Season 3, Post 8: Doctor’s Orders - Heptagon Capital – Production

The end of the pandemic may be in sight as vaccination programmes gain ground and economies correspondingly start to re-open. We’re all looking forward to a…

Season 3, Post 8: Doctor’s Orders

The end of the pandemic may be in sight as vaccination programmes gain ground and economies correspondingly start to re-open. We’re all looking forward to a return to greater normality. However, while seeing friends and visiting restaurants may be high on our – certainly your author’s – list of priorities, sitting in a doctor’s waiting room is probably not. We wrote in-depth recently about telemedicine and the potential it offers to decentralise this legacy practice and improve outcomes for both patients and doctors. Data released this week reinforces our conviction in the durability of the trend.

Why visit a doctor when the doctor can come to you virtually, via the power of broadband and other technologies? There are major efficiencies in terms of better allocation of scarce resource (doctor’s time), reduced travel times (for both parties) and fewer/shorter hospital stays (from earlier and more effective diagnosis). Little wonder then that demand accelerated during last year’s pandemic. Figures released this week from Teladoc, the largest provider of telehealth services in the US, show that ‘visit’ numbers rose over 155% year-on-year in 2020, with some 10.6m users making virtual consultations. Teladoc paid membership numbers have more than doubled in the past two years.

We expect the trend only to continue growing in importance, regardless of a greater return to normality. Several reasons support such a contention: increasing familiarity with and comfort around the service; a growing number of corporates now signing up their workforces to telehealth plans; and the increasing range of reasons for virtual visits (mental health consultations at Teladoc, for example, rose 500% YOY). Teladoc’s Chief Executive, Jason Gorevic, highlighted that demand for its services would “well exceed” pre-pandemic levels. Consider also the large runway ahead. Although ~50m paid Teladoc members sounds impressive (and Teladoc is perhaps 4-5x the size of its nearest competitor), there are over 200m people in the US aged 18 or over, while in international developed markets, this figure tops 1bn.

Of course, telehealth visits will never fully substitute for an in-person consultations, lacking the ability to conduct a physical examination as well as that deeper inter-human connection based around non-verbal cues and the greater transmission of trust and empathy. At the same time, virtual consultations can only be as good as the underlying technology (broadband) that sustains it. Those perhaps most in need of medical services often have least ability to access them. Nonetheless, we expect the telemedicine industry to continue evolving and continue to monitor appropriately valued investment opportunities within it actively.

26 February 2021

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.


The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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