Remote medical care is much more than a passing trend — it’s here to stay. At least, that’s the bullish thesis behind American Well (NYSE:AMWL), a premier provider of telemedicine services. If you agree with this, then you might choose to take a long position in AMWL stock.
The company had its $742 million initial public offering (IPO) on Sept. 17, with backing from tech behemoth Alphabet (NASDAQ:GOOGL,NASDAQ:GOOG) aka Google. What’s more, American Well’s executive team maintains an impressive pedigree. Former Massachusetts governor Deval Patrick and Massachusetts General Hospital president Peter Slavin are both on the Board of Directors at the company.
So, as you can imagine, there’s a whole lot of buzz surrounding this company. American Well President and Co-CEO Roy Schoenberg seeks to start “nothing short of a revolution” with virtual care. But the question still remains — should prospective investors take a chance on AMWL stock?
A Closer Look at AMWL Stock
On Oct. 20, I practically begged InvestorPlace readers to consider owning AMWL stock. Was I right to make such a bullish call?
Back then, the share price was fairly close to $33. Currently, AMWL has declined to the $26 range. Therefore, my timing was less than perfect. But that decline also means there’s now an opportunity to own AMWL stock at a more favorable price point.
If you believe in the future of Schoenberg’s “revolution,” then a few price fluctuations in AMWL shouldn’t matter too much. It’s a relatively new stock, so the market is still likely in the process of price discovery. In other words, traders are figuring out what a reasonable price range is for American Well. While that’s happening, some volatility is to be expected.
I think it’s fair to say that in the wake of the novel coronavirus, the medical field is not just adopting telemedicine — it’s absolutely embracing it.
At this point, health care professionals and patients don’t really have much of a choice. Virtual visits are becoming an increasingly preferred mode of health care delivery due to safety concerns.
American Well’s own research also confirms that telehealth usage is up considerably in 2020. Believe it or not, “22% of consumers and 80% of physicians” had a virtual health visit this year. For comparison, only 8% of consumers and 22% of physicians had virtual visits last year.
Not only that, but it appears that patients may be more willing to continue using telemedicine services in the future. Indeed, American Well’s research revealed that 91% of patients who had their first virtual visit during the pandemic reported that they were either “very” or “somewhat” satisfied with the experience.
On the Cutting Edge
Of course, credibility is of paramount importance in the health care field. Without it, there cannot be any trust between providers and their patients.
This is particularly true in 2020, as the telemedicine niche is still gaining trust and adoption among both practitioners and consumers. Fortunately, though, American Well has recently taken a massive step in the right direction for establishing its credibility.
As Chairman and co-CEO Ido Schoenberg explains, the URAC accreditation will soon be a key industry differentiator for the company:
“By earning this Accreditation, our clients, and the providers and patients who depend on our technology services, can rest assured that we are meeting the highest quality standards for healthcare delivery.”
If URAC accreditation is the gold standard for companies in the health care sector, then American Well is clearly making strides in demonstrating its credibility. In turn, that only bodes well for AMWL stock.
Hopefully, you’ll forgive me about my original bullish call on AMWL stock. Admittedly, it wasn’t the best timing.
That being said, though, I’m still willing to pound the table on behalf of American Well. Investors should ignore the short-term price fluctuations and focus on the long-term value proposition. Telehealth — and American Well — are gaining broad acceptance in the time of Covid-19. Investors would do well to act on that trend.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content -and crossed the occasional line -on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.