Canadian health tech name WELL Health (WELL Health Stock Quote, Chart, News TSX:WELL) just entered the US telemedicine market, but will the company have what it takes to compete with the likes of international telehealth giant Teladoc Health (Teladoc Health Stock Quote, Chart, News NYSE:TDOC)?
At least when it comes to customer satisfaction, WELL CEO Hamed Shahbazi argues his offering may now have the upper hand.
WELL’s share price soared Tuesday on news that it would be acquiring a majority stake in San Francisco-based Circle Medical for approximately $14 million. (All figures in US dollars.)
Already familiar with the company, WELL had participated in an early funding round for Circle Medical in 2018, with Shahbazi now calling Circle Medical one of the best primary care and telehealth providers in the United States.
“This proposed transaction is expected to position WELL as a leading provider of telehealth services in the United States. Since WELL's seed investment in Circle Medical almost two year ago, we've closely tracked the company and their seamless omni-channel patient experience,” said Shahbazi in a press release. “We are looking forward to expanding our relationship with the talented Circle Medical team.”
But WELL isn’t the only telehealth name to be riding high of late. The COVID-19 pandemic has accelerated the adoption of telemedicine services worldwide and pushed investor interest in the space into a frenzy.
Livongo Health, a relative newcomer with its IPO coming a little over a year ago, is already up 268 per cent for 2020, while top dog Teladoc is up 168 per cent year-to-date.
Already the largest US telemedicine provider, Teladoc announced last month it would be buying Livongo for a whopping $18.5 billion. The combined entity should have well over a billion in revenue in 2020, as Teladoc reported second quarter revenue of $241 million and Livongo’s Q2 was $92 million, while the market caps for Teladoc and Livongo currently sit at $17.5 billion and $13.8 billion, respectively.
All of which makes the comparison between Teladoc and WELL Health seem a little lopsided, with WELL’s latest quarter pulling in $10.6 million in revenue and its market cap currently sitting at $633 million.
But Shahbazi thinks WELL is offering something unique through its Circle Medical investment.
“We think Circle Medical is a very special asset,” Shahbazi said, in conversation with BNN Bloomberg on Tuesday. “We don't think it has an equal out there. It has very, very high Net Promoter Scores with consistently between 80 and 90 per cent satisfaction rates.”
“Just to compare that with the industry leader in the United States, Teladoc right now is at 54.5,” Shahbazi said. “[Circle Medical] is a company that’s really focused on the user experience and on creating a phenomenal omni-channel experience between their physical clinics as well as their telehealth product.”
Shahbazi said that where the US has traditionally been ahead of Canada in terms of telemedicine adoption, the pandemic has put the Canadian telehealth sector on the fast track and sped up WELL’s own growth timeline.
“In our second quarter, we saw over a 730 per cent increase in telehealth revenue quarter-over-quarter,” Shahbazi said. “You saw that happen essentially right away as physical distancing occurred.”
“We have five million unattached Canadian patients and they all needed to go online to connect with doctors. And providers like us really stepped up their marketing and awareness efforts and we were able to connect with many of them,” Shahbazi said.
“We’re really pleased to be able to support it.”
Disclaimer: Nick Waddell and Jayson MacLean own shares of WELL and the company is an annual sponsor of Cantech Letter.