Amwell's stock jumps on speculation of potential UnitedHealth deal: media report

Amwell's stock climbed 38% Wednesday just three weeks after raising an outsized initial public offering of $742 million.

Investor interest in Amwell was fueled by speculation that insurer UnitedHealth may buy the telehealth giant, according to healthcare analysts, Business Insider reporter Blake Dodge reported.

On Wednesday, the company's shares climbed to $39, giving the company a valuation of about $9 billion.

"I'm hearing vague takeout speculation, given the move in the stock over the past few days," Jared Holz, a healthcare analyst at Jefferies, told Business Insider. Holz's sources include institutional healthcare investors, the publication reported.

Another analyst who was not authorized to speak to the press told Business Insider they heard from hedge fund clients that UnitedHealth was interested in buying Amwell.

RELATED: Optum eyeing $470M acquisition of digital therapy provider AbleTo: report

However, analysts also said a deal is unlikely, given Amwell just went public and is now more expensive than it was just a few weeks ago, the report said.

The speculation comes after telehealth competitor Teladoc's blockbuster deal to buy Livongo for $18.5 billion.

There has been surging demand for telehealth during the COVID-19 pandemic that has helped propel Amwell to record growth.

During the second quarter of 2020, Amwell saw average monthly visit volumes and average monthly active providers delivering healthcare on its platform increase over 300% and 400%, respectively, compared to the first quarter of 2020, according to the company's S-1 filing with the U.S. Securities and Exchange Commission.

Visits in April 2020 were as high as over 40,000 per day, versus approximately 2,900 visits per day in April 2019, the company said.

Tuesday, Amwell released a report indicating sharper-than-expected uptake of telehealth services. Physicians and consumers expect to use telehealth more often following COVID-19 than they did before the pandemic, according to Amwell's survey.

A new J.D. Power study also ranked named Amwell as the top direct-to-consumer telehealth provider based on satisfaction ratings from customers.

The company, which launched in 2006, works with 55 health plans, including UnitedHealth. Collectively, those plans represent more than 80 million covered lives and more than 36,000 employers. Amwell also works with 150 of the nation’s largest health systems, encompassing more than 2,000 hospitals, according to its S-1 filing.

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

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 $114 million in 2018 and that grew 31% to $149 million in 2019.

The company also operates its Amwell Medical Group, a nationwide clinical network of over 5,000 multidisciplinary providers covering 50 states with 24/7 coverage.

Along with its insurance business, UnitedHealth also operates Optum, the company’s pharmacy benefit management and care services group. The diverse subsidiary, which includes a massive pharmacy benefit manager, physician services and hospitals and various technology platforms, is a key source of financial growth for the company and posted $13.8 billion in profit across 2019.

UnitedHealth netted $13.8 billion in profit across 2019.

In December, Optum CEO and newly appointed UnitedHealth Group President Andrew Witty said the company planned to ramp up its capital investments in technology R&D and data analytics capabilities.

The company is building a digital platform to connect directly with patients and consumers, he said. Optum Health has more than 46,000 primary care providers either employed or contracted to work with the company. 

RELATED: UnitedHealth Group buys DivvyDose to compete with Amazon's PillPack: report

Last year, UnitedHealthcare officials said the company planned to invest in digital tools like virtual care for Medicare plan members and would roll out home-based monitoring technology.

In April, there were reports that Optum was close to pinning down a deal to acquire virtual therapy provider AbleTo for $470 million. The news came as demand for telehealth was heating up during the COVID-19 pandemic.

UnitedHealth has made several acquisitions of late that it folded into Optum. It acquired Diplomat, a specialty pharmacy and infusion services provider, for $300 million.

UnitedHealth Group also is reportedly in talks to buy online pharmacy DivvyDose, which would put the insurer in direct competition with Amazon's PillPack.