In a Nov. 1 research note, Ryan Daniels, a William Blair analyst, reported that Teladoc Health Inc.'s (TDOC:NYSE) Q3/18 results reflect the "positive prerelease" and are "largely in line with consensus expectations." Teladoc is a provider of virtual health services in the U.S.
Daniels added, "We continue to view Teladoc as a strong small-cap growth investment, as we believe the telehealth industry is set for material growth over the coming years."
The analyst presented and commented on the company's quarterly figures.
Q3/18 revenue grew 62% over the prior year to $111 million, and Q3/18 adjusted EBITDA came in at $6.3 million. Both numbers beat consensus' estimates of $109.9 million and $6.1 million, respectively.
Contributing to Q3/18 revenue were $22.7 million in sales from the Advance Medical acquisition, fully under Teladoc's ownership during the quarter. The integration of that company into Teladoc "appears to be off to a solid start, with management already seeing strong client interest from both new and existing accounts," indicated Daniels.
As or sales, Teladoc's "pipeline remains robust," Daniels highlighted. Management increased full-year 2018 sales guidance to $414–416 million from $409–$412 million. They, however, left the projected adjusted EBITDA unchanged, at $12–14 million.
Regarding operational figures, Teladoc ended Q3/18 with 22.6 million U.S. paid members, an 18% increase since Q3/17. This led to a 60% jump in subscription access fee revenue, to $96.6 million, and a year-over-year (YOY) bump up in the average monthly per-member fee, to $1.08 from $1.06.
Visits in Q3/18 totaled about 641,000, reflecting a 110% YOY increase.
Teladoc ended Q3/18 with about $472 million in cash, a strong position for making further strategic acquisitions. Debt at the quarter end was about $562 million.
William Blair has an Outperform stock rating on Teladoc. "Shares currently trade at about 9 times our 2019 sales target—an expensive multiple,but an appropriate one, in our view, given the company's robust growth rate and large market potential," Daniels noted. Teladoc is currently trading at around $55.12 per share.[NLINSERT]
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Disclosures from William Blair, Teladoc Health Inc., Nov. 1, 2018:
William Blair or an affiliate was a manager or co-manager of a public offering of equity securities for Teladoc Health, Inc. within the prior 12 months.
William Blair or an affiliate is a market maker in the security of Teladoc Health, Inc. William Blair or an affiliate expects to receive or intends to seek compensation for investment banking services from Teladoc Health, Inc. or an affiliate within the next three months.
William Blair or an affiliate received compensation for investment banking services or non-investment-banking services from Teladoc Health, Inc. within the last 12 months.Teladoc Health, Inc. is or was, within the last 12 months, an investment banking client of William Blair & Company and/or one or more of its affiliates.
Officers and employees of William Blair or its affiliates (other than research analysts) may have a financial interest in the securities of Teladoc Health, Inc.
Ryan Daniels attests that 1) all of the views expressed in this research report accurately reflect his/her personal views about any and all of the securities and companies covered by this report, and 2) no part of his/her compensation was, is, or will be related, directly or indirectly, to the specific recommendations or views expressed by him/her in this report. We seek to update our research as appropriate. Other than certain periodical industry reports, the majority of reports are published at irregular intervals as deemed appropriate by the research analyst.