Amwell Announces Results for First Quarter 2022

• Total Revenue was $64.2 million, compared to $57.6 million
• Gross margin was 42.8%, compared to 38.0%
• Total active providers were ~102,000 compared to 91,000 last quarter
• Total visits were ~1.8 million, compared to ~1.5 million last quarter
• Converge platform development and implementation on track

BOSTON--(BUSINESS WIRE)--Amwell® (NYSE: AMWL), a national telehealth leader, today announced financial results for the first quarter ended March 31, 2022.

“Q1 was a great start to an important year for Amwell. We made meaningful progress on the launch of Converge, our platform designed to enable trusted healthcare players to deliver the next generation of healthcare, “ said Dr. Ido Schoenberg, co-Chief Executive Officer of Amwell. ”Our teams were busy with customer migrations to Converge, they drove a record number of active providers on the platform and visits on Converge also grew.”

Dr. Schoenberg continued, “Also in Q1, we launched important new programs designed to keep treatment on track and improve outcomes with digital interactions in musculoskeletal and dermatological health. These programs address two of the most pressing cost containment goals facing healthcare today, and add to our list of more than 40 modules and programs that deliver hundreds of powerful use cases and enhance the value of our solution.”

First Quarter 2022 Financial Highlights:

All comparisons, unless otherwise noted, are to the three months ended March 31, 2021.

• Total Revenue was $64.2 million, compared to $57.6 million
  • Subscription revenue was $28.7 million, compared to $24.6 million
  • Visit revenue was $30.7 million, compared to $27.8 million
• Gross margin was 42.8%, compared to 38.0%
• Net loss was ($70.3) million, compared to ($39.8) million
• Adjusted EBITDA was ($47.1) million, compared to ($26.4) million
• Cash and short-term securities as of quarter-end were approximately $674.9 million
• Total active providers were ~102,000 compared to 91,000 last quarter
• Total visits were ~1.8 million, compared to ~1.5 million last quarter
• Converge platform development and implementation on track

Financial Outlook

The Company is reiterating the following outlook for 2022 and expects:

• Revenue between $275 and $285 million
• AMG visits between 1.4 and 1.5 million
• Adjusted EBITDA between ($200) million and ($190) million

Quarterly Conference Call Details

The company will host a conference call to review the results today, Monday, May 9, 2022 at 5:00 p.m. E.T. to discuss its financial results. The call can be accessed via a line 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 telehealth 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 telehealth 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 telehealth solutions for over 2,000 hospitals and 55 health plan partners with over 36,000 employers, covering over 80 million lives. 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, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	176,934		$	746,416
Investments		497,972			—
Accounts receivable ($2,212 and $2,054, from related parties and net of allowances of $1,609 and $1,809, respectively)		47,146			51,375
Inventories		8,025			7,530
Deferred contract acquisition costs		1,250			1,697
Prepaid expenses and other current assets		21,824			20,278
Total current assets		753,151			827,296
Restricted cash		795			795
Property and equipment, net		1,892			2,235
Goodwill		440,697			442,761
Intangible assets, net		145,347			152,409
Operating lease right-of-use asset		15,448			16,422
Deferred contract acquisition costs, net of current portion		2,577			2,028
Other assets		1,891			1,722
Investment in minority owned joint venture		—			168
Total assets	$	1,361,798		$	1,445,836
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	7,496		$	12,156
Accrued expenses and other current liabilities		35,917			58,711
Contingent consideration liabilities		13,870			—
Operating lease liability, current		2,663			1,918
Deferred revenue ($1,499 and $1,860 from related parties, respectively)		68,843			68,841
Total current liabilities		128,789			141,626
Other long-term liabilities		4,517			5,136
Contingent consideration liabilities, net of current portion		—			16,450
Operating lease liability, net of current portion		13,717			14,694
Deferred revenue, net of current portion ($19 and $22 from related parties, respectively)		5,987			7,055
Total liabilities		153,010			184,961
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, 2022 and as of December 31, 2021		—			—
Common stock, $0.01 par value; 1,000,000,000 Class A shares authorized, 232,746,662 and 229,402,453 shares issued and outstanding, respectively; 100,000,000 Class B shares authorized, 27,390,397 and 26,913,579 shares issued and outstanding, respectively; 200,000,000 Class C shares authorized 5,555,555 issued and outstanding as of March 31, 2022 and as of December 31, 2021		2,658			2,620
Additional paid-in capital		2,076,605			2,054,275
Accumulated other comprehensive income		(10,555	)		(6,353	)
Accumulated deficit		(881,321	)		(811,284	)
Total American Well Corporation stockholders’ equity		1,187,387			1,239,258
Non-controlling interest		21,401			21,617
Total stockholders’ equity		1,208,788			1,260,875
Total liabilities and stockholders’ equity	$	1,361,798		$	1,445,836

