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Tuesday, May 30, 2023

Teladoc Health Inc. (TDOC) Services are In Demand Despite Pandemic

It became clear that the services of Teladoc Health Inc. (NYSE: TDOC) remain in high demand after the acute phase of the coronavirus pandemic ended. The number of visitors continues to improve, but losses are increasing due to the recent purchase of Livingo.

During the second quarter of 2021, Teladoc Health Inc. (TDOC) platform visitors increased by 21% year-over-year. Over the same period one year earlier, the company saw an increase of 16 percent in users. There are no signs of a drop in visitors after the most stringent lockdown, as some analysts predicted.

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Meanwhile, the appeals structure has changed. The number of virtual visits related to infectious diseases has decreased, but the number of appointments related to diseases that are non-communicable has increased. More than 80% of TDOC visits were related to noncommunicable diseases in the second quarter, compared with just 50% before COVID. It indicates that Teladoc Health is becoming an important part of healthcare solutions.

Growing costs remain a concern for Teladoc Health Inc. (TDOC). On an unadjusted basis, the company lost 333 million dollars in the first half of the year, higher than the $55 million it lost in the same period last year. This loss is primarily due to the $18.5 billion acquisition of Livongo, a platform for people with chronic conditions.

Long term, this merger is beneficial for Teladoc Health since it enables it to maximize its telemedicine offerings. In the short term, this acquisition is putting the company’s profit margins under serious strain. Since the close of the Livongo deal in late October, Teladoc has incurred $780 million in compensation expenses, amortization of intangible assets, and debt repayment.

Hence, Livongo’s acquisition does not provide immediate value to shareholders. This is probably one of the reasons why Teladoc Health Inc. (TDOC) shares have declined more than 50% from 52-week highs. During the August 10 trading of TDOC shares, the price was $146.79, having fallen about 25% since the year’s beginning.

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