Dialogue Health Technologies Inc.
(CARE-T) C$16.20
Q1/F21 Preview; Strong Growth Set to Continue
Event
Q1/F21 Results: Monday, May 10, 2021, after 5:00 p.m. ET.
Conference Call: Tuesday, May 11, 2021 @ 10:00 a.m. ET (register here). Impact: NEUTRAL
Surge in growth is expected to continue. We are forecasting Q1/F21 revenue of $14.3 million (up 295% y/y, up 6% q/q) and Adj. EBITDA of ($5.0) million, slightly below consensus at $14.5 million and ($4.6) million, respectively. The very strong y/y revenue growth is being driven by the sharp pickup in demand since the start of the pandemic (we estimate organic growth of +150% y/y) and the acquisition of Optima. We are expecting its Adj. EBITDA losses to narrow going forward, aided by continued strong revenue growth, improving gross margins (particularly as more Optima customers shift to the PMPM model), and the benefits of operating leverage inherent in its business model.
Among other things, we are looking to get an update on the pipeline, the ramp with its white-labelling partners Sun Life and Canada Life, the expected launch date of its iCBT offering, and its progress on cross-selling its mental health and EAP services.
Positive read-throughs from Teladoc's Q1/F21 results and outlook. Last week, Teladoc (TDOC-N; not rated) reported better-than-expected Q1/F21 results and in- line-to-better-than-expected Q2/F21 and F2021 guidance. There were some positive takeaways for Dialogue, in our view, including Teladoc's growing pipeline and increased demand for large multi-product deals.
TELUS Health Virtual Care launched; more telehealth M&A. In addition, last week, TELUS announced the launch of TELUS Health Virtual Care, which is its merged Akira/EQ Care B2B telehealth platform, while in the week prior, Accolade (ACCD-Q; not rated) agreed to acquire virtual care provider PlushCare for US$380 million in cash and stock.
TD Investment Conclusion
We are maintaining our C$19.00 target price, which is based on 12.5x our F2022 revenue estimate.