Leading telemedicine provider Teladoc Health (TDOC 3.31%) has seen demand for its services soar in 2020 as more and more patients are choosing to consult with doctors online rather than in person due to the COVID-19 pandemic. As a result, its share price has climbed 150% since the start of the year, and its market cap has nearly tripled to $18 billion. 

The question now is whether Teladoc's strength will continue beyond the coronavirus crisis. With states and countries now allowing medical practices to operate, many people may go back to seeing their doctors in the traditional way. Others may chose to wait until a coronavirus vaccine becomes available to them before they resume in-person visits. Or maybe not. Let's take a closer look at Teladoc's amazing first half and its future prospects.

A woman speaks with her doctor on a virtual visit via her laptop.

Image source: Getty Images.

Advice from an expert

Through Teladoc, members can set up appointments with general practitioners or specialists, get medical advice from experts, have prescriptions sent to their favorite pharmacy, and more. The service is available 24/7. Teladoc offers its services through company benefits plans and health insurers as well as directly to individuals. It has more than 12,000 client organizations and 51.5 million members. It also operates in more than 175 countries.

Last year, Teladoc facilitated 4.1 million medical visits, making it the world leader in its niche in terms of volume. That shows things were looking bright for business even prior to the pandemic.

During Teladoc's second-quarter earnings call in July, CEO Jason Gorevic said the crisis sped up the adoption of the virtual medical visit model. "And I'm confident there's no going back," he added. The numbers support Gorevic's comments. Quarterly revenue rose 85% to $241 million. And Teladoc completed about 2.8 million visits for a 200% increase year over year.

But the key point is this: In the U.S., the volume of visits remains high even in states where the coronavirus crisis is easing. Management said during the July earnings call that volume growth in those areas has been climbing more than twice as fast as it was before the outbreak. And that's as doctors' offices have reopened for business. This supports the idea that many patients will continue to choose the virtual option for doctor visits after the crisis is over.

The global telemedicine market is growing

Market data further support that premise. The global telemedicine market is forecast to grow at a compound annual rate of about 15% between now and 2027 to a value of $155.1 billion, according to Grand View Research. A report by McKinsey & Co. showed that while 11% of U.S. consumers used telemedicine last year, 76% of consumers these days say they are interested in using it in the future. And about $250 billion, or 20%, of today's healthcare spending could be moved from its current in-office or in-hospital locations to virtual, the research showed.

So the market that it serves is growing, and Teladoc is seeing the benefits. Now, what about earnings? Teladoc's merger with Livongo Health (LVGO) should help in that department in the not-too-distant future. Teladoc expects the combined company to post pro forma revenue of $1.3 billion this year and pro forma adjusted EBITDA of more than $120 million. By comparison, Teladoc's revenue last year totaled $553.3 million and adjusted EBITDA was $31.8 million.

Livongo brings to the mix its rapidly growing platform for the management of chronic diseases such as diabetes and hypertension. In the second quarter, for example, enrollment in Livongo's diabetes program surged 113% to 410,000 members. And revenue rose 125% to nearly $92 million.

TDOC Revenue (Annual) Chart

TDOC Revenue (Annual) data by YCharts

Teladoc shares have lost 8.6% since the Livongo merger announcement on Aug. 5 as investors have worried about the share dilution that will result from it. The deal is valued at $18.5 billion; Livongo shareholders will receive 0.592 shares of Teladoc plus $11.33 in cash for each Livongo share.

I see that price decline as a buying opportunity for two reasons: The coronavirus outbreak has accelerated the progress of Teladoc's already promising business. And the Livongo merger adds even more growth potential to a healthcare company that already is a market leader. I expect investors will talk about Teladoc well into the future.