American Well Corp
For the period ended Dec 31, 2024. Filed Feb 12, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 12, 2025
AMWL$11.91-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-15.
0000950170-24-015995
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-12.
0000950170-25-019024
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 162 previous paragraphs and 155 current paragraphs.
113 unchanged; 24 reworded; 15 added; 25 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 8 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Recent Developments
Current report
On January 8, 2025, we, Aligned Telehealth, LLC ("Aligned"), one of our wholly owned subsidiaries, and Avel eCare, LLC (the “Buyer”) entered into an asset purchase agreement (the “Agreement”) relating to the sale to the Buyer of all property and assets owned, leased or licensed by the Seller that are primarily used or held for use in connection with our business of providing telepsychiatry services to hospitals and correctional programs (the “Business”), subject to certain specified exclusions such as cash.
Current report
In connection with such purchase and sale, the Buyer assumed specified contracts and the related accounts receivable and all accounts payable and accrued expenses of the Business. The purchase price is comprised of (i) an upfront cash payment of $20.7 million, which is equal to 1.1x the Business’ trailing twelve-month revenue, excluding on-site revenue attributable to certain of the Business’ contracts, subject to customary adjustments and (ii) an additional cash payment (the “Additional Payment”) equal to 0.4x the Buyer and its affiliates’ aggregate revenues arising from the provision of the Business to current customers and potential customers in the sales pipeline during the twelve-month period immediately following the closing, excluding revenues arising from the provision of on-site psychiatric services to certain of the Business’ contracts and other specified revenues, which Additional Payment is payable within ten days following the final determination of the Additional Payment amount.
Current report
The Company divested our APC business as it was determined the offering no longer fit our goals around profitability and growth. Streamlining our service offerings will enable us to focus our resources on the Converge platform, strategic customers, and our path to profitability.
Current report
Severance and strategic transformation costs
Current report
In the twelve months ended December 31, 2024, the Company recorded charges of $20.9 million, in connection with severance and strategic transformation costs. The Company has executed a series of individual actions designed to maintain or improve our operating results and profitability. The Company continues to evaluate potential actions and may incur additional strategic transformation costs in future periods.
Current report
Our strategic transformation actions include transformational consulting, headcount reductions, and other related transitional amounts to maintain our competitive footprint. Strategic transformation actions are generally funded within twelve months of initiation and are funded by cash flows from operating activities and existing cash balances. We plan to incur additional strategic transformation costs in order to align our recurring cost structure with our current revenue profile. The timing and amount of the incurrence of such future strategic transformation costs are dependent on market conditions, customer actions and other factors.
Current report
For further information, see Note 19, "Severance and strategic transformation costs," to the consolidated financial statements included in this Report.
Current report
We expect research and development expense to decrease over the next year and then to remain flat in future periods. Our research and development expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our research and development expenses based on customer demand and emerging market trends.
Current report
For the year ended December 31, 2024, the decrease in cost of revenue was primarily driven by a decrease in marketing services provided for customers of $3.2 million, and a decrease in employee and provider costs of $3.6 million, driven by headcount reduction and lower visit volume. Consulting spend also decreased by $2.1 million. The Company's cost savings measures continue to have a positive impact on gross margin.
Current report
For the year ended December 31, 2024, the decrease in research and development expense was primarily driven by a decrease of $12 million in consulting spend as the peak development of the Amwell Converge™ platform is complete. There was also a decrease in employee-related costs (including stock comp expense) of $7.6 million due to headcount reduction.
Current report
For the year ended December 31, 2024, the decrease in sales and marketing expense was driven by a decrease in employee-related costs of $8.6 million, a decrease in other consulting spend of $1.9 million, a decrease in business related travel of $1.1 million and a decrease in marketing spend of $1.0 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.
Current report
For the year ended December 31, 2024, the decrease in general and administrative expense was driven by a decrease in employee-related costs of $9.6 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 $2.3 million and consulting spend decreased $2.9 million. There were also decreases of $0.8 million in business related travel and $1.2 million in third-party software costs. 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 and $7.1 million in bad debt mainly driven by service interruptions in third-party providers.
