Teledoc (TDOC)

Investment Analysis Clubs Saul’s Investing Discussions
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barriers to entry are gone.

https://www.statnews.com/2020/03/17/trump-telehealth-restric…

https://www.ama-assn.org/delivering-care/public-health/key-c…

https://www.fool.com/investing/2020/03/18/white-house-remove…

about 80% of our visits are telehealth now as opposed to zero percent 3 weeks ago.

privacy requirements have been loosened, billing codes generalized, regulations relaxed. No more barriers to entry and now everyone is doing it.

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For my current physician enabling zoom video call and overcoming HIPAA trap, that should be relatively easy. I would expect a lot of red tape in using technology in health care would come under severe pressure with this pandemic.

Most practices that I’m aware of do not consider any issues regarding HIPAA when video chatting versus a regular phone call. Many offices use some kind of VOIP service for phone calls anyway. Why would a video call be non compliant when you can call the patient on audio only and have no problem?

TDOC can probably gobble up a decent amount of market share by just selling themselves to insurers but marijuana shops and online “pharmacies” selling erectile dysfunction pills have been doing virtual or otherwise sham visits for years. Doctors offices can just ask their patients to use any video chat service they choose. Unless TDOC says they believe they can eventually replace providers with AI like Uber can with drivers, I don’t see how they have the same kind of leverage in terms of turning a massive profit that most SaaS companies have.

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Thanks Rockleppard…

LVGO is up double digits today… market seems to be catching up to this hidden gem.

Another smaller player in tele-health, Catasys (CATS) came up last week confirming they see upto 5x increase in new members signing rate. CATS did $35M last years, very small player but growing extremely fast. They were forecasting to go to $90M this year… more than 100% growth… before accounting for pandemic’s effects.
It does have some debt on balance sheet, so do you DD before jumping in closed eyes.
(Disclosure: I have small trial position).
https://finance.yahoo.com/news/catasys-telehealth-enabled-on…

LVGO summary

  • TTM revenue is $170M (so >5x of CATS size)
  • grew 138% last quarter… (compare to <30% for TDOC)
  • At the beginning of March, management guided March quarter to grow >90% before the pandemic became clear (so I am assuming upside from pandemic is not accounted for in that 90%+ growth outlook)
  • addresses two critical markets - diabetes care AND mental health care…
  • has established ties with insurers…
  • 73% gross margins

And at ~$27, even after today’s 10%+ bump, it is trading at 15x PS
which is very low for such a high growth company and potential acceleration due to pandemic.

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