Thank you for joining us, for, Is this the last session of the day?
Yeah.
Yeah, I think so. All right. God. Please keep going.
Well-
Here at the 46th annual TD Healthcare Conference, and pleased to have with us Amwell. Joining us today and presenting for the company is Mark Hirschhorn, our Chief Financial Officer and Chief Operating Officer. Mark, good to see you.
Charles, nice to see you too.
I guess to start, right? Maybe just a big picture looking at the market overall. You know, virtual healthcare has had a challenging kinda road, particularly post-COVID. I guess when we Maybe to help us think about where does the market sit today in terms of, you know, folks seeking out sort of a tech-enabled virtual care platform?
Yeah. The market has gone through now several years of challenge, principally as a result of what I would say was really the under-delivery of some of the value-based options, as well as also just the continued introduction of new point solutions and the lack of consolidation. Somebody out there looking to sell into a health plan today is competing with hundreds of others, and while so many of those solutions are valuable, it's very challenging for any of these health plans to be as innovative as perhaps they could have been five, six, seven years ago. Today, they're engulfed with multiple solutions, and they need guidance.
I guess in that environment, so what does that mean then as we kinda look forward here? I mean, do we need more consolidation in the market? Do we need someone to come in and, you know, kinda, you know, kind of change the way we're actually looking at all these things? I mean, 'cause it's not that there isn't virtual care being used, right? You know, you talk to any... Go to any urgent care center, or you go to any physician these days and right there is a virtual care option.
It's clearly being used, but it doesn't seem to be used in sort of the coherent way that, you know, particularly when you guys launched Converge and kinda talked about sort of the cohesive way that it can just bring all elements for a health system in particular, or plans, right? Both. Haven't seen really that kind of thinking from the customer demand side. I guess the question is maybe, A, partly it's this inundation of point solutions and maybe not being able to see through it. You know, how much of it also is they just don't see the return yet to be that kind of have a cohesive platform that way, or maybe very few do? Is it just market dynamics that they're currently in?
Just trying to understand a little bit, 'cause it always kinda made sense to me, you know, why someone would wanna adopt something like Converge, but, you know, we just haven't seen it yet.
That's true. You know, all the value elements around virtual care have not been overestimated. The fact that they have yet to bear fruit in certain ways for people to validate the ROI, the white papers that have been circulated, you can't suggest that there has been an undersupply of virtual care solutions. As far as utilization of those solutions and as far as validation in a very meaningful way, there's been too many shortcomings, and there have not been good ways to represent some of these solutions from either a risk-bearing basis or just coming in and paying on a per visit basis. We've gone through now a decade of where PMPM or PEPM was introduced. That has transitioned to both risk as well as, you know, just on a going back to occurrence basis.
I think it's incumbent on many of us to recognize that there are those that lack scale, and consolidation would be very healthy for this, for the industry and for the entire ecosystem. At the same time, we need a consolidator of services and enabler to come into the health plans and assist them with some of their innovation.
Do you think you guys are positioned maybe to be that kinda consolidator of services for the plans? 'Cause certainly, health plans is where you've had more of your success over recent years. You know, what about this customer segment do you think is unique that has allowed you to see the success that you've had?
Well, I think the customer segment of U.S. payers as well as government opportunities has fortunately been bearing fruit for us. The competitive forces in the hospital and health system field, I think we were probably a few years late in recognizing that that was an uphill battle for us. The diversification of our revenues doesn't actually reflect equally on the opportunities for those separate segments. The opportunities for us and the success that we've had with the DHA and dealing with the government has been extraordinary in this short period of time.
That helped us focus in on the fact that we're going to become a somewhat smaller organization in terms of scope, and truly focus on providing the payers and providing the government with an enabling solution and a technology-enabled platform in order for them to lift off of the platforms they have historically relied on and to introduce new chronic care as well as acute care solutions.
Interesting. When we think about the revenue mix and going forward, we should really focus on... Remind me, I think DHA is buried within health systems.
That's correct.
Sorry. Within health systems or appears?
No, they're in payers as an innovator.
