What happens if a customer or potential customer develops the capability you are selling either themselves or by acquiring a competitor of yours?
That was the question that J.P. Morgan healthcare services analyst Lisa Gill had for Jason Gorevic, CEO of Teladoc, who saw his company’s stock soar during 2020 before getting brutally hammered in 2021.
Gorevic’s answer during Teladoc’s session at the all-virtual J.P. Morgan Healthcare Conference Monday morning was that at least in one prominent instance, it could boost your bottom line. That was his take on the Cigna acquisition of MDLive.
“With respect to the payers, it’s an interesting dynamic because other payers aren’t super interested in relying on a competitor for that kind of strategic role in their product’s portfolio,” he said. “So when I think about Cigna, for example, buying MDLive – that was actually very positive for us, because it opened up a lot of the MDLive client base, of payers, who were looking for a more neutral solution, because they didn’t want to be using Cigna as their virtual care provider. And so we’ve actually seen growth and takeaway opportunities result from that move.”
He added that Teladoc has a great relationship with payers like Aetna, UnitedHealth Group, which owns Optum known for a large network of physicians.
“Most of the other payers just don’t have that kind of a footprint,” he said referring to Optum’s strength. “And we also provide multiple products and services to lots of parts of United, and we continue to actually grow both our revenue as well as the role that we play with multiple parts of the United portfolio. So we feel very good about that relationship.”
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Overall, Gorevic stressed that competition has been a boon, not an impediment, to Teladoc’s growth because their presence validates the fact that telehealth will be a permanent feature of U.S. healthcare. Gill also noted that Teladoc is the “largest virtual end-to-end care platform in the U.S. today” and Gorevic, who is bullish on the company’s future, contended that it’s playing from the front in an increasingly competitive market not only domestically but worldwide.
While the stock has seen much better days – it went from a high of $298 in February 2021 to closing at $82.18 on Monday, the battering does not appear to be because the Purchase, New York-based company hasn’t performed. Teladoc reported 81% year-over-year growth for the third quarter in 2021 with revenue of $522 million, and it updated its revenue outlook for the full year from $2.015 billion to $2.025 billion. It has also laid out hefty growth targets of “25 to 30% top-line growth per year for the next three years on a $2 billion base,” per Gorevic.
Seeking to remain a leader in telemedicine, Teladoc has continued to expand offerings to clients and consumers, taking advantage of acquisitions like its $18.5 billion merger with Livongo in 2020, to help it add new customers and retain existing ones.
For all the confidence that Gorevic demonstrated at JPM, whether he won hearts and minds of investors is anyone’s guess. Analysts have indicated that the depressed stock price is a result of the Street’s switching its opinion on Teladoc. What was seen as a good buy during the pandemic as Covid-19 steered droves of patients to virtual care is now not as valuable. Vaccines have come and people have resumed going back to the doctor in person, though Omicron is likely to change some of that.
Photo: elenabs, Getty Images
