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With the coronavirus refusing to die, telehealth stocks, like Teladoc Health (NYSE:TDOC) have been some of the most explosive stocks on market.
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In fact, when I first weighed in on the TDOC stock, I said, “I wouldn’t be shocked if shares of the viral health care provider soared to $200 per share.”
That was on March 25, as the Teladoc Health traded at a low of $134.13. It’s now up to $198.20. All thanks to a pandemic that just refuses to die.
From here, I wouldn’t be shocked to see $250, as the world waits for a vaccine.
All as the virus super-charges the sector. So much so, analysts at McKinsey & Co. forecast that $250 billion worth of spending will shift to telehealth, “compared to the total $3 billion in revenue that top telemedicine companies generated before the pandemic,” as reported by Reuters’ contributors Noor Zainab Hussain, Manas Mishra and Rebecca Spalding.
Then again, even with a vaccine in hand, telehealth is here to stay for a few reasons.
One, More Patients are Open to Telehealth
According to a an Updox survey of 2,000 patients, 42% said they’ve used telehealth services since the pandemic began. Up to 63% said they like telehealth because it limits potential exposure to other patients.
“Following the current pandemic, telehealth will no longer be a ‘plus’ or ‘nice to have’ for practices — it will become a requirement to stay in business. Virtual care and contactless offices will transform the way healthcare is provided, in response to both provider and patient concerns and preferences,” said Michael Morgan, CEO, Updox.
Two, Telehealth is Seeing Broad Support from the U.S. Government
President Trump just signed an executive order to expand telehealth in rural areas.
“Telehealth use has skyrocketed during the pandemic thanks to the President’s actions, and the telehealth revolution is here to stay. The new gold standard for healthcare will be patients and providers deciding on the right blend of in-person and virtual care, when and where it makes sense for them. The President is now directing HHS to keep charging ahead on giving Americans better access to the doctors of their choice, including via telehealth,” said Health and Human Services Secretary Alex Azar.
Three, We’re Just Now Seeing Industry Consolidation
Teladoc Health just announced it will acquire Livongo Health in a deal valued at $18.5 billion.
The acquisition also builds on Teladoc Health’s virtual mental health offerings. In addition, Teladoc Health just acquired InTouch Health to link providers to in-patient, outpatient, and home care settings. With that, the industry could see even more acquisitions moving forward, as other telehealth companies look to broaden their offerings, as well.
Four, Teladoc Health Earnings Have Been Explosive
For the second quarter ending June 30, 2020, the company posted year over year revenue growth of 82% to $241 million, as total visits jumped 203% to 2.8 million. Year over year six month revenue was up 63% to 442.18 million, as total visits jumped 144%.
Going forward, the company expects total revenue to fall in a range of $275 million and $285 million. EBITDA in a range of -$3 million to $1 million. Adjusted EBITDA in a range of $27 million and $31 million. It also expects to see total U.S. paid membership to be 50 million to 51 million.
“Even as we continue to battle the coronavirus in the U.S. and other hard-hit countries, we are also seeing sustained demand in areas that are no longer considered hotspots. In some states where the curve has flattened, we are still seeing twice as many patient visits as last year,” said Jason Gorevic, CEO of Teladoc Health.
The Bottom Line on Teladoc Health Stock
With the coronavirus showing no signs of easing, demand for telehealth is only likely to increase. Not only do more patients like virtual care at the moment, they’re likely to use it after the pandemic is over, too. In addition, the industry is seeing plenty of support from President Trump. Industry consolidation has just begun. And TDOC earnings are only likely to grow.
With patience, I strongly believe TDOC could be a $250 stock this year.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
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