Teladoc Analysts React To Shocking Q1 Losses, Rising BetterHelp Costs

A brutal 12 months for Teladoc Health Inc TDOC went from bad to much worse on Thursday when the stock dropped another 43% after the company reported much larger-than-expected losses in the first quarter and slashed its 2022 guidance.

On Wednesday, Teladoc reported a whopping EPS loss of $41.58 per share, far worse than the 60-cent per-share loss analysts were expecting. The large loss was driven by a $6.6 billion noncash goodwill impairment charge.

Teladoc also reported first-quarter revenue of $565.4 million, missing consensus analyst estimates of $568.7 million. Revenue was up 25% from a year ago.

Teladoc cut its fiscal year revenue guidance from a previous range of between $2.55 billion and $2.65 billion to a new range of between $2.4 billion and $2.5 billion. Teladoc also cut its full-year EBITDA guidance from a previous range of between $18 million and $48 million to a new range of between negative $52 million and $7 million.

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Rising Competition: Bank of America analyst Allen Lutz said competition is clearly weighing on Teladoc's growth outlook.

"Privately held virtual therapy players like Cerebral have grown rapidly and are putting pressure on advertising rates, something that is unlikely to abate in the near-term," Lutz wrote.

RBC Capital Markets analyst Sean Dodge said rising BetterHelp customer acquisition costs are responsible for the guidance cut.

"We still view TDOC’s scale, breadth and depth as effective long-term competitive differentiators for its core GenMed and Chronic Care businesses," Dodge wrote.

Uncertain Outlook: Wells Fargo analyst Stephen Baxter said Teladoc's visibility is now significantly lower, leaving investors somewhat in the dark about what to expect in coming quarters.

"Most of the lower revenue guidance was attributed to direct-to-consumer mental health (BetterHelp), with TDOC experiencing lower-than-expected yield on BetterHelp marketing spend in recent weeks as a result of increased competition in paid search advertising for keywords associated with online therapy," Baxter wrote.

Needham analyst Ryan MacDonald said Teladoc's Primary360 primary care service was a bright spot in an otherwise extremely disappointing quarter.

"While TDOC is down sharply on the guidance revision, we believe its integrated approach will drive broad platform adoption as the pipeline converts," MacDonald wrote.

Ratings And Price Targets:

• Bank of America had a Neutral rating and a $36 target.
• RBC Capital Markets had an Outperform rating and a $65 target.
• Wells Fargo had an Overweight rating and a $40 target.
• Needham had a Buy rating and a $48 target.