Teladoc Health Stock Rises after Q3 Earnings while Tech Majors Plummet

Teladoc Health (NYSE: TDOC) stock is trading sharply higher in US premarkets today after it impressed markets with its Q3 2022 earnings. The earnings season has however been quite dismal for tech companies.

Teladoc Health reported revenues of $611.4 million in the third quarter of 2022, which was 17% higher than the corresponding quarter last year. The sales were slightly ahead of the $609 million that analysts were expecting.

The company posted a per-share loss of 45 cents which was narrower than the 57 cents that analysts were expecting. In the third quarter of 2021, it posted a per-share loss of 53 cents. Teladoc Health’s adjusted EBITDA in the quarter was $51.2 million which was ahead of the $40 million that analysts were expecting.

TDOC CEO Jason Gorevic said, “Teladoc Health delivered strong third quarter results, including robust revenue growth, and adjusted EBITDA above the high end of expectations.”

He added, “During the quarter we continued to make progress against our whole person care strategy as the market evolves towards integrated virtual and digital health solutions.”

Looking at the other metrics, Teladoc Health said that average revenue per US user increased to $2.61 in the quarter—up from $2.40 in the corresponding quarter last year.

Teladoc Health Posted Better Than Expected Earnings

Along with posting better-than-expected earnings in the third quarter, Teladoc Health also impressed markets with its fourth-quarter guidance. The company expects to post revenues between $625-$640 million while analysts were expecting the metric at $636 million.

It guided for an adjusted EBITDA between $88-$98 million versus consensus estimates of $94 million. The company expects to have between 57-58 million paid members in the US by the end of 2022. In the fourth quarter, it expects total visits to be between 4.7-4.9 million.

TDOC stock is up around 10% in premarkets today. The price action is in stark contrast to other major tech companies. Yesterday, Alphabet and Microsoft plunged after their earnings release. Alphabet missed revenue estimates in the quarter as YouTube’s revenues fell YoY.

Tech Earnings Have Disappointed This Earnings Season

Microsoft posted better-than-expected earnings and sales in the September quarter but spooked markets with its guidance. However, most analysts have a buy rating on Microsoft stock and believe that the company’s long-term outlook is quite bullish.

Tesla had fallen too after the Q3 earnings release. However, the biggest disappointment came from Meta Platforms. The company’s profits almost halved in the quarter and missed analysts’ estimates.

It also said that the operating losses of its Reality Labs business would rise significantly next year. The business, which is building the metaverse, has posted losses of almost $10 billion in the first nine months of 2022 only.

While the earnings season has largely been dismal, Netflix’s performance stands out. The company posted strong earnings in the quarter even as they came amid tepid expectations.

Cathie Wood Added More Teladoc Health Stock

TDOC has been in a free fall this year and has lost almost 70% so far. It took an impairment loss of $9.5 billion in the first half of 2022. To put that in perspective, the company’s market cap is below $4.5 billion.

While several analysts turned bearish on Teladoc Health stock, Cathie Wood of ARK Invest bought more shares. She said, “Teladoc is building the information backbone, which is going to unite hospitals, doctors, insurance companies and patients over time.” We have a guide on buying stocks for beginners.

Wood’s ETFs have underperformed badly this year amid the rout in growth stocks. Wood believes that the US Fed is making a mistake by raising rates too quickly. Some other market observers also say that Fed’s rate hikes would push the US economy into a recession.

As for Teladoc Health, Big Tech’s entry into the healthcare industry is among the major long-term challenges. Amazon has especially been betting on the space, as is reflected in its One Medical acquisition.

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