So far, Teladoc Health (TDOC 0.69%) has been the biggest winner in the growth of telemedicine. But it's an industry that's expected to grow significantly in the years ahead, and competition is likely to be stiff, including recent IPO Amwell (AMWL -3.97%), and potentially competition from companies that aren't known for being big in telehealth but have technologies that could make for a good fit, like Zoom Video Communications (ZM 0.50%).
On the Dec. 8 edition of "The Wrap" on Motley Fool Live, host Jason Hall and Motley Fool contributors Asit Sharma and Brian Feroldi discussed the reasons why Teladoc has a very good shot at remaining the top dog in telehealth. One key take: Even if it doesn't, there will likely be more than one big winner, and that's certainly in Teladoc's favor.
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Brian Feroldi: Who will be the market leader in telehealth? Teladoc, Amwell or Zoom? My money would be on Teladoc, one; Amwell, two; Zoom, three. Don't also count out Twilio.
Jason Hall: Don't count out Microsoft either.
Brian Feroldi: Yeah. The whole category could grow. There could be multiple winners. There's no doubt Teladoc is the leader right now. I would bet on the top dog, but is that right? I don't know. [LAUGHTER]
Asit Sharma: We did a deep dive with Rick Munarriz way back. This was a few weeks into (Motley Fool) Live, I think. One of the things that we noted about Teladoc was they have been a serial acquirer, and of course, they kept acquiring after that deep dive.
But they are now, I was just checking at a $28 billion market cap, I believe. You're looking at Amwell is a $7 billion market cap. I didn't even check Zoom because they're not going to acquire Zoom. But this is a merger-centric company.
I think they're going to keep growing and it may be hard to dislodge them. Of course, if one company could, maybe that's Zoom, but I don't see anything different. Every competitor that's come along for the last, I can't remember now, but 7-10 years, they've just acquired it, and they've used stock along the way to do that. It's an interesting formula that they have. My money would be on Teladoc just for that reason.
But how profitable they do just being an acquirer of this technology and this business model, that tends to hurt over time. You ought to learn how to grow organically so you can get the lift of pricing power, etc. Although, this is a regulated industry but in terms of who will be the biggest or the winner, maybe they have the best chances as it stands right now.
Jason Hall: I have a thought exercise, I want to point out, that I think might be an interesting parallel for Teladoc. It's a best case, and that's Salesforce. Salesforce has spent years and years as an acquisition-driven business. They've excelled at growing organically as well as making what so far have been really well-integrated acquisitions that they've turned into future organic growth as well.
To me, there's two things that I'd take away from it. Number one, you have to have a really good process for how you acquire and how you integrate to wring out costs and make sure you're getting what you bought. What were you trying to get? What were you trying to buy? Salesforce has proven that they can do that so far. They've proven that they can do enough to get them into the Dow Jones Industrial Average.
So the question for Teladoc is, can they continue to do the same thing? Because they are growing organically and growing the other top line through acquisitions, both are growing. The other part of it too is not just, can they get it right, which is the most important thing, but Salesforce was doing it in a high-growth business, in a high-growth industry where there was continued expansion of demand for those online CRM tools. Anything engaged in customer relationship, managing the data.
For Teladoc, telehealth is obviously a massive growth business. The point is to me that I think it makes growth by acquisitions a little easier. You have more margin for error because there's already growth that's happening and that growth can wallpaper over mistakes and give you more margin of error to fix those mistakes because everything is still growing. I think those two things are in Teladoc's favor to staying ahead.