Teladoc Health (TDOC) Q4 Loss Narrows on Lower Expenses
Teladoc Health, Inc. TDOC incurred a fourth-quarter 2023 adjusted loss of 17 cents per share, narrower than the Zacks Consensus Estimate of a loss of 22 cents per share and the year-ago quarter’s figure of a loss of $23.49 per share. The figure also came narrower than the management’s estimated range of a loss of 33-23 cents per share.
Operating revenues improved 4% year over year to $660.5 million (within management’s expected range of $658-$683 million). The top line missed the consensus mark by 1.5%.
The quarterly results were aided by a growing membership base within the Integrated Care segment. A significant decline in overall expenses along with improved access fees also contributed to the upside. However, the upside was partly offset by a decline in visits.
Teladoc Health, Inc. Price, Consensus and EPS Surprise
Teladoc Health, Inc. price-consensus-eps-surprise-chart | Teladoc Health, Inc. Quote
Quarterly Operational Update
Revenues from access fees (which accounted for 87% of total quarterly revenues) amounted to $573.9 million, which advanced 4% year over year in the fourth quarter. However, the metric fell short of the Zacks Consensus Estimate of $590 million and our estimate of $589.8 million.
Other revenues of $86.6 million grew 3% year over year and outpaced the consensus mark of $83 million and our estimate of $82.8 million.
On a geographical basis, revenues from the United States increased 2% year over year to $564.8 million in the quarter under review. U.S. revenues made up 86% of total revenues. However, the figure fell short of the Zacks Consensus Estimate of $581 million and our estimate of $580.7 million. Teladoc Health generated international revenues of $95.8 million, which advanced 15% year over year and surpassed the consensus mark of $92 million and our estimate of $91.9 million.
Adjusted EBITDA of $114.4 million climbed 22% year over year in the fourth quarter and remained within the management’s anticipated range of $107-$117 million. The metric beat our estimate of $111.4 million. The adjusted gross margin improved 30 basis points (bps) year over year to 70.7%.
Total expenses of TDOC declined more than six-fold year over year to $695.6 million and also came lower than our estimate of $702.6 million. The significant year-over-year decline resulted from a fall in general and administrative costs, lower restructuring expenses and a goodwill impairment cost recorded in the year-ago quarter.
Segmental Update
The Integrated Care segment’s revenues grew 8% year over year to $384.4 million in the fourth quarter but missed the Zacks Consensus Estimate of $386 million and our estimate of $387.8 million. Adjusted EBITDA was $56 million, which climbed 28% year over year and came higher than our estimate of $45.8 million. Adjusted EBITDA margin improved 233 bps year over year to 14.6%.
The BetterHelp segment recorded revenues of $276.2 million in the quarter under review, which remained flat year over year and fell short of the consensus mark of $285 million and our estimate of $284.7 million. The unit’s adjusted EBITDA rose 11% year over year to $58.5 million but missed our estimate of $65.6 million. Adjusted EBITDA margin of 21.2% improved 210 bps year over year.
Visits & Memberships
Teladoc Health witnessed total visits of 4.4 million, which fell 8% year over year in the fourth quarter and lagged the Zacks Consensus Estimate of 5 million and our estimate of 4.7 million.
U.S. Integrated Care Members were 89.6 million as of Dec 31, 2023, which improved 8% year over year and came within the management projected range of 89-90 million. The figure matched our estimate.
Financial Update (as of Dec 31, 2023)
Teladoc Health exited the fourth quarter with cash and cash equivalents of $1.1 billion, which rose 22.4% from the 2022-end level. Total assets of $4.4 billion inched up 1.1% from the figure at 2022 end.
Debt amounted to $1.5 billion, up 0.2% from the figure as of Dec 31, 2022. Total stockholders’ equity of $2.3 billion inched up 0.8% from the 2022-end level.
TDOC generated operating cash flows of $130.1 million in the fourth quarter, which surged 98.5% year over year. Free cash flows increased more than eight-fold year over year to $93.6 million. Capex was $36.5 million, which dropped 32.3% year over year in the quarter under review.
Update on Efficiency Program
Management anticipates net pre-tax expense reductions of around net $43 million in 2024 in relation to the comprehensive operational review of the business targeted at lowering costs and driving profits. Teladoc Health expects to incur pre-tax restructuring charges within $12-$16 million in 2024 as part of the efficiency program, out of which roughly $11 million is likely to occur in the first quarter of 2024.
