American Well Corp (AMWL) 2025 Q4 法說會逐字稿

Hello, everyone, and welcome to Amwell's conference call to discuss their fourth fiscal quarter and full year 2025. Joining us on the call today are Amwell's Chairman and CEO, Dr. Ido Schoenberg; and Mark Hirschhorn, 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 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 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 these 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, and good afternoon, everyone. 2025 was a pivotal year for Amwell. We sharpened our focus, executed a major transformation and entered 2026 with clear visibility towards the goal of cash flow breakeven from operations in Q4.

Today, I'll cover three areas: the market trends driving our strategy; our 2025 execution highlights; and our plan for 2026. Mark will then walk you through our detailed financial and guidance. After that, we'll take your questions.

The health care landscape entering 2026 is defined by a clear shift towards operational efficiency. Payers and health systems are aggressively pursuing platform consolidation, guaranteed ROI and industrial strength automation. Managing countless point solutions, one for diabetes, one for MSK, one for mental health, another for wellness, et cetera, creates massive administrative overhead. It creates security vulnerabilities and it creates disjointed member experiences. It forces sponsors to act as system integrators, a role for which they are often ill-equipped.

The pressures are mounting. The Medicare population is aging rapidly. Pharmacy costs are surging. Overall, health care costs keep climbing, especially in behavioral health and GLP-1 usage. Clinician shortages are worsening, Subsidies are evaporating. Payer margins are compressing rapidly. Technology-enabled care is no longer optional. It's essential.

The promise of hybrid care is now clear. combine automation with smart use of clinician time to reduce costs and improve outcomes. AI is accelerating this shift. It's transforming engagement, intake, decision support, care delivery workflows, risk certification and outcomes measurement. It creates tremendous opportunity and real risk that must be managed.

Payers and health systems get this. They're adopting technology-enabled care not as an experiment, but as their primary lever for cost reduction, better outcomes and meeting patient expectations. And increasingly, they want to deliver through a unified platform.

A technology-enabled care or tech platform delivers clear advantages. Sponsors keep their brand front and center. They have full data access. They own the relationship and get credit for the value they enable. Patient engagement becomes more efficient and effective. Our tech platform enables API-first ecosystem. It allows sponsors to consolidate the digital stack on one infrastructure. Clinical programs can be added, swapped or retired quickly. We facilitate vendor rationalization, the process of auditing digital health partnerships and aggressively cutting underperforming programs. Vendor management gets simpler. Vendors sprawl with its fragmented IT strategies, data silos and day-to-day inefficiencies is reduced.

Outcomes tracking across whole person and cohorts becomes actionable. This platformization reduces integration costs. It unifies data lakes for better analytics. It enables risk stratification to identify and intervene with high-risk members early. And it drastically improves the member experience by providing a single, simple, personalized and familiar front door for all care needs. With AI and especially agentic AI-powered clinical programs multiplying rapidly, the ability to experiment and iterate is critical, so is ensuring that authorized clinicians govern the care process through smart integration.

In 2025, we made decisive choice, focused exclusively on offering the best tech platform in the market. The benefits flow to every stakeholder. For patients, personalized, simple access to a growing array of AI-powered care programs. For payers, employers and government sponsors, reduce costs, improve outcomes and exceptional experiences while staying agile to improve ROI as programs evolve.

Member experience becomes critical in 2026 as ACA subsidies expire and drive member disenrollment, adversely impacting payer risk mix. Sponsors also obtain robust ROI using Amwell's proven platform native clinical programs, urgent care, behavioral health and virtual primary care with the flexibility to integrate any third-party solution. It also allows payers to maintain network adequacy, especially in behavioral health services, where supply-demand gap is reaching new heights.

The effective integration of partners like Vida, a digital companion to combat GLP-1 inappropriate utilization or Sword to manage MSK costs are great examples. For health systems, they can extend remote access to their own providers. They can offer services through our platform beyond their catchment area, and they can augment their care with third-party programs. All sponsors can use their tech platform as required infrastructure to unlock federal funding, programs like ACCESS, BALANCE or the Rural Health Transformation.

