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Will Teladoc (TDOC) Show Any Improvement in Q3 Earnings?

Zacks Equity Research

Telehealth provider, Teladoc Inc. TDOC is scheduled to report third-quarter 2016 results on Oct 27 after the closing bell.

Last quarter, Teladoc beat the Zacks Consensus Estimate by 2.6%. Let’s see how things are shaping up for this announcement.

Q3 Flash Back

Teldoc – engaged in offering consumers virtual visits with physicians through voice or video – went public last July and got listed on NYSE. The company is therefore incurring heavy expenditure in the form of substantial investments made to acquire new clients, build its proprietary network of healthcare providers and develop its technology platform.

This time around, Teladoc is expected to post an operating loss on the back of huge expenses on higher advertising, sales, technology and development, general and administrative and depreciation and amortization expenses.
We, however, expect the losses to reduce as the company has started to realize leverage from the scale of its operations.

While we expect to see a surge in revenues, led by new client wins and positive trends in utilization, the increase in expenses will outshine top-line growth.

Also, the acquisition of HealthiestYou that closed in July is expected to result in higher visit and call volume.

Management expects third-quarter revenues between $32 million and $33 million; EBITDA in the range of a loss of $12 million to $13 million; adjusted EBITDA loss between $9 million and $10 million; membership of approximately 16.5 million to 17 million; total visits completed between 205,000 and 215,000; and a net loss per share based on 45.7 million weighted average shares between 35 cents and 38 cents.

Earnings Whispers

Our proven model does not conclusively show that Teladoc is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Teladoc has an Earning ESP of 0.00%. This is because the Most Accurate estimate stands at a loss of 36 cents per share, in line with the Zacks Consensus Estimate. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Teladoc carries a Zacks Rank #3 (Hold) which increases the predictive power. But a 0.00% ESP leaves surprise prediction inconclusive.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

TELADOC INC Price and EPS Surprise

TELADOC INC Price and EPS Surprise | TELADOC INC Quote

Stocks That Warrant a Look

Here are some companies from the health care sector that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:  

VCA Inc. WOOF will report third-quarter earnings results on Oct 26. The company has an Earnings ESP of +1.24% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Tenet Healthcare Corp. THC has an Earnings ESP of +26.32% and a Zacks Rank #2. The company is expected to report third-quarter earnings results on Oct 31.

Rigel Pharmaceuticals, Inc. RIGL has an Earnings ESP of +12.5% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Nov 1.

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