Dive Brief:
- Amwell’s revenue declined 7% year over year in the first quarter, missing Wall Street expectations on revenue as the telehealth vendor works to right its financial ship.
- The company reported revenue of $59.5 million, down from $64 million in the first quarter of 2023. It posted a $73.4 million net loss, compared with a $398.5 million loss last year when it racked up a hefty non-cash goodwill impairment charge.
- The telehealth vendor expects to see revenue contribution from a Department of Defense contract at the tail-end of this year, and the company could eventually see some benefit from big players like Optum and Walmart exiting virtual care, executives said on an earnings call.
Dive Insight:
Amwell has been battling a declining stock price and mounting losses over the past year. The vendor posted a $679.2 million net loss in 2023, and cut its headcount by about 10% since the end of the year, executives said in February.
Last month, the telehealth company reported it could be delisted from the New York Stock Exchange because its share price was consistently trading below the minimum standard. The vendor plans to implement a reverse stock split to boost its stock value.
Amwell has also faced headwinds as it transitions customers to a new telehealth platform called Converge, which aims to consolidate its offerings and include third-party tools.
In the first quarter, 68% of visits took place on the new platform, meaningfully higher than the 54% in the fourth quarter, CEO Ido Schoenberg said on the earnings call.
Total visits reached 1.67 million during the period, a slight decline from 1.7 million last year, affected by a “disruption” related to large client migrations to Converge and the cyberattack against Change Healthcare, said CFO Robert Shepardson.
Providers have reported multiple challenges arising from the outage at the UnitedHealth-owned technology firm, including problems processing claims, receiving payment and checking eligibility.
The Change attack prevented customers from continuing with virtual visits because they couldn’t see their copays. Without Change, visit volume would have been flat year over year, Shepardson said.
But Amwell expects to see financial impact from a contract with the Defense Health Agency soon, with the “lion’s share” of the revenue effect in the fourth quarter, according to Shepardson.
The deal, worth up to $180 million and shared with technology firm Leidos, requires the partners to replace the military’s telehealth product with Converge.
High-profile exits from the competitive telehealth market could eventually help Amwell too. Last week, UnitedHealth’s Optum said it would shut down its virtual care business, while Walmart this week reported it would close its health centers and telehealth offerings.
“We’re still serving a big part of the U.S. ecosystem. When there are going to be less players, the math is that we are likely to net benefit,” Schoenberg said. “But it’s early days, and we’re not trying to suggest right now how quickly this trend is going to evolve.”