Finally, resilience is now a key purchasing criterion. Payers are looking for partners with Zero Trust architecture and proven resilience. Amwell's contract with the Defense Health Agency serves as a powerful validation. It demonstrates that our platform meets the most stringent security standards in the world. With tech as our sole focus, we are building deeper, long-term relationships with the payers, government and health systems. We completed our transformation from a telehealth provider to dependable, trusted enterprise infrastructure.

The Amwell Platform has become an essential utility. It solves existential needs for our customers by effectively enabling consolidation, automation and clinical ROI. This aligns our success with our clients' success and creates a path to higher quality, higher-margin growth. We expect our high-quality growth will be fueled by the powerful secular trend of tech adoption. As AI reshapes health care, we offer our customers a consistent, safe and effective framework to adopt it while remaining flexible and agile.

Following our focused commitment in 2025, we moved quickly. We divested non-core activities. The sale of APC is one example. We restructured our company and dramatically reduced our cost base. We realigned our road map and go-to-market investments.

Clients and prospects responded. 2025 brought significant commercial momentum. In the payer segment alone, we executed over 15 payer contract renewals, representing the vast majority of our existing payer subscription revenue. Coupled with our new logo wins, we validated our platform strategy, strengthened our recurring high-quality revenue base and positioned us well for same-store expansion. Examples include the DHA renewals last summer, Blue Cross Blue Shield of Florida going live this January and most importantly, our 3-year renewal with Elevance.

As we enter 2026, we have responsibly reduced non-core, lower quality activities. Our 2026 top line is smaller, but now it's primarily high-quality, high upside, sticky revenue. This gives us clear visibility to reach our cash flow breakeven goal in Q4 of this year. In 2026, we'll deploy with strict fiscal discipline, innovations that widen our competitive advantage, AI-enhanced patient experience, faster third-party integration, better clinical data utilization and faster, easier deployments.

We've assembled a strong and fresh leadership team, experienced executives with proven track records from world-class companies, united and energized around our clear mission. We have a focused execution path and a market that clearly values what we offer. We start 2026 with healthy cash reserves, no debt, a strong and dependable recurring revenue base and a clear path to multiyear growth.

Our journey wasn't short or easy. My deep appreciation goes to our team members, clients and partners for standing with us through this journey. We carry this trust with us as we execute and deliver in 2026 and for years to come.

With that, I'll turn it over to Mark. Mark?

Thanks, Ido, and good afternoon, everyone. On today's call, I'll start with a few highlights from our full year 2025, then walk through our fourth quarter financial performance and finally, provide an update on our initial guidance for the first quarter and full year 2026.

Starting with the full year, 2025 marked an important period of refocus and financial progress for Amwell. Total revenue for the year was $249.3 million. Importantly, subscription revenue continued to become a larger and more durable component of our business, representing 53% of total revenue, up from 45% in 2024. This deliberate shift reflects our strategic emphasis on higher quality, more predictable SaaS-based revenue streams. From a profitability standpoint, we made meaningful progress. For the full year, we reduced both net loss and adjusted EBITDA losses by approximately $100 million each, driven by disciplined cost actions and a more focused operating model.

Turning to the fourth quarter. We delivered solid results across revenue and adjusted EBITDA, reflecting stronger subscription retention, increased visit volume in specialty care and virtual primary care and meaningful cost efficiencies driven by the successful execution of our transformation plan. We also began to see early benefits from AI integration across our operations. Overall, our fourth quarter performance reinforces that the actions we initiated at the start of 2025 are translating into durable financial improvement and accelerating operating leverage.

Starting with revenue. Total revenue in the quarter was $55.3 million, representing a 22.1% year-over-year decline. Subscription revenue was $28.8 million, down 22% year-over-year. The decline was driven primarily by the step down in our DHA contract this past summer, churn that occurred earlier in 2024 and to a lesser extent, our reprioritization of certain parts of the business to focus on our core payer and government markets.

