Teladoc (TDOC) is among the worst-performing stocks since the COVID-19 pandemic drove the valuations of telehealth companies significantly higher. Valued at $1.66 billion by market cap, Teladoc stock went public in July 2015, and closed its trading debut at $28. It then touched an all-time high of $308 in February 2021, and has since lost about 97% of its market value.
While the broader markets have continued to rally in 2024, Teladoc is down 55.8% for the year. However, it remains a holding in Cathie Wood’s flagship ARK Innovation Fund (ARKK).
Teladoc is the fund’s 26th largest holding, and accounts for just 0.26% of the ETF by weight. However, Wood has held the stock since 2017, and remains bullish on the telehealth giant. Let’s see if this Cathie Wood stock is an undervalued AI play in July 2024.
Is Teladoc an AI Play?
Shares of Teladoc gained momentum last week after the company presented data on how AI-based modeling can help patients control their blood sugar. According to Teladoc, patients identified with uncontrolled diabetes were three times as likely to engage with the company’s diabetes management program when targeted with push notifications on smartphones. Plus, program members who received a weekly email suggesting personalized next-best actions were 50% more likely to meet with a health coach.
Basically, Teladoc illustrated how its predictive modeling capabilities are helping members with type 2 diabetes control their blood sugar by participating in its diabetes management program.
“Teladoc Health has a long-standing history of successfully using data to improve health outcomes for our members, and new applications of AI are helping us accelerate our impact,” said Sal Shafiq, the company's chief data and analytics officer. “Our ability to use data to empower members in the moment is crucial, but the true power lies in our ability to predict health risks and make prevention a reality.”
Teladoc’s previous research study demonstrated that AI can proactively identify a person at risk for uncontrolled outcomes more than a year in advance. The company believes that AI’s ability to forecast the early detection and management of diabetes should allow for timely, personalized interventions to avoid complications, improve outcomes, and control costs.
How Did Teladoc Perform in Q1 of 2024?
In Q1 of 2024, Teladoc reported revenue of $646.1 million, up 3% year over year. While adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose 20% to $63.1 million, its net losses totaled $82 million, or $0.49 per share.
Teladoc’s access fees revenue grew 1% to $557.2 million, and “other” revenue rose by 14% to $89 million. U.S. sales climbed 1% to $547.6 million, and international sales rose by 13% to $98.5 million.
Q1 operating cash flow totaled $8.9 million, and Teladoc spent $35.5 million in capital expenditures in Q1, which means its free cash outflow was $26.6 million - improved from a free cash outflow of $32.5 million in the year-ago period.
The company ended Q1 with 90 million virtual care members, making it among the largest telehealth companies in the world. But its consistent losses make TDOC stock a high-risk bet today.
Out of the 24 analysts covering TDOC stock, five recommend “strong buy,” one recommends “moderate buy,” and 18 recommend “hold,” for an overall consensus of “moderate buy.”
The average 12-month target price for TDOC stock is $16.82, indicating an upside potential of over 78% from current levels.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
