Reasons For and Against Buying Teladoc (TDOC)

Teladoc is the first tele-health company to IPO. They offer access to a doctor via a mobile app.

Teladoc (to my knowledge and at the time of this article) is the first and largest tele-health company to IPO at $19.00 a share (TDOC). A tele-health business is one that offers you the service to visit a doctor right from your mobile app. No more making an appointment. No more visiting a crowded building full of other people with other illnesses. No more taking time off of work to visit the doctor. But gaining the ability to visit your doctor while on vacation (even internationally).

Because I have health insurance through my company and I don't get sick ever, I don't imagine myself needing such a service. However, I will admit it would be useful for those rare times I do get sick. I absolutely hate visiting the doctor. Most of the time, they can't offer anything but to take medicine and get rest. And anything more complicated than medicine and rest, I would probably be better off visiting the actual doctor. 

Teladoc service is taking the on-call nurse that many health insurance companies offer to the next level. From what I hear from others who have had kids, the on-call nurse is a HUGE help for new parents unsure of how to handle situations with newborns. The nurse can help triage to determine if a situation is an emergency that requires an immediate visit to the doctor. Teladoc is exactly that, but for adults.

Reasons to Buy:

  1. Innovative company that promises to offer doctor visits video calls over mobile phone.
  2. My guess is most of Teladoc's profits will come from service fees charged to corporations. If Teladoc can convince the number of Corporations that offer this perk to their employees, then they will have much better odds of success.
  3. Their business make perfect sense (getting prescriptions from a doctor without having to visit the hospital). Patients won't have to wait for an appointment, won't have to wait in a waiting room with other sick patients, and won't congest the already slow medical system in the US.

Reasons not to Buy:

  1. Physically visiting a doctor creates a human connection. That same human connection over a mobile phone might be lost.
  2. Based on this complaint, it looks like Teladoc is ideal for customers who occasionally call in, not for those with systemic problems.
  3. Overvalued. Teladoc has EPS of -$1.17. It has a $1 billion valuation, but only brings in $74 million in revenue.
  4. Other competitors in the space that are not publicly traded, such as Doctor On Demand, Ring a Doc, Direct Dermatology, Health Tap, Breakthrough, Sherpaa, etc... The list goes on and on!
  5. Teladoc faces similar problems to other medical subscription services (think Obamacare). They needs to convince the young and healthy to sign up.

In my opinion, the only way Teladoc will be helpful is if its part of a larger service offering. But it is definitely on the right innovative start for the consumer. Whether it is investable or not, I'm likely to wait and monitor, especially with this financial downturn.

Official Thought Worthy Logo
0 Comments