Amwell Announces Results for First Quarter 2023
03 May 2023
Financial Statement
BOSTON--(BUSINESS WIRE)--Amwell® (NYSE: AMWL), a leader in digital healthcare enablement, today announced financial results for the first quarter ended March 31, 2023.
Amwell First Quarter 2023 Highlights:
Recorded Total Revenue of $64.0 million
Achieved subscription revenue of $28.7 million
Recorded AMG Visit revenue of $32.5 million
Reported gross margin of 39.5%
Net loss was ($398.5) million, compared to ($61.6) million in fourth quarter of 2022 which reflects a non-cash goodwill impairment charge of $330.3 million recorded in the first quarter of 2023
Adjusted EBITDA was ($44.6) million compared to ($43.4) million in fourth quarter of 2022
Total active providers rose 8% to 108,000 compared to 100,000 in the first quarter of 2022
Total visits were 1.7 million; visits on Converge grew to 36% of total visits, from 28% in fourth quarter of 2022
Cash and short-term securities as of quarter-end were approximately $507.2 million
“Q1 was a very busy quarter for our company, one that provided a strong start to the year,” said Dr. Ido Schoenberg, Chairman and CEO of Amwell. “We made great progress with customer migrations and strategic clients went live on Converge, our unique, one-stop-shop, hybrid care enablement platform. These successes provide valuable, in-market validation of the power and scale of Converge. Converge streamlines the simple, cohesive, and efficient delivery of hybrid healthcare. We also had a successful quarter of initiatives aimed at accelerating our momentum in the market.”
Schoenberg continued, “With an expanding stable of reference accounts, we are demonstrating our role as an enabling partner for healthcare leaders, empowering hybrid, digital-first approaches to healthcare as they converge and consolidate their own transformative strategies.”
Financial Outlook
The Company reiterated its guidance, which calls for:
Revenue in the range of $275 and $285 million
AMG visits between 1.45 and 1.65 million
An Adjusted EBITDA range of between ($150) million and ($160) million
Other than with respect to GAAP Revenue, the Company only provides guidance on a non-GAAP basis. The Company does not provide a reconciliation of forward-looking Adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because other deductions used to calculate projected net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in projected GAAP net income (loss) being materially less than projected Adjusted EBITDA (non-GAAP).
Quarterly Conference Call Details
The company will host a conference call to review the results today, Wed., May 3, 2023 at 5:00 p.m. E.T. to discuss its financial results. The call can be accessed via a live audio webcast at https://investors.amwell.com or by dialing 1-888-510-2008 for U.S. participants, or 1-646-960-0306 for international participants, referencing conference ID #7830032. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.
About Amwell
Amwell is a leading digital care delivery enablement platform in the United States and globally, connecting and enabling providers, insurers, patients, and innovators to deliver greater access to more affordable, higher quality care. Amwell believes that digital care delivery will transform healthcare. The Company offers a single, comprehensive platform to support all digital health needs from urgent to acute and post-acute care, as well as chronic care management and healthy living. With over a decade of experience, Amwell powers the digital care of more than 55 health plans, which collectively represent more than 90 million covered lives, and many of the nation’s largest health systems, representing over 2,000 hospitals, have access to Amwell solutions. For more information, please visit https://business.amwell.com/.
American Well, Amwell, Converge, Conversa, SilverCloud and Carepoints are registered trademarks or trademarks of American Well Corporation in the United States and other countries. All other trademarks used herein are the property of their respective owners.
Forward-Looking Statements
This press release contains forward-looking statements about us and our industry that involve substantial risks and uncertainties and are based on our beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations, financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” or “would,” or the negative of these words or other similar terms or expressions.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our beliefs and assumptions only as of the date of this release. These statements, and related risks, uncertainties, factors and assumptions, include, but are not limited to: weak growth and increased volatility in the telehealth market; inability to adapt to rapid technological changes; increased competition from existing and potential new participants in the healthcare industry; changes in healthcare laws, regulations or trends and our ability to operate in the heavily regulated healthcare industry; our ability to comply with federal and state privacy regulations; the significant liability that could result from a cybersecurity breach; and other factors described under ‘Risk Factors’ in our most recent form 10-K filed with the SEC. These risks are not exhaustive. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. Further information on factors that could cause actual results to differ materially from the results anticipated by our forward-looking statements is included in the reports we have filed or will file with the Securities and Exchange Commission. These filings, when available, are available on the investor relations section of our website at investors.amwell.com and on the SEC’s website at www.sec.gov.