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,
	2022			2021
Revenue
($1,215 and $8,845 from related parties, respectively)	$	64,232		$	57,599
Costs and operating expenses:
Costs of revenue, excluding depreciation and amortization of intangible assets		36,765			35,705
Research and development		37,481			23,040
Sales and marketing		21,154			13,732
General and administrative		32,716			21,354
Depreciation and amortization expense		6,598			2,506
Total costs and operating expenses		134,714			96,337
Loss from operations		(70,482	)		(38,738	)
Interest income and other (expense) income, net		108			61
Loss before expense from income taxes and loss from equity method investment		(70,374	)		(38,677	)
Benefit (Expense) from income taxes		332			(309	)
Loss from equity method investment		(211	)		(819	)
Net loss		(70,253	)		(39,805	)
Net loss attributable to non-controlling interest		(216	)		(617	)
Net loss attributable to American Well Corporation	$	(70,037	)	$	(39,188	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.26	)	$	(0.16	)
Weighted-average common shares outstanding, basic and diluted		268,002,110			243,544,647
Net loss	$	(70,253	)	$	(39,805	)
Other comprehensive income (loss), net of tax:
Unrealized (loss) gain on available-for-sale investments		(1,251	)		34
Foreign currency translation		(2,951	)		(52	)
Comprehensive loss		(74,455	)		(39,823	)
Less: Comprehensive loss attributable to non-controlling interest		(216	)		(617	)
Comprehensive loss attributable to American Well Corporation	$	(74,239	)	$	(39,206	)

AMERICAN WELL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except share and per share amounts) (unaudited)
	Three Months Ended March 31,
	2022			2021
Cash flows from operating activities:
Net loss	$	(70,253	)	$	(39,805	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		6,598			2,506
Provisions for credit losses		(200	)		260
Amortization of deferred contract acquisition costs		391			335
Amortization of deferred contract fulfillment costs		133			173
Noncash compensation costs incurred by selling shareholders		2,025			—
Stock-based compensation expense		12,075			8,642
Loss on equity method investment		211			819
Deferred income taxes		(443	)		—
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		4,290			7,357
Inventories		(495	)		(238	)
Deferred contract acquisition costs		(501	)		(203	)
Prepaid expenses and other current assets		(1,838	)		(167	)
Other assets		(169	)		39
Accounts payable		(4,601	)		1,023
Accrued expenses and other current liabilities		(8,446	)		(17,666	)
Other long-term liabilities		(16	)		(19	)
Deferred revenue		(952	)		(4,195	)
Net cash used in operating activities		(62,191	)		(41,139	)
Cash flows from investing activities:
Purchases of property and equipment		(68	)		(148	)
Investment in less than majority owned joint venture		—			(2,548	)
Purchases of investments		(499,223	)		—
Net cash used in investing activities		(499,291	)		(2,696	)
Cash flows from financing activities:
Proceeds from exercise of common stock options		2,536			9,297
Proceeds from employee stock purchase plan		1,501			—
Payments for the purchase of treasury stock		—			(9,383	)
Payment of deferred offering costs		—			(1,613	)
Payment of contingent consideration		(11,790	)		—
Net cash provided by financing activities		(7,753	)		(1,699	)
Effect of exchange rates changes on cash, cash equivalents, and restricted cash		(247	)		—
Net decrease in cash, cash equivalents, and restricted cash		(569,482	)		(45,534	)
Cash, cash equivalents, and restricted cash at beginning of period		747,211			942,711
Cash, cash equivalents, and restricted cash at end of period	$	177,729		$	897,177
Cash, cash equivalents, and restricted cash at end of period:
Cash and cash equivalents		176,934			896,382
Restricted cash		795			795
Total cash, cash equivalents, and restricted cash at end of period	$	177,729		$	897,177
Supplemental disclosure of cash flow information:
Cash (refunded) paid for income taxes	$	(454	)	$	741
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment included in accrued expenses and accounts payable	$	—		$	23
Issuance of common stock in settlement of earnout	$	4,298		$	—
Repurchase of common stock	$	—		$	388
Receivable related to exercise of common stock options	$	4		$	833

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) stock-based compensation expense, (v) public offering expenses, (vi) litigation expenses related to the defense of our patents in the patent infringement claim filed by Teladoc and (vii) 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 public offering expenses, including 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.

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).

The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31,
(in thousands)	2022			2021
Net loss	$	(70,253	)	$	(39,805	)
Add:
Depreciation and amortization		6,598			2,506
Interest income and other (expense) income, net		(108	)		(61	)
Benefit (Expense) from income taxes		(332	)		309
Stock-based compensation		12,085			8,642
Public offering expenses^(1)		—			1,223
Noncash expenses and contingent consideration adjustments^(2)		3,737			—
Litigation expense		1,138			739
Adjusted EBITDA	$	(47,135	)	$	(26,447	)

(1)	Public offering expenses include non-recurring expenses incurred in relation to our secondary offering for the three months ended March 31, 2021.
(2)	Noncash expenses and contingent consideration adjustments include, noncash compensation costs incurred by selling shareholders and adjustments made to the contingent consideration.