Will Teladoc (TDOC) Feel the Heat From SOC Telemed's Expansion?
Competition is likely to stiffen for Teladoc Health, Inc. TDOC as another player SOC Telemed, Inc. TLMD is looking to expand its presence in the telehealth market.
Competition Heating Up
A day ago, SOC Telemed announced its secondary public offering. This provider of acute care telemedicine services and technology to U.S. hospitals and healthcare systems is looking to ramp up its activity by raising money from public for the second time. It issued an IPO only last year via a SPAC (Special purpose acquisition companies).
The domain is being invaded by Amazon.com, Inc. AMZN and Walmart? Also, the incumbent players are adopting the growth-by-acquisition policy or expanding via suitable buyouts or going to the capital markets for raising money.
For instance, Walmart plans to acquire multi-specialty telehealth provider MeMD while Cigna Corp. CI already acquired MDLive. Besides, Amazon had initially rolled out its virtual healthcare service Amazn care for its employees and later made it available to other companies as well in the state of Washington. American Well Corporation AMWL launched its IPO last year.
Too many players are crowding the booming telehealth space. Will this make the competition more fierce?
Teladoc Gains Momentum From COVID-19
Telehealth services have been stealing the limelight since the coronavirus outbreak. Evidently, the Teladoc Health stock witnessed a rally, gaining traction from the prevalent environment.
As hordes of people resorte to remote healthcare to avoid visiting doctors’ clinics and hospitals, demand for Teladoc’s products and services automatically soared.
In 2020, this virtual healthcare provider’s revenues grew 98% (from 32% in 2019) to more than $1.09 billion and onboarded a record 15-million new paid members. Teladoc gained from economies of scale, and its adjusted EBITDA margin, expanded 580 basis points to 11.6%.
Teladoc became the Wall Street’s favorite last year. Investors grew more confident about the stock and this optimism resulted in an upsurge of 139% compared with its industry’s growth of 9.7%.
Will 2021 Replicate This Growth?
Price movement of a stock reflects investors’ sentiment. Teladoc’s year-to-date decline of 30.3% manifests investors’ apathy for stay-at-home stocks now. This could be attributable to the gradually relenting COIVID-19 woes.
The pandemic catapulted the utilization of Teladoc’s telehealth products and services. Now it is to be seen how well this demand trajectory sustains the year ahead with rising competition and successful vaccination drives.
Teladoc’s recent numbers paint a pretty good picture, indicating its steady performance Its revenues in the first quarter soared 151% while total visits climbed 56% to 3.2 million. In 2021, the company is looking to make investments, which strongly bode well for the long haul.
Its solid current-year guidance also calls for 85% revenue growth. Further, total visits are expected in the range of 12.5-13.5 million, suggesting a 22.6% improvement from the year-ago reported figure. All these hint at the industry player’s intact prospects.
SOC Telemed Versus Teladoc
Telemedicine can be broadly categorized into two segments, namely consumer telehealth (i.e., patient-initiated telemedicine) and acute/post-acute care telemedicine (i.e., facilitated-care).
The expansion of SOC Telemed will heighten competition in the facilitated-care sub-segment. In this, telehealth service is primarily provided to hospitals and health systems, physician groups, post-acute providers and government customers.
SOC serves above 500 acute care hospitals while Teladoc caters to more than 600 hospital and health system clients.
Teladoc is also better placed than SOC Telemed as it caters to both segments of consumer telehealth and acute/post-acute care telemedicine.
In the consumer telehealth services, Teladoc serves individuals, payors and employers among others. It also forayed into the acute/post-acute care telemedicine market by its recent acquisition of InTouch, a leading provider of enterprise telehealth solutions for hospitals and health systems.
Bottomline
Teladoc is hurtling with high speed growth strategy that hinges on snapping up complementary business deals. Its recent purchases of enterprise telehealth provider InTouch Health and Livongo will expand the company's bouquet of new product offerings in the emerging markets.
Teladoc’s comprehensive suite of virtual healthcare clinical services, client-winning global footprint, medical operations and members. plus a highly scalable and secure API-driven technology platform give it a firmer footing in the jampacked telehealth space.
It currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock is a long-term play. As Teladoc draws synergies from its accretive acquisitions and capitalizes on its steady investments, a significant value is expected to be unlocked in the future.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Cigna Corporation (CI) : Free Stock Analysis Report
Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report
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SOC Telemed, Inc. (TLMD) : Free Stock Analysis Report
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