TDOC Q2 2020 Quarterly Summary

Tldr –revenue beats: Was 241mm vs 220mm expected. Earnings Miss: Was -0.34 vs -0.23 expected

“Even as we continue to battle the coronavirus in the U.S. and other hard-hit countries, we are also seeing sustained demand in areas that are no longer considered hotspots. In some states where the curve has flattened, we are still seeing twice as many patient visits as last year,” said Jason Gorevic, CEO of Teladoc Health.

Q2 yoy rev grows 85% to $241mm (was 130mm in Q2 19)

Yoy quarterly rev breakdown
U.S. subscription Fee rev 152mm vs 85mm : 78%
International subscription fees – 30mm vs 25mm: 17%
Combined: 182mm vs 11mm: 64%

Visit fee revenue
U.S. paid visits: 39mm vs 15mm: 159%
U.S. visit fee only – 19.4mm vs 3.5mm: 449%
International paid visits: 347k vs 406k: -14%

Q2 yoy visits Increase 203% to 2.8mm vs 908k

Net loss was 25.7mm in q2 20 vs 29.3mm in q2 19

Net loss per basic and diluted share was $(0.34) for the second quarter 2020 compared to $(0.41) for the second quarter 2019. The net loss per share includes a 10 cent net impact associated with our May 2020 convertible debt offering which includes a charge associated with a loss on extinguishment of a portion of our previously outstanding debt that was to mature in 2022.
Vinegar101: how do we evaluate this convertible debt offering impact? Does this mean they would have only missed their earnings estimate for this quarter by $0.01 if it weren’t for this convertible debt offering?

Adjusted gm was 62.3% vs 68% last year

Ebitda was 2.7mm vs -12.2mm q2 19

Adjusted ebitda was 26.3mm vs 6.3mm q2 19.

Forward looking:
Q3 20 revs will be 275mm-285mm, or 99%-106% growth yoy
Ebitda will be -13mm to -6mm
Adjusted ebitda will be 27m-31mm
Total u.s. membership will be 50mm members
Total visits will be 2.5mm to 2.7mm
Net loss will be -.35-.30

2021: preliminary 30-40% rev growth for 2021

Vinegar101: I’m impressed by the revenue growth - it’s now in the same peer group as CRWD and DDOG. Last quarter, revenues only grew 40%, and the quarter before that they only grew at 26%. We are witnessing massive acceleration - TDOC is in the right place at the right time. It is worth noting though they expect next year revenue growth to slow to 30%-40%. However, according to a quick google search, teladoc has beaten revenue estimates 100% of the time! So they are almost certainly setting themselves up to sandbag.

Seems like the net income miss is not a big deal - they have lost between 20mm and 30mm for roughly the past 8 quarters straight, so it is very stable and demonstrates their ability to scale the business intelligently.

I don’t fully understand why the margins dropped yoy - later in the call, they said it was due to a surge in visit growth and visit fee revenue. Maybe I misheard that? I can check once there’s a transcript. Or perhaps those are lower margin activities as compared to just plain old subscription growth. As in, if you have a membership and never visit, you are probably a very high margin customer for teladoc. But if you have a membership and actually use it, even though the company gets visit fees, it is still a lower margin than an unused subscription.

The market seems unimpressed by this quarter (stock price is basically unchanged as of this post), but you can never really tell what the market’s reaction is during after hours trading. Perhaps tomorrow it will jump up, who knows. Also worth noting is that the stock is up over 160% this year, so expectations were certainly high riding into earnings. Perhaps these results were baked in already.


I have to admit, TDOC delivered much stronger results than I expected… more importantly, their confidence with next quarter and next year is impressive…

To me, key points boiled down to (1) growth across different slivers of their businesses… and (2) their new wins / customers that will get on board over next few months / quarters…

This tells me that the growth is sustainable and management confidence is justified…

street seemed to have bogged down in the details and EPS miss… but late in the day, stock started to grow as it should have with such a strong result and projections…

I bought a small position this morning…