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New Coronavirus Strain to Keep Telehealth Stocks in Demand

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Sapna Bagaria
·5 min read
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The coronavirus pandemic continues to prevail despite the roll out of two vaccines to fight the deadly infection. The United States has seen a sudden surge in both new COVID-strains, inducing a rise in the death toll as well. Responding to this aggravated crisis, the Centers for Disease Control and Prevention (CDC) issued a warning that the situation can take a turn for the worse in the coming days.

The spread of the new variant of the virus raises a fresh concern. It is estimated that the new strain is about 50% more contagious than the main versions of the coronavirus that are currently circulating. Questions are raised over the approved vaccines’ efficacy to be able to eventually fight the disease.

As a cloud of uncertainty persists over the ongoing pandemic, people will continue practising social distancing, working remotely, staying home. This, in turn, will sustain demand for telehealth.

New Strain to See a Sharp Spike

On Jan 16, 2021, the CDC cautioned that the highly transmissible COVID-19 strain, which is detected in the U.K., could become the main strain in the United States by March. The new report suggests that this mutant has the ability to show “rapid growth in early 2021” and further urged for increased compliance and stronger strategies including the usage of masks and maintenance of physical distancing.

According to the CDC data, 76 cases are already registered in the United States with the new variant but the strain is likely present in several people who have gone undetected so far.

Prevalent Pandemic Woes to Aid Telehealth

Safe distancing and staying-at-home norms continue to rule our lives as individuals adopted these preventive measures to keep the virus spread under control. These precautionary steps led to a fundamental change in personal lifestyles and daily official activities. One such alteration is visible in the delivery of healthcare. People are increasingly embracing virtual healthcare monitoring via telehealth, which employs technology.  

Even before the pandemic hit the face of the earth, telehealth was gaining acceptance but  the progress was too slow given the reluctance among patients and doctors to adapt to this new methodology.

However, the COVID-19 crisis fuelled this trend that is here to stay as there seems no sign of its subsidence anytime soon.

Against this backdrop, we pick four stocks, which should benefit from the buoyancy in demand for telehealth services.

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

The company’s revenues multiplied 1.8 times to $710.6 million in the first nine months of 2020. The completed 7.6 million telehealth visits reflected an increase of 154%. The company is witnessing a rapid jump in new registrations, which soared more than 80% from the level in third-quarter 2019. Notably, visit growth from the newly-registered individuals continues to outpace the existing user visit growth rate. These new registrations will continue to benefit the company in the future as they create new opportunities to engage with its members.

The stock carries a Zacks Rank #2 (Buy), currently. 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, which saw a substantial visit growth in 2020. The company demonstrated steady revenue growth (78% in the nine months ended Sep 30, 2020) owing to its acceptance of telehealth and penetration of the market. Encouraging revenue performance is reflective of the strong foundation built around health plans, health systems, provider networks and a consistently increasing visit base.

The company’s robust technology platform will continue to serve as a solid basis for its revenue growth. UnitedHealth Group Inc. UNH is making efforts to be on the forefront of a growing need for telehealth. The company gained access to telehealth through the acquisition route. Its non-insurance unit Optum acquired AbleTo, which provides virtual behavioral health care (telepsychiatry). Thus through this purchase, United Healthcare (UHC) will expand its remote mental health capabilities. The company also acquired the remote monitoring startup Vivify.

The stock presently carries a Zacks Rank of 3. Another company that investors can consider from this space is ResMed Inc. RMD, the renowned designer, manufacturer and distributor of medical devices and cloud-based software solutions to manage respiratory disorders. This currently Zacks Rank #3 company’s telehealth services enable physicians to access information on Air Solutions and AirView as well as directly interact with patients over a video chat. Further, the company has been witnessing a rapid adoption of digital health technology around the world over the past few months amid the ongoing pandemic.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
ResMed Inc. (RMD) : Free Stock Analysis Report
Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report
American Well Corporation (AMWL) : Free Stock Analysis Report
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