This one has been lagging for more than a minute…
I just thought I would check in on the current price and I see the current market cap is $23.14 billion. They acquired Livongo Health, a stock that was well loved here for $18.5 billion almost exactly a year ago.
This has me intrigued. I’d love to own Livongo. Now I can get Livongo and Teladoc together for just a 25% more than Livongo was valued at a year ago. Color me intrigued…
the numbers are stunning - $2B revenue run rate (give or take), last growth was 100%, and market cap is 10x sales. The thinking is there will be serious decline in growth rate which is predicated by slowing subscriber growth (though subscriber growth numbers were all over the place during the CC. The other thesis is that anyone with a ZOOM link can provide Telehealth services (which is a joke in my opinion)
If we start seeing serious decline in revenue growth rate then at 10x sales this is a OK price - but this is weird since Telehealth is just getting started. And COVID helped validate it.
I am a holder for the next 2-3 years until something fundamental changes
the numbers are stunning - $2B revenue run rate (give or take), last growth was 100%, and market cap is 10x sales. The thinking is there will be serious decline in growth rate which is predicated by slowing subscriber growth (though subscriber growth numbers were all over the place during the CC. The other thesis is that anyone with a ZOOM link can provide Telehealth services (which is a joke in my opinion)
If we start seeing serious decline in revenue growth rate then at 10x sales this is a OK price - but this is weird since Telehealth is just getting started. And COVID helped validate it.
Hi Suhel,
I preface my comment with a caution that I am not speaking from a position of having any in depth research on TDOC (nowhere near the level as I have done on UPST). My view of TDOC is coming purely from my anecdotal experience (as a physician) that many non-behavioral health patients strongly prefer in-person visits and having read a report on health industry demand/supply from earlier this year (https://f.hubspotusercontent30.net/hubfs/3833986/TrilliantHe…) the telehealth ‘macro’ outlook appears pessimistic to me.
From the report:
“83.2% of individuals that received care for a service with an equivalent virtual option during the peak of pandemic opted for an in-person visit and is similar across payer mix.”
“Delineating between total telehealth visits and the discrete number of unique individuals who used telehealth, the research concludes that only about 13% of Americans used telehealth during the pandemic; of which, most visits were for behavioral health.”
“COVID-19’s acceleration of telehealth adoption is beginning to taper and suggests long-term use
is limited to a discrete user profile. Trends for telehealth and urgent care volume suggest much of the growth in utilization was attributed to forced adoption created by the pandemic, but the widespread use of digital modalities will be limited to niche population cohorts with non-acute clinical needs.”
“The increase in capital investments in retail and tele-based companies is catering to very small
consumer segments of corresponding demand.”
I’m curious if you have a detailed case as to why TDOC should grow faster than its competitors in a likely slowing rate of growth in aggregate telehealth usage. It looks like their full year 2021 subscriber number guide is unchanged between quarters.
Unless a deep due diligence of TDOC (again, which I have not done) reveals that TDOC has exceptional management, leadership, and growth strategies to steal market share in a now flatlined/possibly declining size of the realistic telehealth total addressable market (at least, relative to peak usage rates during COVID), future TDOC growth rates are going to be married to the base case of slowing demand growth.
In comparison to UPST:
I built my largest position in UPST the day after Q1 2021 earnings were released in May, in spite of knowledge that macro outlook (Fed reserve data) was showing personal loan/consumer credit card demand had fallen sharply due to stimulus/pandemic. It was because after I got into the nitty gritty details of what separates UPST from its competitors reassured me of the business’s high probability of outperformance into Q2 2021 and beyond. I hope something similar can be shared for TDOC that we don’t know?
I was going to post this earlier on another TDOC Thread, but it can go here also. While this is antidotal, if I were a current holder of TDOC personally, it would be a big red flag.
I work for a huge video game company, one of the big three, and I went onto our benefits open enrollment site yesterday to see what changes had occurred to my health plan and make changes.
One of the first items I noticed was that our company was no longer using TDOC as our telehealth provider. We are now using a competitor, which I didn’t even know where we’re any others on this level. My company is very considerate about changes they make, and they do not make them just based on pricing. So this decision means something. Especially since they initially instituted TDOC as an option several years ago, they pushed it hard as a great option to traditional doctors visits and then pushed it again during COVID Lockdowns.
This means to me that TDOC is not sticky at all, and that would very much worry me as an investor. That’s just my opinion and, as I said, somewhat antidotal.
I’d love to own Livongo. Now I can get Livongo and Teladoc together for just a 25% more than Livongo was valued at a year ago. Color me intrigued…
Just an observation but please be sure to keep any LVGO thoughts in perspective during due diligence here. A lot of current TDOC love seems to be a transfer of LVGO love. Consider me a LVGO lover as well since it’s my all-time greatest investment. However, the merger represented a fundamental change in the business and much of the brain-power that made LVGO so intriguing has since exited the relationship.
