American Well Corporation Class A

good morning good afternoon and good evening my name is aaron and i will be your conference operator for today at this time i would like to welcome everyone to the amwell q3 2023 earnings call all lines have been placed on mute to prevent any background noise after the speaker's remarks there will be a question and answer session if you would like to ask a question during this time simply press star followed by the number one on your telephone keypad if you would like to withdraw your question press the pound key We do ask that you please limit yourself to one question per time. Thank you. I would now like to hand the call over to Sue Dooley, Head of Investor Relations with Amwell. Sue, you may begin.

Hello, everyone, and welcome to Amwell's conference call to discuss our third quarter of 2023. This is Sue Dooley of Amwell Investor Relations. Joining me today are our Chairman and CEO, Dr. Ido Schoenberg, and Bob Shepardson, our CFO. Earlier today, we distributed a press release detailing our announcement. The release is posted on our website at investors.aml.com and is also available from normal news sources. This conference calls being webcast live on the investor relations 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 filings 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 forward-looking statements. On the call, we'll refer to both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided on our posted earnings release. With that, I would like to turn the call over to Ido.

Thank you, Sue, and hello, everyone. In Q3, our business moved forward in three important ways. We won a striking new opportunity supporting the United States federal government, specifically the Defense Health Agency's Digital First Initiative across the military health system. We are excited by this important validation of our new Converge platform and the expanded opportunity it awards us. We also accomplished our goal for client migrations and reached our metric of 50% of visits on Converge a quarter ahead of schedule. In addition, we made significant progress in transforming our growth organization to maximize the commercial impact of our solution. Finally, we demonstrated the value and benefits of our approach through compelling customer testimonials. I'd like to take some time to go into each of these highlights. The standout event of Q3 was the previously announced $180 million task order awarded to the Leidos Partnership for Defense Health, which includes Unwell. Together, we aim to modernize and provide digital health enablement to DHA providers and patients. Let me jump right into some details I can share. With the Leidos partnership, Amul was selected to power a multi-year transformation as part of DHA's Digital First initiative. This award followed a rigorous, data-driven evaluation process, and our CONVERT solution emerged as uniquely qualified. The award demonstrates our market leadership position as an enabling digital transformation partner. It also extends our TAM, expanding our reach into the government and public sectors. This is a major event in our company's history that increases our revenue visibility and fortifies our path to profitability. After the initial phase next year, The enterprise rollout outlined in the task order would place the US government among our largest customers with a very substantial weighting in reoccurring software revenue. Work has already begun. Roy, myself, and our entire team are so proud of this exceptional opportunity to serve this very special group of people. Bob will provide you with more of this in a moment. Continuing with highlights of Q3, we drove a steady pace of client migrations. Over 50% of our visits were completed on Converge in Q3, up from 43% last quarter. We achieved this milestone a quarter earlier than our plan, propelled in part by our strategic payer client that went live late in Q2, and continue to scale rapidly and drive healthy volumes in Q3. With over half of our volume now on Converge, the data is confirming that our new platform is a game changer. Migrated clients consistently scale rapidly and report high provider and patient satisfaction metrics. Continuing with the theme of solid execution, we are deep into our efforts toward the payer migrations that will start to go live early next year. Q3 was a very active quarter for us. Here are a few additional examples of our success. We also announced a partnership with Nestle Health Science. The partnership leverages our automated patient journeys with Nestle's expertise in nutrition. The first of several programs is for patients undergoing major surgery. On Converge, providers will be able to deliver Nestle content to better prepare patients for surgery, aiming to improve outcomes while minimizing length of hospital stays, lowering risk of surgical complications, and reducing costs. And in yet another notable booking, we had a strategic win with a new Medicare Advantage program in Georgia. This client is looking to add differentiation in the market and fuel their growth initiatives by building out their hybrid care offering to include behavioral health. Turning now to our growth transformation, we are taking swift action, and these efforts are well underway. Here are some of the initiatives we have in place to expand pipeline and drive deal velocity as well as overall efficiency. We completed the summer of learning, and we are hiring and upskilling with precision, assigning proven leaders to key growth teams, including strategic accounts, sales, and sales operations. We are putting in place the data and rigor that enables our team to focus our sales initiatives on the key segments where we see high subscription software content, high profitability, and right to win. We realigned our product solution leaders within our commercial organization to enable faster go-to-market for new products. Finally, we also streamlined and rationalized our commercial headcount, supplementing our ongoing corporate cost reduction initiatives. I'm proud of our teams. We believe these changes are already fueling the sales discussions that will provide the foundation for long-term partnerships high customer value, and retention. In that spirit, we were active at Becker's and Oracle Health conferences during Q3. We also held two of our own virtual forum meetings targeting the provider and payer markets. These are important demand generation events for sharing our vision and the benefits of our approach. Here are some of the customer testimonials we shared. With our hybrid care programs, AU Health's Candler County Hospital drove a 35% increase in net revenues and a 50% reduction in transfers, resulting in a positive operating margin in fiscal year 2022. Northwell Health continues to provide a shining example of focusing on engaging patients to improve outcomes. Northwell's expanding use of our automated programs now extend to 35 specialties, addressing many operational challenges with powerful results. For example, with our automated programs, Northwell reduced colonoscopy no-show rates by 48%, capturing 800 more procedures and $1 million in additional annual revenue. They reduced readmissions by 32 percent, closed gaps in care in 69 percent of the interactions, and identified high-risk pregnancies in 16 percent of routine automated monitoring interactions. And importantly, by leveraging automation, Northwell has aligned providers to focus more on patient care, boosting staff satisfaction and retention while increasing productivity. Finally, our virtual nursing discharge solution is delivering for clients. In the first months of deployment, University of Pittsburgh Medical Center successfully completed over 1,300 virtual discharges, saving about 40 12-hour nurse shifts while registering high patient satisfaction scores. We are rapidly documenting and sharing these client success stories through case studies, webinars, and events. We believe these proof points will inspire other clients and prospects to view our Converse solution as a must-have. I would like to close my remarks with a brief comment. Today, we have a front-row seat as we partner with the most strategic players in healthcare as they strive to own and optimize the patient and provider experience. After years of internal investing and struggling with fragmented IT assets, health organizations are increasingly turning to us. They recognize the value of a partner who can speed the path to the right hybrid care modalities to achieve their goals. And with our DHA win, we added yet another name to the strategic client set of choosing Amwell as their partner. As I think about our company, I believe we are at a turning point, leaving behind us many of the risks of replatforming and rapidly putting in place the strategies to pursue our market opportunity and realize profitable growth. We have shared many green shoots with you tonight. As we emerge from this time of transformation, it is clear from our vantage point the market is moving to us. With that as context, I would like to turn the call over to Bob to review some of the DHA specifics, our Q3 financials, and key metrics plus our guidance.