Teladoc's (NYSE:TDOC) Q2 Earnings Results: Revenue In Line With Expectations, Stock Soars

Max Juang /
2023/07/25 4:13 pm EDT

Digital medical services platform Teladoc Health (NYSE:TDOC) reported results in line with analysts' expectations in Q2 FY2023, with revenue up 10.1% year on year to $652.4 million. The company also expects next quarter's revenue to be around $662.5 million, roughly in line with Consensus. Teladoc made a GAAP loss of $65.2 million, improving from its loss of $3.1 billion in the same quarter last year.

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Teladoc (TDOC) Q2 FY2023 Highlights:

  • Revenue: $652.4 million vs analyst estimates of $649.2 million (small beat)
  • EPS: -$0.40 vs analyst estimates of -$0.40 (small beat)
  • Revenue guidance for Q3 2023 is $662.5 million at the midpoint, roughly in line with what analysts were expecting
  • The company reconfirmed revenue guidance for the full year of $2.64 billion at the midpoint
  • Free cash flow of $64.6 million is up from -$32.5 million in the previous quarter
  • Gross Margin (GAAP): 70.8%, up from 69.2% in the same quarter last year
  • US Integrated Care Members: 85.9 million, up 5.3 million year on year

"Teladoc Health continues to set the standard for delivery of innovative, whole person virtual healthcare solutions to an ever-demanding marketplace focused on the intersection of quality and cost of care," said Jason Gorevic, chief executive officer of Teladoc Health.

Founded to help people in rural areas get online medical consultations, Teladoc Health (NYSE:TDOC) is a telemedicine platform that facilitates remote doctor’s visits.

Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission paying sellers, generating flywheel scale effects which feed back into further customer acquisition.

Sales Growth

Teladoc's revenue growth over the last three years has been incredible, averaging 61.3% annually. This quarter, Teladoc reported mediocre 10.1% year-on-year revenue growth, roughly in line with what analysts were expecting.

Teladoc Total Revenue

Guidance for the next quarter indicates Teladoc is expecting revenue to grow 8.36% year on year to $662.5 million, slowing down from the 17.2% year-on-year increase it recorded in the same quarter last year. Ahead of the earnings results, analysts covering the company were projecting sales to grow 7.59% over the next 12 months.

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Usage Growth

As an online marketplace, Teladoc generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.

Over the last two years, Teladoc's users, a key performance metric for the company, grew 7.57% annually to 85.9 million. This is decent growth for a consumer internet company.

Teladoc US Integrated Care Members

In Q2, Teladoc added 5.3 million users, translating into 6.58% year-on-year growth.

Key Takeaways from Teladoc's Q2 Results

Sporting a market capitalization of $3.82 billion, Teladoc is among smaller companies, but its more than $958.7 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.

Teladoc beat slightly on revenue and more convincingly for adjusted EBITDA. Another major positive was that the company raised full year guidance for revenue, adjusted EBITDA, and EPS. On the other hand, its decelerating revenue growth wasn't great and next quarter's revenue guidance came in slightly below Wall Street's expectations. Overall, the results were mixed but the full year guidance raise was an important positive. The stock is up 7.59% after reporting and currently trades at $24.51 per share.

So should you invest in Teladoc right now? When making that decision, it's important to consider its valuation, business qualities, and what's happened in the latest quarter. We cover this and more in our full company report, and it's free.

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The author has no position in any of the stocks mentioned in this report.