American Well Corp

Previous wording

As we have completed the reverse stock split, we expect that we will cure the previously disclosed deficiency with respect to the continued listing minimum price criteria set forth in Section 802.01C of the NYSE Listed Company Manual as of August 1, 2024

Current wording

On August 1, 2024, the NYSE indicated that the Company's stock price was above the NYSE's minimum requirement of $1 based on a 30-trading day average. Accordingly, the Company cured the previously disclosed deficiency with respect to the continued listing minimum price criteria set forth in Section 802.01C of the NYSE Listed Company Manual as of August 1, 2024.

Previous wording

As of December 31, 2023, we powered the digital care programs of more than 50 health plans, which collectively represent more than 100 million covered lives, as well as approximately 115 of the nation’s largest health systems. Since inception, we have powered approximately 30.4 million virtual care visits for our clients, including approximately 3.2 million in the six months ended June 30, 2024.

Current wording

As of December 31, 2023, we powered the digital care programs of more than 50 health plans, which collectively represent more than 100 million covered lives, as well as approximately 115 of the nation’s largest health systems. Since inception, we have powered approximately 31.7 million virtual care visits for our clients, including approximately 4.5 million in the nine months ended September 30, 2024.

Previous wording

The development of the Amwell Converge platform represented a re-platforming by the Company to provide our customer base with an improved and more robust solution. This re-platforming has been an ongoing effort that resulted in increased research and development costs during the peak development period in 2022 and the first half of 2023, and we expect to see a return to normal levels of research and development spend in the coming quarters. The first quarter of 2024 includes expenses that represent an investment in our government sector customers and to development of the government product that we believe will drive revenue growth in the coming years. We expect to continue these investments during the majority of 2024 before experiencing another reduction in our ongoing research and development expense run rate.

Current wording

The development of the Amwell Converge platform represented a re-platforming by the Company to provide our customer base with an improved and more robust solution. This re-platforming has been an ongoing effort that resulted in increased research and development costs during the peak development period in 2022 and the first half of 2023, and we expect to see a return to normal levels of research and development spend in the coming quarters. Research and development in 2024 includes expenses that represent an investment in our government sector customers and to development of the government product that we believe will drive revenue growth in the coming years. We believe we have completed the majority of the investment needed, and will see a reduction in our ongoing research and development expense run rate in the fourth quarter of 2024.

Previous wording

Re-platforming can impact timing of revenue as we manage on-boarding and customer churn. During the three months ended June 30, 2024, 69% of our visits were provided on the Amwell Converge platform. As of June 30, 2024, we have a thumbs-up rating by patients and providers of over 90%. A major strategic focus for us in 2024 is the delivery of solutions to our government clients as well as our existing commercial clients. In addition, we are focused on the transformational steps necessary to re-accelerate growth during this period of transition. We also continue to focus on the migration of our remaining health plan and health system clients onto the Amwell Converge platform.

Current wording

Re-platforming can impact timing of revenue as we manage on-boarding and customer churn. During the three months ended September 30, 2024, approximately 70% of our visits were provided on the Amwell Converge platform. As of September 30, 2024, we have a thumbs-up rating by patients and providers of over 90%. A major strategic focus for us in 2024 is the delivery of solutions to our government clients as well as our existing commercial clients. In addition, we are focused on the transformational steps necessary to re-accelerate growth during this period of transition. We also continue to focus on the migration of our remaining health plan and health system clients onto the Amwell Converge platform.

Previous wording

Total subscription fees received were $27.5 million and $28.0 million for the three months ended June 30, 2024 and 2023, respectively, and $52.4 million and $56.7 million for the six months ended June 30, 2024 and 2023.

Current wording

Total subscription fees received were $26.2 million and $28.4 million for the three months ended September 30, 2024 and 2023, respectively, and $78.6 million and $85.1 million for the nine months ended September 30, 2024 and 2023.

Previous wording

Fees received from AMG-related visits were $28.7 million and $28.1 million for the three months ended June 30, 2024 and 2023, respectively, and $59.8 million and $60.6 million for the six months ended June 30, 2024 and 2023.

Current wording

Fees received from AMG-related visits were $27.5 million and $26.7 million for the three months ended September 30, 2024 and 2023, respectively, and $87.3 million and $87.4 million for the nine months ended September 30, 2024 and 2023.

