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Diving brief:
- Amwell's revenue declined 7% year over year in the first quarter, missing Wall Street's revenue expectations as the telehealth provider works to turn around its financial situation.
- The company reported turnover of $59.5 milliondown from $64 million in the first quarter of 2023. The company reported a net loss of $73.4 million, compared to a loss of $398.5 million last year when it accumulated significant non-cash losses. goodwill impairment.
- The telehealth provider expects to see revenue contribution of Ministry of Defense contract at the end of this year, and the company could potentially benefit great players like Optum And Walmart exit virtual care, executives said on an earnings call.
Dive overview:
Amwell has struggled with a falling stock price and mounting losses over the past year. Seller posted a net loss of $679.2 million in 2023and has reduced its workforce by about 10% since the end of the year, executives announced in February.
Last month, the telehealth company reported that it could be delisted from the New York Stock Exchange because its stock price was consistently trading below the minimum standard. The seller is considering implementing a reverse stock split to increase the value of its shares.
Amwell has also faced headwinds as its customers transition to a new telehealth platform called Converge, which aims to consolidate its offerings and include third-party tools.
In the first quarter, 68% of visits took place on the new platform, significantly higher than the 54% in the fourth quarter, CEO Ido Schoenberg said during the earnings conference call.
Total visits reached 1.67 million during the period, down slightly from 1.7 million last year, affected by “disruption” related to significant customer migrations to Converge and the cyber attack against Change Healthcaresaid CFO Robert Shepardson.
Suppliers reported multiple challenges stemming from the UnitedHealth-owned technology company's outage, including issues processing claims, receiving payments and verifying eligibility.
The Change attack prevented customers from continuing with their virtual tours because they could not see their quotas. Without changes, visitation volume would have been flat year over year, Shepardson said.
But Amwell expects to soon see the financial impact of a contract with the Defense Health Agency, with the “lion's share” of the effect on revenue in the fourth quarter, according to Shepardson.
The deal, worth up to $180 million and shared with technology company Leidos, requires the partners to replace the military telehealth product with Converge.
High-profile exits from the competitive telehealth market could eventually help Amwell, too. Last week, UnitedHealth's Optum announced it was closing its virtual care business, while Walmart this week announced it was closing its health centers and telehealth offerings.
“We still serve a large part of the American ecosystem. When there are fewer players, the calculation is that we will probably make a net profit,” Schoenberg said. “But we're still in the early stages and we're not trying to suggest at this point how quickly this trend will evolve.”