I am assigning Teladoc Health, Inc. (NYSE:TDOC) a negative risk/reward rating based on the weak cash flow generation of its business model, signs of slowing demand, an elevated valuation, and the heightened execution risk of its acquisition strategy.
That said, the company deserves to be on the watchlist of all growth investors as Teladoc seeks to become the proverbial front door to the healthcare industry for consumers and organizations. If it is successful, Teladoc would position itself as the leading global healthcare delivery platform. The company would then be in an extraordinarily valuable position as consumers, organizations, and governments seek to expand access while reducing healthcare costs. The ability to leverage technological advancements to enable greater use cases would then greatly expand the company’s value proposition.
In this article, I walk through Teladoc’s financial performance to date to understand its strengths and weaknesses with the goal of creating an investment framework for the shares.
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