David Swensen (Trades, Portfolio), Yale’s chief investment officer, purchased a 16,963-share stake in Teladoc Inc. (TDOC, Financial) during the first quarter.
Teladoc is the nation's first and largest telehealth platform. It provides its patients with on-demand health care any time, anywhere, via mobile devices, Internet, video and phone.
The company connects its patients with more than 3,000 board”‘certified physicians and behavioral health professionals. It treats a wide range of conditions and cases from acute diagnoses such as upper respiratory infection, urinary tract infection and sinusitis to dermatological conditions, anxiety and smoking cessation.
More than 13 million unique members now benefit from access to Teladoc 24 hours a day, seven days a week, 365 days a year, at a cost from $40 per visit. Teladoc provides a solution that delivers a median response time of less than 10 minutes from the time a member requests a telehealth visit to the time the member speaks with a Teladoc physician.
Teladoc has a market cap of $490.08 million, an enterprise value of $380.94 million, a P/B ratio of 2.93 and a quick ratio of 9.11.
Teladoc is also traded in Germany.
Teladoc's most recent 10-K filing on March 3 most likely had a strong impact on Swensen's decision to purchase the stake because it said:
- According to the Centers for Disease Control and Prevention (CDC), there are approximately 1.25 billion ambulatory care visits in the U.S. per year including those at primary care offices, hospital emergency rooms, outpatient clinics and other settings. Approximately 417 million, or 33%, of these visits could be treated through telehealth.
- According to the U.S. Department of Health and Human Services Agency for Healthcare Research and Quality (AHRQ), there are approximately 168 million behavioral health market visits in the U.S. per year including only outpatient provider offices. Approximately 131 million, or 78%, of these visits could be treated through telehealth.
- The U.S. health care system is experiencing a growing crisis of access, cost and quality of care due to inefficiencies in today’s health care system and barriers between participants. According to the National Association of Community Health Centers (NACHC), approximately 62 million individuals in the U.S. currently have no or inadequate access to primary care as a result of physician shortages.
- Teladoc's service estimates an average savings of $673 per visit for its clients compared to what the average hospital visit would cost, according to its most recent 10-K filing.
- This estimation is based upon an independent study that was conducted over a 24-month period from an estimated sample size of 24,000 clients as of Dec. 31, 2014, according to Teladoc's most recent 10-K filing.
Below is a chart that shows Teladoc's exponential gross profit growth trendline over the previous five years.
Teladoc's gross profit has increased drastically over the previous three years. In December 2013, the company reported $15.72 million in profit. Over the previous trailing 12 months the company has reported $64.08 million, an average annual increase of 60% over the previous three years.
Conclusion
Teladoc has multiple good signs and has the potential to have a lasting impact on the health care industry. Swensen purchased his stake in Teladoc during the first quarter at an average price of $14.27. Since Swensen purchased his stake, Teladoc's stock price has dropped 11%. This could be a great opportunity to purchase a stake.
Swensen oversees $22 billion in endowment asset and several hundreds of millions of dollars of other investment funds for Yale. Since Swensen began managing billions of dollars for Yale 28 years ago, he has generated an outstanding 13.8% return per annum for the university.
Cheers to your investment success.
Disclosure: Author does not currently own any shares of this holding.
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