This week, we do a deep-dive into another stock in our model portfolio for 2021, Teladoc Health, a leader in telehealth and digital therapeutics. Teladoc’s mission is to create a virtual healthcare system to improve care and cut the cost of healthcare for all. They have grown revenues rapidly over the last three years, boosted in part by the global pandemic, but do they have what it takes to fend off the increasing competition chasing them from the rear?
- Many conditions do not require an in-person visit to a physician and can be held remotely, offering convenience, time-savings, safety, often at a lower cost. On average, a patient can see a physician within 10 minutes of their first enquiry. Teladoc started with general wellness and has expanded its range of services to include dermatology, nutrition and mental health
- Healthcare is a $9T market globally, with $3.6T in the US. It is estimated that $250B of healthcare spending could be virtualised in the US alone, with the market expected to grow 22.4% per year until at least 2028. Teladoc’s revenue is currently less than 0.5% of the projected US market
- Teladoc Health is the largest telehealth provider in the US and has started expanding internationally with operations in the UK, France, Australia, Canada, Spain, Portugal, Hungary, China, Chile and Brazil. It has over 50,000 clinicians in its network globally, and its services are accessible from over 130 countries and are available in more than 40 languages. Teladoc ended 2020 with 51.8M paid US members after adding 15M in 2020
- Teladoc's merger with Livongo Health last year brought remote monitoring and digital therapeutics into their suite of services, using connected devices and artificial intelligence to help patients manage their chronic conditions better. As well as cross-selling services, the synergy of telehealth and remote monitoring may be a game-changer for preventative medicine
- At the end of 2020, Livongo had 600,000 chronic care enrolments, which is a fraction of the 31M people in the US with diabetes, and the 147M living with one or more chronic conditions. They started with diabetes and have expanded their capabilities to include hypertension, prediabetes, weight management and behavioural health
- However, competition is increasing both from traditional healthcare companies plus tech giants such as Amazon and Google. Platforms like Zoom and Twilio have HIPAA-compliant video conferencing which can be used to provide telehealth services. Teladoc is the current leader with agreements with 40% of Fortune 500 companies, but they cannot rest on their laurels in this rapidly innovating space
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