1. Highlights from the 15th annual Teladoc Health Forum
a. Highlights on Primary Care 360 from CEO Jason Gorevic
The pandemic pushed virtual care adoption from 11% to 46% globally. Providers have grown the number of patients they’re seeing virtually by 50x to 175x vs. pre-pandemic. Unsurprisingly, Gorevic has seen “more industry adoption in the last 18 months than vs. the decades before that.”
Through the year 2026, Teladoc expects virtual care spend to quadruple in Europe specifically.
Healthcare demand continues to greatly outpace doctor supply and healthcare costs continue to outpace GDP growth. More than 50% of primary care physicians report feeling burnt out. As a result, the wait time to see a primary care physician is — on average — 30 days. With Teladoc’s Primary Care 360, the company has been able to cut that down to under a week while doubling the access a patient has with their healthcare professional.
Remote access is the primary vehicle for pushing our global healthcare systems to attempt to do more with less. That will not change when Covid-19 ends.
Gorevic also spoke at length on the power of Teladoc’s whole person virtual care approach. Competitors offer specific point solutions within the niches of urgent care, primary care, chronic care and mental health. No competitors offer all of these solutions on one, streamlined platform other than Teladoc Health. This full suite of capabilities has enabled the organization to build a long roster of Fortune 500 clients.
Teladoc Health’s well-rounded virtual care ambition is working. In 2017, just 9% of the company’s users were eligible for multiple virtual services. As of 2020, that number rose to 43% and Gorevic expects the vast majority of Teladoc’s patients to be eligible for multiple services in the next 2 years. Cross-selling has a profoundly positive impact on this organization’s margin profile meaning the trend will be a beneficial one for profitability.
b. Highlights from the President of US Group Health Kelly Bliss
“Net promoter score (NPS) for Primary Care 360 is +95.” - Bliss
c. Highlights from the President of Teladoc International - Carlos Nueno
Carlos covered Germany’s recent passing of the Digital Healthcare Act & its implications. The act opens the door for virtual care reimbursement to more directly incentivize the German healthcare system to adopt it.
He also gave an interesting statistic from the National Health Service (NHS) out of England. NHS has reduced face to face visits by 2/3 while maintaining levels of care by embracing virtual.
d. The Teladoc/Microsoft Teams Partnership with Corporate VP of Global Healthcare and Worldwide Commercial Business at Microsoft Tom McGuinness:
The solo platform’s full integration with Teams is just the first stage of this new partnership. Teladoc will also integrate with Microsoft’s electronic medical record (EMR) database and much more.
“We believe the Teladoc Health partnership will take Microsoft’s impactful solutions for providers to higher levels. Teladoc’s industry leadership and unmatched clinical expertise positions us to make a real difference. No more toggling back and forth between various software programs. Providers will be able to focus on outcomes. We think there will be many more interesting ways for our 2 companies to work together.” - McGuinness
2. Ayr Wellness’s busy week
a. Nevada expansion
Ayr Wellness announced an agreement to purchase Tahoe Hydroponics Company and NV Green for $17 million total. These are two separately-run entities with overlapping ownership.
The deal is made up of $5 million in cash, $3.5 million in debt & $8.5 million in Ayr’s stock. Based on the closing price, Ayr is paying roughly 4.5x adjusted 2021 EBITDA.
The purchase comes with 33,000 square feet of growing and processing space throughout Nevada as well as 75 new employees. Tahoe Hydroponics provides premium cannabis flower and concentrate for its own brand (Tahoe Hydro) as well as other popular labels like Cookies and LIT.
It’s broadly known as one of the highest-quality growers in the state. Specifically, Tahoe Hydroponics has won the coveted Jack Herer Cup 6 times which judges the best cannabis flower.
NV Green specializes in cannabis concentrates like edibles and oils.
With these new assets, Ayr will be able to bolster its wholesale operations as well as fortify the supply it offers its own consumers in its retail shops.
b. Entering Illinois
Ayr Wellness also announced a deal to buy Herbal Remedies Dispensaries. This move adds an eighth state to Ayr’s quickly growing footprint (it was in just 2 states 18 months ago).
Ayr will pay roughly 5 times EBITDA for the retail company and will gain access to the 2 Illinois dispensaries that Herbal Remedies owns. The deal is for $30 million total including $10 million in stock, $12 million in notes and $8 million in cash.
This year, Leafly named the Herbal Remedies 1837 Broadway location as one of the top ten dispensaries in the state of Illinois.
Illinois is quite the attractive state. It commands a 31% higher price per ounce for premium flower vs. other states in Ayr’s portfolio like Nevada. Grow costs are essentially the same between the two states meaning Illinois yields a higher gross profit margin (more generally speaking) vs. Nevada. Compared to the United States as a whole, Illinois enjoys an 8% higher price per ounce for premium flower.
The move brings Ayr’s total footprint to 85 million Americans and adds 50 new team members to the company’s roster.
Click here for my broad overview of Ayr Wellness.
3. Duolingo approaches its IPO
Preliminary pricing on Duolingo’s IPO came in at $85-$95 per share. At the high point, this translates to a $3.4 billion market cap.
Based on $3.4 billion, it will trade for 21x trailing sales and 29x trailing gross profit but the valuation could still rise from here before the IPO comes on July 28th.