Good morning, and thanks for joining us for this next session at the Cowen Healthcare Conference. We're pleased to have Amwell joining us today and speaking for the company is Ido Schoenberg, Chairman and CEO. Today's format will be a fireside chat. For those who aren't aware, Amwell is a unique player in the digital health space as an enabler of hybrid care for the existing healthcare system. Maybe to help people, you know, how would you frame where we are in the journey for development of hybrid care and what barriers, you know, do you think still remain, you know, when we think about utilization and reimbursement as well?
Charles, thank you for having me. I would suggest that we live in really interesting times. There is enormous opportunity and challenges in healthcare today, probably more than ever before. The most interesting phenomena is that more and more people are going online to seek care. That's an opportunity to democratize healthcare, to make care more accessible and more efficient more than ever. At the same time, with AI and other technologies, there is a plethora of clinical programs of different kinds that are able to focus on specific therapeutic areas to really use technology to offer much better clinical outcomes at a much more efficient way and a fraction of the cost.
The challenge is how do you efficiently engage those people and create a single pathway for them to engage with those clinical programs in a way that is orchestrated, coordinated, and allows for good measurement for those outcomes. That is exactly where Amwell comes in. We see ourselves as this middle tier between the tsunami of people that are going online to get care and the tsunami of clinical programs that are leveraging new technologies to provide them care in a way that is fully authorized by the sponsors, is safe, secure, HIPAA compliant, private, and efficient.
The opportunities right now and the challenges revolve around efficient customer acquisition costs, efficient care orchestration, and the ability to create a single reporting infrastructure, data infrastructure to personalize the experience for consumers and at the same time to truly provide payers and other sponsors with what they need in order to see that their investment in those clinical programs is indeed working and justified.
In that regard, you know, where do you think the users of this, you know, either the payers or the providers, you know, as they are trying to tackle these issues, you know, do you think they are fully aware of the challenges that they're facing and/or are they still kind of relying on maybe old thinking in trying to tackle some of these problems?
In my dialogue with many leaders and organizations in the payer space and large providers, it's very apparent that CIOs and others are very concerned about the enormous lift of integrating different programs for both member/consumer engagement and clinical programs. At the same time, they realize that they need to offer diversity. They need to try new things, check whether they're working or not. What we bring to the table, therefore, is really resonating with them because if you have one consumer engagement platform, per design, the cost of acquisition can be spread upon many clinical programs. That's more efficient. If you only offer a clinical program, opening your store, if you will, in this giant shopping mall is really efficient for you because you benefit from the traffic of many consumers that we offer.
I think that after many years of building the Amwell platform and really explaining the benefit of technology-enabled care, the market is now appreciative of what we bring to the table as demonstrated by growth in existing customers and acquisition of new ones.
One of those customers obviously is the Defense Health Agency here. Obviously, it can be a really good springboard, hopefully, right, for Amwell. Maybe tell us a little bit more about your role partnering with Leidos, you know, and the work that you're doing for the Defense Health Agency.
As a veteran myself, personally, I want to share that I've been so proud to have the opportunity to serve those men and women in uniform and their families. It's been an amazing 12 to 18 months that we've been working on this project. Leidos and the Military Health System chose to use the full breadth of Amwell offering, really the full extent of our platform, including different programs around urgent care and behavioral health and automated clinical programs around chronic care and so on and so forth. It really was a very big lift that had to be implemented in the GovCloud and checking the box on many, many lists of requirements that are unique to the government environment.
I'm pleased to say that through this very fruitful and enjoyable collaboration with Leidos and other partners like Oracle, Cerner, and so on that were involved in this project, we are now in a situation where most of this integration, if not all of it, is behind us. A lot of the deployment already took place. The rest of it, geographically, global deployment, not only in the United States, is happening as we speak and will be completed this year and probably before the end of the year. The project was delivered on time and on budget, which is not always common in those environments that are fairly complicated. We couldn't be more pleased. We are focusing on continuing to deliver to this very important customer.
We obviously believe that once we do that, the success will not be lost on other government agencies that could benefit from a similar process.
As we think about the full rollout as it gets completed this year, you know, what is Amwell's role and responsibility to the DHA going forward? Do you expect a certain level of your OPEX being devoted to DHA on an ongoing basis?
As a reminder, in this project, we are only providing SaaS software. The service is offered by the great clinicians of the military. Offered to all the users, all the men and women in uniform and their families around the world, there are 9.6 million of them around the world. The opportunity for efficiency is really staggering. I don't think we had that spectrum of exchange that is global before. Now really anyone, anywhere can use services from anyone, anywhere through a very complicated switchboard that we have created together. Everything is fully embedded in the successful deployment of the Cerner, Oracle, EHR. It is really embedded in the clinical flow of every clinician and every patient. We don't need to do anything else from our end.
