Editor’s note: This column is part of our Best Stocks for 2019 contest. Jason Moser’s pick for the contest is Teladoc Health (NYSE:TDOC).
TDOC stock’s second-quarter results showed us the business remains on track. There were a couple of leadership additions with Mala Murthy coming on as CFO and David Sides as COO. Murthy comes over from American Express (NYSE:AXP) and Sides has a rich history in the healthcare sector including 17 years at Cerner (NASDAQ:CERN).
TDOC’s revenue for the quarter came in just over $130 million –representing 24% organic growth.
Visits of 908,000 represented organic growth of 46% with utilization (total U.S. visits divided by paid U.S. membership) up 100 basis points to 9.1%. The subscription to visit revenue mix remains 85% to 15% which we like to see. U.S. paid members are now at 26.8 million, with visit fee only at 9.7 million.
The 2019 selling season is going well. RFP (request for proposal) volume is accelerating with multi-product volume about four times greater than it was just a year ago and requests for the full suite of offerings up 75% from a year ago. The balance sheet remains in good shape with debt staggered out and close to $500 million in cash and equivalents. Management continues to expect the business to reach positive operating cash flow in 2019.
Medicare Advantage will be a nice catalyst in the coming years as it will open them up to an opportunity as large as 20 million additional members.
It also sounds like the CVS (NYSE:CVS) partnership continues to develop nicely. There was plenty of positive language on the earnings call regarding the relationship building with CVS and Aetna. Minute Clinics have expanded to 8 additional states, and the Aetna acquisition has stoked the HealthHub concept which is essentially geared to offer a broader range of health care services, new product categories, digital and on-demand health tools, trusted advice and personalized care. In fact CVS plans to have 1,500 HealthHUB locations operating by the end of 2021.
All things considered investors should be happy with how things are developing. As of this writing, TDOC stock is in second place for the Best Stocks contest, up 32% year-to-date.
Can Teladoc bypass Lululemon (NASDAQ:LULU) and win the whole thing? We have 3 months left to find out.
As of this writing, Jason Moser, a senior analyst with The Motley Fool, held shares of TDOC.
