People who invested in telemedicine specialist Teladoc Health (NYSE:TDOC) in early 2021 were in for two surprises. The first surprise was a swift rally by TDOC stock; the second was a horrendous collapse by the shares.
Oddly enough, today you can purchase the shares of Teladoc at pre-pandemic prices. It’s as if Wall Street is simply ignoring the powerful, pandemic-driven rise of telehealth.
Due to the fall of TDOC stock, some folks might be led to believe that telemedicine is defunct. As we’ll see, however, that couldn’t be further from the truth.
Besides, Teladoc is on the right track financially, at least in some respects. The company also has room for improvement, though, so prospective investors should keep an eye out for some of its financial metrics in the coming quarters.
A Closer Look at TDOC Stock
While many other stocks swooned, Teladoc’s shares bloomed. Do you remember how it rallied from $85 to $240 during the first half of 2020?
That surge wasn’t destined to last forever, of course. As it turned out, Teladoc’s share price topped out at $308 in February of last year.
The ensuing decline was just as fast as the ascent was, if not faster. TDOC stock slid throughout most of 2021 and continued to deteriorate in early 2022, trading at around $75.50 recently.
For those who see a bright future for telemedicine, Teladoc is one of the few pure-play telemedicine stocks to buy.
Imagine a network that consists of 800,000 connected devices, 2 billion data points, 76 million members and 10,000 healthcare providers.
These figures describe Teladoc’s network, and believe it or not, the company facilitated roughly 18 million sessions in 2021.
It’s no wonder that TDOC stock is widely believed to track the telehealth market. One could almost say that telehealth and Teladoc are synonymous.
And while it’s true that Teladoc is headquartered in New York, investors really ought to consider it an international company.
Data proves that this is true. Impressively, Teladoc has paying members from over 100 countries, and visits on Teladoc’s network have been conducted in 26 languages.
Moreover, it’s a great time to expand Teladoc’s business operations worldwide. The global telehealth market, according to Precedence Research’s estimate, will be valued at roughly $224.8 billion by 2030.
Not only that, but this market is expected to have a compound annual growth rate (CAGR) of 18.8% from 2021 to 2030.
An Eye on the Bottom Line
Given Teladoc’s potential to capture a sizeable portion of the large and expanding addressable telehealth market, it shouldn’t be too surprising to learn that the company is already raking in robust revenue.
In fact, during the third quarter, Teladoc generated $521.66 million of revenue, versus $288.8 million during the same period a year earlier. This shows that Teladoc was able to increase its revenue even after Covid-19 vaccines had been widely distributed to the public.
What the stock’s owners should want to see, going forward, is a reduction in Teladoc’s expenses. For instance, the company spent $111 million on advertising and marketing in Q3. Plus, Teladoc shelled out $103 million for general and administrative costs during that quarter.
As a result of those and other expenses, Teladoc’s net loss in Q3 was $84.3 million. Cost cutting would, therefore, probably benefit the company and help to satisfy the concerns of many investors.
The Bottom Line
Teladoc doesn’t seem to have a problem generating revenue. Furthermore, the company has an overseas presence, and it’s a clear leader in facilitating leading-edge virtual care.
On the other hand, Teladoc could benefit from exercising greater discipline on its spending. Otherwise, the company probably won’t ever become profitable.
Therefore, those considering buying the shares should monitor Teladoc’s spending in the coming quarters. If it drops meaningfully, then TDOC stock will be a worthy, high-conviction investment.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.