Telehealth company Amwell spikes in public debut with outsized $742M IPO

Telehealth company Amwell saw its stock spike 42% in its first day of trading Thursday after raising an outsized initial public offering.

Buoyed by strong demand for IPOs, Amwell raised $742 million Wednesday with the sale of 41.2 million class A shares at $18 apiece. That's a marked increase from plans last week to sell 35 million shares at $14 to $16 a share, according to documents filed with the U.S. Securities and Exchange Commission (SEC).

Amwell’s stock opened at $25.51 per share, well above the IPO of $18 and up 42% on the day. 

The company's public debut also may serve as a barometer for the telehealth market, which has seen business surge as the COVID-19 pandemic drives huge demand for remote care services.

The company is backed by Google, which previously agreed to purchase $100 million of class C shares in a private placement at the same time as the IPO.

RELATED: Amwell CEOs on the telehealth boom and why it will 'democratize' healthcare

Former Massachusetts Gov. Deval Patrick and Peter Slavin, M.D., president of Massachusetts General Hospital, are directors of the company, and each held options on 352,000 class A shares as of Dec. 31, according to the IPO filing. Those shares were worth $6.3 million at the IPO price, the Boston Globe reported.

Amwell priced its IPO on the same day that shares of Snowflake Inc., a California company that helps businesses manage data in the cloud, more than doubled on the first day of trading. 

Brothers Roy and Ido Schoenberg launched Amwell, formerly American Well, in 2006. The Schoenbergs will hold class B shares, which gives them 51% voting power following the IPO.

The company works with 55 health plans, which support over 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 powered over 5.6 million telehealth visits for its clients, including more than 2.9 million in the six months ended June 30.

Amwell reported revenue of $149 million in 2019, up 31% from revenue of $114 million in 2018. However, the company had significant losses of $52 million in 2018, and that widened to $88 million in 2019.

Amwell said in its IPO prospectus that visits nearly tripled to 2.2 million in the second quarter from the previous three months as restrictions on remote care were eased. That's compared to 700,000 telehealth visits in the first quarter of 2020.

RELATED: Amwell files to go public with $100M boost from Google

Visits in April were as high as over 40,000 per day, versus approximately 2,900 visits per day in April 2019, according to the regulatory filing.

In an interview with Fierce Healthcare in June, Roy Schoenberg, the company's president and co-CEO, said the COVID-19 pandemic has catapulted the telehealth industry forward by decades in a matter of months.

That not only benefits the Amwell's business, but it's a win for patients, said Schoenberg. 

"We are going to see an enormous amount of change, nothing short of a revolution, going forward," he said.

The company plans to expand into adjacent markets such as Medicare and Medicaid, government clients, clinical partnerships such as its existing collaboration with Cleveland Clinic and international markets, according to the regulatory filing.

But there are significant risks to Amwell's business, including weak growth and increased volatility in the telehealth market along with its history of losses, the company said in its SEC filing.

And while the pandemic has led to the relaxation of certain Medicare, Medicaid and state licensure restrictions on the delivery of telehealth services, it is uncertain how long the relaxed policies will remain in effect, the company said in its S-1 filing.

"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," the company said.

Morgan Stanley, Goldman Sachs and Piper Sandler are acting as lead joint book-running managers for the offering.