They're in payers, right. Okay. Really, investors should just focus on that line more than anything because that seems to be the main focus. How should we think about growth in providers? Is that just sort of maintain the current clients? Anything there in terms of... I know we've had some churn over the last few years. How do you feel about the stability of that part of the business?
Yeah. Again, that business is not a primary growth area.
Yeah.
We're certainly providing those clients with excellent service, and they will benefit from enhancements that are made to the platform. Our investment in our development and product areas is almost entirely focused on those two primary areas.
All right. Speaking of one of those, you know, on the 4th quarter call, right, you announced that you had renewed with Elevance on another three-year deal, and they also signed up for Converge. I think that was a question a lot of folks had prior going into that. How should we think about what this contract means for Amwell in terms of any kind of change in the economics? Is there incremental revenue opportunities involved with this? Maybe help us understand sort of the opportunities with this one.
Elevance continues to be our most substantial and significant client, both from point of historical but also in terms of growth. Last year, the growth nearly approached double digits. We know that in this sector of healthcare, a growth trajectory like that is very difficult. We introduced new solutions. They were very receptive to those, and they continued to be to other solutions that we're now promoting in front of them. We did rework parts of the contract, but the flip between visit revenue and contractual SaaS revenue, I think affords us an opportunity to see equivalent growth in 2026.
Okay. Equivalent growth to what you saw out of them in 2025.
That's right.
kind of this high single digit.
That's right.
All right. another success, right? Blue Cross Blue Shield, Florida. you know, that started on January first. Obviously, about two months in to the partnership, any kind of, early signs that you can share with us in terms of how that's going?
Yeah. The cutover went extremely well. As we appreciate in many of these payer relationships, there had been some significant turnover of those that we actually contracted with just a year ago. I'm not sure anybody is still there. We're working on building new relationships and building the trust between the teams. You know, certainly the engineering and the customer success teams and customer support teams have been working diligently. The base platform is launched. It's generating, obviously, a good volume of utilization, and there are pleased members and sponsors on both sides. Now we look forward to engaging them and introducing the chronic care programs and ensuring that the Amwell platform is used for the greater and the broad basis that program options now can afford them.
Okay. Obviously big topic early, you know, start of this year, AI, everyone's talking about it. It's obviously I think hurt a lot of companies, right? Who, you know, the simple thinking is, oh, it's a software company, AI is gonna displace it. Maybe kinda help dispel that a little bit, just sort of like when you think about what you're doing. Maybe two questions in that. One, how are you guys implementing and using AI? Secondly, why is it too simplistic to think that, you know, payer A can just say, "Well, I'll just take Anthropic or something, and I can do all the same things.
Yeah. I think we all know at this point that there are certain use cases where, for instance, quality control. We have been experimenting internally with applications that have afforded us the opportunity now to scale significantly and reduce the number of personnel that we had historically assigned to that responsibility. There are areas within development where we're excelling at performing tasks and creating new software in time frames that we never believed were going to be possible. In those areas, it's wonderful. As far as care delivery is concerned, AI is truly enhancing the value of the clinician's time, and the clinician is coming in far more informed than they could have possibly thought. Every area within Amwell has a mandate to utilize AI to ensure that their objectives are well-defined. We know that in certain cases, there are initial defenses from colleagues, from clients.
We don't expect to be replacing broad aspects of the company. What we expect to do is scale at a far lower cost, and of course, benefit from those implementations and those innovations that we find can enhance clinical quality at a far more efficient rate.
Then maybe help understand sort of why is it not so simple as to say, I can just take, you know, Claude or ChatGPT and replicate a lot of what Amwell is doing.
Well, initially, we ended up using some of the LLMs, some of the other tools, and of course, not only hallucinations and other aspects of care delivery, but the core value of what we do is actually deliver care to an individual and that individual, I think, fully understands the difference between going to an AI-enabled and fully supported model as opposed to a clinician who is leveraging AI and not as a dependency but as a value add.
