American Well Corporation Class A

My name is David, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the MLQ2 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question during this time, simply press the star key followed by the number one on your touchtone keypad. If you'd like to withdraw your question, press star one once again. We ask that you please limit yourself to one question. I would now like to hand the call over to Sue Dooley, Head of Investor Relations at Amwell. You may begin.

Hello, everyone. Welcome to Amwell's conference call to discuss our second quarter of 2023. This is Sue Dooley of Amwell Investor Relations. Joining me today are Amwell's Chairman and CEO, Dr. Ido Schonberg, and Bob Shepardson, our CFO. Earlier today, we distributed a press release detailing our announcements. This release is posted on our website at investors.aml.com and is also available from normal news sources. This conference call is being webcast live on the IR page of our website where a replay will be archived. Before we begin our prepared remarks, I'd like to take this opportunity to remind you that during the course of this call, we'll make forward-looking statements regarding projected operating results and anticipated market opportunities. This forward-looking information is subject to the risks and uncertainties described in our failings with the SEC and actual results or events may differ materially. Except as required by law, we undertake no obligation to update or revise these statements. On this call, we'll refer to both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. With that, I would like to turn the call over to Ido.

Thank you, Sue, and hello, everyone. The second quarter of 2023 was another solid quarter for our company. With most of Converge development behind us, we made progress as we continue migrating health systems and payer migrations are underway. I'm also pleased to announce we added to our list of strategic clients on Converge, further validating our approach to the market. We are also putting important pieces in place as we work to reaccelerate our bookings momentum. I would like to go into some more details on the highlights of Q2 before discussing what we are seeing in the markets. Then, Bob will cover our financial results. During Q2, we maintained a steady pace of client migrations. Visits on Converge rose to 43% of total visits in Q2, up from 36% last quarter. We also successfully executed on the migration of Intermountain Health. a major driver of this metric during Q2. A few other examples of these successful migrations and implementations include Northern Arizona Health and Cahuera Health in California. I'm proud of our teams who continue to drive successful migrations, and I'm pleased to report that Converge continues to deliver superb levels of availability and value for our clients. I'm also very happy to announce that the highlight of Q2 was the successful launch of a new and very large strategic payer client on Converge. We are proud to be the engine powering their approach to hybrid care. This payer aspired to deliver best-in-class technical success rates for their provider visits. Upon go-live, the client scaled rapidly and their technical success metrics soared. This is a specially valuable example for us because this client demonstrates the power and value of a connective infrastructure platform independent of the traditional urgent care products purchased by payers. In fact, Converge has already delivered efficiencies by propelling a meaningful reduction in the load on the client's own support call center. In addition, meaningful savings are anticipated with our connected platform across the organization, which allows for more accurate and efficient cost share algorithms, better member experience, and back-end process for the strategic clients. We are honored this innovative and leading pair has chosen us as their partner as they adopt a broad spectrum of our capabilities and look to solve important operational priorities in the evolution to true hybrid care delivery and set new standards for the industry. Continuing with GoLives, we had an exciting expansion deployment of our solution aimed at alleviating the nursing shortage at St. Bernard, Virtual nursing is an emerging capability enabled by our solution, which represents a meaningful opportunity for us. With virtual nursing, care teams leverage our TV kits, devices, and our software to monitor multiple rooms, efficiently handle alerts, escalate for fall prevention, and improve the overall patient and care team experience. San Bernard is currently live with virtual nursing rooms across the organization. with a plan to expand to additional hospital facilities and incorporate additional variety of capabilities, including virtual rounding, specialty services, and pharmacy consults. Now I'd like to speak for a moment about our bookings-related activity as we pursue the hybrid care enablement opportunity in front of us. Q2 was a very active quarter for us as we continue to ramp our enterprise solution selling methodology. Dakota was busy with sales engagement across the payer and provider universe, while we also worked to expand our footprint within our existing client base. Our sales team is sowing the seeds to reap the benefits of our new platform. Here are a few examples of our success this quarter. We had a collaborative and creative win with a new client, Wood County Hospital in Ohio. Wood County will post QR codes across their facility and across nearby Bowling Green University campus. These will seamlessly connect staff, patients, and students to automated programs and care teams in times of need for behavioral health services. Demonstrating the potential that exists within our installed base of clients with a sizable expansion win of our behavioral health services, extending our partnership with one of the largest hospital systems in the Southwest. This hospital system manages 16 hospitals and multiple healthcare facilities throughout the state of Oklahoma, setting a great example for others in the region. Finally, we also achieve traction in our efforts to grow our customer footprint in automated virtual care programs. Penn State and Carilion Health are electing to extend the benefit of our automated care programs across their organization. In the past, we've spoken about the powerful benefits of our ED discharge program and our lifesaving pregnancy chats. It's exciting to see these programs apply to a growing number of use cases. For example, in Q2, Penn State expanded to include six more instances of these valuable programs. I'm pleased with how our relationships with these truly innovative organizations are growing beyond trusted telehealth provider to key strategic hybrid care enablement partner. Before discussing the market for our solution, I want to share a couple of successes from our international efforts. Our track record for delivering measurable results is powering partnerships that extend our reach. We leverage our track record across the NHS in the UK to Ireland's HSC, the National Health Service of Ireland. The HSC will roll out access to our digital behavioral health programs nationwide. We also established a new partnership with Discovery Health in South Africa, and we had an important renewal in Australia with Honeysuckle