(Source – Capital.com)
Teladoc Health Shares, renowned for its BetterHelp therapy platform, took a nosedive in after-hours trading on Tuesday following the release of its largely pessimistic forecast for the upcoming months. The telehealth provider warned investors that the virtual healthcare services market is becoming oversaturated, sparking concerns among analysts and shareholders alike.
In its earnings report, Teladoc (TDOC) projected first-quarter sales between $630 million and $645 million, falling short of FactSet analyst estimates of $673 million. Additionally, the company anticipates a loss of 45 to 55 cents per share during the period, worse than the expected loss of 41 cents per share.
CEO Acknowledges Market Saturation, Signals Shift in Growth Expectations
For the full year, Teladoc Health Shares forecasted sales ranging from $2.64 billion to $2.74 billion, below analyst projections of $2.77 billion. The per-share loss for the year is predicted to be between 80 cents and $1.10, narrower than expectations of $1.20 per share.
The disappointing outlook sent Teladoc Health shares tumbling by 18% in after-hours trading. While the company experienced a surge in stock value during the pandemic as lockdown measures led to increased online interactions, its fortunes have since reversed. Teladoc is now striving to cut costs and enhance profitability amidst market challenges.
Teladoc’s Chief Executive Officer, Jason Gorevic, addressed the market saturation issue during the company’s earnings call, highlighting that most U.S. healthcare consumers already have access to virtual urgent care. He noted that the market is predominantly a replacement market at this stage.
Teladoc Health Shares Disappointing Earnings Report Spurs Concerns Over Future Sales
“We’ve consistently taken a share in this market and we expect to continue to do so,” Gorevic stated. “But it’s fairly well-penetrated and, accordingly, we anticipate revenue growth from our U.S. virtual-care products will be in the low-single digits going forward. So, think of roughly half of the integrated-care segment as stable but lower growth.”
Teladoc’s acknowledgment of market saturation and its revised growth expectations signal a strategic shift for the company as it navigates the evolving landscape of virtual healthcare services.
In the fourth quarter of 2023, TDOC reported an adjusted loss of 17 cents per share, which was narrower than both the Zacks Consensus Estimate of a loss of 22 cents per share and the loss of $23.49 per share recorded in the same quarter of the previous year. The figure also fell within the management’s estimated range of a loss of 33-23 cents per share.
Despite this, operating revenues saw a 4% year-over-year improvement, reaching $660.5 million, which fell within the management’s expected range of $658-$683 million. However, the top line fell short of the consensus mark by 1.5%.
The quarterly results were driven by a growing membership base in the Integrated Care segment, along with a significant decrease in overall expenses and improved access fees. However, these positive factors were partially offset by a decline in visits.
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