American Well Corporation (AMWL) Q1 2026 Earnings Report, Transcript and Summary

Hello, everyone, and welcome to Amwell's conference call to discuss their first fiscal quarter of 2026. [Operator Instructions] 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 the normal news sources. This conference call is being webcast live on the IR page of the website, where a replay will be archived. Before we begin prepared remarks, I'd like to take this opportunity to remind you that during the 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 those 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 like to turn the call over to Ido.

Thank you, operator. Good evening, everyone. Over the past 12 months, we focus on what matters most, solving clear urgent customer needs. We deliver dependable, unified platform, and the market is responding. Elevance renewed for 3 years. DHA deployed globally. Our pipeline is growing. CMS is increasingly making telehealth flexibilities permanent. And in 2025, we reduced losses by $100 million. We also significantly grew our subscription revenue mix. We have ample cash, no debt and a clear path to cash flow breakeven in Q4 with real confidence in multiyear growth beyond it. Amwell entered 2026 with one focus, consolidate our platform and deliver what payer and provider customers need most today and in the future. The market opportunity is real and urgent. Payers are under serious margin pressure. Premiums are not keeping pace with the total cost of care. Technology-enabled care and AI-powered clinical programs, in particular, are now one of the most critical levers payers have. They help control costs. They help improve outcomes. They help payers compete for members and sponsors. This is no longer speculative. It is a survival imperative, but adoption remains hard. Despite strong demand, customers are struggling. Vendor sprawl is a real burden. Legacy tech stacks and internal silos make it expensive to integrate point solutions. The result, fragmented member experiences and very limited visibility into what actually works. Customers cannot easily measure performance across their programs. Switching between them or optimizing member attribution is slow, expensive and painful. That is exactly where we step in. Amwell solves this. We offer a trusted, proven technology-enabled care infrastructure, a unified digital stack that lets health care sponsors act as their own system integrators. Customers white label and embed the clinical programs their members need directly within their own digital front door. They control navigation, they monitor results. And those results go to the heart of their business, lower costs, better outcomes and stronger market share. With Amwell, customers get one unified engagement and navigation platform. It reduces acquisition and retention costs. It matches each patient with the most effective program based on client-defined rules. And it aims to deliver unified analytics across every program, so clients can see what works, document outcomes and adjust quickly. Clients can adjust service attribution by member, group or cohort. They can add Amwell native clinical programs, third-party programs or their own preferred programs. That level of control and agility is highly valued and desired. The Amwell platform is built for where AI is going next. The industry is moving fast from generative AI to agentic AI. These are systems that don't just create content. They execute tasks autonomously across complex workflows. Our customers are preparing for this shift. The Amwell platform is positioned to be the governed environment where these agents operate safely, effectively and at scale. We are not positioning Amwell as an AI feature. We are the infrastructure layer where AI-powered care becomes operational and measurable. A critical enabler of effective AI is data. Because our platform serves as a common infrastructure across all programs, we aim to maintain a unified data structure that is unique in our industry. Before care begins, we look to share relevant member information with clinical programs, which the patient has selected so they can engage effectively from the first interaction. After care is delivered, we aim to collect and consolidate outcomes data across all programs. That data improves attribution, drives personalization and makes every AI-driven program more effective over time. This unified data foundation may create a significant and durable competitive advantage for us. We also have powerful validation at scale. Elevance Health, one of the largest payers in the country, has renewed with Amwell for 3 more years. That is a strong vote of confidence in our platform and the value we deliver in one of the most sophisticated operating environments in the market. We also have powerful validation on the government side. The military health system contract extension in August 2025 put our platform in front of 9.6 million military beneficiaries across the globe, connecting deployed units in and outside combat zones with military hospitals. That level of security, scale and mission-critical reliability is exactly what other government entities, payer and health system clients are looking for. The regulatory environment is now working in our favor. CMS has made telehealth permanently accessible. Rural geographic restrictions are gone. Home-based telehealth is extended through at least 2027. Virtual behavioral health is now a permanent part of Medicare. New reimbursement code for advanced primary care management and behavioral health integration are creating further incentives to shift care into virtual and community-based settings. This is a direct tailwind for our platform. We have also transformed how we operate. Alongside strengthening our platform, we made meaningful operational improvements, sharper focus, significant organizational changes and more efficient ways of working. In 2025, we reduced net loss and adjusted EBITDA losses by approximately $100 million. Subscription revenue grew to 53% of total revenue, a recurring stable income stream. And the market is responding. Renewals are strong, pipeline growth is significant. Our offering is resonating with existing customers and new ones alike. We enter this next phase with $182 million in cash, no debt, a clear path to cash flow breakeven in Q4 of this year and a view towards multiyear growth beyond that milestone. We have a clear strategy, a mature and highly relevant platform, an efficient operation and financial stability that gives us the runway to execute. We are excited about what is ahead. And now I would like to turn to Mark for a closer review of our performance. Mark?

