Whether it's the ability to save travel time, the comfort of talking to a physician from one's own home, or the convenience of consulting with a practitioner at any time of day, telemedicine has significant advantages over traditional brick-and-mortar healthcare. The COVID-19 pandemic has made this even more clear, bringing in patients who may never have tried telemedicine before.

One of the stocks in the sector that everyone has been talking about is 1Life Healthcare (ONEM). For investors looking for a growth stock at a reasonable price, this may be the best choice. Let's take a look at the company's performance and its prospects.

Doctor virtually consulting with patient.

Image source: Getty Images.

Is this company's performance solid? 

1Life Healthcare (operating as One Medical) offers membership-based primary care services at more than 70 clinics across the nation or via its 24/7 digital platform. The company accepts most insurance plans and charges a $199 annual membership fee.

Currently, more than 475,000 members and 7,000 employers use One Medical's services. In the second quarter of 2020, revenue was up by 18% year over year to $78 million, and the company achieved a 31% gross margin. Over the past 18 months, its number of partnerships with clinics and hospitals increased by 50%; these partnerships now account for the majority of its revenue.

Although the company's loss from operations surpassed $28 million, a vast majority of its expenses were non-cash items, such as share-based compensation and depreciation. In the past six months, the company's operating cash use amounted to less than $11 million. 

1Life Healthcare is getting closer and closer to achieving profitability. For the third quarter of 2020, the company expects to grow its member count to between 486,000 and 496,000 and its revenue to between $84 million and $89 million, both sequential increases. For its full 2020 fiscal year, the company's member count will likely surpass 500,000.

At this growth rate, the company will reach $1 billion in sales within a decade, making the stock a terrific long-term hold. Compared with other telehealth providers, 1Life Healthcare has the advantage of a hybrid business model, allowing it to refer patients to one of its clinics for treatment if a virtual consultation is not sufficient. Moreover, it's in a sound financial position, with more than $660 million in cash and investments to offset $234.6 million of convertible debt liabilities.

Takeaways for investors

1Life Healthcare is expensive, trading at 10 times price-to-sales and 7 times price-to-book value. But other telemedicine companies aren't cheap, either. Teladoc Health (TDOC 0.21%) is trading for 22 times sales, while its merger partner, Livongo Health (LVGO) is trading for 47 times sales. And neither company operates brick-and-mortar clinics where patients can go if their health needs cannot be met by a virtual visit.

Given the growth potential that 1Life Healthcare offers, its shares are relatively undervalued. Investors should also note that Alphabet-backed telemedicine company Amwell is set to IPO shortly, which may further increase interest in this growing sector. Overall, those looking for a decent growth stock that is not too highly priced for its potential should consider adding 1Life Healthcare to their portfolios. Since January,  stock has returned more than 27% to investors, beating the S&P 500's 6% return.