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3 Telehealth Stocks to Keep Shaping the Future of Healthcare

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Sapna Bagaria
·7 min read
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The digital care delivery or telehealth is visibly transforming the healthcare picture, courtesy of the COVID-19 pandemic situation. Remote medical counseling via the use of telecommunications technology has been one of the dominant themes in 2020 so far as people followed social distancing to keep the spread of virus at bay). The coronavirus is changing the way care is being delivered.

Telehealth or telemedicine is a broad term that includes everything from live video feeds and telephone consultations to digital CT scans and remote monitoring of intensive-care units (ICUs).

Though telehealth services were present prior to the coronavirus outbreak, there was some reluctance among providers and well as the users to fully accept it. For providers, such as doctors, it was difficult to wholly implement a virtual care program because the learning curve appeared steep and for users, the satisfaction of physical examination and visiting a doctor’s clinic were absent in telehealth counselling.  Moreover, there wasn’t any pressing need to go for the contactless medical services.

The pandemic, however, triggered this willingness among the providers and users alike to use telehealth. Amwell, a national telehealth leader, in October this year, released the results of its annual Physician and Consumer Survey. The data demonstrates that physicians and consumers expect to use telehealth more often following COVID-19 than they did before the pandemic. Telehealth usage is considerably high in 2020 with 22% consumers and 80% physicians experiencing a virtual visit this year, up from 8% and 22%, respectively, in 2019.

This adoption of telehealth with open arms is here to stay given the risk-free, convenient and cost-effective access to care. This telehealth is on course to become the new normal.

Per a Fortune Business Insights report, the global telehealth market size was $61.40 billion in 2019 and is projected to reach $559.52 billion by 2027, seeing a CAGR of 25.2% during the forecast period.

The growth pace achieved by the telehealth industry this year is likely to accelerate further even in the post COVID world, given a slew of shortcomings in the current healthcare system that it efficiently addresses.
Healthcare at present is inefficient, expensive, complicated and fragmented, inducing substantial challenges for providers, health plans as well as patients. Telehealth is crucial to overcoming these key structural headwinds. High quality care will become more affordable and accessible to everyone driven by telehealth.

In 2021, the healthcare industry will gain on the following aspects:

Solving the Access Crisis

Access to appropriate care is one of the most significant issues weighing on the United States’ healthcare system today with shortages in primary and specialist care impacting both urban and rural communities alike. More than 80 million Americans live in areas with insufficient primary care and the average wait time for new patient primary care provider appointments reached 29 days in 2017 according to a Merritt Hawkins report. These extended wait times can result in adverse outcomes.

This access crisis extends to both urban and rural areas with rural communities being particularly affected. Telehealth can address many of these issues. It enables efficient allocation of primary, urgent and acute care by overcoming barriers to access. Patients are able to access care at the most convenient time without traveling long distances. Hospitals are empowered to connect in real time with specialists at the major medical centers to help diagnose and optimize a course of treatment.

Addressing Exorbitant Healthcare Costs

Healthcare expenditures in the United States more than doubled from $1.3 trillion to $3.6 trillion from 2000 to 2018 according to the Centers for Medicare and Medicaid Services (CMS) with escalating costs impacting individuals, employers and health systems. While employers and individuals saw an increase in premium costs, health systems witnessed depressed operating margins.

To mitigate these rising costs, telehealth can be instrumental in helping the healthcare industry adapt to efficient care. Telehealth visits can address the surge in demand from health plans, health systems and consumers for cost-efficient solutions of care, particularly in low acuity episodes. The cost of insurance, which covers telehealth care, is usually lower than the one involving in-person visits. Meanwhile, health systems can also deploy telehealth to deliver operational efficiencies including better utilization of resources as well as reduction or even elimination of travel times for care providers.

Promoting Greater Coordination of Care

According to an L.E.K. Consulting report, more than 60% of hospital revenues will be derived from value-based care models by 2021. Value-based care reimbursement models require efficient management of patient populations to optimize the site of care, organize transitions, alleviate inappropriate utilization and minimize readmissions. To embrace these new innovative models of care delivery, health systems and health plans seek enterprise-wide telehealth platforms to across their organizations.

Below are the three stocks that are turning the wheels of the current healthcare system.

Teladoc Health Inc. TDOC is a telemedicine pioneer that saw its revenues skyrocket owing to high demand for medical services from people staying at home amid the pandemic. The service features physician-patient consultations over phone or via video.

The company’s revenues inched up 1.8% to $710.6 million in the first nine months of 2020. The completed 7.6 million visits reflect a jump of 154%. The company is witnessing rapid growth in new registrations, which surpassed 80% from the level in third-quarter 2019 while visit growth from newly-registered individuals continues to outpace existing user visit growth. These new registrations will continue to benefit the company in the future as they create new opportunities to engage with members.

The stock carries a Zacks Rank #3 (Hold), currently. For 2021, the Zacks Consensus Estimate for the company’s revenues and earnings is pegged at 80.6% and 52.3% growth, respectively.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

American Well Corporation AMWL is a complete digital care delivery solution and saw a substantial visit growth in 2020. The company demonstrated steady revenue growth (78% in the nine months ending Sep 30, 2020) as a result of the acceptance of telehealth and its penetration of the market. Revenue performance is reflective of the strong foundation that revolves around health plans, health systems, provider network and a consistently rising visit base.

The strength of the company’s technology platform will continue to serve as the basis of its revenue growth. The stock presently carries a Zacks Rank of 3. The Zacks Consensus Estimate the company’s 2021 revenues and earnings stands at 11.1% and 81.9% growth, respectively.

UnitedHealth Group Inc. UNH is making efforts to be a frontrunner of a growing telehealth trend. The company worked on its access to telehealth through the inorganic growth trajectory involving acquisitions, mainly. The company’s non-insurance unit Optum bought AbleTo, which provides virtual behavioral health care (telepsychiatry). Through this purchase, United Healthcare (UHC) will expand its remote mental health capabilities. The company also acquired a remote monitoring startup named Vivify.

The stock is currently Zacks #3 Ranked. For 2021, the Zacks Consensus Estimate for the company’s revenues and earnings in 2021 is pegged at 6.04% and 11.1% growth, respectively.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the NewZacks Top 10 Stocks >>

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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report
American Well Corporation (AMWL) : Free Stock Analysis Report
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