1Q24 View
Teladoc Health projects total revenues between $630 million and $645 million. Adjusted EBITDA is estimated to lie between $52 million and $62 million. Net loss per share is anticipated to be in the band of 55-45 cents. U.S. Integrated Care Members are expected to stay within 89.5-90.5 million.
The Integrated Care segment is expected to witness year-over-year revenue growth in the range of 5-7%, while adjusted EBITDA margin is likely to remain within 10.5-12%. Meanwhile, revenues in the BetterHelp segment are forecasted to decline within 3-6% and adjusted EBITDA margin is anticipated to be between 5.5-6.5%.
2024 Outlook Unveiled
Management estimates revenues to lie between $2.635 billion and $2.735 billion, the midpoint of which indicates a 3.2% improvement from the 2023 figure of $2.602 billion.
Adjusted EBITDA is anticipated within $350-$390 million, the midpoint of which implies a 12.8% rise from the 2023 figure of $328.1 million.
Net loss per share is projected to lie between $1.10 and 80 cents in 2024. A loss of $1.34 per share was reported in 2023. U.S. Integrated Care Members are expected to remain within 90-92 million.
Revenues in the Integrated Care segment are forecasted to witness low to mid-single-digit growth on a year-over-year basis, while the BetterHelp unit is expected to record flat to low-single-digit growth.
Adjusted EBITDA margin in the Integrated Care segment is estimated to expand in the range of 150-250 bps year over year in 2024, while it is expected to remain flat or witness a 50-bps increase or decrease from the 2023 reported figure.
Free cash flows are anticipated within $210-$240 million.
Three-Year View
Teladoc Health anticipates annual consolidated revenues to grow in the low to mid-single-digit. The metric is estimated to record increases in mid-single-digit and low single-digit, respectively, for the Integrated Care and BetterHelp units. Margin expansion is likely to witness an annual increase of 50-100 bps. Meanwhile, management targets to achieve an adjusted EBITDA of a minimum of $425 million in 2025, considering the cost actions related to the efficiency program.
Zacks Rank
Teladoc Health currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported fourth-quarter 2023 results so far, the bottom-line results of Tenet Healthcare Corporation THC, Encompass Health Corporation EHC and The Ensign Group, Inc. ENSG beat the respective Zacks Consensus Estimate.
Tenet Healthcare reported fourth-quarter 2023 adjusted earnings per share (EPS) of $2.68, which beat the Zacks Consensus Estimate by 69.6% and surpassed management’s expectations. The bottom line jumped 36.7% year over year. Net operating revenues of THC amounted to $5.4 billion, which improved 7.8% year over year in the quarter under review. The top line outpaced the consensus mark by 2.2%.
Adjusted net income from continuing operations of $283 million rose 32.9% year over year. Adjusted EBITDA increased 12.8% year over year to more than $1 billion. The Hospital Operations and Services segment’s net operating revenues rose 6% year over year to $4.3 billion in the fourth quarter. Higher adjusted admissions, improved pricing yield and a favorable payer mix contributed to the unit’s results. The Ambulatory Care unit reported net operating revenues of $1.1 billion, which climbed 15.4% year over year.
Encompass Health’s fourth-quarter 2023 adjusted EPS of 95 cents outpaced the Zacks Consensus Estimate by 14.5%. The bottom line rose 8% year over year. Net operating revenues amounted to $1.2 billion, which advanced 9.6% year over year in the quarter under review. The top line beat the consensus mark by a whisker.
EHC’s net patient revenue per discharge inched up 0.9% year over year in the fourth quarter. Total discharges of 59.2 million improved 8.3% year over year. Net and comprehensive income of $119.1 million grew 1.4% year over year in the quarter under review. Adjusted EBITDA advanced 9.6% year over year to $255 million, which beat our estimate of $234.5 million. EHC added five beds to its existing hospitals in the quarter under review.
Ensign Group reported a fourth-quarter 2023 adjusted EPS of $1.28, which beat the Zacks Consensus Estimate by a whisker. The bottom line advanced 16.4% year over year. Operating revenues of $980.4 million improved 21.1% year over year in the quarter under review. The top line outpaced the consensus mark by a whisker. Adjusted net income grew 17.5% year over year to $73.7 million in the fourth quarter.
Same-store occupancy improved 240 bps year over year while transitioning occupancy expanded 150 bps year over year. The Skilled Services unit’s revenues rose 21% year over year to $940.8 million in the fourth quarter. Segment income of $116.8 million improved 9.7% year over year. Skilled nursing and campus operations of the segment totaled 259 and 27, respectively, at the fourth-quarter end. Rental revenues amounted to $21.9 million, which grew 12.7% year over year.
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