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Can Teladoc (TDOC) Q2 Earnings Navigate BetterHelp Profit Woes?
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Teladoc Health, Inc. (TDOC - Free Report) is set to report its second-quarter 2024 results on Jul 31, after the closing bell.
The Zacks Consensus Estimate for second-quarter earnings is currently pegged at a loss of 35 cents per share, implying an improvement of 12.5% from the year-ago reported number. The estimate remained stable over the past week. The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $649.6 million, suggesting a 0.4% fall from the year-ago actuals.
Image Source: Zacks Investment Research
TDOC beat the consensus estimate for earnings in three of the trailing four quarters and missed once, with the average surprise being 8.2%, as you can see below.
Our proven model does not conclusively predict an earnings beat for Teladoc this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate currently stands at a loss of 35 cents per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Teladoc currently carries a Zacks Rank #4 (Sell).
Now, let’s see how things have shaped up before the second-quarter earnings announcement.
Q2 Factors to Note
Teladoc’s second-quarter results are likely to have gained from higher visits, U.S. Integrated Care members and lower expenses. We expect BetterHelp paying users to have decreased in the quarter under review.
For the second quarter, the consensus mark indicates a 10% year-over-year increase in total visits. Both the Zacks Consensus Estimate and our estimate for U.S. Integrated Care members for the second quarter indicate a more than 7% increase from the year-ago period.
Both the Zacks Consensus Estimate and our estimate for international revenues indicate a nearly 3% increase from the year-ago period. The Zacks Consensus Estimate for other revenues is pegged at $84.8 million, suggesting a 10.5% increase from the year-ago figure.
Our model indicates that total expenses are expected to have declined nearly 1% in the quarter, primarily due to lower technology and development costs, advertising and marketing, and general and administrative costs. We expect advertising and marketing expenses to have dropped more than 6% in the second quarter. This is likely to have aided the bottom line.
However, both the Zacks Consensus Estimate and our estimate for second-quarter Access Fees revenues indicate a nearly 2% decrease from the prior-year quarter’s tally of $575.7 million. Both the Zacks Consensus Estimate and our estimate for U.S. revenues for the second quarter suggest a 1.2% year-over-year decline. These are likely to have affected TDOC’s top line in the quarter under review.
The Zacks Consensus Estimate for BetterHelp paying users for the second quarter suggests a more than 11% decline from a year ago, whereas our model estimate indicates a more than 10% fall. The consensus mark for adjusted EBITDA from BetterHelp indicates a 25.5% year-over-year fall in the second quarter, while our model estimate suggests a 21% decline. The expected weakness in BetterHelp’s performance makes an earnings beat uncertain.
Previously, at the first-quarter earnings release, management stated that it expects total revenues of $635-$660 million and an adjusted EBITDA of $70-$80 million for the second quarter of 2023. U.S. Integrated Care Members were forecasted to stay within 92-93 million.
Price Performance
Teladoc's stock has lost 56.6% in the year-to-date period against the industry’s growth of 6.8%. Additionally, the stock underperformed the S&P 500 Index, which rallied 14.5% during the same period.
YTD Price Performance
Image Source: Zacks Investment Research
What Should Investors Do Now?
Rising competition in the virtual care space, an expected decline in revenues and its unprofitable operations are major concerns for the stock. It can’t bank on earnings solely to service its debt obligations. The massive decline in share price this year indicates investors’ waning confidence in the stock. Given these headwinds, TDOC appears to be a risky investment in the short run. Exiting the stock may be a prudent decision for investors looking to mitigate potential risks.
Stocks to Consider
While an earnings beat looks uncertain for Teladoc, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Enhabit’s bottom line for the to-be-reported quarter is pegged at 6 cents per share, which increased by a penny over the past week. The estimate signals 50% year-over-year growth. The consensus estimate for EHAB’s revenues is pegged at $266 million, indicating a 1.4% increase from a year ago.
BrightSpring Health Services, Inc. (BTSG - Free Report) has an Earnings ESP of +89.50% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for BrightSpring’s bottom line for the to-be-reported quarter is pegged at 18 cents per share, which remained stable over the past week. The consensus estimate for BTSG’s revenues is pegged at $2.6 billion.
Natera, Inc. (NTRA - Free Report) has an Earnings ESP of +14.90% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Natera's bottom line for the to-be-reported quarter suggests a 28.9% year-over-year improvement. The estimate remained stable over the past week. The consensus estimate for NTRA’s revenues is pegged at $340.1 million, suggesting a 30.1% increase from the year-ago period.
Image: Shutterstock
Can Teladoc (TDOC) Q2 Earnings Navigate BetterHelp Profit Woes?
