Teleconferencing between doctors and patients has the possibility to save consumers around $US104 billion a year.
It also has the chance to make companies that provide the service a lot of money.
One of those companies, Teladoc, had its initial public offering Wednesday and it exploded. Shares were priced at $US19 to open and immediately jumped up, trading as high as $US31.90 and ending the day at $US29.50, a 50% increase.
While still relatively small, Goldman Sachs research estimated that physician-related telehealth industry has a potential market value of $US6.5 billion, with another $US5.5 billion if psychiatric care providers are added.
The field is crowded, however, with standalone services such as American Well, Doctors on Demand and Optum’s Well Clinic. Some insurance companies are beginning to offer in-house services too.
In an interview with Business Insider, CEO Jason Gorevic said Teladoc is far outstripping competitors.
“We are the leader in this burgeoning healthcare space, our patient visits were larger than all other companies in the space combined,” Gorevic said. He noted patient visits were up 130% in Q1 and he projects 500,000 visits for 2015, up from just below 300,000 last year.
The IPO mentioned risk factors that included the shifting field due to the Affordable Care Act and possible regulations from medical boards.
The second issue has already reared it head, as Teladoc doctors were disallowed in Texas from writing prescriptions due to the Texas Medical Board determining the interactions with patient were not substantive enough.
Gorevic is not fazed.
“I actually believe the regulatory environment is a tailwind for us,” he said. “In the last 12 months, 13 states have enacted legislation that is favourable to the telehealth industry.” Speaking about the Texas case, Gorevic said that the court granted an injunction allowing Teladoc to continue to provide prescriptions which indicates there is a high likelihood the company will win the case.
Despite the positive outlook, the company has yet to turn a profit. In 2014, Teladoc posted a loss of $US17 million, up from $US6 million the year before. Gorevic said that the losses were incurred due to investments in the current product new technology and investment in expansion.