Below are my thoughts from when I sold after the merger last August. Rereading it, I’m surprised to find almost every one of them still applies a year later. I don’t have any skin in the TDOC game at this point (and don’t plan to) but thought you might find the comments useful.
https://discussion.fool.com/stocknovice39s-august-portfolio-revi…
However, the merger represented a fundamental change in the business and much of the brain-power that made LVGO so intriguing has since exited the relationship.
To add to what stocknovice is saying here…
I wrote a post just last week on why it was a mistake to hold Teladoc as long as I did, and referenced what Saul and Bear said back last August, as well as highlighting the stagnation in their total memberships as of today.
It might be useful to read this if you’re still holding or thinking about jumping in - https://discussion.fool.com/tdoc-i-should-have-sold-last-august-….
From the quoted report, “COVID-19’s acceleration of telehealth adoption is beginning to taper and suggests long-term use is limited to a discrete user profile. Trends for telehealth and urgent care volume suggest much of the growth in utilization was attributed to forced adoption created by the pandemic, but the widespread use of digital modalities will be limited to niche population cohorts with non-acute clinical needs.”
first reminded me of the famous Watson misquote, “I think there is a world market for maybe five computers” (at best he would only have been talking about the room-sized behemoths) or the DEC guy’s 1977 gem, “There is no reason anyone would want a computer in their home”. However, those guys took more than 3-5 years to be proven wrong. Based on what we know now about how people and their doctors will probably interact in the NEAR future, I’m much more inclined to believe that report: this is not a TAM that’s growing, and could, as jonwayne suggested, actually shrink compared to the Covid peak.
So I thought I’d provide another analogy closer to my day job, not associated with Covid. Say you want to invest in a restaurant and you can pick from two otherwise-similar spots: (a) an area that’s built-out with homes already, with a few restaurants already located there or (b) one that’s earlier in its life obviously going to grow. If you pick (a), you need to take market share from the early-arrivers. If (b), you’d hardly even need a quality product; just the TAM growth alone might be enough to make it look like a decent investment, at least in the short term.
Buffett says he’d rather have a great company at fair price than a fair company at a great price. I think that sort of flips on its head here: It’s better to be in a great TAM growth field with a fair company than a declining-TAM industry with a great company. Capturing the biggest piece of a shrinking pie isn’t my cup of tea. What we do, finding the best companies in fast-growing fields, is the tasty stuff.
-n8 (sold TDOC a few months back… must be getting hungry with the food references)
Lots of very good points made - and I am beginning to question my TDOC investment.
But here are the things
This is the biggest issue with me and I will watch this carefully - I am fully aware that 2020 was a COVID year so comps are hard.
2022 will be crucial to watch and this is what the CEO said
“Our late-stage pipeline at this point is 20% greater than it was last year, right? So we’re now at a point where we have great visibility into what that’s going to look like because we’ve successfully moved those deals through the pipeline.
And what’s most exciting to me is, whereas last year, 50% of our bookings were multiproduct bookings, this year, at this point, we’re up over 75% in terms of our multiproduct bookings. And after seeing an explosion in our average deal size last year, our average deal size in our pipeline now is up another 10% versus where it was last year. So when I put all of those things together, that’s what gives us confidence as we look into '22 and beyond”
I don’t care about the beyond, but 2022 should be a crucial year to evaluate their growth…
I feel like they may be saturated in terms of telehealth subscribers at 60-70M in the US. The street is expecting 58M in 2022. After all this makes the most sense for chronic conditions and “In 2018, 51.8% of US adults had at least 1 chronic condition, and 27.2% had multiple chronic conditions”.
So maybe it makes sense to focus on revenue per subscriber and enrolling more multi-chronic patients
I agree that this may never happen so my focus will be the USA
Lastly I am discounting the competition, since in early stage many competitors show up. Established companies make press releases and in the end the pure-play who has to win or die by the business, wins.
So what about valuation - this is a $2 to 2.5B revenue company which has a lot of room to grow in terms revenue per customer, lots of data which could be leveraged to revenue in the future and some room in the international markets. They are valued at 23B (156M shares X $150). If they can double revenue in the next 2-3 years and are still valued at 10x sales, it would be an approx double.
Love reading everyone’s responses here and to be fair I may change my mind anytime and walk away from this investment (at a smallish loss)
another small competitor
https://www.onemedical.com/locations/
Analyst Ratings For 1Life Healthcare
12:24 pm ET August 12, 2021 (Benzinga) Print
Within the last quarter, 1Life Healthcare (NASDAQ:ONEM) has observed the following analyst ratings:
Last 30 Days 1 Month Ago 2 Months Ago 3 Months Ago
Bullish 0 1 1 0
Somewhat Bullish 1 1 0 3
Indifferent 0 1 0 0
Somewhat Bearish 0 0 0 0
Bearish 0 0 0 0
In the last 3 months, 10 analysts have offered 12-month price targets for 1Life Healthcare. The company has an average price target of $44.2 with a high of $63.00 and a low of $31.00.
This current average has decreased by 13.89% from the previous average price target of $51.33.