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 caused the use of telemedicine and telehealth to skyrocket. The trend has attracted investors hoping to profit from the telemedicine and telehealth boom.
1. Teladoc Health
NYSE: TDOC
Key Data Points
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 93 million members have access to Teladoc Health's services in the U.S. Over 40,000 clinicians use Teladoc's platform. The company has handled more than 75 million virtual visits since 2020.
Teladoc has two business segments: integrated care and BetterHelp. Integrated care includes telemedicine and digital chronic care solutions. The segment generates more than half of the company's total revenue. BetterHelp operates the industry-leading platform for virtual mental health.
The company could grow in several ways, including expanding its products and services. Teladoc should also benefit from long-term tailwinds such as the increasing number of individuals with chronic conditions and provider shortages.
2. Doximity
NYSE: DOCS
Key Data Points
Doximity is widely viewed as a sort of LinkedIn for doctors. That's because the company operates a platform that connects more than 80% of physicians in the U.S. Roughly 95% 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 a voice and video telehealth product called Dialer. KLAS Research has named Dialer the best telehealth video conferencing platform for four consecutive years.
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.
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.
4. GoodRx
GoodRx has achieved success primarily by helping consumers obtain prescription drugs at lower costs. However, 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 between $40 and $90 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 standalone service. The company also expects its telehealth offerings to boost its prescription transactions and serve as an opportunity for cross-selling other products and services.
5. Amwell
Amwell, also 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.
The company's Amwell Medical Group offers a nationwide network of clinicians with 24/7/365 coverage. This unit can augment clients' clinical staff as needed.
Amwell's technology is used by around 50 health insurers that cover more than 80 million members. In addition, more than 2,000 hospitals use Amwell's platform.
The company's growth opportunities include launching new products and expanding into international markets. Its 2021 acquisition of SilverCloud Health, a partner to health programs in several European countries, should continue to help Amwell expand in behavioral telehealth markets outside the U.S.
Related investing topics
Pros and cons of investing in telemedicine stocks
Pros of investing in telemedicine stocks include:
- Growth opportunities resulting from fewer regulatory barriers and greater reimbursement for telemedicine.
- Aging demographic trends should boost the demand for telemedicine.
- Investment alternatives include pure plays such as Teladoc, healthcare giants like CVS Health, and technology platform providers such as Doximity.
However, there are a few potential downsides to investing in telemedicine stocks, such as:
- Significant competition with relatively low barriers to entry.
- Regulatory uncertainty.
- Limitations on what healthcare services can be offered via telemedicine.
How to choose telemedicine stocks
Choosing telemedicine stocks isn't significantly different from choosing other kinds of stocks, although there are a couple of distinctive things to look for that are specific to telemedicine. Here are key factors to consider in choosing telemedicine stocks to buy:
- Revenue and earnings growth.
- Free cash flow.
- Valuation.
- Competitive advantages.
- Management team experience and vision.
- Innovation track record and development pipeline.
- Customer satisfaction with the telemedicine platform.
- Telemedicine regulations in the markets served.
How to invest in telemedicine stocks
Follow these steps to invest in telemedicine stocks:
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
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