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Should Teladoc Be Worried About the Grand Rounds and Doctors on Demands Merger?

By Brian Orelli, PhD and Keith Speights - May 7, 2021 at 12:40PM

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There should be room for multiple winners in the telehealth space.

In March, Grand Rounds and Doctors on Demand disclosed plans to merge. How that'll affect Teladoc Health (TDOC 6.13%) remains to be seen, as Fool.com contributors Brian Orelli and Keith Speights discuss in this video from Motley Fool Live, recorded on March 29.

Brian Orelli: George points out that Grand Rounds and Doctors on Demand plan to merge and will potentially go public, and he's looking at what impact this might have on Teladoc?

Keith Speights: To be honest with you, George, that's a good question, but I haven't followed this potential merger very closely. But if you back up and look at the big picture, the telehealth, and really I'm going to just say virtual care market opportunity, globally is huge. I've always maintained that there's room for multiple winners in this market. It wasn't long ago that Amazon (AMZN 2.07%) made some waves by announcing that it was going to launch Amazon Care, its telehealth service to other employers. I think they're going to start doing that this summer. Teladoc and some of the other telehealth stocks sold off on that news. But again, I think there's room for multiple big players in the market, multiple companies to win over the long term, and I still think Teladoc Health is going to be a winner over the long term. I think the company has such a great head start. It has over 40% of the Fortune 500 companies as customers. It has the Livongo product, the digital health management product for chronic diseases. I think that's a good addition to its product lineup. So Doctor on Demand, Grand Rounds, they could be winners, Amazon could be a winner. But I'm pretty confident that Teladoc is going to be a winner, too.

Orelli: Yeah, I think the moat that it has is probably a big advantage. Although obviously, presumably Grand Rounds and Doctors on Demand are merging because they couldn't compete with Teladoc on their own. Are they going to be a stronger force? Probably, but let's not discount Teladoc's moat.

Speights: Yeah. Actually, without looking at the details of this planned merger, just my gut reaction is it's probably a good move because I think, my opinion is that Amazon's entry into the telehealth market could actually hurt smaller players even more than it would Teladoc Health. So for the smaller companies to join forces could be a good strategic move.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Brian Orelli, PhD has no position in any of the stocks mentioned. Keith Speights owns shares of Amazon and Teladoc Health. The Motley Fool owns shares of and recommends Amazon and Teladoc Health. The Motley Fool recommends the following options: long January 2022 $1920.0 calls on Amazon and short January 2022 $1940.0 calls on Amazon. The Motley Fool has a disclosure policy.

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