Current report
For the year ended December 31, 2024, cash used in operating activities was $127.3 million. The primary driver of this use of cash was our net loss of $212.6 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 and the addition of new strategic agreements. Cash used in operations reflects an increase in accounts receivable of $25.0 million which was primarily driven by service delays in third party providers. The net loss was partially offset by non-cash expenses of $95.3 million (primarily stock-based compensation of $47.5 million and depreciation and amortization of $33.0 million).
Current report
Intangible Assets
Removed paragraphs (25)
Previous report
In the year ended December 31, 2022, we revised our methodology of how we count visits in our Amwell Psychiatric Care business which is part of our AMG visits. This change resulted in an adjustment to the number of visits reported as of December 31, 2021. The numbers included in the table above reflect the current methodology.
Previous report
Active Providers
Previous report
Historically, an important indicator of the value of our enterprise platform and software as a service to our clients was the number of non-AMG providers that are active on the enterprise platform. We defined “Active Providers” as providers that have delivered a visit on the enterprise platform at least once in the last 12 months. Active Providers was initially provided as an indicator that the activity on our platform in a post pandemic world was healthy and sustained.
Previous report
Currently with the majority of our volume on Converge, our clients now aim to improve outcomes less by adding providers, and instead by increasing the number of patients each provider can care for by using our platform capabilities, including our automated programs. We plan to sunset this metric in 2024 and not longer report on this as a key metric and factor affecting our performance.
Previous report
Total Active Providers:
Previous report
In the year ended December 31, 2022, we revised our methodology of calculating Active Providers as part of our efforts to account for unique providers who conduct visits on multiple platforms and products. This change resulted in an adjustment to the number of active providers reported as of December 31, 2021. The numbers included in the table above reflect the current methodology.
Previous report
AMG: providers from our affiliated Amwell Medical Group
Previous report
Client Providers: our Health Plan and Health System client’s own providers (non-AMG providers) that are active on the enterprise platform
Previous report
Active Providers: providers that have delivered a visit on the enterprise platform at least once in the last 12 months
Previous report
Public offering expenses include non-recurring expenses incurred in relation to our secondary offering for the year ended December 31, 2021.
Previous report
Our research and development expenses may also fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our research and development expenses. We accelerated our multiyear technology investment to accommodate the anticipated significant growth in market demand for increasingly broad and sophisticated digital care enablement infrastructure.
Previous report
For the year ended December 31, 2022, the increase in revenue from the prior period was substantially driven by an increase in subscription revenue. While our aggregated number of health systems clients has declined this has not resulted in a revenue decline as we have retained our more significant clients and these clients have expanded their use of our enterprise platform and software as a service. Subscription revenue increased by $12.7 million, or 12% driven by expanded use of our enterprise platform and software as a service by existing clients through increased number of members they provided access to the enterprise platform and software as a service, increased number of programs, increased modules and increased volume of care delivered on our enterprise platform and software as a service by our clients’ own providers. Visit revenue earned from AMG patient visits increased by $7.7 million. The increase was primarily due to increased visit volume in urgent care believed to be driven by the impact of seasonal viruses as well as the Omicron variants, as well as visit volume from new clients. Other revenue increased by $4.0 million due to increased professional service revenue for new clients.
Previous report
For the year ended December 31, 2022, the increase in cost of revenue was primarily due to an increase of $4.0 million in consulting costs and $3.0 million related to employee-related costs due to increased headcount. There was also an increase in provider costs of $4.1 million due to increased visits.
Previous report
For the year ended December 31, 2022, the increase in research and development expense was primarily driven by an increase of $14.6 million in consulting services primarily for the Converge platform (an additional $10.2 million was capitalized as software development costs). There was also a $12.2 million increase in employee-related costs (inclusive of stock compensation expense) due to increased headcount. There was also an increase in non-cash compensation of $2.8 million primarily related the acceleration of the bonus escrow award for the SilverCloud acquisition.
Previous report
For the year ended December 31, 2022, the increase in sales and marketing expense primarily consisted of $7.6 million in employee-related costs (inclusive of commissions and stock compensation expense) due to increased headcount. Consulting expense increased $2.3 million mainly related to marketing campaigns and services for system integration. There was also an increase of $1.8 million related to meals and travel and $1.4 million related to conferences and company meetings that did not occur in the prior year. There was also an increase in non-cash compensation of $1.8 million primarily related the acceleration of the bonus escrow award for the SilverCloud acquisition.
