The healthcare industry has been transforming in recent years, with the rising preference for telehealth and virtually enabled care. And while the COVID-19 pandemic strained the global healthcare industry, it has opened up new prospects for remote healthcare services. With more people opting for virtual medical consultations to save time and safely meet their healthcare needs, the telehealth market is gradually emerging as a post-pandemic winner.
While most countries are now reopening thanks to solid progress on the coronavirus vaccination front, extensive cloud-based tracking and rapid technological advances are projected to increase demand for online consultations, boosting the market for telehealth solutions. Moreover, the reduced patient-wait time and cost-effective treatment options afforded consumers by telehealth could further propel the demand for telehealth solutions. Consequently, the telehealth market is expected to reach $559.52 billion by 2027, growing at a 25.2% CAGR.
Given the industry’s solid growth prospects, Wall Street analysts expect key players in this space—Teladoc Health Inc. (TDOC), American Well Corporation (AMWL), and iRhythm Technologies Inc. (IRTC)—to rally by more than 50% in the coming months.
Teladoc Health Inc. (TDOC)
Dallas, Tex.-based TDOC is a virtual healthcare services provider that operates in the United States and internationally. The company provides virtual access to care for various medical subspecialties, ranging from non-urgent to episodic requirements. It offers virtual healthcare services to its clients on a business-to-business basis and to consumers directly and through channel partners.
This month, TDOC announced a collaboration with Microsoft Corp. (MSFT) through which the company’s Solo platform for hospitals and health systems will be integrated into the Microsoft Teams environment, allowing physicians and patients to have better access to best-in-class virtual healthcare. This collaboration should enable TDOC to provide a seamless experience to physicians and patients by leveraging the artificial intelligence (AI) and machine learning expertise from both companies.
TDOC’s revenue increased 151% year-over-year to $453.68 million in the first quarter, ended March 31, 2021. Its cash and cash equivalents grew 41.8% from their year-ago value to $720.10 million. The company’s adjusted EBITDA increased 430.1% from its year-ago value to $56.60 million.
TDOC’s EPS is expected to increase 48.7% in the current year. A $2.01 billion consensus revenue estimate for its fiscal year 2021 represents an 83.6% increase from the same period last year.
Of the 20 Wall Street analysts that have provided ratings for the stock, 13 rated it Buy, and seven rated it a Hold. Closing yesterday’s trading session at $146.78, the $231.26 average analyst price target represents a potential 57.6% gain.
American Well Corporation (AMWL)
AMWL is a telehealth company that offers a digital care delivery platform. To deliver care across different modalities, including video, phone, and secure messaging, it provides various management tools, clinical processes, Carepoint hardware, and system connections. AMWL is based in Boston.
In April, AMWL revealed its next generation Converge telehealth platform. The platform is intended to host and run apps created by innovators, allowing for even faster progress toward digitally enabled healthcare. This should allow the company’s clients to pick and choose the features that matter most to them.
In the first quarter, ending March 31, 2021, AMWL’s revenue increased 7.2% year-over-year to $57.60 million. Its cash and cash equivalents increased 618.2% from the year-ago value to $897.18 million over this period.
The company’s EPS is expected to grow 65.6% in the current year. Analysts expect AMWL’s revenue to increase 7.2% year-over-year to $263.01 million in fiscal 2021.
Of the eight Wall Street analysts that have provided ratings for the stock, three rated it Buy, and five rated it a Hold. A $16.58 consensus price target represents a 52.8% potential gain from its $10.85 last closing price.
iRhythm Technologies Inc. (IRTC)
IRTC is a digital healthcare company that delivers ambulatory ECG monitoring solutions for individuals at risk of arrhythmias. In addition, the San Francisco company provides Zio service, a cloud-based data analytic platform that combines a wire-free, patch-based, wearable biosensor with a cloud-based data analytics platform to assist clinicians in monitoring patients and identifying arrhythmias.
In May, IRTC received two regulatory certifications—one for a new and enhanced flagship monitor design, and the other for upgraded artificial intelligence capabilities. The certifications show the company’s continued commitment to improving the patient and provider experiences by investing in next-generation diagnostic capabilities throughout its platform.
During the first quarter, ended March 31, 2021, IRTC’s revenue increased 17% year-over-year to $74.31 million. Its gross profit grew 7.1% from its year-ago value to $50.85 million. The company’s cash and cash equivalents increased 143.1% year-over-year to $137.38 million. Furthermore, the company’s net cash from investing activities increased 95.4% year-over-year to $117.04 million over this period.
IRTC is expected to generate 14% revenue growth for the current year. Its EPS is estimated to increase 19.1% in the next year.
Of the seven Wall Street analysts that have provided ratings for the stock, all have rated it a Hold. Currently trading at $53.06, the $81 average analyst price target represents a 52.7% potential gain.
TDOC shares were trading at $148.51 per share on Monday morning, up $1.73 (+1.18%). Year-to-date, TDOC has declined -25.73%, versus a 14.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More…