Are Telehealth Stocks Set to Tumble in 2026?

Telehealth services are convenient. There is nothing quite like being able to get some medical care, albeit virtual, from the comfort of one's home. Telehealth likely saves physicians and patients time and money.

However, none of that has allowed shares of companies like Teladoc Health (NYSE: TDOC) and Doximity (NYSE: DOCS) -- two companies that provide telemedicine services -- to perform well in recent years.

The even worse news is that there are reasons to think 2026 won't likely be very different for either. Both stocks could, once again, tumble this year. Let's find out why.

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Medicare restricts telehealth services

During the early pandemic years, the government sought to make telemedicine services more accessible, for obvious reasons. People were stuck at home, and it was in everyone's best interest to help most patients avoid visiting healthcare facilities unless they absolutely had to do so.

Provisions that reimbursed Medicare patients for telehealth services received anywhere, including at home, stayed on the books. However, they are set to expire on Jan. 31. After that, only Medicare patients receiving telehealth services from healthcare facilities or in rural areas -- or getting virtual mental health services -- will be reimbursed. Those receiving routine telemedicine visits at home in nonrural areas will not be. This will almost certainly impact the demand for telehealth.

How will Teladoc and Doximity perform in 2026?

Teladoc, a pure-play telehealth company, should see another weak performance in 2026. The company's revenue growth has been slow (at best), even without recent Medicare-related changes.

Of course, Teladoc has a vast network of patients and does not rely solely on Medicare. Even so, with the company's results and business already struggling, this can only make things worse. Teladoc also remains unprofitable and continues to struggle to secure broad third-party reimbursement for its virtual therapy service, BetterHelp.

And although its international expansion efforts look decent, with international revenue growing faster, the company faces too many challenges. It's best to avoid the stock this year.

Meanwhile, Doximity isn't just a telehealth company. It provides a platform for physicians to network, read the latest news in their field, etc. Its platform is ideal for pharmaceutical companies looking to market drugs to physicians, and health systems looking to hire them. Doximity generates revenue from subscriptions from pharmaceutical companies and health systems, while also providing physicians with tools to communicate with patients, including a telemedicine platform.

So, Doximity's business won't be as affected by this recent change to Medicare as Teladoc. However, Doximity faces its own issues. Though it is profitable, over the past few years, revenue growth has slowed considerably and has not matched expectations baked into the stock price, leading to a sell-off. Further, with 80% of U.S. physicians already on the platform, the company is struggling to expand its ecosystem as quickly as it once did, and sales growth might never return to its former levels.

For all those reasons, Doximity could also have a terrible year.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Doximity and Teladoc Health. The Motley Fool has a disclosure policy.