Is Teladoc a Good Investment Option? Q3 Revenue Falls Short of Expectations
Teladoc Health (NYSE: TDOC) recently reported its Q3 FY2023 financial results, and the numbers were not as impressive as analysts had hoped. The company’s revenue saw a 7.99% year-on-year increase, reaching $660.2 million. While this growth is commendable, it fell slightly below the estimated revenue of $663.1 million. Additionally, Teladoc’s revenue guidance for the next quarter is projected to be $670.5 million, which is 2.34% lower than analysts’ expectations.
EPS Improvement and Future Prospects
Teladoc’s earnings per share (EPS) showed improvement, with a GAAP loss of $0.35 per share compared to a loss of $0.45 per share in the same quarter last year. This is a positive sign for the company, indicating progress in its financial performance.
Despite the slight revenue miss and lower-than-expected revenue guidance, Teladoc remains an interesting investment option. The company’s CEO, Jason Gorevic, expressed optimism about the future, stating, “We are committed to building an even stronger company that continues to deliver on balanced growth, while keeping our promises to clients and caring for our members.”
Key Highlights from Teladoc’s Q3 FY2023 Results
- Revenue: Teladoc’s revenue reached $660.2 million, slightly below analysts’ estimates.
- EPS: The company’s EPS of -$0.35 beat analysts’ estimates of -$0.37.
- Revenue Guidance for Q4 2023: Teladoc expects revenue of $670.5 million, falling short of analysts’ estimates of $686.6 million.
- Free Cash Flow: Teladoc generated $68 million in free cash flow, maintaining stability compared to the previous quarter.
- Gross Margin (GAAP): Teladoc’s gross margin improved to 71.8% from 69.6% in the same quarter last year.
- US Integrated Care Members: Teladoc experienced a significant increase in its user base, with 90.2 million members, up by 8.1 million from the previous year.
What Teladoc’s Results Indicate
Over the past three years, Teladoc has demonstrated exceptional revenue growth, averaging 52.8% annually. However, its Q3 FY2023 revenue growth of 7.99% fell below Wall Street’s expectations.
The company’s revenue guidance for the next quarter suggests a year-on-year growth of 5.14% to $670.5 million, showing a slowdown compared to the 15.1% growth recorded in the same quarter last year. Analysts had projected an 8.21% sales growth over the next 12 months.
Usage growth is crucial for Teladoc’s revenue growth. As an online marketplace, Teladoc aims to increase both its user base and the average order size. Over the past two years, Teladoc has witnessed a 7.9% annual growth in users, reaching a significant milestone of 90.2 million members. In Q3 FY2023 alone, the company added 8.1 million users, reflecting a 9.87% year-on-year growth.
Investment Outlook
With a market capitalization of $2.97 billion, Teladoc is considered a smaller company. However, its strong financial position, with over $1.03 billion in cash and positive free cash flow, makes it an attractive option for potential investors.
While Teladoc’s Q3 results were not exceptional, there is still potential for growth and improvement. The company’s stock price has seen a 4.3% decline since the announcement of the results, currently trading at $140.6 per share. Whether Teladoc is a good investment option depends on individual investors’ assessment of the company’s future prospects in the telemedicine industry.
