3 Reasons You Should Invest In Teladoc

One of the largest publicly-traded telehealth companies, Teladoc has recently gotten a boost from new laws, a demographic shift, and the coronavirus pandemic

Teladoc Health, Inc. (NYSE: TDOC) was founded in 2002 by Dr. Byron Brooks, a former NASA surgeon, and entrepreneur Michael Gorton. It went public on July 1,, 2015. By 2019, the company was active in 175 countries, with nearly 37 million paying members. Its revenue has seen a steady increase from $77 million in 2015 to $553 million in 2019 (618%). Recently, the company has seen a surge in its stock price as a result of the COVID-19 pandemic and is up more than 100% this year.

Teladoc has been expanding globally of late, as evidenced in its 2017 purchase of Best Doctors, which came with a network of 50,000 medical purchases, followed by the purchase of Advance Medical, and more soon after. Here are three reasons why you should invest in Teladoc.

1. Laws

In 2010, the United States enacted the Affordable Care Act to ensure that every citizen is covered under medical insurance. Initially, this created an influx of 8 million patients into the health care system, with that number growing by roughly 12 million every year since.

A visit to the doctor via Teladoc is faster and less expensive than to a traditional office. Insurance companies like Aetna (NYSE: AET), Blue Shield of California (affiliated with Anthem (NYSE: ANTM), and Oscar began offering Teladoc’s services. Additionally, in an effort to cut costs, the number of all large employers that offered telehealth coverage in their plans rose from 28% to over 50% in one year since the law was passed. This had a positive effect on Teladoc’s revenue, boosting it from $77 million in 2015 to $123 million in 2016.

On March 13, 2020, President Donald Trump declared the U.S.  to be in a state of national emergency as a result of the COVID-19 pandemic. Congress passed the ‘Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020’, which allocated $500 million for Medicare telehealth services. As the leading provider, Teladoc stands to benefit. 

2. Demographic Shift

Most Medicare recipients are senior citizens. The elderly visit doctors more often than younger people, with about 82% suffering from at least one chronic issue that needs continuing care and management. Seniors spend much more on healthcare than younger adults as well:

Segment % More
Medical Services 8.70
Medical Supplies 28.63
Health Insurance 39.73
Drugs 58.28

With nearly 23% of all American seniors living in rural areas, where there is a shortage of doctors, Teladoc is a no-brainer for meeting their medical needs. 

3. COVID-19

In mid-March, Teladoc’s patient visit volume went up 50% over the prior week and continues to rise, with more than half of the visits being from first-time users. With social-distancing becoming a necessity and the coronavirus being one of the most contagious viruses in history, it’s little wonder that more people are turning to Teladoc. In an effort to keep the ‘worried-well’ out of hospitals, the Centers for Disease Control and Prevention advised communities to increase using telehealth if COVID-19 continues to spread. 

Along with Medicare’s broader acceptance of telehealth services, Blue Shield of California announced last week that it would waive all out of pocket costs for its members to use Teladoc in response to the outbreak until May 31. These advantages aside, Teladoc is still poised for incredible growth. The company boasts 40% of Fortune 500 companies and over 50 U.S. health plans as clients. Teladoc estimates around 75 million potential members within its existing client base who have yet to use the service. It is also expanding its service to areas like nutrition and has extensive mental health coverage (which saw a 50% growth in Q3 2019). The global telehealth market is expected to be worth $267 billion by 2026 and as a market leader in the sector, Teladoc stands to profit.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.