Demand for Telehealth is Surging
Accolade said it will pay $40 million in cash and $340 million in its common stock. An additional $70 million in business revenue milestones is available, the company said.
The business deal, which is expected to be completed in June, will contribute primary care to Accolade’s set of offerings. The company, which provides consumers with a better understanding of their health plans and benefits, said it will grow its total addressable market (TAM) to over $200 billion.
“Healthcare is personal, and the connection between physician and patient is the single most important factor in improving outcomes. PlushCare has successfully built a market-changing, direct-to-consumer model with virtual capabilities that extend Accolade’s member engagement deeper into the healthcare experience,” said Rajeev Singh, CEO of Accolade.
Singh said this business deal will help combine a large amount of data it has on customers with a proven primary care service. He added that the inclusion of primary care will help cut business costs even further and improve clinical outcomes.
Demand for telehealth care received a boost during the coronavirus pandemic as people were looking for medical advice without visiting a doctor’s office. Furthermore, new regulations have also fueled the increased interest in telemedicine.
“Primary care doctors play a critical role in delivering preventive care and chronic disease management, areas of the healthcare system ripe for reinvention, reducing waste and significantly lowering the overall cost of healthcare for everyone,” said Ryan McQuaid, CEO of the startup.
The business acquisition represents another Accolade move into the consumer market after the Seattle-based company bought telemedicine startup 2nd.MD for $460 million in January. Accolade said it still intends to continue growing PlushCare’s D2C business.
There are currently 160 million people in the United States (US) whose employers do not cover their healthcare, according to Singh. On the other hand, PlushCare currently has 150 employees and has provided telehealth services to over 400,000 patients to date. The telehealth startup reported $35 million in business revenue last year and has raised over $30 million in private funding so far.
Accolade, on the other hand, made its public debut in July and has reported $38.4 million in business revenue for Q3 and a loss of $16.4 million. The company currently serves 9 million members and 400 customers.
Accolade stock has surged over 50% since the business raised $220 million in funding in July and hit $1.2 billion in business valuation. Accolade has a market capitalization of about 1.2 billion at the moment.
The company was founded in 2007 by Michael Cline and Tom Spann. Singh, who became Accolade’s CEO in 2015, is a co-founder of the travel expense software company Concur, which was acquired by SAP for $8.3 million in 2014.
Accolade said it is buying telehealth primary care startup PlushCare for $450 million, not long after the Seattle-based company acquired the telemedicine startup 2nd.MD.
About the Author
Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.