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Teladoc Health (TDOC) Shares Down 8.9% Despite Q2 Earnings Beat
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Teladoc Health, Inc.’s (TDOC - Free Report) shares lost 8.9% since it reported second-quarter 2024 results on Jul 31, despite an earnings beat. Investors might be worried about BetterHelp's substantial revenue drop, leading to a decline in its adjusted EBITDA. Moreover, the withdrawal of full-year guidance for BetterHelp and the lack of consolidated guidance for the rest of the year added to the uncertainty. Strength in the Integrated Care segment acted as a partial offset.
The company incurred a second-quarter 2024 adjusted loss of 28 cents per share, narrower than the Zacks Consensus Estimate of a loss of 36 cents and the year-ago quarter’s loss of 40 cents.
Operating revenues amounted to $642.4 million, which declined 1.5% year over year. The top line missed the consensus mark by 1.1%.
Teladoc Health, Inc. Price, Consensus and EPS Surprise
Revenues from access fees (which accounted for 87% of total quarterly revenues) declined 3% year over year to $559.6 million in the quarter under review. The metric missed the Zacks Consensus Estimate of $565 million.
Other revenues of $82.8 million increased 8% year over year but were lower than the Zacks Consensus Estimate of $85 million.
On a geographical basis, Teladoc Health generated $540.8 million in revenues from the United States, down 4% year over year, in the second quarter. U.S. revenues made up nearly 84% of total revenues. The metric missed the consensus mark of $555 million. International revenues rose 12% year over year to $101.6 million and outpaced the consensus mark of $93 million.
Adjusted EBITDA climbed 24% year over year to $89.5 million. The adjusted gross margin of 70.7% deteriorated 10 basis points (bps) year over year.
Total expenses increased more than one-fold year over year to $1.5 billion in the quarter, higher than our estimate of $717.3 million. The year-over-year rise resulted from higher amortization of intangible assets and a major goodwill impairment.
Segmental Update
The Integrated Care segment reported revenues of $377.4 million, which improved 5% year over year in the second quarter and surpassed the Zacks Consensus Estimate of $375 million as well as our estimate of $373.1 million. Adjusted EBITDA soared 69% year over year to $64 million, higher than the consensus mark of $49.2 million and our estimate of $45.9 million. Adjusted EBITDA margin of 17% improved 642 bps year over year.
The BetterHelp segment’s revenues declined 9% year over year to $265 million and missed the Zacks Consensus Estimate of $274 million and our estimate of $274.7 million. Adjusted EBITDA of $25.45 million fell 26% year over year and missed the consensus mark of $25.47 million and our estimate of $27 million. Adjusted EBITDA margin deteriorated 209 bps year over year to 9.6% in the quarter under review.
Visits & Memberships
Total visits of Teladoc Health were 4.2 million, which slipped 11% year over year and fell short of the Zacks Consensus Estimate of 5.2 million and our estimate of 4.6 million.
U.S. Integrated Care Members totaled 92.4 million as of Jun 30, 2024, which improved 8% year over year. The metric beat the consensus mark by a whisker.
Financial Update (as of Jun 30, 2024)
Teladoc Health exited the second quarter with cash and cash equivalents of $1.2 billion, which slid 3.4% from the figure in 2023-end. Total assets of $3.5 billion fell 20.5% from the 2023-end level.
Debt amounted to $989.7 million, which declined 35.7% from the figure as of Dec 31, 2023. Total stockholders’ equity of $1.5 billion declined 34.8% from the 2023-end level.
Net cash provided by operating activities amounted to $97.6 million in the first half of 2024, which dropped 14.6% year over year. Free cash flows were $60.9 million in the quarter under review. Capex plunged 24.1% year over year to $27.7 million.
Outlook
Third-Quarter View
Revenues in the Integrated Care segment are forecasted to witness (1)-2% year-over-year growth while the unit’s adjusted EBITDA margin is anticipated to remain within 14.5-16%. U.S. Integrated Care Members are expected to be between 92.5 and 93.5 million.
2024 View
Revenues in the Integrated Care segment are expected to witness low to mid-single-digit growth on a year-over-year basis.
U.S. Integrated Care Members are expected to remain within 92.5-94 million.
Adjusted EBITDA margin in the Integrated Care segment is estimated to expand in the range of 150-200 bps year over year in 2024.
Of the Medical sector players that have reported second-quarter 2024 results so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) , Elevance Health, Inc. (ELV - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) beat the respective Zacks Consensus Estimate.
