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Why Teladoc Health Stock Was Falling Today

By Jeremy Bowman - Apr 29, 2021 at 12:02PM

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Concerns about slowing growth may have spooked investors.

What happened

Shares of Teladoc Health (TDOC 11.43%) were sliding today after the telehealth leader posted strong revenue growth in its first-quarter earnings report but couldn't meet high expectations. The stock was an early winner in the pandemic, and it has faced increasing pressure as vaccines roll out and the stay-at-home tailwinds of the crisis fade.

As of 10:56 a.m. EDT, the stock was down 8.6%.

A woman and her child talking to a doctor on a tablet.

Image source: Teladoc Health.

So what

Teladoc posted revenue growth of 151% in the quarter to $453.7 million, aided by recent acquisitions of Livongo Health and InTouch Health, which was slightly ahead of expectations of $451.9 million. Organic revenue, which strips out the effects of acquisitions, divestitures and foreign exchange, was up 69%.

The company saw solid growth in U.S. paid memberships, which were up 20% to 51.5 million, and total visits and sessions rose 109% to 4.3 million. Access fees, essentially the price of its memberships, jumped 183% to $388.2 million, significantly outpacing growth in visit fees, its other business segment, which were up 24%.

On the bottom line, adjusted EBITDA increased from $10.7 million to $56.6 million, though that excludes $86.3 million in stock-based compensation, and on a free cash flow basis, its loss expanded from $7 million to $20 million,.

The consensus response on Wall Street was that the report was good but not great, and most analysts lowered their price targets on the healthcare stock, though the company is making progress on its goal of cross-selling products and adding new insurance carriers.

CEO Jason Gorevic said, "After a transformational year, Teladoc Health continues to show strong momentum by delivering record results across the business. Consumers are embracing our whole-person virtual care offerings, engaging with multiple products and coming to us for more of their health needs."

Now what

Guidance for the full year called for revenue of $1.97 billion to $2.02 billion, up about 82% at the midpoint and slightly above its previous guidance, but that was not enough to impress the market. The company also expects adjusted EBITDA of $255 million to $275 million, though that includes more than $300 million in share-based compensation.

The guidance also indicates only modest membership growth for the rest of the year, which could be a sign that the pandemic pulled forward new member growth. That may be one reason why the stock is down today.

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Teladoc Health, Inc. Stock Quote
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