Dive Brief:
- Amwell posted a growing net loss in the third quarter as the telehealth firm notched another hefty goodwill impairment charge.
- The Boston-based company’s losses reached $137.1 million — a 94% increase from the same period in 2022 — including $78.9 million in impairment charges linked to sustained decreases in its share price and market capitalization. Revenue declined 11% year over year to $61.9 million.
- But a recent contract with the Department of Defense’s Health Agency that aims to digitize the military healthcare system “fortifies our path to profitability,” expanding Amwell’s reach within the public sector, CEO Ido Schoenberg said on a call with investors Wednesday.
Dive Insight:
Amwell’s financial results, which missed Wall Street expectations on revenue and beat on earnings per share, marked the company’s third quarter this year with a non-cash goodwill impairment charge.
Amwell’s charges now total $436.5 million so far in 2023, the virtual care vendor said in earnings Wednesday afternoon.
The company has been in the midst of transitioning its customers to Converge, a new telehealth platform that aims to consolidate its offerings and include third-party tools. Total visits during the third quarter were 1.4 million, with half taking place on the new product, up from 43% in the second quarter this year.
Amwell is targeting the end of next year to sunset its old platform and wrap up migration, freeing up resources and cash toward other initiatives, CFO Robert Shepardson said on the call.
The contract with the Defense Health Agency, announced last month in partnership with technology firm Leidos, could also serve as a “catalyst” as the company exits its Converge shift, making the federal government one of Amwell's largest customers as early as 2025, he said.
Amwell thinks the deal, worth up to $180 million, could open up more of the government market as well.
“We believe that this initial effort will position us very well to compete for the business of the VA [Department of Veterans Affairs] and other public entities,” Schoenberg said.
Though revenue came in lower than expectations, analysts Charles Rhyee and Lucas Romanski noted the DHA contract win is encouraging, and could lead to “meaningful” revenue acceleration in 2025.
The telehealth firm reiterated its revenue outlook for 2023 between $257 million and $263 million.