UnitedHealth Group reported second-quarter adjusted EPS of $6.80, which beat the Zacks Consensus Estimate by 2.3%. The bottom line rose 10.7% year over year. Revenues amounted to $98.9 billion, which improved 6.4% year over year. The top line outpaced the consensus mark of $98.7 billion The medical care ratio of UnitedHealth Group deteriorated 190 bps year over year to 85.1% .
UNH’s operating earnings deteriorated 2.3% year over year to $7.9 billion. The net margin deteriorated to 4.3% compared with 5.9% in the year-ago period. The health benefits business of UnitedHealth Group, UnitedHealthcare, generated revenues of $73.9 billion. The figure rose 5.3% year over year. The UnitedHealthcare business served 50.4 million people as of Jun 30, 2024, which decreased 4.6% year over year. Revenues in the Optum business line were $62.9 billion, which climbed 11.7% year over year.
Elevance Health reported second-quarter adjusted earnings of $10.12 per share, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line improved 12% year over year. Operating revenues of $43.2 billion dipped 0.4% year over year. However, the top line beat the consensus mark by 0.5%. Medical membership of Elevance Health was around 45.8 million as of Jun 30, 2024, which slipped 5% year over year. Premiums decreased 3.2% year over year to $35.4 billion. Product revenues of $5.5 billion advanced 13.8% year over year.
The Health Benefits segment’s operating revenues totaled $37.2 billion, which decreased 2.2% year over year. Operating gain remained almost flat year over year at $2.1 billion. The operating margin of 5.8% improved 20 bps year over year. The Carelon unit’s operating revenues amounted to $13.3 billion, which rose 10% year over year.
HCA Healthcare reported second-quarter adjusted EPS of $5.50, which beat the Zacks Consensus Estimate by 10.7%. The bottom line improved 28.2% year over year. Revenues amounted to $17.5 billion, which improved 10.3% year over year. The top line outpaced the consensus mark by 2.2%. Same-facility equivalent admissions increased 5.2% year over year while same-facility admissions grew 5.8% year over year.
Same-facility revenue per equivalent admission rose 4.4% year over year. Same-facility inpatient surgeries grew 2.6% year over year while same-facility outpatient surgeries declined 2.1% year over year. Additionally, same-facility emergency room visits rose 5.5% year over year and beat our growth estimate of 4.3%. Adjusted EBITDA improved 16.2% year over year to $3.6 billion.
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Teladoc Health (TDOC) Shares Down 8.9% Despite Q2 Earnings Beat
Teladoc Health, Inc.’s (TDOC - Free Report) shares lost 8.9% since it reported second-quarter 2024 results on Jul 31, despite an earnings beat. Investors might be worried about BetterHelp's substantial revenue drop, leading to a decline in its adjusted EBITDA. Moreover, the withdrawal of full-year guidance for BetterHelp and the lack of consolidated guidance for the rest of the year added to the uncertainty. Strength in the Integrated Care segment acted as a partial offset.
The company incurred a second-quarter 2024 adjusted loss of 28 cents per share, narrower than the Zacks Consensus Estimate of a loss of 36 cents and the year-ago quarter’s loss of 40 cents.
Operating revenues amounted to $642.4 million, which declined 1.5% year over year. The top line missed the consensus mark by 1.1%.
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 accounted for 87% of total quarterly revenues) declined 3% year over year to $559.6 million in the quarter under review. The metric missed the Zacks Consensus Estimate of $565 million.
Other revenues of $82.8 million increased 8% year over year but were lower than the Zacks Consensus Estimate of $85 million.
On a geographical basis, Teladoc Health generated $540.8 million in revenues from the United States, down 4% year over year, in the second quarter. U.S. revenues made up nearly 84% of total revenues. The metric missed the consensus mark of $555 million. International revenues rose 12% year over year to $101.6 million and outpaced the consensus mark of $93 million.
Adjusted EBITDA climbed 24% year over year to $89.5 million. The adjusted gross margin of 70.7% deteriorated 10 basis points (bps) year over year.
Total expenses increased more than one-fold year over year to $1.5 billion in the quarter, higher than our estimate of $717.3 million. The year-over-year rise resulted from higher amortization of intangible assets and a major goodwill impairment.
Segmental Update
The Integrated Care segment reported revenues of $377.4 million, which improved 5% year over year in the second quarter and surpassed the Zacks Consensus Estimate of $375 million as well as our estimate of $373.1 million. Adjusted EBITDA soared 69% year over year to $64 million, higher than the consensus mark of $49.2 million and our estimate of $45.9 million. Adjusted EBITDA margin of 17% improved 642 bps year over year.
