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What changed in American Well Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of American Well Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+530 added−610 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-23)

Top changes in American Well Corp's 2023 10-K

530 paragraphs added · 610 removed · 416 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

147 edited+72 added−75 removed75 unchanged
Biggest changeWe intend to continue to promote our proprietary Carepoint hardware and apps across our client base and believe that expanded Carepoint offerings such as our TV kits will further expand usage of the Amwell Platform. 7 Increase Penetration by Adding New Clients within our Core Verticals While we already partner with many of the largest health systems and health plans in the United States, there is still significant room to add additional client relationships.
Biggest changeAs the number of Carepoint connections rise, utilization goes up and our clients recognize additional value. We intend to continue to promote our proprietary Carepoint devices and apps across our client base as we believe that expanded Carepoint offerings such as our TV kits will further expand usage of Converge.
Competition We view as competitors those companies whose primary business is developing and marketing virtual care and digital care platforms and services. Competition focuses on, among other factors, technology, breadth and depth of functionality, range of associated services, operational experience, client support, extent of client base and reputation.
Competition We view competitors as those companies whose primary business is developing and marketing virtual care and digital care platforms and services. Competition focuses on, among other factors, technology, breadth and depth of functionality, range of associated services, operational experience, client support, extent of client base, and reputation.
At our core we are: • Client First – Focused on understanding and supporting clients by embracing change, innovating and enriching patient-provide relationships; • One Team – Focused on hiring and developing outstanding people who are encouraged to stay informed and speak up, to celebrate our similarities and honor our difference, and to serve our communities; • Deliver Awesome – Focused on bringing passion and energy, acting with integrity, working with agility and a sense of urgency, being accountable, and delivering quality in all we do.
At our core we are: • Client First – Focused on understanding and supporting clients by embracing change, innovating and enriching patient-provide relationships; • One Team – Focused on hiring and developing outstanding people who are encouraged to stay informed and speak up, to celebrate our similarities and honor our difference, and to serve our communities; and • Deliver Awesome – Focused on bringing passion and energy, acting with integrity, working with agility and a sense of urgency, being accountable, and delivering quality in all we do.
We also have a full, evidence-grade digital forensics system that provides real-time analysis using multiple cloud forensic tools to our cybersecurity team. Amwell adheres to what we believe to be the highest security standards in the industry, using Auth0 with OAuth 2.0 SSO webRTC for in-browser video and Google’s Healthcare API for secure and standardized data storage.
We also have a full, evidence-grade digital forensics system that provides real-time 9 analysis using multiple cloud forensic tools to our cybersecurity team. Amwell adheres to what we believe to be the highest security standards in the industry, using Auth0 with OAuth 2.0 SSO webRTC for in-browser video and Google’s Healthcare API for secure and standardized data storage.
We make available free of charge at the Investors section of this website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we file or furnish such materials with the Securities and Exchange Commission, or 21 SEC.
We make available free of charge at the Investors section of this website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we file or furnish such materials with the Securities and Exchange Commission, or SEC.
In such event, failure to comply could lead to adverse judicial or administrative action against us and/or our affiliated providers, civil, criminal or administrative penalties, receipt of cease-and-desist orders from state regulators, loss of provider licenses, the need to make changes to the terms of engagement of our providers that interfere with our business, and other materially adverse consequences. 14 U.S.
In such event, failure to comply could lead to adverse judicial or administrative action against us and/or our affiliated providers, civil, criminal or administrative penalties, receipt of cease-and-desist orders from state regulators, loss of provider licenses, the need to make changes to the terms of engagement of our providers that interfere with our business, and other materially adverse consequences. U.S.
From an operations perspective, we historically deliver high levels of system uptime across the Amwell Platform, maintained through our 24/7 Cyber Command Center that monitors our Platform around the clock. Due to the sensitive nature of our client and patient data, we have invested heavily in data security and protection. We utilize a multi-tiered security architecture.
From an operations perspective, we historically deliver high levels of system uptime across our platform, maintained through our 24/7 Cyber Command Center that monitors our platform around the clock. Due to the sensitive nature of our client and patient data, we have invested heavily in data security and protection. We utilize a multi-tiered security architecture.
