Credit Suisse https://www.credit-suisse.com highlighted key takeaways and addressed some of the key investor questions analysts fielded throughout the day from Teladoc Health’s https://www.teladochealth.com (TDOC 2021 investor day) held in New York City. Some of these debates (beyond the broader volatility in the high growth that HCIT names) pressured TDOC shares during the day (down 8%).
At the investor day, TDOC updated their LT revenue growth and annual EBITDA margin expansion targets. Specifically, TDOC sees consolidated revenue growth at a 25%-30% CAGR from 2021 through 2024.
Additionally, the company sees its annual EBITDA margin expansion in 100-150 bps range. Both of these figures were largely in line with analyst’s expectations (outlined in the Investor Day Preview Note as ~25% and 100-200 bps, respectively}.
Altogether, TDOC provided a 2024 revenue target of >$4 bin. TDOC also highlighted that their competitive advantage across clinical expertise, technology, and engagement makes them well positioned to capture a vast opportunity within the $261 bin TAM.
The 25-30% 2021-2024 CAGR outlook is comprised of 10-20% from virtual medical care (including Primary360), 30-40% from mental health (B2B & DTC), and 25%-35% from chronic care. TDOC emphasized that the majority of their 25-35% CAGR growth will be driven by more revenue per member and less so (only 1-5% per annum) by more members.
The 100-150 bps annual margin expansion (vs prior outlook of 200-300bps) takes into account the significant R&D investments TDOC is planning to make. Separately, while TDOC did not provide “official” EBITDA guidance for 2022, the 100-150 bps of annual margin expansion offset by the ~75bps headwind related to LVGO device benefit implies 2002 adjusted EBITDA margin outlook of ~$340-$350 min, slightly below our expectation of $360-$390 min.
While Credit Suisse’s revenue estimates are largely unchanged, the 2022/2023 EBITDA estimates are now $343/$474 min (prev $377/$562 min). The new TP is $207 (prev $208), 11x (unchanged) and their 2023 revenue estimate. Risks include integration challenges, pricing pressure, and increased competition.
For further information on Credit Suisse’s Investor Day Preview note, ask questions, provide feedback, or news, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.