Teladoc (NYSE: TDOC) has emerged as a stock with spectacular long-term potential, and it’s easy to see why. It is no secret healthcare in the United States is becoming more expensive. The current healthcare model will eventually be upended, or at least dramatically altered. It is not a question of if but when such changes occur. Teladoc is perfectly positioned to benefit from such a disruption.
The medical tech company is the industry’s trailblazer in terms of virtual doctor visits. It might not be long until people meet with doctors through screens as opposed to in-person visits at traditional medical offices. If this shift comes to fruition, Teladoc will benefit.
Teladoc’s Business Model
Teladoc makes money through subscription fees paid by insurance companies and employers. These groups have a vested interest in employee health as they need a productive workforce to turn a profit. Furthermore, if employees can obtain medical assistance online through Teladoc’s virtual physician counseling, they will be able to return to work much quicker than if funneled through the traditional process of scheduling an appointment at a brick-and-mortar physician office. Teladoc also makes money through visit fees. These fees are either paid by patients out-of-pocket or paid for by insurance plans. The overarching aim of Teladoc’s services is to reduce the cost of medical care by making medical appointments completely virtual unless emergency care is necessary.
Will Teladoc’s Business Model Work?
It appears as though Teladoc’s approach to providing highly efficient medical care will prove successful across posterity. Revenues spiked by nearly 90 percent this past year. The company has experienced year-over-year growth in excess of 100 percent. Teladoc membership jumped to nearly 21 million in the first quarter of 2018.
All in all, Teladoc virtual physicians had 606,000 visitors in the quarter. Company executives expect yearly revenue to increase by 50 percent this year. This revenue will increase partially due to the recent acquisition of the company’s primary competition, Best Doctors.
Teladoc also has a plan to grow in an organic manner. The company provides more than 400 unique sub-specialties of medical care. The service list will only continue to increase in the months and years to come.
In particular, Teladoc is positioned to thrive in the field of mental health. The company’s Behavioral Health Navigator serves as a web-based support system designed to assist those with mental health challenges. More than 40 million people living in the United States are plagued by anxiety. More than 15 million United States residents have serious depression. It is quite shocking to learn nearly 10 million of these individuals have not received treatment in the year prior. Teladoc’s virtual physician counseling is here to provide these needy individuals with the assistance they desperately need.
What About the Teladoc Detractors?
Bears claim Teladoc’s gamble on mental health services has the potential to backfire. The argument is the industry is only getting more expensive as time progresses. Add in the fact that Teladoc is saddled with exorbitant costs that have the company mired in the red, and it is easy to see why some are shorting the stock. Yet those who understand the dynamics of the stock market and capitalist economics are well aware of the fact that some of the world’s most successful companies spent years in the red before reaching the black. Amazon is the perfect example of such a company.
Is Teladoc a Buy, Sell or Hold?
Teladoc is a strong buy. We are on the fast track to a future in which autonomous mobile medical units on wheels travel directly to patient homes and other spaces. These services will provide real-time screen-based counseling with physicians and mental health professionals. Some predict such virtual doctors will be stationed in urban centers. Medical advice will also be provided directly to patients through screen-based interactions in the home.
Teladoc’s membership base will continue to grow in the months and years ahead. If company leaders successfully allocate revenue to improving its platform for the delivery of medical services, the stock will continue to climb.
The moral of this story is healthcare is poised for significant change, and Teladoc is leading the charge. Teladoc is a trailblazer in every sense of the word.
Regards,
Ethan Warrick
Editor
Wealth Authority