These security capabilities ensure that clients’ and patients' data are held to high standards, limiting the impact of and ability for cyberattacks. Scalability and Innovation The Converge platform allows providers to easily expand their use of digital care, taking advantage of highly scalable managed services from best-in-class technology partners.
These security capabilities ensure that clients’ and patients' data are held to high standards, limiting the impact of and ability for cyberattacks. Scalability and Innovation Converge allows providers to easily expand their use of digital care, taking advantage of highly scalable managed services from best-in-class technology partners.
As digital care delivery continues to evolve, Amwell clients and partners have the flexibility and agility to scale virtual care 10x, or 1,000x, as needed. Interoperability The Converge platform is built on FHIR (“Fast Healthcare Interoperability Resources”) – not an antiquated, proprietary data model that needs to be translated to HL7 standards.
As digital care delivery continues to evolve, Amwell clients and partners have the flexibility and agility to scale virtual care 10x, or 1,000x, as needed. Interoperability Converge is built on FHIR (“Fast Healthcare Interoperability Resources”) – not an antiquated, proprietary data model that needs to be translated to HL7 standards.
Digital Care Provider Licensing, Medical Practice, Certification and Related Laws and Guidelines The practice of medicine is subject to various federal, state and local certification and licensing laws, regulations, approvals and standards, relating to, among other things, the adequacy of medical care, the practice of medicine (including the provision of remote care), equipment, personnel, operating policies and procedures and the prerequisites for the prescription of medication and ordering of tests.
Digital Care Provider Licensing, Medical Practice, Certification and Related Laws and Guidelines The practice of medicine is subject to various federal, state and local certification and licensing laws, regulations, approvals and standards, relating to, among other things, the adequacy of medical care, the practice of medicine (including 12 the provision of remote care), equipment, personnel, operating policies and procedures and the prerequisites for the prescription of medication and ordering of tests.
Failure to comply with these contractual agreements could lead to loss of clients, contractual liability to our clients, and direct action by HHS, including monetary penalties. 16 Violations of HIPAA may result in significant civil and criminal penalties. Our management responsibilities to AMG include assisting it with its obligations under HIPAA’s breach notification rule.
Failure to comply with these contractual agreements could lead to loss of clients, contractual liability to our clients, and direct action by HHS, including monetary penalties. Violations of HIPAA may result in significant civil and criminal penalties. Our management responsibilities to AMG include assisting it with its obligations under HIPAA’s breach notification rule.
The FTC and states’ attorneys general have brought enforcement actions and prosecuted some data breach cases as unfair and/or deceptive acts or practices under the FTC Act and similar state laws. In recent years, there have been a number of well publicized data breaches involving the improper use and disclosure of PII and PHI.
The FTC and state attorneys general have brought enforcement actions and prosecuted some data breach cases as unfair and/or deceptive acts or practices under the FTC Act and similar state laws. In recent years, there have been a number of well publicized data breaches involving the improper use and disclosure of PII and PHI.
We also integrate with back-end systems to streamline administrative functions such as enrollment, clinical management, payment, claims administration, e-prescribing, follow-up and data interchanges such as picture archiving and communication systems (“PACS”). For our clients, this functionality eases administrative burdens and supports physician workflows.
We also integrate with back-end systems to streamline administrative functions such as enrollment, clinical management, payment, claims administration, e-prescribing, follow-up and data 6 interchanges such as picture archiving and communication systems (“PACS”). For our clients, this functionality eases administrative burdens and supports physician workflows.
Security and Reliability The Converge platform has been designed to be secure and scalable; testing is automated and includes security scans, all vetted by our QA team. These scans are also vetted by our dedicated cybersecurity team, which includes security experts who monitor and address issues around the clock.
Security and Reliability Converge has been designed to be secure and scalable; testing is automated and includes security scans, all vetted by our QA team. These scans are also vetted by our dedicated cybersecurity team, which includes security experts who monitor and address issues around the clock.
For health plans, additional programs are typically focused around virtual primary care, behavioral health services, and a range of condition management services that meet the needs of employer clients as well as Medicare Advantage.