AMERICAN WELL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
March 31, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
112,887
$
538,546
Investments
394,309
—
Accounts receivable ($1,700 and $2,597, from related parties and net of
allowances of $2,069 and $1,884, respectively)
55,871
58,372
Inventories
8,438
8,737
Deferred contract acquisition costs
1,472
1,394
Prepaid expenses and other current assets
15,275
19,567
Total current assets
588,252
626,616
Restricted cash
795
795
Property and equipment, net
719
1,012
Goodwill
106,707
435,279
Intangible assets, net
135,401
134,980
Operating lease right-of-use asset
12,609
13,509
Deferred contract acquisition costs, net of current portion
3,645
3,394
Other assets
2,199
1,972
Investment in minority owned joint venture
178
—
Total assets
$
850,505
$
1,217,557
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
7,050
$
7,236
Accrued expenses and other current liabilities
39,922
54,258
Operating lease liability, current
3,011
3,057
Deferred revenue ($1,232 and $1,665 from related parties, respectively)
65,607
49,505
Total current liabilities
115,590
114,056
Other long-term liabilities
1,611
1,574
Operating lease liability, net of current portion
10,850
11,787
Deferred revenue, net of current portion ($7 and $10 from related
parties, respectively)
8,178
6,289
Total liabilities
136,229
133,706
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares
issued or outstanding as of March 31, 2023 and as of December 31, 2022
—
—
Common stock, $0.01 par value; 1,000,000,000 Class A shares authorized, 247,762,793
and 244,193,727 shares issued and outstanding, respectively; 100,000,000 Class B shares
authorized, 27,390,397 shares issued and outstanding; 200,000,000 Class C shares
authorized 5,555,555 issued and outstanding as of March 31, 2023 and as of
December 31, 2022
2,801
2,766
Additional paid-in capital
2,182,627
2,160,108
Accumulated other comprehensive income
(10,588
)
(16,969
)
Accumulated deficit
(1,479,717
)
(1,082,028
)
Total American Well Corporation stockholders’ equity
695,123
1,063,877
Non-controlling interest
19,153
19,974
Total stockholders’ equity
714,276
1,083,851
Total liabilities and stockholders’ equity
$
850,505
$
1,217,557
AMERICAN WELL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended March 31,
2023
2022
Revenue
($988 and $1,215 from related parties, respectively)
$
64,001
$
64,232
Costs and operating expenses:
Costs of revenue, excluding depreciation and amortization of intangible assets
38,752
36,765
Research and development
25,923
37,481
Sales and marketing
22,726
21,154
General and administrative
36,370
32,716
Depreciation and amortization expense
7,243
6,598
Goodwill Impairment
330,309
—
Total costs and operating expenses
461,323
134,714
Loss from operations
(397,322
)
(70,482
)
Interest income and other income (expense), net
940
108
Loss before expense from income taxes and loss from
equity method investment
(396,382
)
(70,374
)
(Expense) Benefit from income taxes
(1,475
)
332
Loss from equity method investment
(652
)
(211
)
Net loss
(398,509
)
(70,253
)
Net loss attributable to non-controlling interest
(821
)
(216
)
Net loss attributable to American Well Corporation
$
(397,688
)
$
(70,037
)
Net loss per share attributable to common stockholders,
basic and diluted
$
(1.42
)
$
(0.26
)
Weighted-average common shares outstanding, basic and diluted
279,966,645
268,002,110
Net loss
$
(398,509
)
$
(70,253
)
Other comprehensive income (loss), net of tax:
Unrealized (loss) gain on available-for-sale investments
4,319
(1,251
)
Foreign currency translation
2,062
(2,951
)
Comprehensive loss
(392,128
)
(74,455
)
Less: Comprehensive loss attributable to
non-controlling interest
(821
)
(216
)
Comprehensive loss attributable to American Well Corporation
$
(391,307
)
$
(74,239
)
AMERICAN WELL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended March 31,
2023
2022
Cash flows from operating activities:
Net loss
$
(398,509
)
$
(70,253
)
Adjustments to reconcile net loss to net cash used in operating activities:
Goodwill impairment
330,309
—
Depreciation and amortization expense
7,242
6,598
Provisions for credit losses
199
(200
)
Amortization of deferred contract acquisition costs
476
391
Amortization of deferred contract fulfillment costs
107
133
Noncash compensation costs incurred by selling shareholders
—
2,025
Stock-based compensation expense
21,008
12,075
Loss on equity method investment
652
211
Deferred income taxes
(13
)
(443
)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable
2,340
4,290
Inventories
299
(495
)
Deferred contract acquisition costs
(793
)
(501
)
Prepaid expenses and other current assets
4,198
(1,838
)
Other assets
(210
)
(169
)
Accounts payable
(247
)
(4,601
)
Accrued expenses and other current liabilities
(14,159
)
(8,446
)
Other long-term liabilities
—
(16
)
Deferred revenue
17,953
(952
)
Net cash used in operating activities
(29,148
)
(62,191
)
Cash flows from investing activities:
Purchases of property and equipment
(18
)
(68
)
Capitalized software development costs
(6,751
)
—
