American Well Corporation (AMWL) 2026 Q2 法說會逐字稿

Hello, everyone. Welcome to Amwell's conference call to discuss their second fiscal quarter of 2026.

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 replay will be archived.

Before they begin prepared remarks, I'd like to take this opportunity to remind you that, during this 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 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 now like to turn the call over to Ido.

Good evening and thank you for joining our second-quarter earnings call.

As recently announced, we reached an important milestone. The Defense Health Agency issued an intent to reward notice for a sole-source contract directly with Amwell.

We are thrilled by the DHS' decision, which signals an opportunity to strengthen and expand our relationship for many years to come.

This is a deliberate choice by the government to build its core platform around the partners it depends on. The DHA's decision aligns with its policy direction to achieve long-term improvements in cost efficiency.

This transition to direct contracting ensures uninterrupted continuity of operations; and ensures interagency continuum of care remains stable and undisrupted. We are honored by their trust.

Our platform is already built into MHS GENESIS, which operates as the platform that anchors the unified federal health IT ecosystem. The Amwell platform has connected deployed units in combat zones to hospitals back home.

We are proud to serve the 9.6 million service members, families, and retirees of the military health system. We are committed to delivering for them every single day.

More broadly, our strategy is simple: Everything centers on the unified Amwell platform. We give our clients the premier infrastructure for technology-enabled care. t is one platform, not many.

Through it, government, payers, and health systems offer patients a simple, streamlined experience. Members connect to a growing range of clinical programs. They do so with measurable improvements in both clinical and financial outcomes.

This focus is showing up in our revenue mix. Subscription revenue has grown to more than half of our total revenue that is recurring, stable, high-quality revenue.

It is the foundation of a healthier, more predictable business. Throughout 2026, we are delivering a better user experience. We've also greatly enhanced our ability to engage members and activate them into care.

The platform brings clinical partners online quickly; turns our data into useful insight; and runs with the reliability and compliance our customers depend on. In short, we are easier to adopt, easier to build on, and easier to trust.

Let me be specific about the value we create because it is the heart of our story: Payers are under real pressure. Premiums are not keeping pace with the rising cost of care. Technology in AI-powered care are among the best tools they have to control cost and improve outcomes.

The demand is there but acting on it has been hard. Most payers are buried in vendor sprawl -- dozens of separate point solutions that are costly to connect and impossible to measure against one another.

Tired of the fragmentation, payers and employers increasingly want fewer, deeper partnerships -- one partner who can meet many needs through a single relationship.

This is the problem Amwell solves. We give customers one unified platform so they no longer must stitch dozens of vendors together themselves. They put a single Amwell gateway behind their own brand and their own front door.

Members get one simple place to reach the programs they need. Our customer keeps the member relationship. Behind that gateway, customers can mix and match programs -- ours, a partners, or their own -- and swap them in quickly, without disrupting the member experience.

Because every program runs on the same platform, we bring all the data together. For the first time, customers can see clearly what is working; prove the clinical and financial results; and adjust in real time.

We are not selling an AI feature. We are the trusted environment, where AI-powered care runs. We saw a clear illustration of this in Dario's recent announcement that it will bring a new program to the Amwell healthcare marketplace in Arizona.

One more market shift makes this even more important: Customer increasingly focus on actual use. Engagement is no longer a soft metric. It is a financial driver.

Value comes from getting members into the right care, improving their health and avoiding expensive downstream costs. That is exactly what our platform is built to do.

One front door makes services easy to find and use. Our data and analytics power targeted personal outreach. Working closely with employers and health plans, we turn members into active users.

We can prove it. This quarter, a randomized trial of our SilverCloud behavioral health program was published in Nature Human Behavior.

It was funded by the National Institute of Mental Health and led by investigators from Washington University, Penn State, and UCLA. It followed more than 6,200 students for two years, one of the largest studies of its kind.

The results were clear: Students offered SilverCloud engaged at more than double the rate of traditional care. They had lower rates of mental-health disorders over two years. The study pointed to about $1.2 million in avoided costs in the study group, alone.

Better engagement, better outcomes, lower costs, independently validated -- that is exactly what payers are looking for.

Our market momentum is building. Our pipeline is growing. Renewals are strong. We are engaged in encouraging discussions with new prospects across both the commercial and government sectors.

