Capital Markets / Investor Relations in Two Minutes or Less
What Does $TDOC Teach Public Company Executives? TelaPeloton Anyone?
Digital Healthcare suffers from a scalability problem.
Most businesses do not scale and are unable to drive sustainable, scalable growth in the vertical.
Teladoc was great at scalable growth, until it saturated its user base, which is now over 90 million users.
How Do You Scale a Business?
There Are Two Ways
1. User Growth
2. Monetization Growth
How Does a Company Gain a Premium Valuation?
1. Ideally, Both Scale Levers Work Simultaneously
2. Start with User Growth and Transition to Monetization Growth
The basic idea is to build a large and sticky user base, and then transition to monetization growth by either acquisition or adding new products and services, or both.
What Is the Problem with Teladoc?
There are three primary issues facing the company.
1. Market Saturation: Company went from a high teens user growth story to single digit user growth story
2. Cost Input Problem: Doctors are expensive!
3. Failing Transition: The monetization growth story is not working viz-a-viz Livongo, et al.
Double clicking, let us look at Teladoc’s Better Help business, specifically three issues.
1. Doctors are expensive, and Therapists cost even more
2. There is a supply shortage of both
3. Discounting: 15% subscription discounts suggest a churn issue
These three issues seem to run counter to the long-term guidance management gave that Better Help will normalize over the next three years.
What Is the Solution? TelaPeloton anyone?!
Management previously overpaid for Livongo, a lower quality asset than Peloton.
Combining Teladoc with Peloton would put two complimentary assets together and likely reignite the user growth and monetization growth of the platform.
Finally, never give long-term financial guidance at the quarter!
Long term financial guidance requires a nuanced and thoughtful discussion of numerous inputs and data points that are needed to get investors to not only buy-into that guidance, but then reflect it in the stock price!
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