Teladoc Health (NYSE:TDOC) is reimagining healthcare with a virtual-first business model. Last year, its platform saw supercharged growth, as socially distanced patients opted to meet with medical professionals in a virtual setting rather than in the office. However, Wall Street's enthusiasm has waned as Teladoc's membership growth has slowed, and the stock currently trades 54% below its all-time high.

In this Backstage Pass video, which aired on Oct. 1, 2021, Motley Fool contributor Trevor Jennewine discusses Teladoc, focusing on the metrics investors need to monitor when the company reports third-quarter earnings on Oct. 27.

Trevor Jennewine: Teladoc, a virtual-healthcare company. Management believes they offer a greater range of services than any other solution out there on the market, and they made a couple of news recently that I like. I'm going to talk about that in a second. But to set the backdrop, Teladoc is another one of those companies like Etsy that had a lot of business pulled forward, and investors are not so thrilled with it recently. It's actually it's been hit harder than Etsy. I'll throw my slides up here.

You can see the share price in the last year alone has just gone the opposite direction of the S&P 500. It is down quite a bit. One of the big drivers there was that in the last quarter, revenue still grew triple digits, it was 109% growth, but memberships grew just 1%. I think that spooked Wall Street, wondering how durable that virtual telemedicine is going to be as the pandemic winds down, and social distancing measures and precautions are removed and businesses start reopening, people start going back out into the world.

One thing I think was maybe overlooked a little bit is that their visits still climbed to 28% last quarter, and that came on top of a 203% growth in the previous year. It's still, kind of like Etsy is still growing its gross merchandise, Teladoc is still growing their visits even though they had just incredible growth in the previous year. I think that's positive for this company.

Looking at the third quarter, management is expecting revenue of 510 million to 520 million. That'll be up 80%. Adjusted EBITDA, $60 million to $65 million, up about 65%. Then these two numbers I think are worth really paying attention to: Memberships, they're looking for just a small 3% growth, again, 52 million to 53 million. But they are also forecasting visits growth of 27%. Again, that's coming on top of that hyper-accelerated growth that we saw last year during the heart of the pandemic. So I think that's a very positive outlook for this company.

Jason Hall: Well, those metrics, you think about the revenue growth and then you think about the U.S. memberships and then the visits and revenue so much higher, that's utilization. That's, hey, this isn't a COVID stock. That's, hey, here's the other ways that we can use this tool.

Trevor Jennewine: Exactly. Building on that idea, I'm listening for management's commentary. This company acquired Livongo Health. Livongo specializes in the management of chronic conditions like diabetes, hypertension, weight management, and mental health. Integrating that into Teladoc's platform just made it more robust, it expanded their array of services that they can offer.

Then something else that I really like that the company is doing is Primary360. So, Primary360 essentially virtualizes the primary care experience. It sets you up with a dedicated physician and a care team, and it's mental health, physical health. Instead of starting your healthcare journey by going to a physical doctor's office, your baseline is Teladoc. That's where all of your healthcare needs start, and that enables them to enroll patients in other services like the chronic care management that they got with the Livongo acquisition. I think management's growth strategy makes sense. I want to hear them give updates. Is Primary360 gaining traction? Are they adding new health systems and health plans to their customer list? How is the acquisition with Livongo going? I want to make sure that's headed in the right direction.

Free cash flow was positive briefly for this company, and then get back negative in the wake of the acquisition. I'd like to see that number trending back toward positive territory as well. But overall, I think this company is a perfect example of the hype cycle. I think people got way too excited last year, and I think they are discounting its future possibilities now. I think they are way too pessimistic right now about Teladoc's future potential.

Jason Hall: Yeah, I think you're 100% right. It remains one of my favorite businesses. I want to see how they can continue to do acquisitions that don't have to be as big as the Livongo merger was, because there are so many opportunities to continue to acquire here, If they can continue to do that well, I think it's really positive.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.