Amwell� Announces Results for Second Quarter 2021

Amwell® Announces Results for Second Quarter 2021

August 11, 2021

Revenue of $60.2 million in the second quarter increased 5% over last quarter

Gross margins increased 600 bps to 44% of revenue versus 38% last quarter

Total visits of 1.3 million versus 1.6 million last quarter

$12 million increase to annual EBITDA guidance

BOSTON--(BUSINESS WIRE)-- Amwell, (NYSE: AMWL) (the "Company") a national telehealth leader, today announced financial results for the second quarter ended June 30, 2021.

"In Q2, we were pleased to show significant progress in shifting the mix of our revenues more towards enabling technology versus visits. We expect this shift to continue in 2022 and beyond, and after our Converge roll-out to drive better margins and profitability. We are therefore confirming our Subscription, Carepoints and related technology revenue outlook, given the strong performance in the first half.

Regarding visits, on July 18th, the American Academy of Pediatrics reversed their previous guidance and is now recommending that all children, staff, and teachers in grades K-12 wear masks, regardless of vaccination status. Similarly on July 27th, the Centers for Disease Control reversed their previous guidance and are now recommending that all individuals, including those who are vaccinated, wear masks indoors in any location with high or substantial COVID transmission, which currently includes 2/3 of the US population.

With mask mandates quickly returning and also acknowledging other trends we are observing within visit mix and volumes, we need to account for these other dynamics and a likely weaker cold and flu season due to these variant related protective measures. Consequently, we are adjusting down our visit forecast for the remainder of the year to account for these factors," said Dr. Ido Schoenberg, Chairman and CEO.

Dr. Schoenberg continued, "Converge, coupled with our recent acquisitions, set Amwell apart. Together we uniquely provide a single, integrated, scalable and dependable platform that combines physical, virtual, and automated care delivery enablement. We believe that use of our platform will continue to materially increase over the next few years as healthcare workflows go through significant transformation and focus more on efficiency, impact, and reach.

We were pleased by the feedback of our clients as we began to deploy Amwell Now on Converge. Many more will follow this year. We look forward to providing you with more insight as we continue to support our vast ecosystem of partners and clients in their journey to transform and improve healthcare."

Second quarter 2021 Financial Highlights:

All comparisons, unless otherwise noted, are to the three months ended March 31, 2021.

Financial Outlook

For 2021, the Company is adjusting their previous visits outlook to account for changes related to COVID-Delta variant and now expects:

Quarterly Conference Call Details

The company will host a conference call to review the results today, Wednesday, August 11, 2021 at 5:00 p.m. E.T. to discuss its financial results.

About Amwell

Amwell is a leading telehealth platform in the United States and globally, connecting and enabling providers, insurers, patients, and innovators to deliver greater access to more affordable, higher quality care. Amwell believes that digital care delivery will transform healthcare. The Company offers a single, comprehensive platform to support all telehealth needs from urgent to acute and post-acute care, as well as chronic care management and healthy living. With over a decade of experience, Amwell powers telehealth solutions for over 2,000 hospitals and 55 health plan partners with over 36,000 employers, covering over 80 million lives. For more information, please visit https://business.amwell.com/.

American Well, Amwell, Converge and Carepoint are registered trademarks or trademarks of American Well Corporation in the United States and other countries. All other trademarks used herein are the property of their respective owners.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)

