With everything that has been happening in 2020, it is difficult to foresee what will transpire for the rest of the year. Although the major indexes have been trading at virtually record highs again, what is in store for the market in the second half remains a mystery.
Since the COVID-19 pandemic broke out, several businesses have shut down. However, some companies managed to survive with others even thriving in this unpredictable economy.
One of the businesses that exploded during this pandemic is Teladoc Health (TDOC).
Lockdowns and physical social distancing protocols have pushed people to find alternative ways to still go about their lives, and this is where Teladoc comes in.
With the growing fear of infection from the virus, more and more patients are opting for virtual care offerings instead of risking contamination in public.
The exponential rise for this demand was underscored in the second-quarter earnings report of Teladoc.
The company’s revenue jumped by 85% year-over-year to hit $241 million, which blew past the estimated $220.7 million projected by analysts earlier. This substantial increase was primarily fueled by the 203% year-over-year climb of visits.
As for its fee-only visits, Teladoc recorded a whopping 125% increase in the US to hit 21.8 million. Its total visits reach 2.76 million, reporting an over threefold jump from last year.
Teladoc’s paid membership total soared 92% year-over-year in the US alone, reporting 51.5 million members so far.
While this is great news to its investors, Teladoc’s outlook for the third quarter is even more promising.
The company anticipates its third-quarter revenue to be somewhere between $275 million and $285 million, showing off an approximately 103% year-over-year growth.
In terms of its 2020 earnings report, Teladoc is expected to rake in $980 million to $995 million in revenue, with a net loss somewhere between $1.45 and $1.36 for each share.
Based on its preliminary outlook, Teladoc’s growth could slow down next year. However, the company is still estimated to reach a 30% to 40% increase in revenue in 2021.
Riding the momentum of the demand for its services, Teladoc completed the $600 million acquisition of virtual care competitor InTouch Health in July.
This move is anticipated to give a boost to the company’s top line and expand the reach of Teladoc around the world. InTouch is estimated to contribute roughly $80 million in revenues.
With Teladoc’s share price skyrocketing to over 150%, none of its investors could ever find a reason to complain about the company’s performance this year so far.
With the accelerated adoption of telehealth services in various sectors and the growing number of consumers eager to receive treatment, Teladoc is expected to continue reaping the rewards.
Since the COVID-19 crisis has encouraged more people to avail of the telehealth service, it would no longer come as a surprise if most of them decide to become more permanent subscribers of the platform.
This is expected to remain the case even when the growth from this health and financial crisis starts to taper off.
Given the company’s market-leading role in this quickly multiplying virtual care market, Teladoc is well-positioned to dominate the sector in years to come. After all, being the market leader in any industry offers tremendous advantages as seen in the tight COVID-19 vaccine race among Moderna (MRNA), Pfizer (PFE), and AstraZeneca (AZN).
Although Teladoc shares do not come cheap, especially with its ever-growing popularity during the pandemic, the stock’s premium valuation is well warranted.
Teladoc is a stock for investors who are prepared to withstand the considerable volatility that oftentimes accompanies the majority of growth stocks in the biotechnology and healthcare sector. For those uncertain but are curious to own shares of this telehealth platform, the ideal move would be to start with a small position until you feel comfortable investing larger sums.