This quarter, we also moved closer to a goal we have been clear about: positive cash flow from operations by the fourth quarter of 2026. We are on track. This is not a one-time result. It builds a durable foundation for healthy growth in 2027 and beyond.

Our path here has been deliberate. In 2025, we reduced our losses by roughly $100 million. In the second quarter, our adjusted EBITDA loss of approximately $1 million is the closest we have been to breakeven as a public company and gives us increased confidence in achieving our goal of positive adjusted EBITDA in the fourth quarter.

We did this while holding more than $195 million in cash and carrying no debt. We have the runway to execute and a team focused on doing it with discipline. We are achieving all of this with a linear cost structure.

Our focused platform strategy and our operational discipline make that possible, including the integration of AI across our workflows. Underneath it all is something harder to replicate: a purpose-driven culture that attracts and motivates exceptional people.

Let me close with why this matters now: As AI-driven care accelerates, the pressure on payers only grow. In that environment, a single, reliable infrastructure layer becomes essential. That is what Amwell is.

We have completed our transformation from a telehealth vendor into the infrastructure for AI-powered care programs. We have a mature platform, a focused operation, financial stability, and independent proof that what we deliver works.

We are confident in our path to adjusted EBITDA breakeven in Q4 of this year. We are excited about the growth that follows.

With that, I will turn the call over to Mark, who will walk you through our operational and financial metrics. Mark?

Thanks, Ido. Good afternoon, everyone.

On today's call, I'll start with a few highlights from the second quarter; walk through our financial results in detail; and close with an update on our third-quarter and full-year 2026 outlook.

In the second quarter, we delivered revenue results in line with our expectations, reflecting continued subscription stability and a favorable mix shift within our visit portfolio.

Adjusted EBITDA was slightly ahead of our expectations, driven primarily by continued cost discipline across the organization.

These results build on the momentum we discussed last quarter and reinforce our confidence in reaching cash-flow breakeven in the fourth quarter of this year.

Total revenue for the second quarter was $52 million, down approximately 26.6%, year over year. Subscription revenue was $25.7 million, down approximately 36.5% year over year, though up approximately 3.2% sequentially from the first quarter.

The year-over-year decline continues to reflect the previously disclosed churn, as well as a one-time subscription-revenue benefit recognized in last year's second quarter related to the deployment of our platform across the DHA.

Encouragingly, sequential improvement reflects the stability we've continued to see in our core payer and government subscription base.

Amwell Medical Group or AMG visit revenue was $24.4 million, up approximately 7.4%, year over year. AMG paid visits totaled approximately 315,000 visits, flat year over year, with revenue per visit of approximately $77 per visit, up approximately $4 or 6% per visit, year over year.

This is reflected by the continued shift in our visit mix toward higher-acuity, higher-value clinical programs and virtual primary care.

Virtual-primary care visits were up approximately 30% year over year, continuing their strong growth trajectory. Total platform visits were approximately 835,000 visits, down approximately 28.4%, year over year but consistent with the portfolio changes we've previously discussed.

Our gross profit was $27.6 million, with gross margin of 53%, down approximately 310 basis points year over year from the 56.1% in the second quarter of 2025. But it is up approximately 200 basis points, sequentially.

As we've noted, our existing revenue mix is generating a margin profile broadly consistent with recent quarters. We continue to expect our revenue mix to shift toward higher-margin SaaS offerings, over time.

Total operating expenses, including depreciation and amortization, were $37.1 million, down approximately 38%, year over year; and down approximately 18%, sequentially.

As a percentage of revenue, operating expenses improved to 71.3% compared to 84.8% in the second quarter of last year, reflecting the continued benefit of our transformation actions and ongoing cost discipline across Amwell.

Adjusted EBITDA for the second quarter was a loss of $1.15 million compared to a loss of $4.7 million in the second quarter of 2025.

Operating loss was $9.6 million compared to $20.4 million in the second quarter of 2025, which is an improvement of approximately 53%, year over year.

Now, turning to the balance sheet, we ended the second quarter with $196 million in cash and marketable securities, with zero debt.

Now, on to guidance, for the third quarter of 2026, we expect revenue in the range of $46 million to $48 million and an adjusted EBITDA loss in the range of negative $5 million to negative $3 million.

This outlook reflects normal seasonality in visit volumes, as we move throughout the remaining summer months, along with the continued stability we're seeing in our subscription base.

The step-down in adjusted EBITDA from 2Q to 3Q reflects the impact of certain costs associated with the completion of internal projects that we expect to complete prior to the end of this year.