June 30,2021 December 31,2020
Assets
Current assets:
Cash and cash equivalents 975,187 941,616
Investments - 99,963
Restricted cash 795 1,095
Accounts receivable 35,544 45,296
Inventories 8,929 9,128
Deferred contract acquisition costs 2,450 2,134
Prepaid expenses and other current assets 13,491 14,055
Total current assets 1,036,396 1,113,287
2,985 3,836
Property and equipment, net 193,877 193,877
Goodwill 51,672 55,528
Intangible assets, net 3,486 6,609
Operating lease right-of-use asset 898 1,327
Deferred contract acquisition costs, net of current portion 1,246 1,430
Other assets 1,759 752
Investment in minority owned joint venture
Total assets $ 1,292,319 $ 1,376,646
Liabilities, Convertible Preferred Stock and Stockholders' Deficit
Current liabilities:
Accounts payable $ 5,173 $ 5,797
Accrued expenses and other current liabilities 24,864 42,135
Operating lease liability, current 3,471 6,357
Deferred revenue 57,836 66,693
Total current liabilities 91,344 120,982
Other long-term liabilities 26 64
Operating lease liability, net of current portion 776 1,296
Deferred revenue, net of current portion 7,530 8,107
Total liabilities 99,676 130,449
Commitments and contingencies (Note 11)
Stockholders' deficit:
Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares issued or outstanding as of June 30, 2021 and as of December 31, 2020 — —
Common stock, $0.01 par value; 1,000,000,000 Class A shares authorized, 209,875,389 and 201,488,097 shares issued, and 209,875,389 and 200,751,168 shares outstanding, respectively;100,000,000 Class B shares authorized, 26,687,959 and 30,427,128 shares issued, and 26,687,959 and 29,297,382 shares outstanding, respectively; 200,000,000 Class C shares authorized 5,555,555 issued and outstanding as of June 30, 2021 and December 31, 2020 2,422 2,357
Treasury stock, no shares and 1,866,675 shares as of June 30, 2021 and December 31, 2020, respectively — (37,568)
Additional paid-in capital 1,877,497 1,841,405
Accumulated other comprehensive income 140 297
Accumulated deficit (708,587) (582,359)
Total American Well Corporation stockholders' equity 1,171,472 1,224,132
Non-controlling interest 21,171 22,065
Total stockholders' equity 1,192,643 1,246,197
Total liabilities, preferred stock and stockholders' equity $ 1,292,319 $ 1,376,646

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
(unaudited) Three Months Ended June

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Revenue
($1,462, $15,912, $3,089 and $29,160 from related parties respectively) $60,217 $68,568 $117,816 $122,282
Costs and operating expenses:
Costs of revenue, excluding depreciation and amortization of intangible assets 33,889 43,826 69,594 76,853
Research and development 22,378 17,637 45,418 32,573
Sales and marketing 14,789 12,346 28,521 26,220
General and administrative 24,212 80,082 45,566 95,424
Depreciation and amortization expense 2,484 2,509 4,990 4,795
Total costs and operating expenses 97,752 156,400 194,089 235,865
Loss from operations (37,535) (87,832) (76,273) (113,583)
Interest income and other income (expense), net 224 308 285 1,155
Loss before expense from income taxes and loss from equity method investment (37,311) (87,524) (75,988) (112,428)
Expense from income taxes (103) (252) (412) (252)
Loss from equity method investment (722) (444) (1,541) (764)
Net loss (38,136) (88,220) (77,941) (113,444)
Net loss attributable to non-controlling interest (277) (1,562) (894) (2,405)
Net loss attributable to American Well Corporation $(37,859) $(86,658) $(77,047) $(111,039)
Net loss per share attributable to common stockholders, basic and diluted $(0.15) $(1.99) $(0.31) $(2.66)
Weighted-average common shares outstanding, basic and diluted 249,366,652 43,484,313 246,471,733 41,793,108
Net loss $(38,136) $(88,220) $(77,941) $(113,444)
Other comprehensive income (loss), net of tax:
Unrealized gain on available-for-sale investments (119) (323) (85) (280)
Foreign currency translation (20) 349 (72) 178
Comprehensive loss (38,275) (88,194) (78,098) (113,546)
Less: Comprehensive loss attributable to non-controlling interest (277) (1,562) (894) (2,405)
Comprehensive loss attributable to American Well Corporation $(37,998) $(86,632) $(77,204) $(111,141)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share and per share amounts)
(unaudited)
Six Months Ended June 30,

Six Months Ended June 30,
2021 2020
Cash flows from operating activities:
Net loss $ (77,941) $ (113,444)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense 4,990 4,795
Provisions for doubtful accounts (57) 640
Amortization of deferred contract acquisition costs 731 730
Amortization of deferred contract fulfillment costs 351 339
Stock-based compensation expense 19,368 72,096
Loss on equity method investment 1,541 764
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable 9,809 (8,708)
Inventories 199 (2,107)
Deferred contract acquisition costs (618) (1,506)
Prepaid expenses and other current assets 284 (3,004)
Other assets 184 229
Accounts payable (624) (2,494)
Accrued expenses and other current liabilities (16,063) (687)
Other long-term liabilities (38) (195)
Deferred revenue (9,506) (5,270)
Net cash used in operating activities (67,390) (57,822)
Cash flows from investing activities:
Purchases of property and equipment (283) (2,304)
Investment in less than majority owned joint venture (2,548) (2,940)
Purchases of investments — (29,777)
Proceeds from sales and maturities of investments 100,000 39,355
Net cash provided by investing activities 97,169 4,334
Cash flows from financing activities:
Proceeds from issuance of Series C convertible preferred stock, net of issuance costs — 146,764
Proceeds from exercise of common stock options 16,733 2,232
Payments for the purchase of treasury stock (11,628) (163)
Payment of deferred offering costs (1,613) (371)
Net cash provided by financing activities 3,492 148,462
Net decrease in cash, cash equivalents,and restricted cash 33,271 94,974
Cash,cash equivalents,and restricted cash at beginning of period 942,711 138,816
Cash,cash equivalents,and restricted cash at end of period 975,982 233,790
Cash,cash equivalents,and restricted cash at end of period:
Cash and cash equivalents 975,187 232,695
Restricted cash 795 1,095
Total cash,cash equivalents,and restricted cash at end of period 975,982 233,790
Supplemental disclosure of cash flow information:
Cash paid for income taxes $955 138
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment included in accrued expenses and accounts payable $- $572
Common stock issuance costs $- $440
Preferred stock issuance costs $- $750
Receivable related to exercise of common stock options $71 100

