Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- American Well Corp (AMWL, Financial) announced a significant milestone in modernizing the military health system for the Defense Health Agency, with plans for enterprise-wide deployment by the end of 2024.
- The company has aligned its cost structure to focus on efficiency and effectiveness, resulting in improved EBITDA guidance for 2024.
- AMWL has positioned its growth organization to deliver high-quality growth in 2025, with a focus on higher-margin revenue.
- The company reported strong client satisfaction, with patient and provider ratings across converged deployments remaining well over 90%.
- AMWL ended the third quarter with a strong balance sheet, holding $245 million in cash and marketable securities and no debt.
Negative Points
- Total revenue for the third quarter was flat compared to the previous year, with subscription revenue down 5% from the last quarter.
- The company experienced a 4.6% decline in visit volumes compared to the previous year, with expectations for this softness to continue into Q4.
- AMWL revised its 2024 revenue guidance downward due to ongoing softness in visits and client execution challenges.
- The company faces execution risks in achieving its target of being cash flow positive by 2026, particularly in terms of revenue growth and cost management.
- There is a competitive landscape challenge, as other vendors are providing similar services to AMWL's clients, potentially impacting market share.
Q & A Highlights
Q: Can you expand on your focus on high-quality profitable growth in 2025? Is this related to the competitive backdrop or specific strategic shifts at Amwell?
A: It's more about our strategic focus. We've been enhancing our core services, particularly subscription-heavy offerings, for both payers and providers. We have good visibility into high-quality growth for 2025, dominated by subscription revenue, which is less vulnerable to visit fluctuations. This is a multi-year trend where our platform's enabling functions will be central to our strategy. - Ido Schoenberg, Chairman and CEO
Q: Can you clarify your comments around achieving cash flow positive by 2026? What risks do you foresee in reaching this target?
A: We are confirming our target for 2026. The execution risks include ensuring new revenue streams come together and maintaining our cost base. We have good visibility into 2025 revenue, but we'll need additional revenues to achieve the necessary gross margin levels. - Mark Hirschhorn, CFO
Q: Regarding the Defense Health Agency (DHA) contract rollout, is there any delay in the enterprise-wide deployment expected by year-end?
A: No, there is no delay. We are on track for the enterprise-wide deployment by year-end. The final decision on timing is with the customer, but we have no reason to believe there will be changes. The current funding continues until next summer, and we expect the contract to be renewed. - Ido Schoenberg, Chairman and CEO
Q: How does SilverCloud integrate with other virtual behavioral health providers in a network without being cannibalistic?
A: Our platform offers a singular pathway for consumers to engage with various clinical programs, including those from third parties. SilverCloud is one of many programs, and our role is to match patients with the right program, facilitating a seamless experience. This orchestration is complementary, not cannibalistic. - Ido Schoenberg, Chairman and CEO
Q: Can you discuss the potential for monetizing the routing capabilities of your platform, particularly with third-party programs?
A: Yes, we can monetize these capabilities. The cost of patient acquisition is high, and our platform provides a more efficient pathway for engagement. We have revenue-sharing agreements with partners, similar to an app store model, which we expect to grow over time. - Ido Schoenberg, Chairman and CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