Previous report
For the year ended December 31, 2022, the increase in general and administrative expense was driven by an increase related to employee-related costs (inclusive of $23.2 million of stock compensation expense) of approximately $33.5 million, due to additional equity awards granted in 2022 and headcount increase. There was an increase of $2.8 million in system costs to enhance administrative processing. In addition, there was an increase in contingent consideration adjustments recorded of $14.7 million related to the Conversa and SilverCloud revenue earnouts and an increase in non-cash compensation of $3.8 million primarily related the acceleration of the bonus escrow award for the SilverCloud acquisition. There was also a decrease of $5.9 million in consulting costs as there were no acquisitions in the current year and two acquisitions in the prior year.
Previous report
Income tax expense was $0.1 million for the year ended December 31, 2022, compared to income tax benefit of $5.4 million for the year ended December 31, 2021. The decrease in the benefit is primarily due to the fact we released part of the valuation allowance in the prior year in the U.S. due to the Acquisitions the Company continues to be in a net loss position and have minimal tax expense.
Previous report
For the year ended December 31, 2021, cash used in operating activities was $141.5 million. The primary driver of this use of cash was our net loss of $176.8 million. The net loss for the year was reflective of the investments made back into the Company (from both a personnel and technology perspective), partially offset by the overall growth of our business including an increase in new clients and expansion of business with existing clients. The net loss was partially offset by non-cash expenses of $63.0 million (primarily stock-based compensation of $43.8 million and depreciation and amortization of $16.1 million).
Previous report
Cash used in investing activities was $59.6 million for the year ended December 31, 2021. Cash used in investing activities consisted of $156.5 million in acquisitions of businesses, a $2.5 million investment in the CCAW, JV LLC joint venture with Cleveland Clinic and $0.6 million in the purchases of property and equipment offset by $100.0 million in proceeds from maturities of investments.
Previous report
Business Combinations
Previous report
The Company accounts for business combinations using the acquisition method of accounting. Application of this method of accounting requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill. Transaction costs related to business combinations are expensed as incurred.
Previous report
Determining the fair value of assets acquired and liabilities assumed and the allocation of the purchase price requires management to use significant judgment and estimates, especially with respect to intangible assets. Critical estimates in valuing certain identifiable assets include, but are not limited to, the selection of valuation methodologies, estimates of future revenue and cash flows, expected long-term market growth, future expected operating expenses, costs of capital and appropriate discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, the Company may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, which could last up to one year after the transaction date, all adjustments are recorded in the consolidated statements of operations and comprehensive loss.
Previous report
Goodwill and Intangible Assets
Previous report
We recognize the excess of the purchase price over the fair value of identifiable net assets acquired as goodwill. Goodwill is not amortized but is tested for impairment annually on November 30 or more frequently if events or changes in circumstances indicate that the carrying amount of the goodwill may not be recoverable. These events include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our market capitalization, as indicated by the Company’s publicly quoted share price, below our net book value. Our goodwill impairment tests are performed at the enterprise level given our single reporting unit.
Previous report
When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that carrying value exceeds its fair value, we perform a quantitative goodwill impairment test. Under the quantitative goodwill impairment test, if our reporting unit’s carrying amount exceeds its fair value, we will record an impairment charge based on that difference. In performing the goodwill quantitative assessment we compared market capitalization adjusted for the control premium (amount paid by a new controlling shareholder for the benefits resulting from synergies and other potential benefits derived from controlling the acquired company) to carrying value of our single reporting unit. A charge is reported as impairment of goodwill in the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2023 the Company recorded a full impairment of goodwill as the fair value of our reporting unit did not exceed our carrying value.
