Teladoc Health (NYSE:TDOC), the virtual healthcare platform, reported its second-quarter earnings report with sales growing 109% to $503m, and virtual patient visits up 28% to 3.5m. But there’s a metric turning investors off:

• Losses grew to $133m — sending its stock down 10% before recovering the majority of its losses through the day.

What’s the big deal? Teladoc continued to grow in 2021 despite the huge jump in sales last year as virtual care use accelerated.

But like many other stocks that benefited during COVID, 2021 hasn’t been as kind. TDOC is down nearly 50% from its Feb peak. What’s to blame for the poor performance?

• Incoming competition: In 2021, Amazon and Walmart announced their entry into telehealth services.
• Valuation concerns: Its stock rise in 2021 sent its valuation to extreme levels, which fell back to historic levels.

But don’t take its fall in its stock price as a sign of trouble in its business. In the past 5 years, TDOC has been a growth machine — its stock is still up by more than 6x despite its big 2021 drop.

Looking forward: As the largest telehealth provider, TDOC’s position in the telemedicine space is enviable. The massive healthcare industry is still largely offline — giving TDOC plenty of room to grow.

• In 2021, TDOC acquired Livongo, a diabetes monitoring startup — signaling its expansion into other areas of healthcare.

TDOC expects growth to slow to 77% and 39% in the next two quarters — a far drop from the 100-150% growth during COVID — but still in line with its ~30% growth before COVID.

• TDOC has nearly fallen to its pre-COVID valuation of ~10x price-to-sales multiple — indicating the worst may soon be over.
• Hidden inside these 2021 underperformers are bargains waiting to be picked up.

The ETF way: Global X Telemedicine & Digital Health ETF (NYSE:EDOC) invests in companies related to telemedicine and digital health.