Teladoc Health, Inc. (TDOC - Free Report) is set to report its second-quarter 2024 results on Jul 31, after the closing bell.
The Zacks Consensus Estimate for second-quarter earnings is currently pegged at a loss of 35 cents per share, implying an improvement of 12.5% from the year-ago reported number. The estimate remained stable over the past week. The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $649.6 million, suggesting a 0.4% fall from the year-ago actuals.
TDOC beat the consensus estimate for earnings in three of the trailing four quarters and missed once, with the average surprise being 8.2%, as you can see below.
Teladoc Health, Inc. Price and EPS Surprise
Teladoc Health, Inc. price-eps-surprise | Teladoc Health, Inc. Quote
Q2 Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Teladoc this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate currently stands at a loss of 35 cents per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Teladoc currently carries a Zacks Rank #4 (Sell).
Now, let’s see how things have shaped up before the second-quarter earnings announcement.
Q2 Factors to Note
Teladoc’s second-quarter results are likely to have gained from higher visits, U.S. Integrated Care members and lower expenses. We expect BetterHelp paying users to have decreased in the quarter under review.
For the second quarter, the consensus mark indicates a 10% year-over-year increase in total visits. Both the Zacks Consensus Estimate and our estimate for U.S. Integrated Care members for the second quarter indicate a more than 7% increase from the year-ago period.
Both the Zacks Consensus Estimate and our estimate for international revenues indicate a nearly 3% increase from the year-ago period. The Zacks Consensus Estimate for other revenues is pegged at $84.8 million, suggesting a 10.5% increase from the year-ago figure.
Our model indicates that total expenses are expected to have declined nearly 1% in the quarter, primarily due to lower technology and development costs, advertising and marketing, and general and administrative costs. We expect advertising and marketing expenses to have dropped more than 6% in the second quarter. This is likely to have aided the bottom line.
However, both the Zacks Consensus Estimate and our estimate for second-quarter Access Fees revenues indicate a nearly 2% decrease from the prior-year quarter’s tally of $575.7 million. Both the Zacks Consensus Estimate and our estimate for U.S. revenues for the second quarter suggest a 1.2% year-over-year decline. These are likely to have affected TDOC’s top line in the quarter under review.
The Zacks Consensus Estimate for BetterHelp paying users for the second quarter suggests a more than 11% decline from a year ago, whereas our model estimate indicates a more than 10% fall. The consensus mark for adjusted EBITDA from BetterHelp indicates a 25.5% year-over-year fall in the second quarter, while our model estimate suggests a 21% decline. The expected weakness in BetterHelp’s performance makes an earnings beat uncertain.
Previously, at the first-quarter earnings release, management stated that it expects total revenues of $635-$660 million and an adjusted EBITDA of $70-$80 million for the second quarter of 2023. U.S. Integrated Care Members were forecasted to stay within 92-93 million.
Price Performance
Teladoc's stock has lost 56.6% in the year-to-date period against the industry’s growth of 6.8%. Additionally, the stock underperformed the S&P 500 Index, which rallied 14.5% during the same period.
YTD Price Performance
Image Source: Zacks Investment Research
What Should Investors Do Now?
Rising competition in the virtual care space, an expected decline in revenues and its unprofitable operations are major concerns for the stock. It can’t bank on earnings solely to service its debt obligations. The massive decline in share price this year indicates investors’ waning confidence in the stock. Given these headwinds, TDOC appears to be a risky investment in the short run. Exiting the stock may be a prudent decision for investors looking to mitigate potential risks.
Stocks to Consider
While an earnings beat looks uncertain for Teladoc, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Enhabit, Inc. (EHAB - Free Report) has an Earnings ESP of +63.64% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Enhabit’s bottom line for the to-be-reported quarter is pegged at 6 cents per share, which increased by a penny over the past week. The estimate signals 50% year-over-year growth. The consensus estimate for EHAB’s revenues is pegged at $266 million, indicating a 1.4% increase from a year ago.
BrightSpring Health Services, Inc. (BTSG - Free Report) has an Earnings ESP of +89.50% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for BrightSpring’s bottom line for the to-be-reported quarter is pegged at 18 cents per share, which remained stable over the past week. The consensus estimate for BTSG’s revenues is pegged at $2.6 billion.
Natera, Inc. (NTRA - Free Report) has an Earnings ESP of +14.90% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Natera's bottom line for the to-be-reported quarter suggests a 28.9% year-over-year improvement. The estimate remained stable over the past week. The consensus estimate for NTRA’s revenues is pegged at $340.1 million, suggesting a 30.1% increase from the year-ago period.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.