Reworded paragraphs (24)
Previous wording
Amwell is a leading enterprise platform and software as a service company digitally enabling hybrid care. We empower health providers, payers, and innovators to achieve their digital ambitions, enabling a coordinated experience across in-person, virtual and automated care. We provide our clients with the core technology and services necessary to successfully develop and distribute digital care programs that meet their strategic, operational, financial and clinical objectives under their own brands. Our enterprise platform and software as a service solutions enable hybrid care delivery by offering our clients products to help weave digital care across all care settings. We bring technology and services that facilitate new models of care, strategic partnerships, consistent execution and better outcomes. 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 more than 27.2 million virtual care visits for our clients, including more than 6.3 million in the year ended December 31, 2023.
Current wording
Amwell is a leading enterprise platform and software as a service company digitally enabling hybrid care. We empower health providers, payers, and innovators to achieve their digital ambitions, enabling a coordinated experience across in-person, virtual and automated care. We provide our clients with the core technology and services necessary to successfully develop and distribute digital care programs that meet their strategic, operational, financial and clinical objectives under their own brands. We offer our clients products to help weave digital care across all care settings. We bring technology and services that facilitate new models of care, strategic partnerships, consistent execution and better outcomes. As of December 31, 2024, we powered the digital care programs of approximately 50 health plans, which collectively represent more than 80 million covered lives, as well as approximately 100 of the nation’s largest health systems. Since inception, we have powered more than 33.1 million virtual care visits for our clients, including more than 5.9 million in the year ended December 31, 2024.
Previous wording
Health System: A health system is an enterprise platform client whose primary business case is the delivery of care by its providers. A typical health system client has many hospitals within its system. The average number of health system clients is calculated by averaging the number of such clients under contract at the beginning and end of each fiscal year. The decline in number of health system client is due to consolidation in the market as well as churn experienced with re-platforming.
Current wording
Health System: A health system is an enterprise platform client whose primary business case is the delivery of care by its providers. A typical health system client has many hospitals within its system. The average number of health system clients is calculated by averaging the number of such clients under contract at the beginning and end of each fiscal year. The decline in number of health system clients is due to consolidation in the market as well as churn experienced with re-platforming.
Previous wording
Digital care utilization is a key driver of our business. A client’s overall utilization of its digital care platform provides an important measure of the value they derive. Digital care utilization drives our business in three important ways. First, to the extent a client succeeds with its digital care program and sees good usage, they are more likely to renew and potentially expand their contract with us. Second, our health systems agreements typically include a certain number of visits conducted by their own providers annually and provide that as certain volume thresholds are exceeded, its annual license fees will rise to reflect this growing value. Third, to the extent that clients utilize provider services from AMG, Amwell derives revenue from clinical fees. We expect that our future revenues will be driven by the growing adoption of digital care and our ability to maintain and grow market share within that market.
Current wording
Digital and hybrid care utilization is a key driver of our business. A client’s overall utilization of its digital care platform provides an important measure of the value they derive and drives our business in three important ways. First, to the extent a client succeeds with its digital care program and sees good usage, they are more likely to renew and potentially expand their contract with us. Second, our health systems agreements typically include a certain number of visits conducted by their own providers annually and provide that as certain volume thresholds are exceeded, its annual license fees will rise to reflect this growing value. Third, to the extent that clients utilize provider services from AMG, Amwell derives revenue from clinical fees. We expect that our future revenues will be driven by the growing adoption of digital care and our ability to maintain and grow market share within that market.
Previous wording
We continue to experience strong digital care adoption and usage of our enterprise platform and software as a service. In the year ended December 31, 2022, our clients completed a total of 6.5 million visits on our enterprise platform, while in the year ended December 31, 2023, 6.3 million visits were completed. The decrease in number of visits is due in part to the churn experienced with re-platforming as well as a decline in the number of scheduled visits. Scheduled visits were 4.1 million and 4.6 million during the years ended December 31, 2023 and 2022, respectively. AMG providers accounted for 25% and 25% of total visits performed on our enterprise platform during the years ended December 31, 2023 and 2022, respectively.
Current wording
We continue to experience strong adoption and usage of our enterprise platform and software as a service. In the year ended December 31, 2023, our clients completed a total of 6.3 million visits on our enterprise platform, while in the year ended December 31, 2024, 5.9 million visits were completed. AMG providers accounted for 25% and 25% of total visits performed on our enterprise platform during the years ended December 31, 2024 and 2023, respectively.
