American Well Corp. (AMWL) offers a single platform to support all telehealth needs from urgent to acute and post-acute care to chronic care management and healthy living. While there are many private competitors within the telehealth space, Amwell will become the closest public comparable when it begins trading next week for Hedegye Health Care Best Idea Long, TDOC+LVGO.
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AMWL | PRE-IPO BLACK BOOK Please join us on Thursday, September 17, 2020 @ 2 PM ET - Add to Outlook Calendar Participating Dialing Instructions Toll Free: Toll: UK: 0 Confirmation Number: 13709141 Healthcare Subscribers: CLICK HERE for event details (includes video link, materials link and dial-in). |
Background
AMWL will be the closest compare for TDOC+LVGO in the virtual care telehealth/telemedicine arena when it comes public next week. COVID-19 has changed the delivery of medicine in significant and permanent ways, the most notable of which has been the widespread adoption of telemedicine. The TDOC+LVGO merger has confused, if not confounded, investors leading to questions about valuation and the timing and scale of future synergies. While we may be more confident in the synergies and rationale for the deal, and the future indeed looks bright for the combined company, valuation is a question that the AMWL IPO may help answer near-term (i.e., "What multiple are investors willing to continue to pay for these digital health companies?")
Thesis
Will the shares rocket higher on the open? Based on our revenue estimates for 2021, we’re not optimistic this will be a runaway success on the open. However, an investment by Google, high investor interest in virtual care, and changes in consumer/patient behavior all help. It might indeed be a moonshot, 2020 has, after all, been a year of surprises. The bottom line is we are less impressed by the upside available to AMWL’s business model, which operates primarily through Health System partners. The long thesis keys off customer count and "modules" purchased per customer. For the former, we believe we have a way of monitoring current and new customers beyond the 43 partners the company discloses on its website. For the latter, we will be monitoring our proprietary claims data, app downloads, and active users for reads on trends.
Valuation
At the expected price range of $14 to $16, AMWL will trade at a multiple comparable to TDOC on an EV/Sales basis. Given the absence of consensus estimates, the price will essentially be "untethered."
Catalysts
The IPO scheduled for the back half of next week (Thursday, Sept 17th), and we will update our tracking data weekly. Also, we will be hosting calls with experts across the domain.
Risks
Practitioners and patients have been returning to in-person care from the depths of COVID-19 lockdowns. AMWL’s model is reliant on telehealth maintaining a growth trajectory and taking share of patient-physician interactions (whether through health plans or providers). Said differently, Health System partners must continue to invest in and push the Amwell platform, and health plans must push members to change behavior. Meanwhile, there are a host of alternatives available - the telehealth/telemedicine space is crowded - and it is not clear how channels will evolve. We must also watch Epic, Cerner, and smaller EHR providers that build in telehealth functionality.
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