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Is Teladoc Stock a Smart Buy After Q3 Earnings?

By Trevor Jennewine and Rachel Warren – Nov 13, 2021 at 7:45AM

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Wall Street may be underestimating this company.

Teladoc Health (TDOC 4.56%) became a household name during the pandemic, when its telemedicine platform saw widespread adoption. However, membership growth has slowed in 2021 and the stock has been pummeled, falling nearly 50% from its all-time high.

In this Backstage Pass video, which aired Oct. 27, 2021, Motley Fool contributor Rachel Warren discusses Teladoc's third-quarter earnings, and explains why she still has long-term conviction in the company. Fool contributor Brian Withers is also in this clip.

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Rachel Warren: Teladoc reported its earnings for the 3rd quarter of 2021, just a little while ago. Essentially, the company mostly beat or met expectations across all metric. Just a quick rundown here, you can see what management was forecasting revenue in the range of $510 to $520 million. Operating at a loss according to EBITA, not surprising because of the acquisitions of Lavango and InTouch Health. And then forecasting solid membership growth and visit.

Teladoc reported that its revenue grew 81% year-over-year to $522 million, which actually beat the high end of its revenue forecast for the quarter. It did so well during the three months period that management actually raised the company's full-year outlook on the lower end of the range again. Raised its guidance for the full-year.

Still operating at a loss according to EBITA, but it was a lower number than they had forecast. Profitable on an adjusted-EBITA basis and reported adjusted-EBITA of $67.4 million. The company had originally forecast (on the high end) $65 million. It beat that.

Net loss per share was lower than they had anticipated. The thing I was really looking at here, besides revenue growth, it's not surprising the company is still recording net losses. As I mentioned earlier, it may be huge acquisitions since last year that pretty much cemented the company as this full-service virtual healthcare provider, to provide every healthcare solution imaginable from primary care to specialty care. That is part of why you're still seeing these losses, although those do seem to be in some cases narrowing.

Besides revenue growth, which was stellar, the other thing was, the company is continuing to grow a paid membership base, as well as users that essentially they conduct visits on the platform, but they're not part of the paid membership base. It ended the quarter with 52.5 million paid members. A jump of 2% year-over-year. Not a huge jump. Definitely a slowdown compared to the height of the pandemic, but right within the range of the paid membership that it was forecasting.

The company actually beat it's guidance for total visits chronic platform, total visits were nearly four million during the three-month period. Which was a 37% spike from the third quarter of 2020. I was very pleased with these results.

I'm not surprised that paid membership has slowed, although the fact that the company is still processing this volume, this visits, and essentially met or beat guidance on all counts, I think is really great.

Then just a quick look here -- you can see that since the time Teladoc has been a publicly traded company, it has consistently been a market beating stock. Definitely, I felt that was a positive quarter as a shareholder. I got a little notification that Teladoc was trading down a little bit after hours. I think the market has just been really hard on this stock.

Brian Withers: That's what I was going to say, too. You have a great quarter and you're rewarded with after-hours down almost 5% -- I'm like, 81% up in revenue, and everybody thought this was a coronavirus stock? Teladoc doesn't get the love. I think in a couple of years, this is all going to be behind us and Teladoc is just going to be rocking it. This is one that I don't think the market gives it enough credit. Early in the pandemic, the market pushed it up, but now it's like, what have you done for me lately?

Rachel Warren: I'm just trying to be patient with this one, because I love the company and I think it's a great business. I'm holding on to it.

Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Teladoc Health. The Motley Fool has a disclosure policy.

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