Teladoc Inc. (NYSE: TDOC) - Sell or Short Recommendation - $16.50 PT
December 28, 2015, concludes the 180-day lockup period on Teladoc Inc.
When the lockup period ends for TDOC, its pre-IPO shareholders, directors and executives will have the chance to sell their ~28 million shares.
(Source)
The potential for a sudden increase in stock available in the open market may cause a significant decrease in Teladoc shares, opening a short opportunity for aggressive investors.
Business Summary: The Telehealth platform offers 24/7 access to physicians and behavioral health professionals over the phone and online.
Teladoc is the first and largest telehealth platform in the United States. Founded in 2002, the company provides healthcare at any hour by phone, Internet, video and mobile devices.
Teladoc healthcare professionals are licensed in internal medicine, pediatrics, emergency medicine, family medicine, behavioral health and dermatology. These professionals must be credentialed every three years with NCQA-certified credentialing standards. They are primary care physicians, dermatologists, pediatricians, psychiatrists, psychologists, social workers and licensed therapists. Generally, most of these providers integrate telehealth or telemedicine into their primary medical practices.
The Teladoc platform has approximately 11 million unique members. The cost per visit is $40, and the average wait time to connect with a healthcare professional is about 10 minutes. Also, 92 percent of Teladoc members have their medical issue resolved through the service. Teladoc doctors can diagnose, recommend treatment and prescribe medication if necessary.
Teladoc offers these telehealth services on a subscription basis to large employers who then offer the service as an employee benefit. Approximately 90 percent of consultations take place over the phone and the service enjoys a 95 percent member satisfaction rate.
(Source)
In 2014, Teladoc reported ~$44 million in revenue, an increase of 119 percent over 2013. Membership increased 1.9 million to 8.1 million and annual per-member revenue increased to $5.37 from $2.16.
Currently, Teladoc has over 1,600 direct and administrative services only (ASO) clients including 160 Fortune 1000 companies, Shell, Pepsi, Bank of America, and Accenture. They also have health system clients such as Henry Ford, Memorial Hermann and Mount Sinai.
Competition: Doctor on Demand, MDLive and Urgent Care Clinics
Teladoc faces competition from other providers of telehealth services such as Doctor on Demand, American Well and MDLive. In addition, the company faces competition from services such as urgent care clinics located within drug stores like the Minute Clinic in CVS pharmacies (NYSE:CVS).
Early Market Performance: Solid Start
Teladoc priced its IPO at $19 per share, well above its expected price range of $15 to $17. The stock opened on the first day of trading at $29.90 and closed at $28.50 for an increase of 50 percent. Since then the stock reached a high of $34.82 on August 4 and a low of $15.61 on November 6. Currently, the stock trades at $18.10 (12.21.2015).
(Nasdaq.com)
Conclusion: Sell/Short TDOC ahead of Dec. 28th
Although TDOC has faced some stumbling blocks, including losing health insurer Highmark's contract, its post-IPO performance has been solid.
In addition, company reported that membership grew by 56 percent and total doctor visits grew by 89 percent for the third quarter of 2015.
Principal stockholders (see below) might take the opportunity to sell some or all of their holdings.
(Source)
Five PEs and ~13 individuals hold over triple the amount of shares currently trading. If even a portion of these insiders decides to sell, it could put significant pressure on TDOC's share price due to an oversupply on the market.
Our firm has found abnormal negative returns of ~4% surrounding the event.
Comments
Log in or sign up to join the conversation.