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Will Teladoc (TDOC) Survive Competition From Amazon's Entry?

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Teladoc Health, Inc. (TDOC - Free Report) has been a real winner amid the ongoing pandemic, which has led to a surge in demand for its telehealth product and services.  

Full-year 2020 revenues grew 98% year over year to $1,094.0 million and total visits increased 156% to 10.6 million.

Teladoc’s stock however took a beating last week after Amazon.com, Inc. (AMZN - Free Report) announced that its virtual care program named Amazon Care is now available to employers in Washington and that, beginning this summer, the service will be extended to companies and every Amazon employee in all 50 states. Amazon Care’s in-person services will be expanded to Washington, D.C., as well as Baltimore and other U.S. cities over the next several months.

Tech behemoth Amazon has a successful track record of disrupting any business and its entry into telehealth sends signals of tough competition for Teladoc. However, Teladoc is better placed in the market than Amazon, which has for now limited its telemedicine program to employers and has not yet addressed the payer (insurance providers) market that Teladoc serves. Also, Teladoc’s unique strengths discussed here will help it to face the incoming competition:

Comprehensive Suite of Virtual Healthcare Clinical Services: The company provides a comprehensive and integrated Whole Person virtual healthcare solution that covers a full spectrum of clinical conditions — from wellness, prevention and acute care to chronic conditions and complex healthcare needs — as well as a wide range of services, such as telehealth solutions, chronic condition management, expert medical services, behavioral health solutions, guidance and support, and platform & program services. This full range of services helps in better customer acquisition and retention.

Global Footprint Spanning Clients, Medical Operations and Members: Teladoc is the only virtual healthcare provider having a global footprint, spanning a diverse set of client channels, medical operations and members. Combining its suite of international clinical capabilities with its technology and operational scale uniquely equips the company to meet the needs of U.S. multinational employers that serve more than one third of their employees who live abroad. Its International operations also provide it the benefits of geographical diversification.

Unmatched Breadth of Solutions for Clients Across All Channels Served: The company caters to a diverse client population through a highly efficient and effective distribution network wherein it reaches clients and consumers on a direct B2B basis through its client and channel partners as well on a D2C basis by marketing its solution directly to potential Members.

Highly Scalable and Secure API-Driven Technology Platform: The company’s business is highly scalable, which means that additional capacity can be added without incurring additional cost. Its integrated, application program interface or API-driven technology platform, is currently equipped to serve over 100 million members and can provide the same level of member support and response time for more than 100,000 visits per day. Also, its platform has been built to accommodate the seamless and quick introduction of new services and products that have been recently introduced by the company such as behavioral health, dermatology, nutrition, expert medical opinions, Primary360, global healthcare including its Canadian telehealth program, and other services that are currently in the development stage.

Telaodoc’s growth strategies will further aid the company. The company is creating a new virtual front door for consumers to access the healthcare system. Its mission is to position virtual care as the first place consumers go to get the care they need and manage their health.

The company is also expanding its suite of clinical services to address the unmet needs of patients. It also seeks to increase engagement with its customers by driving expanded access & enhanced touch points. The company is also making efforts to increase its business by expanding penetration among existing clients.  The company estimates the opportunity to grow its membership base by more than 65 million individuals in the United States by expanding its penetration within its existing clients alone.

We believe the company is well equipped to face growing competition in the virtual care delivery space, which saw the recent IPOs of 1Life Healthcare, Inc. and American Well Corporation (AMWL - Free Report) .

Teladoc has lost 1.3% year to date compared with its industry’s decline of 2.8%. The stock carries a Zacks Rank #4 (Sell) currently.

 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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