American Well Corporation Q4 FY2025 earnings call

• 2025 was a pivotal year where the company sharpened its focus, executed a major transformation, and aimed for cash flow breakeven from operations in Q4 2026. - The health care landscape was shifting towards operational efficiency, with payers and health systems seeking unified tech platforms for cost reduction and better outcomes. - American Well's tech platform offered advantages like an API-first ecosystem, consolidation of the digital stack, and improved member experience. - In 2025, the company divested noncore activities, restructured, reduced its cost base, and achieved significant commercial momentum with over 15 payer contract renewals and new logo wins. - The company assembled a strong leadership team and positioned itself for 2026 with a focus on fiscal discipline and innovations such as AI-enhanced patient experience and faster deployments.

Total revenue for 2025 was $249.3 million, with subscription revenue accounting for 53% of total revenue, an increase from 45% in 2024. In the fourth quarter of 2025, total revenue was $55.3 million, a year-over-year decline of 22.1%. Subscription revenue was $28.8 million, down 22% year over year. Amwell Medical Group (AMG) visit revenue was $23.7 million, a 18.7% year-over-year decrease. Paid AMG visits were flat at approximately 340,000 visits in the quarter. Total platform visits were 1.0 million visits, a 28.4% year-over-year drop from 1.4 million visits in 2024. Cost of goods sold in the quarter was $27.0 million, resulting in a gross profit of $28.3 million, a 17.6% year-over-year decline, with gross margin at 51.2%, a 280 basis point decrease from the prior year.

• For the full year 2026, the company expects revenue to be in the range of $195.0 million to $205.0 million. - AMG visits are projected to be between 1.32 million and 1.37 million visits. - Adjusted EBITDA loss is expected to be in the range of $24.0 million to $18.0 million. - For the first quarter of 2026, revenue is expected to be in the range of $48.0 million to $53.0 million, and adjusted EBITDA loss is expected to be in the range of $7.0 million to $5.0 million. - The company expects to achieve positive cash flow from operations in Q4 of 2026.

• Dependence on key contracts, such as the Defense Health Agency (DHA) renewal, which could impact revenue if not renewed successfully. - Competition from new AI companies entering the health care tech space, which could disrupt market share. - Regulatory challenges related to the implementation and use of AI in health care, including compliance with security and data privacy standards.

Q: As we think about 2026, how should we think about when existing client contracts would be up for renewal? And do you have any additional color related to your government opportunities?

A: In 2025, the company secured a recurring revenue base with most contracts renewed. Significant open renewals in 2026 are lower except for the DHA renewal expected in summer. The company is positive about the DHA renewal and government opportunities with a large pipeline.

Q: What are your thoughts on some of the new AI companies and trends seeing opportunities in health care, and how do you see the competitive landscape evolving?

A: The company is bullish on the impact of AI, but integrating AI programs and connecting to a regulated infrastructure is a challenge. American Well's platform is unique in matching regulated infrastructure with AI programs and is well-positioned.

Q: Can you talk about some of the headwinds and tailwinds that could cause either an increase or risk to the guide?

A: A tailwind could be earlier adoption of the technology-enabled platform from government RFIs/RFPs. A headwind could be the DHA renewal, but the company is confident in renewing it.

Q: Do you think about 2026 as a baseline in terms of the ability to resume growth? What type of growth profile can you generate with this business?

A: 2026 is a baseline with opportunities for same-store growth and government opportunities. The secular trend of technology-enabled care adoption provides growth, with high-margin revenue from adding AI-powered programs.

Q: Can you give us a little bit more on what you are deemphasizing and why the revenue is running lower than we might have expected?

A: The company deemphasized noncore, lower-quality activities to focus on the tech platform. Revenue is lower due to divestitures and reprioritization, but now focuses on high-quality, sticky revenue.

Q: How do those renewals or those discussions in those renewals inform your go-to-market approach for net new opportunities?

A: Renewals demonstrate the value of the platform, making net new sales easier. The company focuses on same-store growth, government pipeline, and commercial payers as the sweet spot.