Teladoc Health (TDOC) stock crashed nearly 16% in Wednesday’s after-hours trading after reporting mixed results for the second quarter of Fiscal 2024. What’s worse, Teladoc withdrew its full-year Fiscal 2024 outlook for consolidated operations and its BetterHelp segment as well as the three-year guidance for its consolidated operations and operating segments.
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Performance of Teladoc’s Key Segments
Teladoc Health is an American telemedicine and virtual healthcare provider that offers primary care, mental health, and chronic condition management. The company’s BetterHelp segment, an online mental help counseling service, has been performing poorly in recent quarters as its paying users are declining. In Q2 2024, the segment’s average Paying Users fell 14% year-over-year to 407,000.
In contrast, Teladoc’s Integrated Care segment, which provides virtual medical services, saw its U.S. Integrated Care Members grow by 8% year-over-year to 92.4 million.
Understanding TDOC’s Q2 Results
For Q2 FY24, TDOC reported revenue of $642.4 million, which reflected a 2% year-over-year decline and missed analysts’ estimates of $649.85 million. On the other hand, the company’s adjusted loss of $0.28 per share was narrower than both the expected loss of $0.34 per share and the prior-quarter loss of $0.40 per share.
Teladoc reported a GAAP loss of $4.92 per share due to a goodwill impairment charge of $790 million or $4.64 per share. The non-cash impairment charge was related to the changes in estimates of future cash flows from the BetterHelp segment.
Teladoc’s Integrated Care segment posted a 5% year-over-year increase in revenue, while the BetterHelp segment recorded a 9% year-over-year decline in its top line. Moreover, the adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of the Integrated Care segment jumped 69% year-over-year, while BetterHelp’s profitability declined 26%.
Teladoc’s Future in Jeopardy
Teladoc remains under immense pressure as its BetterHelp division continues to underperform, dragging down the entire company’s performance and share price value. Year-to-date, TDOC shares have lost over 56%, with the company facing multiple lawsuits for allegedly misleading shareholders.
To avert the possibility of over-projecting and failing investors, Teladoc withdrew its previously announced financial outlook for consolidated operations and the BetterHelp segment for FY24. At the same time, the company withdrew its three-year guidance for consolidated operations and both operating segments as provided on April 25, 2024.
Meanwhile, Teladoc provided forecasts for the Integrated Care unit based on its best assumptions as of today. For Q3 FY24, the unit’s year-over-year revenue growth is expected between -1% and 2%. The U.S. Integrated Care Members (at the end of Q3) are forecasted in the range of 92.5 to 93.5 million.
For FY24, the Integrated Care unit is projected to show revenue growth in the low-single digits to mid-single digits compared to FY23. The company expects U.S. Integrated Care Members to be between 92.5 and 94.0 million for the full year.
Is Teladoc a Buy, Sell, or Hold?
Wall Street is divided on Teladoc stock’s trajectory owing to several headwinds. On TipRanks, TDOC stock has a Moderate Buy consensus rating based on five Buys and 14 Hold ratings. However, most of these ratings were given before the Q2 print and are subject to change. Also, the average Teladoc Health price target of $16.28 implies 72.6% upside potential from current level. Shares have plunged 66% in the past year.