For health plans, additional programs are typically focused around virtual primary care, behavioral health services, and a range of condition management services that meet the needs of employer clients as well as Medicare/caid Advantage.
For health systems, additional modules typically include an expanding range of specialty care use cases across the care continuum. • Enabling the sale of new programs and services for clients to sell to their consumers and B2B customers – Many clients benefit from our scalable and customizable Platform to create high value programs to sell into their clients, whether it be virtual primary care staffed by their own providers, chronic care management programs or retail urgent care.
For health systems, additional solutions typically include an expanding range of specialty care use cases across the care continuum. • Enabling the sale of new solutions and services for clients to sell to their consumers and B2B customers – Many clients benefit from our scalable and customizable platform to create high value programs to sell into their clients, whether it be virtual primary care staffed by their own providers, chronic care management programs or retail urgent care.
Our Board consists of nine directors, 22% identifying as diverse and 78% are independent, who bring a diversity of perspectives, experience, and backgrounds to their role of monitoring and advising management.
Our Board consists of nine (9) directors, 22% identifying as diverse and 78% are independent, who bring a diversity of perspectives, experience, and backgrounds to their role of monitoring and advising management.
Certain federal courts have held that the Anti-Kickback Statute can be violated if “one purpose” of a payment is to induce referrals.
Certain federal courts have held that the 13 Anti-Kickback Statute can be violated if “one purpose” of a payment is to induce referrals.
Other To the extent required by Item 1 of Form 10-K, the information contained in Item 7 of this Annual Report is hereby incorporated by reference in this Item 1.
Other To the extent required by Item 1 of Form 10-K, the information contained in Item 7 of this Annual Report is hereby incorporated by reference in this Item 1. 22
For example, some health systems have embedded our Platform in their own patient portals. From a provider perspective, clients are embedding the provider virtual care workflow in their EHRs so that online visits are as easy to schedule and conduct as physical visits. Sales and Marketing We sell our digital care solution through our direct sales organization.
For example, some health systems have embedded our solutions in their own patient portals. From a provider perspective, clients are embedding the provider virtual care workflow in their EHRs so that online visits are as easy to schedule and conduct as physical visits. Sales and Marketing We sell our digital care solution through our direct sales organization.
The future-ready, customizable and configurable Platform allows clients to target specific populations and opens up new revenue sources for our clients, driving higher value. • Expanding their Carepoint suite —Clients typically increase the number of Carepoint devices over time, as they penetrate additional locations and expand their own network of digital care delivery.
Our future-ready, customizable and configurable enterprise platform allows clients to target specific populations and opens up new revenue sources, driving higher value. • Expanding their Carepoint suite —Clients typically increase the number of Carepoint devices over time, as they penetrate additional locations and expand their own network of digital care delivery.
Our ability to operate profitably will depend in part upon our ability, and that of our affiliated providers, to maintain all necessary licenses and to operate in compliance with applicable laws and rules. Those laws and rules continue to evolve, and we therefore devote significant resources to monitoring developments in healthcare and medical practice regulation.
Our ability to operate profitably will depend in part upon our ability, and that of AMG's providers, to maintain all necessary licenses and to operate in compliance with applicable laws and rules. Those laws and rules continue to evolve, and we therefore devote significant resources to monitoring developments in healthcare and medical practice regulation.
For patients and members, our embedded functionality simplifies digital care delivery directly into the portals and systems those individuals are already utilizing. Connected Ecosystem of Health Systems, Health Plans and Innovators We partner with many of the world’s largest and most trusted health systems, health plans and healthcare innovators.
For patients and members, our embedded functionality simplifies hybrid care delivery directly into the portals and systems those individuals are already utilizing. Connected Ecosystem of Health Systems, Health Plans and Innovators We partner with many of the world’s largest and most trusted health systems, health plans and healthcare innovators.
The application of some of these laws to digital care is unclear and subject to differing interpretation. Physicians who provide professional medical services to a patient via digital care must, in most instances, hold a valid license to practice medicine in the state in which the patient is located.
