- Telehealth vendor Amwell has priced its initial public offering of about 41.2 million shares of Class A common stock at $18 a share, for total gross proceedings of about $742 million.
- Initially, the Boston-based company, fresh off an $100 million investment pledge from Google, planned to sell 35 million shares for between $14 and $16 a pop. But Amwell expanded the price and number of shares on Wednesday, bringing its valuation to $4.1 billion. Its biggest competitor, Teladoc, current has market cap of about $15.7 billion.
- Trading began Thursday on the New York Stock Exchange, under the ticker AMWL and will close Monday.
Amwell is going public on a busy week for tech IPOs, but investor demand in the vendor remains high amid a generally bullish outlook for the telehealth industry. It's one of the few U.S. sectors that has actually profited from the COVID-19 pandemic, with patients turning to virtual care in droves as the novel coronavirus locked them out of the in-person delivery system.
Amwell's underwriters, which include Morgan Stanley and Goldman Sachs, have the option to buy up to 6.2 million additional shares, which could bump Amwell's take to $853.3 million. The company has almost 220.2 million Class A, Class B and Class C shares outstanding after the IPO. At current price, that's valued at about $3.96 billion, which — taken along with the underwriter option — bumps Amwell's overall valuation to almost $4.1 billion.
In August, Google pledged to buy $100 million of Amwell's Class C shares in a private placement concurrent with the IPO. The 14-year-old vendor will use Google's cloud services as part of the agreement. Google will hold 3.03% of Amwell common stock after the IPO, per the initial prospectus.
Telehealth has skyrocketed in popularity amid the pandemic as patients eschewed in-office care, though early data suggests utilization has mitigated somewhat from a high in April and May. Amwell reported in its IPO prospectus its visits nearly tripled to 2.2 million in the second quarter compared to the prior three months, a growth it partially chalked up to temporary regulatory flexibilities from the Trump administration during the national emergency.
But it's unclear how many of the friendly policies will endure in the long-term. The most meaningful would require Congressional action, an unlikely situation given the gridlock in Washington leading up to the November presidential election. "There can be no guarantee that once the COVID-19 pandemic is over that such restrictions will not be reinstated or changed in a way that adversely affects our business," Amwell, whose extensive customer list includes 2,000 hospitals, 55 payers and a number of state and federal government agencies, said in the prospectus.
The vendor has access to some 80 million covered lives and reported revenue of $122.3 million in the first half of 2020, up 77% on a year-over-year basis. But the company isn't yet profitable. Its net loss almost tripled over the same period to $113 million this year.
The IPO comes following rival Teladoc's $18.5 billion acquisition of chronic care manager Livongo Health in August in what's the biggest U.S. digital health deal to date. Teladoc went public in 2015.
Prior to COVID-19, the sum annual revenues of all U.S. telehealth providers were about $3 billion. A slew of different projections analyzing the market craze have attempted to quantify how big it could eventually grow, with consultancy McKinsey predicting $250 billion of all healthcare spend could eventually be digitized.