Thanks, Ido, and good afternoon, everyone. On today's call, I'll start with a few highlights from the first quarter, walk through our financial results in detail and close with an update on our second quarter and full year 2026 outlook. In the first quarter, we delivered strong results across revenue, gross margin and adjusted EBITDA. The outperformance was driven by strong visit volumes in urgent care and clinical programs with continued cost discipline. These results demonstrate continued progress on our path toward profitability and reinforce our confidence in the trajectory of our business. Total revenue for the first quarter was $54.9 million, down approximately 18% year-over-year. Subscription revenue was $24.9 million, down approximately 23% year-over-year, driven primarily by previously disclosed churn. Encouragingly, renewals and retention were higher than budgeted in the first quarter, providing greater confidence in the stability of our subscription base going forward. Amwell Medical Group, or AMG visit revenue was $28.9 million, up approximately 9% year-over-year. AMG paid visits totaled approximately 382,000 visits, up slightly year-over-year with revenue per visit of approximately $76 up approximately $5 per visit year-over-year, reflecting the growing contribution of our clinical programs and the broader shift in our visit mix toward higher acuity, higher-value care. Virtual primary care continued its strong growth trajectory with visits up approximately 57% year-over-year, underscoring the increasing adoption of our VPC offering across our client base. Total platform visits were 1 million visits, down approximately 19% year-over-year, which is in line with the portfolio changes we have previously discussed. Gross profit was $28 million with a gross margin of 51%, down approximately 180 basis points year-over-year from 52.8% in the first quarter of 2025. Near term, our existing revenue mix will likely generate a margin profile similar to what we just generated. We continue to see our projected revenue mix shifting toward higher-margin SaaS offerings, which we believe will support margin expansion over the next several years as our scale improves. Total operating expenses were $45.4 million, down approximately 31% year-over-year. As a percentage of revenue, operating expenses improved to 82.6% from 98.3% in Q1 of 2025, reflecting the benefits of our transformation actions and continued cost discipline. Adjusted EBITDA for the first quarter was a loss of $3.1 million compared to a loss of $12.2 million in Q1 of 2025, representing a $9.1 million improvement. Operating loss was $17.4 million compared to $30.4 million in Q1 of 2025, an improvement of approximately 43% year-over-year. Now turning to the balance sheet. We reported cash burn of approximately $3.1 million, down from $19 million last quarter. We ended the quarter with $179 million in cash and investments with 0 debt. Now turning to guidance. For the second quarter of 2026, we expect revenue in the range of $48 million to $52 million and an adjusted EBITDA loss in the range of negative $4 million to negative $2 million. This Q2 outlook reflects normal seasonality in visit volumes and the continued step down in subscription revenue impacted by previously discussed churn. Additionally, for the full year, we are reiterating our revenue outlook and updating our expectations for adjusted EBITDA. The revised adjusted EBITDA range reflects the progress we've made in the first quarter and that which we expect to continue throughout 2026. We now expect full year 2026 to generate revenue in the range of $195 million to $205 million and adjusted EBITDA loss of $16 million to $12 million compared to our previous range of a loss of $24 million to $18 million. The strength of Q1 gives us increased confidence in our goal of achieving positive cash flow from operations in the fourth quarter of this year. In summary, Q1 was a promising start to the year. Visit volume momentum, stable subscription revenue and a leaner cost structure give us confidence that we are on the right path. I want to thank the entire Amwell team for their hard work and dedication. These results reflect their efforts. With that, I'll turn it back to Ido.

Thank you, Mark. We are encouraged by our progress. It was made possible by the amazing team at Amwell. We feel privileged to help improve care for millions of patients and especially for the men and women in our military and their families around the globe. Amwell is playing an important role in transforming health care. What we do matters, and we believe it will only become more valuable going forward. We are proud of what we've accomplished, and we are truly excited about the road ahead. With that, I'd like to open the call for questions. Operator, please go ahead.