For the full year, we are narrowing our revenue range and raising our adjusted EBITDA range to reflect our year-to-date performance.

We now expect full-year 2026 revenue in the range of $200 million to $205 million, raising the low end of our previously communicated range of $195 million to $205 million.

We are raising our full-year adjusted EBITDA guidance to a loss in the range of negative $9 million to negative $7 million, a meaningful improvement from our prior range of a loss of $16 million to $12 million.

We continue to expect full-year AMG visits toward the high end of our previously communicated range of 1.32 million to 1.37 million visits.

In summary, Q2 was another step forward on our path to rightsizing the company and working toward achieving profitability.

Continued subscription stability, a favorable visit mix, and a leaner cost structure give us confidence that we remain on track to achieve our cash-flow breakeven goal in the fourth quarter.

I want to thank the entire Amwell team for their continued hard work and dedication. These results reflect their dedication and tremendous efforts.

With that, I'll turn it back to Ido.

Thank you, Mark.

Before we open the call for your questions, let me leave you with the take-aways that matter most:

First, the DHS intent to reward a sole-source contract directly to Amwell is a powerful vote of confidence. It deepens the partnership at the heart of the military health system and affirms our position as core infrastructure for the unified federal health IT ecosystem, an opportunity we expect to build on for many years.

Second, the quality of our business keeps improving. Subscription revenue is now more than half of total revenue and grew sequentially this quarter. That reoccurring, stable foundation is what makes Amwell more predictable and more valuable, over time.

Third, our strategy is resonating in the market. Payers want fewer, deeper partnerships. Our single unified platform is built precisely for that. We no longer just claim results. We prove them.

The independently run study published in Nature Human Behavior showed more than double the engagement, better outcomes, and meaningful avoided costs. That is the evidence payers are looking for. It's powering a growing pipeline and strong renewals.

Fourth, our discipline is delivering: an adjusted EBITDA loss of roughly $1 million, the closest we have ever been to break even as a public company; raised full-year adjusted EBITDA guidance; nearly $200 million in cash; and no debt.

We are firmly on track for positive adjusted EBITDA and positive operating cash flow in the fourth quarter. That milestone is not the finish line. It is the foundation for healthy, durable growth in 2027 and beyond.

Amwell has completed its transformation. We have the platform, the proof, the partnerships, and the financial strength to lead, as AI-powered care accelerates.

I want to thank the Amwell team for their exceptional work and our shareholders for their continued trust.

With that, we're now happy to open the call for your questions. Operator, please go ahead.

Thank you. At this time, we will conduct the question-and-answer session.

(Operator Instructions)

Ryan McDonald, Needham.

Hey. This is Matt Shea, on for Ryan. Thanks for taking the question.

Maybe, start on the DHA contract, not really sure what the best way to ask this is but, ultimately, just help us bridge the difference between the DHA's intent. Sounds like you guys are in the pole position but, the bridging from the intent to actual implementation, what's left from here? Or what does that timing look like from here to close out the contract?

And then, I think, last quarter, you had talked about the opportunity for there to be an inclusion of additional programs that weren't in the prior implementation; notably, the mental-health program. Where does that opportunity stand today? How do you foresee that timeline playing out, as well?

Hi. It's Mark.

This is where we stand with the current negotiations: The DHA in June put out a release calling for a direct sole-source contract with Amwell and four other vendors.

We are all currently negotiating with the DHA. They dropped the deadline of July 30 of this year, with an intent to get some of those contracts live.

But, as is almost expected in these cases, all the parties required some additional information and some time.

Their drop-dead date is July of next year. But their intention from our last conversations -- even this past week -- was that they need a couple more months to negotiate.

We're currently in those negotiations. They've noted that they would like to transition over as soon as possible. We're working very closely with our trusted partners over at Leidos and, also, with the DHA in order to make this as smooth of a transition as possible.

Okay. That's helpful.

Yeah. The second part of your call, I think, likely references our behavioral health, SilverCloud, offering, which we did have active in force in that environment for several months, last year.

It was decided, after the issues with DOGE and a number of other things that affected our ability to continue at that service level, that we would reintroduce that offering in conjunction with having our direct sole-sourced contract.

That conversation, also, is underway. We would expect that the opportunity to turn those services on the soonest opportunity would be in 2027.

Okay. Great. That's super helpful, Mark. I appreciate that.

