The company makes its money by selling premiums directly to its members, and to CMSRead more...
The company sells subscription software, and it also makes money on a per-visit basis
When it comes to the sectors that won and lost in 2020, the clear winner was telemedicine: whereas only eight percent of patients had tried these services, despite having access to them for years, the space grew so quickly thanks to COVID that it was estimated that 20 percent of all medical visits in 2020 would be done through telehealth.
Among the biggest winners in the space was Amwell, which raised two big rounds of funding before going public in September, raising $742 million in the process.
Founded in 2006, Amwell (formerly known as American Well) provides a platform that supports telehealth during urgent, acute and post-acute care needs. It also supports chronic care management and healthy living.
The company currently reaches 150 million individuals through over 55 health plan partners, including 33 Blue Plans and UnitedHealthcare. It has over 240 health system partners, including Cleveland Clinic, Commonspirit Health and Northwell, which represent over 2,000 hospitals. Amwell also has over 36,000 employers on its platform.
Amwell makes its the majority of its money in two ways: subscription revenue and visit revenue.
On the subscription side, the company sells the Amwell Platform to health systems and health plans.
Health systems use the platform to facilitate consultations between patients and providers, and health plans, which use it to provide better access to care, better coordination of care and the ability to direct care referrals to providers owned or affiliated with the respective health plan.
Subscription fees for health systems are determined based on the initial forecasted number of overall consultations, and they include a maximum number of consultations that can be delivered on the platform, which is "similar to a cellular phone plan, when consultations exceed the contractual maximum, overages result in higher subscription fees in the following annual period," the company wrote in its S-1 filing with the SEC.
For health plans, they sign a contract with Amwell that includes a recurring subscription fee based on the number of members who have access to the platform, plus additional subscription fees associated with the various programs that Amwell offers.
When it comes to revenue from visits, those are made on a fee-for-service basis through the Amwell Medical Group (AMG), a physician owned and operated medical practice that provides telehealth care exclusively on the American Well platform. AMG earns revenue for each episode of care delivered on the Amwell Platform by its 5,000 providers, with fees varying by physician specialty or clinical program.
AMG includes specialists in family medicine, psychology, psychiatry, gynecology, pulmonology, urology, and gastroenterology, among others.
The company has a third revenue stream, which it calls services & carepoints, though it's significantly smaller than its other two streams.
"We offer a full suite of paid, supporting services to our clients to enable their telehealth offerings, including professional services to facilitate telehealth implementation, workflow design, systems integration and service expansion. To help our clients promote adoption and utilization, we offer patient and provider engagement services through our internal digital engagement agency," the company wrote.
Telemedicine is deployed through Carepoints, which are medical carts and kiosks that are designed for various clinical and community settings.
"These Carepoints enable providers to deliver digital care into clinical care locations, such as the ED and clinics, as well as into community settings such as retail stores, community centers, employer sites, skilled nursing facilities and schools. Carepoints consist of hardware integrated into our Platform but can also be deployed independent of our software solution."
In the first half of 2020, Amwell saw a total of $122.3 million in revenue, up 77 percent from $53.2 million for the same period in 2019. The company attributes that rise mostly to an increase in visit revenue: the amount earned from AMG patient visits came to $62.5 million, up 237 percent from $18.5 million a year prior. In all, this segment accounted for 51 percent of revenue.
Subscription revenue totalled $46.2 million, up 18.8 percent from $38.9 million in the first half of 2019, or 38 percent of total reveue, while revenue earned from services and carepoints was $13.6 million, up 16.3 percent from 11.7 million, for 11 percent of revenue.
Before it went public, Amwell raised $194 million in Series C funding across two tranches in May. The funding came from what it described as "many early investors and strategic partners," including Allianz X and Takeda.
That was followed by another $100 million investment in August from Google Cloud, a deal that also included a multi-year partnership. The two companies said they will use their combined technology "to expand access to virtual care, improve patient and clinician experiences, and leverage their unique capabilities to deliver new, differentiated healthcare solutions—across the continuum of care."
Through the partnership, Google Cloud selected Amwell as its preferred global telehealth platform partner, and Amwell selected Google Cloud as its preferred global cloud platform partner. Google Cloud's artificial-intelligence and machine-learning technologies will be used to assist patients and front-line workers with intake, inquiries, and triage.
Amwell is now trading at $25.38 a share.
(Peter Antall, MD, CMO at Amwell, will be speaking at our May 19 Future of Mental and Behavioral virtual event. We'll have top-level VCs and C-level executives from the leading mental and behavioral companies, such as Teladoc's BetterHelp, Ginger, Doctor on Demand, Kaiser Permanente, Bessemer Ventures and more)
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