The $TDOC + $LVGO merger created the undisputed leader in telehealth but with the industry still in its early innings, finding who will occupy that second spot can pay off big

And if there’s anyone who can do it, I think it will be Amwell $AMWL: https://sec.report/Document/0001193125-20-228478/d943395ds1.htm#tx943395_8

(THREAD)

Put simply, you can think of Amwell as the “Shopify” to Teladoc’s “Amazon”.

Unlike TDOC which mainly focuses on employers, Amwell helps health systems and plans embed telehealth within their existing user interfaces under their own brands.

Their platform consists of the Home line (provider-to-patient telehealth interactions at home) and the Hospital line (provider-to-provider telehealth interactions, or provider-to-patient, in an inpatient setting). They also sell kiosks and carts which can extend clients’ reach.

The platform has 40 pre-packaged care modules and programs including urgent care, behavioral health, telestroke, telepsychiatry, and specialty consultations that power over 100 unique use cases, charging more depending on the number of modules a client uses.

They also supplement a health system’s network with their own via the 5000 physicians who are a part of the Amwell Medical Group (AMG), charged on a fee-for-service basis. AMG providers accounted for 23% of total visits this past quarter vs 65% of total visits last year.

For the six months ended June 30, 2020, they powered 2.6M visits (out of 5.6M since inception!) for the digital care programs of 55 health plans, which support over 36,000 employers and 80M covered lives, as well as 150 health systems, encompassing more than 2,000 hospitals

For the three months ended June 30, 2020, Amwell has seen 2.2M visits with average monthly visit volumes increasing over 300%. Their largest client, Anthem, accounted for 23% of their revenue in 2019.

For comparison, Teladoc saw an increase of 200% in the same period to 2.8M.

Revenue grew 93.6% in Q2 to $68.6M, and 77% for the 6 months ended June 30th, 2020 and 30.6% YoY in 2019. 84% of revenue was recurring. For the 6 months ended June 30th, GAAP gross margins were 37% and op margins were (92.9%). So bit better growth than TDOC but much worse losses

Primary competition includes the Big 4 telehealth players: Teladoc, Doctor on Demand, and MDLive, as well as EHR providers like Epic, and consumer platforms like Zoom and Twilio. There are many niche players, but they don’t have the scale to compete.

EHR providers and $TWLO or $ZM don’t have the features or integration to compete LT. Amwell could be better suited to primary and chronic care as patients see their own providers rather than an unknown one through Teladoc, but $LVGO and InTouch make a strong case for $TDOC.

I see Amwell’s primary strength vs TDOC as their agnostic positioning. They don’t compete with the health systems for patients, rather they enable them to create their own end-to-end virtual care network. They are also by far the 2nd largest player (though still way behind TDOC)

It’s not a major threat to TDOC though, because remote monitoring will be very difficult for health systems to integrate. TDOC is also already in 175 countries, while Amwell is still only in the US (w/one partner in Israel).

It made sense for LVGO to merge with TDOC.

Amwell could still do quite well, the biggest barrier to health systems adopting telehealth was a lack of reimbursement but new regulatory changes could potentially make payment parity permanent. Either way, the pressure to change will ensure telehealth is here to stay.