Teladoc

Teladoc

We are long-term investors here at MyWallSt and recommend companies that we believe will have consistent growth for years to come. Updates are an opportunity for us to reaffirm our stance on a company while keeping you up to date on its developments. By renewing our comments with the latest information, we ensure that investors have confidence in our selections, regardless of their start date.

One of the best-performing stocks in the MyWallSt stock list is Teladoc, the largest telehealth company in the world. Since joining the shortlist in December of 2017, it has risen more than 450%, but that doesn't mean it’s running out of steam.

2020 was a great year for Teladoc. In the wake of the pandemic, it was able to add 15 million new members, exceeding analysts’ expectations by more than double. This translated into a 150% increase in patient visits and revenue growth of 98% year-over-year. However, more impressive than these figures are the visible shifts in member behavior and the company's strategic acquisitions which will push Teladoc into more lucrative markets and expand its new member pipeline.

When thinking about telehealth, it's tempting to picture a single appointment made because you have a sinus infection or strep throat. All you need is to briefly talk to a physician, get a prescription, and go on your way. For many years, this was the main function of Teladoc. In 2019 about 50% of visits were made due to infectious disease, meaning 50% of these bookings were for a single product rather than a recurring service. Stay-at-home orders and limitations on doctor's offices meant that more and more users began to turn to Teladoc for a much broader set of needs and the company was prepared to help them.

Through its acquisition of BetterHelp in 2015 and Best Doctors in 2017, Teladoc has significantly expanded its network capability, acquiring a diverse number of specialists along the way. In 2020, this allowed for 43% of Teladoc's members to use multiple products or services, up from 9% in 2017. Recurring services in the dermatology and behavioral health segments saw the biggest jump, increasing 500% year-over-year. This increased the amount of revenue being generated by each member per month (known as the PMPM) by 30%. Significantly, this growth will most likely continue as Teladoc has seen 60% greater utilization when members have two or more products. This demonstrates the stickiness of Teladoc's products and would suggest that once members begin to effectively engage with the company, they spend more.

Converting the image of Teladoc from a once in a blue moon backup to a legitimate healthcare player will also be aided by the company's significant investment in monitoring capabilities. A considerable amount of healthcare spending is concentrated on chronic illnesses, such as diabetes, which require consistent check-ins with a doctor. In 2020, Teladoc acquired Livongo which provides products and software to monitor blood pressure, weight, and blood sugar. Through AI, the company can send live alerts to patients and doctors to avoid costly trips to the ER, saving the average participant $1,908 per year. Teladoc plans to expand this division in the hopes of capturing more of the chronic disease and aging patient market, which CEO Jason Gorevic acknowledges is a "tremendous financial contributor in terms of PMPM". With 94% of Medicare advantage plans expected to offer telehealth benefits in 2021, compared to 58% in 2020, it may become a serious tailwind for the company.

The pandemic has served to accelerate the transition to telemedicine in significant ways but there is still plenty of room to grow. McKinsey estimates that the sector will expand by 40% annually over the next three years. Teladoc is leading the pack as the first and biggest telemedicine company but it isn't taking this for granted as it continues to find new ways to innovate and capture new members.

In light of its response to the pandemic and new acquisitions, we have updated our comments on Teladoc. Click on the stock button below to read them.

Anne MarieAnne Marie

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