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Teladoc Edges Closer to Profits

By Danny Vena – Updated Feb 27, 2020 at 6:24AM

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The telemedicine and virtual health provider posted impressive Q4 results.

Expectations were already high going into Teladoc Health's (TDOC -3.54%) fourth-quarter financial report. The virtual healthcare services company had provided robust preliminary results at the J.P. Morgan Healthcare Conference last month. CEO Jason Gorevic revealed that the company exceeded both internal and external revenue expectations.

On Wednesday, Teladoc went further, delivering revenue that was even higher than it initially reported. The company generated revenue of $156.5 million, up 27% year over year, sailing past the high end of its guidance range -- which topped out at $153 million -- and beating analysts' revised estimates of $152.95 million. 

An elderly woman videoconferencing with a doctor on a laptop.

Image source: Getty Images.

The bottom line held its own surprises, as Teladoc delivered a net loss of $19 million, resulting in a loss per share of $0.26. This was a vast improvement from the loss per share of $0.35 in the prior-year quarter. For perspective, Wall Street had been expecting a per-share loss of $0.33.

The healthy report sent shares soaring more than 17% in after-hours trading.

Strong financial and operational metrics

The overall results were driven by strong growth in both the U.S. and international segments. Teladoc's subscription-access fees increased to $127 million, up 24% year over year. Fees from visits climbed at an even faster rate, to $29.5 million, up 47%.

Total office visits climbed 44% year over year to 1.24 million, exceeding Teladoc's guidance that topped out at 1.2 million, showing the continuing strength of the company's subscription-based business model. Paid memberships in the U.S. climbed to 36.7 million, up 61% year over year, while U.S. fee-only patient access soared 104% to 19.3 million.

Keeping InTouch

In mid-January, Teladoc announced that it planned to acquire InTouch Health in a deal valued at $600 million. As a leading provider of enterprise telehealth solutions, the company has software, integrated technology, and devices that made it a natural fit for Teladoc's business. InTouch is the provider of choice for more than 450 hospitals and healthcare systems, used by 14,500 physicians globally. 

Gorevic pointed out on the conference call that there was "very little overlap" between the products and services that each company provides, offering a "significant opportunity" to expand the market with Teladoc's acquisition of InTouch Health.

A healthy outlook

For the first quarter, management is forecasting revenue in a range of $169 million to $172 million, an increase of 32% year over year at the midpoint of its guidance. This was well above Wall Street's expectations of $163.88 million, or growth of about 28%. The company is also forecasting continued strong total visits between 1.4 million and 1.6 million, or year-over-year growth of 41%, at the midpoint of its guidance.

The full-year guidance was also better than expected. Teledoc is forecasting 2020 revenue in a range of $695 million to $710 million, or growth of about 27%, easily eclipsing expectations of $692 million. Total visits is also expected to continue its robust growth, growing to a range of 5.5 million to 5.9 million, up between 33% and 43%.

On the very first question on the conference call, an analyst brought up the coronavirus outbreak and the expectation that patients might be more likely to avoid healthcare facilities, resulting in increased use of telehealth services. Dr. Lewis Levy, Teladoc's chief medical officer, noted that the company has been partnering with the U.S. Centers for Disease Control and Prevention for several weeks, and Gorevic pointed out that events such as these tend to encourage patients to use telehealth services, bringing new members into the fold, though it's still too early to quantify.

Danny Vena owns shares of Teladoc Health. The Motley Fool owns shares of and recommends Teladoc Health. The Motley Fool has a disclosure policy.

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