TDOC

Investment Analysis Clubs Saul’s Investing Discussions
#1

Looks like CMS has passed new billing rules for 2021 expanding coverage for telemedicine. This should be a tailwind for Teladoc.

CMS released its annual changes to the physician fee schedule for 2021, which updates the payment rates for physician services and expands the list of telehealth services covered by Medicare.

Six takeaways from the 2,165-page final rule:

2. Telehealth. The final rule adds more than 60 services to Medicare’s telehealth list, ensuring they’re covered beyond the end of the COVID-19 public health emergency. “These additions allow beneficiaries in rural areas who are in a medical facility … to continue to have access to telehealth services such as certain types of emergency department visits, therapy services, and critical care services,” CMS said. The agency said it will gather more data and evaluate whether more services should be added.

3. Direct supervision by interactive telecommunication technology. For the duration of the public health emergency CMS adopted a policy revising the definition of direct supervision to include virtual presence of the supervising physician or practitioner using real-time video communications technology. Under the final rule, direct supervision can be provided using real-time, interactive audio and video technology through Dec. 31, 2021.

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#2

Six takeaways from the 2,165-page final rule:

This HUGE regulatory oversight is one of the main reasons I stay away from healthcare stocks. Teladoc was one exception but only for the “Tela” part of the equation. Livongo was the other exception because I did not see it as healthcare but as cost cutting for healthcare payors. Livongo is gone with the merger and TDOC has been falling for over four months.* I’ve been looking for replacements for TDOC for several months. Last week I had a good look at ARK Invest whose largest position is Tesla, not to invest in their ETFs but to get to know their investing strategies. Some turn to Bert and Beth. I prefer to study ARK Invest’s philosophy. At the core of ARK’s strategy is Wright’s Law (similar to Moore’s Law), a law that predicts how much the cost of production drops with increasing volume. Similar to economies of scale but taking into account the learning curve. This is not a magic wand. Part of the 2000 bubble bursting can be attributed to the fast falling cost of fiber optics as technology figured out how to send multiple signals in parallel down the fiber. The stiff competition drove prices so low that optic fiber communication networks did not have enough cash flow to pay off their investments so they were bankrupt. Too much of a good thing! :frowning:

Currently Saul’s focus is on Growth via SaaS which has delivered fantastic returns. While I’m heavily invested in SaaS I’m also looking for segment diversification to counteract my low position count concentration. While price regulation keeps me from most healthcare some areas are less affected. I found three that ARK Invest likes, Twist Bioscience Corporation (TWST), Pacific Biosciences of California, Inc. (PACB), and Invitae Corporation (NVTA) plus one specialty 3DP outfit, Nano Dimension Ltd. (NNDM). I started researching these companies as substitutes for TDOC but I have yet to take a position in any of them:

Nano Dimension Ltd. (NNDM)
Ness Ziona, Israel
Speculative, specialized 3DP - small position

Nano Dimension Ltd., together with its subsidiaries, provides additive electronics in Israel and internationally. Its flagship product is the proprietary DragonFly lights-out digital manufacturing system, a precision system that produces professional multilayer circuit-boards, radio frequency antennas, sensors, conductive geometries, and molded connected devices for prototyping through custom additive manufacturing.
https://finance.yahoo.com/quote/NNDM/profile?p=NNDM

Why Nano Dimension Stock Skyrocketed 110.5% in November
https://finance.yahoo.com/m/20d19cd2-5694-3736-912d-507f4f51…

Twist Bioscience Corporation (TWST)
South San Francisco, CA

Twist Bioscience Corporation, a synthetic biology company, manufactures and sells synthetic DNA-based products. The company’s DNA synthesis platform enables the manufacturing of synthetic DNA by writing DNA on a silicon chip. It offers synthetic DNA-based products, including synthetic genes, tools for sample preparation, antibody libraries for drug discovery and development, and DNA as a digital data storage medium.
https://finance.yahoo.com/quote/TWST/profile?p=TWST

About Twist Bioscience Corporation

Twist Bioscience is a leading and rapidly growing synthetic biology and genomics company that has developed a disruptive DNA synthesis platform to industrialize the engineering of biology. The core of the platform is a proprietary technology that pioneers a new method of manufacturing synthetic DNA by “writing” DNA on a silicon chip. Twist is leveraging its unique technology to manufacture a broad range of synthetic DNA-based products, including synthetic genes, tools for next-generation sequencing (NGS) preparation, and antibody libraries for drug discovery and development. Twist is also pursuing longer-term opportunities in digital data storage in DNA and biologics drug discovery. Twist makes products for use across many industries including healthcare, industrial chemicals, agriculture and academic research.
https://finance.yahoo.com/news/twist-bioscience-expands-gene…

