If an organization is judged by the company it keeps, Boston-based Amwell should be held in high regard. The telehealth specialist, backed by the likes of Anthem Inc. (ANTM), Jefferson Health System, Takeda Pharmaceuticals Inc. (TAK) and Alphabet Inc.'s Google (GOOG) (GOOGL), plans to go public soon, possibly before September is out.
Google's cloud division is making the biggest bet of around $100 million on Amwell, formerly known as American Well. Its investment will be a simultaneous private placement at the IPO price, according to CNBC.
As part of the collaboration with Google, Amwell will shift parts of its web services business that are currently with Amazon.com Inc. (AMZN) to Google Cloud. The two companies said in a press release they will also cooperate on technology and build out a dedicated sales effort to expand Amwell's telehealth business,
Amwell has priced its stock between $14 and $16 per share. It hopes to sell 35 million shares, which would net it between $490 million and $560 million. The funds will be used for working capital, R&D and to beef up its sales force. Shares would be listed on the NYSE under the ticker "AMWL."
Amwell, which started in 2006, already works with 55 health plans that cover more than 36,000 employers and collectively represent more than 80 million covered lives, as well as 150 of the nation's largest health systems, encompassing more than 2,000 hospitals, according to its S-1 filing.
To date, Amwell says it has hosted more than 5.6 million telehealth visits for its clients, including more than 2.9 million just in the first half of 2020. Although it's still not making money overall, sales have been on a rapid upswing. During the first half of 2020, the company's revenue soared to $122 million, up 75% from the same period last year.
As I pointed out in a previous GuruFocus article on June 2, consumers and providers have turned to telehealth in a big way. According to a McKinsey & Co. survey conducted in April, consumer use of telehealth exploded during the pandemic, going from just 11% of U.S. consumers using it in 2019 to 46%. Moreover, the report said a quarter of a trillion dollars in current U.S. health care spending could now be going virtual.
The demand for telehealth is expected to grow at nearly a 17% average annual rate, from $25.4 billion in 2020 to $55.6 billion in 2025, according to Markets and Markets. The biggest player in the field is currently Teladoc Health Inc. (TDOC), whose shares are up about 135% this year to more than $193.
Some analysts expect telehealth use to tail off when the coronavirus comes under some level of control. Others think the technology will continue to gain momentum for the next 12 to 18 months, or at least until a vaccine is widely available, by which time digital care will have become a more permanent part of health care.
Disclosure: The author has no position in any of the companies mentioned in this article.
Read more here:
- Biotech IPO Party Rages On
- Anti-Depressant OK Could Boost Intra-Cellular Drug into Blockbuster Territory
- Renaissance Capital Expects Grail IPO to Raise $500 Million
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
