Will Amazon Move Into the Telehealth Space?

Brian Orelli: Amazon is rolling out a telehealth service called Amazon Care to all of its employees this summer. It started as a pilot program two years ago. It started with just urgent care, telecare, and in-home nurses for testing and vaccinations, but it’s expanded into primary care services.

Of course, this comes on the heels of the winding down of Haven, which was the healthcare joint venture with Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) and JPMorgan (NYSE:JPM).

What do you think about the move, Keith? Amazon — how do you think it’s going to affect Teladoc and Amwell, which are both telehealth companies. Both were down about 4.5% on the news, which doesn’t seem like that big of a deal.

Keith Speights: First, I will just say that I own shares of both Amazon and Teladoc Health, so I’m rooting for both companies, so let me put that out there first.

Amazon is pretty clear that they are going after the telehealth market. They stated that they’re going to roll out this service called Amazon Care, this telehealth service to other employees throughout the U.S. this summer, but they also said that they’re going to target other employers and make it available to other employers.

This was not a surprise whatsoever. When Amazon first launched Amazon Care a couple of years ago, there was widespread speculation at that time, that this pilot for its employees in Washington state really was just a springboard for Amazon to ultimately jump fully into the telehealth market, and I think that’s exactly what we’re seeing. No surprise whatsoever. This is par for the course for Amazon, they dip their toes into the water of a new market, and then they ease on and a little more, and then they dive in head first. I think that’s exactly what’s going to happen with Amazon later this year. I think they will go after the employer market hard.

But you know, Brian, it’s really way too early to predict what’s going to happen here. I don’t know that Amazon’s entrance into this market is going to significantly hurt either Teladoc or Amwell. Now, it could. Obviously, Amazon is a giant. They have a lot of financial resources to bring to bear, and so they could be a market player.

But I think it’s way too premature to say that Amazon is going to put these other companies out of business or anything that dire, because if you look at it, Teladoc already has a great head start in this market. They claim over 40% of the Fortune 500 companies as customers, so that’s a big chunk of the Fortune 500. They have net promoter scores. If our viewers are not familiar with that, net promoter score is a way of measuring customer satisfaction, but even beyond that, how much customers promotes your products to others. They have a really high net promoter score of over 60 overall, which is exceptionally strong. Then for their new product, it’s a primary care service product called Teladoc Primary 360, they have a net promoter score of 95, which is astronomical. That shows folks really love this new primary care product. So Teladoc Health has an excellent market position already.

I also like that they acquired Livongo Health last year. That gives them a digital health platform for helping individuals manage their chronic conditions, such as diabetes and hypertension. I think that’s a great fit with the telehealth focus and gives them a virtual care overall product mix that Amazon and others don’t have.

Then if you look at Amwell, they have a solid network, more than 62,000 providers at last count in their healthcare networks, so that’s really strong. I think both Teladoc and Amwell have really good head starts that won’t be easy to overcome for Amazon.

My view is that Amazon, might present a bigger threat to some of those smaller telehealth players. But overall, the telehealth market is a huge opportunity. I think it’s big enough to support multiple winners. I think Teladoc, Amwell, and probably Amazon will all be winners.