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Why Teladoc Health Stock Popped 21.5% in January

By Steve Symington – Feb 11, 2020 at 8:24AM

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The telehealth company made a big acquisition and bumped up its Q4 guidance.

What happened

Shares of Teladoc (TDOC -3.35%) climbed 21.5% in January, according to data from S&P Global Market Intelligence, after the telemedicine technology stock announced an exciting $600 million acquisition and raised its fourth-quarter outlook.

So what

Teladoc shares surged almost 10% on Jan. 13 alone when the acquisition news broke, detailing a $600 million cash-and-stock ($150 million in cash and $450 million in stock) agreement to acquire virtual care specialist InTouch Health. According to Teladoc CEO Jason Gorevic, the move "will make Teladoc Health the clear virtual care leader across every front door of healthcare, further accelerating the adoption and impact of virtual care for millions of people around the world."

InTouch already partners with over 450 hospitals and health systems encompassing more than 14,500 physician users.

Chalk board with five arrow charts and one larger green arrow in the center indicating gains

Image source: Getty Images.

Now what

The acquisition should close by the end of Teladoc's second quarter, and should bring incremental revenue to Teladoc of roughly $80 million (a figure that's up 35% year over year for InTouch).

In the meantime, Teladoc also increased its fourth-quarter guidance to call for revenue of $155 million to $156 million, up from its old range of $149 million to $153 million and well above consensus estimates at the time for sales closer to $151.7 million.

Of course, we'll be looking for more than just revenue growth when the company formally announces its fourth-quarter results on Feb. 26, 2020. But after coupling that raised guidance with the promise of Teladoc's impending acquisition, I think Teladoc investors have every right to celebrate last month's gains.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Teladoc Health. The Motley Fool has a disclosure policy.

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