Why Teladoc Health is a Top Pick for this portfolio manager

But Scotia Wealth’s Stan Wong thinks there’s still lots of life left in Teladoc, which gets the portfolio manager’s nod for a Top Pick for the next 12 months.

“They're in 175 companies and they provide comprehensive virtual health care on demand to people and members of employee plans and so forth and they're the largest company of its kind,” said Wong, director of wealth management at Scotia Wealth Management, speaking in conversation with BNN Bloomberg on Wednesday.

Wong said seismic shift in consumer preferences regarding health care is now speeding up growth for stocks like Teladoc.

“The United States is their largest revenue source but they're in Canada as well. They're a partner with employers, health plans, insurers, health systems and they basically provide virtual health to members and patients,” Wong said. “COVID-19 has obviously accelerated this market share growth for Teladoc and this industry. Their growth rate from a revenue perspective is 30 per cent going forward and from an earnings perspective 33 per cent going forward, a very strong, attractive growth story.”

Teladoc flexed some of that muscle in their latest earnings report at the end of July where the company’s second quarter 2020 saw year-over-year revenue growth of 85 per cent to $241.0 million. Total visits on its platform increased by 203 per cent to 2.8 million. (All figures in US dollars.)

Teladoc’s Q2 featured a loss of $0.34 per share, which was better than analysts had expected at $0.23 per share. But the company is expecting further growth, with management guiding for third quarter revenues to be between $275 and $285 million.

Wong said the appeal of telemedicine is simple and obvious.

“You wake up in the middle of night and your three-year-old has a fever. What do you do? You go to the emergency room or you can just do a virtual call with a Teladoc doctor on your phone,” Wong said. “And when you want your prescription refilled, do you really need to go into the doctor's office and sit and wait for half an hour to get a simple refill? Or can I just call my doctor or call a doctor, and everything's done on the go, while you're in the car at the office?”

“That's why I think Teladoc is [benefitting from] a change in consumer behaviour because of the pandemic,” Wong said.

Teladoc on Thursday announced that it would be providing free virtual health care services to residents, first responders and others impacted by Hurricane Laura, expected to hit Texas and the Louisiana Coasts.

“Virtual care is a proven solution that supports community health during these times, especially when healthcare facilities and providers may also be affected and unable to provide care for residents,” said Dr. Lewis Levy, chief medical officer with Teladoc Health, in a press release.