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American Well Corp (AMWL)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 delivered stable revenue and clear operating progress: revenue was $62.8M, gross margin expanded to 37%, adjusted EBITDA loss improved to $(35.0)M from $(45.7)M in Q1 as cost actions flowed through and one-time Q1 items rolled off .
  • Management raised 2024 adjusted EBITDA guidance by $10M to $(150)M–$(145)M and reiterated 2024 revenue of $259M–$269M and AMG visits of 1.6M–1.7M; 2025 preliminary outlook (revenue $335M–$350M; adjusted EBITDA $(45)M–$(35)M) remains unchanged, with a stated plan for adjusted EBITDA breakeven in 2026 .
  • Mix and execution highlights: subscription revenue rose to $27.5M (incl. ~$1.5M timing benefit), AMG visit revenue was $28.7M, services & carepoints $6.6M; total visits were 1.5M with ~70% on Converge and 66% scheduled, supporting higher ARPV ($80) and margin improvement .
  • Strategic drivers: Defense Health Agency (DHA) implementation milestones are on track (behavioral health live at 5 sites; next go-lives in Q3; enterprise rollout slated for end of Q4), supporting a 2025 “step function” in growth and gross margin >50% as software mix increases .
  • Estimates context: S&P Global (SPGI) consensus estimates were unavailable due to data limits at the time of request, so we cannot provide vs-estimate comparisons for Q2; management indicated subscription revenue was “a bit ahead” of expectations (with ~$1.5M timing), and reiterated/raised key 2024 guideposts . SPGI data unavailable at time of request.

What Went Well and What Went Wrong

What Went Well

  • Cost alignment drove profitability progress: gross margin increased ~660 bps QoQ to 37% and adjusted EBITDA improved to $(35.0)M from $(45.7)M in Q1; 2024 adjusted EBITDA guidance raised by $10M to $(150)M–$(145)M .
  • Converge platform scaling with strong client satisfaction and migration progress: ~70% of Q2 visits were on Converge; patient “thumbs-up” above 90%; notable migration of Capital Blue Cross late in Q2 .
  • DHA program on schedule and reinforcing 2025 mix shift: behavioral health live at 5 sites; next capability go-live targeted for Q3; enterprise go-live targeted at end of Q4; management reiterated 2025 gross margin expectation “in excess of 50%” as software mix rises .

What Went Wrong

  • Revenue growth still muted YoY as re-platforming headwinds and mix transitions persist: total revenue was $62.8M, roughly flat YoY vs. $62.4M in Q2’23 and up modestly QoQ .
  • Subscription revenue included ~$1.5M one-time timing benefit; management expects a “small” sequential dip in Q3 before a substantial Q4 step-up (timing-related dynamics) .
  • AMG visits were “slightly lower” YoY; although ARPV increased to $80, AMG continues to be a lower-margin revenue stream relative to subscription software, which tempers margin expansion until the 2025 mix shift materializes .

Financial Results

Core P&L vs Prior Periods

MetricQ4 2023Q1 2024Q2 2024
Revenue ($M)$70.7 $59.5 $62.8
GAAP Net Loss ($M)$(50.0) $(73.4) $(49.9)
GAAP EPS (Basic & Diluted)$(0.17) $(0.25) $(3.36)
Gross Margin (%)34% 31% 37%
Adjusted EBITDA ($M)$(36.9) $(45.7) $(35.0)

Notes: GAAP EPS figures per period as reported. Gross margin % per company disclosures.

Revenue Mix (Segments)

Revenue Component ($M)Q4 2023Q1 2024Q2 2024
Subscription$27.3 $24.9 $27.5 (incl. ~$1.5M timing)
AMG Visit Revenue$32.1 $31.1 $28.7
Services & Carepoints$11.3 $3.6 $6.6
Total Revenue$70.7 $59.5 $62.8

