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Teladoc (TDOC) December Business Reveals Outperformance

Zacks Equity Research

Teladoc Inc. TDOC, the first and the largest telehealth company, disclosed that in the month of December it crossed more than two million patient visits. This increase in traffic was attributed to higher utilization among existing and new members, along with expanded clinical services.

The 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 in the range of 915,000 to 930,000 for 2016 and 273,000 to 288,000 for the fourth quarter.


The company’s consistent business growth is also evident from its share price movement which is better than the Zacks categorized Medical Services industry. In 2016, the company lost 8.13%, which is lower than the sector’s loss of 13.3% during the same time frame. The share price decline was due to investors' weariness over net losses generated by the company. Yet the stock performed better than the sector. This throws hints of optimism over the stock’s ability to turn to profits very soon.

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 attributes 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 #2 (Buy). Some other stocks carrying the same rank in the same space are Quintiles IMS Holdings, Inc. Q, INC Research Holdings, Inc. INCR and PRA Health Sciences, Inc. PRAH. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quintiles beat expectations in three out of the last four quarters, with an average beat of 2.57%.

INC Research Holdings beat expectations in three out of the last four quarters, with an average beat of 8.21%.

PRA Health beat expectations in three out of the last four quarters, with an average beat of 7.48%.

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