40, compared with the earlier view of net loss of $1.60-$1.25 per share. U.S. Integrated Care Members are forecasted to be between 89-90 million this year, up from the previous guidance of around 86 million.
Of the Medical sector players that have reported third-quarter 2023 results so far, the bottom-line results of Elevance Health, Inc. (ELV - Free Report) , Quest Diagnostics Incorporated (DGX - Free Report) and Abbott Laboratories (ABT - Free Report) beat the respective Zacks Consensus Estimate.
Elevance Health reported third-quarter 2023 adjusted net income of $8.99 per share, which surpassed the Zacks Consensus Estimate by 6.4%. The bottom line climbed 20.5% year over year. Operating revenues rose 7.2% year over year to $42.5 billion in the quarter under review. Yet, the top line missed the consensus mark by a whisker. As of Sep 30, 2023, ELV’s medical membership was around 47.3 million, which inched up 0.1% year over year in the third quarter. Operating revenues of the Carelon segment improved 14.3% year over year to $11.9 billion, higher than our estimate of $10.8 billion. The unit’s operating gain inched up 1.4% year over year to $650 million in the third quarter.
Quest Diagnostics’ third-quarter 2023 adjusted earnings per share of $2.22 beat the Zacks Consensus Estimate by 1.4%. However, adjusted earnings declined 5.9% from the year-ago adjusted figure. Reported revenues in the third quarter declined 7.7% year over year to $2.29 billion. However, revenues exceeded the Zacks Consensus Estimate by 1.7%. Base Business (excludes COVID-19 testing) revenues were $2.27 billion in the reported quarter, up 4.6% year over year. DGX’s adjusted operating margin of 16.2% represented a five bps expansion year over year.
Abbott Laboratories reported third-quarter 2023 adjusted earnings of $1.14 per share, which topped the Zacks Consensus Estimate by 3.6%. However, the adjusted figure declined from the prior-year quarter’s levels by 0.9%. Third-quarter worldwide sales of $10.14 billion were down 2.6% year over year on a reported basis. The top line exceeded the consensus estimate by 3.6%. ABT reported an adjusted operating profit of $2.14 billion in the quarter under review, down 5.5% year over year. Also, the adjusted operating margin contracted 66 bps to 21.1%. In the third quarter, the Medical Devices segment’s sales rose 16.6% year over year on a reported basis (up 14.7% on an organic basis) to $4.25 billion.
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Teladoc Health (TDOC) Q3 Loss Narrows on Integrated Care Strength
Teladoc Health, Inc. (TDOC - Free Report) incurred third-quarter 2023 adjusted loss of 35 cents per share, narrower than the Zacks Consensus Estimate of a loss of 37 cents per share and the prior-year quarter’s figure of a loss of 45 cents per share. The figure also came narrower than the management’s projected range of a loss of 50-40 cents per share
Operating revenues of $660.2 million rose 8% year over year (within management’s expected range of $650-$675 million). Yet, the top line fell short of the consensus mark by a whisker.
The quarterly results benefited on the back of improved access fees as well as solid contributions by the Integrated Care and BetterHelp segments. An expanding membership base within the Integrated Care unit contributed to the quarterly results. However, the upside was partly offset by a decline in visits and escalating expenses, related to higher advertising and marketing costs.
Teladoc Health, Inc. Price, Consensus and EPS Surprise
Teladoc Health, Inc. price-consensus-eps-surprise-chart | Teladoc Health, Inc. Quote
Quarterly Operational Update
Revenues from access fees (which comprised 88.2% of total quarterly revenues) improved 8% year over year to $582.1 million in the third quarter. The figure surpassed the Zacks Consensus Estimate of $576 million and our estimate of $575.6 million.
Teladoc Health reported other revenues of $78.2 million, which advanced 10% year over year but missed the consensus mark of $80 million as well as our estimate of $80.5 million.
On a geographical basis, revenues from the United States amounted to $569.3 million, which accounted for 86.2% of total revenues. The figure grew 7% year over year and beat the Zacks Consensus Estimate of $568 million as well as our estimate of $568.3 million. International revenues of $90.9 million climbed 17% year over year in the quarter under review and came higher than the consensus mark of $88 million as well as our estimate of $87.8 million.
Adjusted EBITDA soared 73% year over year to $88.8 million (exceeding the management’s projected range of $72-$82 million), higher than our estimate of $78.9 million.
The adjusted gross margin of 71.8% improved 220 basis points year over year in the quarter under review.
TDOC’s total expenses of $725 million increased 6.1% year over year due to higher advertising and marketing expenses, general and administrative costs as well as acquisition, integration and transformation expenses. The figure came higher than our estimate of $718.7 million.
