Amwell’s Earnings Call Highlights Strong Software Growth

American Well Corporation ((AMWL)) has held its Q1 earnings call. Read on for the main highlights of the call.

During the recent earnings call, American Well Corporation, also known as Amwell, conveyed a generally positive sentiment despite some challenges. The company reported strong software revenue growth and an improved adjusted EBITDA, driven by strategic deployments such as the Military Health System. While there were some hurdles like delayed deployments and lower visit volumes, the overall outlook remains optimistic with promising prospects for future growth and positive cash flow.

Strong Software Revenue Growth

Amwell’s software revenue experienced a significant increase, growing over 30% from the first quarter of the previous year. This growth was largely attributed to strategic client deployments, including the implementation of the Military Health System, which has been a key driver of this success.

Improved Adjusted EBITDA

The company reported an improvement in adjusted EBITDA for the fourth consecutive quarter. The loss narrowed to $12.2 million, a substantial improvement from the $45.6 million loss reported in the first quarter of 2024, showcasing the company’s efforts in enhancing its financial performance.

Partnership with Military Health System

Amwell’s platform is now operational for scheduled visits across the global Military Health System. This deployment has been met with high satisfaction rates from both patients and providers, exceeding 90%, highlighting the effectiveness and acceptance of Amwell’s solutions.

Positive Cash Flow Prospects

The company is on a path to achieving positive cash flow from operations by 2026. This goal is supported by cost reduction measures and an improved revenue mix, which are expected to drive financial stability and growth.

Delayed Deployment Due to Leadership Transition

The deployment of automated and Digital Behavioral Health programs has been delayed to the third quarter, pending final confirmation from the new Director of the Defense Health Agency. This leadership transition has temporarily impacted the company’s deployment timeline.

Lower Visit Volumes

Amwell completed approximately 1.3 million visits in the first quarter, marking a 23% decrease from the previous year. This decline is attributed to a normalization in visit volumes following the pandemic-induced surge.

Economic Uncertainty and Tariff Concerns

The company is facing challenges related to macroeconomic factors, including tariffs and economic uncertainty. These issues are affecting sales timelines as health systems reassess their IT budgets, adding a layer of complexity to Amwell’s sales strategy.

Forward-Looking Guidance

In its forward-looking guidance, Amwell provided several key metrics and expectations. The company reported total revenue of $66.8 million for the quarter, a 12% year-over-year increase, with software revenue growing by 30%. Amwell aims to achieve positive cash flow from operations by 2026, driven by a strategic shift towards a higher mix of subscription software revenues. The company reiterated its full-year 2025 revenue guidance of $250 million to $260 million and maintained its adjusted EBITDA guidance, indicating a significant year-over-year improvement.

In conclusion, Amwell’s earnings call reflected a positive sentiment with strong software revenue growth and improved financial metrics. Despite facing some challenges, the company remains optimistic about its future prospects, focusing on strategic deployments and cost reductions to drive growth and achieve positive cash flow.