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How Valuable Is Teladoc's First-Mover Advantage?

By Taylor Carmichael - Updated Jun 29, 2021 at 3:09PM

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Amazon and Walmart are about to find out.

Teladoc Health (TDOC 3.50%) is top dog and first mover in the online telehealth industry. Now some major players like Amazon (AMZN -0.99%) and Walmart (WMT 0.81%) might be moving in. Will these retailing giants take market share from Teladoc?  

In this Motley Fool Live clip, recorded on May 14, Corinne Cardina, bureau chief of healthcare and cannabis at Fool.com, and Motley Fool writer Taylor Carmichael discuss these emerging threats to Teladoc. 

Taylor Carmichael: Teladoc, as you said, they have a strong advantage in that they were first movers. They have a huge doctor network. It's my own opinion that they have a stronger brand than Amwell (AMWL 3.41%). It is one of their main competitors right now I think, is that right? Amwell?

Corinne Cardina: Yes.

Carmichael: I can never remember their name. Talk about mindshare. Teladoc has just a beautiful market share and mindshare and they're the dominant name in this. Amazon, I think they could steal customers from Teladoc in the sense of stealing the insured. If you go where your insurance allows you to go. They could take customers that way. 

Cardina: One more thing that's interesting is we talk a lot about stealing customers, stealing insurers. Let's not forget about the doctors on the platform. Teladoc obviously has a giant network of physicians. They are also expanded into mental health. They've got therapists on there. It's very possible that there could now become a little bit of a tug of war for the providers. Maybe Amazon starts offering more money for each visit for the physicians. It could drive Teladoc's costs up as they try to compete with them. There could be exclusivity rules. If I'm a physician, can I be on Teladoc and Amazon or do I have to choose? We could see some developments on that side of things and a little bit of a tug-of-war.

Carmichael: Yeah. I think the main issue for Teladoc still is the existing healthcare paradigm of going to your doctor in a doctor's office in a doctor clinic. Virtual healthcare is an expanding market. You get more players going into it, but the market itself is getting bigger and they're competing with the existing model. Historically, it's like Amazon, for instance. Amazon was early in e-commerce. They were early in internet retail. Other people came online, everybody came online. That did not hurt Amazon, it helped them because it just validates the model, makes more and more people, the late bloomers get online, too, and they all go to Amazon which is the one they've heard about. In a sense, having Walmart and Amazon come into virtual healthcare just validates that model and it just makes it obvious to more and more people that's where healthcare is moving, virtual healthcare, that people are thinking about it. Since I don't see this as bad news for Teladoc, not yet anyway. Still, it's very early in the story.

Cardina: It is. Teladoc also has things that Amazon doesn't. We can't neglect to mention the Livongo deal. Teladoc not only has telehealth but they also have this remote patient monitoring suite of services from Livongo. If I'm an insurer, that could be an attractive proposition more so than what Amazon has, because Teladoc is trying to occupy this whole spectrum of digital health from, OK, the first time I log on and see a doctor to my doctor can now prescribe some biometric monitoring for my home and track my whether it's high blood pressure or those sorts of things, diabetes. They still are really trying to build out an end-to-end product suite. That is more than Amazon can offer today.

Carmichael: The main thing I think about I think is that Amazon's competing with insurers. They're going to offer their own insurance plan. What that means is that all those health insurers are going to swing to Teladoc. That's the offering that they're going to offer. They have to, really, to compete with Amazon. You're competing with Amazon, you need virtual healthcare in that wheelhouse, in that bucket. Ultimately, it's a strong benefit for Teladoc. I think they are having an amazing advantage in being the first mover. I just think it was huge for them.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Corinne Cardina owns shares of Teladoc Health. Taylor Carmichael owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon, Amwell, and Teladoc Health. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Teladoc Health, Inc. Stock Quote
Teladoc Health, Inc.
TDOC
$38.79 (3.50%) $1.31
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$139.41 (-0.99%) $-1.39
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$127.61 (0.81%) $1.03
American Well Corporation Stock Quote
American Well Corporation
AMWL
$5.16 (3.41%) $0.17

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