Segmental Update
The Integrated Care segment generated revenues of $374.4 million, which rose 9% year over year in the third quarter and outpaced the Zacks Consensus Estimate of $371 million as well as our estimate of $369.9 million. The unit’s adjusted EBITDA surged 62% year over year to $62.8 million, higher than our estimate of $44.7 million. Adjusted EBITDA margin was 16.8%.
The BetterHelp segment’s revenues advanced 8% year over year to $285.8 million in the quarter under review. However, the figure missed the consensus mark of $291 million as well as our estimate of $286.2 million. The unit’s adjusted EBITDA of $26 million more than doubled year over year but lagged our estimate of $34.2 million. Adjusted EBITDA margin was 9.1%.
Visits & Memberships
Total visits declined 4% year over year to 4.4 million in the third quarter and missed our estimate of 4.8 million.
U.S. Integrated Care Members were 90.2 million as of Sep 30, 2023, which exceeded the management expectation of around 86 million. The figure improved 10% year over year and surpassed our estimate of 86.1 million.
Financial Update (as of Sep 30, 2023)
Teladoc Health exited the third quarter with cash and cash equivalents of $1,030.5 million, which grew 12.2% from the figure at 2022 end. Total assets of $4,328 million dipped 0.4% from the 2022-end level.
Debt amounted to $1,537.8 million, which inched up 0.2% from the figure as of Dec 31, 2022. Total stockholders’ equity of $2,294.1 million decreased 0.6% from the 2022-end level.
TDOC generated operating cash flows of $105.6 million in the third quarter, which soared 67.6% year over year. Free cash flows were recorded at $68 million, which increased more than three-fold year over year. Capex were $37.6 million in the quarter under review, which fell 13% year over year.
4Q23 View
Teladoc Health projects total revenues to be within $658 million and $683 million in the fourth quarter of 2023. Adjusted EBITDA is anticipated to be in the range of $107-$117 million. Net loss per share is estimated to be in the band of 33-23 cents. U.S. Integrated Care Members are forecasted to stay within 89-90 million.
2023 Outlook Revised
Management anticipates revenues to lie within $2,600 million and $2,625 million for 2023, down from the prior guidance of $2,600-$2,675 million. The midpoint of the revised guidance implies a rise of 8.5% from the 2022 figure.
Adjusted EBITDA is estimated to be within $320-$330 million, up from the previous outlook of $300-$325 million. The midpoint of the updated outlook suggests 31.8% growth from the 2022 figure.
Net loss per share is projected to lie in the band of $1.50-$1.40, compared with the earlier view of net loss of $1.60-$1.25 per share. U.S. Integrated Care Members are forecasted to be between 89-90 million this year, up from the previous guidance of around 86 million.
Zacks Rank
Teladoc Health currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported third-quarter 2023 results so far, the bottom-line results of Elevance Health, Inc. (ELV - Free Report) , Quest Diagnostics Incorporated (DGX - Free Report) and Abbott Laboratories (ABT - Free Report) beat the respective Zacks Consensus Estimate.
Elevance Health reported third-quarter 2023 adjusted net income of $8.99 per share, which surpassed the Zacks Consensus Estimate by 6.4%. The bottom line climbed 20.5% year over year. Operating revenues rose 7.2% year over year to $42.5 billion in the quarter under review. Yet, the top line missed the consensus mark by a whisker. As of Sep 30, 2023, ELV’s medical membership was around 47.3 million, which inched up 0.1% year over year in the third quarter. Operating revenues of the Carelon segment improved 14.3% year over year to $11.9 billion, higher than our estimate of $10.8 billion. The unit’s operating gain inched up 1.4% year over year to $650 million in the third quarter.
Quest Diagnostics’ third-quarter 2023 adjusted earnings per share of $2.22 beat the Zacks Consensus Estimate by 1.4%. However, adjusted earnings declined 5.9% from the year-ago adjusted figure. Reported revenues in the third quarter declined 7.7% year over year to $2.29 billion. However, revenues exceeded the Zacks Consensus Estimate by 1.7%. Base Business (excludes COVID-19 testing) revenues were $2.27 billion in the reported quarter, up 4.6% year over year. DGX’s adjusted operating margin of 16.2% represented a five bps expansion year over year.
Abbott Laboratories reported third-quarter 2023 adjusted earnings of $1.14 per share, which topped the Zacks Consensus Estimate by 3.6%. However, the adjusted figure declined from the prior-year quarter’s levels by 0.9%. Third-quarter worldwide sales of $10.14 billion were down 2.6% year over year on a reported basis. The top line exceeded the consensus estimate by 3.6%. ABT reported an adjusted operating profit of $2.14 billion in the quarter under review, down 5.5% year over year. Also, the adjusted operating margin contracted 66 bps to 21.1%. In the third quarter, the Medical Devices segment’s sales rose 16.6% year over year on a reported basis (up 14.7% on an organic basis) to $4.25 billion.