Over the past five years, Teladoc Health (TDOC 2.19%) has lost more than 98% of its market value, as the telemedicine specialist failed to reproduce the success it had during the earlier pandemic years.
Teladoc Health has been looking to turn things around. It hopes that several of its initiatives will eventually pay off. But how likely is that?
Let's look a bit deeper into Teladoc and decide whether the stock will keep plummeting until its shares become essentially worthless or whether there is a strong chance it can stage a rebound.
Image source: Getty Images.
The competition is fierce
Demand for telemedicine services peaked during the pandemic, as people had little choice but to use them. It dropped sharply post-pandemic, but the data suggest it remains well above pre-pandemic levels.
One study found that telemedicine usage went from 5% before the pandemic to 42.1% during, then 21.8% after. That's still a large increase compared to pre-2019, and being a leader in this niche, you might think Teladoc would benefit.
One issue, though, is that the company started facing significant competition, sometimes from much larger corporations with deep ecosystems. Amazon is just one such example. Competition, especially within the virtual mental health niche, also posed a problem for Teladoc's biggest growth driver: BetterHelp, its virtual therapy service.
How has Teladoc sought to address these challenges? The company is seeking third-party coverage for BetterHelp, which could boost demand for the platform. It has also launched new services, including continuous health monitoring and chronic care, such as health coaches, at-home testing for various health markers, and access to a dietitian, among other things.
Teladoc has also expanded internationally. International revenue has been growing much faster than the rest of the business in recent quarters.
NYSE: TDOC
Key Data Points
But is it enough?
Despite Teladoc's efforts, revenue continues to grow slowly -- at best, earnings are negative, and although international expansion is going well for now, it will stretch its expenses, and the company might run into the same problems abroad.
Further, it has not yet secured broad health insurance coverage for its therapy services. This is despite Teladoc acquiring UpLift, a virtual care service with 100 million covered lives -- most of whom have yet to opt in. This also shows that even third-party coverage does not necessarily translate into demand for the product or into revenue for Teladoc.
So, can the stock bounce back? My view is that Teladoc faces nearly insurmountable challenges and is more likely to continue moving in the wrong direction. The company's shares recently traded hands for $4.90 apiece. In five years, it might be even closer to $0.
