TelaDoc, the largest telehealth firm in the United States, saw its stock price nosedive by more than 60% in the past month. TelaDoc’s stock price is down 78% from its high last year. This is significant considering health care experts predicted telemedicine would get a huge boost from Covid and telehealth visits become mainstream. What’s behind the stock slide? Was it profit-taking by early investors or has the public’s interest in telehealth waned? By the way, TelaDoc was founded in Dallas in 2002 and funded my early policy work on telemedicine 15 years ago under different leadership.
Telemedicine increased during the Covid pandemic due to lockdowns and patients not wanting to expose themselves to in-office physician visits. Prior to the pandemic, Medicare beneficiaries were generally not allowed to have telehealth visits that occurred from their homes. This rule was relaxed during Covid and home telehealth visits continue to be allowed under Medicare unless reversed at some future date. In 2019 there were 840,000 telehealth visits among Medicare beneficiaries. In 2020 this amount increased to 52.7 million. About 92% of these occurred from the patients’ home rather than from a clinic facility.
Although telehealth visits remain higher than prior to the pandemic, they have fallen significantly since the height of the Covid. One growth area for telemedicine is thought to be in behavior health visits. The huge increase in telehealth was especially pronounced for behavioral health visits, rising from 1% in 2019 to 38% in 2020.
Oddly enough, a February 2022 survey found more than half of respondents (53%) preferred in-office visits, while only 21% wanted a video chat visit. Younger people were also more likely to prefer telehealth visits than seniors. While patients find telehealth convenient, doctors aren’t so sure. Only about one-third (36%) of physicians surveyed find telehealth more convenient than in-office. A McKinsey report suggests doctors don’t like how telehealth is reimbursed but I suspect it also has to do with first-time users having a hard time getting web cams to work at the scheduled appointment time. I recall messing with a webcam for a Zoom veterinary visit and taking minutes to connect with a primary care physician for a scheduled Zoom call. In the office, patients wait and are led into the exam room as the previous one walks out. It’s hard to beat that for physician convenience. Perhaps physicians need a way to queue patients onto Zoom in advance and have them standing by for their turn to speak with a doctor.
A combination of factors has adversely impacted TelaDoc’s stock price. The hikes in interest rates tend to hammer growth stocks more than dividend stocks. Growth in telehealth visits appear to be slowing, with many patients preferring to see their doctor in the office. TelaDoc overpaid for Livongo, a virtual diabetes disease management company TelaDoc acquired in 2020. TelaDoc recently had to write off $6.6 billion in acquisition costs. In addition, the cost of acquiring new TelaDoc members has shot up as the tailwinds of Covid dissipate and competitors bid up the cost of advertising that tech firms use to connect with potential customers.
Analysts are divided about whether TelaDoc stock is a good buy at the moment or whether to sit on the sidelines. One thing that few analysts doubt is that millions of Americans will continue to consult with their doctors over the phone, by Zoom or video chat in the future. Chronic disease management is especially suited for electronic communications with providers helping manage their conditions. Recuro Health is one example. It was founded in 2021 by one of the founders of TelaDoc.