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Why Teladoc Health's Q1 Results Didn't Fire Up Investors

By Keith Speights - Apr 29, 2021 at 5:55AM

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A big net loss plus some questions with the company's guidance overshadowed Teladoc's strong revenue growth.

What started out as a great year for Teladoc Health (TDOC 4.88%) has quickly gone south. The telehealth services leader's shares are down 40%, with the decline stemming in part from worries about slowing growth rates.

The company announced its first-quarter results after the market closed Wednesday. Those results didn't exactly fire up investors, though, with shares sliding 5% in after-hours trading. Here are the highlights from Teladoc's Q1 update.

A healthcare provider and patient having a telehealth appointment.

Image source: Getty Images.

By the numbers

Teladoc Health reported revenue in the first quarter of $453.7 million, a 151% year-over-year jump. This result beat the consensus Wall Street revenue estimate of $451.9 million.

The company announced a Q1 net loss of $199.6 million, or $1.31 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, Teladoc posted a net loss of $29.6 million, or $0.40 per share. The average analysts' estimate projected a net loss of $0.59 in the first quarter.

However, Teladoc achieved significant improvement on another front. The virtual care leader recorded adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $56.6 million in the first quarter, up from $10.7 million in the prior-year period.

Behind the numbers

Everyone expected Teladoc's year-over-year comparisons to be really good. The COVID-19 pandemic has dramatically changed the telehealth market over the last 12 months. What's more interesting, though, is Teladoc's growth compared to the previous quarter. 

The company's revenue increased 18% sequentially. Part of this growth, though, came from Teladoc's acquisition of Livongo, which closed on Oct. 30, 2020.

Teladoc's U.S. paid membership actually decreased in the first quarter to 51.5 million from 51.8 million in the previous quarter. However, its total number of visits rose nearly 8% quarter over quarter to nearly 3.2 million. The company's utilization rate also increased to 19.6% from the fourth quarter's 17.7%.

That steeper net loss in Q1 stemmed in part from a $68 million increase in stock-based compensation expense. Teladoc also recorded amortization of acquired intangibles related to its Livongo and Intouch Health acquisitions that pulled its bottom line down by $37 million compared to the prior-year period. The company took the biggest hit, though, from an $87 million non-cash income tax charge that primarily reflected a valuation allowance on the stock compensation benefits linked to its purchase of Livongo.

Looking ahead

Teladoc expects second-quarter revenue of between $495 million and $505 million. The midpoint of that range reflects a 10% quarter-over-quarter increase. Teladoc projects full-year revenue of $1.97 billion to $2.02 billion, in line with the consensus analysts' estimate.

However, the company wasn't overly optimistic with some of its guidance. Teladoc anticipates total U.S. paid membership in Q2 of between 52 million and 53 million, not much higher than its Q1 level. For the full year, it looks for U.S. paid membership to climb no higher than 54 million. The company doesn't expect total visits to rise much in Q2, either, with a projection of between 3.2 million and 3.4 million.

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