3 Telehealth Stocks to Watch Amid the Coronavirus Crisis

Given the extreme volatility of the stock market amid the coronavirus chaos, you may think there are no strong bets in the market today. But here’s a play that should be a stable bet for the foreseeable future: telehealth stocks.

Telemedicine is the way of the future. It enables patients to receive an examination, diagnosis, and treatment all from the comfort of their own home. This treatment is delivered by a video link the way a remote worker has a video conference call at their job.

Now more than ever it will be important for doctors to be able to treat their patients from a distance. As more jobs and industries telecommute, medicine will be sure to follow this trend. Let’s take a deeper dive into why telehealth stocks will be a strong stock play going forward.

The Growth of Telemedicine

The medical industry was slow to adapt telemedicine technology. This is understandable. Medical professionals felt the need to see their patients in person to provide them with the best treatment.

But that sort of thinking is becoming old fashioned and, frankly, outdated. 15% of physicians now work with organizations that offer telemedicine services. That number is only going to go amidst the global pandemic frenzy.

To break it down even further, telemedicine is used by:

• 40% of radiologists
• 24% of cardiologists
• 28% of psychiatrists
• 39% of emergency room doctors

Again, those numbers are sure to grow. This will increase the value of telemedicine stocks moving forward.

Every single state in the nation as well as the District of Columbia now allow telemedicine. Medicare and medicaid allow it. And not only do most insurance companies allow it, but most even offer their own telehealth services.

The cheaper cost of telemedicine for patients is also worth noting. Most telehealth services cost between $45 and $50 for a 15-min video visit although they can be higher than that. Compare that with the following rates:

• Office visits for primary physicians and specialists: $125
• Urgent care visits: $300
• Emergency room visits: can be up to $1,000 or more

Even if the coronavirus were not currently happening, the attractive cost savings are a major appeal to the typical healthcare consumer.

BREAKING: I just signed legislation to expand access to telehealth services and expedite licensure of out-of-state professionals.

By allowing New Jerseyans to receive care from the safety of their own home and fast-tracking temporary licenses, we’ll curb the spread of #COVID19.

— Governor Phil Murphy (@GovMurphy) March 20, 2020

3 Telehealth Stocks to Watch

The market for telemedicine was valued at $29.6 billion in 2017. It is expected to have a CAGR of 19% between 2017-2022. According to the Global Telemedicine Market Outlook 2022, sources of growth will include increasing adoption of telehealth technology, rising cases of chronic diseases, a growing elderly population, government spending and initiatives, and a shortage of doctors.

Here are three telehealth stocks you should be paying attention to as 2020 continues to roll on:

• Teledoc Health, Inc. (NYSE: TDOC) – Teledoc Health happens to be the only pure play telehealth stock in the United States. Over the past year, the stock has seen its share price grow from $48.57 to about $167 for a gain of about 244%. And over the last month the stock has grown from $114.26 to its high of $167. The company has not been profitable over the past year, although its quarterly losses have shrank from -$30 million to -$19 million while revenues have grown each quarter and year-over-year. In addition to telehealth services the company also makes use of analytics, artificial intelligence, medical opinions and licensable platform services.
• Humana Inc. (NYSE: HUM) – The insurance powerhouse Humana offers exposure to telemedicine through its Humana at Home and Kindred at Home programs. Insurance companies have been increasing their exposure to telehealth and Humana is one of those companies that is taking advantage of the trend. Unfortunately, after growing along with the stock market for the last year, Humana has crashed along with the market. It has dropped from its high of $385 all the way down to $214.43 yesterday. On the bright side, its revenues have been consistent each quarter at about $16 billion and its earnings have been $500 million or more each of the last four quarters.
• CVS Health (NYSE: CVS) – In 2018, the pharmacy giant entered into a $69 billion merger with insurance company Aetna. It has its own telehealth business called MinuteClinic. Aeta also offers its own telemedicine services. Like Humana, the stock market crash has not helped its stock. Over the last year, the stock climbed to a high of $77.03 and then plunged down to a price of $53.09 as of yesterday. On the plus side, the stock is now trading at a relatively cheap Price to Earnings Ratio (P/E Ratio) of 10.44. Over the last year the company has had consistent revenues in the $60 billions and has put up over $1.5 billion in earnings each quarter. The company also has a health $5.68 billion in cash on hand.

Concluding Thoughts

Telehealth stocks are a strong bet to do well in the current market environment. And even once the coronavirus crisis is over, telemedicine is likely to remain increasingly popular.

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