Virtual healthcare companies like Teladoc Health (NYSE:TDOC) grew rapidly in the last year, thanks to the novel coronavirus. Now there’s concern that TDOC stock could suffer as Covid-19 vaccines go into people’s arms around the country.
In the last three weeks alone, Teladoc stock tumbled 30% as coronavirus cases fell, the number of vaccines administered daily steadily increased, and states announced plans to fully reopen.
President Joseph Biden used his first prime-time national address to speed up the recovery even more. Biden is urging states to make vaccines available to every adult by May 1. He says that this year’s July 4 holiday should be an Independence Day from the virus.
That’s great for the U.S. It’s great for the economy. It’s great for the millions of people around the country who haven’t seen their loved ones for a year now.
But if you’re holding TDOC stock, you’ve got to be a little concerned that your gains may get wiped off the board.
TDOC Stock at a Glance
Remember, Teladoc was trading for roughly $85 per share in January 2020, when rumors of an unusual illness in China began circulating in the medical community. In 2020 TDOC stock saw gains of 130% as virtual health care took hold in the U.S.
The New York Times reports that telehealth services accounted for nearly $4 billion in billings in March and April of last year, when the pandemic shut down much of the country and forced people needing healthcare to do so online.
By way of comparison, in March and April of 2019 telehealth services billed only $60 million in services.
In the fourth quarter, Teladoc reported revenue of $383.3 million, which beat analysts’ estimates of $378.4 million. That’s an increase of 145% from the previous year.
But earnings per share was a disappointment. TDOC posted a loss of 27 cents per share versus analysts’ expectations of a loss of 24 cents per share.
The company issued guidance of $445 million to $455 million in sales for the first quarter, versus estimates of $446 million. For the full year, TDOC is projecting sales of $1.95 billion to $2 billion, versus analysts’ estimates of $1.95 billion.
CEO Jason Gorevic predicted that telehealth demand will remain high even after the pandemic.
“We are heartened by the progress that has been made in delivery of the coronavirus vaccines and expect some return to normalcy, coupled with strong continued demand for virtual care, well exceeding pre-pandemic levels. The strategic investments we made during 2020 to expand the breadth and depth of our capabilities have uniquely positioned us to serve the growing client and consumer demand for virtual care. And have accelerated our path to realizing our vision of becoming consumers’ trusted destination for whole person health. The expansion of our capabilities in the hospital and health system market, including the acquisition of InTouch, positions us as the leader in that channel.”
The Way Forward for Teladoc
Teladoc has its fingers in a lot of pies. It offers a lot of different services.
For instance, it has a Get Care Now unit that provides general medical advice. This is a much better solution than looking up your symptoms on WebMD. People can use Get Care Now to get advice from real board-certified doctors.
TDOC also has mental health care services, nutrition counseling, programs to help you stop smoking or using tobacco, skin care and other expert advice from medical specialists.
So, the services will continue to be online. The question is how many people will continue to use telemedicine after the pandemic is over?
In my estimation, quite a few. The pandemic changed how we do a lot of things. Online shopping will continue to be a popular alternative over brick-and-mortar stores. It’s unclear if movie theaters will ever go back to pre-pandemic levels because at-home streaming options are so popular.
Businesses have learned that they can be just as effective with a mobile workforce and using video conferencing. They can have business meetings online instead of spending the money for airfare and hotels.
With the rollout of 5G, telemedicine is a viable alternative for many patients who need to speak to and be seen by a doctor, but don’t want to leave their homes. 5G technology means people can use their smartphones for reliable, real-time connections with their doctors.
Canaccord analyst Richard Close says he’s still bullish on TDOC stock, even after the pandemic is over. Close says in a research note that the dip in Teladoc is a great buying opportunity. He says Teladoc’s 2021 is conservative considering the company should continue to see greater sales, increasing utilization and additional registrations.
The Bottom Line
TDOC stock has a “B” grade and a buy recommendation in my Portfolio Grader. As Close says, the recent drop in stock price is a buying opportunity for investors. You just have to believe that telehealth will continue to carve out a place in the medical community after Covid-19.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system —with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
