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Teladoc Up 33% Year to Date: Will the Momentum Continue?

Zacks Equity Research

Teladoc Health, Inc. TDOC has been in investors’ good books, given clear visibility of business growth in a rapidly growing telehealth services industry.

Teladoc holds a first-mover advantage in the telehealth industry with no other player having the scale and size of business that it commands.

Teladoc has impressed its investors with revenue rise of 40% and visits of 73% in the first six months of 2019. This growth has been achieved on the back of its inorganic and organic endeavors.

The company’s strong performance has led the stock to increase 33%, compared with its industry’s growth of 0.1%.

What looks furthermore impressive is the company’s ability to keep growing on the back of its recent deals and efforts on expansion in international markets, the aging U.S population, which will likely drive demand for telehealth services and its efforts to grow in Medicare advantage business.  

Factors to Drive Growth

Recent regulatory changes, which now allow telehealth benefits to be part of Medicare Advantage plans is a positive for Teladoc.

Teladoc is on track to deliver an integrated virtual care experience across platforms supporting acute complex and chronic care needs and addressing the mental health and physical health challenges in 2020. In this vein, the company made an investment in Vida Health.

Teladoc Health is expanding into Canada with product launches and the signing of its first client a third-party administrator channel partner, which will provide it with significant access to the market.

In the United States,Teladoc is integrating with UnitedHealth Group, Inc. UNH and the development of Medicare capabilities are also progressing per schedule and  this  should accrue to its revenues in 2020 and beyond.

Recently, CVS chose Teladoc for MinuteClinic virtual visits rollout to eight additional states as well as the broader HealthHUB expansion.

Teladoc is actively engaging with CVS Health leadership on their enterprise virtual care strategy, including potential applications of its wide range of services, as well as joint development areas in connection with their HealthHUB strategy.

Strong business pipeline and continuous development of product and services provide the company with long-term growth trajectory.

Zacks Rank

Teladoc carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are AMN Healthcare Services Inc. AMN and Medpace Holdings, Inc. MEDP. Both AMN Healthcare and Medpace carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare and Medpace have surpassed earnings estimates in each of the four reported quarters with an average positive surprise of 7.3% and 12.9%, respectively.

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