The turn of the 20th century witnessed a fierce competition between Thomas Edison and Nikola Tesla to revolutionize the way Americans lived and worked. While Edison and Tesla did not invent the lightbulb, their efforts to establish safe and efficient systems for distributing electricity laid the foundation for the modern economy. Both men lived well into the 1900s, witnessing the realization of their efforts, with one building a successful company and family, while the other lived in solitude and developed a strange fascination with pigeons.
Fast forward to the present day, the Schoenberg brothers, Roy and Ido, have been working for nearly two decades to make healthcare more accessible and convenient through telehealth. Their company, AmWell, did not invent telehealth but has been striving to distribute it nationwide. The pandemic drove a surge in telehealth volume, leading AmWell to go public and raise over $1.1 billion. However, the company has faced significant setbacks, including a decline in revenue and a plummeting stock price.
Despite holding over $370 million in cash with no debt, AmWell’s market capitalization now sits at just $156 million, with investors valuing the company less than the cash it has on hand. Questions arise regarding the leadership of the Schoenberg brothers and their control over corporate voting power, with investors attributing negative value to them. The future of AmWell and the valuation of its shares remain uncertain.
Amidst challenges, AmWell stands as a leader in the telehealth industry, serving numerous hospital customers and health plan partners. Despite its market prominence, the company has lagged in terms of revenue growth and financial performance compared to competitors like Teladoc. The company faces issues with low gross margins and high expenses related to research and development and acquisitions, impacting its profitability.
To address its growth and financial challenges, AmWell must refocus its strategy, sell value rather than technology, improve gross margins, engage directly with consumers, and create network effects among its client base. The company’s ability to pivot and execute on these strategies will be crucial in retaining talent, navigating competition, and capitalizing on the opportunities in the telehealth market.
While the Schoenberg brothers face scrutiny and dwindling investor confidence, their diligent efforts to innovate and drive transformative change in healthcare mirror Edison’s persistence in the face of failures. Despite setbacks, AmWell’s assets and market presence make it a valuable entity to strategic buyers. The future of telehealth and the role of companies like AmWell in shaping healthcare delivery remain essential factors to consider in evaluating the company’s prospects.
