WebMD, the media and healthcare information company, is hinting that it will enter the telemedicine space as acquisition prices become more reasonable.
On an earnings call Tuesday, WebMD CEO David Schlanger said it's “likely” that the New York-based company could enter the telehealth space through either an acquisition or partnership, but he did not provide a time frame. The sellers' market that had raised valuations for mergers and acquisitions is starting to moderate, he added, providing an opening for companies like WebMD.
“We believe that alternative primary care like telehealth will eventually gain a wider adoption, and we think that WebMD is well-positioned to provide access to those services because of the trust in our brands and our distribution,” he said.
While WebMD has long been said to be interested in the telemedicine space, the earnings call comments raise the likelihood that the company could actually forge a deal, Charles Rhyee, an analyst at Cowen & Co., said in a note to clients.
Its entry point could come through a partnership with a large, established telemedicine player or by acquiring a smaller company, Rhyee added. It's too early to speculate which companies this might include. Most telemedicine providers have their own contracts with physicians, or might use a local health system's doctors.
WebMD already has a presence in the virtual wellness space, and offers a Web- and app-based wellness coaching program in partnership with Walgreens.
But if it launches a full-scale telemedicine offering, it will likely be competing with Walgreens and other pharmacy chains such as CVS Health. Walgreens offers telemedicine services through a partnership with MDLive that it recently expanded to 25 states. Last year CVS partnered with three telemedicine providers—American Well, Teladoc and Doctor on Demand—to significantly expand its telehealth capabilities.
The market for “on demand” services is growing in nearly every industry and healthcare is no exception. Healthcare is the second-fastest growing segment for on-demand services, and the number of companies operating in that space has swelled from four in 2010 to 42 in 2014, according to a recent report from Accenture. Investment in on-demand healthcare, meanwhile, grew at a compound annual growth rate of 224% over that same period.
Telemedicine companies have been some of the primary beneficiaries.
Primary-care physicians also like the model because it offers flexible, work-from-home schedules and pays rates that are comparable, if not better, than office visits, said Adam Jackson, co-founder and CEO of Doctor on Demand, which has raised $86 million in three funding rounds.