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Teladoc (TDOC) Hits 52-Week High: Will Momentum Sustain?

Sapna Bagaria

On Jan 21, Teladoc Health, Inc. TDOC hit a 52-week high of $101.28 before ending the session at $98.25. The surge can be attributed to the company’s announcement of acquiring InTouch Health and positive earnings pre-announcement.

The stock has gained 62.4% over the past year against its industry’s decline of 7.4%.

 

Investors seem to have taken the acquisition news positively since the deal will expand Teladoc’s presence in the virtual healthcare industry. Via InTouch Health, Teladoc will be able to provide healthcare solutions ranging from critical to chronic to everyday care. The deal will expand total addressable market (TAM) for Teladoc and open up another avenue for growth.

Through InTouch Health, Teladoc will be able to provide care at sites such as Hospital, ED,  Ambulance, Post-Acute, Physician Office, Retail Clinic, Pharmacy, Worksite as well as Home.

Teladoc’s positive earnings pre-announcement also aided the surge in shares. The company raised its 2019 revenue expectation to $552-$553 million, up from its earlier guidance of $546-$550 million. Also, total visits are expected to be more than 4.1 million compared with previous estimate of 3.9-4.1 million.  

For the fourth quarter of 2019, Teldoc revised its revenue guidance to $155-$156 million, up from the previous estimate of $149-$153 million. It now expects visits to be more than 1.2 million, up from the previous estimate of 1-1.2 million.

Notably, huge market opportunity is expected to aid the company’s long-term growth.

Teladoc currently serves $54 million of U.S. population and has nearly 75 million potential members within existing clients.

The company posted a positive EBITDA for the first time in 2018, which impressed investors. In 2019, the progress on EBITDA was impressive.

The differentiating factor for Teladoc is its scale, breadth of clinical offerings and its programmatic efforts to drive utilization. It is the largest provider of telemedicine services globally.

Recent regulatory changes, which now allow telehealth benefits to be part of Medicare Advantage plans is a positive for Teladoc. Effective 2020, telemedicine services will be eligible for reimbursement under MA. This is believed to increase the company’s market share as nearly 20 million of individuals, currently insured under MA, moves to telehealth services.

Teladoc is on track to deliver an integrated virtual care experience across platforms supporting acute complex and chronic care needs and addressing the mental health and physical health challenges in 2020. In this vein, the company made an investment in Vida Health. Teladoc Health will be the exclusive virtual care partner of Vida Health, collaborating to deliver chronic care solutions with increasing digital and clinical integration.

Teladoc has integrated with UnitedHealth Group, Inc. UNH, which has given the former company access to 15 million of its customers. This should accrue to Teladoc’s revenues in 2020 and beyond.

Recently, the company launched Teladoc Medical experts in the U.S. market, onboarding more than 100,000 employees from UPS and Nationwide Insurance, leveraging insights and capabilities from its Advanced Medical and Best Doctors acquisitions into one single experience. The Teladoc medical expert service creates a virtual center of excellence for individuals grappling with the challenges of complex physical and mental conditions.

We believe the company enjoys multiple tailwinds, which should support the stock going forward.

Teladoc carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are HealthEquity, Inc. HQY, LHC Group, Inc. LHCG and CareDx, Inc. CDNA. While LHC Group sports a Zacks Rank #1 (Strong Buy), HealthEquity and CareDx carry a Zacks Rank #2 (Buy).

You can see the complete list of today's Zacks #1 Rank stocks here.

HealthEquity, LHC Group and CareDx surpassed earnings estimates in the last reported quarter by 113.64%, 16.67% and 100%, respectively.

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