Teladoc (NYSE: TDOC) has had an amazing year. There are few companies that ever have as exciting a year as Teladoc did in 2020. A remote service during a global pandemic, a transformational deal, and a stock price that is up 140% will generate some buzz. Now that 2020 is ending, should we buy, sell, or hold Teladoc heading into 2021?
Image source: Getty Images.
A new normal
Teladoc's numbers paint a clear picture of the pandemic. Revenue and telehealth visits have continued climbing throughout the year while the number of members has stagnated. As you might guess, the utilization -- the number of visits divided by the number of members -- has jumped from 9.5% at the end of 2019 to 16.5% now.
| Quarter | Revenue Growth | Visit Growth | Members |
|---|---|---|---|
| Q4 2019 | 27% | 44% | 36.7 million |
| Q1 2020 | 41% | 92% | 43.0 |
| Q2 2020 | 85% | 203% | 51.5 |
| Q3 2020 | 109% | 206% | 51.5 |
Data Source: Teladoc Press Releases.
One of the big questions for investors is whether consumers who are now aware of telehealth will continue using it after the pandemic is over. So far, the evidence suggests they will. Even as offices opened up in the third quarter, people still opted for televisits. CEO Jason Gorevic noted on the third-quarter earnings call that users are now logging onto the platform for a broader array of services than at the height of shutdowns. He predicted even in a more normal infectious-disease environment, the new utilization rates would persist next year.
Cultural fit
The other big unknown is how smoothly the company can integrate Livongo, a digital health-management company, now that the chief executive officer (CEO), president, chief financial officer (CFO), and senior vice president (SVP) of business development have left the acquired company. Although I remain skeptical of the tie-up, maintaining the high utilization rates would eliminate one of my primary concerns. For now, I believe the stock is a "hold" until we get a sense of how well Teladoc can integrate Livongo's customers without disrupting the culture that made it so successful.
