Credit Suisse https://www.credit-suisse.com in a post quarterly conference call with Teladoc Health (TDOC) discussed key investor concerns (see our initial note for additional thoughts: (Parsing the Moving Pieces in 1Q21).
TDOC noted that Credit Suisse’s estimate for Livongo revenue (net of deferred revenue impact) of $124 min in the quarter was in the ballpark. Both 1Q21 Livongo revenue and chronic care enrollment tracked TDOC’s internal expectations.
As for InTouch Health, TDOC notes that the business has been bundled into its single “Hospital & Health Systems business”. In 1Q21, this business grew both Y/Y and Q/Q. With respect to the lack of membership upside in the quarter and the full year outlook, management notes that after the two years of strong membership additions, there was unlikely to be a huge membership upside in 2021. In fact, TDOC does not need to add a material number of members to hit their revenue targets.
Finally, on BetterHelp, TDOC notes that while the business certainly saw a benefit from COVID in the middle of 2020, patients/consumers have realized that virtual care is perfectly suited for mental health. Importantly, TDOC emphasized that they are already outperforming the initial forecast for the pro-forma company outlined in the September merger proxy for 2021.
With the recent acquisition of a telehealth company by a health plan, TDOC notes there is definitely more interest and opportunities as a direct result of that transaction. In fact, the Blue Cross Blue Shield contract win represents a competitive takeaway. TDOC is essentially not running into new competitors/entrants and simply not seeing them in the marketplace. In essence, it does not seem like they are gaining any traction at all.
Credit Suisse analysts report their 2021 & 2022 revenue estimates are now $1,998 min and $2,580 min (vs. $1,975 and $2,714 min, previously). The analysts updated estimate primarily reflects the company’s 2021 outlook and the analyst’s relatively more conservative assumptions for InTouch Health revenue contributions. Our TP is now $264 ($300 previously), 18x (unchanged), our 2022 rev estimate. Risks include integration challenges, pricing pressure, and increased competition.
For more on Teladoc Health (TDOC), go the slides titled Connecting the Dots at https://plus.credit-suisse.com/rpc4/ravDocView?docid=V7rXFj2AN-WTBd.
For more information, ask questions, provide feedback, or want to provide news, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.