The utilization is really driven by the Leidos and the Military Health System deployment, which is very successful and is going to continue. We fully expect that to continue and grow naturally with us making sure that we continue to support the platform, but there is really not much development that we need to do, if any, to sustain this project.
You know, obviously, DHA is on track to be sort of the largest client for Amwell. You know, I know on the last call, you guys, you know, had been asked about sort of helping size it. Anything that you can help us in terms of the scale of it, you know, relative to your 2025 outlook for revenue?
It is true that they are going to be our largest customer. Their largest customer before was Elevance Health. We reported the $60 million size of that customer. This will be bigger, significantly bigger. Unlike Elevance Health and others, this is, as I mentioned earlier, a pure software deal. It is indeed very meaningful for Amwell.
You know, has this helped kind of jumpstart discussions with other potential customers, you know, that have watched this deployment? Maybe talk about how, you know, the DHA and the successful rollout here has maybe created new opportunities either in the government space or in the public sector space?
Yes. In the last earning call, I mentioned that our pipeline is growing and it's growing not only in size, but also in quality. Obviously, projects like the DHA are what we mean when we say quality. It's software only, very broad, very, very meaningful. The price of entry into this market is very high. It took us many, many years to get to where we are right now. You need to really qualify. You need to understand the requirements. We're done. We checked that box. Our platform works very well on the GovCloud system. It integrates very well with Oracle, Cerner, which is very prevalent in the government sector. We are looking at more than a handful of opportunities that are active right now beyond the DHA that we are engaging in dialogue in. Some of them are quite sizable.
Having said that, you should realize that timelines in this sector are long. Sales cycle is considerable. We are very optimistic that we are going to grow beyond the DHA to other opportunities in this sector because we are a proven entity, because what we've done really was delivered on time, on budget, and is generating significant value in way of improving access to care at a fraction of the cost. In these current days, people are very focused on efficiency and on strengthening our military and our defense systems.
Yeah. If we think about, I think the one thing that folks are obviously focused on is the renewal because we're coming to sort of the end of the initial term. Obviously, the DHA will be an ongoing entity. Just maybe kind of describe sort of how that process is going. I know you expressed confidence on the last call, but just maybe kind of just remind us, you know, where we're at with that process.
The headline is that we continue to be very optimistic about the renewal, but it's not done until it's done. We don't really control it at the end of the day. Here is what we know. We know that the DHA announced publicly a sole source to Leidos in Q4 of the year. We know that they named our platform as part of the sole source grant. We know that the deployment is going very well and the customer is very happy. We also know that our project is bundled together in the same vehicle with something that is truly mission critical in addition to what we do, which is the EHR for the military. We also know that the renewal timeline is this summer. It's pretty close. We'll know pretty soon.
I don't see a scenario where the military will be left without those critical infrastructure elements that enable care to so many people. The good news is we don't need to wait for long. This should be coming fast and furious to all of us fairly soon.
I guess just in that regards, no concerns given obviously a lot of, you know, what's the right way to say it? A lot of disruptions potentially in the government right now in terms of, you know, if you think about all the DoD stuff as well, a lot of focus on spending. Any concerns that that might trickle through defense budget, et cetera?
I really recommend listening to the last earnings call of Leidos where Tom, the CEO, gave a really nice overview about where they sit and the value that they provide in the current environment. He is very optimistic and I agree with him that what we do really saves a lot of money and has some critical functions that are truly impossible to do without. We feel quite good about our alignment with the priorities of the current administration that are not very different from what we said before. There is very little bipartisan dispute about the importance of our military and the importance of delivering care at a lower cost and improved outcomes.
Okay. That's helpful. Maybe switching gears a little bit and talking more broadly about, you know, the Converge platform and obviously which is driving, which is underpinning all of this. You know, your other strategic clients, you mentioned Elevance as well. I know CVS is another one of them. How has sort of the experience been with them, you know, now that we're sort of, you know, gotten through a lot of the implementation stage? You know, what have you learned from these clients that you think can help you as you look forward to trying to win other strategic clients in the future?
Without going into specific client information, more generally, as I mentioned earlier, clients realize that it's very, very important to create one member experience, one patient experience. That means that the customer acquisition cost is well spent, but it's also very good for people. You don't want to go to a million places to get your care. You want to do that in one environment, which in way of example is not unlike online retail. We all enjoy going to Amazon and buying everything that we need in one place through a reproducible, consistent, simple experience. That's one of the unmet needs that we are filling. In addition to that, you do want to have a lot of choice in diversity. You do want to have many clinical programs.
