Update on TDOC:

I think most people on this board no longer own TDOC but I just wanted to give an update on my conviction and position given I’ve talked about it here before.

I thought the quarter itself was fine, growth was mostly in-line, supported by better-than-expected BetterHelp performance but Livongo and InTouch growth came short. You can’t compare Livongo growth post-merger apples to apples but no matter how you spin it, they slowed down sequentially versus past years.

However, the main reason behind me trimming my position is that after some recent expert calls, I believe execution risk with the integration is higher than I thought. I am still bullish on their long-term outlook but I have much less conviction than before. Between the large health plans, Epic, and Amazon, there is no shortage of competitors with deep pockets. I made a bet on TDOC because I believed in their focus on the patient, best-of-breed acquisitions, and ability to innovate but the calls painted it in a less optimistic light. Anyone can acquire assets and these large players also have massive distribution networks to sell into. TDOC still has the benefit of being a neutral third party and a first mover but I’ve always believed that integrating LVGO is mandatory to retain their moat over the long term.

While I think there’s upside to consensus estimates next year with the national rollout of VPC and cross-selling synergies, it made sense to lower my allocation due to the increased long-term uncertainty. I knew legacy TDOC wasn’t a great business but felt that the LVGO integration would change things. However, I don’t invest based on “potential”, I invest based on what is likely given the data I have today and recent data indicates that my vision is more unclear than I thought.

I lost some trust in management when they refused to break out LVGO’s numbers separately. And although most LVGO management left, Glen and Hemant stayed so I was shocked to see them leaving so soon too and it only compounds the execution risk I’m seeing given some past acquisitions. I don’t care if a stock underperforms if I have full confidence in the company. In this case, although I still think TDOC does well LT, based upon this new data, I think the thesis is a lot less clear and have accordingly trimmed my position.

That being said, personally I’m very bullish on GoodRx’s prospects if anyone’s interested in digital health. I think they are very strongly positioned, should see reopening tailwinds, and are highly misunderstood by the market right now. Should be a consistent 30-40% grower imo. If you’d like to learn more, I encourage you to read this excellent piece:

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