Teladoc vs. Livongo

I own both having bought TDOC in February (up 92%) and LVGO just last week (up 8%). The two make up one third of my portfolio. Teladoc has been discussed at NPI for a couple of years but it took covid-19 and the accelerated growth to make up my mind.

There is a good Foolish article today comparing the two companies. Normally I only but the leader in any industry but despite Teladoc and Livongo being in the same industry, their business models are so different that they are complimentary. In a nutshell, Livongo addresses healthcare payers while Teladoc addresses healthcare providers, two different pools of money.

An extract:

Better Buy: Teladoc vs. Livongo Health
Both virtual healthcare companies were thriving even before the coronavirus pandemic made such services even more compelling.
Jim Crumly
(TMFSpeyside)
Jul 22, 2020 at 6:16AM

Complementary businesses

Teladoc and Livongo are both in the business of delivering virtual healthcare to patients, and both market their services to clients such as health plans, employers, government entities, and healthcare providers, which in turn offer them to their members. Both offer strong value propositions to these clients because the telehealth services lower the overall cost of care. And both make most of their money through the subscription fees that their organizational clients pay so their members and employees can access the services.

Which one is better? I think the best plan is to buy shares of both, which is what I’ve done. Together, they give an investor good exposure to two complementary facets of virtual care that have plenty of growth ahead.

https://www.fool.com/investing/2020/07/22/better-buy-teladoc…

Denny Schlesinger

30 Likes

My interest in TDOC peaked when the LVGO CEO said they were complimentary a few weeks ago. From last quarter’s TDOC announcement…
YoY revenue growth of 41% (>35%, good).


Net loss was $(29.6M) for Q1'20 compared to $(30.2M) for Q1'19 (slightly improving) 
GM% was 60% vs 65% last year Q1. 
Q2 Revenue forecast of $215 million to $225 million, up 22% sequentially (which is fantastic) and 69% YoY.   

Any chance they beat their revenue forecast? Up 69% YoY puts TDOC up with the companies we follow here that have nice YoY Revenue growth rates, e.g. >60%.

Also, any idea why the drop in GM%? I realize this is like asking the Ferrari salesman why the glovebox is a particular color I don’t like; GM% of 60% is great, but I’m getting used to seeing GM% in the 70s, or even higher, which is clouding my judgment.

3 Likes

I own both having bought TDOC in February (up 92%) and LVGO just last week (up 8%). The two make up one third of my portfolio.

Hi Cap, good to read you again.

I’m long LVGO (been buying since $32/share) now 15%+ of my portfolio and been reading about TDOC as well. But in terms of rev. growth & margin they are in completely different ball games, don’t you agree? TDOC seems to be accelerating but we’re still talking about 40%ish growth (TDOC) vs. 114% (LVGO).

You didn’t state your allocation for each stock. Is it somewhat 50/50?

I’m not asking what to do, but i would like to understand if you see these two as bearing the same wheight, in terms of opportunity, or maybe is just misunderstood you.

Thanks!

ML

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You didn’t state your allocation for each stock. Is it somewhat 50/50?

I’m not asking what to do, but i would like to understand if you see these two as bearing the same wheight, in terms of opportunity, or maybe is just misunderstood you.

I hardly ever mention my portfolio allocations because it’s seldom relevant to my posts. The only reason I had for stating “The two make up one third of my portfolio” in this case is because Teladoc has been mostly ignored by this board as it had been ignored by me until covid-19 hit. Since February TDOC has been my second best performer and I think TDOC and LVGO will run close to each other but only time will tell. I don’t much favor portfolio rebalancing, it tends to sell winners to buy losers. :wink:

Denny Schlesinger

7 Likes

Any chance they beat their revenue forecast? Up 69% YoY puts TDOC up with the companies we follow here that have nice YoY Revenue growth rates, e.g. >60%.

Also, any idea why the drop in GM%? I realize this is like asking the Ferrari salesman why the glovebox is a particular color I don’t like; GM% of 60% is great, but I’m getting used to seeing GM% in the 70s, or even higher, which is clouding my judgment.

I’m having a hard time answering these questions because these details don’t matter much for me. I like the business model and the stock price says Mr. Market agrees. Years ago I wrote a post to the effect that my portfolio was my mini-conglomerate. I pay my CEOs enough that they should take care of day to day business. If they fall out of favor, since I can’t fire them, I sell the whole business. Trends matter, quarter to quarter numbers not so much. With covid-19 we had a huge discontinuity and discontinuities in the reporting should be expected. If there are no specific news like we had with Cloudflare, I would just ignore it.

