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What's Up with Teladoc

You won’t find many stocks with bigger stories bigger than Teladoc (TDOC); the company is the clear leader in virtual care (often called telemedicine), allowing millions of people to get medical advice (and often run-of-the-mill prescriptions) over the phone or videoconference in a variety of fields, notes Mike Cintolo, editor of Cabot Top Ten Trader.

All told, clients can access 50,000 experts across 450-plus specialties along with 7,000 clinicians—and those clients include 40% of the Fortune 500 and thousands of small businesses.

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Its clients include 30,000 small businesses in Canada that recently signed up along with many public health plan users (Medicare Advantage has 20 million members and is a new opportunity for Teladoc next year) and 300 hospital health systems.

At the end of Q2, the firm had 26.8 million paid U.S. members, up 19% from a year ago. There are a lot of moving parts and costs (the bottom line is drenched in red), but it’s a simple, powerful concept that’s working.

Not only are revenues cranking ahead (up 38% from a year ago; subscription access fees, which make up 85% of revenues, were up 39%), but the sub-metrics look great, too, with total visits expected to rise 66% this year (up 70% in Q2), while utilization continues to rise (9.1% of members used the service in Q2, up from 8.0% a year ago), with 40% of U.S. members accessing at least two products.

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The biggest recent news is of an expanded relationship with United Health, which could bring in an addition five million paid members and 10 million fee-only members, with further upside beyond that. This remains a big idea with plenty of potential if management continues to execute.

TDOC had a big run from its original breakout in early 2017 near $20 to its high of $89 last September. The 50%-plus fall during the next three months was par for the course late last year, but it stagnated for most of this year, too.

But after six months of consolidating, it now looks like the buyers have taken control — following the United news, TDOC has been shot out of a cannon, ripping back to the 70 area on two weeks of big volume. Starting small here is fine with us.

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