Overview
Teladoc is expensive, faces competition from brick-and-mortar practices and a growing number of online only and hybrid virtual care models. Despite this, 2Q20 was well ahead of our above consensus outlook, and they raised guidance substantially. We're staying long the positive revision cycle.
2Q20 Earnings Recap | Notes
- TDOC 2Q20 beat and raised guidance raised well ahead of consensus, even net of the acquisition of InTouch
- Expected growth rate of 30-40% in 2021 vs consensus of mid 20s
- 2020 and 2021 guidance excluding acquisition of InTouch also ahead of expectations on absolute dollar and growth rate
- EBITDA level raised but at an inline incremental margin of 12%
- 2Q20 member utilization lower than we expected but against a higher than expected membership
- Gross margin slightly better sequentially and vs expectations in 2Q20 as capacity utilization improves
- Virtual primary care (VPC) pilot began 2Q20, anticipated 1H21 launch
- VPC begins answer the question of patient preference for seeing their own doctor, survey result below
- 50% of patients do not have a primary care doctor, which dampens the impact of brick and mortar practices adding virtual capabilities
- Bookings up 70%, 2/3 multi-product vs 50% last year
- In our view, management is successfully transitioning the narrative to a post-COVID world
- Our key model assumptions (below) for member volume penetration will need to increase significantly to match the raised guidance
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