Okay. big topic, DHA, you know, that contract comes up for renewal this summer. You noted last year that the DHA had kind of eliminated behavioral health and the automated care program part of it, the core platform obviously is still that there. I think that was more DOGE related action back at the time. This February this year, right, DHA sworn in a new full-time director. Have you had any sort of discussions with new leadership at DHA? I know you've sounded, you guys have sounded fairly positive on at least the renewal. What about possibilities for a reinstatement of some of these programs as well?
Yeah. We are fortunately in a very positive position now because of the receptivity of the new DHA. The framework around behavioral as well as automated care is one where we have the opportunity to represent. As we have now, I'd say finished 8+ months of full services into the DHA, we have a relationship both with Leidos and the DHA that's strong enough to feel very positive about the great likelihood of a renewal and the opportunity to add additional services. We're in the best position we've been with them since full implementation.
When you guys talk about the renewal expectation, if we think about how much DHA is part of revenue coming out of 25, or I'm sorry, that's within 26, embedded within 26. Is the renewal to continue roughly at that rate or is your expectation, 'cause you just mentioned the ability to present again sort of automated care, behavioral health, is that a separate topic with them? Right now, the renewal is to continue what you're currently generating from them, and then maybe at a later time, we're gonna get the potential to add these back?
Well, it's not a bifurcated conversation. We're approaching them now as a trusted partner.
Mm.
Like tens of thousands of visits are completed on that platform throughout the U.S., even internationally. All the Department of Defense physicians operating that platform, everybody's having a wonderful experience. Now it's really the appropriate time to talk about what was eliminated, not as a result of a bad experience, because they did in fact trial our automated care, and there were tens of thousands of people also using behavioral health that was terminated without notice as a result of DOGE. This is a very logical progression, and I think the relationship, again, everything bodes well based on our experience over the past several quarters, and we will most likely have an opportunity to represent all of the options for an effective renewal and commencement of new services this summer.
When we think about the potential for renewal, I mean, it's fair to say, right, you just mentioned before, tens of thousands of people are using it every day. There's nothing they can fall back to if they choose not. Like if they choose not to renew, I mean, is there a fallback at this point?
There is not.
Okay.
That also suggests that since we're performing at this very high level and relations are very strong and there is no fallback, we feel very confident about a renewal.
All right. Okay. That's good to think of. Maybe switch to 2026 guidance that you guys put out just a couple weeks ago. $195 million-$205 million, maybe help us think about the breakout between subscription versus visit revenue versus Carepoint.
It's about 60% subscription revenue now. I think with the pipeline that exists today and the likelihood that we'll convert some of that pipeline to backlog and a win, that 60% is poised to grow to 80% at some point in 2027. We're not talking about two years out or three years out, but we're talking about the magnitude of a number of government contracts that if they come to fruition, really changes the financial profile of this company. As we exited 2025, we left a year of a $40 million adjusted EBITDA loss. A year before that, it was nearly $100 million higher than that at about $125 million. This year will likely generate less than $20 million, all things, you know, working out well.
We've committed to a fourth quarter EBITDA break even, and we're well on our way. Our visibility into that revenue guide is in excess of 95%. We're not relying on any new client joining Amwell. We're relying on some internal growth from existing clients, and our visibility into cost is quite precise. I know we've had prior conversation about some of the resource reductions and the allocations to the respective groups that are required to bring this company back to levels of generating positive cash flow, and I think we're well on our way. This is not, you know, a year out or two years out, we're two quarters out.
Yeah. A lot of work obviously done to get there. When we think about then the revenue mix, you know, obviously a lot of, you know, the turn was a fair issue a few years back, and it seems like and obviously we have a little bit of step down if we think about a couple clients that have kind of left. How do you feel about the stability? You know, 'cause obviously you have 95% plus visibility into the guide. Are we, you know, any renewals on the horizon that you have to worry about, or are we kinda pretty good on renewals, let's say, over the near term? Anything about that in terms.
Yeah
of stability in the client base?
We went through a tremendous renewal cycle last year, there's nothing of any materiality, any magnitude that can impact the 2026 guide other than the DHA.
Okay.
If there was any existential threat to completing the year within the range that has been shared, it would only be the DHA.
