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Amwell Co-CEO on Amazon telehealth: we don’t see them as a competitor

Yahoo Finance's Anjalee Khemlani, Julie Hyman, and Brian Sozzi speak with Amwell Chairman and Co-CEO Ido Schoenberg about the company's latest earnings report, outlook, and competition in the healthcare space.

Video Transcript

JULIE HYMAN: Well, Amwell health just came out with its numbers. And the company showing a lot of growth year over year. It's telehealth, so not a surprise, since we have seen such an explosion in demand over the course of the pandemic. Just one example here, total active providers on the company's networks to 72,000 from 7,000 a year prior.

Want to welcome in the CEO of the company, Ido Schoenberg now. He's the chairman and co-CEO, I should say, as well as our Anjalee Khemlani. Ido, thank you for being here. I noticed such exponential growth in visits, in providers on the platform. Revenue during the quarter was up about 34%.

So if you can, explain to me here the huge growth in users and the sort of more modest growth in revenue.

IDO SCHOENBERG: Sure. So things are happening in health care in biology terms. This is not an overnight switch. We just came out from a once in a century crisis of COVID, where the entire role of telehealth has changed.

So if in the beginning of the year, 1% of visits were done online, at the height of COVID, 50% of the visits were online. And now it's stabilized around 15% to 20%. During the pandemic, obviously, people did not start new projects but really focused on survival in many ways. We have nothing but admiration to the teams at the front line that took care of people and used whatever they had in their arsenal in order to do that. Telehealth became a very important protective measure for both staff and patients to interact. In products like Amwell Now or C-500 were designed to offer a very simple, very affordable way to engage.

Our revenue in every other metrics actually grew up fairly dramatically during this time. What changed at the end of the year is based on those very important numbers and embracement of telehealth not as a service anymore, but rather as an enabling technology, a new way for every doctor to interact with every patient covered by every employer, every payer, and every government. That's a sea change. That's a secular sea change in the way that we think about telehealth.

So what we've done is, we've decided to basically take a three to four-year development program and condense it into this year so we can offer the best-enabling infrastructure for the entire ecosystem under one very extensible, very scalable code base, realizing that life will never be the same.

As we deploy new technology, you need to understand the way that recognition works and the way that you first sign up to purchase that infrastructure. Then you integrate and deploy it. Then you accept and go live. And then you begin to see the revenues trickle in on a monthly basis for the balance of the year. And that's so--

ANJALEE KHEMLANI: Basically-- sorry. So basically, what you're saying is that you have a lot of expense to sort of build out in a very short period of time to meet the demand of what the pandemic brought on. But now that you're seeing that sort of balance out, what would you say is the look forward? How do you plan to sort of continue growing revenue as you see that sort of decline or stabilization of utilization?

IDO SCHOENBERG: So people keep talking about visits. And visits, as you know, Anjalee, is not our number one metric for the simple reason that in the future, what we want to do is spend less time with doctors and get services much more quickly using automation. The role of technology is to make sure the very precious, not scalable, time of those providers is much better spent. There is enormous waste in the interaction between patients and doctors today. And that's really our role.

So when we look into the future, we assume the following. We assume that this connective electronic tissue that brings all the players together is going to bring enormous efficiencies that will make sure that every resource is much better spent. The proportion of contribution to actual clinical services and technology in our company will go well into the technology and much less into clinical services for the simple reason that we believe that the doctor that you know in your community that has access to your record is the right person to interact with you. And we are just going to envelope that relationship with any type of support and automation so the time is well-spent.

On the financial lens, when you build an enabling technology, the offering is global. You can do that anywhere around the world. It's infinitely more scalable. And the margins are much higher versus services. Now, in courtesy of COVID, we believe that the world has changed to the extent where digital connectivity, not necessarily visits, between the payer is going to be a very big part of the health care experience going forward.

ANJALEE KHEMLANI: And we've seen that also with Amazon also looking to really capture the market. We've seen greater investment broadly in the health care space, not just in the biotechs, which have been on fire, but also with remote services, remote monitoring, et cetera. That's a really growing space. What do you anticipate you'll be able to pick up from there as it gets more competitive?

IDO SCHOENBERG: So maybe interestingly for some of your viewers, we don't see Amazon as a competitor. In fact, we welcome them coming in because essentially our view is that you need a connective platform. But then you have modular components where every entity is bringing what they do best to create a total experience that is better.

So if you think about Amazon, of course about our partner Google, they really excel in consumer experience. When you go to their sites, the experience is second to none. The build, the infrastructure of Amazon to deliver drugs to your home is phenomenal. Of course, we all get packages from Amazon. They do it really well. They are also very obsessed on consumer experience in many other ways.

And that is a contribution that I think we all want to experience in health care. Health care is not that great as it relates to consumer experience. Having said that, and when you take a page from what happened in Haven or in other big tech projects, when big tech companies try to move into the incredibly complicated, regulated, convoluted world of health care, that doesn't work really well.

So when you want to have a very quick access to an acute care visit to take care of your sore throat or ask for a nurse to come to your home, I think that Amazon's ability to build a very reliable, dependable system is actually very good. And in fact, we would love to have those services use our platform to increase the reach and get to many more users.

However, if someone is not that fortunate and they have a heart condition, they would really go to Cleveland Clinic and not to anyone else. Or if there is an endocrinologist in Boston that they need to look, I'll go to Mass General. My child is sick, I'll go to Boston children and on and on.

So the whole approach that we have is we are plumbers. We are solving for one problem, which is connectivity in health care, that has become incredibly important post-COVID. Everybody is up and understanding that they need to work with everybody else. It's about the coalition.

And Amazon and others could bring a lot of value to those coalitions, they should not be seen as necessarily competing unless you're trying to do exactly what they do. And there are some companies, including some telehealth companies, that that's what they do. They focus on services. They try to sell you a very affordable visit with a short wait time and a good experience. They should be incredibly concerned when someone so sophisticated as Amazon is trying to compete in that turf.

JULIE HYMAN: Right. Ido, thanks for being here. Ido Schoenberg, Amwell chairman and co-CEO. And our Anjalee Khemlani, appreciate it.