Two Boston deals underscore investors’ surging interest in telehealth during the pandemic

"Everyone is recognizing that virtual care is here to stay," said one CEO.

Melvin Makhni, MD, spine surgeon, Department of Orthopedic Surgery, Brigham and Women's Hospital demonstrated a telehealth follow up appointment with Nicole Dane, a patient who recently had motion-sparing fusionless surgery for spinal cord compression neurologic issues (pre-COVID-19).Jessica Rinaldi/Globe Staff

Like many people, investors were once slow to embrace the promise of telemedicine. Not anymore.

Two Boston deals involving companies that offer virtual medical care were announced this week. The deals are quite different. But they underscore the surging interest in this sector, thanks to the suddenly widespread use of telehealth during the coronavirus pandemic.

On Monday, Boston-based telemedicine firm American Well Corp. disclosed two major milestones: a $100 million plan from Google to invest in the company, and a long-anticipated filing with the Securities and Exchange Commission to go public.

ConsumerMedical, a provider of health care guidance and advice based on the South Shore, announced on Wednesday that it has scooped up InfiniteMD, a relatively young startup in Boston that provides virtual health care on a global basis. ConsumerMedical had already bought a minority stake in InfiniteMD a year ago, but interest from other investors in buying the business outright percolated during the pandemic, so ConsumerMedical made its move to outflank those potential bidders. (The price of the acquisition wasn’t disclosed.)

These two deals pale in comparison to the mega-deal unveiled on Aug. 5 that still has the industry buzzing: Purchase, N.Y.-based telehealth giant Teladoc’s $18.5 billion plan to purchase Livongo, a California company that helps patients manage chronic diseases such as diabetes.

“Telemedicine was moving along at a snail’s pace really before COVID, because it threatened the status quo,” said Chris Kryder, an executive partner at Boston VC firm Flare Capital Partners. “Now it’s moving at a greyhound’s pace.”

Kryder personally invested in InfiniteMD in 2017, and helped guide the nearly four-year-old company. (He cashed out through the ConsumerMedical purchase.) He was initially intrigued by the firm’s plan to provide medical expertise from Boston to patients in China. ConsumerMedical was, as well: The Norwell firm can line up second (and sometimes third) opinions through employer plans in the United States, but the InfiniteMD platform provides technology and expertise to reach key markets in Europe and Asia.

Kryder said ConsumerMedical, which joined him as an investor in InfiniteMD in 2019, probably would have acquired InfiniteMD even without the pandemic, but the firm’s performance in recent months cinched the deal. He said: “If there had been any ambivalence, it evaporated once the platform was being used at 50 percent greater clip [than last year] right away.”

Nearly 20 employees at InfiniteMD, led by chief executive Babak Movassaghi, have joined about 170 at ConsumerMedical. David Hines, chief executive at ConsumerMedical, said his team particularly liked InfiniteMD’s “asynchronous” technology for health visits — a system for physicians recording their opinions for patients, and then patients viewing that video at a later time and responding in kind. This option largely eliminates the need to sync up schedules, or even time zones.

Hines said there was considerable interest in InfiniteMD from other potential buyers.

“What you’re seeing in the investment community is that everyone is recognizing that virtual care is here to stay,” Hines said.

That sentiment could be one factor motivating executives at American Well, led by brothers Ido and Roy Schoenberg, to file documents with the SEC to become a publicly traded company. Google would also buy a $100 million stake at the time of the IPO, in part to cement a business relationship between American Well, now branded as Amwell, and Google’s web services platform, Google Cloud. A spokeswoman for Amwell, which reported nearly $150 million in 2019 revenue and a net loss of $88 million for the year, said the company would not be able to comment because of SEC rules for “quiet periods” around IPO filings.

Health insurers and their clients use Amwell to expand their health care networks, in part by shifting care to lower-cost settings and filling in gaps in care. Demand for remote services soared during the pandemic as routine medical visits were either postponed or were converted into virtual meetings. Amwell, in its SEC documents, notes that the barriers to telehealth reimbursements fell significantly during the pandemic, while health systems strove to limit exposure for their workers by often going remote.

How busy did it get at Amwell? Average monthly visit volumes more than quadrupled in the three-month period that ended in June, compared with the prior quarter. The number of virtual visits via Amwell reached as high as 40,000 a day in April, compared with 2,900 in the same month a year ago. Yes, Amwell concedes that COVID-19 is a unique event, and there’s no guarantee that reimbursement rates will continue. But the company expects that usage will remain at higher levels once the pandemic ends.

Stephanie Davis, a managing director at health care investment bank SVB Leerink, is betting that will be the case for telehealth in general. The arrival of the coronavirus turned out to be a watershed event that accelerated the acceptance of telehealth among investors, consumers, and policymakers alike, she said. The benefits, though, go beyond safety during a pandemic: better access to health care for aging baby boomers, for example, and more productivity for doctors.

“You have people trying it for the first time, getting rid of a lot of skepticism around it,” Davis said. “The idea of care from home became a lot more appealing, all of a sudden. . . . I thought this would be more of a 10-year arc. Instead, telemedicine is effectively here.”

And the $18.5 billion price tag for the Teladoc-Livongo deal sent a signal, Davis added, to “all these different telehealth players that, hey, the market is willing to support this.”