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Will Higher Business Volumes Aid Teladoc (TDOC) Q4 Earnings?

By Zacks Investment ResearchStock MarketsFeb 21, 2021 08:39PM ET
Will Higher Business Volumes Aid Teladoc (TDOC) Q4 Earnings?
By Zacks Investment Research   |  Feb 21, 2021 08:39PM ET
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Teladoc (NYSE:TDOC) Health, Inc. TDOC is set to report fourth-quarter earnings on Feb 24.

The company is likely to report strong revenue outperformance for the fourth quarter, driven by broad-based momentum across the business and a sharp acceleration in visit-volume growth.

In the last reported quarter, Teladoc incurred a loss of 13 cents per share, narrower than the Zacks Consensus Estimate of a loss of 33 cents.

Moreover, the reported figure was narrower than the year-ago quarter’s loss of 39 cents per share. This was primarily due to strong revenue growth, courtesy of constant uptick in member visits across the company’s commercial channels.

Earnings & Revenue Expectations

The Zacks Consensus Estimate for Teladoc’s fourth-quarter loss of 25 cents per share indicates a 3.9% improvement from the prior-year reported number. Likewise, the consensus estimate for sales of $379.95 million suggests a 142.8% rise from the year-ago reported figure.

Factors likely to Affect Q4 Result

Teladoc is likely to have gained from increased demand for virtual healthcare services driven by the ongoing pandemic that has highlighted the critical role of virtual care within the overall health care system. Owing to this, the company continued to see increasing adoption by consumers, clients and providers.

It is also expected to have witnessed a surge in visit volumes, boosted by greater patient satisfaction as consumers benefit from the company’s convenient, lower cost and high-quality service. Further, visits from newly-registered individuals might have shot up, which indicates that greater number of patients have been adopting its virtual health care services.

Additionally, Teladoc is likely to have seen significant growth in general medical visits, and buoyant demand for specialist care including dermatology as well as mental health. Visit volumes grew sequentially in every month of the year, both on the business-to-business (B2B) and direct-to-consumer (DTC) sides of the business, and the trend is likely to have continued in the to-be-reported quarter as well. BetterHelp (acquired in 2015), the company’s direct-to-consumer mental health offering, has been exhibiting accelerating traction, which is likely to have bumped up DTC visit volumes.

The international business is likely to have performed well. In the last reported quarter, it entered into a partnership with Telefónica, one of the largest telecom providers in Europe and Latin America, with more than 14 million customers in Spain. It also executed geographic expansion into the Nordic region via a new client partnership with a large financial institution in this area. These initiatives, along with the company’s existing partnerships, are likely to have led to increased contribution from the international business.

The recently closed acquisition of InTouch is likely to have led to cross sales as health systems and physician practices have been increasingly looking for enterprise-wide integrated solutions.

In the to-be reported quarter, the company is likely to report an increase in operating expenses owing to higher advertisement and marketing expenditure.

During the quarter, it completed the acquisition of Livongo Health (NASDAQ:LVGO), Inc. Taking this acquisition into account, the company expects total revenues in the range of $369-$379 million ($294-$304 million was predicted previously) and adjusted EBITDA within $34-$37 million (versus $21-$24 million expected earlier).

Earnings Surprise History

The company boasts a decent earnings surprise track. Its bottom line beat estimates in two of the last four quarters and missed the same on the other two occasions, with the average surprise being 4.9%. This is depicted in the chart below:

What Our Model Says

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. But this is not the case here.

Earnings ESP: It has an Earnings ESP of 0.00%.

Zacks Rank: Teladoc currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are some companies worth considering from the healthcare space as our model shows that these have the right combination of elements to beat on earnings in the upcoming quarterly reports:

Medtronic (NYSE:MDT) PLC MDT has an Earnings ESP of +0.13% and a Zacks Rank #3

Amedisys (NASDAQ:AMED), Inc. AMED has an Earnings ESP of +5.89% and a Zacks Rank #3

Lexicon Pharmaceuticals (NASDAQ:LXRX), Inc. LXRX has an Earnings ESP of +3.57% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Will Higher Business Volumes Aid Teladoc (TDOC) Q4 Earnings?

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Will Higher Business Volumes Aid Teladoc (TDOC) Q4 Earnings?

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Sandra Ford
Sandra Ford Feb 22, 2021 9:33AM ET
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hello I'm new here how can I invest
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