The application of some of these laws to digital care is unclear and subject to differing interpretation. Clinicians who provide professional medical services to a patient via digital care must, in most instances, hold a valid license to practice medicine in the state in which the patient is located.
Failure to comply with these laws and regulations could result in licensure actions against the physicians, our services being found to be non-reimbursable, or prior payments being subject to recoupments and can give rise to civil, criminal or administrative penalties.
Failure to comply with these laws and regulations could result in licensure actions against the clinicians, our services being found to be non-reimbursable, or prior payments being subject to recoupments and can give rise to civil, criminal or administrative penalties.
Additionally, the modular architecture allows for swappable exchange of the entire A/V experience, allowing different vendors or capabilities such as payments or identity management to be quickly integrated into the Platform in response to client need.
Additionally, the modular architecture allows for swappable exchange of the entire A/V experience, allowing different vendors or capabilities such as payments or identity management to be quickly integrated in response to client need.
Risk Factor), including in the states where we predominantly conduct our business, we provide administrative and management services to entities associated with AMG (which are consolidated subsidiaries from a financial reporting perspective) pursuant to which those entities reserve exclusive control and responsibility for all aspects of the practice of medicine and the delivery of medical services.
Risk Factors), including in the states where we predominantly conduct our business, we provide administrative and management services to entities associated with AMG (which are consolidated subsidiaries from a financial reporting perspective) pursuant to which those entities reserve exclusive control and responsibility for all aspects of the practice of medicine and the delivery of medical 11 services.
All data is secured both in motion and at rest using the latest encryption technologies. Our C3 data control center constantly monitors for vulnerabilities and intrusions, including using third-party penetration testing. We believe that all clinical data usage is HIPAA compliant. We maintain HITRUST, ISO 27001 and PCI compliance certifications.
All data is secured both in motion and at rest using the latest encryption technologies. Our C3 command center constantly monitors for vulnerabilities and intrusions, including using third-party vulnerability and penetration testing. We believe that all clinical data usage is HIPAA compliant. We maintain HITRUST, ISO 27001 and PCI compliance certifications.
All data within the Platform works with healthcare organizations’ systems and any EHR. Being FHIR-native allows Amwell to be truly interoperable with the entire healthcare ecosystem and creates an open platform for third-party developers. 10 App Framework We have opened the Converge platform to others to build on and expand its abilities.
All data within the platform works with healthcare organizations’ systems and any EHR. Being FHIR-native allows the platform to be interoperable with the entire healthcare ecosystem and creates an open platform for third-party developers. App Framework We have opened Converge to others to build on and expand its abilities.
In particular, HIPAA establishes privacy and security standards that limit the use and disclosure of PHI, and require the implementation of administrative, physical, and technical safeguards to ensure the confidentiality, integrity and availability of PHI in electronic form. AMG, our health system clients, and our health plan clients are all regulated as covered entities under HIPAA.
In particular, HIPAA establishes privacy and security standards that limit the use and disclosure of PHI, and require the implementation of administrative, physical, and technical safeguards to ensure the confidentiality, integrity and availability of PII, including health information, in electronic form. AMG, our health system clients, and our health plan clients are all regulated as covered entities under HIPAA.
It has been designed from the ground up with the holistic understanding that the future of care of any one person will inevitably blend a mix of in-person, digital and automated experiences.
It has been designed from the ground up with the holistic understanding that the future of care of any one person will inevitably blend a mix of in-person, virtual and automated experiences.
In response to the COVID-19 pandemic, state and federal regulatory authorities loosened or removed a number of regulatory requirements in order to increase the availability of digital care services.
During the COVID-19 pandemic, state and federal regulatory authorities loosened or removed a number of regulatory requirements in order to increase the availability of digital care services.
Through events, discussions and other festivities, we will highlight the incredible history, contributions, traditions and milestones of our workforce. Our Company DE&I Pillars and Internal DE&I Committee help guide our initiatives and drive our mission forward. The committee fosters education and development opportunities to educate the employees on topics critical to us in our lives and in the workforce.
Through events, discussions and other festivities, we will highlight the incredible history, contributions, traditions and milestones of our workforce. Our Company DEI&B Pillars and Internal DEI&B Committee help guide our initiatives and drive our mission forward. The Committee fosters education and development opportunities to educate the employees on topics critical to us in our lives and in the workforce.
