Teladoc Health is a well-known telemedicine company offering online consultations with doctors, video chats, appointment scheduling and secure messaging. This includes health assessments, chronic disease management, and medication services.
What is Teladoc Health?
Teladoc Health (NYSE:TDOC) is an industry leader in telehealth and virtual healthcare services. It is a multinational company founded in Dallas, Texas, in 2002 and is currently headquartered out of New York. Teladoc debuted on the New York Stock Exchange through its IPO in July of 2015 and is a component of the Russell 1000 index. At the time of writing (May 2022), TelaDoc has a market cap of $5.4 billion and a 52-week trading range of $27.38 to $174.32.
Is Teladoc a Stock in Recovery?
Teladoc has had a tough year. Shares of the company have lost 65% since the start of 2022 and 76% over the past 52 weeks. What was once a pandemic darling stock has fallen on challenging times as the world begins to emerge from the effects of Covid-19. The stock hit an all-time high price of $308.00 per share in February of 2021, and it has been a fairly steady decline ever since. Teladoc’s stock is on life support, but investors might have some reasons to have some optimism.
First of all, the company’s sentiment is at an all-time low following its recent earnings call. In the first quarter of 2022, TDOC reported a loss of $41.58 per share due to a non-cash goodwill impairment charge of $41.11 per share. It also forecasted a weaker than expected guidance for the rest of 2022, as the company grapples with this new post-pandemic environment. Following the report, shares dropped by 48%.
Following a catalyst like a bad earnings call, we usually see the stock oversold, which is likely where it sits now. But it isn’t all bad news. In particular, the goodwill impairment charge really made the figures seem worse than they are – It reported a 25% year over year growth in revenues, while memberships and total visits also rose in the quarter.
On top of that, a popular growth investment firm, Ark Invest, has been adding shares of Teladoc at its depressed prices. So while Cathie Wood’s comparison of TDOC to Amazon (NASDAQ:AMZN) might be a bit of a stretch, the polarising investor is undoubtedly bullish on Teladoc’s long-term prospects.
Is Teladoc a good investment?
Herein lies the question. When a popular stock plummets to these low levels, many people see it as a buying opportunity. After all, Teladoc traded at $300 before, so why can’t it do it again? The problem with Teladoc is that it has always been a questionable industry moat. What exactly does Teladoc’s service offer that other companies don’t? Other competitors such as Amwell (NYSE:AMWL) and MDLIVE offer essentially the same services with no noticeable drop in quality.
There is no doubt that telehealth services are here to stay. Many doctor’s visits don’t need to be in person. Telemedicine also helps in rural regions where doctors have reduced access while increasing convenience for patients. Still, there is no proof that what Teladoc offers is a competitive advantage over any other telehealth company. The stock is trading at a discount, but investors might want to keep an eye on the next few quarters before committing to invest long term.
“The recent financial news from Teladoc Health has been widely publicised – The significant increase in their net loss per share from previous years due to the impairment charge caught the attention of many in the sector.
However, their telehealth visit statistics correlate well with the growing trends and benefits of remote or virtual care. Last year, they had 15.4 million telemedical visits, an increase of 38%. The projection for 2022 is to increase further to around 18.5-19.5 million. The highest forecast would also result in their paid US member numbers improving to 56 million.
Most analysts believe the annual growth rate is significantly high for global telehealth, with it being at least double digits. While many players are emerging, and with the likes of Amazon potentially being a threat, it only confirms the viability and potential of this market. As such, even a single-digit market share for one provider could bring in billions of revenue. Therefore, a lot can be learnt from the initial entrants or innovators such as Teladoc.” – Dr Vinay Shankar