Teladoc Sinks In Pre-Market Despite Strong Top Line Trends

Shares in Teladoc (TDOC) are sinking 4.4% in Thursday’s pre-market trading despite the telehealth company reporting a solid top and bottom line beat.

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Specifically, Q3 Non-GAAP EPS of -$0.13 beat consensus by $0.18. Meanwhile revenue of $288.81M more than doubled year-over-year (Y/Y), topping Street estimates by $6.64M, with non-GAAP EBITDA of $39.5M ( up338.9%). However GAAP EPS of -$0.43 missed Street expectations by $0.11.

“The revenue upside was driven by both higher visits (2.8M vs. guidance 2.5-2.7M) and higher PMPMs [per-member, per-month] ($1.18 vs. $1.02 in 2Q), and EBITDA upside from the higher revenue coupled with a $4-5M shift of advertising expenditures from 3Q into 4Q” explained RBC’s Sean Dodge. He has a buy rating on the stock and $260 price target.

TDOC also reported strong non-GAAP Gross margin of 63.7% versus consensus of 62.4% and GAAP Gross margin of 63.3%.

As for membership numbers, Total U.S. Paid Membership came in at 51.5M, up 47% Y/Y with Total Visits of 2.84M- representing incredible year-over-year growth of 206%.

“Our strong third quarter results exceeded expectations, driven by broad-based strength across the business and building on the momentum we saw in the first half of the year,” commented Jason Gorevic CEO of Teladoc. “We are seeing significant market success and consistent growth in member visits throughout all of our commercial channels.”

Looking forward, TDOC is now guiding for revenue of $294M-304M vs consensus at $282.17M, non-GAAP EBITDA of $21M-24M and loss per share of ($0.36-0.33).

That translates into a 2020 revenue guidance of $1,005M-1,015M from $980M-995M (with consensus at $991.96M) and loss per share of ($1.36-1.32), an improvement on the prior guidance of ($1.45-1.36).

“The results appear strong at first glance, driven by solid top line trends and very strong margin outperformance” cheered Oppenheimer’s Michael Wiederhorn following the results.

He has a buy rating on the stock and $250 price target (10% upside potential). “We believe Teladoc remains the best positioned pure-play telehealth company, benefiting from highly favorable industry dynamics and share-gain opportunities related to cross-selling opportunities” the analyst added. (See TDOC stock analysis on TipRanks).

Overall, TDOC shows a cautiously optimistic Moderate Buy Street consensus with 14 recent buy ratings vs 7 hold ratings. Meanwhile the average analyst price target indicates marginal upside potential lies ahead, with shares already exploding by over 170% year-to-date.