The BetterHelp segment’s revenues declined 9% year over year to $265 million and missed the Zacks Consensus Estimate of $274 million and our estimate of $274.7 million. Adjusted EBITDA of $25.45 million fell 26% year over year and missed the consensus mark of $25.47 million and our estimate of $27 million. Adjusted EBITDA margin deteriorated 209 bps year over year to 9.6% in the quarter under review.
Visits & Memberships
Total visits of Teladoc Health were 4.2 million, which slipped 11% year over year and fell short of the Zacks Consensus Estimate of 5.2 million and our estimate of 4.6 million.
U.S. Integrated Care Members totaled 92.4 million as of Jun 30, 2024, which improved 8% year over year. The metric beat the consensus mark by a whisker.
Financial Update (as of Jun 30, 2024)
Teladoc Health exited the second quarter with cash and cash equivalents of $1.2 billion, which slid 3.4% from the figure in 2023-end. Total assets of $3.5 billion fell 20.5% from the 2023-end level.
Debt amounted to $989.7 million, which declined 35.7% from the figure as of Dec 31, 2023. Total stockholders’ equity of $1.5 billion declined 34.8% from the 2023-end level.
Net cash provided by operating activities amounted to $97.6 million in the first half of 2024, which dropped 14.6% year over year. Free cash flows were $60.9 million in the quarter under review. Capex plunged 24.1% year over year to $27.7 million.
Outlook
Third-Quarter View
Revenues in the Integrated Care segment are forecasted to witness (1)-2% year-over-year growth while the unit’s adjusted EBITDA margin is anticipated to remain within 14.5-16%. U.S. Integrated Care Members are expected to be between 92.5 and 93.5 million.
2024 View
Revenues in the Integrated Care segment are expected to witness low to mid-single-digit growth on a year-over-year basis.
U.S. Integrated Care Members are expected to remain within 92.5-94 million.
Adjusted EBITDA margin in the Integrated Care segment is estimated to expand in the range of 150-200 bps year over year in 2024.
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 second-quarter 2024 results so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) , Elevance Health, Inc. (ELV - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) beat the respective Zacks Consensus Estimate.
UnitedHealth Group reported second-quarter adjusted EPS of $6.80, which beat the Zacks Consensus Estimate by 2.3%. The bottom line rose 10.7% year over year. Revenues amounted to $98.9 billion, which improved 6.4% year over year. The top line outpaced the consensus mark of $98.7 billion The medical care ratio of UnitedHealth Group deteriorated 190 bps year over year to 85.1% .
UNH’s operating earnings deteriorated 2.3% year over year to $7.9 billion. The net margin deteriorated to 4.3% compared with 5.9% in the year-ago period. The health benefits business of UnitedHealth Group, UnitedHealthcare, generated revenues of $73.9 billion. The figure rose 5.3% year over year. The UnitedHealthcare business served 50.4 million people as of Jun 30, 2024, which decreased 4.6% year over year. Revenues in the Optum business line were $62.9 billion, which climbed 11.7% year over year.
Elevance Health reported second-quarter adjusted earnings of $10.12 per share, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line improved 12% year over year. Operating revenues of $43.2 billion dipped 0.4% year over year. However, the top line beat the consensus mark by 0.5%. Medical membership of Elevance Health was around 45.8 million as of Jun 30, 2024, which slipped 5% year over year. Premiums decreased 3.2% year over year to $35.4 billion. Product revenues of $5.5 billion advanced 13.8% year over year.
The Health Benefits segment’s operating revenues totaled $37.2 billion, which decreased 2.2% year over year. Operating gain remained almost flat year over year at $2.1 billion. The operating margin of 5.8% improved 20 bps year over year. The Carelon unit’s operating revenues amounted to $13.3 billion, which rose 10% year over year.
HCA Healthcare reported second-quarter adjusted EPS of $5.50, which beat the Zacks Consensus Estimate by 10.7%. The bottom line improved 28.2% year over year. Revenues amounted to $17.5 billion, which improved 10.3% year over year. The top line outpaced the consensus mark by 2.2%. Same-facility equivalent admissions increased 5.2% year over year while same-facility admissions grew 5.8% year over year.
Same-facility revenue per equivalent admission rose 4.4% year over year. Same-facility inpatient surgeries grew 2.6% year over year while same-facility outpatient surgeries declined 2.1% year over year. Additionally, same-facility emergency room visits rose 5.5% year over year and beat our growth estimate of 4.3%. Adjusted EBITDA improved 16.2% year over year to $3.6 billion.