Reston telehealth startup Avizia may have been purchased by Boston's American Well Corp. (Amwell) in 2018, but the combined company's pending public offering reveals additional details about that transaction that point to its continued boon to the D.C. area’s early-stage venture ecosystem.
While the two companies did not disclose the transaction price at the time of the acquisition, new Securities and Exchange Commission filings show Amwell bought Avizia for $137.8 million in cash and stock. Investors in Avizia ended up with more than half of the deal in shares — $72.5 million in equity comprised of 1,115,934 shares at about $65 per share, according to the filings.
It's also clear there has already been a significant upside to Avizia investors receiving Amwell stock. In 2019, more than one year after the transaction closed, Amwell sold stock at $75 per share, and also purchased another company with a stock component valued at $75 per share. That would make the 1,115,934 shares of Amwell received by Avizia investors worth $83.7 million, up from the initial $72.5 million.
In 2020, Amwell sold an additional round of shares for $100 per share, which would make the Avizia stake worth about $111.6 million.
Meanwhile, the potential price or date of Amwell's IPO has not yet been set, which means that stake can continue to rise in value once the company is public. Avizia CEO and co-founder Mike Baird said the Avizia segment had seen its revenue grow 75% during the last 12 months, according to his LinkedIn profile. Baird was president at Amwell after the acquisition, but stepped down in July.
The IPO filings also revealed additional details about Avizia immediately following the acquisition, including that it recorded $10.8 million in revenue and a $9.7 million net loss from July 3, 2018 through December 31, 2018. Amwell had revenue of $114 million in 2018, which grew to $149 million in 2019, according to the filings preempting the IPO.
As for Avizia's early stage investors, many are based in Greater Washington, according to PitchBook.
Those local investors included NextGen Venture Partners, which was subsequently acquired by investment firm Brown Advisory, Blu Venture Investors, Middleland Capital, MCVC Partners and Lavrock Ventures, who all participated in Avizia's seed or series A funding rounds, according to PitchBook.
Founded in 2013 and based in Reston — where Amwell continues to maintain offices — Avizia ultimately raised $49.5 million in funding in the five years before its acquisition, PitchBook data show.
“Its' an excellent example of what the right team and what the right technology and what the right collection of customers could do,” said J.S. Gamble, managing principal at Blu Venture Investors LLC. "I continue to be impressed with Mike Baird as a very effective leader. We saw firsthand the culture that Mike and his team built.”
While the Avizia acquisition and Amwell’s pending IPO does serve as a form of validation for the region’s venture scene, Gamble stressed that Avizia’s technology and market fit set it up for success.
“It’s hard to be successful as an early-stage company, no matter what the industry is. in this case, Avizia had the elements, they got lucky breaks along the way and I think Amwell is very very happy with the acquisition,” Gamble said.
And Amwell benefited from the acquisition, which gave it an international footprint "that we continue to grow," the firm said in its IPO filings.
"This acquisition brought a comprehensive acute care capability, including a hospital-based cart lineup and custom software workflows for more than forty clinical specialties, including telestroke and tele-behavioral health. This acquisition enhanced options available to clients across Amwell’s diverse telehealth ecosystem, including health systems, health plans and innovators, enabling clients to choose one comprehensive single platform solution," Amwell said in the filings.
This story has been updated to reflect Mike Baird’s departure from Amwell.
