• Total Revenue: $71 million for Q4, flat compared to Q4 2023.
• Subscription Revenue: $37 million in Q4, up 36% year-over-year.
• Visits Completed: Approximately 1.4 million in Q4, 18% lower than the previous year.
• Average Annual Contract Value (ACV): Health plan ACV grew to $963,000; Health systems ACV expanded to $488,000.
• AMG Visit Revenue: $29.2 million, 9% lower than last year.
• Average Revenue Per Visit: $77, a 7% increase from the previous year.
• Gross Profit Margin: 48% in Q4, up 11 points from Q3.
• R&D Expenses: $18.8 million, a 29% decline from Q4 2023.
• Sales and Marketing Expenses: $15.4 million, 8% lower than last quarter and 29% lower year-over-year.
• G&A Expenses: $34.8 million, 38% higher than last quarter due to a one-time bad debt accrual.
• Adjusted EBITDA: Negative $22.8 million, improved from negative $36.9 million in Q4 2023.
• Cash and Marketable Securities: $228 million at the end of Q4, with zero debt.
• 2025 Revenue Guidance: $250 million to $260 million.
• 2025 Adjusted EBITDA Guidance: Negative $55 million to negative $45 million.
• 2025 AMG Visits Guidance: 1.3 million to 1.35 million visits.
• Q1 2025 Revenue Guidance: $59 million to $61 million.
• Q1 2025 Adjusted EBITDA Guidance: Negative $18 million to negative $20 million.

• Warning! GuruFocus has detected 9 Warning Signs with AMWL.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• American Well Corp (NYSE:AMWL) achieved significant progress in its strategic initiatives, including the successful deployment of its solution across the Military Health System, marking the most significant growth initiative in the company's history.
• The company reported a substantial increase in subscription software revenue, which grew by over 30% compared to the previous quarter, driven by strategic client deployments.
• AMWL improved its adjusted EBITDA for the third consecutive quarter, reflecting effective cost reduction measures and a focus on high-margin revenue growth.
• The divestiture of Amwell Psychiatric Care strengthened the company's balance sheet by adding up to $30 million in cash, allowing AMWL to focus on its core platform.
• The company has a strong cash position with $228 million in cash and marketable securities and zero debt, providing financial stability and flexibility for future growth initiatives.

Negative Points

• Total revenue for Q4 2024 was flat compared to Q4 2023, indicating a lack of overall revenue growth despite strategic initiatives.
• The number of completed visits in Q4 decreased by approximately 18% year-over-year, reflecting market-wide and client execution-related challenges.
• AMWL's adjusted EBITDA remained negative at $22.8 million for the quarter, although it showed improvement from the previous year.
• The company experienced significant churn in 2024, which impacted its revenue and required managed attrition of clients not aligned with its strategic direction.
• There is a dependency on the successful renewal and expansion of government contracts, such as the DHA, which could impact future revenue growth if not secured.

Q & A Highlights

Q: Can you discuss the progress of the DHA deployment and any key milestones for the rest of the year? Also, what are the growth expectations for the broader business in 2025? A: The DHA deployment is progressing well, possibly better than expected. Most components are customized and implemented, with enterprise deployment expected to be completed this year. We are seeing strong demand for technology-enabled care platforms, evidenced by significant growth in our pipeline, favoring higher-margin software components.

Q: Regarding the DHA contract, do you have visibility on when the sustainment contract will be signed? A: In Q4, DHA announced a sole source grant to Leidos for a three-year extension, including our component and other deployments. The deployment is going well, and we believe the extension is likely to be signed soon, although we await official notification.

Q: How did the ACV for health plans and health systems improve in 2024, and what are your expectations for 2025? A: We expect significant growth this year, driven by a larger and higher-quality pipeline favoring subscription revenue. The successful DHA deployment indicates future growth potential, and we see strong demand from health plans and systems for digital assets and technology-enabled care.

Q: Can you explain the visibility into your 2025 guidance and any key variables outside of DHA? A: We have over 90% visibility into our 2025 guidance, with subscription revenue expected to exceed $150 million. The remainder is transactional visit volume, which we have extensive data on. We are confident in our conservative guidance and will provide quarterly updates.

Q: How does the divestiture of Amwell Psychiatric Care impact your revenue, and what was the mix of subscription and visit revenue? A: The divestiture represents an annualized revenue impact of over $25 million, entirely from visit revenue. This move allows us to focus on our core platform and improve our financial position.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.