TDOC - Notes after IR Dept. call

Investment Analysis Clubs Saul’s Investing Discussions
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Recently, I arranged a call with TDOC’s IR Department and since some on this board have a position in this business, am sharing my notes below -

Teladoc is the worldwide leader in telemedicine

It has 80% market share of online consultations in the US, next largest competitor has 13-15% market share, 3rd biggest firm only has 2-3% market share

Company has signed up more than 3,000 doctors on its network

A typical GP consultation costs $45, the doctor keeps $25, cost to the company (call centre + infrastructure) is $5; so gross profit from GP consultation is $15

GP consultation costs $45, dermatology = $80 and mental health consultations = $120

Average gross profit across all types of consultations is around $25

Business has already signed up over 12,000 corporate clients in over 125 countries

40% of the Fortune 500 companies are now clients

Total members are around 23 million out of which 19 million are non-subscription fee members (Aetna, TriCare and Bluecross members AND 9.6 million individuals who only pay per consultation)

Member count may go up significantly in 2020 once the government approves telemedicine for Medicare and Medicaid

According to TDOC, the TAM is $57 billion and its current penetration rate is around 1%

Teladoc considers that the breadth of services (GP, mental health, second opinions) and international reach are competitive advantages

Advantage of service to users = 24/7 healthcare and access in remote areas

Approximately 50% of telemedicine consultations are during holidays and outside working hours

Advantage of service to insurers and government = lower healthcare costs

Risks include government regulation, cyber hacks and increased competition

Growth has been impressive but has been boosted due to acquisitions (2yr revenue CAGR = 84%)

Recurring subscription revenue = 84% and consultation revenue = 16%

International revenue has grown to around 22% of total revenue

Existing employers’ utilisation is going up (employees are using the service more each year)

Organic US paid membership growth (YOY) = 23%

The company estimates that in 2018 it arranged 2.55 million consultations (versus 1.46 million in 2017)

Teladoc expects revenue to grow by 25-30% CAGR for several years

Over 1 billion doctor visits take place each year in the US alone

If telemedicine accounts for just 5% of all consultations in the future and if increased competition reduces Teladoc’s US market share from 80% to just 50%, this will equate to around 25 million annual domestic consultations - 10x from current levels

Telemedicine appears to be a promising industry and although it will never fully replace actual doctor visits, there is a good chance that 5-10% of consultations may end up online in the future.

After all, telemedicine is cheaper, more convenient and available 24/7 at short notice.

I hope this has been helpful.

  • GM
19 Likes
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Great post GM… how did you find success setting up a call with IR? I’d love to do these personally too.

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Thanks Austin; your recent post on TDOC inspired me to share my notes on this board and I’ve also initiated a starter position. I’ve also sent Asher (TDOC’s IR Dept.) a bunch of follow up questions and will post after he responds.

Arranging calls with the IR Department is easy; I arranged hundreds of these when I ran my money management firm for 15 years.

These days, I just email the IR Department and tell them that I’m a private investor and a money manager who is interested in their company. When the companies ask for details, I simply send them youtube links of my TV interviews with Bloomberg, CNBC etc which I used to do regularly pre-retirement; that usually works :slight_smile:

Nine times out of ten, the companies are more than willing to speak to me.

If you want me to arrange additional ‘calls’ with any IR Department, let me know and I’ll try.

Best,

GM

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I have used their services twice in the last week. They saved me trips to emergency rooms (and the $200 charge each time I set foot in there). My insurance company, blue shield of CA, sent out their cards to all the members in my company.

Downloading the iOS app was trivial. It took maybe 15 minutes to set up everything (medical history, insurance, payment, etc).

Each visit cost me $5 out of pocket. One call I set up an appointment “as soon as possible” and it took about an hour to get a response. On another, I scheduled a video call appointment at a particular time, the doctor came online 10 minutes later. The consultation took around 15 minutes each time. I got prescriptions from my pharmacy of choice within an hour and had the medicine in my hand in about 2 hours.

I am pretty satisfied as a customer. I am a little considered about the size of the losses. I try to find companies that are fast growing while close to breakeven. This company appears 2-3 years out from breakeven, so a little early for me.

But I am considering it.

Thanks for the writeup!
Rob

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Thanks Rob for sharing your personal experience with Teladoc.

I’m not based in the US so your first hand account is very useful.

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I have been in and out of this one… just not sure what the organic growth looks like vs bought out growth with all acquisitions.

I thought the cash flow from operations hit positive last quarter, not sure if this was seasonal effect or one can expect sustained positive cash flow.

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Agreed.

Depending on the IR Department’s response, I may close my starter position. Too many great growth stories around so we are all spoilt for choice.