Teladoc Health (TDOC +4.24%) is top dog and first mover in the online telehealth industry. Its first-mover status gives the company powerful advantages in mindshare and name recognition. A lot of copycats have emerged, including Amwell (AMWL +2.84%). Now some massive retailing giants like Amazon (AMZN +0.55%) and Walmart (WMT +0.37%) also want a piece of the online healthcare pie.
Is all this competition a danger for Teladoc investors? Or does it simply validate the business model? In this Fool Live segment, recorded on May 14, Corinne Cardina, bureau chief of healthcare and cannabis at Fool.com, and Motley Fool writer Taylor Carmichael discuss the arrival of powerful retailers that now want to start offering healthcare.
Corinne Cardina: We've already got some people excited about the telehealth issue in Slido, so hopefully, we can address some of these things. Telehealth, so during the pandemic, of course, telehealth has been all the rage. Teladoc went to its all-time highs back when you couldn't even go to the doctor's office because the pandemic was just raging last year. A lot of people who wouldn't typically have been interested in virtual doctor visits, tried it out during the pandemic a lot of times because that was their only option. But going over that hurdle of doing it the first time is a great tailwind for the telehealth industry. A lot of those people will probably return for things that don't require in-person visits. Teladoc, of course, has enjoyed a nice first-mover advantage in this space for a little while. Not to say that there aren't other telehealth providers, but they have really been the pioneer. As with anything that picks up steam, the field is starting to get a little bit crowded. In the past week, we have heard that Walmart is going to be expanding into telehealth. They are doing an acquisition with a company called M-E-M-D, MEMD, I guess and then Amazon Care signed its first enterprise customer. Let's start with Walmart. They've got pharmacies in a lot of their stores. It's not a huge jump for them. What do you think about Walmart getting into telehealth?
Taylor Carmichael: Well, for both these companies, for Walmart and Amazon, telehealth is just part of their strategy, I think. Walmart originally talked about thousands of stand-alone healthcare facilities for people. That would not be in the stores. This is like a separate stand-alone building. It's interesting and some people are questioning whether they have pulled back from that. Originally that was their plan, they went all in. The CEO who came up with this has left the company and many of their health executives have left the company fairly recently, so there has been some questions about, are they still pursuing that? They're talking about having thousands by, I think it was 2029, so it's a long term play for them. Telehealth is cheaper, it's easier. It's a lot better than, I mean, for a company it's a lot easier to do a telehealth solution than to create brick-and-mortar facilities -- thousands of them. So Walmart might have adjusted their plans a bit, we don't really know yet.
I'm not a Teladoc investor but if I was a Teladoc investor, I believe I'd be more worried about Amazon than I would be about Walmart personally just because of their branding strength (online). It's interesting particularly in Amazon's case -- I guess I'm jumping ahead to Amazon -- but Amazon's pursuing health insurance and that's where they're competing. It's a backdoor competitive threat to Teladoc. One of the things Teladoc has to think about is how are people coming to our website? Are they coming because they have health insurance paying for it, or are they coming just because they've heard of us and they're paying out-of-pocket? Teladoc has a lot of agreements with health plans with multiple payers. Amazon's competing with that whole industry and creating their own health insurance like they first did in-house for Amazon and now they're spreading it to other companies. For companies that buy into this plan, you buy Amazon health insurance, all your employees have health insurance. Then if they want virtual healthcare, they go to the Amazon version of virtual healthcare. It is a threat for Teladoc but on the other hand, it might make the other players in the industry more willing to work with Teladoc and more willing to send people to Teladoc.
Cardina: What I'm hearing is that Walmart is approaching this from a B2C, business to customer, and Amazon is approaching this from a B2B, business-to-business on the back end.
Carmichael: That's a very good way to think of it. Absolutely. I don't know enough about Walmart if they're going to start with their plan is to offer health insurance or not. They originally were talking about creating all of these clinics for people. Walmart's synonymous with low cost. If you're paying out of pocket, Walmart's where you'd want to go. But if your insurance is paying for it, I don't know that Walmart is where you'd want to go.
Cardina: It's two different markets that Walmart is approaching it from people who are already at Walmart and people who may not have insurance. You've got like maybe a flat co-pay for your virtual visit versus Amazon is really going after your insurer's money. You have to already have insurance whether through your job or the marketplace, that kind of thing. Based on that I would say agree with you that Amazon seems like more of a threat to Teladoc's business.
