Doctor Care Anywhere (ASX:DOC) share price jumps 6% on record quarter

It was a record-setting quarter for the telehealth company…

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The Doctor Care Anywhere Group PLC (ASX: DOC) share price is finding enthusiasm on Wednesday after releasing its third-quarter trading and activities update. The market has responded positively to the United Kingdom-based telehealth company's record-setting quarter.

At the time of writing, shares in Doctor Care Anywhere are fetching 74.5 cents apiece, an increase of 6.43%. For comparison, the S&P/ASX 200 Index (ASX: XJO) is trading 0.82% higher heading into the afternoon.

Let's peel back the wrapping on this quarterly surprise.

Why is the Doctor Care Anywhere share price surging today?

It was a solid quarter for the telehealth company. While some investors may have expected growth to slow down as a result of the UK's lockdown restrictions ending, it had the opposite effect. To briefly summarise, here are some highlights from the quarter:

  • Revenue increased 21.6% quarter on quarter to A$10.7 million
  • Number of consultations grew by 30.6% quarter on quarter to 116,800
  • Number of signups (or activated lives) reached 603,200
  • Completed the acquisition of Australian telehealth and tele-mental provider, GP2U Telehealth
  • A record 41,000 patients had their first consultation with the company
  • Net operating cash outflows of A$4.24 million compared to A$1.11 million in the prior quarter.

What happened during the quarter?

In its first quarter since UK lockdowns had been lifted, Doctor Care Anywhere witnessed a re-acceleration in growth. This is demonstrated by the significant rise in revenue compared to the prior quarter. For instance, the A$10.7 million derived in Q3 is roughly half the total revenue collected in FY20.

Due to the reopening, wait times for appointments across the UK public health system have deteriorated. This has been a positive for the company, as more patients turn to a more convenient and efficient alternative.

In September alone, 45,800 consultations were handled, with 1,900 patients completing Doctor Care's secondary care diagnostic pathway. The sudden influx in demand looks good for the Doctor Care Anywhere share price.

Illustrating the recurring nature of Doctor Care's telehealth service, more than 65% of consultations were to returning patients. The company aims to scale in response to demand in a bid to increase its pool of returning patients.

Additionally, with the company attempting to capture the increase in demand, operating margins were depressed during Q3. This was as a result of Doctor Care increasing its investment in the supply of clinicians. However, it remains confident that these decisions will eventually lead to better margins in 2022.

While the numbers appeared to be positive for revenue growth, they came at a cost. Consequently, net operating cash outflows increased to A$4.24 million from A$1.11 million in the prior quarter.

Management commentary and outlook

Commenting on the third-quarter result, Doctor Care Anywhere CEO Dr Bayju Thakar said:

We are excited by the continuing rapid growth in demand for our services. The increasing volume of consultations and diagnostic referrals completed in Q3 provides further evidence that patients, doctors and insurers are seeing the benefits of our integrated digital offering.

The convenience that our solution provides is compelling for patients. We are also demonstrating value for doctors and insurers by removing inefficiencies and reducing costs throughout the patient journey.

Regarding its outlook, the company reaffirmed its previously set guidance for FY21, which involves achieving at least 100% organic year-on-year revenue growth. Notably, the revenue growth excludes contributions from its recently acquired Australian business.

Despite these factors, the Doctor Care Anywhere share price is still down 36% over the past year.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Doctor Care Anywhere Group PLC. The Motley Fool Australia has recommended Doctor Care Anywhere Group PLC. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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