KPIs and Operating Metrics

KPIQ4 2023Q1 2024Q2 2024
Total Visits (M)1.6 1.7 1.5
% Visits on Converge52% 68% ~70%
% Scheduled Visits60% 63% 66%
AMG Average Revenue/Visit$72 $77 $80
Cash & Marketable Securities (End of Period)$372M cash & short-term securities $309M cash & equivalents ~$277M cash and marketable securities ; $276.9M cash & equivalents (balance sheet)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2024$259M–$269M $259M–$269M Maintained
Adjusted EBITDAFY 2024$(160)M–$(155)M $(150)M–$(145)M Raised (less negative by $10M)
AMG VisitsFY 20241.6M–1.7M 1.6M–1.7M Maintained
Gross MarginFY 2024Approx. 2023 levels (high 30s) Approx. 2023 levels (high 30s) Maintained
Revenue (Prelim.)FY 2025$335M–$350M Unchanged (to be updated in Q4 call) Maintained
Adjusted EBITDA (Prelim.)FY 2025$(45)M–$(35)M Unchanged Maintained
Gross MarginFY 2025>50% >50% Maintained
ProfitabilityFY 2026Adj. EBITDA breakeven Adj. EBITDA breakeven Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
Converge migration & client satisfaction52% of visits on Converge in Q4; migrations of Elevance/Highmark in early Q1; NPS/thumbs-up very strong ~70% of visits on Converge; 90%+ patient thumbs-up; Capital Blue Cross migration streamlined Positive adoption; platform maturity rising
DHA deployment milestonesBehavioral health live at 5 sites; enterprise rollout anticipated end-2024 Behavioral health live at 5 sites; next go-live in Q3; enterprise go-live end of Q4 On track; execution confidence higher
Mix shift & margin outlook2025 gross margin >50% as software mix increases Reiterated >50% in 2025; Q2 gross margin +660 bps QoQ to 37% Improving trajectory toward 2025
Go-to-market transformationHunter–farmer model; cost restructuring; focus on high-ROI software Robust pipeline; expansions (Elevance, others); subscription timing nuance; headcount down mid-teens Execution driving bookings and cost leverage
AI/automation & product roadmapAutomation as value driver; AI referenced conceptually AI impacts “pretty much every aspect” though specifics not disclosed; automation demand in provider space Strategic emphasis, details TBD
Cybersecurity & market eventsChange Healthcare breach impacted Q1 visits; recovered with alternatives One-time Q1 cost impacts behind; margin recovery in Q2 Transitory headwind resolved

Management Commentary

  • “Our focus is strong as we deliver on key strategies that support our guidance which calls for a step function in our growth in 2025 leading to adjusted EBITDA breakeven in 2026.” – CEO Ido Schoenberg .
  • “Total revenue [Q2] increase of 5% [QoQ], gross profit margin increase of 660 basis points and adjusted EBITDA increase of 23%.” – CFO Robert Shepardson .
  • “Subscription revenue…was $27.5 million in Q2…Approximately $1.5 million of the increase is onetime in nature…we expect a small quarter-over-quarter decline in subscription revenue in Q3, followed by a substantial increase in 4Q.” – CFO .
  • “We are improving our guide for 2024 adjusted EBITDA by $10 million to negative $150 million to negative $145 million…we continue to expect revenue for 2024 to be in the range of $259 million to $269 million.” – CFO .
  • On DHA: “Behavioral health…is live in production at all 5 designated sites…Enterprise Go-Live is still scheduled for Q4.” – CEO .

Q&A Highlights

  • Go-to-market and pipeline: Management emphasized a unified sales motion, stronger conversion, and meaningful same-store expansions alongside new logos; pipeline and 2025 setup characterized as robust .
  • Subscription revenue cadence: ~$1.5M timing benefit in Q2; management guides modest Q3 downtick and a large Q4 step-up as go-lives kick in .
  • Margin and cost trajectory: 2024 gross margin to approximate 2023 levels; 2025 gross margin >50% as mix tilts to software; headcount down mid-teens; further SG&A efficiencies expected in 2H .
  • DHA utilization/progress: Behavioral health progressing “very, very well”; enterprise rollout “at the end of the fourth quarter,” fully deployed at the start of 2025; viewed as a steady, sustaining contributor .
  • AI and product integration: AI expected to influence products and operations broadly; specifics withheld but framed as a multi-faceted driver .

Estimates Context

  • S&P Global consensus estimates were unavailable due to data-access limits at the time of analysis; as a result, we cannot present vs-consensus comparisons for revenue or EPS for Q2 2024. SPGI data unavailable at time of request.
  • Qualitatively, management noted Q2 subscription revenue was “a bit ahead of earlier expectations” (with ~$1.5M timing) and raised full-year adjusted EBITDA guidance by $10M while maintaining revenue and visit ranges, indicating internal outperformance vs plan in cost alignment and milestone execution .

Key Takeaways for Investors

  • Cost execution is showing up in results: gross margin rebounded to 37% and adjusted EBITDA loss improved to $(35)M; 2024 adjusted EBITDA guidance raised by $10M signals improving operating traction .
  • The 2025 setup remains the principal narrative: enterprise DHA go-live by year-end supports a software-heavy mix, materially higher gross margin (>50%), and a step-change in revenue ($335M–$350M prelim.) .
  • Watch subscription cadence: expect Q3 subscription softness (timing) and a strong Q4 ramp; any slippage in go-lives would push revenue/EBITDA improvements right .
  • Converge is scaling with high satisfaction and operating leverage; 70% of visits now on Converge and ARPV rose to $80 on mix shift—supportive of expanding software economics over time .
  • Balance sheet provides runway: ~$277M in cash/marketable securities at Q2-end funds the path to targeted 2026 adjusted EBITDA breakeven without near-term capital needs, assuming execution .
  • Primary execution risks: timing of DHA milestones, subscription go-lives, and maintaining momentum in bookings while managing cost discipline; management reiterated confidence and maintained 2025/2026 milestones .
  • Stock catalysts: confirmation of Q3 DHA capability go-live and Q4 enterprise rollout; visible subscription step-up in Q4; continued gross margin expansion and reaffirmation/raise of 2025 outlook on Q4 call .

Supporting detail and sources are embedded in the tables and quotes above.