After reading Teladoc Health, Inc.'s (NYSE:TDOC) latest earnings update (31 December 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether TDOC has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Did TDOC's recent performance beat its trend and industry?
TDOC is loss-making, with the most recent trailing twelve-month earnings of -US$98.9m (from 31 December 2019), which compared to last year has become more negative. Furthermore, the company's loss seem to be growing over time, with the five-year earnings average of -US$76.3m. Each year, for the past five years TDOC has seen an annual increase in operating expense growth, outpacing revenue growth of 46%, on average. This adverse movement is a driver of the company's inability to reach breakeven.
Eyeballing growth from a sector-level, the US healthcare services industry has been growing its average earnings by double-digit 23% in the past twelve months, and 21% over the past half a decade. This growth is a median of profitable companies of 10 Healthcare Services companies in US including Medidata Solutions, Cerner and Simulations Plus. This means that any uplift the industry is deriving benefit from, Teladoc Health has not been able to leverage it as much as its average peer.
Although Teladoc Health is loss-making, its has a good cash runway to meet its upcoming operating expense (should SG&A and one-year R&D remain constant at the current level of US$404m) over the next year. This is a strong indication of good cash management.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Teladoc Health may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Teladoc Health to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TDOC’s future growth? Take a look at our free research report of analyst consensus for TDOC’s outlook.
- Financial Health: Are TDOC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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