Hello Everyone, Happy December! I hope your Thanksgiving was filled with good food, fun times, and people you love, even if they are physically far away.
This year, I am most grateful for the health of myself and my family. In a world dealing with a historic pandemic, staying healthy looks a bit different. Rising industries like Telemedicine, along with the dedication of healthcare workers, are helping us stay safe and healthy in these uncertain times.
Today I’m going to talk about the Telemedicine industry. We'll take a look at why it has risen so quickly during the pandemic, and 3 telemedicine stocks I’m looking at for myself as a 2-5 year buy.
📰 In the Headlines
Breaking down this week's biggest financial news stories
Translation: People are still catching the travel bug
One of the biggest financial losers of the Pandemic has been air travel. Most airlines are just hanging on by a thread and a few loyalty points. Almost 1.2 million people traveled by plane this Thanksgiving weekend, indicating that people are still interested and willing to travel, despite possible risks. This may mean they are in for a faster recovery than predicted.
Translation: The Zoom rocket ship is running low on fuel
If airline travel is the pandemic loser, Zoom has to be named the winner. The video streaming platform experienced explosive growth this year as everything from work, to school, to your family’s thanksgiving went virtual this year. The company projected more modest revenue growth as they head into the new year, sparking fears with investors that their insane growth is coming to an end. Their stock is currently down about 13%.
Translation: Things are looking good for Bitcoin and Gold
The value of the dollar has fallen more than 2.2 percent so far in November, as investment in stocks, bonds and currencies outside the U.S has surged. This is good news for counter investments like Bitcoin and Gold. The news has already caused gold to have one of its largest daily bumps of the year, and Bitcoin to hit a new all-time high.
🩺 A Much Needed Checkup
Virtual doctor visits, remote prescription filling, and advanced data analysis are just a few ways startups are using technology to improve the ways we receive healthcare. I mean, who wants to dive 45 min just to get their test results?
Healthcare has been in need of a tech makeover for a long time, and this pandemic is just what we needed to push things over the edge. The move to telehealth in healthcare has been likened to “moving from the Blockbuster to a Netflix model", and you could get out in front of it.
If you're wondering why it has taken us so long to get to this point, here are a few reasons telemedicine has grown during the pandemic:
One of the biggest blockers of the growth of Telehealth in the past was restrictions on healthcare providers from Federal and State regulations. Two major pieces of regulation have been implemented during the pandemic that remove these barriers. First, they are now allowing patients to connect from home, whereas prior to the pandemic, unless they were in a rural area, patients were required to go to a medical facility. Second, there was relaxation of medical licensure rules, meaning the federal government many state governments said it would be okay to practice across state lines, allowing the flexibility companies need to offer services on a wide scale.
Whether these new policies will remain in place relies on congress and President Biden's health secretary. Right now, both front runners have been vocal about the importance of social distancing and shutdowns to slow the spread of COVID-19.
The second indicator that this industry is ripe for long term growth is how much people like it. A study conducted by the National Institute of Health showed that 94 and 99 % reported being "very satisfied" with all telehealth attributes with One-third preferring a telehealth appointment to traditional in-person visits. Doctors are on board too. The American Medical association estimated that 90% of physicians are now choosing to use some sort of telehealth services, about half of which for the first time.
While regulation and buy-in are important, the key ingredient that was missing had always been the financial one. For years, many doctors resisted transitioning to using telehealth because there was ambiguity in if and how they would be paid.
Many major US healthcare providers, like Kaiser Permanente and United Healthcare, now cover Telehealth services in their regular policies. Also, Medicare now compensates physicians at the in-person payment rate for at-home virtual visits. About 15% of the U.S. population is enrolled in Medicare, so that's a big market that will need services.
🏥 Buying In
Here are a few companies I’m considering for a 2-5 year buy. Many of these stocks are starting to cool off after red-hot 2020 runs, which means it might be the perfect time to take a look at them as long-term investments:
This virtual health visit company first caught my eye last summer, when they got a $100 million investment from Google’s investment firm, Alphabet. Since then, they have IPO’d this past September, more than doubling their stock price in the first three weeks of trading. The stock has since come down to earth, at $27 a share, but that's still a gain of 49% from its IPO. Not only that, but their monthly site volume increased by 4x in the first six months of 2020, and their revenue rose 77% year over year.
Why I like them: When looking at long-term investments, size and scalability are key. American Well has gained more than 2,000 hospital and health system partners, that cover over 80 million people. They have positioned themselves as the most easily accessible and connected
Teladoc is one of Wall Street's best-known telehealth stocks, and is one of the biggest beneficiaries of the recent move to virtual healthcare. The company has seen their revenue more than double, total visits tripled during the third quarter, and has projected to facilitate more than 10 million virtual visits on its platform this year.
Why I like them: Teladoc not only focuses on the scalability of its services, but also on integrating its platform with other areas of healthcare. In August, announced a merger with Livongo Health, a company that specializes in diabetes management. The combined company aims to become a one-stop shop for all virtual care needs.
This exploding AI company is taking on the data challenges of the healthcare industry. early 90% for the year-to-date and analysts think they have more room to run. Although the stock looks pricey – trading at almost 40 times 2021 earnings on a long-term growth forecast of just 8.5% – they seem to believe it can get even pricier.
Why I like them: Healthcare is a world of infinite data, and cloud-based healthcare solutions will be relying on artificial intelligence to ensure that data remains accessible, usable, and secure.
If you are still wondering whether Telehealth will really stick around after the pandemic, I’ll leave you with a quote from the CMS Administrator Seema Verma “It's fair to say that the advent of Telehealth has been just completely accelerated, that it has taken this crisis to push us to a new frontier, but there's absolutely no going back.”
Word of the day
Price-to-Sale (P/S) ratio
(n.) A calculation of a company's Market Cap, divided by their annual sales, or revenue over the past 12 months.
Analysts and investors use this number when evaluating whether to buy a stock. The smaller the Price to Sale ratio, the more likely that stock is a good investment.
A price-to-sales ratio less than 2 is considered good, and then 1 is considered excellent.
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