Previous wording

Fees received from the provision of services and Carepoint devices were $6.6 million and $6.3 million for the three months ended June 30, 2024 and 2023, respectively, and $10.1 million and $9.1 million for the six months ended June 30, 2024 and 2023.

Current wording

Fees received from the provision of services and Carepoint devices were $7.3 million and $6.8 million for the three months ended September 30, 2024 and 2023, respectively, and $17.5 million and $15.9 million for the nine months ended September 30, 2024 and 2023.

Previous wording

We continue to experience strong adoption and usage of our enterprise software and products. In the six months ended June 30, 2024, our clients completed a total of 3.2 million visits using our enterprise software, while in the six months ended June 30, 2023, 3.2 million visits were completed. AMG providers accounted for 24% and 24% of total visits performed using our enterprise software during the six months ended June 30, 2024 and 2023, respectively.

Current wording

We continue to experience strong adoption and usage of our enterprise software and products. In the nine months ended September 30, 2024, our clients completed a total of 4.5 million visits using our enterprise software, while in the nine months ended September 30, 2023, 4.6 million visits were completed. AMG providers accounted for 24% and 24% of total visits performed using our enterprise software during the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Severance and strategic transformation costs include expenses associated with the termination of employees and expenses that focus on transforming the strategy of the Company’s sales and growth organization as well as our overall cost structure during the three and six months ended June 30, 2024 and 2023.

Current wording

Severance and strategic transformation costs include expenses associated with the termination of employees and expenses that focus on transforming the strategy of the Company’s sales and growth organization as well as our overall cost structure during the three and nine months ended September 30, 2024 and 2023.

Previous wording

The following table sets forth our summarized condensed consolidated statement of operations data for the three and six months ended June 30, 2024 and 2023 and the dollar and percentage change between the respective periods:

Current wording

The following table sets forth our summarized condensed consolidated statement of operations data for the three and nine months ended September 30, 2024 and 2023 and the dollar and percentage change between the respective periods:

Previous wording

For the three months ended June 30, 2024, visit revenue increased $0.7 million due to an increase in special program visits. Other revenue increased by $0.3 million primarily related to an increase in marketing revenue with one of our strategic customers of $2.3 million partially offset by a decline in professional service revenue of $1.8 million due to timing of services for a large customer in the prior year. The increase was partially offset by a decrease in subscription revenue of $0.5 million due to customer churn during re-platforming, partially offset by growth in our existing strategic clients.

Current wording

For the nine months ended September 30, 2024, subscription revenue declined $6.5 million due to customer churn during re-platforming, partially offset by growth in our existing strategic clients. Visit revenue remained consistent as the decline in specialty visits was offset by an increase in special program visits. The decrease was partially offset by an increase in other revenue of $1.6 million primarily related to an increase in marketing revenue with one of our strategic customers.

Previous wording

For the three months ended June 30, 2024, the increase in cost of revenue was primarily driven by an increase in marketing services provided for customers of $3.1 million, partially offset by a decrease in consulting costs of $0.7 million and a decrease of $0.5 million related to hardware costs. The decrease in gross margin is a result of the shift in revenue mix to lower margin visit revenue from higher margin subscription revenue.

Current wording

For the three months ended September 30, 2024, the decrease in cost of revenue was primarily driven by a decrease in marketing services provided for customers of $2.1 million, and a decrease in employee and provider costs of $0.8 million. This decrease was partially offset by an increase in third party related costs of $0.8 million. The Company's cost savings measures continue to have a positive impact on gross margin.

Previous wording

For the six months ended June 30, 2024, the increase in cost of revenue was primarily driven by an increase in marketing services provided for customers of $2.9 million and an increase of $1.4 million related to third party costs, partially due to incentives being fully utilized in the prior year. The increases were partially offset by a decrease in hardware costs of $0.6 million. The decrease in gross margin is a result of the shift in revenue mix to lower margin visit revenue from higher margin subscription revenue.

Current wording

For the nine months ended September 30, 2024, the increase in cost of revenue was primarily driven by an increase of $2.1 million related to third party costs, partially due to incentives being fully utilized in the prior year. The increase was partially offset by a decrease in employee and provider costs of $0.6 million. The decrease in gross margin is a result of a temporary shift in revenue mix to lower margin marketing revenue from higher margin subscription revenue.

