The rise and fall of Teladoc Health (TDOC 0.26%) over the past three years has not been an easy experience for investors. The company benefited early in the pandemic as people increasingly sought medical care through virtual means. However, marketwide trouble and somewhat disappointing financial results from Teladoc have all contributed to its downfall, with its shares plunging 73% in the past year.

Despite that, there are good reasons to think this story has a good ending. Let's examine why Teladoc is a buy, especially at current levels.

The bottom line should improve next year

The most disappointing part of Teladoc's recent results has been the bottom line. In the trailing-12-month period, the company reported a massive net loss of $9.86 billion, dwarfing its revenue of $2.32 billion in the same period.

TDOC Revenue (TTM) Chart

TDOC Revenue (TTM) data by YCharts

Here's the story behind Teladoc's deep net losses. In 2020, it acquired diabetes-focused health monitoring company Livongo Health for $18.5 billion, paying a rich premium. It has had to write down the value of this acquisition, a noncash accounting transaction that impacts a company's bottom line.

In the first two quarters of the year, Teladoc recorded a total of $9.6 billion in impairment charges related to the Livongo deal. In other words, the company would be pretty close to profitability if it weren't for these noncash charges. And that's good news because the worst of the Livongo-related write-downs may well be in the rearview mirror.

Over the next few quarters, we should see the telehealth specialist's bottom line improve substantially on a year-over-year basis. 

Teladoc's business can still expand

Although the pandemic is behind us and government-imposed restrictions have expired in most countries, patients continue to seek virtual care services. In the third quarter, Teladoc recorded 4.6 million total visits, an increase of 14% compared to the year-ago period. The company's mid-range guidance for the entire fiscal year is 18.5 million visits, which would represent an increase of about 20% compared to 2021.

The ongoing adoption of telehealth should continue for a while. Some analysts estimate that the industry will expand at a compound annual growth rate of 24% through 2030. That shouldn't come as a surprise. Telehealth services are super convenient; they allow consultations with doctors -- as well as prescriptions and referrals -- from the comfort of one's home. In some cases, medical professionals can go beyond that. Consider mental health services. Teladoc offers therapy and counseling through its mental health platform, BetterHelp. 

The company charges between $60 and $90 per session. In contrast, in-person therapy typically costs between $75 and $150 per session on average. Receiving patients in an office requires more overhead costs, meaning a virtual care platform like BetterHelp helps physicians save money. These cost savings can be passed on to customers. That is one of the major appeals of telehealth, and it is one reason it will likely continue to grow beyond the end of the decade. 

Teladoc has built a recognizable brand name, as well as a rich ecosystem of customers (including individuals and organizations), health professionals, and medical facilities. In the third quarter, it had 57.8 million paid members in the U.S., a 10% year-over-year increase. The company recorded revenue of $611.4 million, up 17% compared to the year-ago period. 

And its net loss shrunk to $73.5 million, improving from the $84.3 million net loss it reported in the third quarter of 2021. Strengthening financials (including a better-looking bottom line) along with a significant long-term tailwind in the form of the telemedicine industry should work in Teladoc's favor. And here's the best part: the company's shares have arguably gotten dirt cheap, with a forward price-to-sales ratio of just 1.9.

TDOC PS Ratio (Forward) Chart

TDOC PS Ratio (Forward) data by YCharts

The lower, the better with this financial metric, and it doesn't get much lower than this number. Teladoc's share price of about $26.50 isn't that far off its 52-week low of $23.08 and is well below what it was in early 2020 before the company's business boomed throughout the pandemic. For investors focused on the long game, Teladoc's reasonable price is a key reason why it is a smart buy today.