Business Overview
Amwell, a leading enterprise platform and software company, is at the forefront of enabling hybrid care delivery for healthcare organizations. With a history dating back to 2006, the company has pioneered virtual healthcare and continues to innovate as the industry evolves toward a seamless integration of in-person, virtual, and automated care models.
Amwell was incorporated under the laws of the State of Delaware in June 2006 and is headquartered in Boston, Massachusetts. The company was founded with the goal of enabling digital delivery of care for healthcare’s key stakeholders. In its early years, Amwell focused on providing the core technology and services necessary for clients to successfully develop and distribute digital care programs under their own brands.
As the company evolved, it expanded its enterprise platform and software capabilities, enabling a coordinated experience across in-person, virtual, and automated care. By December 31, 2023, Amwell had powered the digital care programs of more than 50 health plans, representing over 100 million covered lives, as well as approximately 115 of the nation’s largest health systems. Since its inception, the company has facilitated approximately 31.7 million virtual care visits for its clients, including 4.5 million in the first nine months of 2024.
In 2016, Amwell made a strategic move by increasing its investment in National Telehealth Network LLC (NTN), raising its ownership percentage above 50%. This allowed the company to obtain control over NTN and include the results of NTN’s operations in its consolidated financial statements from January 1, 2016 onward. However, as Amwell owns less than 100% of NTN, it recognizes net loss attributable to non-controlling interest in its consolidated statements of operations and comprehensive loss.
Today, Amwell’s Converge platform serves as the foundation for its enterprise-level offerings. The platform is designed to enable healthcare organizations, including payers and providers, to seamlessly blend in-person, virtual, and automated care modalities under their own branded experiences. By integrating a wide range of clinical programs and services, Amwell empowers its clients to offer personalized, coordinated care that spans the entire patient journey.
The Amwell Converge platform is the company’s latest enterprise platform software, designed to digitally enable a unified, scalable healthcare experience across all care settings. It offers state-of-the-art data architecture, video capabilities, flexibility and scalability, as well as a user experience focused on the needs of patients, members and providers.
Financial Snapshot
Amwell’s financial performance has reflected the company’s strategic transformation and investments in its platform. In the latest fiscal year (2023), the company reported annual revenue of $259.05 million, a decrease of 6.5% compared to the prior year. This decline was primarily driven by a 12.5% drop in subscription revenue, which accounted for the majority of the company’s top line.
The company’s net loss for the year widened to $675.164 million, compared to a net loss of $272.07 million in the previous year. This significant increase was largely attributable to a $436.48 million goodwill impairment charge recognized in 2023. Operating cash flow (OCF) was -$148.343 million, and free cash flow (FCF) was -$163.591 million.
Liquidity
Despite the financial challenges, Amwell has maintained a strong balance sheet, with $244.65 million in cash and cash equivalents as of September 30, 2024. The company has no outstanding debt, providing it with financial flexibility to navigate the evolving market landscape. Amwell has access to an undrawn credit facility, although details on the size or terms were not provided.
The company’s debt-to-equity ratio stands at 0.0075737184928756, indicating a very low level of debt relative to equity. Amwell’s current ratio is 2.92, and its quick ratio is 2.88, both suggesting a strong ability to meet short-term obligations.
Quarterly Performance
In the most recent quarter (Q3 2024), Amwell reported total revenue of $61.046 million, a slight decline of 1% compared to the same period a year ago. Subscription revenue declined 5% to $26.23 million, while visit-related revenue from the company’s Amwell Medical Group (AMG) increased slightly to $27.47 million. Other revenue, which includes professional services and device sales, grew by 7.3% to $7.34 million.
The company’s net loss for the quarter was $43.464 million, with operating cash flow of -$32.354 million and free cash flow of -$37.087 million. The adjusted EBITDA loss for the quarter improved to $31 million, compared to a loss of $39 million in the prior-year period. This progress reflects Amwell’s ongoing efforts to align its cost structure with its strategic priorities and market conditions.
Amwell’s visit volumes remained under pressure, with approximately 1.4 million visits in the quarter, a 4.6% decrease from the same period last year. The company attributed this decline to both market-wide and client-specific execution challenges.
Product Segments
Amwell’s business can be divided into three key product segments:
Visits Revenue: Amwell generates fee-for-service revenue from virtual care visits delivered through its platform by its affiliated provider network, Amwell Medical Group (AMG). For Q3 2024, visits revenue was $27.47 million, representing a slight increase of 2.8% year-over-year. While the company saw a decrease in specialty visits, this was offset by an increase in revenue from special program visits.
Other Revenue: This segment includes revenue from professional services, such as implementation and integration support, as well as revenue from the sale of Amwell Carepoint devices and software. For Q3 2024, other revenue was $7.34 million, an increase of 7.3% compared to the prior year period, primarily driven by higher marketing revenue from one of Amwell’s strategic customers.
Guidance and Outlook
For the full year 2024, Amwell has revised its revenue guidance to a range of $247 million to $252 million, down from the previous range of $255 million to $265 million. This adjustment reflects the softer-than-expected visit volumes experienced in the third quarter, which are expected to persist through the fourth quarter.
However, the company has raised its adjusted EBITDA guidance, now expecting a loss of $142 million to $137 million, compared to the prior range of $150 million to $145 million. This improvement in the EBITDA outlook demonstrates Amwell’s progress in aligning its cost structure with its strategic priorities.
For AMG visits, the revised guidance is between 1.4 million and 1.5 million visits, compared to the previous range of 1.6 and 1.7 million visits. Amwell expects full year 2024 subscription revenue to be roughly equivalent to what they generated in 2023.
Looking ahead, Amwell remains focused on delivering high-quality, profitable growth in 2025 and beyond. The company is positioning its sales organization and go-to-market strategy to drive increased subscription revenue and higher-margin offerings, capitalizing on the growing demand for comprehensive digital care solutions among its healthcare clients. Amwell plans to provide 2025 guidance when they report their Q4 2024 results in February.
Risks and Challenges
Amwell’s success is subject to various risks and challenges, including the highly regulated nature of the healthcare industry, competition from other telehealth and digital health providers, and the ability to effectively integrate new technologies and services into its platform.
The company’s reliance on a limited number of large clients also presents a potential risk, as the loss or reduction of business from these customers could have a significant impact on Amwell’s financial performance.
Additionally, Amwell’s ability to maintain and grow its provider network, as well as its capacity to continuously innovate and adapt to evolving market trends, will be crucial to its long-term success.
Conclusion
Amwell is at the forefront of the digital care transformation, empowering healthcare organizations to deliver seamless, integrated care experiences across in-person, virtual, and automated modalities. While the company has faced headwinds in recent quarters, its strategic investments, cost optimization efforts, and focus on high-quality growth opportunities position Amwell for future success in the rapidly evolving healthcare technology landscape. The company’s strong balance sheet, with no outstanding debt and a healthy cash position, provides financial flexibility as it navigates the challenges and opportunities in the digital health sector.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.