Previous wording

For the three months ended June 30, 2024, there was a decrease in employee-related costs of $2.6 million (due to headcount reduction and reduced stock compensation expense). There was also a decrease of $2.4 million in consulting spend as the peak development of the Amwell Converge platform is complete.

Current wording

For the three months ended September 30, 2024, there was a decrease in employee-related costs of $2.7 million (due to headcount reduction and reduced stock compensation expense). There was also a decrease of $5.0 million in consulting spend as the peak development of the Amwell Converge platform is complete.

Previous wording

For the six months ended June 30, 2024, there was a decrease in employee-related costs of $3.6 million (due to headcount reduction and reduced stock compensation expense). There was also a decrease of $0.9 million in consulting spend as the peak development of the Amwell Converge platform is complete.

Current wording

For the nine months ended September 30, 2024, there was a decrease in employee-related costs of $6.3 million (due to headcount reduction and reduced stock compensation expense). There was also a decrease of $5.9 million in consulting spend as the peak development of the Amwell Converge platform is complete.

Previous wording

For the three months ended June 30, 2024, there was a decrease in employee-related costs of $2.3 million, a decrease in marketing spend of $0.5 million, and a decrease in meals and travel of $0.4 million, due to headcount reduction and cost savings put into place.

Current wording

For the three months ended September 30, 2024, there was a decrease in employee-related costs of $2.6 million, a decrease in marketing spend of $0.4 million, a decrease in consulting spend of $0.2 million and a decrease in business related travel of $0.2 million, due to headcount reduction and cost savings measures put into place.

Previous wording

For the six months ended June 30, 2024, there was $3.6 million in non-recurring consulting costs related to organizational strategy initiatives. This increase was partially offset by a decrease in employee-related costs of $1.5 million, a decrease in other consulting spend of $0.9 million, a decrease of $0.7 million in research spend and a decrease in meals and travel of $0.6 million, due to headcount reduction and cost savings put into place.

Current wording

For the nine months ended September 30, 2024, the decrease in sales and marketing expense was driven by a decrease in employee-related costs of $4.1 million, a decrease in other consulting spend of $1.1 million, a decrease of $0.8 million in market research, a decrease in business related travel of $0.8 million and a decrease in marketing spend of $0.4 million, due to headcount reduction and cost savings measures put into place. These decreases were partially offset by $3.6 million in non-recurring consulting costs related to organizational strategy initiatives.

Previous wording

For the three months ended June 30, 2024, the decrease in general and administrative expense was driven by a decrease related to employee-related costs of $10.0 million. The employee related costs were driven primarily by the decrease in stock compensation expense as higher value historic awards had become fully expensed, as well as headcount reduction. In addition insurance costs decreased by $0.7 million. These decreases were partially offset by $3.0 million in non-recurring consulting costs related to organizational strategy initiatives

Current wording

For the three months ended September 30, 2024, the decrease in general and administrative expense was driven by a decrease in employee-related costs of $1.1 million. The employee related costs were driven primarily by the decrease in stock compensation expense as higher value historic awards had become fully expensed, as well as headcount reductions. In addition, consulting spend decreased $1.2 million, insurance costs decreased by $0.7 million, third-party software costs decreased by $0.3 million, business related travel decreased by $0.3 million and other taxes and bank fees decreased by $0.3 million, as a result of cost savings measures put into place.

Previous wording

For the six months ended June 30, 2024, the decrease in general and administrative expense was driven by a decrease related to employee-related costs of $13.8 million. The employee related costs were driven primarily by the decrease in stock compensation expense as higher value historic awards had become fully expensed, as well as headcount reduction. In addition, insurance costs decreased by $1.3 million. There were also decreases of $0.4 million in meals and travel and $0.4 million in conferences due to cost savings put into place. These decreases were partially offset by $5.0 million in non-recurring consulting costs related to organizational strategy initiatives.

Current wording

For the nine months ended September 30, 2024, the decrease in general and administrative expense was driven by a decrease in employee-related costs of $14.9 million. The employee related costs were driven primarily by the decrease in stock compensation expense as higher value historic awards had become fully expensed, as well as headcount reductions. In addition, insurance costs decreased by $2.0 million, consulting spend decreased $1.3 million and other taxes and bank fees decreased by $0.8 million. There were also decreases of $0.7 million in business related travel, $0.5 million in third-party software costs and $0.4 million in conference spend. The reduction in spend was due to cost savings measures put into place. These decreases were partially offset by $5.0 million in non-recurring consulting costs related to organizational strategy initiatives.