Pacific Biosciences of California, Inc. (PACB)
Menlo Park, CA

Pacific Biosciences of California, Inc. designs, develops, and manufactures sequencing systems to resolve genetically complex problems. Its single molecule real-time (SMRT) sequencing technology enables single molecule real-time detection of biological processes.
https://finance.yahoo.com/quote/PACB/profile?p=PACB

Invitae Corporation (NVTA)
San Francisco, CA

Invitae Corporation, a medical genetics company, processes DNA-containing samples, analyzes information related to patient-specific genetic variation, and generates test reports for clinicians and their patients in the United States, Canada, and internationally. It offers genetic tests in various clinical areas, including hereditary cancer, cardiology, neurology, pediatrics, metabolic conditions, and rare diseases; prenatal and perinatal genetic tests; and non-invasive prenatal screening products.
https://finance.yahoo.com/quote/NVTA/profile?p=NVTA

Furthermore, the actual care that you receive is changing due to the science of information technology applied to biology, commonly called precision medicine, which is starting to make patient care better and more tailored to your unique biology. We’ve seen some multibillion-dollar deals shining a light on the precision-medicine space recently, including Illumina’s [ticker: ILMN] acquisition of Grail and Invitae’s [NVTA] acquisition of ArcherDx.

https://www.barrons.com/articles/precision-medicine-is-trans…

Invest like the best with Cathie Wood (ARK Invest)
I [Jimb05] had a started position in ILMN and sold it because of valuation. I was an idiot.
https://discussion.fool.com/invest-like-the-best-with-cathie-woo…

As you can see, I’m more interested in the stories that back good numbers than just in the numbers. There is a lot of “old school” in medicine but science and technology about genes and DNA should be the fast growing “new school.” In case you didn’t notice, all three bioscience outfits are located in Silicon Valley! The reason for the post is that I’m going to sell out TDOC, probably tomorrow. It’s not that TDOC is not a good investment but I think there are better ones.

Denny Schlesinger

  • The TDOC price chart wedge suggests there should be breakout soon. Hard to tell if up or down.

Wedge
By GORDON SCOTT, CMT

What Is a Wedge?

A wedge is a price pattern marked by converging trend lines on a price chart. The two trend lines are drawn to connect the respective highs and lows of a price series over the course of 10 to 50 periods. The lines show that the highs and the lows are either rising or falling and differing rates, giving the appearance of a wedge as the lines approach a convergence. Wedge shaped trend lines are considered useful indicators of a potential reversal in price action by technical analysts.
https://www.investopedia.com/terms/w/wedge.asp

https://finance.yahoo.com/quote/TDOC/chart?p=TDOC#eyJpbnRlcn…

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#3

I don’t Usually respond to posts because I’m still a novice in this world.
Found AMWL on Beth’s site and started a half position last week. This trend isn’t going away anytime soon. Worth putting on it on your watch list.

American Well Corporation is a telehealth company enabling digital delivery of care for the healthcare sector. The Amwell Platform is a digital care delivery solution that equips its health system and health plan, including government, clients with the tools to enable new models of care for their patients and members. Its technology embeds with its clients’ existing offerings and clinical workflows, spanning the continuum of care and enabling care delivery across a range of clinical, retail, school and home settings. The Amwell Platform consists of the home line, provider-to-patient telehealth interactions, typically in the home, and the hospital line, supporting provider-to-provider telehealth interactions, or provider-to-patient, typically in an inpatient or ambulatory setting. The Company offers a range of management software, clinical workflows, Carepoint hardware and system integrations to deliver care across various modalities, including video, phone and secure messaging.

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#4

The reason for the post is that I’m going to sell out TDOC, probably tomorrow. It’s not that TDOC is not a good investment but I think there are better ones.

Hmmm. I looked and TDOC is my only red position since purchasing. -2.71%

Thank you.

#5

I prefer to study ARK Invest's philosophy.

ARK has been loading up on Teledoc over the past month. They now hold 4M shares worth $786M in the Innovation and Next Gen Internet ETFs, 6th and 5th largest positions respectively.

Study their philosophy, not follow their trades. :wink:

Denny Schlesinger

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#6

Denny,
I see a couple of issues facing TDOC:

  1. Can they handle the Livongo merger well?
  2. Will post Covid lead to a huge drop in telehealth?
    On #1 for next quarter or 2 I would like to see more and more Livongo wins such as the one we saw with Guidewell in Oct. On #2 everything I have seen about Telehealth shows that it will grow at CAGR of 25%+ for the next 5-7 years.
    I think both of the issues will resolve positively for TDOC. But we can know that for sure only after the combined company has had a quarter or 2 under its belt.
    At current price TDOC will have a P/S of <14 by 12/21 assuming $2 B rev for 2021. For a 40%+ grower that seems reasonable.
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#7

I prefer to study ARK Invest’s philosophy.