Amwell Medical Group, or AMG visit revenue was $23.7 million, down 18.7% year-over-year, reflecting the sale of APC as well as some remaining churn from 2024. In terms of volumes, paid AMG visits were flat at approximately 340,000 visits in the quarter. Total platform visits were 1 million visits, down 28.4% year-over-year from the 1.4 million visits in the fourth quarter of 2024, which is consistent with the portfolio changes I just described.

Cost of goods sold in the quarter was $27 million, resulting in a gross profit of $28.3 million, which was down 17.6% year-over-year. Gross margin was 51.2%, repre senting a 280 basis point decline year-over-year. While we experienced some near-term margin pressure, we continue to see our revenue mix shifting toward higher-margin SaaS offerings, which we believe will support margin expansion over time as our scale improves.

Turning now to operating expenses. Total operating expenses, including depreciation and amortization, were $55.3 million. That's a 30.7% reduction year-over-year. Operating expenses as a percentage of revenue improved meaningfully to 96.7% compared to 108.7% in the fourth quarter of last year, reflecting the benefits of our transformation actions and continued cost discipline.

Adjusted EBITDA for the quarter was a loss of $10.3 million. That's an improvement from a loss of $12.7 million in the third quarter of 2025, and a 55% improvement from the $22.8 million in the fourth quarter of 2024. Net loss was $25.2 million compared to $30.7 million in the third quarter, representing a 43.5% improvement year-over-year.

Turning now to the balance sheet. We reported cash burn of approximately $19 million in the fourth quarter. We ended the year with approximately $182 million in cash and marketable securities and importantly, no debt.

Now I'd like to turn to guidance. For the full year 2026, we expect revenue in the range of $195 million to $205 million. We expect AMG visits between 1.32 million and 1.37 million visits. Adjusted EBITDA loss in the range of $24 million to $18 million. And this first quarter of 2026, we expect revenue in the range of $48 million to $53 million, and an adjusted EBITDA loss in the range of $7 million to $5 million.

Based on our current outlook and continued execution, we expect the company to achieve positive cash flow from operations in the fourth quarter of this year. This guidance reflects our expectations around continued subscription stability, visit volume trends in specialty care and virtual primary care, ongoing cost discipline and incremental benefits from automation and AI-driven efficiencies across the business.

In closing, 2025 was a year of refocus and progress. We concentrated on our core markets, payers and government entities while positioning the company to return to delivering durable growth. At the same time, we made meaningful progress reducing cash burn and losses by nearly $100 million, putting us on a clear path forward to achieving positive cash flow from operations by the fourth quarter of this year.

These results would not have been possible without the hard work and dedication of our entire team, and I want to sincerely thank them for their efforts. We look forward to keeping you updated on our progress this year.

With that, I'll turn it back to Ido for his closing remarks. Ido?

Thank you, Mark. We are encouraged by the process we made in 2025. We successfully sharpened our focus on our tech platform, validated strong market demand and meaningfully improved both our efficiency and cost structure. We enter 2026 with clear visibility into continued performance improvement, position us well to achieve our goal of cash flow breakeven from operations in Q4. Equally important, the changes we've made have strengthened our revenue quality.

We now work with clients to extract even more value from our partnership, leading to longer-lasting, stickier relationships that generate higher margins more reliably and offer significantly greater same-store growth potential. With AI-driven clinical programs growing exponentially and payers, government and health systems increasingly in need of infrastructure to deploy them safely and effectively, we believe Amwell has reached an exciting inflection point. We look forward to an important year ahead.

With that, I'd like to open the call to questions. Operator?

(Operator Instructions)

Stan Berenshteyn, Wells Fargo Securities.

Hi, This is Corey on for Stan. It's encouraging to see progress towards free cash flow breakeven despite retention challenges. As we think about 2026, how should we think about when existing client contracts would be up for renewal? And do you have any additional color related to your government opportunities?Thanks.

