2. Teladoc Health, Inc (NYSE:TDOC)
ARK Investment Management’s 13 Portfolio: 5.86%
ARK Investment Management’s Stake Value: $1.40 billion
Number of Hedge Fund Holders: 36
Teladoc Health, Inc (NYSE:TDOC) provides virtual healthcare services in the United States. It ranks as ARK Investment Management’s second largest holding, representing 5.86% of its total portfolio with a $1.4 billion stake.
36 hedge funds held positions worth $1.96 billion in Teladoc Health, Inc (NYSE:TDOC) at the end of Q1 2022. This is in comparison to 39 hedge funds with $2.45 billion worth of stakes in the company a quarter ago.
Oppenheimer analyst Michael Wiederhorn noted on May 26 that he continues to favor Teladoc Health, Inc (NYSE:TDOC) in the telehealth segment as a high risk/reward opportunity, and believes recent government policies will promote usage of telehealth in the long term. A bipartisan group of US senators have recently introduced legislation that would remove Medicare’s requirement for in-person visits before telehealth visits for mental services, a move that will boost the telehealth industry and improve transparency.
Investment firm RiverPark Funds talked about the market position of Teladoc Health, Inc. (NYSE:TDOC) in its Q1 2022 investor letter, stating:
“Teladoc is the largest telehealth provider in the US and has recently begun to expand internationally. TDOC’s platform enables an ever-expanding list of patient-doctor interactions (including those for primary health care, mental health issues and chronic condition management) to transition from an on-site visit to one that can be done remotely with full video- based interaction. TDOC provides its platform of services on both a business-to-business and direct-to-consumer basis, through monthly subscription-based relationships. For its core business-to-business clients, the company contracts with a wide range of entities, including large scale employers (the company currently contracts with over 50% of the Fortune 500), health plans, health systems, and medical insurance companies, which currently cover more than 50 million members. For these customers, the company provides a win-win-win, as patients spend no time traveling and less time waiting, doctors are more efficient seeing more patients in less time, and payers (employers and plan sponsors) save money while being able to offer a highly popular additional benefit for their employees. This B to B market is projected to be a +$100 billion market opportunity and TDOC is the clear global market leader. For its direct-to- consumer clients, the company provides a growing suite of services for individuals to have affordable access to on-demand and scheduled medical services, for which their current insurance does not provide reimbursement (such as extended mental health counseling).
Although the company has been growing steadily for well over a decade, the business has transformed over the past few years as the COVID pandemic caused a significant increase in the demand for virtual healthcare. In addition, the company’s 2020 acquisitions of Livongo, the leader in virtual chronic condition management, and InTouch a competitive telehealth platform, materially broadened the company’s product offerings. At its recent analyst day, management guided to 25-30% top line growth for each of the next three years, exiting 2024 with more than $4 billion in annual revenue. The company also anticipates expanding margins by 100-150 basis points per year in each of the next three years, while still accelerating its investments in marketing and R&D. As with many of our recent purchases, we took advantage of the decline in the company’s shares (down a breathtaking 70% from its 2021 high of almost $300 per share) to establish a small position in Teladoc.”
