Teladoc Health (TDOC 0.26%) claims it has a massive $121 billion combined total addressable market in the telehealth space. But how did it get that number?

In this video from "Beat & Raise" on Motley Fool Live, recorded on Sept. 23, contributor Brian Withers answers a viewer question by breaking down Teladoc's TAM calculations and shares the things he looks for when evaluating the metric. 

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Brian Withers: Charles was asking about the total addressable market. I'll share the slide again. He says, "What makes up the $121 billion in TAM? It seems mystical."

I think you're absolutely right. TAM is very much as an investor, I'd take it with a grain of salt. Really, what they're doing here, I'll just take one of this. Expert medicine here, they went and found a source that says there's 5.1 million annual incidences and it's about $5,500 per each case. You multiply that together and you get $28 billion. Behavioral visits, 216 million annual visits, their estimate of how many of these can be treatable. I like how they put the math down here. But it does give you some, wow, these are just wild guesses. The thing that I look at for a TAM is a couple of things. One is the company, it has a reasonable base of reality and where they're coming from and they're focused on increasing their TAM into adjacent markets. Teladoc has absolutely done that with its acquisitions and things that it's trying to pick up.