Teladoc stock tumbles on growing losses as telehealth giant expects deficits to continue

Teladoc stock was down nearly 8% in after-hours trading Tuesday after the telehealth giant reported wider than expected losses in the second quarter.

The company's shares fell more than 11% in opening trading Wednesday to $134 per share.

Teladoc shares have lost about 25% since the beginning of the year versus the S&P 500's gain of 17.7%, Yahoo Finance reported.

Teladoc reported a net loss of $133.8 million, or 86 cents a share for the second quarter, the company said in its second-quarter earnings call Tuesday. Wall Street’s consensus estimate called for a net loss of 53 cents a share, according to analysts polled by FactSet.

Losses more than doubled year over year from $26 million, or 34 cents a share, in the second quarter of 2020.

It's a trend that is expected to continue as Teladoc guided for a wider per-share loss for the year than analysts forecast.

The company expects third-quarter revenue between $510 million and $520 million, and a net loss between 78 cents a share and 68 cents a share. For the full year, the company guided for revenue between $2 billion and $2.025 billion in revenue, alongside a per-share loss between $3.60 and $3.35. The analysts surveyed by FactSet expect a loss of $2.84 a share for the year.

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The wider losses were due to expenses related to the large-scale acquisition of Livongo and InTouch Health. "The larger net loss was primarily attributable to increased stock-based compensation," Chief Financial Officer Mala Murthy said during the company's second-quarter earnings call Tuesday.

The company saw continued improvement with its adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, which came in at $67 million for the quarter compared to $26 million a year ago and ahead of consensus estimates at $62.9 million, according to FactSet.

"Our move back to profitability, as last year we got to EBITDA positive, so we'll back there in the not-too-distant future," Teladoc Chief Operating Officer David Sides told Fierce Healthcare in an interview.

Sides also noted that the company continues to be cash-flow positive.

Despite the losses, Teladoc was bullish on its second-quarter performance. Sales grew 109% year over year to $503 million from $241 million a year ago. That was ahead of Wall Street analysts' projection for $501 million. That performance is driving the company's 2021 revenue outlook increase to between $2 billion and $2.025 billion.

Excluding revenue from acquisitions, the company saw organic revenue growth of 41%, Jason Gorevic, Teladoc chief executive officer, said during the earnings call.

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Total second-quarter telehealth visits topped 3.5 million, up 28% higher than the second quarter in 2020 in the first wave of the COVID-19 pandemic. During the second quarter of 2020, Teladoc saw 2.7 million visits.

"Teladoc Health delivered a strong second quarter, marked by exciting new client wins, product launches, and tremendous progress on our quest to be the category-defining provider of whole person virtual care,” Gorevic said in a statement. “We have solid momentum heading into the second half as the market embraces the unified care experience that only Teladoc Health has the breadth and scale to achieve.” 

Membership in the Livongo chronic care suite of products grew 45% over the prior year to 715,000 members, Gorevic said.

Out of its $503 million quarterly revenue, revenue from subscription access fees came to $434 million, up 138% from the prior year's quarter, while total visit-fee revenue increased 1% to $59 million.

U.S. paid membership inched up slightly by 500,000 members to 52 million members in the quarter.

During the earnings call, Gorevic was bullish on the company's new capabilities due to the Livongo integration and new provider and payer partnerships.

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Teladoc signed a significant new agreement with Health Care Service Corporation, the fifth-largest insurer, to provide Teladoc Health’s suite of whole-person chronic care solutions.

The company also launched its first Teladoc-Livongo integrated product, called myStrength Complete, an integrated mental health service that combines app-based tools and coaching expertise with Teladoc’s therapists and psychiatrists.

The company also is seeing increased uptake of its virtual primary care program, called Primary360. "We have signed a significant Primary360 contract with a national payer and are in late-stage discussions with other health plans," Gorevic said.

For the full year, the company forecasts sales of $2 billion to $2.025 billion. Its net loss outlook is $3.60 a share to $3.35 a share. It also expects total visits between 13.5 million and 14 million, with U.S. paid memberships ranging from 52 million to 54 million members.