Previous wording

Depreciation expense remained consistent for the three months ended June 30, 2024. Amortization expense increased by $0.8 million for the three months ended June 30, 2024. The increase in amortization was related to the amortization of the internally developed software intangible assets.

Current wording

Depreciation expense remained consistent for the three months ended September 30, 2024. Amortization expense was also consistent for the three months ended September 30, 2024.

Previous wording

Depreciation expense declined by $0.3 million due to assets becoming fully depreciated for the six months ended June 30, 2024. Amortization expense increased by $1.5 million for the six months ended June 30, 2024. The increase in amortization was related to the amortization of the internally developed software intangible assets.

Current wording

Depreciation expense declined by $0.3 million due to assets becoming fully depreciated for the nine months ended September 30, 2024. Amortization expense increased by $1.8 million for the nine months ended September 30, 2024. The increase in amortization was related to the amortization of internally developed software intangible assets.

Previous wording

For the three and six months ended June 30, 2024 and 2023, interest income and other (expense) income, net consist entirely of interest income and gains from our cash equivalents and short-term investments.

Current wording

For the three and nine months ended September 30, 2024 and 2023, interest income and other (expense) income, net consist entirely of interest income and gains from our cash equivalents and short-term investments.

Previous wording

Income tax expense was $0.1 million and $1.4 million for the three and six months ended June 30, 2024, compared to income tax expense of $0.7 million and $2.2 million for the three and six months ended June 30, 2023.

Current wording

Income tax (benefit) expense was $(0.1) million and $1.2 million for the three and nine months ended September 30, 2024, compared to income tax expense of $1.1 million and $3.3 million for the three and nine months ended September 30, 2023.

Previous wording

During the three months ended June 30, 2024 and 2023, the Company recognized a loss of $0.8 million and $0.6 million, respectively, as its proportionate share of the joint venture results of operations. During the six months ended June 30, 2024 and 2023, the Company recognized a loss of $1.7 million and $1.3 million, respectively, as its proportionate share of the joint venture results of operations.

Current wording

During the three months ended September 30, 2024 and 2023, the Company recognized a loss of $0.7 million and $0.6 million, respectively, as its proportionate share of the joint venture results of operations. During the nine months ended September 30, 2024 and 2023, the Company recognized a loss of $2.4 million and $1.9 million, respectively, as its proportionate share of the joint venture results of operations.

Previous wording

Our principal sources of liquidity were cash and cash equivalents totaling $276.9 million and $372.0 million as of June 30, 2024 and December 31, 2023, respectively, which were held for a variety of growth initiatives and investments as well as working capital purposes. Our cash and cash equivalents are comprised of money market funds.

Current wording

Our principal sources of liquidity were cash and cash equivalents totaling $244.6 million and $372.0 million as of September 30, 2024 and December 31, 2023, respectively, which were held for a variety of growth initiatives and investments as well as working capital purposes. Our cash and cash equivalents are comprised of money market funds.

Previous wording

As shown in the accompanying condensed consolidated financial statements, the Company incurred a loss from operations of $127.4 million and a net loss of $124.0 million for the six months ended June 30, 2024 and had an accumulated deficit of $1,879.8 million as of June 30, 2024.

Current wording

As shown in the accompanying condensed consolidated financial statements, the Company incurred a loss from operations of $174.8 million and a net loss of $168.1 million for the nine months ended September 30, 2024 and had an accumulated deficit of $1,923.3 million as of September 30, 2024.

