Amwell, a prominent telehealth provider, recently announced the sale of its virtual psychiatric care business to Avel eCare for approximately $21 million in cash. This strategic move includes an additional earn-out payment for Amwell if the business achieves specific financial targets. The sale encompasses the transfer of the psychiatric care segment’s technology, personnel, and Asana, a clinical network that employs and contracts with the unit’s clinicians.
Ido Schoenberg, the CEO of Amwell, emphasized that this divestiture will enhance the company’s balance sheet and bolster their confidence in achieving positive cash flow by 2026. The decision to sell the virtual psychiatric care business comes after Amwell’s acquisition of the Asana medical group in 2019 through the purchase of Aligned Telehealth. In 2021, the company launched Amwell Psychiatric Care utilizing Asana clinicians to provide telepsychiatry services to hospitals and health systems.
With the sale of this business unit, Avel eCare will gain around 40 health system clients across multiple states. Despite this divestiture, Amwell remains committed to offering behavioral healthcare services, including therapy and its SilverCloud digital mental health platform, through its medical group. The Amwell Medical Group, which comprised 3,000 providers by the end of 2023, will continue to focus on delivering these essential services.
The decision to sell the virtual psychiatric care business aligns with Amwell’s strategy to concentrate on its core services subscriptions for providers and payers, emphasizing growth initiatives. While there are no immediate plans for additional divestitures, the company remains focused on optimizing its product portfolio to drive growth and profitability.
Amwell’s stock price has faced challenges since its initial public offering during the COVID-19 pandemic in 2020. To address this, the telehealth company implemented a reverse stock split last summer to maintain compliance with the New York Stock Exchange’s listing standards. Despite reporting a net loss of $44 million in the third quarter, Amwell remains optimistic about its 2024 financial outlook, expecting revenue between $247 million and $252 million.
In conclusion, Amwell’s decision to sell its virtual psychiatric care business to Avel eCare reflects the company’s strategic realignment to focus on core services and growth opportunities. This move underscores Amwell’s commitment to delivering high-quality telehealth services while optimizing its operations for long-term success.
