• Total Revenue: $66.8 million for Q1, a 12% increase from Q1 2024.
• Subscription Software Revenue: $32.2 million in Q1, up 30% year-over-year.
• Gross Margin: 52.8% in Q1, an increase of 4.3 percentage points from Q4.
• Adjusted EBITDA: Negative $12.2 million, improved from negative $45.6 million in Q1 2024.
• Cash and Marketable Securities: $222 million at the end of Q1, with zero debt.
• R&D Expenses: $22.1 million, a 17% decrease from Q1 2024.
• Sales and Marketing Expenses: $12.6 million, 51% lower than Q1 2024.
• G&A Expenses: $23.2 million, 29% lower than Q1 2024.
• Visit Revenue: $26.6 million, 14.3% lower than last year, but 6.6% higher after normalizing for APC.
• Average Revenue Per Visit: $71, 8% lower than Q1 2024, but 8% higher after normalizing for APC.
• Q2 Revenue Guidance: Expected to be in the range of $62 to $67 million.
• Q2 Adjusted EBITDA Guidance: Expected to be in the range of negative $12 to $10 million.
• 2025 Revenue Guidance: Expected to be in the range of $250 to $260 million.
• 2025 Adjusted EBITDA Guidance: Expected to be in the range of negative $55 to $45 million.

• Warning! GuruFocus has detected 6 Warning Signs with AMWL.

Release Date: May 01, 2025

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

Positive Points

• American Well Corp (NYSE:AMWL) reported a strong start to 2025 with significant progress towards achieving positive cash flow from operations by 2026.
• The company made substantial advancements in its partnership with the military health system, positioning itself as a major contributor in the federal market landscape.
• AMWL's software revenue grew over 30% from Q1 of last year, driven by strategic client deployments.
• The company successfully increased its mix of subscription software revenues, targeting meaningful margin expansion this year.
• AMWL's platform reported high patient and provider satisfaction, with scores well over 90%.

Negative Points

• The deployment timing of AMWL's automated and digital behavioral health programs has been delayed to Q3 due to leadership transitions at the DHA.
• The company experienced a 23% decrease in completed visits compared to the previous year, reflecting a decline in visit revenue.
• Average revenue per visit decreased by 8% compared to last year's Q1.
• AMWL's adjusted EBITDA remains negative, although it has improved from the previous year.
• There is uncertainty regarding the renewal of the DHA contract, which is crucial for AMWL's future revenue projections.

Q & A Highlights

Q: Outside of the DHA, can you talk about bookings trends for Converge more broadly and the impact of hiring Dan from Amazon? A: We see strong receptivity to the Amwell platform beyond the DHA, with growing understanding that more people will seek care online. Dan, who joined from Amazon, brings expertise in AI and platform services, which will help streamline consumer experiences and improve data analytics.

Q: Is the current gross margin rate sustainable, and can we expect it to improve? A: Yes, the gross margin rate is expected to improve as software revenues increase. The timing of CarePoints can lower the overall margin, but software revenue margins are projected to be between 75% to 90% over the next few quarters.

Q: Have macroeconomic factors affected your sales timeline, and what is your direct tariff exposure? A: While there is market uncertainty, our platform is seen as a solution for efficiency and growth, accelerating rather than decelerating trends. Our direct tariff exposure is minimal as most hardware is sourced from third parties, and our software is primarily U.S.-manufactured.

Q: Regarding the DHA contract, are there any expected changes in economics, and what about other government opportunities? A: We do not anticipate significant changes in the DHA contract economics. The contract is relatively new, and we are pursuing other government opportunities, leveraging our successful DHA implementation.

Q: Can you provide details on the DHA contract's usage and its importance? A: The DHA contract serves 9.6 million military personnel and their families, with high satisfaction scores and efficiency. The contract is crucial, and we believe it will be renewed due to its alignment with the military's strategic goals.

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