The telehealth industry took off during the early stages of the pandemic when it was pivotal for patients to be able to access remote care easily. But a big assumption many investors have made is that the growth won't be as promising now that things have largely returned to normal. Telehealth, however, is here to stay, and it presents a big growth opportunity within healthcare.
Analysts from Grand View Research estimate it is already a $100 billion industry globally. And by the end of the decade, they expect it could be worth more than $455 billion. The growth opportunities in telehealth make this an area of healthcare that investors shouldn't overlook.
A couple of top telehealth stocks to buy hand over fist and take advantage of their valuations while they remain low are Teladoc Health (TDOC -2.40%) and Hims & Hers Health (HIMS 1.87%). Here's why these can be outstanding buys for the long haul.
1. Teladoc Health
Teladoc Health expanded at a feverish pace when stay-at-home restrictions were in place during the pandemic. Nowadays, its growth rate is a bit more modest, with the company generating just single-digit revenue increases. But the key thing is that Teladoc is still growing. Its revenue is going in the right direction. It finished 2023 with more than $2.6 billion in revenue, which was up 8% year over year, but that was also more than double the $1.1 billion it reported back in 2020.
The company isn't profitable yet, but its losses have been shrinking, and last year its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 33% to $328.1 million, or more than 12.6% of revenue.
For many growth investors, Teladoc simply isn't expanding at a fast enough rate to convince them that the company is still a good one to invest in. But with more than 18 million virtual visits last year and improvements in its top and bottom lines, the business remains strong. And as a leading provider of telehealth solutions, Teladoc is a great stock to buy to take advantage of the industry's long-term growth opportunities.
The stock is currently trading near its 52-week low and investors can get it for right around book value. It's also trading at a price-to-sales multiple of just under 1 because its market capitalization is incredibly low at $2.5 billion. The healthcare stock can be a steal of a deal and it has the potential to generate fantastic returns for investors who are willing to buy and hold.
2. Hims & Hers Health
One telehealth stock that has been a hot buy this year is Hims & Hers Health. It's up 65% because investors have been bullish on its recent results. The good news is that with a market cap of just over $3 billion, there's still room for this business to become even more valuable in the future.
Hims & Hers focuses on providing people with easy access to prescription and over-the-counter drugs that can be ordered online. It targets sensitive areas of healthcare, including hair loss and erectile dysfunction. It recently launched a virtual weight-loss program as it looks to take advantage of the growing popularity of Ozempic and other glucagon-like peptide 1 (GLP-1) drugs.
The company is a bit earlier in its growth trajectory than Teladoc and that has made it a bit easier for it to still post impressive increases in its top line. Last year's revenue totaled $872 million, which was up an impressive 65% year over year. It posted a loss of $23.5 million, but adjusted EBITDA flipped from a loss of $15.8 million in 2022 to positive $49.5 million.
Hims & Hers also finished the year with 1.5 million subscribers, which was an increase of 48% year over year. Subscribers are a key to the business because they order products on a recurring basis, and continued growth in that metric is a positive sign the business is expanding.
While Hims & Hers stock trades at more than 8 times book value and may not be as cheap of a buy as Teladoc, its more explosive growth rate and the potential for it to get much bigger in the future makes this another outstanding stock to load up on right now.
