Teladoc, Amwell gain as Amazon plans to shut telehealth service
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The shares of telehealth providers Teledoc Health (TDOC) and American Well (AMWL) are on the rise in the pre-market Thursday after e-commerce giant Amazon (NASDAQ:AMZN) announced plans to shut its Amazon Care telehealth business by the end of the year.
TDOC and AMWL have added ~5% each, while their peers in the digital health space GoodRx Holdings (GDRX) and Hims & Hers Health (HIMS) have also gained in reaction.
Launched as an internal healthcare offering for its staff initially, Amazon Care led to concerns in the medical sector over the healthcare ambitions of Amazon (AMZN), the nation's second-largest employer.
Getting rid of its virtual health solution "is far from the death knell for AMZN's healthcare ambitions," Citi analysts wrote in a flash note on Wednesday, adding "more like just the beginning."
Just last month, AMZN agreed to acquire the concierge healthcare start-up One Medical (ONEM), and early this week, there were reports that the company was among the leading bidders for home health service provider Signify Health (SGFY).
Given the pending ONEM acquisition and the limited success of Amazon Care in attracting clients, the decision to shut Amazon Care "is not entirely surprising given the two solutions would be largely redundant," Citi analyst Daniel Grosslight added.
Amazon (AMZN) has partnered with Teladoc (TDOC) to offer virtual healthcare services via Alexa.
Available for employees of six corporate clients, including Amazon-owned Whole Foods, and Hilton (HLT), Amazon Care was set to offer in-home care in 20 cities by the end of this year.
According to Grosslight, with the decision to acquire ONEM, where digital transactions are three times larger than in-person interactions, AMZN has gained the scale to achieve a national offering for a virtual health solution. 
Amazon Care is the second healthcare solution the tech giant has rolled back. In 2021, AMZN and partners Berkshire Hathaway (BRK.A) (BRK.A) and JPMorgan Chase (JPM) decided to wind down a health-insurance venture called Haven.