And then, maybe, switching gears to the payer segment: I believe it was last quarter you talked about reintroducing Amwell to several health plans and that part of the mandate is the coming back into the market, as you think the relevance of Amwell was lost. But with Elevance and DHA implementations, that credibility is coming back.

Maybe, first, how important is the DHA renewal to support that credibility narrative?

And then, second -- and, really, more the meat of the question is -- it sounds like there's some marketing efforts behind this reintroduction to health plans so it would be helpful to, maybe, hear how you're positioning Amwell with health plans this selling season? Any marketing investments you're making? Or what's resonating, so far?

And then, are efforts enough to translate to Jan 1, 2027, wins? Or is this more of an evolving opportunity that might not take root until, say, next selling season?

Sorry. I know there's a lot there but just think it's an important topic.

I'm going to have Ido take the first part of that.

(multiple speakers) -- can you hear me now? Can you hear me?

Yes.

Yeah.

Okay. Matt, great question. Thank you.

There is no question that the DHA relationship we are super proud of is an important milestone and a great proof point. They are certainly not the only one -- not that is published and not that is coming. It definitely creates momentum.

The infrastructure of the DHA is very common across the entire government infra system.

Our ability to work so well for such large audience in such scale with such result that is demonstrated very importantly with the decision to do sole source, which usually also means -- and they said as much -- very long-term agreement -- three to five years, at least -- is an indication of how things are going.

It's totally not lost on the rest of the government market. But, in many ways, what government players are dealing with is very similar, in some ways, to commercial players.

Essentially, the problem today -- more zooming out for a second -- is that the cost of care is rising through the roof. Activating members to engage in technology-enabled care is extremely inefficient and ineffective.

When they do engage, the ability to understand and prove the outcomes is increasingly complicated in a scenario where there are so many vendors. There is vendor fatigue. Piecing that together -- the data -- is so hard and so on and so forth. That's exactly where we come in.

The reason we see this market receptivity is fairly simple: One, almost all our customers and potential customers have vendor sprawl and vendor fatigue. They hire more and more people to manage more and more relationships. They don't always pan out.

The pressure because of rising cost of care and inability to raise premium accordingly, where the margins are distressed, is very much to try to improve efficiency of care. That's really our business.

The technology-enabled care is a fantastic experience for members. It's also a way to attract and retain members; and comfort clients.

The fact that the platform is built inside their infrastructure and inside the trusted brand is very important. Essentially, they are very open in this time of distress to talk about consolidation and simplification of what could be an important lifeline for them to try to improve financial and clinical outcomes.

That's exactly us: less integration under a known brand, which is their brand; not losing the patient-member relationship to anyone.

We've proven at the DHA and elsewhere that you are fairly effective in attracting people to their digital door; to their infrastructure. But we are not only there. We are activating members, using technology and clinical measures.

The infrastructure of AMG, for example, is a very important technology-enabled care piece of what we do that allows to form longstanding reoccurring relationship between doctors and patients.

That is not a dead end but, rather, an orchestration layer to growing array of AI-powered care. That works really, really well, as the gateway is an enabler.

When we talked about this care, we are offering our own native programs. There are so many of them: urgent care, primary care, behavioral health -- mark talked about the growth there, nutrition, psychiatry and so on; but, also, a rapidly growing roster of partners: Sword, Hello Heart, Vida, Dario, DermatologistOnCall -- to name a few.

But, much more importantly, the pressure is to prove outcome. We build a data infrastructure that allows to piece together the results; and really understand what's working and not working. When something doesn't work or doesn't work as well, we have the ability to switch over programs very easily.

Our customers are able to accommodate their own client very dynamically in an era where new programs show up every day.

This entire solution of Amwell is very differently received from the way that traditional telehealth was received. It's working. I'm not going to name all the names because most of the people on the call know our clients. They are very, very big.

You mentioned the marketing to those payers and government. We have a very seasoned team. Our customers are sizable. We don't need an army in order to engage in those platforms. No one buys those platforms in a seasonal way. You don't buy an infrastructure for a database in the summer.

What we do is a strategic solution for our customers that is essential today more than ever and is working. Our two decades of experience is showing.

They know they can trust us to take off a lot of weight they have off their shoulders and manage this zoo -- this dynamic array of clinical programs, without new integrations, without multiple contracts, without piecing different pieces of data together; and with protecting the outside in areas like cybersecurity and privacy and compliance, which are also very, very important.

