The pandemic gave Teladoc Health (TDOC -3.02%) a big boost. That's because so many people favored online medical visits. So, the company's revenue, visits, and share price took off. Since those early days of the pandemic, revenue and visits continue to climb. But the share price story hasn't been so bright.
Teladoc has fallen 78% from its peak of $249 back in August of 2020. In fact, today it's trading lower than Wall Street's most pessimistic share price forecast. What's the problem? Some investors worry about an eventual slowdown in growth once the pandemic is over. Another concern is competition. As a result, it's logical to wonder if Teladoc ever will top $200 again. Let's take a look at a few clues and try to find the answer.
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What's held Teladoc back
First, let's consider the concerns that have held back Teladoc's performance in recent times. It's true that the earliest days of the pandemic offered Teladoc an extraordinary lift. For instance, revenue and visits climbed in the triple digits. As lockdowns eased and business returned to normal, that growth dropped into the double digits.
But here's an important element to note. The company has maintained those double-digit gains through these times when people have returned to their usual routines. And Teladoc has even grown key metrics such as membership numbers and revenue per member. In the fourth quarter, revenue and visits climbed 45% and 41%, respectively. U.S. paid members increased 6.6% to 53.6 million. And average revenue per member in the U.S. rose 53% to $2.49.
Here's why this is particularly significant: Teladoc says gains in members and revenue per member will help it achieve its 2024 revenue goal. And that's a goal of more than $4 billion in annual revenue.
Now, let's take a look at competition. Teladoc faces rivals such as American Well and -- more recently -- Amazon. But comments from Teladoc management have been encouraging. In the fourth-quarter earnings call, CEO Jason Gorevic said Teladoc beat out a rival for a deal to launch a virtual health plan with a big organization in the Midwest. Gorevic also has frequently mentioned Teladoc's whole-person care as an element that helps it maintain leadership.
Teladoc's prospects
So, we've talked about the main concerns that have held back Teladoc's stock performance. And it looks as if worries may be overdone. Now let's move on to Teladoc's prospects.
The global telehealth market, at a compound annual growth rate of more than 36%, is expected to reach $787.4 billion by 2028, according to Grand View Research. In an investor presentation earlier this year, Teladoc said 60% of consumers expressed interest in a virtual plan.
Teladoc has made progress, as I mentioned above, on growing members and revenue per member. And that's likely to continue. Today, about 92 million U.S. lives have access to a Teladoc product. That's out of a total of 298 million U.S. insured lives. So, there's room to grow.
And those with product access don't yet have access to all Teladoc products. For instance, only 35% have access to mental health telemedicine. That means there is room for growth within the current membership base too. Teladoc has a solid track record of bringing members into multiple products. For example, the percentage of individuals enrolled in more than one chronic care program doubled in the fourth quarter year over year.
A 40% decline
Let's move on to stock price. Teladoc shares haven't reflected any of the positive points above. So far this year, they've lost 40%. They're trading at little more than four times sales. This is their lowest by that measure since 2016.
TDOC PS Ratio data by YCharts
It's impossible to predict when Teladoc will rebound. But, considering business today and future potential, the stock looks cheap today. Will it top $200 again? Wall Street's most bullish analysts think so. Analysts' highest 12-month share price forecast is $215. I'm not convinced Teladoc will get there in just a year. It may take a while for investors to come back to the stock. But I am optimistic Teladoc will get there -- and maybe farther -- over the long term. And that's why it's a great stock to buy now at this dirt cheap price.
