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Teladoc (TDOC) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Teladoc Health, Inc. TDOC, the global leader in virtual care, will release first-quarter 2019 results on Apr 30, 2019, after the market closes.

The company is expected to post a loss of 44 cents per share, which is wider than the loss of 39 cents, sustained in the year-ago quarter. Revenues of $128.14 million are expected to grow 43% year over year.

In the last reported quarter, the company sustained a loss of 35 cents per share, in line with the Zacks Consensus Estimate. The same was also lower than the year-ago quarter’s loss of 50 cents per share. The decline in losses was supported by increase in revenues, partly offset by rise in expenses.

Let’s see the factors affecting Q1 results

We expect to see higher visit revenues in the first quarter of 2019, attributable to increased adoption of virtual care and benefits from the company’s diversification strategy, pursuant to which it had broadened the scope of clinical services offered.

In the recent past, the company launched Teladoc Global Care that enables multinational organizations to provide expats and travelers with a single solution for convenient and easy-to-navigate access to quality care, regardless of geographic location. This should buoy the company’s revenue from international operations. Moreover, the company has already closed meaningful cross-selling expansion contracts in 2019, in sync with the aim of selling its full suite of products around the world.

The company is constantly witnessing growth in its client roster due to the addition of new clients across multiple market segments. Its emphasis is on increasing value-add clients through product innovation that will also help to retain customers. In the first quarter, the company’s growing clients should aid the top line.

Teladoc has been banking on acquisitions to boost growth. The buyouts of Advance Medical and Best Doctors should result in membership growth thus aiding revenues.

Per management, the first quarter is typically the least profitable quarter of the year as the company realizes the expense of on-boarding millions of new members in advance of associated visit revenue. Therefore adjusted EBITDA should decline in the first quarter of 2019, compared with the fourth quarter of 2018.

Also rise in expenses primarily due by higher marketing and advertising, technology and development, and legal expenses, should compress margins.

Company’s Guidance

For the first quarter, the company expects total revenues of $126-$129 million and total adjusted EBITDA of $0-$2 million. It projects total visits between 950,000 and 1050,000. Net loss per share, based on 70.8 million weighted average shares outstanding, is expected to range from a loss of 44 cents to 46 cents per share.

Earnings Surprise History

The company boasts an attractive earnings surprise history having surpassed estimates in three of the four reported quarters with an average positive surprise of 4.4%.This is depicted in the graph below:

Teladoc, Inc. Price and EPS Surprise

Teladoc, Inc. Price and EPS Surprise | Teladoc, Inc. Quote

 

What Our Model Says

Our proven model does not conclusively show that Teladoc is likely to beat estimates in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. 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 #4 (Sell). We caution against stocks with a Zacks Ranks #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks Worth a Look

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

WellCare Health Plans, Inc. WCG has an Earnings ESP of +1% and a Zacks Rank of 3.

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

Pfizer Inc. PFE has an Earnings ESP of +0.65% and a Zacks Rank 3.

Amgen Inc. AMGN has an Earnings ESP of +0.37% and carries a Zacks #3.

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