Our ability to be very friendly to the likes of Dario and Vida and so many other third parties that we now host inside our platform is not lost on people. A lot of effort and focus is on the quality of our data and our analytics. With AI, that effort is really resonating with our customers. Yesterday, we announced a new leader in Amwell, Dan Zamansky , who came from Amazon. He focuses on AI. We brought him in also to further accelerate our effort with this technology to further improve the simplicity and the elegance of the consumer experience, to improve better routing and interaction with clinical programs, and to be better custodians for our customers so they can have the information they need to prove the outcomes for their ASO and other customers or their ability to analyze at-risk lives for them.
I think that our many-year investment in building the Amwell platform is finally paying off. It's resonating. People understand what we do. They understand the value of what we do. The fact that we are doing it for many years at large scale is important because those projects are complicated and have their share of risks in multiple areas. We feel that there is a lot of upside from where we are for Amwell and for our customers.
If we think about where the consumer is, you know, and I think when you look at surveys either that we've done or others have done, you know, it does seem that the consumer is more open to and willing to get care virtually. You know, I think, you know, a lot of it though is still maybe focused on urgent care. When we think about the ability to deliver primary care or even, you know, chronic care management, you know, in a virtual kind of setting, there still seems to be, you know, the adoption doesn't seem to be as quick as you might think. You know, what do you think needs to happen maybe to help accelerate that?
What we know is that the clinical programs beyond urgent care are phenomenal. When you have digital behavioral health, for example, we know, as we proved in the military and in the NHS in the UK and in other places, that we can really fight depression, anxiety, important challenges for consumers using this program. We know with Vida using GLP-1 that if you think about obesity, those online programs that are hybrid programs that include the physical element and an online element really, really work. I can go on and on, but I think you understand the direction. On the flip side, one of the challenges is engagement. If you ask Sword about what it would take to find the people that have back pain right now, that is super expensive and really hard to justify on a narrow use case of back pain treatment.
The fact that we created a shopping mall where everybody benefits from a single source of foot traffic, if you will, is really, really helpful. I would argue that it's not binary. I would agree that it's a process. What we see very clearly is that more and more people are going online. You're right. Initially for simple things like urgent care. We know that when they use our platform for other things, they have a phenomenal experience that has very important ROI for their sponsors. It is very clear where the trend is. The trend is that more people are going to use more clinical programs across the full care continuum very, very soon. In order to enable that, you need to route them into a singular experience and you need to have one reporting infrastructure. That is really our goal.
Can that also be transferred over to the provider market? I think, you know, early on in the Amwell story, right, we were very focused on providers and we would look at the early adopters like Cleveland Clinic or Intermountain. You know, they would be really strong advocates for where sort of this integrated idea of virtual care and extending care can be. You know, broad swaths of the provider market still have yet to really fully embrace it, right? I think they're all using around the edges. Is that also the barrier, like for them to try to put together a virtual program which would be piecemeal, you know, and what they really need is maybe like a single kind of also like a one-stop shop for them to be able to fully deploy?
It's fascinating, right? Because the naive view of providers where doctors are going to spend most of their time in front of a video screen talking to the patient versus seeing them in person is not panning out. Many people, when they can, prefer to see their doctors in person. There is a finite amount of time where people go virtually. That's not to say that technology-enabled care cannot have a giant impact on health systems as well and that health system could not participate in the vision that I articulated a few minutes ago. Let's start from the basics. Technology-enabled care can really create enormous efficiency in hospitals. For example, when you need to bring in a psychiatrist to free a bed, that's very, very helpful.
When you have a virtual nursing station in a room and you can discharge a patient much sooner or admit a patient much sooner, that's very, very helpful. Telestroke in a remote hospital bringing a specialist when needed, that's very, very helpful. Or a program that helps to keep in touch with the patients to avoid readmissions, we know that works. That is one area that is important. Another area is that health systems cannot do everything. Some hospitals do not have behavioral health. Some hospitals do not have, as I mentioned, neurology service for stroke and so on and so forth. The ability to create a platform that engages the patients with doctors in the health systems, but also offers programs to complement what they do in a way that is truly integrated in the EHR is something that more and more health systems are talking about.
Longer term, we believe that those health systems will participate in the clinical programs that are offered by payers and you're going to see one continue. We built the Amwell platform with a sole code base that is addressing both providers and payers, which is fairly unique for Amwell. We're not holding our breath at this point. They do what they do with different drivers, business drivers, and we check a lot of boxes for both. We really see a multi-year opportunity to combine those systems in a way that is totally integrated. There are many examples where you have a dominant payer and a dominant health system operating in the same territory, and they could really benefit from connecting what they do. Just one example, the dominant health systems could be very helpful in closing gaps in care for the payer that resides in the same territory.
