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In little more than a year, telehealth has gone from a backwater of American health care to a booming business. Billion-dollar valuations, once a rarity, are now common as companies seize on a dramatic increase in demand to raise money and enter the public markets during the coronavirus pandemic.

But the overnight change in fortunes for the industry is also raising alarms of a bubble, especially as more telehealth providers merge with shell companies known as SPACs — special purpose acquisition corporations — that offer a faster and easier road to going public. Experts in health finance said the rush to capitalize on sudden changes in supply and demand may cause companies and investors to overlook significant risks, such as a reemergence of regulatory barriers waived during the pandemic or clinical studies that may call the value or quality of telehealth care into question.


“Perfect storm I don’t think overstates it at all,” said Erik Gordon, a health finance professor at the University of Michigan. He said the convergence of the SPAC craze and the pandemic is artificially accelerating the industry’s maturation. What would normally be a 10-year process of building viable businesses is, in some cases, unfolding in less than half that time, making it difficult to distinguish between strong and weak performers.

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