American Well Corporation 2026 Q2 Earnings Call

Good evening, and thank you for joining our second quarter earnings call. As recently announced, we reached an important milestone. The Defense Health Agency issued an intent to award notice for a sole source contract directly with Amwell. We are thrilled by the DHA's decision, which signals an opportunity to strengthen and expand our relationship for many years to come. This is a deliberate choice by the government to build its core platform around the partners it depends on. The DHA's decision aligns with its policy direction to achieve long-term improvements in cost efficiency. This transition to direct contracting ensures uninterrupted continuity of operations and ensures inter-agency continuum of care remains stable and undisrupted. We are honored by their trust. Our platform is already built into MHS GENESIS, which operates as the platform that anchors the unified federal health IT ecosystem.

The Amwell platform has connected deployed units in combat zones to hospitals back home. We are proud to serve the 9.6 million service members, families, and retirees of the Military Health System, and we are committed to delivering for them every single day. More broadly, our strategy is simple. Everything centers on the unified Amwell platform. We give our clients the premier infrastructure for technology-enabled care. It is one platform, not many. Through it, government, payers, and health systems offer patients a simple, streamlined experience. Members connect to a growing range of clinical programs, and they do so with measurable improvements in both clinical and financial outcomes. This focus is showing up in our revenue mix. Subscription revenue has grown to more than half of our total revenue. That is reoccurring, stable, high-quality revenue. It is the foundation of a healthier, more predictable business.

Throughout 2026, we're delivering a better user experience. We've also greatly enhanced our ability to engage members and activate them into care. The platform brings clinical partners online quickly, turns their data into useful insight, and runs with the reliability and compliance our customers depend on. In short, we are easier to adopt, easier to build on, and easier to trust. Let me be specific about the value we create, because it is the heart of our story. Payers are under real pressure. Premiums are not keeping pace with the rising cost of care. Technology and AI-powered care are among the best tools they have to control cost and improve outcomes. The demand is there, but acting on it has been hard. Most payers are buried in vendor sprawl, dozens of separate point solutions that are costly to connect and impossible to measure against one another.

Tired of that fragmentation, payers and employers increasingly want fewer, deeper partnerships. One partner who can meet many needs through a single relationship. This is the problem Amwell solves. We give customers one unified platform, so they no longer must stitch dozens of vendors together themselves. They put a single Amwell gateway behind their own brand and their own front door. Members get one simple place to reach the programs they need, and our customer keeps the member relationship. Behind that gateway, customers can mix and match programs, ours, a partner's, or their own. Swap them in quickly without disrupting the member experience. Because every program runs on the same platform, we bring all the data together. For the first time, customers can see clearly what is working, prove the clinical and financial results, and adjust in real time. We are not selling an AI feature.

We are the trusted environment where AI-powered care runs. We saw a clear illustration of this in DarioHealth's recent announcement that it will bring a new program to the Amwell healthcare marketplace in Arizona. One more market shift makes this even more important. Customer increasingly focus on actual use. Engagement is no longer a soft metric. It is a financial driver. Value comes from getting members into the right care, improving their health, and avoiding expensive downstream costs. That is exactly what our platform is built to do. One front door makes services easy to find and use. Our data and analytics power targeted personal outreach. Working closely with employers and health plans, we turn members into active users, and we can prove it.

This quarter, a randomized trial of our SilverCloud behavioral health program was published in "Nature Human Behaviour." It was funded by the National Institute of Mental Health and led by investigators from Washington University, Penn State, and UCLA. It followed more than 6,200 students for two years, one of the largest studies of its kind. The results were clear. Students offered SilverCloud engage at more than double the rate of traditional care. They had lower rates of mental health disorders over two years, and the study pointed to about $1.2 million in avoided costs in the study group alone. Better engagement, better outcomes, lower cost, independently validated. That is exactly what payers are looking for. Our market momentum is building. Our pipeline is growing. Renewals are strong. We're engaged in encouraging discussions with new prospects across both the commercial and government sectors.

This quarter, we also moved closer to a goal we have been clear about: positive cash flow from operations by the fourth quarter of 2026. This is not a one-time result. It builds a durable foundation for healthy growth in 2027 and beyond. Our path here has been deliberate. In 2025, we reduced our losses by roughly $100 million. In the second quarter, our adjusted EBITDA loss of approximately $1 million is the closest we have been to breakeven as a public company and gives us increased confidence in achieving our goal of positive adjusted EBITDA in the fourth quarter. We did this while holding more than $195 million in cash and carrying no debt. We have the runway to execute and a team focused on doing it with discipline. We are achieving all of this with a linear cost structure.

Our focused platform strategy and our operational discipline make that possible, including the integration of AI across our workflows. Underneath it all is something harder to replicate: A purpose-driven culture that attracts and motivates exceptional people. Let me close with why this matters now. As AI-driven care accelerates, the pressure on payers only grow. In that environment, a single, reliable infrastructure layer becomes essential. That is what Amwell is. We have completed our transformation from a telehealth vendor into the infrastructure for AI-powered care programs. We have a mature platform, a focused operation, financial stability, and independent proof that what we deliver works. We are confident in our path to adjusted EBITDA breakeven in Q4 of this year. We are excited about the growth that follows. With that, I will turn the call over to Mark, who will walk you through our operational and financial metrics.

Mark? Thanks, Ido. Good afternoon, everyone.

On today's call, I'll start with a few highlights from the second quarter, walk through our financial results in detail. Close with an update on our third quarter and full year 2026 outlook. In the second quarter, we delivered revenue results in line with our expectations, reflecting continued subscription stability and a favorable mix shift within our visit portfolio. Adjusted EBITDA was slightly ahead of our expectations, driven primarily by continued cost discipline across the organization. These results build on the momentum we discussed last quarter. Reinforce our confidence in reaching cash flow breakeven in the fourth quarter of this year. Total revenue for the second quarter was $52 million, down approximately 26.6% year-over-year. Subscription revenue was $25.7 million, down approximately 36.5% year-over-year, though up approximately 3.2% sequentially from the first quarter.

The year-over-year decline continues to reflect the previously disclosed churn, as well as a one-time subscription revenue benefit recognized in last year's second quarter related to the deployment of our platform across the DHA. Encouragingly, sequential improvement reflects the stability we've continued to see in our core payer and government subscription base. Amwell Medical Group, or AMG visit revenue, was $24.4 million, up approximately 7.4% year-over-year. AMG paid visits totaled approximately 315,000 visits, flat year-over-year, with revenue per visit of approximately $77 per visit, up approximately $4 or 6% per visit year-over-year. This is reflected by the continued shift in our visit mix toward higher acuity, higher value clinical programs and virtual primary care. Virtual primary care visits were up approximately 30% year-over-year, continuing their strong growth trajectory.

Total platform visits were approximately 835,000 visits, down approximately 28.4% year-over-year, but consistent with the portfolio changes we've previously discussed. Our gross profit was $27.6 million, with gross margin of 53%, down approximately 310 basis points year-over-year from the 56.1% in the second quarter of 2025. It is up approximately 200 basis points sequentially. As we've noted, our existing revenue mix is generating a margin profile broadly consistent with recent quarters, and we continue to expect our revenue mix to shift toward higher margin SaaS offerings over time. Total operating expenses, including depreciation and amortization, were $37.1 million, down approximately 38% year-over-year and down approximately 18% sequentially. As a percentage of revenue, operating expenses improved to 71.3%, compared to 84.8% in the second quarter of last year, reflecting the continued benefit of our transformation actions and ongoing cost discipline across Amwell.