ARK has been loading up on Teledoc over the past month. They now hold 4M shares worth $786M in the Innovation and Next Gen Internet ETFs, 6th and 5th largest positions respectively.

Study their philosophy, not follow their trades. :wink:

Denny Schlesinger

um…I think their biggest philosophy in the last 10 months = buy TDOC (not sell TDOC)

So, across 4 ETFs, ARK owns about $2.5 billion.

I had not added it up before, but that equals almost 9% of the entire company. ARK has 24 separate buys of TDOC stock in Nov and Dec. No other stock is even close for # of buys or % (size) of buys. I’m not understanding how you are following their philosophy if you are selling the biggest thing they are buying.

Yes, it has gone nowhere (or down) since the merger. I agree with what someone else said - the market is waiting to see the ER results of the combined company. I also think there is probably some tax loss harvesting going on.

I am biased. Biggest position - 12%. Was 20% at one point, but other stocks have caught up while TDOC treads water. TDOC is a long term hold for me.

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#8

This is a useful site to track ARKs position sizes over time vs price…

https://cathiesark.com/ark-funds-combined/complete-holdings

TDOC certainly seems like a stock they are loading up on…

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#9

I’m not understanding how you are following their philosophy if you are selling the biggest thing they are buying.

I didn’t say I was going to follow their philosophy. I said: “I prefer to study ARK Invest’s philosophy. At the core of ARK’s strategy is Wright’s Law (similar to Moore’s Law), a law that predicts how much the cost of production drops with increasing volume.”

https://discussion.fool.com/six-takeaways-from-the-2165-page-fin…

An important issue is that each portfolio should fit the owner like a well tailored suit. I, of course, looked at ARK’s positions to see which of them would be a good fit for my portfolio. I clearly stated why I was looking to replace Teladoc:

Six takeaways from the **2,165-page** final rule:

This HUGE regulatory oversight is one of the main reasons I stay away from healthcare stocks.

https://discussion.fool.com/six-takeaways-from-the-2165-page-fin…

The idea is not to clone Cathie Wood or Saul Rosenthal but to learn from them.

Denny Schlesinger

BTW, TSLA was becoming a very large position in my portfolio before I met Cathy! :wink:

BTW2, TDOC has outperformed all five of ARK’s ETFs over the past five years.

https://softwaretimes.com/pics/tdoc-12-14-2020.gif

Now that TDOC is off its high and down to the 200 DMA, it seems a reasonable time for ARK to load up on TDOC. I don’t see how Wright’s Law applies since they don’t manufacture anything. They must be using a different algorithm.

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#10

This is a useful site to track ARKs position sizes over time vs price…

Wow.

That site is great - thank you so much for sharing. Seeing the trades graphed for each stock is beautiful. Pops out on the graph that ARK has tripled its position in the last 6 weeks. They have made a big time investment in TDOC.

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#11

I just began to track Teladoc’s tweets.
It is going to be interesting to see the trend of number of tweets and their sentiments (AI)
I will post the trend in 1 or 2 weeks.

Here are two latest sample tweets from customers - one positive and one negative

y’all I cannot say enough good things about
@Teladoc Access to healthcare for minor things can be so diffcult esp right now so being able to access cheap/free medical help from my phone … 10/10

Doctor misses putting in the prescription and
@Teladoc won’t make any time commitment to getting the issue resolved - God help the patient #Telemedicine

The trend is one more input in your investment decision about the company.
I don’t own TDOC but looking at it to invest.

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#12

“I don’t see how Wright’s Law applies since they don’t manufacture anything. They must be using a different algorithm”.

Cathie explains their investment thesis here at 1:08:40

https://ark-invest.com/webinars/november-20-market-update-we…

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#13

Cathie explains their investment thesis here at 1:08:40

https://ark-invest.com/webinars/november-20-market-update-we…

RoNerd, I really appreciate the link. Indeed Teladoc is not based on Wright’s Law but on gathering more information for AI. While that sounds like an advantage it’s not as time tested as Wright’s Law. A bit earlier she describes Teladoc as professional oriented with lots of competition and Livongo as patient oriented, pretty much like I saw them myself.

While ARK has five ETFs they share a lot of the stocks. Does Tesla really fit all four categories it’s in?

I bought a tiny position in Nano Dimension (NNDM). I like 3DP but only for specialized applications, not commodity plastic printers. Cathie mentioned the new management. This is another case where “founder led” is not the best practice. Don’t get enamoured by concepts, they have to fit the whole corporate story.

Again, thanks a bundle! Very informative.

Denny Schlesinger

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