Amwell, formerly known as American Well, found itself in the spotlight with a staggering loss of $679 million in the year 2023. This financial blow prompted the company to take decisive action, including a reduction of 10% of its workforce by the end of the year, aimed at curbing expenses.
The losses for Amwell in 2023 were compounded by significant goodwill impairment charges amounting to $436 million. These charges were attributed to a sustained decline in the company’s share price during the initial three quarters of the year.
However, amidst these challenges, Amwell’s leadership remains resolute in their commitment to future growth and profitability. A pivotal moment came with the announcement of a major contract with the Defense Health Agency (DHA). This contract is anticipated to have a substantial impact on Amwell’s financial trajectory moving forward.
In addition to the DHA contract, Amwell is placing significant emphasis on its Converge platform. This platform, designed to support a digital-first approach to healthcare, consolidates all of Amwell’s products, programs, and third-party applications into a unified ecosystem. According to company executives, this move aims to capitalize on the evolving landscape of virtual care post-pandemic.
“We improved focus and efficiency in our company and are committed to continue optimizing our organization to streamline and propel growth. Based on the 2023 achievements, we begin 2024 with high conviction regarding our path to profitability,” remarked Ido Schoenberg, M.D., chairman and CEO of Amwell, during the company’s earnings call.
Schoenberg highlighted the successful migration of a significant portion of the company’s volume onto the Converge platform, alongside the accumulation of ROI proof points, signifying tangible progress in Amwell’s strategic initiatives.
Looking ahead, Amwell is positioning itself not merely as a telehealth vendor but as a hybrid care enablement partner, catering to the evolving needs of healthcare organizations. The company aims to expand its technological partnerships with existing clients while also seeking to win over new customers in the year 2024.
The landmark contract with the Defense Health Agency represents a significant step towards this goal. In collaboration with Leidos, Amwell will deploy its Converge platform to drive the digital transformation of the Military Health System. This venture, valued at up to $180 million, is poised to revolutionize healthcare delivery for the DHA’s 9.6 million beneficiaries.
Despite facing a decline in revenue year over year, Amwell remains optimistic about its future prospects. The company’s fourth-quarter results surpassed Wall Street estimates, underscoring its resilience and potential for growth.
Looking further into the future, Amwell is projecting a 30% boost in revenue by 2025, primarily driven by the deployment of contracted software backlog, including the DHA deployments. This anticipated growth trajectory, coupled with strategic investments and cost optimizations, sets the stage for Amwell to achieve adjusted EBITDA breakeven by 2026.
As Amwell charts its course towards profitability, its executives express confidence in the company’s ability to navigate the evolving landscape of healthcare delivery, emerging as a key player in the realm of hybrid care solutions.
