Shares of Teladoc Health (TDOC 3.08%) collapsed over 30% this week, according to data from S&P Global Market Intelligence. The telehealth provider posted weak revenue growth, more operating losses, and bad 2024 guidance in its 2023 earnings release. Investors have soured on Teladoc stock after it boomed in 2020.
The pandemic-era favorite is now off 95% from all-time highs, meaning for every $100 invested at its share price peak, only $5 remains today.
Slowing growth, unprofitability
In the fourth quarter, Teladoc's revenue was $661 million, well below analyst estimates of $671 million. Revenue grew by just 4% in the quarter, while the company continues to lose money. In all of 2023, Teladoc had an operating loss of $250 million despite putting in multiple quarters of cost cuts.
Guidance was not there to save it, either. In the first quarter of this year, Teladoc is guiding for $630 million to $645 million in revenue, which was significantly below analyst estimates of $673 million. The company has spent billions of dollars acquiring other telehealth platforms like Livongo and BetterHelp, but has yet to gain much traction among healthcare consumers, except during the pandemic lockdowns when people were forced to search for digital solutions.
For example, in 2023 Teladoc spent close to $700 million on marketing and over $200 million on its sales staff. This only amounted to revenue growing from $2.4 billion to $2.6 billion, which is highly inefficient. Teladoc has not proven it has a suite of products that people or health insurers actually want to utilize. Or, at least, it can't run it profitably.
NYSE: TDOC
Key Data Points
If not now, when will profits materialize?
Even worse for Teladoc shareholders may have been management's three-year guidance. Management is only calling for mid-single-digit (5%) revenue growth and slight margin expansion over the next few years, meaning that operating losses are likely set to continue. Shareholders have been continually diluted, with shares outstanding up 366% over the last 10 years. This makes it incredibly difficult to generate per-share value.
Despite the stock looking cheap at a price under $15, Teladoc is generating no value for shareholders and is expected to post little growth over the next few years. For this reason, investors should stay far away from this stock right now.
