Teladoc Health (TDOC -1.52%), the leader in virtual healthcare, is slated to report its first-quarter 2021 results after the market close on Wednesday, April 28.
Investors will probably largely be approaching the report with cautious optimism. On the positive side, the company's revenue has been growing rapidly, fueled by the COVID-19 pandemic. Consumers have flocked to methods of consulting remotely with healthcare providers in order to stay safe during the crisis, and most folks seem to love the convenience aspect. Moreover, many investors are enthused about Teladoc's acquisition of digital health-tools specialist Livongo Health, which closed on Oct. 30, 2020.
On the other hand, some investors are concerned about the company's ability to keep growing at a brisk rate in a post-pandemic world. A related concern is competition heating up. Most notably, Amazon (AMZN -2.56%) recently announced that it will be expanding its Amazon Care telehealth service to its employees throughout the country this summer and has also begun making it available to other companies based on geographic location.
While Teladoc has a strong lead in the virtual healthcare market, Amazon should never be underestimated. That said, there should be room for a few dominant players in the market. Indeed, popular stock-picker Cathie Wood's moves suggest she agrees with that take. Following Teladoc stock's drop in March on the Amazon news, she increased her holdings of the stock across several of her ARK Invest exchange-traded funds (ETFs). Teladoc stock is now the ARK Innovation ETF's second-largest holding, accounting for 6.05% of the fund, as of April 26. Moreover, Teladoc is currently also the second-largest holding across the entire ARK fund family, behind only Tesla.
In 2021, Teladoc stock is down 5% (though it's taken a wild ride, as you'll see in the stock chart below) through April 26, while the broader market has returned 12%. In 2020, the stock gained 139%, making it one of the year's top performing healthcare stocks in the large-cap category (market cap of at least $10 billion). The S&P 500 index returned 18.4% last year.
Here's what to watch when Teladoc reports.
Image source: Getty Images.
Key numbers
| Metric | Q1 2020 Result | Teladoc's Q1 2021 Guidance | Teladoc's Projected Change (YOY) | Wall Street's Q1 2021 Consensus Estimate | Wall Street's Projected Change (YOY) |
|---|---|---|---|---|---|
|
Revenue |
$180.8 million |
$445 million to $455 million |
146% to 152% |
$451.9 million |
150% |
|
Adjusted earnings per share (EPS) |
($0.40) |
N/A |
N/A |
($0.62) |
Loss expected to widen by 55% |
Data sources: Teladoc Health and Yahoo! Finance. Teladoc did not provide earnings guidance. YOY = year over year.
Teladoc also guided for first-quarter total visits between 2.9 million and 3.1 million.
The upcoming quarterly report will be the first one that laps (partially) the start of the pandemic-related surge in demand for the company's services. That surge began in the latter half of March 2020, after most U.S. states and many countries issued stay-at-home orders. In other words, Teladoc will now be facing tougher year-over-year comparables.
Teladoc's Q1 revenue will benefit from the sales contributions from Livongo and InTouch Health, neither of which the company owned in the year-ago period. (InTouch is a hospital-based telemedicine company that Teladoc acquired at the start of the third quarter of last year.)
For context, in the fourth quarter of 2020, Teladoc's revenue grew 145% year over year to $383.3 million, driven by total visits jumping 139% to 3 million. So, Wall Street's Q1 2021 revenue estimate of $451.9 million represents a sequential growth expectation of 18%.
Data by YCharts.
Guidance
The stock market looks ahead, so its reaction to Teladoc's report will probably hinge more on the company's guidance (both second-quarter guidance and any changes to the full-year 2021 outlook) than on its Q1 results, relative to Wall Street's expectations.
For the second quarter, Wall Street is modeling for revenue to increase 102% year over year to $486.2 million and loss per share to widen 50% to $0.51.
For full-year 2021, here's the company's initial guidance:
- Revenue in the range of $1.95 billion to $2 billion, or year-over-year growth of 81% at the midpoint.
- Total visits of 12 million to 13 million, or growth of 13% to 23% over 2020's total visits.
