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2 Stocks to Buy as the U.S. Population Ages

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One's a healthcare disruptor, the other's a consumer tech powerhouse that's beginning to make inroads into the healthcare space.

The healthcare industry is known to be financially resilient -- companies in it provide products and services that people will continue to need regardless of outside factors such as changes in the economy. Companies operating in or around this industry will also make particularly interesting investments because the demographic makeup of the U.S. population is getting steadily older. 

In this segment of Backstage Pass, recorded on Oct. 13, Fool contributors Trevor Jennewine and Brian Withers discuss two stocks that they think will be great performers over the long haul due to the nation's aging population. 

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Trevor Jennewine: So I'm sure most of our viewers are familiar with Teladoc (TDOC -5.50%). The company became a household name last year with the pandemic. Teladoc has a virtual-first healthcare platform which essentially allows patients to meet with medical professionals from the comfort of their own home. So one of the big advantages of virtualized healthcare is that convenience, and I think that's valuable -- especially in an aging population where they might need to meet with their healthcare providers more frequently than the younger populations might need to do. Just to put a number behind that convenience, last year, in Teladoc's SEC filings, it mentioned that the average time between a member's request for a visit and that visit taking place was less than 10 minutes.

So that's just a really fast turnaround time. I don't know about you, but it takes me longer than 10 minutes to drive to the doctor, let alone actually sitting in the waiting room, and then you have to drive back home. So, very convenient.

But I think it also makes things more efficient on the provider side. Maybe they don't need as much support staff or they spend less on maintaining their offices. So these cost savings end up being passed along to clients.

In Teladoc's SEC filings, it mentions that the average savings per general visit is $472 -- that's what's being saved by its clients -- health plans, insurance companies, employers. That's a big figure, $472 per visit. So it's more convenient on the patient side. It seems to be more cost-effective on the client side. I think the reason Teladoc in particular is well-positioned to benefit maybe more than its peers in the industry is that management is really focused on building out the whole-person-care platform.

Teladoc's network of providers includes a global expert panel that comprises 50,000 healthcare professionals around the world, and that group includes 450 sub-specialties. The platform supports everything from general health and wellness -- if you want to see a nutritionist, with Teladoc you can do that -- to acute care. If you have an upper respiratory tract infection or the flu, you can see a physician for that. And then also chronic conditions -- the Livongo acquisition really expanded Teladoc's presence in that chronic care sector.

Livongo's platform blends artificial intelligence and health coaches to help patients manage chronic conditions like diabetes and hypertension. It's expanded into weight management and mental health. Then there's more cost savings that are created by helping these patients, like diabetes in particular, by helping patients control their blood sugar and control their diabetes in general. Teladoc mentioned $1,908 savings per customer per year that's enrolled in its diabetic management program. Again, an enormous savings figure with this platform.

And I think this is particularly valuable: It has pushed into primary care. It has a product called Primary360 where it's essentially virtualizing primary care solutions. Rather than just being the place you go when you get sick and you're not expecting it, you wake up with a fever, they're building a primary care solution where patients are matched up with the care team and one physician, so you build a relationship with those providers over time. So you're not seeing somebody different each time you go to one of these virtual visits.

I think all of those things are valuable to aging populations. Chronic conditions tend to be more prevalent in those populations, and so having that broad portfolio of services, a huge array of medical professionals around the world, plus that push into primary care -- I think that makes Teladoc a standout solution in the market, and I think that makes it [valuable] to aging patients.

Brian Withers: Trevor, you took my pick. [laughs] Absolutely. What a pitch. You pitched it way better than I could. But absolutely. The aging population, you think about it, anytime they get in the car to go someplace else -- I had an aging relative who was going back to the doctor for just a checkup, and then just getting in and out of the car, they fell and caused some additional injuries which took even longer to get over. Just the convenience of healthcare in the home and what Teladoc can do to facilitate that, I think is an absolute great, fantastic tailwind.

So playing off of that, we talked about Best Buy the other day, and how it's getting into healthcare devices that people can use at their home -- connected devices to the Internet that can track chronic care or keep track of blood pressure or all sorts of different things. I think that there is absolutely a desire here for people to have more capabilities at home as Teladoc becomes more available.

Can you get your blood pressure or can you take your temperature or whatever other measurements you can get at the doctor? Having devices in your home readily available that can provide that information could make a Teladoc visit even more effective. Apple (AAPL -2.01%) is looking to make a huge dent here. Tim Cook has gone on record saying he wants Apple to be known as a healthcare company. Their Series 7 Watch has more healthcare features and apps than any version in the past.

I think that is a fantastic way to keep track of how your health is going -- through a device that's on your wrist. How much simpler can it get? As we all age, it's likely we are going to have something on our wrist that may even just hook up to Teladoc and let us know if there's a problem in advance of it happening. So Apple is my pick there -- AAPL.

Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple and Teladoc Health. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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