American Well Corporation Class A

Hello everyone and welcome to AMWEL's conference call to discuss their first fiscal quarter of 2026. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Joining us on the call today are Amwell's Chairman and CEO, Dr. Ido Shinberg, and Mark Hirshhorn, Amwell's CFO and Chief Operating Officer. Earlier today, a press release was distributed detailing their announcement. The earnings report is posted on the Amwell website at investors.amwell.com and is also available through the normal news sources. This conference call is being webcast live on the IR page of the website, where a replay will be archived. Before they begin prepared remarks, I'd like to take this opportunity to remind you that during the call, we will 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 the filings with the SEC. Actual results or events may differ materially. Except as required by law, we undertake no obligation to update or revise those forward-looking 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 the earnings release. With that, I would like to turn the call over to Ido.

Thank you, operator. Good evening, everyone. Over the past 12 months, we focused on what matters most, solving clear urgent customer needs. We deliver dependable, unified platform and the market is responding. Elevance renewed for three years. DHA deployed globally. Our pipeline is growing. CMS is increasingly making telehealth flexibilities permanent. And in 2025, we reduced losses by $100 million. We also significantly grew our subscription revenue mix. We have ample cash, no debt, and a clear path to cash flow breakeven in Q4 with real confidence in multi-year growth beyond it. I will enter 2026 with one focus, consolidate our platform, and deliver what payer and provider customers need most, today and in the future. The market opportunity is real and urgent. Pairs are under serious margin pressure. Premiums are not keeping pace with the total cost of care. Technology-enabled care and AI power clinical programs in particular, are now one of the most critical levers payers have. They help control costs. They help improve outcomes. They help payers compete for members and sponsors. This is no longer speculative. It is a survival imperative. But adoption remains hard. Despite strong demand, customers are struggling. Vendor sprawl is a real burden. Legacy tech stacks and internal silos make it expensive to integrate point solutions. The result? Fragmented member experiences and very limited visibility into what actually works. Customers cannot easily measure performance across their programs. Switching between them or optimizing member attribution is slow, expensive, and painful. That is exactly where we step in. Amwell solves this. We offer a trusted, proven technology-enabled care infrastructure, a unified digital stack, that lets healthcare sponsors act as their own system integrators. Customers white-label and embed the clinical programs their members need directly within their own digital front door. They control navigation. They monitor results. And those results go to the heart of their business. Lower costs, better outcomes, and stronger market share. With Amwell, customers get one unified engagement and navigation platform. It reduces acquisition and retention costs. It matches each patient with the most effective program based on client-defined rules. And it aims to deliver unified analytics across every program. so clients can see what works, document outcomes, and adjust quickly. Clients can adjust service attribution by member, group, or cohort. They can add Amwell-native clinical programs, third-party programs, or their own preferred programs. That level of control and agility is highly valued and desired. The Amwell platform is built for where AI is going next. The industry is moving fast from generative AI to agentic AI. These are systems that don't just create content. They execute tasks autonomously across complex workflows. Our customers are preparing for this shift. The Amwell platform positioned to be the governed environment where these agents operate safely, effectively, and at scale. We are not positioning Amwell as an AI feature. We are the infrastructure layer where AI-powered care becomes operational and measurable. A critical enabler of effective AI is data. Because our platform serves as a common infrastructure across all programs, we aim to maintain a unified data structure that is unique in our industry. Before care begins, we look to share relevant member information with clinical programs which the patient has selected so they can engage effectively from the first interaction. After care is delivered, we aim to collect and consolidate outcomes data across all programs. That data improves attribution, drives personalization, and makes every AI-driven program more effective over time. This unified data foundation may create a significant and durable competitive advantage for us. We also have powerful validation Elevance Health, one of the largest payers in the country, has renewed with Amwell for three more years. That is a strong vote of confidence in our platform and the value we deliver in one of the most sophisticated operating environments in the market. We also have powerful validation on the government side. The Military Health System Contract Extension in August 2025 put our platform in front of 9.6 million military beneficiaries across the globe, connecting deployed units in and outside combat zones with military hospitals. That level of security, scale, and mission-critical reliability is exactly what other government entities payer and health system clients are looking for. The regulatory environment is now working in our favor. CMS has made telehealth permanently accessible. Rural geographic restrictions are gone. Home-based telehealth is extended through at least 2027. Virtual behavioral health is now a permanent part of Medicare. New reimbursement codes for advanced primary care management and behavioral health integration are creating further incentives to shift care into virtual and community-based settings. This is a direct tailwind for our platform. We have also transformed how we operate. Alongside strengthening our platform, we made meaningful operational improvements sharper focus, significant organizational changes, and more efficient ways of working. In 2025, we reduced net loss and adjusted EBITDA losses by approximately 100 million. Subscription revenue grew to 53% of total revenue, a reoccurring stable income stream. And the market is responding. Renewals are strong. Pipeline growth is significant. Our offering is resonating with existing customers and new ones alike. We enter this next phase with 182 million in cash. No debt. A clear path to cash flow breakeven in Q4 of this year and a view towards multi-year growth beyond that milestone. we have a clear strategy, a mature and highly relevant platform, an efficient operation, and financial stability that gives us the runway to execute. We are excited about what is ahead. And now, I would like to turn to Mark for a closer review of our performance. Mark?

