Friday File: Mostly Boring Real Estate Stuff This Week, Sorry

Updates on some healthcare and real estate stocks in the Real Money Portfolio, including four add-on buys and two new names for the watchlist

By Travis Johnson, Stock Gumshoe, August 14, 2020

As I noted yesterday, I added to my Teladoc (TDOC) position because of the Livongo Health (LVGO) acquisition. That acquisition doesn’t make this less of a risk, Livongo was one of the few companies trading at an even more lofty valuation than Teladoc during this COVID-19 crisis (on a price/sales metric, at least — though it’s actually a more profitable operation than Teladoc), but I think it makes Teladoc a considerably better company.

And probably just in time, at least when it comes to investor optics — Teladoc’s best-financed and most-established competitor, Amwell, raised another $200 million in May and has reportedly made a confidential pre-IPO filing with the SEC, with the aim of going public later in 2020. While I think there’s likely to be plenty of growth to justify several public companies duking it out, getting a strong foothold in disease management and monitoring through Livongo, including a large established base of devices used by patients (monitoring and collecting data on things like blood pressure for hypertensives, or glucose levels for diabetics) should help Teladoc to differentiate itself from the rising competitors. And there will be more, there are still a handful of “startup” sized companies in this space, and the much smaller MDLive (sales roughly 1/10 of Teladoc’s) is also planning to go public by next year.

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There is no guarantee that Teladoc will “win” the telehealth race, of course, nor that there will be a “winner” — while we’re accustomed to big tech being a “winner take all” kind of business that leads to natural monopolies, telehealth may well not be that kind of business… part of it is consumer-driven, to be sure, and that makes brands and network effects doubly important, but the sector is dominated by partnerships with health insurers, hospital groups, and state and federal regulators, and nobody really knows what the landscape will look like post-COVID. Essentially all the rules about telemedicine and insurance coverage were scrapped during the pandemic, since we immediately needed to get people out of going to doctor’s offices if they didn’t really have to, but some of those rules will be back in some form in the new world that comes past the horizon (privacy, level of insurance compensation for telehealth visits, etc.). As investors, we’ll have to live with that uncertainty for a while. It could also be that the ...

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