Stryker shares tumble despite strong Q2 results and raised guidance
On Thursday, Needham reiterated a Hold rating on Teladoc Health Inc. (NYSE:TDOC) shares, following the company’s mixed fourth-quarter results. The stock has fallen 13.4% over the past week, though according to InvestingPro data, it maintains a "GREAT" financial health score of 3.07 out of 5. The telehealth provider’s initial outlook for the fiscal year 2025 did not meet expectations due to various challenges, including the loss of a large client, currency exchange headwinds, and delays in customer enrollments. With annual revenue of $2.59 billion and trading at an EV/EBITDA multiple of 32.76x, the company faces pressure to justify its valuation.
Teladoc’s integrated care segment is not anticipated to achieve organic growth for the fiscal year 2025. The company cited the loss of a significant client and foreign exchange headwinds as contributing factors. Additionally, the ramp-up of Chronic Care Management (CCM) enrollments and Tricare members is expected to be more heavily weighted toward the second half of 2025, which may impact growth in the near term.
In the BetterHelp division, which offers online counseling and therapy services, there was a sequential increase in average paying users during the fourth quarter. However, Teladoc is still seeking signs of stabilization in this segment. The company is hopeful that a transition to a weekly payment model and international expansion will help to slow the decline in user numbers, aiming for near-flat levels by the fourth quarter of 2025.
Despite Teladoc’s efforts to focus on achieving a sustainable balance between growth and profitability, Needham expressed that there remain too many uncertainties regarding the company’s future performance. The firm’s analyst noted that the questions surrounding Teladoc’s growth trajectory and profitability prevent a more positive stance on the stock at its current levels. InvestingPro analysis reveals a strong free cash flow yield of 18%, suggesting potential value creation opportunities. Discover more insights and 8 additional ProTips for TDOC with an InvestingPro subscription, including detailed valuation analysis and growth prospects.
In other recent news, Teladoc Inc reported its fourth-quarter 2024 earnings, revealing a revenue of $640.5 million, which slightly surpassed the forecast of $638.5 million. However, the company posted an earnings per share (EPS) of -$0.28, missing the expected -$0.23. For the full year of 2024, Teladoc’s revenue was $2.6 billion, marking a 1% decrease from 2023. The company ended the year with $1.3 billion in cash and cash equivalents. Looking ahead, Teladoc’s guidance for 2025 suggests flat to slight revenue growth, with adjusted EBITDA expected to range between $278 million and $319 million. The company is also focusing on expanding its offerings in weight management and chronic care programs. Additionally, Teladoc announced an agreement to acquire Catapult Health, which is expected to contribute to its integrated care segment. These developments come amid ongoing challenges such as medical cost inflation and demand for mental health services.
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