To say that the telemedicine industry has seen explosive growth due to COVID-19 is an understatement. Between that and the recent rebirth of the stock market, telehealth stocks are a savvy investment decision for investors.
Within this post, you’ll find info on the following topics:
- The Growth of Telemedicine
- Is telemedicine a good investment?
- How to Invest in Telehealth Stocks
- Healthcare Stocks to Buy
The Growth of Telemedicine
Telehealth has grown dramatically in the last year, and researchers pose that the Coronavirus will plant seeds for telemedicine’s continued growth. Frost & Sullivan predict that telehealth will grow by seven times by 2025. That’s a 38.2% five-year compound annual growth rate.
Additionally, Frost & Sullivan predicts:
- Improvements in analytics
- Cybersecurity improvements
- Better adherence to privacy regulations
- Telehealth’s ROI making “lasting regulatory changes.”
Potential patients polled indicate that around three-fourths might use telehealth for remote COVID-19 screenings. Two-thirds of those surveyed claim that the Coronavirus opened them up to the idea of telemedicine.
Is telemedicine a good investment?
According to Motley Fool, around $3.5 trillion is spent on healthcare in the United States each year. That’s almost half of the global healthcare spending of $7.8 trillion. And with COVID-19 still a concern, that number will likely increase.
COVID-19 boosted telehealth’s growth, and its adoption has spurred growth that experts expect to last. As a result, the trajectory of telehealth stocks is up. Moreover, patients like virtual healthcare because it provides a viable solution for decreasing healthcare costs.
Thinking logically, you might consider how the patient feels about using a telemedicine platform. If patients don’t use the virtual services, telemedicine will not succeed.
However, patients are on board. In a study by Accenture, up to 60% of patients who used telehealth services during the pandemic would like to use them consistently in the future.
Reasons cited for the preference were things like:
Additionally, 63% of those surveyed say they now trust their medical providers more, and 45% are more confident in medical device companies and the pharmaceutical industry.
The next thing you might consider is how providers feel about telehealth software. How do you feel about telehealth software? Your colleagues?
According to Merritt Hawkins, a study of the pandemic’s effect on telehealth revealed that almost half of physicians use telemedicine.
How to Invest in Telehealth Stocks
Motley Fool recommends the following steps when investing
1. Decide upon how you will invest.
Will you purchase individual stocks, or will you approach investing less actively?
Here are some of the ways you can invest:
- Individual stocks:
Individual stocks are great for those who want a hands-on approach to investing. However, if you don’t have the time to research and evaluate the various stores available, this might not be the best option for you.
Robo-advisors have become quite popular recently. They are brokerages that invest for you, make necessary changes over time, and ensure tax efficiency.
- Index funds
A lower-cost option, Motley Fool states that index funds “track a stock index like the S&P 500.”
Everyone has the potential to do well investing, but different approaches work better for different people.
2. Determine the amount to invest.
Consider the following:
- Your age
Motley Fool recommends subtracting your age from 110 to get the percentage of your investible funds that should go to stocks. This calculation allows you to consider retirement since the percentage you invest in stocks decreases closer to retirement. Since stocks can fluctuate so much, other investments should account for a higher percentage than stocks close to retirement.
- Your risk tolerance
Investing in stocks has its ups and downs- some can be drastic, like the recent drop due to COVID-19 and the subsequent skyrocket to the highest numbers in history.
If you get a rush from risk, invest more of your investible funds in stocks. If not, you might consider investing the bulk of your money in another type of fund and allocating less to stocks.
- Your investment goal
Do you want to see results in the next 3-5 years? Or are you thinking more long-term?
The stock market can yield results in the short and long term, but many experts consider it a long-term investment option.
3. Start your investing account.
To purchase stocks, you must have a brokerage account.
There are other options, but the three above are popular.
Once you’ve started your account, loading funds through EFT is a short process that’s easy to complete. You can also use a check or wire money to the account.
4. Stock diversification.
Choose multiple stock types, and start your portfolio with a foundation of well-established businesses.
5. Invest long-term.
When you choose the exceptional businesses you want to invest in, maintain ownership of those stocks for as long as you can- as long as the company is profitable.
As with any stocks, investing in telehealth stocks comes with risks. Some risks are identical between telehealth stocks and other stocks, as the threat of competition with a better offering.
On the other hand, some risks are specific to healthcare.
A couple of potential risks associated with telehealth stocks are:
- Regulatory changes within the healthcare sector:
Healthcare Stocks to Buy
One of the best virtual care stocks to invest in. Their recent Livongo Health acquisition in 2020 provided the opportunity to help those dealing with chronic health conditions.
Teledoc’s visit total in 2020 was over 10 Million. The company predicts revenue totaling over $3.45 Billion by 2023.
Another fantastic option. Acquiring Cloudbreak and UpHealth will make GigCapital2 one of the largest telehealth businesses in the United States. Forecasts indicate a potential-jump from Cloudbreak and UpHealth’s combined revenue of $115 million to $194 in 2021, leading to $346 in 2022.
China’s leading pharmaceutical company. Almost 1 billion people use the service. And Motley Fool says, “Back in Q3 2020, its revenue increased by a stunning 113% year over year to 2.363 billion yuan (about $366 million).”
To sum it up
To sum it up, telemedicine stocks are a fantastic investment option right now. The industry is skyrocketing and expected to do so for the foreseeable future. So do your research and diversify your portfolio, and you could see tremendous returns.