Previous wording
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, (vii) public offering expenses, (viii) acquisition-related expenses, capitalized software costs, (ix) capitalized software, (x) litigation expenses related to the defense of our patents in the patent infringement claim filed by Teladoc and (xi) other items affecting our results that we do not view as representative of our ongoing operations, including direct and incremental expenses associated with the COVID-19 pandemic. We had no such other items during the years ended December 31, 2023, 2022 and 2021.
Current wording
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 and strategic transformation costs, (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. We had no such other items during the years ended December 31, 2024, 2023 and 2022.
Previous wording
Severance costs associated with the termination of employees during the year ended December 31 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 year ended December 31, 2024 and 2023, as described below in “—Severance and strategic transformation costs.”
Previous wording
The Company has demonstrated the strength of our revenue as a direct result of the increasing acceptance of digital care, our penetration of the market, and the successful launch of new or expanded products that enable broadened applications for care delivered virtually. Revenue performance is reflective of the strong foundation that has been built, focused around health plans, health systems, our provider network.
Current wording
The Company has demonstrated the strength of our revenue as a direct result of the increasing acceptance of digital care, our penetration of the market, and the successful launch of new or expanded products that enable broadened applications for care delivered virtually. Revenue performance is reflective of the strong foundation that has been built, focused around health plans, health systems, and our provider network.
Previous wording
Research and development expenses include personnel and related expenses for software and hardware engineering, information technology infrastructure, security and compliance and product development (inclusive of stock-based compensation for our research and development employees). Research and development expenses also include the periodic outsourcing of similar functions to third party specialists. In recent years, we accelerated the expansion of our enterprise platform volume capacity and the development of additional functionality through new programs and modules. We have also expanded the use of offshore resources to provide more efficient rates which are designed to offset the increased research and development spend. While we have recognized an increase in the research and development expense throughout the prior years, the corresponding future revenue growth is expected to result in lower expenses as a percentage of revenue. This increased spend represents an investment in a more scalable and economically beneficial solution that will properly position the Company to benefit in the long term. We believe the increase in spend in the prior years was temporary and we have seen a gradual decline during 2023 as we return to normal levels of spend in future periods.
Current wording
Research and development expenses include personnel and related expenses for software and hardware engineering, information technology infrastructure, security and compliance and product development (inclusive of stock-based compensation for our research and development employees). Research and development expenses also include the periodic outsourcing of similar functions to third party specialists. In recent years, we accelerated the expansion of our enterprise platform volume capacity and the development of additional functionality through new programs and modules. We have made an effort to optimize our resourcing structure with a mix of nearshore and offshore employees and contractors, resulting in a more efficient cost structure. While we have recognized an increase in the research and development expense throughout the prior years, the corresponding future revenue growth is expected to result in lower expenses as a percentage of revenue. We believe increased spending in prior years was a temporary investment to accelerate development of a more scalable and economically beneficial solution that will properly position the Company to benefit in the long term and have seen marked decline during 2024 as we return to normal levels of spend in future periods.
Previous wording
We expect our sales and marketing expense to decrease as a percentage of our total revenue in future periods. Our sales and marketing expenses will fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our advertising and marketing expenses.
Current wording
We expect sales and marketing expense to decrease over the next year and then to remain flat in future periods. Our sales and marketing expenses will fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our advertising and marketing expenses.
Previous wording
We expect our general and administrative expenses to decrease as a percentage of our total revenue over the next several years. Our general and administrative expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our general and administrative expenses.
Current wording
We expect our general and administrative expenses to decrease over the next year and then remain relatively flat in future periods, based on the impact of cost savings measure put in place throughout 2024. Our general and administrative expenses may fluctuate as a percentage of our total revenue from period to period due to the timing of contracts with strategic customers and the timing and extent of our general and administrative expenses.
Previous wording
For the year ended December 31, 2023, subscription revenue declined $8.6 million due to customer churn during re-platforming, partially offset by growth in our existing strategic clients. While our aggregated number of health systems clients has declined during re-platforming, we have retained the majority of our historically significant clients and with the Converge platform have been able to strengthen and expand our strategic clients during the year. Visit revenue decreased $4.9 million due to a decline in visit volume and lower utilization in specialty care. Other revenue decreased by $4.7 million primarily related to a decrease in hardware and services revenue.