Thanks, Ido, and good afternoon, everyone. On today's call, I'll start with a few highlights from the first quarter, walk through our financial results in detail, and close with an update on our second quarter and full year 2026 outlook. In the first quarter, we delivered strong results across revenue, gross margin, and adjusted EBITDA. The outperformance was driven by strong visit volumes in urgent care and clinical programs with continued cost disciplines. These results demonstrate continued progress in our path toward profitability and reinforce our confidence in the trajectory of our business. Total revenue for the first quarter was $54.9 million, down approximately 18 percent year-over-year. Subscription revenue was $24.9 million, down approximately 23 percent year-over-year, driven primarily by previously disclosed churn. Encouragingly, renewals and retention were higher than budgeted in the first quarter, providing greater confidence in the stability of our subscription base going forward. Amwell Medical Group, or AMG, visit revenue was 28.9 million, up approximately 9% year-over-year. AMG paid visits totaled approximately 382,000 visits, up slightly year-over-year, with revenue per visit of approximately $76, up approximately $5 per visit year over year, reflecting the growing contribution of our clinical programs and the broader shift in our visit mix toward higher acuity, higher value care. Virtual primary care continued its strong growth trajectory with visits up approximately 57% year over year, underscoring the increasing adoption of our VPC offering across our client base. Total platform visits were 1 million visits, down approximately 19 percent year-over-year, which is in line with the portfolio changes we've previously discussed. Gross profit was $28 million with a gross margin of 51 percent, down approximately 180 basis points year-over-year from 52.8 percent in the first quarter of 2025. Near term, our existing revenue mix will likely generate a margin profile similar to what we just generated. We continue to see our projected revenue mix shifting toward higher margin SAS offerings, which we believe will support margin expansion over the next several years as our scale improves. Total operating expenses were $45.4 million, down approximately 31 percent year-over-year. As a percentage of revenue, operating expenses improved to 82.6 percent from 98.3 percent in Q1 of 2025, reflecting the benefits of our transformation actions and continued cost discipline. Adjusted EBITDA for the first quarter was a loss of $3.1 million, compared to a loss of $12.2 million in Q1 of 2025, representing a $9.1 million improvement. Operating loss was $17.4 million compared to $30.4 million in Q1 of 2025, an improvement of approximately 43% year over year. Now, turning to the balance sheet, we reported cash burn of approximately $3.1 million down from $19 million last quarter. We ended the quarter with $179 million in cash and investments with zero debt. Now turning to guidance. For the second quarter of 2026, we expect revenue in the range of $48 million to $52 million and an adjusted EBITDA loss in the range of negative $4 million to negative $2 million. This Q2 outlook reflects normal seasonality in visit volumes and the continued step down in subscription revenue impacted by previously discussed churn. Additionally, for the full year, we are reiterating our revenue outlook and updating our expectations for adjusted EBITDA. The revised adjusted EBITDA range reflects the progress we've made in the first quarter and that which we expect to continue throughout 2026. We now expect full year 2026 to generate revenue in the range of $195 to $205 million and adjusted EBITDA loss of $16 million to $12 million compared to our previous range of a loss of $24 million to $18 million. The strength of Q1 gives us increased confidence in our goal of achieving positive cash flow from operations in the fourth quarter of this year. In summary, Q1 was a promising start to the year. Visit volume momentum, stable subscription revenue, and a leaner cost structure give us confidence that we are on the right path. I want to thank the entire Amwell team for their hard work and dedication. These results reflect their efforts. With that, I'll turn it back to Ido.