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Teladoc November Visits Set Record: Why is Stock Suffering?

Zacks Equity Research

Teladoc Inc. TDOC, the first and the largest telehealth company disclosed that the month of November witnessed a total of 101,600 patient visits. This increase in traffic was attributed to higher utilization among existing and new members, along with expanded clinical services.

Number of visits, which generates fees and contributes to the top line, has been increasing for the past several quarters. In 2015 and 2014, patient visit grew 93% and 135% year over year, respectively. The company guided patient visit for 2016 in the range of 915,000 to 930,000.

Despite its growing business, the company’s share price has tanked 35.3% since its listing on Jul 1, 2015, significantly underperforming the Zacks categorized Medical Services industry which has declined 18.3% over the same time frame. The underperformance reflects concerns over the company’s inability to turn to profit.


Teladoc has incurred significant losses in each reporting cycle since 2013. As of Dec 31, 2015, the company had an accumulated deficit of $130.5 million. These losses and accumulated deficit reflect substantial investments made by the company to acquire new clients, build its proprietary network of healthcare providers and develop its technology platform.

The company’s prior losses, combined with its expected future losses, have had and will continue to have an adverse effect on its stockholders’ equity and working capital.  For 2016, the company expects EBITDA in the range of a loss of $64 million to a loss of $65 million; adjusted EBITDA in the range of a loss of $41 million to a loss of $42 million and net loss per share, based on 42.3 million weighted average shares outstanding, between $1.79 and $1.81. We do not expect the stock to see any respite over the near term till it turns to profit.

Coming back, Teladoc took great pride in mentioning that it was able to increase visit despite the disclosure by the Centre for Disease Control that total flu visit was below the national base line this year. The company attributed this outperformance to its member engagement initiatives, broad network of U.S. board-certified physicians, and expansion into clinical specialties, which attracted more visits.

The company foresees unprecedented market opportunity in the telehealth market which is less than 0.5% penetrated and expects continued growth in its business.

Teladoc carries a Zacks Rank #3 (Hold). Some better-ranked players are Quintiles IMS Holdings, Inc. Q, First American Financial Corporation FAF and Biocept, Inc. BIOC.

Quintiles beat expectations in three out of the last four quarters, with an average beat of 2.57%. It sports a Zacks Rank #1 (Strong Buy)

First American Financial delivered positive surprises in each of the last four quarters, with an average beat of 14.32%. It carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank  stocks here.

Biocept, with a Zacks rank #2 (Buy), delivered positive surprises in two of the last four quarters, with an average beat of 2.02%.

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