HealthTech stocks traded lower Wednesday after telehealth provider Teladoc Health (NYSE:TDOC) reported its Q4 2023 results, indicating a lower-than-expected revenue outlook for Q1 and the full year.
Before Teladoc (TDOC) hovered near a 52-week low, Baird analyst Vikram Kesavabhotla argued that the company’s shares would come under pressure as the results/ guidance extended uncertainty over the long-term health of the business.
Notable decliners include TDOC’s rival American Well (NYSE:AMWL), which exceeded Wall Street forecasts with its Q4 financials last week. Others, including Health Catalyst (HCAT), Hims & Hers Health (HIMS), Phreesia (PHR), and Ontrak (OTRK), also edged lower.
While Teladoc (TDOC) beat consensus with its earnings, its revenue for the quarter rose ~4% YoY to $660.5M, falling short of estimates as revenue from its mental health segment, BetterHelp, remained flat.
For Q1 and 2024, the company projected $630M–$645M and $2,635M–$2,735M in revenue, respectively, lower than the consensus. It also indicated low to mid-single-digit annual revenue growth as its three-year outlook.
“There is some potential that this update will allow growth expectations to sufficiently reset and pave the way for cleaner execution going forward, supported by some of the drivers still ahead (international expansion, chronic care, etc.),” Kesavabhotla wrote. Baird has a Neutral rating and a $16 target on the stock.
However, Oppenheimer retained its Outperform rating and $26 per share target, defending TDOC’s Q4 print and citing its valuation. “Overall, TDOC continues to manage through a tough operating environment, but with an attractive valuation, we remain Outperform for long-term investors,” analyst Michael Wiederhorn and the team argued.
Teladoc (TDOC) CEO Jason Gorevic shed some light on the sector headwinds during the earnings call, arguing that the U.S. telehealth market has become “fairly well penetrated.” “And accordingly, we anticipate revenue growth from our U.S. virtual care products will be in the low single digits going forward,” Gorevic added.