The other government contract that you just kind of alluded to here, maybe talk more broadly, the pipeline in terms of other government entities and what kind of? You know, when I think of DoD, right, I mean, isn't this what, you know? Is like when you think of other government agencies, what, are we talking like VA? Like, or is it other departments within, let's say, you know, other departments outside of defense, let's say, you know, other government.
Yeah
entities.
It's certainly both, Charles.
Okay.
Yeah. you know, the Rural Health Initiative, there are a number of things that we spoke to, or spoke about in earlier calls, but these are all institutions that are funded by the U.S. government budget, in certain cases, Department of Defense, VA, and the states, and the granting from the big, beautiful bill. We have participated in more RFIs in the past 2 quarters than we had collectively in the five years prior to that.
Okay. Any sense on, like, the timing of how long those things might take, you think? Or is there, do you get any visibility into that or?
We do. We believe we're going to be getting notification of several of these opportunities within the calendar quarter, the second quarter, at most delayed into the third quarter. Also what's exciting for us is that we're not waiting till the end of this year, and we're not holding our breath for some positive element to sustain what we believe is a solid trajectory into this, into these government opportunities.
When you think about the payer market, the core payer market, the government market, where we see most of the future growth coming from, you know, I think the question that we get often is what is sort of a reasonable kind of growth profile for this business? You know, 'cause obviously a lot of noise over the last few years, and I think it's been hard for people to figure out what should this business grow at. Anything that you can help us think through that, not trying to pin you to like a long-term growth rate per se, but maybe if you can help us understand sort of what these markets look like for you and how you're kind of thinking about it.
Yeah. I think my long-term growth rate from now over the next five years, also informed by the history I had over the past 15 years.
Yeah
in this environment. We certainly were able to grow at rates in excess of 20% and then between 15% and 20%, five years ago and 10 years ago. I think it's somewhat irrational to believe that growth is gonna be greater than the low single digits. That type of growth on a base, if we're looking, you know, if, again, I'm looking at a run rate opportunistically in 2027 of, you know, returning back to $250 million, I don't think it's wise to set those growth rates at expectations that we know are challenging for some of the most premier companies out there today. I think what's different with our opportunities is that we're partnering with a far higher caliber partner.
Those You know, those partners such as Oracle or Accentures and the Deloittes and the Leidos' of this world, they give us much more confidence into our ability to commit to a growth rate down the road than what we had previously.
Sorry, just to clarify, you're saying that 15%-20% is not an unreasonable expectation that's going forward, or are you saying that was sort of historic?
I'm saying nothing over 20% would I be comfortable to commit to today.
Okay. Right.
... based on what we see in the market.
Certainly better than low single digits.
Absolutely.
Okay, I see.
Yeah.
Somewhere between 5 and 20 you're saying is. Okay. Well, that works. You mentioned earlier, right, still committed to EBITDA breakeven by the fourth quarter here. That indicates that we should still see OpEx kinda ticking down quarter on quarter. Once we get to that year-end level, how should we think about OpEx going forward? Is that sort of the right run rate level that we should think of exiting 2026, and then it's really about revenue growth to drive leverage?
It certainly is. We recognize that we've been in the penalty box for quite some time. I believe we didn't act fast enough to reduce some of the elements of cost in this company. After years of really becoming a solutions-focused company and one that was creating bespoke solutions for clients like Optum and CVS and others, we built an army of developers and product teams that we had hoped that we would be able to utilize them and leverage them in further opportunities. Those opportunities didn't materialize in 2024 and 2025 and even back in 2023. We're just at that point where I'd say we're almost right-sized.
We have a couple more quarters, we certainly should be at a position in that 4th quarter where even with the addition of what we will hope to be these new government contracts, that should be used as a pro forma basis to look into 2027. We have no intention of going back to loss-making years. It's been quite a road to get the company to where it is now, Knowing that the visibility to Q4 is very, very clear, it's very exciting opportunity for this company to make its full transition.
