- Teladoc shares are up 113% this year.
- Teladoc holds 31% of the global telemedicine market.
- The company recently raised its guidance for full-year revenue to more than $1 billion.
Teladoc Health (NYSE:TDOC) is one of this year's stock market winners. The stock has climbed 113% since January as investors continue to reward the company for increasing revenue in a fast-growing telehealth marketplace. While activity at many other companies stalled due to the coronavirus health crisis, Teladoc experienced just the opposite. The platform for online medical visits saw business soar. Third-quarter revenue jumped 109% and total medical visits rose 206% year over year.
Though Teladoc is down from its all-time high of more than $249 reached in July, the shares have still offered the long-term investor big rewards. How much would you have today if you'd been one of the first to bet on Teladoc? Let's find out.
50% one-day gain
Teladoc wasn't a quick success story from an investment point of view. Its shares were priced at $19, and on the first day of trading, July 1, 2015, they closed at $28.50. That 50% one-day gain was great. But from there, the shares took their sweet time in growing. They traded below $40 until February 2018. Then they traded in the range of about $50 to $80 in the following year. Teladoc only surpassed the level of $100 a share at the start of 2020.
So, if you participated in the initial public offering (IPO) at the price of $19, you could have purchased about 53 shares, leaving you with about $9,490 today. If you'd scooped up the shares at the closing price on that first day of trading, you would have 35 shares worth $6,265 right now. In both cases, that is reason to celebrate. Now the question is whether there are more gains ahead for the healthcare stock.
The general market picture should make us optimistic. The worldwide telemedicine market is expected to reach more than $185 billion in value by 2026, sporting a compound annual growth rate (CAGR) of about 23% until that time, according to Fortune Business Insights. That's up from a $34 billion valuation in 2018. Teladoc's market share is also reason to be confident. Globally, the company is only second to China's Ping An Good Doctor. Ping An held 40% of the worldwide market as of last year while Teladoc held 31%, a BIS Research report shows.
Winning more market share
Just recently, Teladoc took a step that should lead to gaining market share in the coming years. The company merged with Livongo, a specialist in the at-home management of chronic diseases such as diabetes and high blood pressure. With Livongo's systems of monitoring devices, patients can track their conditions and stay in contact with healthcare professionals to guide them as needed. This expands Teladoc's already wide array of services, which includes online medical appointments in more than 450 subspecialties. The company also offers consultations with medical experts who may review diagnoses or help patients make important treatment decisions.
Of course, this year, stay-at-home orders and the temporary closure of medical offices boosted the telemedicine market. But the market forecast described above and Teladoc's own observations support the idea that growth is just beginning. Teladoc reported 2.7 million virtual visits in the second quarter, when the coronavirus crisis peaked. Even though doctor's offices reopened in the third quarter and fewer patients faced lockdowns, Teladoc's virtual visits grew to 2.8 million. "We continue to see strong evidence of sustained utilization increases for virtual care," CEO Jason Gorevic said on the company's Q3 earnings call.
An encouraging outlook
Right now, Teladoc shares are trading for less than even Wall Street analysts' lowest price forecast. According to the average price projection, the stock could increase 35% in the coming 12 months. That's encouraging. But what's even more encouraging is Teladoc's outlook. The company raised its full-year revenue guidance to more than $1 billion from the earlier range of $980 million to $995 million. Teladoc also lifted its forecast for the number of visits to the range of 10.4 million to 10.6 million. That's up from the range of 9.8 million to 10.3 million.
So if you didn't invest in Teladoc's IPO, don't worry. There are many reasons for Teladoc's shares to continue their gains: a strong position in a growing market, an expanding business with the addition of Livongo, and increasing revenue. That's just to name a few. And it means investors who buy shares today should benefit down the road.