Teladoc stock has fallen 41% in the last two and a half months. The vaccination efforts and pandemic cooldown are changing the telemedicine landscape in North America. Before we see why I think the market is overreacting to the earnings report and pandemic cooldown, it is vital to look at key trends.
New technologies in telecommunications complement the growth in Telehealth. There are several current opportunities for the industry due to increasing chronic diseases that need immediate attention from physicians. Also, telepsychiatry achieved a major share due to increasing mental health issues rising from the pandemic. Teladoc has declared its motivations to exploit these opportunities further in their investor reports.
Overaction: Sell off due to optimism for in-person visits, pandemic cooldown, and vaccine rollout
Investors are questioning whether Teladoc will continue to deliver impressive growth when it becomes safe for people to see their doctors in person once again. This is a market overreaction due to the vaccine rollout.
Year-over-year U.S. visits were up 158% in the fourth quarter (ended Dec. 31, 2020) to 2.5 million. That drove the percentage of members utilizing Teladoc's platform to 17.7%. Despite COVID restrictions being lifted in many areas, the company's virtual health services appear to have reached a new steady state. While COVID cases fluctuated throughout the year, the percentage of members who are using Teladoc's services steadily increased.
Teladoc purchased InTouch Health in January and Livongo Health in August. While most people think that the Livongo merger was not very well executed, they do not realize that they are yet to exploit the benefits of the merger, Not only can they get new clients, but it can cross-sell Livongo's services to its legacy customers.
According to a survey of 500 Americans across all 50 states conducted by a group called Satelliteinternet, about 60% of respondents said they used telehealth for the first time during the pandemic. 80% rated the service equal or better than in-person care, and 76% said they plan to continue using the tool post-pandemic. 54% seek out medical advice more often with telehealth options. 53% find telehealth most effective for mental health counseling and 56% feel routine check-ups are most effective via telehealth.
These numbers call for a more promising future for Teladoc. If the management can support the above growth prospects with strong operation profits, we can expect a skyrocketing stock performance like in January 2021.