With widespread social distancing and quarantines accelerating transformative changes in the U.S. healthcare sector, both 1Life Healthcare (NASDAQ:ONEM) -- also known as "One Medical" -- and Teladoc Health (NYSE:TDOC) have sprung into action. As consumers look to renegotiate their access to care while also avoiding now-risky in-person appointments with healthcare providers, these companies are competing to be the better option.

But both companies are relatively new, unprofitable, and perhaps underprepared for the burgeoning demand for accessible healthcare. Furthermore, it's unclear how large insurance companies will react if the newcomers threaten their control of the market for care. So which of these two companies is a better buy?

A person at a laptop displaying a doctor in a telehealth consultation

Image source: Getty Images.

One Medical aims for a hybrid of digital and traditional healthcare

One Medical offers a blend of in-person and telehealth options to its subscribers, and has been public (as 1Life Healthcare) since the end of January. Customers can either subscribe directly or use an eligible insurance plan to access the service for $199 per year. In terms of coronavirus-specific services, One Medical provides testing at some of its clinical sites, and virtual consultations for patient screening.

All of the company's in-person services are confined to a small handful of major cities, mostly on the coasts. Thanks in part to its telehealth features, One Medical's membership expanded by 25% in the first quarter, accounting for a total of 455,000 people, and the company expects to add at least another 45,000 members before the end of the year. If each of these new members is insured and pays the standard subscription fee, the company will add another $9 million in recurring revenue, a small sum in comparison to its current trailing-12-month revenue of $292 million.

While investors may balk at its negative profit margin of 27.3%, the company reported 25% year-over-year quarterly revenue growth, meaning that it's feasible for One Medical to become profitable over the next couple of years. Despite its stock experiencing a surge this month and 84% growth over the past 12 months, One Medical also missed both of its most recent earnings estimates.

Teladoc angles for telehealth supremacy

Teladoc Health provides telehealth consultations at scale using phone calls and videoconferencing. It boasts more than 50 million full members, 19 million pay-per-visit members, and millions of virtual visits each year. Unlike One Medical, Teladoc sells its services to insurance providers and employers directly, rather than giving consumers the option to purchase a subscription independently.

Teladoc's year-over-year quarterly revenue growth of 40.6% is even more impressive than One Medical's, and its negative profit margin of 16.2% is significantly less daunting, so the company will probably reach profitability sooner. Another critical difference is that Teladoc had trailing-12-month free cash flow of $31.4 million, so the company's operations are generating enough breathing room to continue growth for at least a while longer. Indeed, the company's profitability may not be an ongoing problem at all, as in its most recent quarterly report it claimed that it was anticipating around $800 million in total revenue by the end of the year.

The stock has been very good for investors recently, growing by 223.7% over the past 12-month period, spurred in no small part by a massive surge of new customers early this year -- the company's number of virtual visits exploded by more than 50% in a single week. Nonetheless, Teladoc missed its last earnings estimate, though it substantially beat the prior two.

The company also recently concluded its acquisition of InTouch Health, for $150 million in cash and $4.6 million in stock. Management hopes this move will improve its clinicians' ability to coordinate care with each other in support of patients with multifaceted medical problems.

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Which company is a stronger competitor?

With its massively larger membership base, free cash flow for expansion, superior historical performance as an investment, and higher revenue growth, I think Teladoc is the better coronavirus stock for most healthcare investors. Considering that One Medical likely has significantly higher overhead costs stemming from its physical locations, it's hard to see how it could grow more aggressively than Teladoc in the near future.