The medical industry is ripe for innovation, and perhaps nowhere more so than here in the U.S., where we pay almost twice the average of ten other high-income countries, yet get worse results, Mike Cintolo, growth stock expert and editor of Cabot Top Ten Trader.
Enter Teladoc (TDOC), which since 2002 has been offering virtual access to healthcare professionals and is now the undisputed leader in the field.
Its 20 million members have access to 3,100 board-certified physicians, dermatologists, therapists, etc; enjoy a median response time of ten minutes; have 92% of issues resolved after one “visit” and have 95% member satisfaction.
The company is not yet profitable—it is still focused on growth—but the fact that the market values it at 10 times revenues tells you there’s a lot of confidence that earnings will eventually flow.
Most recently, on May 1, the company reported its first quarter results: revenue was $89.6 million, up 109% from the year before; total visits from paid members were 554,000, up 44% from the year before; and adjusted EBITDA was a loss of $1.4 million, compared to a loss of $9.1 million the year before.
And then just two days later, the firm raised $250 million (up from a proposed $225 million) by selling convertible notes that are due in 2025. Translation: demand for the stock is good because all observers know this company could be far larger—and quite profitable—in time.
Technically, DOC came public in July 2015 at $19, peaked soon after at $35, and then spent a year trending down to a bottom at 9, but since then the trend has been up.
Most recently, the stock built a tidy two-month base between $38 and $44 (ignoring the general market weakness), until the combination of a good quarterly report and the successful offering kicked the stock out to new highs. There’s no doubt that the buyers are now in control.
