Kevin's Weekly Health Tech Reads 8/30

"Welcome back from vacation Kevin now get back to work here are the AmWell & GoodRx S-1s to read " and some other stuff

For access to exclusive content, join the community


  • AmWell filed its S-1 to go public and announced that Google has committed to purchase $100 million worth of shares in the IPO and AmWell is going to partner with Google Cloud. Some takeaways from the S-1 below - crazy how much a business can change in six months. Link (S-1). Link (CNBC Summary).
  • 2019 revenue was $150 million - $84 million of subscription revenue, $41 million of visits, and $24 million of other (consulting / implementation). In 2019, 138 health systems accounted for $38.8 million of the subscription revenue (an annual contract value of $282k) while 56 payors accounted for $30.6 million (an annual contract value of $546k). Interesting how small the investment is that health systems are making in telehealth compared to their other tech investments - a couple hundred grand a year is peanuts. Pg. F-23 and 89.
  • Revenue is up significantly in the first six months of 2020, up to $122 million vs $69 million in 2019. $44 million of growth was from increases in visit revenue (the fee for service revenue AmWell charges for its employed provider group doing video visits). AmWell is also facing huge losses in the first six months of 2020 - increasing to $113.4 million from $41.6 million in 2019. Pg. 94.
  • Visit revenue appears to be a significantly lower gross margin business than the subscription revenue - which makes sense as they’re paying for the providers time for the visit - as AmWell’s gross margins declined from 48% to 37% in the first six months of 2019 to 2020. Pg. 93.
  • $34 million of revenue (23% of total revenue) in 2019 came from Anthem, although the split between subscription revenue and visit revenue is unclear. Anthem of course is a large investor in AmWell, investing $32 million in the company in 2012 & 2014. Would be interesting to see how much the average contract value for payors drops if you exclude Anthem. Pg. F-47.
  • An Anthem subsidiary and AmWell also created a JV a few years ago called NTN, National Telehealth Network, to employ docs that provide video visits for Anthem. AmWell has taken over a majority stake in that entity, but it looks like that entity provides only telehealth services for Anthem. It looks like that agreement ends after 2022. This business would look drastically different if Anthem chose to go another direction after that. Pg. 141 / 142.
  • AmWell has done 5.6 million video visits since its inception. 2.9 million of those visits - over 50% - were done in the first six months of 2020. Mind you, this company was founded in 2006. Just wild. Pg. 79.
  • Really interesting to see how COVID changed the nature of the AmWell platform in terms of the providers who are actively doing visits on the platform, which jumped from 24k to 57k total between Q1 and Q2 this year. The vast majority of the increase in providers was from health system customers adding more of their own providers to the AmWell platform - doubling from 22k to 53k from Q1 to Q2 this year. AmWell employed docs increased from 2k to 4k. Additionally, each health system provider was doing significantly more visits - the number of visits per health system provider went up from 16/provider to 32/provider as customer visits went up from 360 thousand to 1.7 million. AmWell employed docs, on the other hand, saw their average number of visits go down - from 180/provider to 127/provider. Curious. See below in chart form. Pg. 111 / 112.
  • The Intermountain customer case study provides some good data on costs of virtual care for low acuity conditions. AmWell cites that video visits are cheaper on a per claim basis - video visit at $45; urgent care at $136; PCP visit at $114; ED visit at $1,384. They get to a cost savings of $323 per episode via virtual care, which includes additional follow-up care costs. Oddly, urgent care costs come in lower than primary care costs - seems weird. Pg. 139.
  • Interesting to look at how slow health systems (and payors too for that matter) are in adopting telehealth even once they’ve decided to buy. For AmWell’s typical health system customer contracts in year 1, 80% of providers adopt only one or two telehealth modules. In year 2 it goes down to only 75%, year 3 it’s 55%. The majority of customers after three years still have only 1 or 2 modules implemented? Makes sense why the annual contract values are so low - this seems like a huge opportunity as telehealth presumably penetrates care delivery more fully. Pg. 84.
  • The Cleveland Clinic JV gets some good air time and Cleveland Clinic is referenced 34 times in the S-1. AmWell contributed $2.5 million to the JV for 49% ownership, with a total commitment over time of up to $12 million. Looks like the JV is doing a couple million of revenue and losing $1.5 million dollars thus far in 2020. Doesn’t seem like a huge investment for either party in the JV. Cleveland Clinic is a relatively large health system client of AmWell though, with an annual contract value of $1.2 million in 2019. A bit worrying that 2018 revenue with Cleveland Clinic was $1.4 million - why the decline?? Pg. F-16 / F-47.
  • GoodRx also filed its S-1 on Friday. Thoughts below. Link.
  • GoodRx has the unique status of high growth healthcare startup that is also - wait for it - profitable! They’ve had positive operating income / net income since at least 2016. In 2019 they generated $140 million of operating income on $388 million of revenue. Pg. 12.
  • These tweets from Adam Fein explain nicely GoodRx’s business model / where they sit between pharmacies, PBMs, and consumers. Link.
  • What a kick ass business these folks have built in general: $20 billion of savings generated for consumers, 4.4 million monthly active customers, 4.8 star rating on Apple App Store, 90 NPS for consumers, and the most downloaded medical app out there. Pg. 78.
  • On that note, I find it funny that GoodRx has to call out its telehealth platform HeyDoctor in the risk factors section of the S-1 because the margins are so much worse than the core business. “Our business model is so good that if we’re too successful in the telehealth space it’s going to be bad for us financially”. What a flex. It appears GoodRx is operating HeyDoctor at a breakeven gross margin at the moment - the revenue from visits ($20/visit) is equal to what they’re paying providers. Pg. 19 & 88.
  • They do a nice job walking through their various consumer use cases with screen shots of the app - a nice touch in the S-1, starting at Pg. 118.
  • Revenue is quite concentrated with a handful of PBMs - which shouldn’t be surprising given how concentrated the PBM business is - but the top three PBM customers have accounted for 50% - 60% of GoodRx’s revenue over the past few years. Pg. 24.
  • 80% of GoodRx’s transactions are repeat activity from existing customers - either a refill of a prescription or new prescription for them. Some really nice stickiness. Pg. 81.
  • A big payor / provider value-based collaboration this week in - where else! - the lovely state of Minnesota between Allina Health and BCBS MN. BCBS MN and Allina are aiming to reduce to total cost of care by 10% over the next five years for the 130,000 BCBS MN members that Allina treats. Allina looks like it will get compensated in other ways to make up for the revenue reduction. It’s a bold move for both leadership teams in the midst of everything happening in 2020 - kudos to them for seeing the deal through. Link.
  • Google / Verily announced that it is kinda getting into the insurance game via stop loss insurance. It’s launching a new business in the space called Coefficient Insurance in partnership with Swiss Re Group. Seems like a good opportunity to apply some new approaches to a sleepy industry. Curious to see how this goes for them - their JVs seem to have mixed results thus far, but this one seems to have the most practical / least ‘moon shot’-y business case behind it. Link.
  • Baptist Health is launching an $100 million initiative to become the “Amazon Prime of healthcare in South Florida”. Beyond the general silliness of the notion of the ‘Amazon Prime of healthcare in South Florida’ (if only I had built the Amazon of bookstores for Central Minnesota, just imagine!), it is nice to see health systems realizing they’re going to need to devote significant budgets to building out their digital health efforts. Link.
  • Amazon launched its Apple Watch / Fitbit competitor this week. If it were 2010 I’d be super excited about this news, but hey, Gartner does say that wearables are going to be a $52 billion! market this year. Link.
  • Lyra Health, a mental health startup, raised $110 million valuing it at $1.1 billion. Link.
  • PatientPop, a startup helping physician practices go virtual, raised $50 million. Link.
  • BrightLine, a startup building a behavioral health model for kids, raised $20 million. Link.
  • Aetion, the real world data platform startup, added $19 million to a previous round. Link.
  • Klara, a patient engagement startup for physician practices, raised $15 million. Link.
  • SeamlessMD, a patient engagement platform, raised $4 million. Link.
  • MindRight Health raised $1 million for its mental health coaching platform for people of color. The founder, Ashley Edwards, according to this article is only one of 35 black women to have raised a financing round of at least $1 million. Seems like that needs to change. Link.
  • Aetna is partnering with WellBe Senior Medical in Atlanta and Chicago to provide in home primary care for 10,000 high risk seniors. Link.


