Teledoc Stock Review: It’s time to brush off an old FinTwit favorite that fell off this year. Teladoc (NYSE: TDOC) was a pandemic darling. Many claimed that the company had changed the healthcare industry forever. It seemed like they could do no wrong but could’ve been a prisoner of the moment. The stock began 2020 trading at $84.00 and by February 2021, had hit an all-time high of $308.00. In the five months following, shares have tumbled. So what happened? Teladoc was labeled a pandemic stock the most.
Companies like Zoom (NASDAQ: ZM) and DocuSign (NASDAQ: DOCU) were grouped in with Teladoc. But neither has been beaten down to the same extent. Are people really in a rush to head back to doctor’s offices? To me, that seems unlikely. So how has Teladoc lost so much support in the investing community?
After being an undisputed leader in 2021, Teladoc’s stock has now fallen by nearly 30% over the past 52-weeks. This means shares have lagged the benchmark S&P 500 index by 66% as of the time of this writing.
Teladoc’s market cap has tumbled to just over $23 billion, and the balance sheet has $1.43 billion in debt compared to about $722 million in cash. Fundamentally speaking, Teladoc’s profile matches that of a high-growth company that is yet to be profitable.
Technically speaking, Teladoc is in a bearish downtrend. A Teladoc stock review finds that it’s trading below both its key 50-day and 200-day moving averages and is looking to find support below.
The MACD indicator is starting to curl downwards. This generally means the market has a bearish sentiment for the stock. Nearly all technical signs are pointing towards more short-term pain for TDOC shareholders.
One bullish note is that institutions have been scooping up TDOC shares at is depressed price. Teladoc is the number one holding in Ark Invest’s Genomics Revolution ETF (ARK.G) with a 6.79% portfolio weighting. It’s also the number three holding in the Ark Innovation ETF (ARK.K) with a 5.66% portfolio weighting. According to Yahoo Finance, 80.98% of Teladoc’s outstanding shares are owned by institutional investors. A further 5.78% of its shares are held by Teladoc insiders, and 11.15% of shares are held in short positions.
What Makes Teladoc Special?
Perhaps the most interesting part of the Teladoc ecosystem is its acquisition of Livongo in 2020. This purchase cost Teladoc $18.6 billion; which is currently about 64% of its market cap.
Why does this matter? Livongo was an industry leader in analyzing health data for patients with diabetes. Patients could send blood glucose records, blood pressure, and other data directly to Certified Diabetes Educators.
It’s essentially a real-time tracker for patients with a digital medical staff available for support. Hence our Teladoc stock review.
Teladoc is hoping to utilize this infrastructure to include its telehealth technology. So what makes Teladoc’s technology better than others? In short, nothing.
This is probably why investors are starting to lose faith in the stock. What Teladoc has is brand awareness. This can act as somewhat of an industry moat. Teladoc has over 12,000 clients, over 51.5 million paid members and delivered 10.5 million visits in 2020 alone.
Teladoc targets both health insurance plans and corporate medical plans in its strategy. The company already has existing corporate partnerships with Johns Hopkins Medicine, Lowe’s, Whirlpool, Truist, and Wellcare. It’s also partnered with lucrative health insurance companies like Guidewell, Blue Cross, and Health Partners Plans.
TDOC prides itself on offering a wide variety of services for its clients, as well as several different platforms. Whole Person Telehealth provides 24/7 access to actual qualified doctors, who can provide advice or diagnosis if needed. Mental Health care provides therapy and counseling, as well as removing barriers to care with full, self-guided programs. Teladoc even offers chronic condition care, which helps patients keep in touch with a regular team of healthcare professionals. This can help Teladoc stock review to look up.
The Future of Telehealth
In a recent report, Teladoc estimates that its market share of customers includes the 182 million Americans that haven’t already used its services. A skeptical analysis of its total addressable market in my opinion. I’d have preferred the company to provide an outlook on international expansion. For example, Teladoc just joined forces with Vivo, the largest telecommunications company in Brazil. The partnership gives all 211 million Brazilians access through the Vivo app to access telehealth consultations and services.
