Best Stocks for 2019: Teladoc Stock Is Here to Stay
Editor’s note: This column is part of our Best Stocks for 2019 contest. Jason Moser’s pick for the contest is Teladoc Health (NYSE:TDOC).
Teladoc looked like it was going to end the quarter in fourth or even fifth place. But after a rally that started last Wednesday, TDOC stock slid past Adobe (NASDAQ:ADBE), Amazon (NASDAQ:AMZN) and Charlotte’s Web (OTCMKTS:CWBHF) for a second-place finish.
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So how does TDOC look going forward?
TDOC’s First Quarter Earnings
Teladoc’s first quarter was a good one. Revenue of $128.6 million marked growth of 43% (23% organic) and total U.S. paid members are now at 26.7 million along with 10.2 million visit fee-only users. Total visits of 1,063,000 represented 29% organic growth.
It’s also worth noting that this represented the first quarter where the business crossed 1 million doctor’s visits, and that was actually in spite of a weaker flu season. International visits grew from basically nothing a year ago to 282,000 this quarter.
Gross margin was 65.3% versus 70% a year ago and as we’ve seen in previous quarters this investment in behavioral along with a more comprehensive offering. TDOC’s balance sheet remains in good shape considering the deals the company has made recently with $479 million in cash and equivalents and $450 million debt. It’s also worth noting that debt is in convertible notes that don’t even come due until 2022 and 2025.
Looking Ahead for TDOC
The business is still unprofitable but what else is new? Profitability will come in time and management reiterates that the company will be cash flow positive for the first time in 2019 so we’ll hold them to that target.
The CVS and Aetna relationships have never been stronger and we should expect some additional news regarding Teladoc and Aetna at some point in the near future as well.
CEO Jason Gorevic likes this business because there are so many levers for growth. I tend to agree; healthcare is a phenomenally large global market opportunity.
One final note, the CFO search is over as Mala Murthy has joined the Teladoc team. A seasoned vet, Murthy comes to the company from American Express so it’s encouraging to see the team in a good place going forward.
As of this writing, Jason Moser, a senior analyst with The Motley Fool, held shares of TDOC.
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