Google-backed Amwell prices push IPO above $ 18 range

• Telemedicine service provider Amwell priced its initial public offering of approximately 41.2 million Class A common shares at $ 18 per share, with gross proceeds of approximately $ 742 million.

• The Boston-based company originally planned for a $ 100 million investment commitment from Google to sell 35 million shares for between $ 14 and $ 16 per person. But Amwell raised the price and number of shares on Wednesday, raising its valuation to $ 4.1 billion. Its main competitor, Teladoc, currently has a market capitalization of around $ 15.7 billion.

• The stock started trading on Thursday on the New York Stock Exchange under the AMWL brand and ended on Monday.

Amwell will go public in a busy week for the technology’s IPOs, but investor demand for the provider remains high despite the generally optimistic outlook for the telemedicine industry. It is one of the few American sectors to have really benefited from the COVID-19 pandemic. Patients are turning to virtual care in droves because the novel coronavirus has excluded them from the personal delivery system.

Amwell’s underwriters, which include Morgan Stanley and Goldman Sachs, have the option to purchase up to an additional 6.2 million shares, which could bring Amwell’s earnings to $ 853.3 million. The company has nearly 220.2 million Class A, B, and C shares outstanding after its IPO. At the current price, that’s about $ 3.96 billion, which together with the option to buy brings Amwell’s overall valuation to almost $ 4.1 billion.

In August, Google pledged to buy $ 100 million of Class C shares of Amwell in a private placement concurrent with the IPO. The 14-year-old provider will use Google’s cloud services as part of the deal. Google will retain 3.03% of Amwell’s common stock after its IPO.

The popularity of telemedicine has skyrocketed in the face of the pandemic as patients shun office care, although early data suggests uptake has declined slightly since the peak in April and May. Amwell reported in its IPO prospectus that its second-quarter visits nearly tripled from the previous three months to 2.2 million, growth due in part to the administration’s temporary regulatory flexibility. Trump during the national emergency.

However, it is not known how many friendly measures will last in the long run. The sane thing to do would require congressional action, an unlikely situation has given the stalemate in Washington ahead of the November presidential election. “There is no guarantee that these restrictions will not be reintroduced or changed after the end of the COVID-19 pandemic, which will negatively impact our business,” said Amwell, whose extended customer list is 2,000 hospitals, 55 payers and various clients include state and federal government authorities, we read in the prospectus.

The provider has access to around 80 million insured people and had revenue of $ 122.3 million in the first half of 2020, up 77% year-over-year. But the business is not yet profitable. The net loss nearly tripled to $ 113 million this year over the same period.

The IPO comes after rival Teladoc acquired chronic care manager Livongo Health in August for $ 18.5 billion. Teladoc went public in 2015.

Before COVID-19, the total annual revenue of all telemedicine providers in the United States was around $ 3 billion. Several different forecasts examining the enthusiasm of the market have attempted to quantify its size. Consulting firm McKinsey predicts that $ 250 billion of all healthcare spending could eventually go digital.