The Trump administration has nominated Dr. Marty Makary for the role of the United States Federal Drug Administration (FDA) commissioner. Dr. Makary is the Chief of Islet Transplant Surgery at Johns Hopkins University in Baltimore, Maryland, and also serves as the chief medical officer at Sesame, an online telehealth platform. As an avid supporter of telemedicine, his appointment as the FDA chief, upon Senate approval, would benefit telehealth companies and their stocks. Here are two telehealth stocks in the medical sector that could benefit from Dr. Makary’s appointment.
Hims & Hers Health: GLP-1 Compounds Could Gain More Acceptance
Popular telehealth platform provider Hims & Hers Health Inc. (NYSE: HIMS) offers a range of healthcare treatments for sexual health, anxiety, skincare, hair growth, and weight loss. The company has been experiencing explosive growth, and the addition of GLP-1 compounds has accelerated growth even higher. The company reported 77.1% YoY revenue growth to $401.56 million, crushing consensus estimates for $382.2 million in its third quarter 2024 earnings report. The company also crushed EPS consensus estimates by 22 cents, coming in at 32 cents. Its subscribers surged 44% YoY to 2 million.
Eli Lilly Requests FDA Remove Tirzepatide from the Drug Shortage List
The shortage of GLP-1 drugs, including Eli Lilly & Co. (NYSE: LLY) Tirzepatide sold under brands Mounjaro for type 2 diabetes and Zepbound for obesity, has enabled Hims to market compounded versions of GLP-1. When drugs are on the FDA’s Drug Shortage List, outsourcing labs are legally allowed to produce compounded versions using bulk drug substances without any further clinical trials. The lawsuit calls for more transparency from the FDA in defining and managing drug shortages.
The FDA abruptly took Tirzepatide off the shortage list on Oct. 2, 2024, without any opportunity for public comments and without filing with the Federal Register. Furthermore, it appears that the drug was taken off the list at the request of Eli Lilly, who seeks to gain monetarily from being the only provider of Tirzepatide. Hims & Hers argues there is still a shortage of Tirzepatide and Novo Nordisk A/S (NYSE: NVO) Semaglutide as evidenced by their GLP-1 supply tracker, which has shown that 80,000 users have reported the inability to access branded versions of GLP-1 drugs.
Dr. Makary Is an Advocate of FDA Transparency and Telemedicine
Dr. Makary has been an advocate for transparency within the FDA and a staunch believer in telemedicine. He would likely side with the compounders in this case, as they are a more cost-effective solution. Sesame, the telehealth platform Dr. Makary is the medical director of, also sells compounded versions of Tirzepatide and Semaglutide. His nomination announcement triggered an 18% stock rally in shares of HIMS. The company can continue to benefit if the United States Senate finally confirms Dr. Makary's appointment.
Teladoc: Making Telemedicine and Mental Healthcare Accessible and Available to All
While telemedicine platform provider Teladoc Inc (NYSE: TDOC) saw parabolic growth during the pandemic, shares have since fallen 96% from its $308.00 high in February 2021 down to $11.98 as of the Nov. 29, 2024, market close as patients return to physical doctor visits. Teladoc is the largest telehealth platform that provides virtual healthcare services with a network of more than 7,000 licensed care providers, including board-certified physicians and therapists. Its BetterHelp segment provides virtual virtual visits to on-demand mental health.
Teladoc Is Starting to Stage a Turnaround
The post-COVID normalization has been long and painful, but Teladoc has exhibited signs of a turnaround. Its third-quarter 2024 EPS loss was trimmed to 19 cents, beating consensus estimates by 9 cents. Revenue decline improved to just 3.8% YoY to $640.6 million, firmly beating $631.18 million consensus estimates. United States revenue fell 5.8% YoY to $536.16 million, but international revenue rose 14.8% YoY to $104.35 million. Its United States Integrated Healthcare Members continued to increase to their highest levels at 93.9 million members.
Raising the Bar and Goldman Sachs Sees Opportunity
Teladoc raised its fourth-quarter 2024 revenue guidance to reflect flat to 2.5% YoY revenue growth or $646 million to $662 million versus $633.02 million consensus estimates. Adjusted EBITDA is expected to decrease by 6% to 83.3 million versus $88.8 million in the third quarter of 2023. The Integrated healthcare segment is expected to see adjusted EBITDA grow 8% to $68 million, while the BetterHelp segment sees its adjusted EBITDA fall 41% YoY to $15.2 million.
Goldman Sachs initiated coverage of TDOC shares with a buy rating and price target of $14. Analyst David Roman sees membership to continue growing, driven by the integrated care business led by the chronic care segment. BetterHelp growth is targeted to resume in 2026.