Hi Corey, well, as I mentioned earlier in my prepared remarks, in 2025, we signed 50 contracts, most of which are renewals. And in that, we really secured our reoccurring revenue base to a great extent. Therefore, the amount of what we renewed in '26 are significantly lower with one important exception, which is the DHA renewal that we expect to have this summer. We're very pleased with the value that we generate with the DHA and the traction and are optimistic that our performance and our strong relationship position us well for multiple year renewal also in that important segment of the market.

Jailendra Singh, Truist.

Yeah, Ido, you talked about 2026 being a year of operational efficiencies and you spent a lot of time on AI. Clearly, AI is going to be playing a big role here, and you guys have been one of the early adopters. But what are your thoughts on some of the new AI companies entrants, which are seeing opportunities here in terms of having an impact in health care. And clearly, they are all trying to make a big push given all the inefficiency in the system. How do you see the competitive landscape evolving considering these new entrants in the market?

So we are, thank you, Jailendra. We are very bullish and optimistic about the impact of AI on health care with the obvious asterisks and exceptions of risk management and so on. But overall, the trend is very powerful. AI can do many things. And in Amwell, we implemented AI liberally across our entire workflow and operations and inside our own product.

Having said that, the ability of AI to impact the most for our customers is in clinical programs, and they typically focus on one therapeutic area at a time, whether it's MSK, GLP-1, things with diabetes, blood pressure and so on and so forth.

The integration of those AI programs and the ability to integrate, switch and maintain multiple AI programs turned out to be a very big challenge for our customers and you need to connect them into a consistent, highly regulated infrastructure.

So for example, as you develop an entry point, a digital door for your digital assets and a workflow for your own members, you want to make it consistent and you want to not rebuild it each time whenever you change an AI program versus another. And that's really our role. Our role is to match the regulated baseline infrastructure with the tsunami of AI programs reliably. There are -- we are not aware of many or even any company that does exactly that right now. And very importantly, we are now already implemented with our new platform with a very big market share footprint right now that is proving to work very effectively. And the opportunity is really to use AI and to add AI to this infrastructure rather than replace it.

So saying it in summary, we believe that AI will be endorsed and adopted quite a bit across our client base. And we believe that our platform would be an important utility as our clients do that.

Dave Larsen, BTIG.

Hi, as we look towards 2026, can you talk about some of the headwinds and tailwinds that could cause either an increase or risk to the guide? Thanks very much.

Hi, This is Mark. I think the most likely tailwind would be an earlier adoption of our technology-enabled platform options. We are participating in all 50 states RFIs, RFPs right now. We've got a significant opportunity in a few other government segments as well. We expect to hear in second quarter, so only a few months from now as to how deep our participation will be and when those revenues will commence. While we have not built any of that revenue into our current 2026 plan, we certainly believe that as a result of the pipeline being larger today than it has been in the history in all the past history of Amwell, much of that will convert into some backlog that we'll see come to fruition in 2027.

As far as any of the headwinds, we do, of course, have a renewal with the DHA this summer. We're extremely confident that, that will be renewed again and hopefully for a longer term. But beyond that, our other material contracts are not up for renewal in 2026.

And can you remind me for the DHA renewal, what you mentioned like a step down in the DHA revenue, what was that related to and then could you win that back in the summer and if you did, how much of a step up in incremental revenue would there be related to the DHA on the same annual run rate basis? Thanks.

Yeah, so you're correct, We experienced, unfortunately, as a result of the DOGE, an elimination of our digital behavioral health and automated care programs in the summer of 2025. We had initially rolled that out to a select number of locations. It was doing extremely well. The uptake on those programs was very strong. But as a result of an overall cost efficiency mandate, they were not renewed as the contract and the base contract was renewed. We certainly feel very, very positive about the status of that contract and the opportunity to revisit adding those two programs to the base platform renewal coming up this summer.

