Teladoc Inc. TDOC, a premier telehealth services provider, is rapidly expanding its business in the booming telehealth services industry.
Teladoc commands a top position in an underpenetrated and growing market with nearly 75% market share.
Its superior performance is reflected in its share price which despite losing 8.13% in 2016, was better off than the Zacks categorized Medical Services industry’s loss of 13.3%. The share price decline was due to investors' weariness over net losses registered by the company over the past many quarters. Yet, the stock performed better than the sector, which gives hints of optimism over its ability to turn to profits very soon. Also, so far this year, the stock has given a stupendous performance, gaining 28.2% compared with the 1.1% gain registered by the Zacks categorized Medical Services industry.
The $29-billion telehealth industry is significantly underpenetrated (less than 1% penetrated). This provides an opportunity for long-term, sustainable growth. Also, the company is larger than its three main competitors – MDLIVE, amwell and Doctor On Demand – combined.
The company’s revenue, membership and visits increased at a CAGR of respectively 80%, 40% and 95% from 2013–2016. Telehealth is fast gaining popularity as witnessed by growth in visit outpaced by growth in membership.
It is also witnessing client growth with client wins across multiple market segments. It now has on its rolls more than 7500 clients with more than 220 Fortune 1000 clients.
The company emphasizes increase in client value-add through product innovation to retain them. It is also focusing on spreading its client base by penetrating underserved segments such as provider market, and small and mid-sized employers.
Teladoc is investing heavily in new marketing technologies and support staff to aid sales force in existing accounts, lead generation, new client generation and implementation. These initiatives will help in boosting its client base, thereby leading to top-line growth.
Teladoc is well poised for growth in the telehealth industry. Demand for telehealth services is being fueled by increasing health care cost following inefficient care, duplication of services, significant waste and extreme variation in access, cost and quality of care. Costs and associated burden on health plans, employers and consumers are only expected to increase. Centers for Medicare and Medicaid Services, or CMS, projected U.S. national health expenditure reached $3.1 trillion, or approximately 18% of the GDP in 2014, and will reach approximately 20% of GDP by 2022.
Teleheath brings significant opportunity to solve access, cost and quality of care challenges through a platform that cater to consumer demand and physician availability in real-time and in various modalities such as video, web, mobile and telephone. Moreover, the emergence of technology such as big data and analytics, cloud-based solutions, online video and mobile applications present this industry with huge scope for growth.
In order to grow in this thriving industry the company raised $124 million in Jan 2017 via a follow-on offering of approximately 7.9 million shares. This capital raise provides the company with significant additional financial strength and the flexibility to reinvest in growth. Moreover, it strategically adds to its business as opportunities present themselves.
Teladoc carries a Zacks Rank #3 (Hold). Some better-ranked stocks are AMN Health Services Inc. AMN, BioTelemetry Inc. BEAT and The Advisory Board Co. ABCO. Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN posted a positive earnings surprise in each of the last four reported quarters with an average beat of 15.8%.
The Advisory Board posted a positive earnings surprise in each of three of the four reported quarters with an average beat of 33.4%.
BioTelemetry posted a positive earnings surprise in three of the last four quarters with an average beat of 15.8%.
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