This year will be remembered for lots of things. The COVID-19 pandemic, of course. The wild stock market roller coaster ride. The most named tropical storms in history.

But 2020 will also be known as a great year for initial public offerings (IPOs).

While Snowflake's IPO has received the most attention, another company that's a leader in a fast-growing market also recently went public. Telehealth services provider American Well (NYSE:AMWL) priced its IPO at $18 per share, higher than the $14 to $16 range that the company initially projected. The stock opened on Sept. 17 nearly 42% higher than its IPO price. 

It's only natural for investors to compare Amwell with another telehealth star, Teladoc Health (NYSE:TDOC). But is the hot IPO stock actually a better buy than Teladoc?

Person holding a smartphone displaying a video call with a doctor.

Image source: Getty Images.

Striking similarities

Amwell and Teladoc certainly have a lot in common. They've both emerged as leaders in a relatively fragmented telehealth services market.

Founded in 2006, Amwell now provides telehealth services to 55 health plans, plus 150 of the largest health systems in the U.S. It has powered more than 5.6 million telehealth visits since then.

Teladoc began operations in 2002. Today, the company's paid membership totals close to 50 million. Teladoc expects around 10 million telehealth visits this year. 

While some telehealth providers focus only on a specific niche, Amwell and Teladoc offer a broad range of services. Both companies support primary care, acute care, behavioral health, and chronic disease management, for example. Both Amwell and Teladoc make it easy for patients to connect online with healthcare providers. 

The two companies also should have huge growth prospects. The telehealth market is still in its early stages. Both Amwell and Teladoc have experienced accelerated growth so far this year because of the COVID-19 pandemic, but anticipate that this momentum will continue well into the future.

Clear contrasts

But there are also clear contrasts between Amwell and Teladoc. Although the companies are leaders in the telehealth market, Teladoc is much bigger. In 2019, Teladoc Health generated revenue of $553.3 million compared to Amwell's revenue of $148.9 million. Teladoc's market cap is more than three times larger than Amwell's.

Teladoc has a more significant international presence. In the first half of this year, the company made more than $59 million in revenue in international markets. Amwell's platform is used by the third-largest health maintenance organization (HMO) in Israel, but the company doesn't yet have extensive international operations.

Perhaps the most important differentiators between Amwell and Teladoc going forward, though, are their business development deals. Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Google owns a significant stake in Amwell. The two companies also struck a deal where Amwell will be Google Cloud's global telehealth solution platform partner, while Google Cloud will be Amwell's global cloud platform partner for telehealth visits.

Meanwhile, Teladoc plans to merge with Livongo Health (NASDAQ:LVGO), which operates a digital health platform for chronic disease management. The combination of the two companies will create a virtual care juggernaut serving over 70 million individuals in the U.S. alone. 

The better telehealth pick?

My view is that both of these telehealth stocks could be winners over the long run. I'll keep my eyes on Amwell, especially if its relationship with Google opens up new opportunities. However, I think that Teladoc Health remains the better pick for now.

Teladoc's scale and international operations give it a key competitive advantage. Buying Livongo should be a smart move that will help the company attract even more clients with the resulting combination of telehealth and chronic disease management offerings.