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Investing.com -- Shares of Teladoc Health Inc (NYSE: NYSE:TDOC) climbed 6% after Citron Research, led by notable short seller Andrew Left, highlighted the company’s potential in a recent report. Citron’s endorsement described Teladoc as an "Under-the-Radar AI Play," praising its recent acquisition of Catapult Health and its effective use of technology to enhance profitability and expand margins.
Citron’s analysis pointed out that while the market has been treating Teladoc as a mere remnant of the pandemic era, the company has been transforming into a "cash-generating machine." The report emphasized Teladoc’s strategic investments in technology, particularly artificial intelligence, to streamline operations, which has led to improved healthcare services and increased operational efficiency. Citron underscored the company’s shift from focusing on telemedicine growth to prioritizing profitability and high-margin business operations.
The report also noted Teladoc’s significant investments in research and development, with $400 million earmarked for 2024, aimed at advancing virtual care. Citron’s bullish stance was further supported by Teladoc’s financials, which showed $79 million in free cash flow for the third quarter and $113 million year-to-date (YTD). Additionally, the company reported a 22% increase in EBITDA year-over-year (YoY), reflecting its growing operational efficiency.
Teladoc’s expanding membership base, now exceeding 90 million, was highlighted as a competitive advantage that startups in the space cannot easily match. Citron suggested that Teladoc’s business model would attract the attention of major companies, hinting at the potential interest from entities like Amazon (NASDAQ:AMZN) or CVS.
The report also touched upon the evolving legislative landscape in the United States, which is expected to further entrench telehealth and drug access, solidifying virtual care as a fixture in the healthcare industry.
The positive assessment by Citron Research comes at a time when Teladoc is working to redefine its market position and investor expectations. While the market has yet to fully acknowledge the company’s strategic pivot, Citron’s outlook suggests that once it does, Teladoc’s stock could experience a significant re-rating.
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