[Operator Instructions] Our first question comes from the line of John Park of Morgan Stanley.

On the DHA relationships, could you remind us or help us understand if there's any dependencies on the broader DHA's GENESIS or partners like Leidos and if that ecosystem dynamic would influence any renewal decision in the near future?

I believe, Ido, may be having some tech problems.

I'm sorry, I'm back, I apologize for this. Can you hear me now?

Loud and clear.

Okay. So essentially, when we take this incredibly important customer, the DHA, we really focused on delivering on their very specific and high expectations. We are privileged to have many other players involved, but our focus remains on making sure that first and fore, we put the customer first. There are many changes happening in different areas, but the service that we are providing and the integration into the backbone of the DHA remains constant. From where we sit and we strongly believe that based on our performance and relationship, we would likely hope and believe we are going to renew and continue to serve this customer for many years, recognizing that not all the players -- other players may or may not continue in the same format, but we are fairly confident and hopeful that we will, although we can never take it for granted and we work every day to continue and justify their trust.

Got it. My just follow-up would be, you talked about perhaps the broader pipeline. I remember perhaps the broader government pipeline you talked in the past. When you think about the rural health transformation initiative, I was wondering if you see any opportunities that this program could serve as a diversification lever relative to the broader government portfolio?

You're absolutely correct, John. In general, as we focus our efforts on our single platform and related products, I mentioned in my prepared remarks that people have great clarity. about the value that we bring and see the urgency in fulfilling that value that we believe we provide fairly uniquely. That's true for health system. It's certainly very true for commercial payers. And now that we have demonstrated in very large scale in a very unique and challenging environment of the GovCloud, our ability to operate there, that's not lost on government entities. From where we see it, we certainly believe that we are going to continue to grow in the commercial space, but also in the government space going forward. We are trying to submit RFPs to many of the opportunities that you mentioned in rural health. This is a long process. We believe we are well positioned, but the jury is still out as to the results, and we'll just have to wait patiently with everybody else. That's not the only opportunity in government that we are pursuing. We're pursuing other opportunities as well. And that's certainly part of the pipeline I talked about and Mark mentioned as well.

Our next question comes from the line of Corey DeVito of Wells Fargo.

This is Corey on for Stan Berenshteyn. Two questions on my end. One, any update on upselling the scope of the current DHA contract? And then the second one, what's the driver of the sequential increase in deferred revenue? I believe it's up $7 million quarter-over-quarter.

I'll take the first, and Mark will answer the second part of your question, Corey. Thank you. As it relates to the DHA, we are laser focused, as I mentioned earlier, on renewing our agreement for the current scope, and we are hopeful that, that's going to be the case. As it relates to further expansion, especially behavioral health, what we know is that we did deploy that successfully in the past, quite significantly in different demonstrative regions. And we know that it delivered on the value. The decision, of course, lies with the customer, and we hope they will expand at some point, but we don't have any specific information as to if and when at this point. And with that, I'll turn to Mark for the second part of your question.

Yes. The deferred revenue is purely a result of timing based on the renewals of some of our largest clients, those which took place in the first quarter as compared to prior year, which took place at the end of the calendar year.

Our next question comes from the line of Charles Rhyee of TD Cowen.

Congrats on all the progress that you've made so far. Ido, you made the comment earlier that the pipeline is growing and obviously, where subs and renewal and retention better than expected. So kind of giving you confidence in sort of the model as it goes forward. But maybe to dive into the pipeline a little bit more. Can you give us a sense on the mix of what that pipeline is maybe from a -- maybe a dollar standpoint to think through how much is health plans, health systems, government? Because when we look at 2025 revenues, Elevance obviously, is your largest customer, a fairly significant mix. DHA is not too far behind. And then there's a decent concentration in the top 10 as well. So just trying to understand, as we think forward, as we get through this period and we think about where growth is coming from, if you could help us understand where the opportunities you think are sort of the easiest to go after and sort of what that -- and how does that pipeline kind of reflect that?

