It’s no secret that the healthcare sector is rapidly changing. Companies are launching new diagnostics and therapies on a regular basis. Even the way that healthcare services are delivered has evolved.
The adoption of telemedicine and telehealth stands out as a perfect example. The two terms are often used interchangeably to refer to the remote delivery of healthcare services using telecommunications technology. Technically, however, telemedicine specifically refers to providing clinical services remotely; telehealth can include non-clinical services as well.
The COVID-19 pandemic has caused the use of telemedicine and telehealth to skyrocket. The trend has attracted investors hoping to profit from the telemedicine and telehealth boom.
Top telemedicine and telehealth stocks to buy
There are hundreds of telemedicine and telehealth companies. Many are small and not publicly traded. However, investors still have plenty of choices to consider. Here are five top telemedicine/telehealth stocks:
1. Teladoc Health
Teladoc Health ranks as the global leader in virtual healthcare. The company offers a broad range of telehealth and digital health services, including virtual primary care, behavioral health, and chronic disease management.
More than 50% of the Fortune 500 companies use Teladoc. These large organizations, however, make up only a fraction of Teladoc’s 12,000+ clients. The company serves more than 76 million members, and its provider network includes more than 10,000 healthcare professionals.
Despite Teladoc’s success, the company still has plenty of room to grow. Fewer than one-third of insured Americans currently have access to Teladoc products. The company’s services and innovative new products continue to attract new customers even with economic uncertainty weighing somewhat on near-term growth projections.
But Teladoc doesn’t necessarily have to pick up new customers to expand its business. The company estimates that it has a $75 billion revenue opportunity within its existing membership base. Signing up current members for additional products is the key to capitalizing on the opportunity; fewer than 1% of Teladoc members use its new Primary360 virtual primary care service.
Teladoc estimates its potential market tops $260 billion in the U.S. alone. The company only has to capture a small chunk of that market to be able to deliver tremendous growth.
The stock has plunged sharply from its all-time high set in early 2021, and Teladoc’s slowing growth rate has disappointed investors. However, the company’s long-term prospects still appear to be very good.
Doximity is widely viewed as sort of a LinkedIn for doctors. That’s because the company operates a platform that connects 80% of physicians in the U.S. More than 80% of Doximity’s revenue comes from selling subscriptions to pharmaceutical companies and healthcare systems that allow the clients to promote their products and services to physicians.
However, telehealth has become a growing market for Doximity as well. The company has two telehealth products -- a free version with limited functionality and a more robust enterprise-level version that launched in May 2020. Today, Doximity has more than 360,000 active telehealth providers. More than 150 hospitals and health systems use its Doximity Dialer Enterprise telehealth product.
Doximity’s telehealth solution has also won a key industry accolade. KLAS Research named Doximity Dialer as the “Best in KLAS” winner for 2022 in the telehealth-video conferencing platforms segment.
The company’s primary growth prospects are in expanding adoption of its marketing solutions by drugmakers and healthcare systems. But Doximity thinks that it has a potential $4.3 billion market in telehealth.
Doximity’s share price has fallen significantly since September 2021, but the company continues to generate strong revenue growth and remains profitable.
3. CVS Health
You might be surprised to see CVS Health on the list of telehealth and telemedicine stocks. CVS is best known for its nationwide chain of retail pharmacies, its big pharmacy benefits management unit, and its Aetna health insurance business.
However, CVS Health is also a key player in the telehealth market. The company began working with AmWell, Doctor on Demand, and Teladoc in 2015 to explore how to incorporate virtual care into its MinuteClinics, which operate within CVS pharmacy stores.
Today, MinuteClinics allow patients to talk with licensed healthcare providers about common illnesses or prescription medication refills 24 hours per day, 365 days per year. Virtual visits related to mental health and chronic diseases are also supported during normal business hours.
Aetna teamed up with Teladoc to enable health insurance members to receive virtual care at any time from anywhere. In 2021, Aetna launched a virtual primary care service powered by Teladoc’s Primary 360 product.
CVS Health’s focus on telehealth isn’t the main reason for investors to consider the stock. However, the company could have a significant growth opportunity in telehealth, one that could boost its Aetna and retail pharmacy businesses.
GoodRx has achieved success primarily by helping consumers obtain prescription drugs at lower costs. But the company’s broader goal is to provide a digital platform that addresses all aspects of consumer healthcare.
Telehealth is a natural part of GoodRx’s strategy. The company acquired telehealth services provider HeyDoctor in 2019, and it rebranded the business as GoodRx Care the following year. GoodRx typically charges $49 for a telehealth visit, and customers who have a GoodRx Gold subscription pay only $19 per telehealth visit.
GoodRx doesn’t just offer access to its own telehealth service, though. The company’s GoodRx Telehealth Marketplace also features other third-party providers of telehealth services.
Telehealth should be a key growth driver for GoodRx in the future as a stand-alone service. The company also expects its telehealth offerings will boost its prescription transactions and serve as an opportunity for cross-selling other products and services.
GoodRx stock has plummeted in 2022. One key factor behind the decline is a dispute with a large grocery chain that stopped accepting discounts for some prescription drugs. GoodRx announced in August 2022 that the issue has been resolved.
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Amwell, formerly known as American Well, provides enterprise software solutions to enable healthcare professionals to offer telehealth services to their patients. Its telehealth platform can be fully integrated with clients’ patient portals and claims systems.
In addition to its software platform, Amwell can augment its clients’ clinical capacity. The company’s Amwell Medical Group operates a nationwide network of 6,500 healthcare professionals.
Amwell ranks as one of the biggest digital healthcare companies in the world. Its technology is used by more than 55 health insurers that cover more than 80 million people. In addition, about 150 of the largest health systems in the U.S. -- including more than 2,000 hospitals -- use Amwell’s platform.
The company’s growth opportunities include launching new products and expanding into international markets. In particular, Amwell thinks there’s potential for increasing access to digital health services for hospital patients and patients at home by using televisions. Its 2021 acquisition of SilverCloud Health, a partner to health programs in several European countries, also puts Amwell in position to move into behavioral telehealth markets outside the U.S.
Like several of the other telemedicine stocks discussed here, Amwell’s share price has fallen sharply since 2021, and the company’s revenue growth rate has slowed. But Amwell thinks that 2022 is a “transition year” with better prospects on the way.