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Our take: What Google's $100M investment in Amwell means for virtual care

By Andrew Rebhan

August 26, 2020

    A few weeks ago, there was the big announcement that Teladoc Health would be purchasing Livongo for $18.5 billion, creating a digital health powerhouse. I wrote about that deal in a separate post, and I figured it was only a matter of time before we would see other competitive moves occur in the market.

    Webinar series: How several companies are transforming digital health

    It only took about one week.

    In response to the news, Teladoc's rival MDLive announced that it was planning a public offering come early 2021. MDLive's planned IPO was likely already in the works due to spiking telehealth demand from Covid-19, but the company's CEO did note in an interview with STAT News that the Teladoc/Livongo deal contributed to his decision.

    Big tech, not to be outdone, makes its own moves

    But there is another intriguing move that raised a few eyebrows this week: Google announced that it is investing $100 million in the telehealth firm Amwell. This investment was announced the same day as Amwell filed its preliminary prospectus with the Securities and Exchange Commission and will be concurrent with its IPO (Amwell confidentially filed for an IPO in June). As part of the deal, Google will become Amwell's preferred global cloud partner.

    And the very next day, there was more news: Fitbit, which is in the process of being acquired by Google, announced a new line of wearables, including a new smartwatch. The Fitbit Sense smartwatch (set to launch late September) allows users to track physical activity, menstrual health, heart rate, sleep patterns, and stress levels. A user's stress levels are measured using the watch's built-in electrodermal activity (EDA) sensor, which pairs with a stress management feature in the Fitbit mobile app. Company executives noted that this stress measurement feature gained greater focus due to Covid-19's noticeable negative affect on people's mental health.

    The Sense's sensor technology can also be used to monitor heart rhythms for signs of atrial fibrillation (though it's still waiting on FDA certification for its ECG app) and can evaluate skin temperature to detect potential signs of fever. New users also get a free trial of Fitbit's Premium service, which offers guided health programs, personalized reports, virtual workouts, and optional digital coaching. The Sense offers health tracking features that are more advanced than its existing Versa smartwatch line and shows how Fitbit is trying to expand beyond its core fitness tracker business.

    These recent announcements by Fitbit are a clear move to compete with Apple, Samsung, Garmin, and others in the wearables market.

    Google is playing the long game when it comes to virtual care

    The fact that the Amwell investment and the new Fitbit smartwatch product line were announced one day apart may just be a coincidence, but I think there is a strategic plan unfolding here.

    Google has been trying to carve out a business in health care for years, just like Apple, Amazon, and other big tech firms, and it's likely they too were shook by the news of Teladoc and Livongo coming together. The combined "Teladongo" entity will be a digital health force, combining an established telehealth provider with a strong chronic diseases management platform that is built for a post-Covid environment.

    Google sees that and is likely leveraging investments in Amwell and Fitbit (among other acquisitions) to complement the strength of its cloud platform and data management capabilities.

    The long-term opportunity: Home health and wraparound virtual services

    As Covid-19 has pushed the industry to give more serious consideration to home health models, these investments allow Google to tap into the lucrative virtual care market through video visits, wearables for remote patient monitoring, mobile-based access to physical and mental health guidance, Google Assistant for voice-activated services, and other connected home devices. Furthermore, in its public filing, Amwell noted its plans to expand its digital platform into patient's homes, including TV-based digital services, its AI-enabled triage chatbot tool "Ami," continued investments in remote patient monitoring, and home delivery of pharmaceuticals.

    Google is going down the same strategic route as Teladoc and Livongo, but with a somewhat deconstructed approach. This is to be expected with massive big tech firms such as Google or Amazon that operate across a wide range of business lines. (Although one caveat is that Google's acquisition of Fitbit faces ongoing regulatory scrutiny that may delay the merger until 2021.)

    It will be interesting to compare the approach to virtual care between big tech and more "pure play" companies such as Teladoc and Livongo. In either case, the "Teladongo" effect is real, and I anticipate there will be several other shake ups in the digital health sector before the end of the year.

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