Earnings Call Insights: American Well Corporation (AMWL) Q4 2025
Management View
- Ido Schoenberg, Chairman & CEO, described 2025 as a “pivotal year” marked by a major transformation and a sharpened focus on offering what he called “the best tech platform in the market.” He stated, “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.” Schoenberg emphasized that 2026 begins with “clear visibility towards the goal of cash flow breakeven from operations in Q4.”
- Schoenberg highlighted the company’s strategic shift, saying, “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.” He noted that Amwell is now “building deeper, long-term relationships with the payers, government and health systems.”
- Mark Hirschhorn, Executive VP, COO & CFO, reported, “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.”
- Hirschhorn also emphasized cost control and profitability progress: “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.”
Outlook
- Hirschhorn provided guidance for 2026: “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.” For Q1 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.”
- Hirschhorn stated, “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.”
Financial Results
- Hirschhorn reported, “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.” He attributed the decline to “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 visit revenue was $23.7 million. Paid AMG visits were flat at approximately 340,000 visits in the quarter. Total platform visits were 1 million, down 28.4% year-over-year.
- Cost of goods sold was $27 million, resulting in gross profit of $28.3 million. Gross margin was 51.2%, down 280 basis points year-over-year. Operating expenses, including depreciation and amortization, were $55.3 million, a 30.7% reduction year-over-year. Adjusted EBITDA for the quarter was a loss of $10.3 million, improving from a loss of $12.7 million in the previous quarter. Net loss was $25.2 million compared to $30.7 million in the third quarter.
- Cash burn for the quarter was approximately $19 million, with $182 million in cash and marketable securities and no debt at year-end.
Q&A
- Corey DeVito, Wells Fargo Securities: Asked about contract renewal timelines and government opportunities. Schoenberg responded, “In 2025, we signed 50 contracts, most of which are renewals… 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.”
- Jailendra Singh, Truist Securities: Inquired about the competitive landscape with new AI entrants. Schoenberg answered, “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… our platform would be an important utility as our clients do that.”
- David Larsen, BTIG: Asked about headwinds, tailwinds, and specifics on the DHA renewal. Hirschhorn said, “The most likely tailwind would be an earlier adoption of our technology-enabled platform… 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.”
- Craig Hettenbach, Morgan Stanley: Queried about long-term growth prospects with a smaller, higher quality revenue base. Schoenberg highlighted, “We believe that the same-store growth presents a very meaningful revenue opportunity for us… the government sector represents an incredible growth opportunity as well.”
- Eric Percher, Nephron Research: Asked about revenue quality and divestitures. Schoenberg replied, “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…”
- Ryan MacDonald, Needham & Company: Sought insight on renewal discussions informing go-to-market strategy. Schoenberg shared, “All of our renewals… were related to the same offering to the new Amwell Platform. And in many ways, while they are technically renewals… you can consider them in many ways, a new sale or almost a net new sale.”
Sentiment Analysis
- Analysts expressed cautious optimism, focusing on renewal risks, adoption of AI, and long-term growth clarity. The tone was generally neutral, with some probing on competitive threats and contract renewals.
- Management maintained a confident tone throughout, repeatedly referencing cost controls, subscription durability, and “clear visibility” to cash flow breakeven. Hirschhorn stressed, “We expect the company to achieve positive cash flow from operations in the fourth quarter of this year.”
- Compared to the previous quarter, management’s tone shifted to greater confidence and clarity about the company’s direction, whereas analyst questions remained consistently focused on core business risks and long-term growth.
Quarter-over-Quarter Comparison
- The current quarter saw management further streamline operations, complete divestitures, and shift to a single core platform offering. This contrasts with the previous quarter’s emphasis on broad product integration and early-stage divestitures.
- Guidance for 2026 was more explicit, with management forecasting revenue between $195 million and $205 million and a target for positive cash flow in Q4, compared to previous guidance focused on cost containment and broad operational efficiency.
- Analyst focus remained on contract renewals, particularly the DHA, and the long-term impacts of AI integration, similar to the prior quarter.
- Margins and operating expenses continued to improve, with a more significant drop in operating expenses this quarter.
- Management’s confidence in hitting cash flow breakeven has grown, and there is a clearer articulation of the strategic shift to high-quality, recurring revenue.
Risks and Concerns
- Management identified continued churn, the need to renew the DHA contract, and the challenge of integrating rapidly evolving AI programs as ongoing risks.
- Hirschhorn noted the potential revenue impact if the DHA contract is not renewed or expanded, stating that adding back previously eliminated digital behavioral health and automated care programs to the DHA contract would be “material.”
- Analysts pressed on potential headwinds to guidance, competitive threats from new AI entrants, and clarity around revenue quality as non-core assets are exited.
- Management responded by emphasizing the high renewal rate, the shift to a single platform, and ongoing cost discipline as mitigation strategies.
Final Takeaway
Amwell’s leadership emphasized that the company enters 2026 with a streamlined business model centered on a single, high-quality technology platform, a strong recurring revenue base, and no debt. Management stated that strategic divestitures and a focus on core payer and government markets position the company to achieve cash flow breakeven from operations in the fourth quarter of 2026, while continuing to invest in AI-driven innovation, deepen client relationships, and pursue meaningful growth opportunities in both same-store and government sectors.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.