Max Grigoryev
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Max Grigoryev in Fundamentality,

Teladoc: an interesting stock

Teladoc provides telehealth services via mobile devices, the Internet, video, and phone to clients and their customers. The company went public earlier this year. Its current stock price is 50% below the IPO level. After the announcement of Q3 results the company lost almost $60M in market capitalization (stock price decreased 10%).

This stock acquired all my attention today, because it increased more than 5% already and is among the top gainers. As soon as Teladoc is somewhere between healthcare and technology, I decided to take a better look at the financial statements of the company. I made the following summary for me about Teladoc's business:

  • The company has two ways of business - first is the paid membership, the second is fixed price per visit. The last one means that anybody who has any health-related questions can book the so called "visit" via Internet. The price for such visit is $40;
  • Financial metrics:
    • Revenue increased almost 80% on year-over-year basis;
    • Cost of revenue increased more than 141%, marketing and sales expenses increased 92%;
    • The fact of increased cost is even worse because Teladoc increased costs as % of revenue: cost of revenue was 19.4% of revenue as of September 2014 and became 26.2% as of September 2015. Sales and marketing expenses grew up from 47% to 50%;
    • Product development costs increased 50%, however, as % of revenue this type of costs increased just by 1.3% (from 17.05% to 18.36%);
  • Operating metrics:
    • Paid memberships increased 90% (+4.2M members);
    • As soon as paid memberships contribute around 85% to the revenue, we can calculate the ARPA. ARPA decreased almost 10% due to 2 facts: 1) paid membership accounted for 88% as of September 2014 and 85% as of September 2015; 2) too high growth rate in the number of memberships - +90% over the last year;
    • Number of visits accounted for 15% as of September 2015. This number increased more than 89% over the last year.

Teladoc received the last pre-IPO funding a year ago, in September 2014. The company received $50M funding. Teladoc made several useful acquisitions during this year - they acquired BetterHelp, AmeriDoc and Consult a Doctor. 

To summarize, Teladoc's stock seems to be very interesting for me, because the business model itself is very prospective and interesting. However, the company has too many risks at the moment. I suppose investing into this stock could be tricky, however, I think that as soon as investors will find this instrument prospective, its price will be much higher. 

Have you ever used Teladoc? What do you think about the stock?