Absolutely, Charles, and thank you for joining. Good to hear your voice. As it relates to the pipeline, as we mentioned earlier, it is significant and very different from the past years. I'll talk about it a little bit qualitatively. Essentially, the exciting news is that our new platform, the Amwell platform resonates really, really well across the market. And that's a tool that allows us not only to have subscription revenues, but also to grow the related clinical services, Amwell and non-Amwell services that we also generate revenue from when we do that. I mentioned earlier that while this technology and these services are relevant to health systems, to payers and to government entities across the board, we really believe that the most pressing need, obviously, is with large payers. They clearly need an infrastructure like that. And when that happens, 2 things happen. One, we have some new logos, but much more importantly, as they deploy our platform, it contributes to same-store growth, as it becomes more and more efficient in creating engagement with more members, and it is built to increase same user utilization of the clinical programs I discussed, encouraging the sponsors to continue and finance both engagement and coverage as we are able to demonstrate and prove outcomes, financial and clinical outcomes that also drive success in open enrollment and market expansion. So I believe that it's very refreshing for us to see a product mix that used to be many, many products across vast markets narrowed down to essentially one platform and related services and still generates a very healthy growth in pipeline and a healthy level of enthusiasm by existing in a new potential customers.

Is there any way -- can you share maybe sort of what that kind of growth looks like? Are we talking double-digit growth in the pipeline maybe since last year? Or anything you can share in terms of sort of the growth outlook?

Charles, I would just jump in and suggest that the pipeline is a multiple of what it had been last year. So it would be closer to triple digit as a result of those opportunities that Ido addressed. And again, primarily, it falls in line with what we believe will be principally components of government opportunities.

Okay. And maybe just one more, if I may. I think to a previous question, getting an update on DHA. Can you remind us the time lines of when you would expect to get a decision on, a, the renewal? And remind us in the off chance that there isn't a renewal, what is the fallback for the government? Because the DoD because my understanding is they don't really have one. And then lastly, can you kind of remind us what the opportunities are for expansion with this renewal? Would they come together? Or would those be 2 separate decisions?

Yes, Charles. So the renewal, we think, is going to be very straightforward. We believe that will be completed at the end of the quarter, start of the third quarter, perhaps July. We also believe that the opportunity to expand that will take place after the initial renewal. And as Ido alluded to earlier, whether that's a direct contract, whether we continue to work with our Leidos partners, irrespective of who ends up being the contracting party, we feel very confident that, that renewal is going to commence within that time frame I just spoke to.

Our next question comes from the line of Jailendra Singh of Truist Securities.

My first question is around the visit volume in the quarter, around 1.1 million. How did that track compared to your internal expectations? And what's driving the full year guidance of $1.3 million to $1.37 million? Some providers have talked about soft volume trend. They saw soft flu season, some weather disruption, which might have been a tailwind for you. Just curious like puts and takes you saw in Q1 and how we think about the trends for the rest of the year?

Hi, Jailendra, it's Mark. The trends were positive in both regards to premium-priced visits. So those that represented more higher-priced care specifically those clinical programs and virtual primary care as opposed to what had been the vast majority of our revenue-producing visits coming from urgent care in prior periods. We've also seen a nice high single-digit growth in volume. So we did not experience what some others may have told you was soft. We actually saw a nice seasonal boost that brought us through to the end of the quarter. And now we're obviously seeing the expected seasonality set in. So it was a nice surprise. It was one that I think was supported by the fact that we've got some additional ASO clients participating in the offerings that we've introduced. So the trend is positive, and we expect it to continue throughout the year.

Great. And then my follow-up, your comments around a number of meaningful renewals and strong pipeline. How often do AI capabilities come up in your client discussions now? And is the behavior different when you're talking to a health plan versus health system? And related to that, when clients evaluate your AI capabilities, are they willing to pay explicitly for those? Or they're saying like they should be bundled in your current platform and pricing? Just how are those conversations evolving?

