Teladoc Health (NYSE:TDOC), the global leader in virtual healthcare, reported powerful second-quarter 2020 results after the market closed on Wednesday.
Shares were down 1.5% in after-hours trading on Wednesday, as of 7:33 p.m. EDT. We can attribute the market's slight negative reaction mainly to the company's bottom-line guidance for full-year 2020 falling short of Wall Street's consensus estimate; though on the positive side, its full-year top-line outlook came in higher than analysts had expected. As for Q2, adjusted earnings came in a little lower than the consensus estimate, while revenue comfortably beat expectations.
In 2020 through Wednesday's regular trading session, shares of the healthcare stock have rocketed 161%. The S&P 500 has returned 2% over this period.
Here's an overview of Teladoc's second quarter and guidance.
Revenue soared 85%
Teladoc's sales soared 85% year over year to $241 million. Revenue easily topped the company's guidance of $215 million to $225 million. It also exceeded the $220.7 million that analysts had expected.
For context, in the first quarter, revenue grew 41% year over year. Only the last month of that quarter got a tailwind from the COVID-19 pandemic. In the fourth quarter of 2019 -- an entirely pre-pandemic period -- revenue increased 27% year over year.
Here's how revenue broke out:
Q2 2020 Revenue
|U.S. subscription fees||$152.0 million||78%|
|-- International subscription fees||$30.2 million||17%|
|Total subscription fees||$182.2 million||64%|
|-- U.S. paid visits||$39.0 million||159%|
|-- U.S. visit fee only||$19.5 million||449%|
|-- International paid visits||$347,000||(14%)|
|Total visit fees||$58.9 million||209%|
|Total revenue||$241.0 million||85%|
Total visits skyrocketed 203%
Total visits in the quarter tripled year over year to 2,755,000. Moreover, total visits soared 38% from 2.0 million in the prior quarter.
In Q1 and Q4 2019, total visits rose 92% and 44%, respectively, year over year.
U.S. paid membership surged 92%
Total U.S. paid membership surged 92% year over year (and about 20% sequentially) to 51.5 million members.
I'll reiterate what I wrote last quarter: "This huge increase bodes well for the company's long-term growth. The pandemic has greatly increased the public's awareness of telehealth, and it seems to me that folks who have access to the company's services will now be much more likely to use them -- including when the crisis is over."
The increase in U.S. visit-fee-only customers was also powerful: up 125% year over year to 21.8 million.
Loss per share narrowed 17%
Net loss narrowed 12% to $25.7 million, which translated to net loss per share narrowing 17% to $0.34. This result includes a $0.10 negative impact associated with the company's "May 2020 convertible debt offering, which includes a charge associated with a loss on extinguishment of a portion of our previously outstanding debt that was to mature in 2022."
Excluding this charge, loss per share was $0.24 -- just a tad short of the Wall Street consensus estimate of a $0.23 net loss.
2020 revenue is expected to grow 100% to 107% (and 65% to 68% organically)
Teladoc issued third-quarter guidance and updated its full-year 2020 outlook. As to 2020 guidance, the company increased its expectations for revenue and total visits, and lowered its bottom-line projection.
Guidance includes the contribution from InTouch Health, a hospital-based telemedicine company acquired by Teladoc on July 1. InTouch is expected to generate approximately $63 million in revenue in the second half of the year. Management said on the earnings call that excluding the contribution from InTouch, the company expects 2020 revenue to grow 65% to 68%.
New Guidance (Loss)
Projected Change YOY
|Q3 revenue||$275 million to $285 million||N/A||100% to 107%|
|Q3 earnings per share (EPS)||($0.35) to ($0.30)||N/A||Loss expanding 7% to 25%|
|2020 revenue||$980 million to $995 million||
$800 million to $825 million
77% to 80%
(65% to 68% organic growth)
|2020 EPS||($1.45) to ($1.36)||($1.27) to ($1.13)||Loss expanding 5% to narrowing 1%|
|2020 total visits||9.8 million to 10.3 million||
8 million to 9 million
135% to 150%
|2020 total U.S. paid members||At least 50 million||
At least 50 million
|At least 36%|
Going into the report, analysts had been modeling for a loss per share of $1.13 on revenue of $844.2 million in 2020. So the company's full-year earnings guidance fell short of the consensus estimate, though its revenue outlook surpassed expectations.
A fantastic quarter with continued strong growth expected
The future continues to look bright for Teladoc and its investors.