The telehealth segment of the healthcare industry has shown decent growth this year thanks to the pandemic. As work, education, and shopping have gone virtual, healthcare has also become digitized. Due to the prolonged lockdown and stay-at-home normal, necessary medical care has been possible with the help of technology.
Increased incidences of chronic ailments, an ageing population, and growing demand for periodic health monitoring have led to an expansion of the telehealth market. Disruptive technology like AI and cutting-edge medical devices have also paved the way for the telehealth segment to flourish.
According to Grand View Research, the global digital health market is likely to grow at a CAGR of 27.7% between 2019 and 2025, and COVID-19 has been a major catalyst. Meanwhile, McKinsey predicted that nearly $250 billion of existing US healthcare spending would be virtualized.
The pace at which patients and doctors are adopting telehealth is just the tip of the iceberg. There is an immense scope for growth as the sector is still in its nascent stages. Stocks like Anthem, Inc. (ANTM), Teladoc Health, Inc. (TDOC), and Nuance Communications, Inc. (NUAN) have witnessed significant investor attention recently and are likely to perform well over the near term.
Anthem, Inc. (ANTM)
ANTM is a health benefits company that operates through three segments: Commercial & Specialty Business, Government Business, and Other. The company offers network-based managed care health benefit plans, Medicaid, and Medicare markets. Some of the other services offered by ANTM are disease management, medical cost management, wellness programs, as well as actuarial services.
In July, ANTM in collaboration with CloudMedx, launched digital tools through the C19 Explorer platform to help employers and public health officials track the impact of COVID-19. The platform is classified under five tabs with different pockets of information, which enables users to access information at the national, state, county, or city level.
During the third quarter that ended September 2020, ANTM’s operating revenue surged 15.9% year-over-year to $30.6 billion, driven by higher premium revenue on the back of growth in Medicaid and Medicare. The launch of IngenioRx and the return of the health insurance tax in 2020 also increased pharmacy product revenue. At the end of the third quarter, the company’s Medical enrolment through its affiliated health plans was 42.6 million members. In its continued services for the pandemic, ANTM waived all cost-sharing for COVID-19 diagnostic tests and treatment until December 31st. The company’s EPS for the quarter dropped 80.9% year-over-year to $0.87.
Analysts expect revenue for the fourth quarter ending December 2020 to be $30.9 billion, indicating a 13.8% increase year-over-year. Meanwhile, EPS is likely to grow at the rate of 13.9% per annum over the next five years.
On a year-to-date basis, ANTM gained 3.1% to close yesterday’s trading session at $313.90. During the past six months, the stock jumped 5.9%.
How does ANTM stack up for the POWR Ratings?
A for Trade Grade
B for Peer Grade
B for Buy & Hold Grade
B for Industry Rank
B for Overall POWR Rating.
It is also ranked #3 out of 9 stocks in the Medical – Health Insurance industry.
Teladoc Health, Inc. (TDOC)
TDOC is a leading company that offers virtual healthcare services to patients in the United States and internationally. The healthcare services treat clinical conditions, episodic care, as well as chronic and complex cases such as congestive heart failure and cancer. The company allows patients and healthcare providers to enjoy a seamless smart user experience through web, smartphones, and other handheld devices.
TDOC’s revenue for the third quarter that ended September 2020 surged 109.3% year-over-year to $288.8 million. Total visits during the quarter climbed 205.5% to 2.8 million. The company’s loss per share expanded to $0.43 from $0.28 posted in the same quarter last year. TDOC’s CEO, Jason Gorevic foresees significant opportunities for the company post-merger with Livongo. Gorevic also expects to see consistent growth in member visits throughout all of the commercial channels.
The consensus revenue estimate for the fourth quarter ending December 2020 is $373.7 million, signaling a 138.9% surge year-over-year. For 2021, the EPS is expected to grow 55.2%. TDOC expects total revenue to be in the range of $294 million to $304 million for the fourth quarter. It also estimates a loss per share to be between $0.36 and $0.33.
TDOC rallied 137.4% on a year-to-date basis to end yesterday’s trading session at $195.19. During the past six months, the stock jumped 14.2%.
Nuance Communications, Inc. (NUAN)
NUAN is one of the leading AI companies, which, through its Healthcare segment, offers clinical language understanding and cloud-based speech solution, that enhances the clinical documentation process. This includes capturing the complete patient record as well as premium measures for reimbursement. Computer-assisted physician documentation and diagnostic imaging are some of the other solutions offered by NUAN.
NUAN, along with GE Healthcare, is part of an alliance launched by Nvidia (NVDA) featuring AI-focused medical imaging startups. The accelerator program would enable start-ups to join the GE Healthcare Edison Developer Program and Nuance AI Marketplace for diagnostic imaging.
During the third quarter that ended September 2020, revenue dropped 9% year-over-year to $352.9 million. However, the company is upbeat about the continued strength in its Dragon Medical One and emerging cloud-based Healthcare offerings. NUAN also announced the divestiture of medical transcription and EHR Go-Live services during the quarter. The company posted a loss per share of $0.08, compared to EPS of $0.01 in the same period last year.
The street expects revenue for the fourth quarter ending December 2020 to grow 7.7% year-over-year to $1.46 billion. Meanwhile, EPS is likely to grow at a rate of 5.1% per annum for the next five years.
NUAN closed yesterday’s trading session at $42.27, surging 141.9% year-to-date. Over the past six months, the stock has soared 88.5%.
NUAN’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade, and Peer Grade and a “B” in Industry Rank. It is ranked #12 out of 96 stocks in the Software – Application industry.
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ANTM shares were trading at $318.96 per share on Wednesday afternoon, up $5.06 (+1.61%). Year-to-date, ANTM has gained 6.71%, versus a 15.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
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