Teladoc Health (NYSE:TDOC) was once a pioneer in the new telemedicine industry, a virtual healthcare technology that took off during the pandemic. The company’s shares soared to roughly $295, attracting notable investors like Cathie Wood’s Ark Investment Management, the company’s largest shareholder. However, after three challenging years, the stock became a gamble. The firm has struggled to capitalize on its early advancement and has struggled with its business model and high expenses, highlighted by the recent departure of its CEO.
The shares have been down over 93% in the past three years and now trade at a significant discount. However, until a new CEO takes the reins and signs of a turnaround are evident, the stock is likely more of a value trap than a value trade. Investors would be wise to observe this one from a distance.
Teladoc Risks Losing Further Market Share
Teladoc Health is a major player in the telemedicine and virtual healthcare sector. Known for its brands Teladoc, Livongo, and BetterHelp, the company caters to a diverse clientele, including employers, health plans, hospitals, health systems, and insurance and financial service companies, as well as individual members.
In April 2024, the company’s former CEO, Jason Gorevic, resigned, triggering a leadership shift. The Board of Directors has initiated a search for a new CEO, with the current CFO, Mala Murthy, appointed as acting chief executive in the meantime.
A new leadership team at the helm could catalyze transformation and significantly boost the company’s stock price, with the U.S. telehealth market valued at $101.2 billion in 2023 and projected to grow at a CAGR of 23.4% by 2030. Teladoc represents roughly 6.16% of the market share (nearly half of what it was in 2021) and will need to shore up its flagging revenue growth or risk a further decline in its market position.
Analysis of Teledoc’s Recent Financial Results
For the first quarter of 2024, the company reported a revenue of $646.13 million, a 3% increase compared to the first quarter of 2023, and slightly surpassed analyst estimates for $637.29 million. However, the company saw a net loss of $81.9 million or -$0.49 per share in Q1 2024, a noticeable increase from the -$69.2 million or -$0.42 per share loss in Q1 2023. This net loss was more significant than analysts’ estimations, predicting a loss of -$0.46 per share.
Teladoc has issued guidance for the second quarter and anticipates revenue between $635 million and $660 million, less than consensus expectations for $662.56 million. The company also expects adjusted EBITDA in the range of $70 million to $80 million and a net loss per share between -$0.45 and -$0.35, exceeding analyst expectations of -$0.30.
In total, revenue is expected to be between $2.635 billion and $2.735 billion in 2024. The adjusted EBITDA is forecasted at $350 million to $390 million, with a net loss per share between -$1.10 and -$0.80.
What Is the Price Target for TDOC Stock?
Analysts following the company have taken a cautious stance on the stock. For example, Jefferies analyst Glen Santangelo recently lowered the price target from $16 to $14 while maintaining a Hold rating on the shares, noting that the firm continues to trend in the wrong direction.
Overall, Teladoc is rated a Hold based on the recommendations and price targets assigned by 20 analysts over the past three months. The average price target for TDOC stock is $16.72, representing a possible upside of 57.14% from current levels.
The stock has been on an extended downward trajectory since early 2021, most recently shedding 31.75% in the past 90 days. Shares trade at the bottom of their 52-week price range of $10.63-$30.41 and continue to show negative price momentum, trading below the 20-day (11.61) and 50-day (12.85) moving averages.
The stock has entered oversold territory, hitting an RSI (14) of 27.35. It trades at a significant discount to industry peers, with a P/S ratio of 0.67x compared to the Health Information Services industry average of 2.08x.
Final Analysis on TDOC
Teladoc Health, a pioneer in the telehealth virtual space, has seen turbulence in its business model, evident in its declining share price and the departure of its CEO. The change in leadership could potentially prompt a turnaround strategy that can revitalize the firm, but evidence of this is yet to surface.
The latest financial results show a modest increase in revenue but a more substantial net loss compared to the same period in the previous year, further underscoring the challenges the company is facing. While the stock trades at a significant discount, investors may want to maintain a cautious stance until clear signs of improvement in operations appear.