Health. The demonstrated success of our digital behavioral health programs are a big component of these wins. While our sales efforts are focused in the U.S., we are planting the seeds for international expansion with flagship partners, starting in English-speaking countries and leveraging our established presence in Europe and in Israel. We think these wins extend our total addressable market and further validate the large opportunity we are addressing. Now I'd like to take a moment to comment on the environment and our focus on driving growth. Out in the field, my sales conversation and interactions with healthcare leaders continue to underscore their priorities. The strain on budgets in healthcare is real. Improving margins, solving staffing shortages, establishing new sources of revenue, and improving patient experience and outcomes consistently rise to the top of their lists. These priorities require healthcare leaders to rigorously prioritize spending. Increasingly, a key to that involves leveraging technology by evolving to a digital-first approach to hybrid care. In this environment, demonstrated outcomes are essential, and this provides a long-term tailwind for us. These conversations about Converge are leading to more involved, more strategic investigations of how Converge can enhance patient and provider experience and improve operational efficiency. We are finding this new elevated dialogue can also take additional time in the sales process and in some instances influence the timing of bookings commitments. Because of this, our booking performance in H1 was somewhat muted versus our expectations and will impact our full-year results. While these conversations can, in some cases, extend the sales process, they are at the core of our platform approach, and we view them as positive for our business over the long run. As we quickly gain experience selling Converge, and proof points and use cases accumulate, we expect our sales cycles can shorten and become more streamlined. The shift to Converge platform requires changes to a selling approach from a point solution focus sale to an ROI based solution driven methodology, which we believe will result in long term partnerships and high customer value and retention. As we enter the second half, our go to market teams are developing experience rapidly in a very focus on mastering this transformation. The transformation to ROI-based enterprise selling involves upskilling, training, and rapid ramp of marketing programs to position our solution and grow our pipeline. These efforts are well underway. We are also accelerating selling initiatives for our high ROI automated programs and virtual nursing. These solutions are in high demand and help our clients efficiently scale in a labor-constrained environment. In this regard, I'm pleased to say that a highlight of Q2 was the addition of the new leader of our growth organization, Kathy Weiler. We are excited to have Kathy's experience with powerful organizational transformation as we align our team around an ROI-based selling methodology. Kathy brings with her important capabilities and insights from years at United Health Group, Optum, Blue Cross Bushido Massachusetts, and Fidelity. To conclude this discussion of our go-to-market, we are making the necessary moves to ensure our place at the table, transforming our selling approach in order to establish our solution as a must-have in any environment. We are winning the most strategic players in healthcare. We remain steady in our confidence in the business over the long term, bolstered by our strategic customers, successful migrations, and case examples. Meanwhile, the industry is taking notice of our solution, and I want to share a few examples. Demonstrating Amul's robust offering in the digital behavioral health space, in May, Amul ranked highest In Avia's Marketplace's Top Digital Behavioral Health Companies report, the report speaks to how our automated programs help health systems alleviate strains on teams. It describes our ability to empower cost-effective, proactive, accessible care to underserved populations and hesitant patients. It also praises Amol Psychiatric Care's comprehensive and evidence-based digital mental health content. In June, our automated programs were recognized. The Journal of Diabetes Science and Technology published an article on the efficacy of diabetes education chatbot pilot. Authored by a client, MedStar Health, the article highlights how our program drove an increase in self-care confidence for patients and a 13% reduction of A1C, higher than the control group. Continuing with success stories, our popular webinar series, Doing Well, featured a compelling example from El Camino Health. This innovative health system chose Amel for its on-demand virtual care platform in 2019. They launched automated programs shortly after that, and they were our first client migrated to Converge. El Camino has big plans to be at the forefront of digital care, and they are a great example of a land and expense story for us. In a highlight of his webinar, El Camino reported that 92% of patients said respiratory automated chats made them feel more confident managing their health. Before wrapping up, I want to comment briefly on the current dialogue around artificial intelligence and its implications in healthcare and for Armwell. We believe this conversation is lifting awareness and acceptance for hybrid care overall and will be a tailwind for our growth. AI-related technologies are advancing quickly. Converge is built to allow for integration of AI with trusted providers, both in person and virtual. We enable the future-ready engine to connect and empower healthcare organizations and innovators as healthcare adapts to an artificial intelligence world. We believe Amwell is uniquely positioned to accelerate AI adoption and value creation. This is because both native and third-party applications of AI can be embedded in and associated with Converge thus enabling trusted, existing healthcare connections. An example of this is a patient who has regular interactions with their doctor via a platform and will begin to benefit from AI-powered follow-ups on behalf of their doctor between live visits. At Amwell, we believe AI and hybrid care will amplify our hybrid care platform, which is designed to extend and augment rather than replace care teams and drive improvements in patient and staff experience, as well as operational efficiency and outcomes. However, as we evolve to hybrid care and integrate with automated programs, it is crucial that we ensure patient and provider confidence in these tools. I think that tonight we've given some examples that demonstrate we are doing that today. In closing, hybrid care is rapidly becoming the main highway forward, but the journey is complex. Clients looking to address technological fragmentation and move beyond a build-it-yourself approach are seeing the light. We are adapting our selling methodology rapidly. With our unique combination of technology, services, and client experience, we believe Amwell is ideally suited to be the one-stop shop where our clients can access the benefits of the digital care transformation. With that as context, I would like to turn the call over to Bob to review our Q2 financials, some key metrics, and our guidance. Bob?