Teladoc Health's (TDOC -0.07%) stock price soared during the early days of the pandemic as people opted for online medical visits. As a result, Teladoc's visits and revenue climbed.
The future also seems bright. Analysts predict major growth for telehealth companies. The global telehealth market, at a compound annual growth rate of 32%, is expected to reach $636 billion in 2028, according to Fortune Business Insights.
But in recent times, investors haven't been so optimistic about Teladoc. The shares fell 54% last year and have lost 34% so far this year, despite the company's continued growth. Why the negative feelings? Let's take a look at a big risk Teladoc faces -- and one comment from the company's CEO that may eliminate it.
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Competition in a growing market
First, let's talk about the risk -- and that's the competition in this growing market. American Well, known as Amwell, and Amazon are just two examples. Alphabet's Google partnered with Amwell back in 2020. Google Cloud invested $100 million in the company as part of an effort to expand access to virtual care. Amwell also went public that year, and like Teladoc, its revenue has been on the rise.
As for Amazon, the retail giant entered the telehealth market with its Amazon Care service back in 2019. First, it offered services only to Amazon employees, and then started rolling them out to other companies.
Investors have been worrying that these and other telehealth providers may limit Teladoc's growth over the long term. But 18 words from Teladoc CEO Jason Gorevic during this week's earnings call show that the company may be staying ahead of its competitors.
During the fourth-quarter call, Teladoc said it plans on welcoming several new clients to its Primary360 offering this year. This includes a partnership with a big organization in the Midwest. Teladoc will start a virtual first healthcare plan there. In this type of plan, patients' first point of contact for care is an online medical visit.
"This integrated health system deal is notable as we beat out an incumbent telemedicine provider in the process," Gorevic said.
The ability to stand out
This illustrates Teladoc's ability to stand out among rivals. Gorevic has spoken out on the subject in past earnings calls, too. In the third quarter, he emphasized the strength of Teladoc's retention and win rates. And he mentioned that the reason behind the success is the complete selection of products available.
It's important to remember that Teladoc is aggressively promoting its ability to treat the whole person. The starting point is Primary360. This is the primary-care product that Teladoc considers an entry point to its services. Teladoc now has more than 50 clients -- many of them Fortune 500 companies -- using Primary360.
The company also is making gains in two other important areas: mental health and chronic care. Teladoc says this use of a complete range of services is adding to revenue. Members using mental-health services, along with other Teladoc programs, usually result in 20% to 60% more revenue than members using mental health services only. As for chronic care, Teladoc increased the number of individuals enrolled by 22% year over year to 729,000.
This is an important growth market. That's because about 40% of the total U.S. population suffers from chronic conditions, according to the National Health Council.
What does all of this mean for investors? It's clear that competition exists in the telemedicine market, but it may not represent a huge problem for Teladoc. The company is showing it can stay ahead of rivals. And growth in visits and Teladoc's various services has continued, during the worst of the pandemic through the days when people returned to their normal routines. This indicates telemedicine wasn't just a trend during lockdowns.
All of this means investors have reason to be optimistic about Teladoc's market position today -- and down the road.
