Teladoc Health, Inc.'s (NYSE:TDOC): Teladoc Health, Inc. provides virtual healthcare services on a business-to-business in the United States and internationally. The company’s loss has recently broadened since it announced a -US$97.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$104.7m, moving it further away from breakeven. The most pressing concern for investors is TDOC’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for TDOC, its year of breakeven and its implied growth rate.
According to the 19 industry analysts covering TDOC, the consensus is breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$30m in 2022. So, TDOC is predicted to breakeven approximately 3 years from now. What rate will TDOC have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 51%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving TDOC’s growth isn’t the focus of this broad overview, but, take into account that generally healthcare tech companies, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing I would like to bring into light with TDOC is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in TDOC’s case is 44%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on TDOC, so if you are interested in understanding the company at a deeper level, take a look at TDOC’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further examine:
- Valuation: What is TDOC worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether TDOC is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Teladoc Health’s board and the CEO’s back ground.
- 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.
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