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Teladoc (TDOC) to Post Q4 Earnings: What's in the Cards?

Zacks Equity Research

Teladoc Health, Inc. TDOC, the global leader in virtual care, will release fourth-quarter 2019 results on Jan 26, 2020, after market close.

The Zacks Consensus Estimate stands at a loss of 32 cents per share. The company had reported loss of 39 cents in the year-ago quarter. The consensus mark for revenues is pegged at $153.79 million, indicating 25.3% increase from the year-ago period reported figure.

Factors at Play

Teladoc is likely to have witnessed higher visit fee revenue driven by increase in U.S. paid membership visits as well as individuals with visit-fee-only access in the fourth quarter. The U.S. paid membership visits include revenues from general medical visits as well as other specialty visits primarily comprised of expert medical and commercial behavioral health services. The balance of visit fee revenue is primarily comprised of the company’s visit-fee-only access.

Higher visit revenues, which are attributable to increased adoption of virtual care and benefits, are likely to have aided the company’s fourth-quarter performance.

The acquisition of Advance Medical, made last year, is likely to have benefited the company’s revenues by increasing membership in the quarter under review.

Teladoc’s Behavioral Health business is likely to have been one of the strongest drivers of visit growth in the fourth quarter. The company might have witnessed increased engagement in its business-to-business service in terms of increased number of visits.

In its Health Plan business, the company is likely to have witnessed growth in terms of new distribution and penetration of existing relationships in the to-be-reported quarter. This area continues to diversify with wins in new lines of business, population and geographies both commercial and government programs.  

Teladoc recently expanded its relationship with a major Blues plan and continued to increase penetration into its largest client's books of business, where its sales velocity is healthy and on track with expectations.

This is likely to have benefited the company’s performance in the to-be-reported quarter.

Operating expenses are likely to have increased in the fourth quarter as the company continued to gain from operating leverage.

Company’s Guidance

For full-year 2019, revenues are expected between $552 million and $553 million, and total visits are anticipated to be more than 4.1 million.
For the fourth quarter of 2019, Teldoc estimates revenues between $155 million and $156 million. It expects visits to be more than 1.2 million.

Earnings Surprise History

The company surpassed estimates in two of the four reported quarters, the positive surprise being 0.6%, on average. It missed estimates by 2.5% in one quarter and matched the same in the other quarter. This is depicted in the graph below:

What Our Model Says

Our proven model does not predict an earnings beat for Teladoc this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -2.86%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, the company carries a Zacks Rank #3.

Stocks to Consider

Here are a few stocks worth considering as these have the right combination of elements to beat on earnings in the upcoming quarterly results.

Eton Pharmaceuticals, Inc. ETON has an Earnings ESP of +17.24% and a Zacks Rank 2.

You can see the complete list of today’s Zacks #1 Rank stocks here.

AMAG Pharmaceuticals, Inc. AMAG has an Earnings ESP of +36.55% and a Zacks Rank of 3.

GenMark Diagnostics, Inc. GNMK has an Earnings ESP of +6.25% and carries a Zacks #2.

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