As far as materiality, it's significant. It's material. While we don't disclose the total value of the contract, I think we did suggest in the past and we would going forward that adding those two components would certainly be material.

Okay, thanks very much. You're welcome.

Craig Hettenbach, Morgan Stanley.

Yeah, thank you. Ido, just keying off with your comment around kind of smaller top line but higher quality and stickier. How do you think about 2026 as a baseline in terms of the ability to kind of resume growth? And then with the business as it stands in 2026, what does the long-term growth look like? What type of growth profile can you generate with this business?

Hi Craig, well, you're absolutely correct. In fact, two years ago, we sold so many products to so many market segments. The market product fit was different between one versus another. As a reminder, we had APC and we play psychiatry, sometimes in person hospitals with a very big hardware business inpatient solution, competing directly with EHRs and things of that nature. While we have some of it left and we are going to always serve our clients really well, we really essentially have now reduced all those many products into one beautiful platform, but one platform, the technology-enabled care Amwell Platform and connected to our own native services and a growing array of third-party services, out of which you can add even more.

When you look at the market right now, and I mentioned in my prepared remarks, the incredible importance and value of diverting clinical demand from brick-and-mortar into technology-enabled care, everybody is convinced you need to really have this infrastructure. So we fully expect our sponsors, our clients to invest in encouraging their members to use it more and more often in marketing and in cost attractiveness and things of that nature.

So there is a strong secular trend that is not going anywhere in the next few years to have people use our platform, not only for urgent care like in the early days, but really across the entire care continuum.

The infrastructure that we built is big and deep. You don't change it every day. Our sales cycles take for a reason 9 to 12, sometimes more months. But once implemented, they're really connected to the financial and clinical backbone of the sponsors, both in way of incoming traffic and in way of outgoing analytics and reporting. However, the middle ground, the area where you have all those AI-driven clinical programs is growing extremely rapidly. And there is real motivation to add more. And as that happens, we are going to benefit from higher-margin revenue for us.

I'll give you just one example. I don't recall any CFO leadership with any payer customer that we have that is not incredibly concerned about GLP-1 spending. The ability to very easily add Vida or other programs to the existing integrated infrastructure is extremely attractive for our customers to do, and we make it incredibly simple and easy for them to do that.

To summarize, we believe that the same-store growth presents a very meaningful revenue opportunity for us. In addition to that, as you know, we invested very heavily in penetrating the very hard-to-penetrate governance market. I'm very pleased with our performance there. And there are many other large opportunities that are very similar to the one that we presented with the DHA. So we do believe that the government sector represents an incredible growth opportunity as well, both in way of net new logos and even in same-store growth, like the example that Mark gave recently to really reinstate our behavioral health and maybe other alternatives.

The success that we have with our existing clients is not lost on others. And many of them are really under pressure to add those programs, but they do that today with an infrastructure that is much smaller. A lot of the IT departments in payers are much smaller today because of cost pressures. So their ability to serve as an integrator for all those programs and then to match them with a different ASO is becoming much more difficult. Amwell and the Amwell Platform presents itself as a very good solution, both for them and obviously, also for those vendors that can accelerate their penetration and offering into those conservative, highly regulated clients through our infrastructure.

Eric Percher, Nephron Research.

Thank you. I'd also like to dig in a little bit more on the, I think what comes from the improvement in revenue quality.

When we look at what, the guidance for this coming year holds, it sounds like some de-emphasis. I know there were also divestitures that you had considered. Can you give us a little bit more on what you're de-emphasizing and where those, maybe a little bit of why the revenue is running lower than we might have expected and. Does that not include any of the divestitures that you've looked at? Would those be ultimately incrementally beneficial to bottom line while perhaps taking down top-line from here where we send '26?

