Google invests $100M in Amwell as it goes public

TELEMEDICINE COMPANY Amwell Aug. 24 filed a registration statement for a proposed initial public offering with the Securities and Exchange Commission and applied to list its common stock on the New York Stock Exchange under the ticker AMWL.

Amwell plans to raise up to $100 million in the IPO, according to its S-1 filing. It hasn’t determined the number of shares to be offered or the price range for the proposed offering.

Upon closing the offering, Amwell’s founders will hold Class B common stock worth 51% of voting power. Other investors will hold Class A common stock, with the exception of Google, which will receive Class C common stock. Amwell this month entered into a stock purchase agreement under which Google invested $100 million in the company.

As part of the agreement, Amwell will migrate its video performance capabilities onto Google Cloud and the companies say they’ll work together to develop new capabilities with Google Cloud’s artificial-intelligence tools.

Amwell, which was founded in 2006 as American Well Corp., brought in $148.9 million in revenue last year, up 30.6% from 2018, according to its S-1 filing. Amwell earns most of its revenue from charging recurring subscription fees to its customers, which include 150 health systems and 55 health plans.

The company reported $122.3 million in revenue for the first half of 2020, up 77% year-over-year in growth partially fueled by the COVID-19 pandemic. Amwell’s average monthly visit volumes increased more than 300% from the first to second quarters of 2020.

“The COVID-19 pandemic has had a massive impact on our clients and, as a result, created significant needs and opportunities for Amwell to partner with them to help solve their most critical challenges,” the filing reads.

Healthcare groups have expressed concern that telemedicine’s rapid rise during COVID-19 could prove unsustainable if regulatory flexibilities pushed through in response to the pandemic aren’t made permanent, and early research has suggested that telemedicine use has declined since hospitals began resuming non-emergency care in April—though it’s plateaued at a higher rate than before COVID-19.

Amwell in its filing, however, said it expects to maintain its momentum.

“We do not believe that the visit volume on our platform or visit revenue will materially decrease based on a return to the status quo from a regulatory perspective,” Amwell’s filing reads. “In fact, we believe that such a return would benefit us as the renewed enforcement of HIPAA regulations may force many marginal telehealth platforms out of the marketplace, thereby lessening our competition.”

Amwell reported net loss of $88.4 million in 2019, compared with net loss of $52.3 million in 2018.

Amwell’s largest competitor, Teladoc Health, earlier this month announced plans to merge with Livongo, a digital health company that helps users manage chronic conditions. Teladoc posted full-year 2019 revenue of $553.3 million, up 32.4% year-over-year, and a net loss of $97.1 million, compared with a $98.9 million net loss in 2018.

Livongo, which began trading on the Nasdaq in July of last year, had been one of the most recent digital health companies to go public. ●