Teladoc Health, Inc. (NYSE:TDOC) stands poised for growth fueled by increasing access fees and the ongoing adoption of telehealth services. Its expanding range of products is anticipated to attract more members in the foreseeable future.
With a market capitalization of $2.6 billion, Teladoc offers virtual access to high-quality healthcare and expertise. With solid prospects, this company presents a compelling case for retention in your investment portfolio.
The Zacks Consensus Estimate for TDOC’s current-year earnings points to a 20.2% year-over-year improvement. Teladoc has surpassed earnings expectations in each of the last four quarters, with an average surprise of 16.2%. This consistent performance is illustrated in the graph below.
Previously, steep operational costs hindered TDOC’s profitability, but the situation is now improving. Total expenses are anticipated to decrease by 0.3% year over year in 2024. The company anticipates saving over $85 million through restructuring and efficiency measures. It projects adjusted EBITDA for 2024 to range between $350 million and $390 million, suggesting a 12.8% growth from 2023.
The Zacks Consensus Estimate for current-year revenues stands at $2.7 billion, indicating a 2.3% rise from the prior year. Teladoc expects total revenues to range between $2.635 billion and $2.735 billion in 2024. A projected 1.9% year-over-year increase in access fees for 2024 is expected to support top-line growth.
Overpaying for the Livongo acquisition posed a significant challenge for TDOC in recent years, resulting in substantial impairment charges. However, as various projects conclude, the company anticipates cost moderation in 2024. Margin expansion is a key focus through cost-efficiency initiatives.
Teladoc’s cash flow situation has been strengthening, with net operating cash flow surging by 84.9% year over year to $350 million in the trailing twelve-month period. Free cash flow reached $194 million, up from $17 million in the prior year. TDOC expects free cash flow to range between $210 million and $240 million in 2024, surpassing the prior year’s figure.
The Integrated Care segment is significantly contributing to Teladoc’s overall revenue performance. Chronic Care program enrollment is projected to grow, driven by successful bundled chronic care management solutions. Improved margin in the Integrated Care segment in 2023 was fueled by reduced expenses and enhanced performance-based revenues. Teladoc expects U.S. Integrated Care members to range between 90 and 92 in 2024, with this segment playing a major role in overall margin expansion over the next three years.
The BetterHelp business is expected to benefit from new member growth and stable customer acquisition costs. TDOC anticipates flat to low-single-digit revenue growth in the BetterHelp unit for 2024. With the burgeoning telehealth industry, Teladoc is well-positioned for long-term growth with its digital health interaction platforms.
Key Risks
Despite its favorable prospects, investors should monitor competition in the virtual care space, which could exert pressure on pricing.
Teladoc’s reliance on debt for growth exposes it to risks associated with high interest rates, potentially leading to increased borrowing costs.
Nevertheless, we believe that Teladoc’s systematic and strategic approach will underpin its long-term growth trajectory.
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