Teladoc Health Inc – Anticipating losses even in FY21

Teladoc Health Inc (NYSE: TDOC) is a virtual healthcare provider, which deals in telehealth services and deliverer 24-hour on-demand support.

Investment Rationale – Avoid at USD 197.28

• From a technical standpoint, 20-day SMA (204.80) indicating a downward trend in the stock.
• Over the past three years (FY17 to FY20), EBITDA margin and net margin of the Company are in the negative zone, while the industry median reflected a positive figure.
• EBITDA loss for FY21 is anticipated to be in the range of US$110 to US$90 Million.
• The net loss per share for FY20 stood at US$5.36, compared to US$1.39 in FY19.

Risk Assessments

• The Covid-19 pandemic can adversely impact the supply chain and demand for their services.
• The foreign exchange fluctuations, loss of licenses and economic instabilities can impact the Company’s growth trajectory.

Financial Highlights for the year ended 31 December 2020 (as on 24 February 2021)

 (Source: Company Website)

• During Q4 FY20, revenue grew 145% year-on-year (yoy) since the total visits climbed 139% yoy to 3.0 million.
• Similarly, during FY20, revenue surged 98% yoy since the total visits jumped 156% yoy to 10.6 million.
• As the Company introduced a category of whole-person virtual care, it experienced rapid growth in demand.
• Notwithstanding, net losses were worsened with hefty acquisition-related costs.

Share Price Chart    

 (Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: EV/Sales (NTM) (Illustrative)

Conclusion

Although the Company experience a strong trading momentum in FY20 but ended the year in aggravated losses. Given the uncertainties of the Covid-19 pandemic and the broader economic impact, TDOC expects to report an EBITDA loss in the range of US$110 million to US$90 million in FY21. Moreover, there is a risk to demand for its services and loss of clients in the short-term. Therefore, it is prudent not to punt on this stock in the current scenario. Stock 52 week High and Low were USD 308.00 and USD 134.13, respectively.

Based on the anticipated losses, uncertain economic conditions and the valuation conducted above, we have given an “Avoid” stance on Teladoc Health Inc at the closing price of USD 197.28 (as on 22 March 2021), while we look forward to reviewing how the Company would pitch its depth and breadth of unique capabilities into the market.

American Resources Corp – Expects to drive significant value with near-term catalyst.

American Resources Corp (NASDAQ: AREC) operates coal processing and coal mining, focused on eastern Kentucky. It supplies raw materials to the infrastructure market. It is involved in the extraction, processing, and distribution of metallurgical Carbon to the steel industry.

Investment Rationale – Hold at USD 4.20

• From a technical standpoint, 14-day RSI (42.55) is supporting the upside potential in the stock.
• AREC is well-positioned as a long-term supplier of critical elements to the infrastructure industry.
• During FY20, the Company improved the balance sheet’s strength and flexibility after raising U$13 million in October 2020 by issuing 5.2 million common shares.
• Reaffirmed the revenue guidance of US$55 million to US$75 million for FY21.

Risk Assessments

• The business needs to adhere to the stringent environmental and compliance guidance, failure to adhere to those policies can have an adverse impact on output and cause legal actions as well.
• Furthermore, the unavailability of adequate working capital can impact regular revenue and cash flow. The other risks include the availability of mining licenses, the risk associated with interest rates movement and credit risk.

Recent News

22 March 2021: American Acquisition Opportunity Inc, wherein AREC has an indirect investment, closed an initial public offer of US$100,000,000.

Financial Highlights for the year ended 31 December 2020 (as on 11 March 2021)

 (Source: Company Website)

• During FY20, revenues declined significantly since mining operations were idled due to the Covid-19 disruptions.
• During Q4 FY20, net loss reduced to US$10.26 million and a loss per share reduced to US$0.35.
• The increase in cash from debt and equity led to the increase in higher assets in FY20.
• With the execution of convertible debt, there was a decrease in total liabilities.

Share Price Chart    

 (Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: EV/Sales Approach (NTM) (Illustrative)

Conclusion

During FY20, there was a substantial decline in revenues due to muted operates. Nevertheless, net loss reduced considerably. Moreover, the Company expects to have near-term catalysts to drive significant growths since it has improved the balance sheet strength. Furthermore, robust demand for steel products can spur the demand for AREC’s products as well. The Group is catalysing on its asset base and setting up a dynamic platform for a greener economy. In a nutshell, the Group has substantial assets, an innovative technological framework, and solid liquidity to take advantage of the upcoming market trends. Stock 52 week High and Low were USD 8.02 and USD 0.73, respectively.

Based on the business capabilities, industry prospects, and valuation conducted above, we have given a “Hold” stance on American Resources Corp at the closing price of USD 4.20 (as on 22 March 2021), while we look forward to reinvesting when the Company has better clarity over the outlook and guidance.

*All forecasted figures and Peer/Industry Information have been taken from Refinitiv, Thomson Reuters.

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