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Will Amazon or Walmart Acquire Teladoc?

By Taylor Carmichael - Updated Jun 26, 2021 at 10:22PM

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These two retailing giants want to enter the healthcare field. Does that make Teladoc an acquisition candidate?

Amazon (AMZN -1.44%) and Walmart (WMT 0.96%) are both making noises of entering the healthcare field. Will these retailing giants try to build up their healthcare offerings from scratch? Or will they try to acquire existing businesses in the space?

In this Fool Live clip, recorded on May 14, Corinne Cardina, bureau chief of healthcare and cannabis for Fool.com, and Motley Fool contributor Taylor Carmichael discuss whether or not Teladoc Health (TDOC 0.53%), the leading player in the telehealth field, might be an acquisition candidate.

Corinne Cardina: We got to an interesting Slido question I'm going to throw your way. Will asks, "Why don't you guys think Walmart or Amazon buys Teladoc? It seems it will be easier to just get all their data and customers as opposed to setting up their own system. Thanks, guys." I looked up the market cap of Teladoc really quickly which is $21 billion.

Taylor Carmichael: It's cheaper than I thought. I was thinking 30.

Cardina: It's gone down recently. Sadly, I'm a Teladoc shareowner. I'm happy to be a Teladoc shareowner, but it's --.

Carmichael: Do you have this one share?

Cardina: I do have my one share. It's been cut in half since --

Carmichael: It's a one-share that's been cut in half.

Cardina: Its latest highs. Amazon, meanwhile I'm looking at their quarterly cash, $73 billion.

Carmichael: Sure.

Cardina: Amazon's got more money than God, let's be honest.

Carmichael: They do. They have a lot of money.

Cardina: I don't know they want to spend about a quarter of their cash on this new field, but I wouldn't put it past them.

Carmichael: Well, wouldn't get it for 20 either, it would probably be 40.

Cardina: You got to pay a premium for sure.

Carmichael: It's interesting, 10 or 15 years ago, I'd say no. Amazon doesn't really make big acquisitions except they did buy a Whole Foods which shocked everybody.

Cardina: They did PillPack, and that's healthcare.

Carmichael: The alternative is to build it in-house. Amazon's two alternatives is one, build it in-house or acquire. Walmart acquired this little company, but again, you start to build it up. Part of the building is getting all these doctors on board. The size of your company is dependent on how many doctors are in your network. That's how that limits your growth and your opportunities. You have to have a lot of doctors signed up and Teladoc is huge in that regard. How many, tens of thousands of doctors they have. They have a lot of doctors.

Cardina: It might make more sense for Amazon to go after a smaller company like Amwell or GoodRx. I could see GoodRx fitting into their healthcare suite with PillPack. Anytime you underestimate Amazon, it comes back to bite you, I'll just say that. That has been reflected in Teladoc share price since Amazon announced this new enterprise customer.

Carmichael: Well, if I was a Teladoc shareholder, I think I'd wish that they do not acquire us, just because I think the upside for Teladoc remains huge. I think healthcare is such a big industry. We don't know how much of it is shifting online. We know it will shift some of it, a good chunk of it is going to shift.

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 GoodRx Holdings, Inc. and 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
$37.99 (0.53%) $0.20
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$140.64 (-1.44%) $-2.05
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$129.82 (0.96%) $1.24
American Well Corporation Stock Quote
American Well Corporation
AMWL
$5.01 (-1.96%) $0.10
GoodRx Holdings, Inc. Stock Quote
GoodRx Holdings, Inc.
GDRX
$7.60 (2.56%) $0.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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