Previous wording

We believe that our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months from the issuance date of the financial statements. Our future capital requirements will depend on many factors including our growth rate, the scope of our relationship with the Defense Health Agency, contract renewal activity, number of consultations on our enterprise software, the timing and extent of spending to support product development efforts, our expansion of sales and marketing activities, the introduction of new and enhanced services offerings, and the continuing market acceptance of digital care services. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies and intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

Current wording

We believe that our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months from the issuance date of the financial statements. Our future capital requirements will depend on many factors including our growth rate, the scope of our relationship with the Leidos Partnership for Defense Health, contract renewal activity, number of consultations on our enterprise software, the timing and extent of spending to support product development efforts, our expansion of sales and marketing activities, the introduction of new and enhanced services offerings, and the continuing market acceptance of digital care services. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies and intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

Previous wording

Cash used in operating activities was $81.5 million for the six months ended June 30, 2024. The primary driver of this use of cash was our net loss of $124.0 million. The net loss was partially offset by non-cash expenses of $46.2 million (primarily stock-based compensation of $26.1 million and depreciation and amortization of $16.5 million). The net loss was reflective of the investments made back into the Company (from a technology and infrastructure perspective), partially offset by the overall growth of our business including expansion of business with existing clients.

Current wording

Cash used in operating activities was $113.9 million for the nine months ended September 30, 2024. The primary driver of this use of cash was our net loss of $168.1 million. The net loss was partially offset by non-cash expenses of $66.8 million (primarily stock-based compensation of $36.7 million and depreciation and amortization of $24.8 million). The net loss was reflective of the investments made back into the Company (from a technology and infrastructure perspective), partially offset by the expansion of business with existing clients.

Previous wording

Cash used in operating activities was $68.8 million for the six months ended June 30, 2023. The primary driver of this use of cash was our net loss of $492.0 million. The net loss was reflective of the investments made back into the Company (from a technology and infrastructure perspective), partially offset by the overall growth of our business including expansion of business with existing clients. The net loss was partially offset by non-cash expenses of $417.8 million (primarily goodwill impairment of $357.6 million, stock-based compensation of $42.7 million and depreciation and amortization of $15.0 million). .

Current wording

Cash used in operating activities was $106.8 million for the nine months ended September 30, 2023. The primary driver of this use of cash was our net loss of $629.1 million. The net loss was partially offset by non-cash expenses of $523.1 million (primarily goodwill impairment of $436.5 million, stock-based compensation of $59.6 million and depreciation and amortization of $23.2 million). The net loss, excluding impairment charge, was reflective of the investments made back into the Company (from a technology and infrastructure perspective), partially offset by the overall growth of our business including expansion of business with existing clients.

Previous wording

Cash used in investing activities was $9.8 million for the six months ended June 30, 2024. Cash used in investing activities consisted of $8.0 million in capitalized software development costs and $1.7 million investment in the less than majority owned joint venture.

Current wording

Cash used in investing activities was $14.5 million for the nine months ended September 30, 2024. Cash used in investing activities consisted of $12.7 million in capitalized software development costs and $1.7 million investment in the less than majority owned joint venture.

Previous wording

Cash used in investing activities was $308.9 million for the six months ended June 30, 2023. Cash used in investing activities consisted of $13.8 million in capitalized software development costs, $3.9 million investment in the less than majority owned joint venture and purchases of short-term investments of $390.0 million, partially offset by sales and maturities of investments of $98.9 million.

Current wording

Cash used in investing activities was $113.5 million for the nine months ended September 30, 2023. Cash used in investing activities consisted of $13.8 million in capitalized software development costs, $3.9 million investment in the less than majority owned joint venture and purchases of short-term investments of $390.0 million, partially offset by sales and maturities of investments of $294.3 million.

Previous wording

Cash provided by financing activities for the six months ended June 30, 2024, was $1.0 million. Cash provided by financing activities consisted of $1.0 million of proceeds from the employee stock purchase plan.

Current wording

Cash provided by financing activities for the nine months ended September 30, 2024, was $1.4 million. Cash provided by financing activities consisted of $1.4 million of proceeds from the employee stock purchase plan.

Previous wording

Cash provided by financing activities for the six months ended June 30, 2023, was $1.3 million. Cash provided by financing activities consisted of $1.8 million of proceeds from the exercise of employee stock options and employee stock purchase plan, offset by $0.6 in the repurchase of stock to cover tax withholding obligations upon vesting of restricted stock units.

Current wording

Cash provided by financing activities for the nine months ended September 30, 2023, was $2.1 million. Cash provided by financing activities consisted of $2.7 million of proceeds from the exercise of employee stock options and employee stock purchase plan, offset by $0.6 in the repurchase of stock to cover tax withholding obligations upon vesting of restricted stock units.