Teladoc Health (TDOC) experienced a decline in stock value following the announcement of lower-than-expected revenue and a weak financial forecast.
Revenue Falls Short of Expectations
During the third quarter, Teladoc reported $660.2 million in revenue, which fell short of Wall Street's estimate of $663.7 million, according to FactSet data. However, the company managed to surpass earnings estimates by reporting a loss of 35 cents per share, one cent better than expected.
Uncertain Financial Outlook
Teladoc's financial forecasts for the fourth quarter are more nuanced. The company anticipates reporting revenue between $658 million and $683 million, with a projected loss ranging from 23 cents to 33 cents per share. Analysts were predicting higher revenue of $687.2 million and a loss of 18 cents per share.
For the full year, Teladoc expects revenue to range from $2.6 billion to $2.625 billion, compared to the previous range of $2.6 billion to $2.675 billion. Adjusted earnings before interest, tax, depreciation, and amortization are now projected to be between $320 million and $330 million, up from the previous estimate of $300 million to $325 million.
Analysts Offer Insight
Analysts from Needham, led by Ryan MacDonald, expressed their interest in Teladoc's prioritization of profitability over revenue. However, they noted that they require more specific information regarding the magnitude and timing of these changes before making any recommendations.
Guggenheim analysts Jack Wallace and Mitchell Ostrovsky, who rate Teladoc shares as Neutral, also commented on the earnings report. They acknowledged that due to the post-COVID hyper-growth stage, Teladoc cannot sustain its previous growth rates. They stated that the company is taking necessary steps to adapt its organizational structure to better align with the current market conditions.
The analysts further highlighted the importance of striking a balance between growth and expanding profit margins, particularly for BetterHelp, Teladoc's direct-to-consumer mental health service, where growth is closely tied to advertising spend.
Teladoc's Performance in 2021
Teladoc shares have experienced a 23% decline in value throughout the year.
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