Teladoc Health, Inc. (NYSE:TDOC) has released its Q3 2023 financial results, revealing an adjusted loss of 35 cents per share, surpassing the Zacks Consensus Estimate of a 37-cent loss. This marks a significant improvement from the previous year’s Q3 loss of 45 cents per share. The results also exceeded the company’s projected range, which had anticipated a loss between 40 and 50 cents per share.
The company reported operating revenues of $660.2 million, representing an 8% year-over-year increase and falling within the management’s expected range of $650-$675 million. Despite this growth, the top line fell just short of the consensus estimate.
Teladoc Health’s Q3 success can be attributed to increased access fees and solid contributions from the Integrated Care and BetterHelp segments. The expansion of the membership base within the Integrated Care unit significantly boosted the quarterly results. However, these positive factors were partially offset by a decline in visits and rising expenses, particularly related to higher advertising and marketing costs.
Q3 Operational Highlights
Access fees made up 88.2% of total quarterly revenues and increased by 8% year over year to $582.1 million, surpassing both the Zacks Consensus Estimate and our estimate.
Teladoc Health’s other revenues amounted to $78.2 million, reflecting a 10% year-over-year increase but falling short of the consensus and our estimates.
In terms of geography, revenues from the United States reached $569.3 million, accounting for 86.2% of total revenues, and grew by 7% year over year. International revenues amounted to $90.9 million, climbing 17% year over year in the quarter under review.
Adjusted EBITDA saw a substantial 73% year-over-year increase, reaching $88.8 million, surpassing the management’s projected range and exceeding our estimate. Additionally, the adjusted gross margin improved to 71.8%, up 220 basis points year over year.
Total expenses increased by 6.1% year over year, reaching $725 million, driven by higher advertising and marketing expenses, general and administrative costs, and acquisition, integration, and transformation expenses, surpassing our estimate.
Segmental Highlights
The Integrated Care segment generated $374.4 million in revenues, representing a 9% year-over-year increase, exceeding the Zacks Consensus Estimate and our estimate. The segment’s adjusted EBITDA surged by 62% year over year.
The BetterHelp segment’s revenues advanced by 8% year over year, reaching $285.8 million. However, it missed both the consensus and our estimate. The unit’s adjusted EBITDA more than doubled year over year.
Visits & Memberships
Total visits decreased by 4% year over year, reaching 4.4 million in Q3, missing our estimate.
U.S. Integrated Care Members exceeded expectations, reaching 90.2 million as of Sep 30, 2023, a 10% year-over-year improvement.
Financial Update (as of Sep 30, 2023)
Teladoc Health reported cash and cash equivalents of $1,030.5 million, a 12.2% increase from the previous year. Total assets dipped by 0.4%, reaching $4,328 million, while debt inched up 0.2% to $1,537.8 million. Total stockholders’ equity decreased by 0.6% from the previous year.
Operating cash flows in Q3 reached $105.6 million, soaring by 67.6% year over year. Free cash flows exceeded three-fold year over year, recording $68 million, with capex falling by 13% year over year to $37.6 million.
Q4 2023 & 2023 Outlook
For Q4 2023, Teladoc Health anticipates total revenues to range between $658 million and $683 million. Adjusted EBITDA is estimated to be in the range of $107-$117 million, and the net loss per share is projected to be between 23 and 33 cents. The U.S. Integrated Care Members are expected to remain within the range of 89-90 million.
The 2023 outlook has been revised, with management anticipating revenues between $2,600 million and $2,625 million, down from the prior guidance of $2,600-$2,675 million. Adjusted EBITDA is estimated to be within $320-$330 million, up from the previous outlook of $300-$325 million. Net loss per share is projected to range from $1.40 to $1.50, compared to the previous view of a net loss of $1.25-$1.60 per share. U.S. Integrated Care Members are forecasted to be between 89-90 million this year, an increase from the previous guidance of around 86 million.
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