Teladoc Health (TDOC -0.07%) experienced some exceptional gains when the global pandemic hit as telehealth medical appointments were the only option available.
Investors are concerned that the post-pandemic period will be the end of virtual healthcare. That, however, is not the case. The pandemic highlighted the benefits of virtual healthcare, and people want to continue reaping them. Let's take a look at Teladoc's efforts to expand its business and see if the stock is a good buy right now.
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Teladoc's fundamentals are strong
Although Teladoc's stock is down 68% from its 52-week high, its revenue and patient visits growth are outstanding. Teladoc's third-quarter results are a testament to its ongoing success. Third-quarter revenue jumped 17% to $611 million versus the prior-year quarter, driven by higher demand domestically and internationally.
While investors worry that telehealth patient visits will decline now that hospitals and healthcare are working in full swing, Teladoc's total visits increased by 14% to 4.5 million in Q3.
For the nine months that ended Sept. 30, total visits surged to 14 million, much higher than 7.6 million during the same period in 2020, which was the year when telehealth demands were at their peak.
The company is also making every effort to achieve profitability. Despite reporting a huge net loss in the second quarter, which included a one-time impairment charge, Teladoc seemingly recovered as it improved its net loss in the third quarter. In fact, it narrowed its net loss to $73 million from $84 million in the year-ago quarter.
Due to the rising demand, Teladoc recently revised its revenue guidance to a sunnier outlook for Q4 and the full year ended Dec. 31. Management now anticipates Q4 revenue to be in the range of $633 million to $640 million, with total visits between 4.7 million and 4.9 million.
Based on company projections, Teladoc could report a strong finish for 2022, with around $2.40 billion to $2.41 billion in revenue. Further management estimates its' BetterHelp mental health product brought in $1 billion in sales for the year.
Total visits for the 2022 fiscal year could be around 18.4 million to 18.6 million, versus 15.4 million in 2021. Adjusted EBITDA could be in the range of $240 million to $250 million. We will know more when Teladoc releases its Q4 results, likely in February. Beyond user and revenue growth, the company has a plan to reduce operational costs that could continue to propel its bottom line forward.
Virtual healthcare is the future
Various patient surveys have revealed that telehealth services allow patients to have a pleasant and stress-free medical consultation, saving them both time and money. The global telehealth and telemedicine market could be worth $285 billion by 2027, growing at a compound annual rate of 26%. Teladoc, which is already a major player in this field could thrive in the post-pandemic market. CEO Jason Gorevic stated at the J.P. Morgan Healthcare conference that the company already serves over 80 million people worldwide.
What is the verdict?
Given the growth prospects of the virtual healthcare industry and Teladoc's efforts to capture this market, this stock is a strong buy right now. But note that growth stocks also carry some risks. Healthcare stocks are likely to experience the market's highs and lows.
TDOC PS Ratio data by YCharts
That said, demand for telehealth services could increase further due to the convenience and comfort they provide to patients. Teladoc's business could thrive in the coming years, as revenue and total visits keep increasing. The stock is relatively cheap now, trading at a very low price-to-sales ratio considering its growth potential.
Those who already own this stock should hold on to it because the future opportunities for this healthcare stock to become a bigger and better business are high.
