- Needham downgraded Teladoc Health Inc TDOC to Hold following the company's revised FY22 outlook, which now assumes the low end of their reiterated guidance, with potential for further downside.
- Teladoc maintained its previously issued FY22 revenue and adjusted EBITDA outlook.
- It expected revenue of $2.4 billion - $2.5 billion and adjusted EBITDA of $240 million - $265 million. However, based on current trends in the market, Teladoc said it now expects results to be toward the lower end of said ranges.
- Further downside stems from an elongating employer deal pipeline, implied churn in paid membership, and the elimination of 2H22 chronic condition enrollment upside, the analysts wrote.
- According to Needham, for TDOC to outperform the low end of guidance, consumer discretionary budgets must remain strong to drive excessive utilization of the DTC BetterHelp offering.
- This outcome is unlikely because of macro uncertainty, inflationary pressures, and deteriorating consumer sentiment.
- The issues could continue into FY23, pushing to the sidelines until signs of better pipeline conversion, stability in paid membership, and improvement in consumer sentiment are visible.
- Price Action: TDOC shares are down 18.9% at $35.08 during the market session on the last check Thursday.
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