Sure. So Eric, what we've done really is to centralize our offering around one offering, which is the Amwell Platform. And it does what we described earlier and does it really, really well. As you know, we had other offerings in market segments where the product market fit was not great. We divested APC, and we deemphasized other areas that are non-core. Essentially, our one product right now is still a very good match to all the market segments that we operated before, but there is one product across the segment versus many products across many segments.

The value proposition to payers and government is very strong and very sizable. A very big part of our revenue is derived from there. And since it connects millions and tens of millions of individuals that are motivated to use the platform more and more across the ecosystem, that also presents the most important growth opportunity for us.

Having said that, many health systems are now bearing risk. Many of them want to participate in different government programs like ACCESS. And in order to do that, they really benefit from a platform like Amwell, because you can add all those very efficient clinical programs to their current offering in a way that is integrated out of the box and is doing that very efficiently.

So that allows us to really be very efficient in focusing on one highly attractive and differentiating product, benefit from secular demand that is growing without a lot of cost to grow it once we are implemented, adding programs and seeing more traction is much less expensive than creating the platform that we've done over the past few years. And of course, there are not too many of those in the market. So we fully expect that the example we gave recently with Blue Cross Blue Shield of Florida is not going to be a singular one.

Mark, I don't know if you have anything to add.

I should have been more precise. Does the '26 revenue and EBITDA reflect full exit of the businesses we discussed could be exited?

I don't think so. There is some residual activity, but it's diminishing in percentage points and in proportion until a point where it's going to be negligible over the next two years.

Okay. Thank you.

(Operator Instructions)

Ryan MacDonald, Needham & Company.

Thanks for taking my questions, Ido, great to hear that you got the 15 renewals done, obviously, and sort of the obviously, the large three-year renewal with Elevance. I'm curious if you could talk about sort of how those renewals or those discussions in those renewals are informing your go-to-market approach for net new opportunities. And as you think about 2026, if you kind of look at sort of across government, payer, provider, where are you sort of skating to the fastest? Or where are you really focusing those go-to-market efforts in terms of bringing in net new logos to the business? Thanks.

Absolutely, Ryan. So I'm pleased to share that all of our renewals, it relates to the payers that we mentioned and others were related to the same offering to the new Amwell Platform. And in many ways, while they are technically renewals, since the offering is so different than what they had in the past and our role is so different, you can consider them in many ways, a new sale or almost a net new sale. You need to remember also that when people renew and migrate their platform into the new platform, that comes with deep integration into financial and clinical backbone. So you don't to do it very quickly, you do it as a long-term investment.

The value of our existing customers is now demonstrated really well. And when we implement the new customers, it's really a very similar workflow. So reproducing it becomes much easier and simpler and much more efficient going forward. So as I mentioned earlier, when we look at multiyear growth, the most obvious and impactful area is same-store growth, benefiting from more programs to more people that we lose it more often and more efficiently and really benefiting from those secular tailwinds.

In addition to that, as Mark mentioned earlier, we have the largest pipeline we had in our history, I think, that I remember at least for now. And it's all about this. There's nothing else. It's about our one beautiful platform and its clinical services and the value it should generate as an infrastructure to adopt more and more AI-powered clinical programs. So we have a lot of proof points, a lot of success points in a very large scale.

When I look at the segments, commercial payers, obviously, is our sweet spot, Blues and others, but there's no question that our advantage in the government is even bigger. And the reason is that, that's a really high barrier of entry segment when you think about cybersecurity, regulations, things of that nature, and we have that right now. We spend enormous amounts and time and effort and resources getting there, and it performs really, really well. So we fully expect this to grow meaningfully over the next few years.

And lastly, we believe that health system will participate, but in proportion, probably their contribution is going to be smaller than the first two segments I just mentioned.

Thank you. And I'm currently showing no further questions at this time. I'd now like to hand the call back over to Ido Schoenberg for closing remarks.

Thank you, operator, and thank you, everyone, for joining. We really appreciate your support of Amwell, and we look forward to talking to you very soon. Have a good evening.

This concludes today's conference. Thank you for your participation. You may now disconnect.