Current wording
For the year ended December 31, 2023, subscription revenue declined $8.6 million due to customer churn during re-platforming, partially offset by growth in our existing strategic clients. While our aggregated number of health systems clients declined during re-platforming, we have retained the majority of our historically significant clients and with the Amwell Converge™ platform have been able to strengthen and expand our strategic clients during the year. Visit revenue decreased $4.9 million due to a decline in visit volume and lower utilization in specialty care. Other revenue decreased by $4.7 million primarily related to a decrease in hardware and services revenue.
Previous wording
For the year ended December 31, 2023, the decrease in research and development expense was primarily driven by a decrease of $24.8 million in consulting services as spend related to the development of the Converge platform has declined (contributing to this decrease was $15.1 million capitalized as software development costs) as well as a decrease of $1.2 million in third party software costs. There was a decrease in $0.7 million in employee related costs and $0.6 million in recruiting and hew hire costs due to a reduction in headcount. Research and development expense also decreased as there was no non-cash compensation in the current year related to the SilverCloud acquisition, and there was a charge of $3.4 million in the prior year due to the settlement of the SilverCloud bonus escrow award in 2022.
Current wording
For the year ended December 31, 2023, the decrease in research and development expense was primarily driven by a decrease of $24.8 million in consulting services as spend related to the development of the Amwell Converge™ platform has declined (contributing to this decrease was $15.1 million capitalized as software development costs) as well as a decrease of $1.2 million in third party software costs. There was a decrease in $0.7 million in employee related costs and $0.6 million in recruiting and hew hire costs due to a reduction in headcount. Research and development expense also decreased as there was no non-cash compensation in the current year related to the SilverCloud acquisition, and there was a charge of $3.4 million in the prior year due to the settlement of the SilverCloud bonus escrow award in 2022.
Previous wording
Total research and development employee headcount decreased to 332 on December 31, 2023, as compared to 358 on December 31, 2022 and 347 on December 31, 2021.
Current wording
Total research and development employee headcount decreased to 289 on December 31, 2024, as compared to 332 on December 31, 2023 and 358 on December 31, 2022.
Previous wording
Total sales and marketing employee headcount increased to 304 on December 31, 2023, as compared to 291 on December 31, 2022 and 249 on December 31, 2021.
Current wording
Total sales and marketing employee headcount decreased to 180 on December 31, 2024, as compared to 304 on December 31, 2023 and 291 on December 31, 2022.
Previous wording
General and administrative expenses, excluding the increase in stock-based compensation, are expected to remain relatively flat in future periods as we have now recognized the impact of the regulatory and compliance costs associated with being a publicly traded company and scaled the Company to meet these complexities and requirements.
Current wording
General and administrative expenses, excluding the decrease in stock-based compensation, are expected to decrease in 2025 and then remain relatively flat in future periods as we have now recognized the impact of many strategic transformation costs.
Previous wording
Total general and administrative employee headcount decreased to 229 on December 31, 2023, as compared to 248 on December 31, 2022 and 221 on December 31, 2021.
Current wording
Total general and administrative employee headcount decreased to 189 on December 31, 2024, as compared to 229 on December 31, 2023 and 248 on December 31, 2022.
Previous wording
Depreciation expense remained consistent for the year ended December 31, 2022. Amortization expense increased by $10.7 million for the year ended December 31, 2022. The increase in amortization was related to a full year of amortization related to the intangible assets acquired in the Acquisitions.
Current wording
Depreciation expense declined $0.3 million from the year ended December 31, 2024 as assets from prior years have become fully depreciated. Amortization expense increased by $1.8 million for the year ended December 31, 2024. The increase in amortization was related to the amortization of the internally developed software intangible assets that had a full year of amortization.
Previous wording
During the year ended December 31, 2023, the goodwill was impaired by $436.5 million (or $1.54 per basic and diluted share) as a result of sustained decreases in the Company's publicly quoted share price and market capitalization.
