Shares of telehealth start-up Amwell (AMWL -6.64%) have risen sharply since the company made its public stock-market debut in September. The most recent spike was fueled by speculation that UnitedHealth Group (UNH 0.91%) was eager to acquire the company despite its surging market value.

Neither company has commented publicly about a potential merger, but that hasn't stopped investors from wondering whether it's a good idea or not.

Sales representative and a physician having a discussion.

Image source: Getty Images.

Why UnitedHealth should acquire Amwell

Amwell's a leading telehealth platform operator that powers the digital-care programs of 55 health plans. These plans collectively represent more than 80 million covered lives. The COVID-19 pandemic is boosting first-time utilization of Amwell's platform, and it's hard to find telehealth customers who aren't eager to keep using telehealth services after their first successful virtual visit. 

During the three-month period ended Jun. 30, 2020, Amwell saw average visit volumes increase more than 400% year over year. Despite the growth to date, it looks like the company has plenty of room to grow. There are over 290 million individuals enrolled in insurance plans that Amwell has identified as potential subscribers to its platform.

Why UnitedHealth should pass

Amwell's enterprise value at recent prices works out to an even $8.0 billion, which is a lot to pay for a business that hasn't figured out how to make any money yet. Use of Amwell's platform has exploded this year, but so have expenses associated with facilitating all those visits.

During the first six months of 2020, Amwell reported top-line revenue that rose just 77% year over year to $122.3 million, while usage of its platform rose more than fivefold. Operating expenses soared 108% over the same period, leading to a frightening loss of $113 million in the first half of the year.