Teladoc (TDOC +0.47%) has played a vital role in allowing people to safely get the healthcare they need during the pandemic, and has expanded impressively in the process. In addition to its incredible organic growth in 2020, management also made two major acquisitions. But what can investors expect from the telehealth leader this year?
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1. Indigestion
The first thing to expect is that Teladoc may experience some difficulties in integrating the larger of those two acquisitions. Livongo, which it purchased for $18.5 billion, offers chronic condition management through technology, virtual care, and coaching. It also boasts world-class customer loyalty and employees who are deeply committed to its mission. In fact, one-third of Livongo employees actually use its services. But several C-suite executives are leaving now that the deal has closed, and blending the two cultures may prove more difficult than shareholders are expecting.
2. International flair
By the end of 2019, the company had 17 offices worldwide, allowing it to serve patients in more than 175 countries and 40 languages. Expect Teladoc to continue selectively buying international companies. In the first nine months of 2020, international visits rose 73% year over year to 1.33 million. In order to become the dominant virtual health provider globally, management will want to increase its presence and offerings for multinational corporations. It has already signed up 40% of the Fortune 500 as clients.
3. Stock price volatility
As the distribution of COVID-19 vaccines accelerates, there is hope that the second half of the year will include something like a return to normalcy. If the pandemic recedes as a threat, expect a lot of uncertainty about the addressable market for telehealth, and patients' interest in continuing to utilize it. So far, virtual visits have continued to grow.
| Quarter | Patient Visits | Growth (YOY) | Utilization Rate |
|---|---|---|---|
| Q4 2019 | 1.24 million | 44% | 9.5% |
| Q1 2020 | 2.00 million | 99% | 13.4% |
| Q2 2020 | 2.80 million | 208% | 16% |
| Q3 2020 | 2.84 million | 206% | 16.5% |
DATA source: TELADOC. YOY = YEAR OVER YEAR. TABLE BY AUTHOR.
If patients' new healthcare habits outlast the current crisis, 2021 might offer further market-beating returns for Teladoc. If its key metrics return to 2019 levels, however, shareholders can expect a rough year.
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