Hi, Jailendra, that's a great question. So essentially, the answer is a little bit complex in this -- when people buy the platform, some of the AI capabilities that we use directly relate to things like consumer experience, streamlining navigation, providing sophisticated analytics and things of -- such things. Interestingly enough, not all our customers are ready to accept those modules. Some of them actually are very cautious about those models and really focus on the reoccurring, stable, proven parts of our platform as their main interest. However, all our customers, without exceptions, are eager and ready to test AI-driven clinical programs on our platform. And the reason is that we built the platform such that integration is very fast and the integration and replacement is even faster without changing many things like the consumer experience or the analytics. So there is a general recognition that AI clinical programs are necessary in order to achieve improved clinical and financial outcomes and they prove them. But that does not necessarily need to be expressed in the risks related to the actual platform, but rather more to the different programs that people test. So while we have a healthy bit of AI in our own offering, which we deploy to customers who are ready to benefit from it, the most important value that we bring is the safe, reproducible, scalable way for our customers to test different options. Most of them are AI-driven, not necessarily for a full cohort, but rather to certain ASOs versus others and so on and so forth and then really manage risk while having access to all the opportunities that all those innovations bring to them.

Our next question comes from the line of David Larsen of BTIG.

Can you talk a little bit more about the Defense Health Agency contract? I think there was a component in there. I think it was mental health that didn't renew, that might renew in the future and expand. What is the annual dollar value amount of that, please?

David, we can't speak to the exact dollar value of that, but we would expect it to represent in excess of 15% to 20% of the total value of the platform today. That's based on the experience that we had at the beginning of 2025 when the DHA was actively using those services. We are fully engaged in the discussion around reintroducing those services. However, we believe that will likely take place after the effective renewal of the base services earlier this summer.

And can you please talk about the nature of those services? Is it mental health? Is that correct? And I would think there's no greater need that the military has the mental health services given sort of the nature of their roles and their jobs. And I would think that the federal government would be very sympathetic towards supplying whatever support they can to serve our men and women in uniform.

David, this is Ido. Obviously, I totally agree with you, and we are very hopeful that's going to happen. The sequence is as follows: we are very grateful to be in a position to be the backbone and the infrastructure for technology-enabled care for the U.S. military. That relates to the core connection between any member of this wonderful family and their doctors, wherever they are. So that's Amwell. In addition to that, one of the clinical programs that fits, obviously, as a native solution, totally integrated in our solution is our behavioral -- automated behavioral health program that one of its main benefits is that it allows for a handful of therapies to reach dramatically more patients. So -- and that's a giant problem. There is a giant supply and demand in behavioral health in general, and that also includes an environment like this environment. And this is not theoretical. I mean we've tried it in this environment. We integrated it and it works and it's needed. The customer decided because of their own reasons to defer that deployment after we've proven that it works well and fully integrated, and that's perfectly fine. Should the client decide to add that again, the speed is going to be very, very quick. We believe it's going to be very helpful, and it does make sense. But these are totally the decisions of the customer, not our decisions. We know that it worked really well, not only in places like the DHA, but for example, in the National Health Service, the NHS in the U.K. where studies proven that we could dramatically change the ratio between therapists and patients. And that's obviously a wonderful thing, both in way of cost, but more importantly, in way of accelerating access that is such a pain point for everybody.

And then for 2027, would you expect revenue to grow on a year-over-year basis? And I understand there's been some churn. I guess, any more color around the churn that has already occurred? Why has it occurred? Is it maybe 1 or 2 clients? And then would you expect revenue to grow in '27 relative to '26?

Sure. 2026 churn has been immaterial. We would always expect low single-digit churn as we would in any business in a competitive market. We do have significant expectations for revenue growth. I had alluded to that even at the end of last year that even if a part of our pipeline converts this year, we expect to have meaningful revenue improvement in 2027 coming from these new government contracts.

And one more quick one. Mark, fantastic job getting a lot of these costs under control. Just are you sort of there? Or how much more in incremental annualized cost can you pull out of the business and nice work, by the way.

I appreciate that. Of course, I speak on behalf of all my colleagues as well because, as you know, it takes teams, essentially a village to get there. People have done much more with far less in this company over the past 18 months. We are all very pleased with where we are. However, everybody understands that the job is not finished yet. We have the next couple of quarters to ensure that we complete some of the initiatives that we've invested in over the past several quarters, but we do have a step down of costs, which means a lower operating cost basis coming out of the third quarter. So we are well on our way. You could probably tell that we're very optimistic and excited about achieving that milestone, but we're also very excited about what we believe is going to be meaningful growth next year.

[Operator Instructions] I'm showing no further questions at this time. So I would like to return it to Ido for closing remarks.

Thank you, Ari, and thank you, everyone, for joining. We truly appreciate your many years of support in Amwell and look forward to talking with you all soon. Take care.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.