Teladoc Health (NYSE:TDOC) continued rewarding investors with the stock uptrend in the last quarter. And for good reason, too. The company posted strong third-quarter top-line results and raised its guidance. Markets view the multinational telemedicine and virtual healthcare supplier as both part healthcare and part technology. By utilizing artificial intelligence and analytics and licensing its platform services, this scalable company touched all-time highs recently. The stock may forge new highs if it raises its guidance yet again.
In the third quarter, Teladoc reported revenue of $138 million, up 24% from last year. Revenue growth was lifted by global subscription access fees of $119.1 million. This accounted for 86% of its total revenue. It lost 28 cents a share, which is not a concern because the company is building its sales levels and taking market share first. The company forecast Q4 revenue in the range between $149 million and $153 million.
For full-year 2019, revenue will be $546 million to $550 million. This is up from its previous guidance of $538 million to $545 million. Teladoc expects total visits topping up to 4.1 million.
Visits rose 45% from last year to 928,000. And utilization rates came in just under 8%, up 17 basis points year-over-year.
Strong Tailwinds
Teladoc benefited from the greatest population expansion in the company’s history. When over 17 million people gained access to Teladoc, it lifted total visits and revenue. More importantly, TDOC stock rose because investors expect the company to further entrench its distribution channels. Management added UnitedHealth (NYSE:UNH) to its platform. That netted 15 million commercial members and gives UNH a fully integrated virtual care offering to its customers.
Teladoc proved it can deliver on a product rollout without any project delays. Its initial launch went through without any issues. The teams at Teladoc and UNH proved they can collaborate successfully. This may lead to more collaborative projects for Teladoc in the future, further expanding its population expansion.
In the last quarter, the company saw request for proposal volumes jump 25% year-over-year. This implies product orders will continue increasing as client interest strengthens. Bookings rose around 30% and along with deal sizes increasing, Teladoc is on a positive trajectory.
Global Growth
Teladoc launched in the United Kingdom and introduced the market to its first virtual mental health service. It counted on American International Group (NYSE:AIG) for the launch. In Canada, Great-West Life added the Mental Health Navigator service. In the U.S., companies like UPS (NYSE:UPS) and Nationwide Insurance chose Teladoc to give over 100,000 employees access to medical experts. So, the Teladoc medical expert service, which is a virtual center of excellence, should improve health support for those who need it.
2020 will benefit from accelerating revenue growth, as management forecasts long-term annual revenue growth between 20% and 30%. And thanks to the customer base getting bigger annually and clients coming from a variety of global locations, TDOC stock deserves richer premiums.
Price Target And My Takeaway
Nine of the 14 analysts who cover Teladoc stock rank it as a “buy.” Their average price target is $85.07. Conversely, the cautious investor may forecast a downside scenario in which revenue growth stalls. Assume that the perpetuity growth rate is 4% and revenue growth falls to 30% annually. In this case, TDOC stock is worth $70.
For now, Teladoc investors need not expect growth slowing. The company is gaining momentum and winning bigger contract deals. This will support its historical sales growth rates, sending the stock higher.
As of this writing, Chris Lau did not hold a position in any of the aforementioned securities.