Clearly I can see the opportunity here on the government side and it sounds very interesting, just the level of interest and RFIs that you're getting. What about the traditional health plan side? You know, obviously you have some very premier customers. We just talked about Florida as well, you know, that seems to be going well. Maybe talk a little bit more about the pipeline. You know, what are the types of health plans reaching out to you? You know, obviously you know about the big nationals, when we think about the regionals, some of the Blues, how are those conversations going? Are they able to see the success that you're driving for the big guys to then come reach out? Like maybe give us a sense for what that pipeline looks like.
Yeah. I think we're currently building our pipeline around Blues opportunities, some of the regionals and smaller plans. They're a bit more receptive to our unsolicited approach to them and trying to reintroduce our technology-enabled care platform. Quite frankly, they didn't really find us to be as relevant years back because we were focused on delivering a much more, let's call it high-end technical solution that was not very appealing to them. We're reintroducing the company. We've rebuilt the sales team. We've done a number of things that I think will bear fruit this year in pipeline build.
Those things that are far more tangible because of the amount of clarity that we have around these government contracts, I feel those will be the first to materialize, to really begin to earn our way back into not only investor favor, but also the other constituents who are looking at Amwell and wanting Amwell to succeed because they've put and they've installed us into their base, and of course, they want us to continue to innovate.
All right. Maybe in the last couple of minutes, it's not a question that, you know, that there's been a lot of answers for in the short term, but obviously capital deployment, now that we're gonna getting to the point where we're EBITDA breakeven and hopefully, you know, looks like we'll be in a cash-generating position going forward, kinda now opens up the opportunities to deploy capital, whereas perhaps in the past you might have felt a little bit more constrained. Still $128 million of cash on the balance sheet. We're probably gonna exit probably what, like $100+ on the balance sheet at the end of the day. Have you given some thoughts on, you know, how the company should prioritize capital deployment, you know, as we go into 2027 and go into the future?
Yeah. You know, we feel that we'll have over $125 million of cash on the balance sheet at the end of the year. We know that we're gonna be a far more appealing candidate to entertain conversations with either some partners that we deal with today. Right? We find a tremendous amount of value in some of those companies. We offer the Amwell platform today to our to our payer clients. In certain cases, I walked in here 16 months ago, and there were still companies that were interested in potentially acquiring Amwell, which I found to be completely absurd based on the amount of losses that were being generated and the amount of work that would have to be done to curb those losses.
We're so much more appealing today, but even six months out, not just the mere reduction of our losses today down to zero or to a turn to positive. My feeling is as we return to growth, we become a completely different company. That whole story of the transformation solidifies with a catalyst such as an announced win with one of these government contracts, and then adding to that, the confirmation that the company is no longer bleeding cash. Those are the two significant measurement points for me, and I think for many other people who are aware of our situation.
Do you think that also creates more opportunities? You know, obviously you have partners that you're able to deliver their services through Amwell. Are there other potential partners out there that have maybe held off 'cause they're not sure of sort of the, I don't wanna say ongoing nature, right, but, you know, obviously they look at the solutions and say, "Well, you know, let's hold off." Do you think that opens up the opportunity for more partners to say, "Hey, we wanna partner with you now. Help us deliver our services through to, you know, the plans and to the government"?
There were several people who questioned my sanity, you know, a year and a half ago because I think the question of a concern was right at the forefront of many of the decisions. I don't blame the sales team in certain cases for not being able to penetrate some opportunities because they weren't able to eloquently answer a question as to, "Hey, I'd love to contract with you, and I know you're looking for a three-year contract, but I'm not really confident you're gonna be around in three years." That discussion is off the table.
Yeah. All right. Well, that looks and sounds like very exciting and seems like, you know, we'll wait. Timing, you said this summer, just a reminder for DHA, is that, you know, what is that, like two months, three months out, you think? Do you have a rough sense when we can expect something?
It's an end of July renewal, and I think we're not going to see something similar to last year as a result of the budget and DOGE, you know, coming right up to the end of the month. I think, second calendar quarter, right, by June, we should have announcements with regard to the DHA renewal, as well as hopefully sharing the news with a new government contract.
All right. Well, we'll look forward to that. Mark, good to see you.
Charles, thank you for your time.
Absolutely. Thank you, everyone, for joining us.
Thank you.