(Bloomberg) — Cathie Wood appears undaunted that Amazon.com Inc. is eyeing a business staked out by her biggest bet in telemedicine, Teladoc Health Inc.
Three funds at Wood’s Ark Investment Management expanded their stakes in Teladoc, seizing on the dip Wednesday caused by Amazon’s move to offer its virtual-doctor-visit system to other companies, according to trading disclosures. Teladoc shares slipped 4.4% Wednesday on the heels of Amazon’s announcement and continued to drift lower Thursday.
“The pandemic has materially accelerated the adoption of virtual care,” Simon Barnett, an investment research analyst with ARK, said in an interview Thursday. “It’s like trying to put toothpaste back in the tube. It’s not something that’s going to go back to brick and mortar as the pandemic abates.”
“We don’t really think that Amazon, despite its balance sheet and brand name, is necessarily going to do something that will help it get inroads very quickly in the healthcare ecosystem,” he said. “There’s a lot of difficult to crack components that are really key, like relationships with insurers health systems that are not necessarily something that you can just buy.”
Barnett predicts that the global telehealth market could reach around $150 billion over the next five years — the typical time horizon for the funds’ investments — though advances in preventative testing in areas like cancer detection could expand it even more.
Teladoc is the largest holding in the ARK Genomic Revolution fund and the third largest in the ARK Innovation ETF.
The stock has dropped about 37% from February’s record highs after a conservative membership forecast spooked investors and sentiment on tech stocks soured.
Sellside analysts have stuck by Teladoc and peer American Well Corp. after Amazon’s latest venture. The specter of Amazon has long loomed large over the sector, despite the goliath’s limited success so far in health care.
“The threat is overstated, because Teladoc and American Well have contracts with many of the large health plans,” BTIG’s David Larsen said in an interview. “Amazon has been very successful taking share from your traditional retail store fronts in many areas. But health care is different.”
He expects Amazon may be able to make inroads with the uninsured instead of employer health plans, a segment where Teladoc and American Well have a head start.
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