Earlier this month, Teladoc announced the acquisition of Advance Medical, a paid service that provides patients with optimal care when a medical crisis arises. Not only does this strengthen Teladoc’s ecosystem, but it provides them with access to new insurers in markets like Europe, Asia, and Latin America. If the future of healthcare is digital, Teladoc needs to focus more on its international markets.
Telehealth worked during the pandemic, but it seems like Wall Street is discounting its future utility. I still think a majority of doctors visits can be done remotely, especially for things like prescription renewals. If an actual medical procedure or test needs to be done, then obviously in-person visits will remain. But for a majority of minor visits, utilizing telehealth platforms like Teladoc will save time and money for everyone.
Herein also lies the danger with Teladoc: what actually sets it apart? There are dozens of other telehealth companies including Amwell, Doctor on Demand, MDLive, Doximity, SteadyMD, and LiveHealth Online, just to name a few.
The problem with Teladoc’s moat is that it isn’t entirely up to the user. If the company you work for uses Amwell as its telehealth provider, you don’t have much choice! If your insurance company uses MDLive, then why would you intentionally use Teladoc instead? Something to consider in this Teladoc stock review.
The Trillion Dollar Elephants in the Room
There’s been some serious talk about Amazon, Apple, and Microsoft all entering the space. Amazon already has Amazon Care, a nationwide digital health service it offers to its employees.
Many believe that Amazon could offer these to its over 200 million Amazon Prime subscribers at some point in the future. Amazon certainly has the deep pockets and ability to pull this off, but remember the company already failed once in its healthcare bid with Haven.
Apple is really pushing its wearables to have built-in health monitoring, and has even tried a digital primary care plan for its employees. The goal would be to link the data from things like the Apple Watch directly to clinical care. The proposed plan could potentially take a big bite out of Teladoc’s individual members, who are not customers via a corporate or health insurance plan.
Microsoft recently announced that it is partnering with Windows-based hospitals to provide telehealth care via its Microsoft Teams app. The move allows Microsoft to utilize its enterprise services advantage, and provide hospitals with built-in communication via Teams. In a twist, Microsoft and Teladoc are actually partnering in some hospitals to combine the Teladoc Solo platform directly with Microsoft Teams. Since Microsoft is all about leveraging its existing software advantage, this partnership could benefit Teladoc in the long run. Microsoft does not seem to be as direct of a threat as Apple or Amazon.
Still, if I were a shareholder of Teladoc, I certainly wouldn’t want to be competing with any of these companies. Could any of these behemoths acquire Teladoc? It’s possible, but something tells me that none of them value Teladoc’s technology as its edge over the competition. Acquiring Teladoc would primarily be for its existing partnerships and access to the Livongo technology.
So the question remains: How will Teladoc perform in 2021? With just over five months left in the year, it may be a tall task for the stock to outperform the broader markets. Teladoc would need to change its own market sentiment back to bullish, which may require a major catalyst. The catalyst could come as early as July 27th, when Teladoc is set to report its second-quarter financial results.
Despite showing 151% year-over-year revenue growth last quarter, the stock tumbled following wider net losses than Wall Street projected. Shares fell nearly 12% the following day and still haven’t recovered three months later. Teladoc will most likely need to impress Wall Street, while at the same time topping tough year-over-year comparisons from its historic year during COVID-19.
Warren Buffett said to buy when others are fearful, and Teladoc certainly has a bearish sentiment. The problem is, the company hasn’t convinced me it has enough of a moat to continue dominating the telehealth industry. On top of this, the world is reopening, and despite variants of the virus popping up, vaccine efficacy has helped reduce hospitalizations and deaths. Telehealth absolutely has a place in the future of healthcare. But at this point, Teladoc needs to show me that its usage can continue to rise in a post-pandemic world.