  • This is a good read from Austin Frakt summarizing how confused people seem to be by purchasing insurance and the various options that are available to them. Presents some interesting questions / thoughts around how many choices people really need. Link.
  • I enjoyed the anecdotes in the Weekly Gist this week on two topics: first, the experience at MemorialCare implementing Olive.Ai, a robotic process automation startup. And second, a data point on employer activity looking at direct-to-employer relationships with startups. Activity appears to be down on the whole, particularly with large employers, but there seems to be an opportunity with a subset of smaller employers. Link.
  • McKinsey shared an interesting post on the financials of ACOs and how hospitals could try to make ACOs profitable for them in light of recent data suggesting hospital-led ACOs generally tend to increase costs while physician led ACOs may generate cost savings. Link.
  • Two reads on the mental health market:
  • This is a good overview and market map of the mental health startup landscape by Sarah Du. Link.
  • Here’s an interesting read on the impact COVID-19 has had on mental health and what it means going forward by Gil Kazimirov. Link.


  • Deloitte did a consumer survey and shares some insights on the interests of folks who will be shopping for coverage either via the exchanges or Medicaid. Interesting to note that Medicaid has had one of the highest use rates of virtual care both during and pre-COVID. Around 25% of Medicaid patients, according to the survey, had a virtual visit in the last year, and they had the highest use rate of virtual health during the pandemic of any insurance group. Medicare is by far the lowest, followed by employer (which seems somewhat surprising given all the activity there). Link.
  • This is a really interesting read on health insurance in the Netherlands and how basically nobody there chooses the optimal deductible plan for their needs. Individuals with lower education / SES tend to make worse choices. Link.