Companies Dealing with COVID-19

With the recent increases in COVID-19 cases in the U.S., Credit Suisse checked with several companies such as HMS Holdings Corp, Teladoc Health, and Change Healthcare (CHNG) to discuss how their businesses and day-to-day operations will and are being affected by the COVID-19 outbreak. 

HMS Holdings Corp (HMSY), a U.S company based out of Irving Texas, offers services to help customers contain healthcare insurance benefit costs. Service offerings include the Coordination of Benefits (COB) which ensures the right party pays a health claim and Payment Integrity (PI) services to ensure that the billing and/or payment is accurate and appropriate.

In dealing with the recent increase in COVID-19 cases, HMSY notes that it will likely have some positive implications for their businesses as the company will have more opportunities to audit and review claims.

As for implications for the third-party carriers/partners who supply data to HMSY, the company notes that most of the systems are automated and should not see any service disruption. Also, HMSY’s employees can work remotely and access company resources from home. HMSY’s technology-driven automated work environment has allowed HMSY to avoid operations being disrupted.

Teladoc Health (TDOC), questions if it is more beneficial to the company if individuals use telehealth to avoid crowded places such as clinics, ERs, etc. or is it more beneficial for the company to use telehealth to triage individuals showing coronavirus-like symptoms? TDOC notes that the vast majority of patients will not need to go to a facility and are likely to be treated at home unless they need to get tested.

The company thinks that any quarterly benefit may be transitory, but if there is a long term benefit, it is towards the adoption curve for telehealth. This may occur since more people would likely use the service that otherwise would not have been used before the outbreak. This may drive further adoption and long-term utilization.

So far, TDOC reports that their patient visit volumes have spiked 50% over the prior week and continues to rise. TDOC notes that between March 6 and March 13, the company provided an estimated 100k telehealth visits which was a 50% increase from the prior week to patients in the U.S.

Credit Suisse research analysts believe that since the company gets paid on only roughly 55% of their visits, the company will have to incur the cost on all visits. This limits the potential revenue and EBITDA upside than what might be implied by the increase in the number of visits.

However, analysts also think that since a significant portion of TDOC’s membership is related to the commercial market either by contracting directly with employers or contracting with health insurers, the company’s membership is likely to be unfavorably impacted by any increase in the unemployment rate if there is a potential economic recession.

The company’s recent initiatives to expand into the government businesses such as (Medicare Advantage and Medicaid), and the provider telehealth market as well, is a push towards the utilization rate which should serve to offset any membership headwind.

Change Healthcare (CHNG), management in discussing the use of telehealth, explained that in terms of the possible impact of individuals delaying elective procedures/surgeries or staying away from physician clinics and ERs, this may result in a negative impact, but so far, CHNG has not yet seen any negative impact. However, since the company has more robust services and product offerings than some of their peers, this may minimize the negative impact.

Given the company’s high recurring revenue model, most of next year’s sales are already on contract which provides the company with higher growth visibility. However, on a cautious note, if there is a major pullback in the overall economy, this would not bode well for CHNG.

As for CHNG’s ability to provide some of their services remotely, management notes that other than their RCM business, most installations are conducted virtually. The company is continuing having meetings with customers and scheduling demos in virtual settings. Also, since the company has a geographically diverse workforce, CHNG is able to transfer workloads around critical processes.

Analysts note that this is the first large scale pandemic experience for the telehealth industry so most companies don’t have enough relevant data to be able make predictions using artificial intelligence or machine learning as to the demand and impact of the pandemic.

For more information or to provide feedback, email Jailendra Singh, Research Analyst at or call 212-325-8121.


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