This is not academic. We are having those discussions with some of our customers that realize that they really operate and engage the same individual as a member that is also the patient for those health systems.
I guess the following question to that would be though that there isn't the biggest friction, not necessarily a technology issue or a system issue. It's really more of a reimbursement issue of like, you know, where the value is and, you know, how do you pay appropriately, like, you know, the structure for preventative care or, you know, generating savings or better outcomes. You know, having the Amwell platform is all in good, but, you know, isn't the limiting factor a little bit outside your control in that sense?
Totally. Look, this is not easy. Reimbursement is a giant issue, but there are other issues. Security, privacy, credentialing, for example, state lines. I mean, there are a million things that you need to think about. I'm not suggesting that it's easy, but overall, the entire healthcare market is interested in cost-effective care, improving access to more affordable, high-quality care. That is the most important trend that eventually will arrange everything around that. The movement from brick-and-mortar care into hybrid care and then technology-enabled care is a giant revolution that we are experiencing as we speak. The path of least resistance at the end of the day will bring all the players to realize what I'm saying. We are seeing some significant steps in reality in everything that we are doing. You mentioned Elevance earlier. They used to offer only urgent care.
Now they offer 20 different programs for the different national accounts, 800 national accounts across the full care continuum. This is happening as we speak. Some of those are things like second opinion services from Cleveland Clinic, who is a health system and is now part of their own offering. It will take time, but the trend I think is very, very clear.
That's helpful. If we translate that for Amwell's business and maybe just help us think through, you know, obviously you guys talked about being on track to reach, you know, break even in 2026 and obviously we'll have a very strong balance sheet and cash position even at that time. How should investors then think about sort of the, like a sales momentum, bookings momentum as we go through this year and into next year? Obviously, the DHA coming on is a big piece of that. As you just described, as you know, the market starts to understand or is learning about sort of the opportunities through sort of this, you know, idea of technology-enabled care, when do you think investors should start to expect or will see that kind of translate into, you know, sort of a sales momentum?
It already is. I mean, this year we are seeing growth for the first time in a while. We fully expect this growth to accelerate. Our cash flow break even plan for 2026 is based on very little go get. It is based on contracted or extremely likely arrangements that we have. At the same time, we spend a lot of time on this conversation today talking about how well our offering resonates. We really see very good reason for excitement as it relates to demand for our technology-enabled platform. At the same time, it is hard to ignore the enormous focus measures that we took in cost. We are moving from a very large loss to a quarter of the loss this year. That is very, very significant.
We did that by really aligning on the high margin opportunity for Amwell and divesting anything else, including the APC divestment in way of example. That is not the only measure. We are entering 2025 in a situation where our cost structure is dramatically smaller. Our pipeline is growing. The margin on our product is much higher if you think about the product needs and demand is there. I see a very good probability of executing on our plan and growing in a multi-year growth opportunity years after that.
Given sort of the visibility that, you know, it seems like you have and all the efforts that you've done in terms of, you know, reducing the operating expense base, et cetera, knowing that you're going to be coming out of this with, you know, $100 million plus in cash on the balance sheet, can you talk a little bit about then how you're thinking of capital deployment and, you know, could we see things like, you know, maybe a bigger share repurchase, you know, given sort of the value that, you know, maybe is not fully recognized yet?
Our plan calls for at least $150 million, just to make sure. We have a very high degree of confidence in realizing this plan. We understand that we're going to have ample cash in the situation that we are profitable. Definitely, repurchase is extremely tempting in the current place that the stock is. That is one of the options. There are others. Right now we are laser focused on our path to profitability. That is the most important thing that we are doing right now. Everybody in the company really has their eye on this ball. Once we accomplish that, I agree with you, there are tons of good things that we could do.
Great. Maybe the last question here. Then perhaps, you know, what do you think at this point, you know, investors perhaps do not understand or fully appreciate about Amwell at this time?
I think that telehealth got a bad name by many companies over the years as associated with what became commodity urgent care online provider supervision. The market is so much different and I'm really appreciating the opportunity for speaking with you today to talk about the fact that what we do has little to do with that legacy. Not everybody fully understands that. You need to be a little bit involved in the market, but everybody will once we're through with this process. Our numbers, I think, are showing very, very clearly with improved EBITDA, with improved profitability. We're going to basically make sure that everybody understands what we do in way of execution.
Great. We will look forward to that. I think with that, we are at time. You know, thanks for being with us today.
Charles, thank you for having me. It's a pleasure.
Great. Thank you, everyone.