Current wording
During the year ended December 31, 2023, the goodwill was fully impaired by $436.5 million as a result of sustained decreases in the Company's publicly quoted share price and market capitalization.
Previous wording
For the year ended December 31, 2022, interest income and other expenses consist primarily of interest income and gains from our cash equivalents and short-term investments, the decline in interest income is due to the decline in the investments held during the year.
Current wording
For the year ended December 31, 2024, interest income and other expenses consist primarily of interest income and gains from our cash equivalents. The decrease in interest income is due to a reduction in our cash equivalents, which were invested in money market securities yielding a lower rate of return for the majority of 2024.
Previous wording
During the years ended December 31, 2023 and 2022, the Company recognized a loss of $2.6 million and $2.3 million as its proportionate share of the joint venture results of operations, respectively.
Current wording
During the years ended December 31, 2024 and 2023, the Company recognized a loss of $3.1 million and $2.6 million as its proportionate share of the joint venture results of operations, respectively.
Previous wording
Our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $372.0 million as of December 31, 2023, which were held for a variety of growth initiatives and investments as well as working capital purposes. Our cash, cash equivalents and short-term investments are comprised of money market funds and marketable securities including U.S. Treasury bills.
Current wording
Our principal sources of liquidity were cash and cash equivalents totaling $228.3 million as of December 31, 2024, 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 consolidated financial statements, the Company incurred a loss from operations of $692.1 million and a net loss of $679.2 million for year ended December 31, 2023 and had an accumulated deficit of $1,757.8 million as of December 31, 2023.
Current wording
As shown in the accompanying consolidated financial statements, the Company incurred a loss from operations of $217.5 million and a net loss of $212.6 million for year ended December 31, 2024 and had an accumulated deficit of $1,965.9 million as of December 31, 2024.
Previous wording
Cash provided by financing activities for the year ended December 31, 2021, was $5.8 million. Cash provided by financing activities consisted of $20.8 million of proceeds from the exercise of employee stock options. These proceeds were offset by cash payments primarily for the purchase of treasury stock of $15.0 million.
Current wording
Cash provided by financing activities for the year ended December 31, 2024, was $1.4 million. Cash provided by financing activities consisted of $1.4 million of proceeds from the exercise of employee stock options and employee stock purchase plan.
Previous wording
When there is a triggering event the Company assesses the potential impact on its goodwill, definite-lived intangibles, and other long-lived assets. To test intangible assets for impairment the Company performs an undiscounted cash flow analysis to establish fair value. The significant estimates used in fair value methodology, which are based on Level 3 inputs, include the Company's expectations for future operations and projected cash flows, including revenue, gross margin and operating expenses. Reasonably possible changes in those assumptions could result in non-cash impairment charges in the future.
Current wording
When there is a triggering event the Company assesses the potential impact on its definite-lived intangibles and other long-lived assets. To test intangible assets for impairment the Company performs an undiscounted cash flow analysis to establish fair value. The significant estimates used in fair value methodology, which are based on Level 3 inputs, include the Company's expectations for future operations and projected cash flows, including revenue, gross margin and operating expenses. Reasonably possible changes in those assumptions could result in non-cash impairment charges in the future.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
For the year ended December 31, 2024, subscription revenue increased $3.2 million due to growth in our strategic clients. While our aggregated number of health systems clients declined during re-platforming and market consolidation, we have retained the majority of our historically significant clients and with the Amwell Converge™ platform have been able to strengthen and expand our strategic clients during the year. The increase was offset with a decrease in visit revenue of $3.0 million due to a decline in visit volume and lower utilization in specialty care, and a decrease in other revenue of $4.8 million primarily related to a decrease in marketing and services revenue due to timing of services provided to various strategic customers each year.
Current report — wording carried from elsewhere
Income tax expense was $2.8 million for the year ended December 31, 2024, compared to income tax expense of $3.9 million for the year ended December 31, 2023. The decrease in the expense is primarily due to an decrease in foreign tax expense.
Current report — wording carried from elsewhere
Cash used in investing activities was $18.7 million for the year ended December 31, 2024. Cash used in investing activities consisted of $15.1 million of capitalized software development costs and a $3.4 million investment in the less than majority owned joint venture.