Investment in less than majority owned joint venture
(980
)
—
Purchases of investments
(389,990
)
(499,223
)
Net cash used in investing activities
(397,739
)
(499,291
)
Cash flows from financing activities:
Proceeds from exercise of common stock options
289
2,536
Proceeds from employee stock purchase plan
1,268
1,501
Payments for the purchase of treasury stock
(1
)
—
Payment of contingent consideration
—
(11,790
)
Net cash provided by (used in) financing activities
1,556
(7,753
)
Effect of exchange rates changes on cash, cash equivalents, and restricted cash
(328
)
(247
)
Net decrease in cash, cash equivalents, and restricted cash
(425,659
)
(569,482
)
Cash, cash equivalents, and restricted cash at beginning of period
539,341
747,211
Cash, cash equivalents, and restricted cash at end of period
$
113,682
$
177,729
Cash, cash equivalents, and restricted cash at end of period:
Cash and cash equivalents
112,887
176,934
Restricted cash
795
795
Total cash, cash equivalents, and restricted cash at end of period
$
113,682
$
177,729
Supplemental disclosure of cash flow information:
Cash paid (refunded) for income taxes
$
458
$
(454
)
Supplemental disclosure of non-cash investing and financing activities:
Issuance of common stock in settlement of earnout
$
—
$
4,298
Receivable related to exercise of common stock options
$
—
$
4
Non-GAAP Financial Measures:
To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, of US GAAP, we use adjusted EBITDA, which is a non-U.S GAAP financial measure to clarify and enhance an understanding of past performance. We believe that the presentation of adjusted EBITDA enhances an investor’s understanding of our financial performance. We further believe that adjusted EBITDA is a useful financial metric to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. We use certain financial measures for business planning purposes and in measuring our performance relative to that of our competitors. We utilize adjusted EBITDA as the primary measure of our performance.
We calculate adjusted EBITDA as net loss adjusted to exclude (i) interest income and other income, net, (ii) tax benefit and expense, (iii) depreciation and amortization, (iv) goodwill impairment, (v) stock-based compensation expense, (vi) severance expenses, (vii) capitalized software costs, (viii) litigation expenses related to the defense of our patents in the patent infringement claim filed by Teladoc and (ix) other items affecting our results that we do not view as representative of our ongoing operations, including noncash compensation costs incurred by selling shareholders and adjustments made to the contingent consideration.
We believe adjusted EBITDA is a commonly used by investors to evaluate our performance and that of our competitors. However, our use of the term adjusted EBITDA may vary from that of others in our industry. Adjusted EBITDA should not be considered as an alternative to net loss before taxes, net loss, loss per share or any other performance measures derived in accordance with U.S. GAAP as measures of performance.
Adjusted EBITDA has important limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations of adjusted EBITDA include (i) adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these capital expenditures. Our legal, accounting and other professional expenses reflect cash expenditures and we expect such expenditures to recur from time to time. Our adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate adjusted EBITDA in the same manner as we calculate the measure, limiting its usefulness as a comparative measure.
In evaluating adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. Adjusted EBITDA should not be considered as an alternative to loss before benefit from income taxes, net loss, earnings per share, or any other performance measures derived in accordance with U.S. GAAP. When evaluating our performance, you should consider adjusted EBITDA alongside other financial performance measures, including our net loss and other GAAP results.
The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31,
(in thousands)
2023
2022
Net loss
$
(398,509
)
$
(70,253
)
Add:
Depreciation and amortization
7,243
$
6,598
Interest income and other income (expense), net
(940
)
(108
)
(Expense) Benefit from income taxes
1,475
(332
)
Goodwill Impairment
330,309
—
Stock-based compensation
20,997
12,085
Severance(1)
1,575
—
Capitalized software costs
(6,751
)
—
Noncash expenses and contingent consideration adjustments(2)
—
3,737
Litigation expense(3)
—
1,138
Adjusted EBITDA
$
(44,601
)
$
(47,135
)
(1) Severance costs associated with the termination of employees during the three months ended March 31, 2023.
(2) Noncash expenses and contingent consideration adjustments include, noncash compensation costs incurred by selling shareholders and adjustments made to the contingent consideration.
(3) Litigation expense relates to legal costs related to the Teladoc litigation which was dismissed pursuant to a confidential settlement between the parties in 2022.
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