I know it was a mouthful. It was a relatively long answer to a short question. But these are the reasons why you see the results that you see. This is the reason why I said I'm so optimistic about our growth in '27 and beyond.

We are seeing it, right now. There is good receptivity. The pipeline is growing. There is a lot of activity on the sales side. But, much more importantly, we see the impact on our existing customers.

When you think about some of them, we're talking about people with tens of millions of potential members. Across the board today, only few members actually enroll; less than half, in some cases. Only 4% or 5% -- and I'm optimistic -- actually engage and bring outcomes. We are changing that.

The financial impact and value to payers and their customers is enormous. I don't think we've ever been as optimistic as we are. I don't think we've ever been as focused as we are.

It's a delightful experience to be in the market today, with our existing customers and with new ones; and see the twinkle in their eyes, as we solve something that is a high priority problem for them.

That's great to hear. Appreciate all that color. Thank you.

David Larsen, BTIG.

Hi. Can you talk about the progression of EBITDA from 2Q to breakeven 4Q; how you're planning to get there; and just maybe an update on your cost-restructuring efforts?

Thanks very much.

Yeah. Certainly. We communicated at the beginning of the year that we would have a cycle of costs that would end or would bring us to the point where we would have a number of quarters working towards a breakeven at the end of the year.

There's some project work that we had commenced at the end of last year. It brought us through to the beginning of this year. It's cycling down now in the third quarter.

While we will have a quarter that's going to have a small degree of losses, we have great visibility and a certain degree of conviction around where those costs will be over the next several months.

That's why. we are very confident that we will hit our cash-flow breakeven and adjusted-EBITDA breakeven in Q4. As you likely just saw with the release, we came very close to that this quarter.

Conservatively, we've given a range for full-year EBITDA. Obviously, it's our internal goal to beat that. We've been successful over the last several quarters doing that and coming in with better bottom-line and top-line results. I believe we're very conservative in the top-line, as well.

Assuming we have a status quo with our existing clients, we have not incorporated any new revenues, just a little bit of seasonality in Q4 for visit volume.

Okay. And then, as we think about, like, 2027, can you provide some color around maybe, like, backlog metrics? Is that a number you track -- bookings? Anything, like, around expected retention levels in '27?

Basically, at a high level, without guiding, is your revenue going to grow year over year in '27? Thanks.

Yeah. We will, obviously, share much more visibility on expected 2027, perhaps, earlier than the end of this year.

If the prospects that we're currently speaking to on the government side do, in fact, come to fruition and we have signed contracts, that will give us a great degree of visibility into revenue growth for 2027.

Internally, again, we would like to see the company return to a level of double-digit growth. We think that is very attainable with the consummation of the contracts that are currently under discussion with those clients that form the majority of our pipeline.

One more quick one for me, please? With the DHA contract, the intent to award Amwell a sole-source deal, number 1, was that a renewal so will there be any incremental revenue tied to that?

And then, number two, I think I heard you say there were four other vendors included in that. Can you correct me, like, when I hear sole source, it sounds to me like Amwell is the only vendor that was awarded something but then, I heard you say that there were four other vendors who may have been awarded something?

And then, do you know what the revenue is that you will realize under that deal? Or is that all getting worked through? Thanks.

Yeah. The release I'm referring to is, under the new model, the DHA stated they're going to contract directly with proprietary-solution providers for their core system capabilities, rather than going through pass-through entities.

In these cases -- or in this particular case -- that was Leidos. Now, Leidos has been a wonderful partner.

We may end up obviously working with Leidos on a number of other things but, in relation to this particular contract, these services are provided by four distinct companies -- Amwell; Oracle Health; Phillips -- oh, five, actually -- Solventum, which was that former 3M subsidiary; and Henry Schein.

The DHA's intent, prior to the end of July next year, is to create and execute contracts with each of these five companies.

Will we end up seeing a little more revenue for additional services that we may have to take on, in lieu of the third-party systems integrators and others? That's absolutely a likelihood.

Okay. You're the only telehealth platform of those handful that you mentioned. These other ones are important. But they are basically providing different pieces of the overall project.

Okay. Thanks very much.

Absolutely, David. Absolutely.

(Operator Instructions)

Jailendra Singh, Truist Securities.

Yeah. Thank you. Thanks for taking my question.

