1. Teladoc Health (TDOC) — National Labor Alliance + Cigna
Teladoc Health announced a deepening of its exclusive relationship with National Labor Alliance (NLA) — the largest alliance of labor unions and labor management coalitions in the United States. The new arrangement includes Teladoc’s full suite of products to bring whole-person care to this organization’s vast network. The deal also creates an “exclusive endorsement” to NLA’s coalition across 6 million members and all 50 states.
Cross-selling is a large part of Teladoc’s plans for long term growth. In its investor day presentation, the majority of the 25%-35% 3 year compounded annual growth rate (CAGR) that it laid out was mainly due to up-selling new services within its existing member base. Teladoc already has a 36% share of its current market according to McKinsey — but whole-person activations are poised to grow this market from $121 billion to $261 billion in the coming years. I believe it’s best-positioned to capture this opportunity.
To further highlight the impact of cross-selling, a case study from a company client with 10,000+ employees revealed that purchasing multiple products leads to Teladoc collecting $95 per member per month (PMPM). This is vs. $70 with one product — not to mention most of the revenue from a 2nd product sale flows to Teladoc’s bottom line. Breadth of services and data is how Teladoc differentiates itself in a sea of competition — this piece of news serves as another sign that this path is being met with real traction.
Cigna also dropped Livongo as a digital health tool of choice. According to a Teladoc Spokesperson, this was a matter of the company deciding “not to pay the premium for the privileged status next year” along with hundreds of other digital tools. This seems to be a matter of endorsement fees and not utility.
2. SoFi Technologies (SOFI) — Warrants Redeemed
SoFi finalized the redemption of all outstanding warrants dated October 8th, 2020 — adding gross proceeds of $95 million to its balance sheet.
Click here for my broad overview of SoFi.
3. Olo (OLO) — New Lyft Partnership
Olo announced a new partnership between its Dispatch module and Lyft to deepen the value proposition of Olo’s delivery optimization software.
The Dispatch module allows restaurant chains to field bids from all delivery service providers (DSPs) in real-time — as well as any internal options available — to automatically select the best bid based on pricing and timing. For many of Olo’s clients, Dispatch has cut reliance on 3rd party DSP’s — and so hefty take rates and consumer data fragmenting — by 50%.
Adding a massive, national driver fleet like Lyft’s merely bolsters the appeal of this product. More bids means more options and lower pricing for Olo’s clients leading to better margins and service scores. As a reminder, Olo does not actually fulfill any of these deliveries. It’s merely facilitating the process as economically as possible for its partners. This is why the company’s margins are so good.
Click here for my Olo deep dive.
4. CuriosityStream (CURI) — New Partners + Adding it to My Hot Seat
CuriosityStream announced 3 million additional subscribers via new partnerships announced with vendors in China, Europe and Latin America. This announcement brings its total subscriber count to roughly 23 million — the company will debut more languages to support the expansion.
To be candid, this was not all that encouraging to me. The 4th quarter is supposed to be the company’s best time of the year for demand. With the period’s end just weeks away, jumping from 20 million to 23 million sequentially is nothing to be proud of and it has little time to land more deals for 2021. This is not good enough. The pandemic did halt its travel and a lot of its bundled selling activity, but that should not have impacted subscription growth like it did.
Maintaining its original $71 million revenue guidance and lofty direct subscriber growth both make that less concerning. Still, a lot more of the total revenue pie is being generated via non-recurring program sales than I expected. That revenue is lower quality and diminishes the selection of CuriosityStream’s own content library.
As a result, I am placing CuriosityStream on my hot seat and pausing any adds going forward. The company needs to generate $71 million or more in 2021 sales and guide to over $120 million in 2022 sales with an improved gross margin for me to resume accumulating shares. I’d also like to see it turn EBITDA positive at some point next year as well. I have no plans to sell any shares, but will simply hold what I have until those benchmarks are cleared. If performance continues to deteriorate, I will sell.
As an investor in young, unproven, high growth disruptors — I will always have bad picks and will never bat 1.000. Thankfully, the fixed potential downside and unlimited potential upside that public equities feature make that reality perfectly fine. This is also why I never invest more than 4% of my total capital in any single position. It doesn’t take a portfolio full of future Google’s to generate life-changing wealth over decades — just a few.
It’s about how right I am when I am right about a company. For example, the return generated by holding Revolve has more than tripled the losses I’ve realized thus far with my worst 3 performing positions.
I am not ready to give up on CuriosityStream — but I am getting slightly closer to that point. As a reminder, Nanox and Tattooed Chef are also on my hot seat.
Click here for my broad overview of CuriosityStream.
5. CrowdStrike (CRWD) — Accolade
Frost & Sullivan named CrowdStrike the Asia-Pacific Endpoint Security Company of the Year for 2021.
This just serves as yet another sign of the utility and incremental efficiency that CrowdStrike generates.
6. Lemonade (LMND) — Bitcoin
Lemonade now has $1 million worth of Bitcoin on its balance sheet — or roughly 0.1% of its cash and equivalents — as part of the Metromile purchase. This was an interesting headline but not relevant to my bull thesis for the company.
Click here for my broad overview of Lemonade.