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Sohn Investment Conference: ARK Invest’s Cathie Wood on telehealth stocks

The rise of telehealth and online medicine as a result of the COVID-19 pandemic has been behind the recommendation of New York based fund manager Cathie Wood, for US based telemedicine and virtual health care company Teladoc Health as her stock pick for the 2020 Australian Sohn Hearts & Minds Investment Conference.
Glenda Korporaal
The Australian
 • 
Nov 13, 2020

The rise of telehealth and online medicine as a result of the COVID-19 pandemic has been behind the recommendation of New York based fund manager Cathie Wood, for US based telemedicine and virtual health care company Teladoc Health as her stock pick for the 2020 Australian Sohn Hearts & Minds Investment Conference.

Founded in Texas in 2002, Teladoc is now based in New York state providing online health care to more than 60 million people in more than 175 countries including Australia, with a turnover of more than $US550m ($761m).

Wood, the chief executive of ARK Invest, who oversees an investment portfolio of almost $US30bn, is predicting its customer base will rise to some 220 million over the next five years with its revenues rising to $US7.8bn by 2025 as a result of the rise in the telehealth market and the expansion of its services from health care providers to patient care.

“The US has the highest level of spending on health care as a percentage of GDP in the world- almost 20 per cent of GDP,” Ms Wood told the virtual conference on Friday.

“We are facing a shortage of physicians and an increasing demand for doctors.

“We believe that technology will be the solution.”

“Virtual health care will be a big part of the solution.”

Ms Wood, whose tip for electric car company Tesla has become the best-performing stock of 2019’s Australian Sohn conference, said the global shutdown as a result of the pandemic had forced patients and health care providers in the US “with no choice but to go virtual.”

“In the world of innovation, when times are really tough, innovation gains traction at an accelerated rate.”

“I have not seen anything happen more quickly than this transition.”

Teladoc allows companies to pay a fee for their employees to have access to online medical consultations with patients also paying per consultation.

Its early customers included large employers such as AT&T who provide the service for their employees as a health benefit.

It has since expanded into other sectors of the market with the acquisition of BetterHelp in 2015, medical consultation firm Best Doctors in 2017, Advance Medical in 2018, which employs doctors in Latin America, Europe and Asia and French health company MedicinDirect in 2019.

Ms Wood said that online health care consultations in the US had gone from 11 per cent last year to 45 per cent of total consultations by the middle of this year as both patients and health care providers sought ways to continue to operate during COVID-19.

She said this had been accelerated the US social security system had begun reimbursing people for online consultations.

“Social security and Medicare is usually the last to adopt new technologies,” she said.

“Teladoc is blazing the trail in this new health care world.”

Teladoc, which is aimed at health care providers, had just bought a company called Livongo which specialises in chronic disease management for patients.

She said this meant the company now had operations in both the online health care provider side and the patient management side of virtual health care.

It would give the company an advantage given its use of artificial intelligence and the data it now had access to.

She said she expected that Teladoc would see “exponential growth” because of its extensive data in the virtual health care market.

Teladoc currently has 60 million members around the world.

“We are going to see it go to 220 million in the next five years – an annual compound growth rate of more than 30 per cent.”

She said the company was also going to be able to expand the monetisation of its membership offering them a broader range of services.

“We believe its revenue will growth at nearly 50 per cent annual compound over the next five years, by which time it will only have six per cent of the addressable market,” she said.

 

This article was originally posted on The Australian here.

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