Just to make sure I understand the DHA contract: Is there a change -- any change -- to the annual revenue compared to what the current arrangement did? Or is the primary benefit here is that we have, now, greater contract visibility and duration?

Just trying to understand the change here.

Yeah. There is obviously an opportunity to create more services being directly provided by Amwell to the DHA. There are a number of things that are currently in discussion.

We would expect that there will be opportunity for a broader scope of services.

Okay. And then, my follow-up, on your comment about strong renewal and a growing pipeline, anything you can share in terms of, is the current pipeline -- is expanding with your existing customers versus you are seeing, now, new logos, new customers coming through?

How much of these pipeline discussions are involving some of your AI focus and investment you're doing there? Just trying to understand the AI focus versus non-AI; and, also, the existing versus new customers?

Hi, Jailendra. Yes, yes to all.

Basically, many of the market players are now in search of platforms -- vendor fatigue, cost of engagement, -- things I discussed earlier. The market is definitely alive and kicking to change platforms.

They want to change platform, also, because they want or, sometimes, are forced to add more programs because some of the new programs are just very effective. Some of them are dangerous and ineffective. It's hard to tell which is which.

One thing's for sure: managing yourself is incredibly taxing: super expensive, super complicated, super hard. That's what we've done for a really long time. That's what the platform does.

There is enormous interest by new players in what we have. But their interest is really driven, very much, because of the success we see with our existing customers.

The DHA, Elevance, there are quite a few others that are basically performing and performing very well. You see it in renewal.

If it relates to AI, AI changes everything. It's hard for me to overstate the enormity of the revolution that touches everything, not only in healthcare, of course.

First, we -- and, boringly, we're using AI across the company in everything we do: better deliverables, better workflows, better data-driven strategy, better everything. You saw the dramatic change in our cost structure that was simply not possible without AI.

We are nowhere near done. We are going to be dramatically more effective, only because we have AI. I assume that many companies are doing the same. It's not a great, necessarily, differentiator. But not doing it is existentially dangerous, in our opinion.

Much more importantly, in way of our infrastructure and product, of course, we have, also, AI investment in our own product in managing data analytics, data-science engagement, and all those things.

But, zooming out on the big picture, our biggest contribution is to basically free our customers from the need to diligent, to integrate, to piece together a lot of new programs.

They turn to us to do their job. Our platform is designed to do that. We do it quite well.

The fact that we have a national network of thousands of doctors around the clock with short wait times that are extremely experienced and high-clinical quality with very, very high NPS that are all connected and engaged to this platform is incredibly important.

You need a clinical human in the loop in order to enable a lot of the greatness that new and existing clinical programs are offering.

The fact that we saw recent renewals on very large audiences; and the fact that we are much better in marketing to individuals -- members, patients, beneficiaries, employees, regardless of how you call them; and we are able to dramatically improve the engagement per individual; and that results in measurable outcomes that we can prove; and the ability to switch over and monitor is something that is fairly basic and fundamental to our customers and could drive and is already driving -- and you saw some of the numbers today -- drives a higher utilization with our existing customers.

The white space of same-store growth is hard to exaggerate on. That growth and that success will definitely have -- already have and will continue to have a great impact in our ability to sell.

We sell what works. What works works with our existing customers. Our priority is to maximize the value to them. That's the best sales and marketing tool for new ones in a time where there is great distress and great need.

We are not viewed as extra SaaS expense. We are viewed as a tool to consolidate, save, simplify, and achieve results in a very meaningful way.

Great. Perfect. Thanks a lot.

Craig Hettenbach, Morgan Stanley.

Understanding the opportunity set has been shifting to the government programs you've been talking about, can you just touch on what you're seeing at your health-system customers? What's resonating with them today? What are some areas that they're focused on most versus, maybe, cutting back?

Sure, Craig.

Essentially, everybody is trying to do what I said, right? Everybody has addressable population that they need to engage to use more technology-enabled care, powered by AI, to improve the outcome, improve them. And then, if it doesn't work, fix that. That's true across the board.

The government, obviously, is a huge infrastructure or huge container of a lot of people. That is very impacted by the value that we can create. You see the momentum there.

But it's almost the same momentum with commercial payers. We see it very clearly. Their interests are the same. Their clients, employers -- especially self-insured employers -- are demanding the type of infrastructure; the type of agility and ability to improve.

The health-systems issue is different. We used to have a very wide net of products across different areas. Some of them are growingly occupied by the traditional EHR players -- urgent care, for example; telepsychiatry that we sold recently; and so on and so forth.