Non-GAAP Financial Measures:

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, of US GAAP, we use adjusted EBITDA, which is a non-U.S GAAP financial measure to clarify and enhance an understanding of past performance. We believe that the presentation of adjusted EBITDA enhances an investor’s understanding of our financial performance. We further believe that adjusted EBITDA is a useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. We use certain financial measures for business planning purposes and in measuring our performance relative to that of our competitors. We utilize adjusted EBITDA as the primary measure of our performance.

We calculate adjusted EBITDA as net loss adjusted to exclude (i) interest income and other income, net, (ii) tax benefit and expense, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) public offering expenses, (vi) acquisition-related income and expenses, (vii) litigation expenses related to the defense of our patents in the patent infringement claim filed by Teladoc and (viii) other items affecting our results that we do not view as representative of our ongoing operations, including direct and incremental expenses associated with the COVID-19 pandemic.

We believe adjusted EBITDA is a commonly used by investors to evaluate our performance and that of our competitors. However, our use of the term adjusted EBITDA may vary from that of others in our industry. Adjusted EBITDA should not be considered as an alternative to net loss before taxes, net loss, loss per share or any other performance measures derived in accordance with U.S. GAAP as measures of performance.

Adjusted EBITDA has important limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations of adjusted EBITDA include (i) adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these capital expenditures. Our IPO and acquisition-related expenses, including legal, accounting and other professional expenses, reflect cash expenditures and we expect such expenditures for acquisitions to recur from time to time. Our adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate adjusted EBITDA in the same manner as we calculate the measure, limiting its usefulness as a comparative measure.

In evaluating adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. Adjusted EBITDA should not be considered as an alternative to loss before benefit from income taxes, net loss, earnings per share, or any other performance measures derived in accordance with U.S. GAAP. When evaluating our performance, you should consider adjusted EBITDA alongside other financial performance measures, including our net loss and other GAAP results.

Other than with respect to GAAP Revenue, the Company only provides guidance on a non-GAAP basis. The Company does not provide a reconciliation of forward-looking Adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation because other deductions (such as COVID expenses and acquisition related expenses) used to calculate projected net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in projected GAAP net income (loss) being materially less than projected Adjusted EBITDA (non-GAAP).

The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2021 2020 2021 2020
Net loss $(38,136) $(88,220) $ (77,941) $ (113,444)
Add:
Depreciation and amortization 2,484 2,509 4,990 4,795
Interest income and other income (expense), net (224) (308) (285) (1,155)
Expense from income taxes 103 252 412 252
Stock-based compensation 10,726 67,638 19,368 72,096
Public offering expenses — 526 1,223 677
Acquisition-related expense(income) 587 (65) 587 (48)
COVID-19-related expenses(1) — 4,329 — 5,742
Litigation expense 808 — 1,547 —
Adjusted EBITDA $(23,652) $(13,339) $(50,099) $(31,085)

  1. COVID-19-related expenses include non-recurring provider bonus payments, emergency hosting licensing fees and non-medical provider temporary labor costs related to on-boarding non-AMG providers incurred in response to the initial outbreak of the COVID-19 virus as Amwell attempted to scale quickly to meet unusually high patient and non-AMG provider demand.

  2. Public offering expenses include non-recurring expenses incurred in relation to our initial public offering for the three and six months ended June 30, 2020 and our secondary offering for the six months ended June 30, 2021.

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Media Contact:

Holly Spring press@amwell.com 781.888.8219

Investor Contact:

Asher Dewhurst investors@amwell.com