Teladoc Health (NYSE: TDOC) is one of my favorite health service providers. The share price is up with a respectable 16% so far this year. In the first quarter, Teladoc's revenue increased 43% the following year, and the company's total visit increased by 75% to over 1 million.
But as much as I like Teladoc Health for how it does now, I like it even more for what I expect the company will do in the future. Where will Teladoc be in 10 years? My answer to that question gives me a lot of confidence in my investment in the warehouse.
Blue sky for telehealth
To find out where Teladoc Health will be in 1
The main reason I am optimistic about Teladoc's future is that I am bullish on the prospects of telehealth in general. An important consideration is the development of aging demographics. The US Census Bureau points to 2030 – a little over 10 years from now – as "an important demographic turning point in American history." That's when all individuals in the baby boom generation will be 65 or older.
This means increased demand for health services. For example, the American Hospital Association estimates that 2030 more than 60% of baby boomers will have at least one chronic condition to deal with.
It will also almost certainly lead to increased focus from payers, including government programs, employers, and private insurance companies, to find ways to control rising health care costs. And this is not a challenge just for the United States all over the world to have greater numbers of senior citizens.
Telehealth provides a way to help keep health costs under control. A study conducted by large health insurance company Humana (NYSE: HUM) last year showed that the use of telehealth services reduced the cost of doctor visits by two-thirds. Another study by the California Public Employees Retirement System found that patients who participated in a telehealth visit were less likely to require a follow-up visit compared to patients with similar conditions who visited an emergency department or doctor's office.
The Association of American Medical Colleges is projecting that the United States may have a shortage of up to 120,000 doctors by 2030. Some areas will not have enough doctors to serve their populations. Telehealth is a logical solution that helps solve this problem.
Teladoc Health's strategy
Just because telehealth should be broader adopted, does not automatically mean that Teladoc Health will reap significant benefits from this growth. But I think it will, mostly because the company's strategy should make it happen.
Teladoc continues to expand its range of clinical services it offers. This will enable me to be a go-to telehealth provider for many employers, health plans, and government programs.
Regarding government programs, Jason Gorevic, CEO of Teladoc Health in the company's Q1 conference call, said Teladoc is "in active discussions" with Medicare Advantage plans and should have more information on its progress in the second half of 2019. I believes that Medicare will be a major part of the company's business over the next few years.
The company also increases its penetration of global markets. Teladoc Health already offers the widest global footprint for all telehealth service providers. Because the control of healthcare costs and the better availability of healthcare services are problems worldwide, I believe that Teladoc's leadership in international markets will play a key role in the company's success over the next 10 years.
While Teladoc is working to expand outwardly, it also focuses on existing customers. A key component of the company's growth strategy is to increase penetration with current customers. It is a great opportunity to take into account that Teladoc's customer base includes 40% of Fortune 500 and thousands of smaller organizations.
Do good in & # 39
So where will Teladoc Health be 10 years from now? My opinion is that the company will enjoy much more than it is today.
I think Teladoc will be very profitable. Currently, it loses money – but largely because it continues to invest in growth. If Wall Street's growth estimates prove accurate, Teladoc stocks can more than double over the next five years. I think it's achievable. And I suspect that stocks could come close to doubling in the next five years.
If I'm right, Teladoc Health could be worth more than $ 15 billion in 10 years, compared to just over $ 4 billion now. I plan to hold onto this stock in the long run.