While we see -- and we have a loyal base of customers in health systems; and we are proud of that relationship; and we believe that providers have a very important role, also, in the future in enabling AI care -- AI-enabled care -- the financial opportunity, right now, that moves our needle is very much in the government and payer sector as priorities.

But we are certainly not discounting the health systems. Pre-design, they are smaller; they move in different dynamics. Our focus area today is much better defined than it was before, which I think is very positive for everybody.

We're not doing things that we are not great at. We do one thing. We think we are very good at that. It has a very clear implication on all payers. But our priorities were as said it was.

Got it. And then, just a follow-up for Mark: In a scenario where you are able to get back to double-digit revenue growth, can you talk about, just, the operating leverage in the model at this point?

I know you guys have done a lot of cost reductions and have tightened up. In that double-digit revenue scenario, how would you envision OpEx in terms of headcount or just things, even if it's at a high level?

Yeah. Greg, we've completed the vast majority of our cost reductions, coming to the latter half of this year.

Our margin profile will likely pick up about [1,000 basis points] -- looking at 1,000 basis points between where we are today and run rate -- Q4 of 2027 -- as we achieve a significant improvement on the subscription-revenue line.

The costs to manage; and to continue to grow and support that line are considerably less than where we had been with services, creating the larger component.

We would likely look at our headcount to be somewhat similar between years with, I would say, mid-teens growth projections, if all came -- if all of our prospects that we believe have a high probability of coming in between now and the end of next year do materialize.

Got it.

Thank you.

Welcome.

Stan Berenshteyn, Wells Fargo Securities.

Hi. Good evening. Thanks for taking my questions. I apologize if I'm re-asking anything. I did hop on a little late here.

But, given your comments related to the pipeline growth, are there any changes in R&D or sales or marketing focus for you or reinvestment, as we think about the next 6 to 12 months?

And then, furthermore, I just wanted to get a follow-up: Are you looking at any opportunities to further rationalize any of your non-core assets?

Thank you.

Hi, Stan. I think the two parts of your question really complement each other perfectly.

We are laser-focused. We have one platform that does what I said earlier on the call. That means that we are divesting assets that are non-core and are going to reinvest our efforts in doing what I said earlier on the call.

Our R&D team is much more efficient today. It's much smaller than it was. But it's more productive, in many ways, mostly because of the strategic focus; but, also, because of the layering and reorganization and different processes and liberal use of AI and other tools.

That's really what's going to continue to allow us to be very effective.

Some of the contracts that we are looking at or some of the opportunities may require some investment. But these are going to be accretive investments that are not going to change our position, as we talk about growth and profitability.

We are very, very disciplined now much more than before in only engaging in opportunities that do not require us to defocus and do not require us to do any custom development or things that their profitability is unclear.

It's one engine. It does something very specific. It is customizable. But we are not creating any different variation of it for different customers that are all using the same backbone in the same way. That allows us just to be much more impactful.

I think, in many ways, some of the pipeline growth that we see; some of the reason our story is resonating is the fact that it's truly trustworthy.

There are so many casualties, right now; also, different programs, especially new AI programs and so on that are not necessarily panning out that experimenting with them is a must.

But experimenting with them on a trusted platform that does consistent member experience; that fits consistent reports in the same format; that requires one integration; that reduces the number of contracts and relationships that you have to manage; and, in addition to that, enables a flywheel where the same patient can actually get multiple types of service that reinforce each other and work in harmony is the reason where the revenue per employee, the impact of the company, its profitability, is going to, in our opinion, continue to grow over the next few years.

Appreciate the color.

It seems like you agree that, perhaps, there might be some non-core assets that might be divested. Is there anything, from, like, a timing standpoint, that you can haircut here and suggest that, maybe, there's something on the horizon? Or is this more of just a theoretical thing that may or may not happen?

Thanks.

I wouldn't call it theoretical. We did divest quite a few things, already. We care deeply about our customers. That's our number 1 priority.

Whatever we do, we're going to do in a responsible way to make sure that we maintain important relationships in the market and not leave anyone in any type of an issue.

We are actively working on that. You should expect us to continue to defocus. It may come with some revenues -- or income, not revenues. I'm sorry.

But the main benefit is the laser focus of the company. Our plan is to be left with one platform, one product, one type of service for everyone that we serve.

Great. Thanks so much.

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