I believe most of the industries we follow are very early in their “S” curve. It’s not an escalator to financial heaven, expect 50% drops from time to time. Getting too involved in the details just activates our fight or flight instincts which are not a good guide to success in the stock market. That’s one reason you don’t see me doing “deep dives.” If it ain’t broke, don’t fix it.

Denny Schlesinger

41 Likes

I have owned TDOC in the past for short period and had hard time being convinced in the story as most of their growth did come from series of acquisitions… and they were losing pricing power to the point their visit-fees only members were growing much faster (so no annual / access fees… I believe it was Aetna deal but I may be forgetting)… but that was before pandemic…

With the pandemic, TDOC is squarely in the middle of big trend… so I agree with captain that it is at the right place at the right time…

there are many questions once you look past pandemic, as most of doctors / providers / hospital now offer some sort of virtual / remote visit and so I do worry if TDOC will retain relevance two years from now… but for now and next two years, it will rise with all boats…

I am more convinced on LVGO (its grown to my largest holding) more because it does not directly compete with traditional healthcare delivery system which is more designed for acute problems and LVGO truly offers better approach for chronic problems… and has grown organic (other than tuck-in acquisitions…)…
sure there are questions on LVGO as well, when you look two years out… but at this point, to me at-least, they look less difficult than what TDOC could face…

just my 2 cents

nilvest
LVGO (double digit, top position), TDOC (keep watching, no position)

20 Likes

With the pandemic, TDOC is squarely in the middle of big trend… so I agree with captain that it is at the right place at the right time.

The trend is clearly there, but the question is whether the two companies are positioned relative to it in the same way.

LVGO seems to me to offer a service which not only has no direct competitors, but which has multiple direct concrete benefits to its users.

TDOC seems to me to offer a generic service, little different than what others are offering through other means, not the least Zoom.

While TDOC may be doing some trail blazing by providing suppliers who are not those one would get through one’s ordinary health plan, the technology required for a local ordinary health supplier to provide equivalent support, with the advantage of it being the same doctor one would see in an in-person office visit, seems like a fragile differentiation.

Whereas, with LVGO, a competitor has to create an actual competitive service and get it accepted by insurance and claim market share.

13 Likes

there are many questions once you look past pandemic, as most of doctors / providers / hospital now offer some sort of virtual / remote visit and so I do worry if TDOC will retain relevance two years from now… but for now and next two years, it will rise with all boats…

TDOC seems to cover that area where you need to do a virtual session as well as need to find a doctor at the same time. When you already have a doctor, likely those virtual sessions could be done on Zoom.

Another use case the TDOC covers is international travel. When I travel for work, I am covered under a different insurance policy from my company. That providers gives us access to this service service.

https://www.advance-medical.net/services

TDOC bought Advance-medical back in May 2018

https://teladochealth.com/newsroom/press/release/teladoc-acq….

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nilvest and tamhas make good observations about Teladoc. We don’t know what will happen two years from now. Zoom and Teladoc were just sailing along until the covid-19 tsunami hit and then “everything changed forever.” Maybe not forever.

Teladoc’s acquisition spree turned out to be a good move in acquiring new services and cutting down the competition. Since path dependence is an important influence on future outcomes it remains to be seen if Teladoc can consolidate its leading position or if it will become just a large provider of a commodity service. A good point to keep in mind to help one not fall in love with the stock. But for now TDOC is a top contender for investment.

Denny Schlesinger

4 Likes

my doctors (based in a university hospital setting) allow patients to choose face to face or Zoom for their office visit. However the same problem of getting an appointment within a reasonable time persists. This system is in the top 20 in the US so the demand for doctors exceeds the supply. They do have walk in or appointments within the same day local clinics ,but once there you are likely to see a Nurse Practitioner , not an MD. I have availed myself of the latter once, the NP made an incorrect diagnosis. So there is a place for TDOC , at least you get to “see” a doctor
There is plenty of competition for TDOC
some examples

https://communityquickcare.com/?gclid=Cj0KCQjw6uT4BRD5ARIsAD…

https://getcare.khealth.ai/doctor2/?af_c=9984874982&af_c…{adgroup}&utm_matchtype=b&utm_campaign={campaign}&af_sub2=2708543070336321868&gclid=Cj0KCQjw6uT4BRD5ARIsADwJQ1-N7VERzCLCeAGYkyADtj16mJlN_cCP1VB8_-9hygimqnb-RXqEAKwaAmyOEALw_wcB

agree with nilvest.= day to day management of something like diabetes is a bigger unmet need than getting to see some sort of medical practitioner for an acute problem. "See"either in person or teleconference

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