American Well Corporation (Amwell) — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This annual filing reports full-year results; it does not provide a clear standalone fourth-quarter income statement or cash-flow summary.
Business context
Amwell provides enterprise software and related services for virtual and hybrid healthcare delivery. Revenue comes primarily from platform subscriptions, clinical visits through Amwell Medical Group (AMG), and other services and hardware. At year-end, the platform served more than 55 health plans representing over 90 million covered lives and approximately 140 health systems representing more than 2,000 hospitals.
Amwell reported 6.465 million visits in 2022, up from 5.885 million in 2021. Its Converge platform accounted for 28% of visits in Q4 2022, versus 8% in Q4 2021.
Financial and operating performance
| Metric | FY 2022 | FY 2021 | Change |
|---|---|---|---|
| Revenue | $277.2 million | $252.8 million | Up 10% |
| Platform subscription revenue | $120.9 million | $108.3 million | Up $12.7 million |
| Visit revenue | $124.4 million | $116.6 million | Up $7.7 million |
| Other revenue | $31.9 million | $27.9 million | Up $4.0 million |
| Operating loss | $275.9 million | $179.1 million | Loss widened |
| Net loss | $272.1 million | $176.8 million | Loss widened |
| Adjusted EBITDA (non-GAAP) | $(175.3) million | $(122.7) million | Loss widened |
| Cash used in operating activities | $192.3 million | $141.5 million | Use increased |
| Cash, cash equivalents and short-term investments | $538.5 million | $746.4 million | Down $207.9 million |
Costs of revenue, excluding depreciation and amortization, were $160.4 million, or about 57.9% of revenue; the corresponding gross margin was approximately 42.1%, compared with approximately 41.3% in 2021. Total costs and operating expenses rose 28% to $553.0 million, outpacing revenue growth. The reported basic and diluted net loss per share was $0.99, compared with $0.69 in 2021.
Amwell reported no debt at December 31, 2022. Current assets were $626.6 million and current liabilities were $114.1 million. Management said existing cash and cash equivalents were expected to fund working capital and capital expenditure needs for at least 12 months from the financial-statement issuance date, while also anticipating operating losses in future years.
Material changes and notable items
- Revenue growth was driven mainly by expanded subscription use among existing clients, higher AMG visit volume, and increased professional-services revenue. Average health-system subscription contract value rose to $401,000 from $356,000; health-plan value rose to $862,000 from $723,000.
- R&D expense increased 30% to $138.5 million, primarily reflecting Converge development and employee costs. Management expected elevated investment to decline gradually during 2023.
- G&A expense increased 55% to $146.4 million, including higher stock-based compensation and acquisition earnout-related items. Stock-based compensation was $69.1 million for the year.
- Cash and cash equivalents declined from $746.4 million to $538.5 million, largely reflecting operating cash use. FY 2022 investing cash use was $11.6 million; financing cash use was $3.6 million.
- The Conversa and SilverCloud acquisition earnouts were settled in 2022, primarily with shares. The Teladoc patent litigation was dismissed under a confidential settlement in June 2022; the filing does not disclose settlement terms.
- Goodwill was $435.3 million. The November 2022 impairment test found no impairment, but estimated fair value exceeded carrying value by approximately 10%; management warned that a sustained share-price decline or weaker projections could prompt further testing.
Outlook, risks and contingencies
The filing provides no specific revenue, earnings, or cash-flow guidance for 2023. Management identified continued Converge migration and investment in technology and sales as priorities, noting that these investments could increase near-term losses. Visit demand is seasonal, and the future impact of COVID-19 and seasonal viruses on utilization and forecasting remains uncertain.
Key risks include persistent losses and cash burn; reliance on a concentrated client base (Elevance represented 23% of 2022 revenue, and the top ten clients represented 47%); client adoption and implementation of Converge; intense competition and pricing pressure; evolving healthcare reimbursement, licensing and corporate-practice rules; and cybersecurity, privacy, and clinical-liability exposure. The company also disclosed that founders retain at least 51% of voting power while Class B shares remain outstanding. Management reported effective disclosure controls and internal control over financial reporting; PwC issued an unqualified audit opinion.
Most important facts for investors to verify
- Whether subscription growth, client renewals, and Converge adoption can offset ongoing operating losses and cash use.
- Cash runway under actual operating performance, planned investment, and potential acquisition activity.
- Elevance contract terms and revenue concentration following the new master services agreement and related provider agreements filed in late 2022.
- Progress in migrating clients to Converge, including implementation costs, client retention, and resulting revenue or utilization.
- Potential dilution from equity awards, earnout shares, and the multi-class voting structure; also monitor goodwill impairment assumptions.