In addition, Amwell enables payers to bring in their own digital assets, influence member workflows and present key clinical quality information, such as gaps in care, to providers at the time of a visit. The Amwell Platform also enables payers with provider networks or integrated delivery networks to seamlessly incorporate their own providers to care delivery programs.
In addition, the platform enables payers to connect their own digital assets, influence member workflows, and present key clinical quality information, such as gaps in care, to providers at the time of a visit. Converge also enables payers with provider networks or integrated delivery networks to seamlessly incorporate their own providers to care delivery programs.
Corporate Practice of Medicine Laws in the U.S.; Fee Splitting We contract with physicians or physician-owned professional associations and professional corporations to provide access to the Amwell Platform to them and their patients.
Corporate Practice of Medicine Laws in the U.S.; Fee Splitting We contract with physicians or physician-owned professional associations and professional corporations to provide access to our enterprise platform to them and their patients.
Many states in which we operate and in which our patients reside also have laws that protect the privacy and security of sensitive and personal information, including health information. These laws may be similar to or even more protective than HIPAA and other federal privacy laws.
Many states in which we operate and in which our patients reside also have laws or are in the process of adopting laws that protect the privacy and security of sensitive and personal information, including health information. These laws may be similar to or even more protective or broader than HIPAA and other federal privacy laws.
This app framework allows clients to deliver better, more efficient access to effective care, helping to close gaps in care, enhance treatment and better enable provider-to-patient relationships. Technology Back-end Architecture Secure, Scalable, Hosted Environment We host the Amwell Platform in secure, redundant data centers designed with high levels of availability, redundant subsystems, and compartmentalized security zones.
This app framework allows clients to deliver better, more efficient access to effective care, helping to close gaps in care, enhance treatment and better enable provider-to-patient relationships. Technology Back-end Architecture Secure, Scalable, Hosted Environment We use secure, redundant data centers designed with high levels of availability, redundant subsystems, and compartmentalized security zones.
We are a business associate of our covered entity clients when we are working on behalf of our covered entity clients including our affiliated medical groups and also when we are providing technology services to those clients via the Amwell Platform.
We are a business associate of our covered entity clients when we are working on behalf of our covered entity clients including our affiliated medical groups and also when we are providing technology services to those clients via our enterprise platform.
As we expand our capabilities, our modules, programs and Carepoint offerings allow us to partner with clients that are new to digital care delivery as well as with rapidly expanding digital care market leaders.
As we expand our capabilities, our solutions, programs and Carepoint offerings allow us to partner with clients that are new to hybrid care delivery as well as with rapidly expanding digital and hybrid care market leaders.
In addition, changes were made to the Medicare and Medicaid programs (through waivers and other regulatory authority) to increase access to digital care services by, among other things, increasing reimbursement, permitting the enrollment of out of state providers and eliminating prior authorization requirements.
For example, changes were made to the Medicare and Medicaid programs (through waivers and other regulatory authority) to increase access to digital care services by, among other things, increasing reimbursement, permitting the enrollment of out of state providers and eliminating prior authorization requirements.
Our culture and actions are grounded in our DE&I pillars: • Recruitment — o Inclusive hiring practices o Recruiting with purpose o Collaborating with purpose • Awareness and Engagement— o Support talent to feel included and understood o Enable talent to collaborate o Inspire talent to lead o Educate talent to grow • Community— o Support the communities we serve o Support the communities we live In o Reflect our mission externally.
Our culture and actions are grounded in the following DEI&B pillars: • Recruitment o Inclusive hiring practices o Recruiting with purpose o Collaborating with purpose • Awareness and Engagement o Support talent to feel included and understood o Enable talent to collaborate o Inspire talent to lead o Educate talent to grow • Community o Support the communities we serve o Support the communities we live in o Reflect our mission externally.
Moreover, a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration, including waivers of copayments and deductible amounts (or any part thereof), that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of Medicare or Medicaid payable items or services may be liable for civil monetary penalties of up to $10,000 for each wrongful act.
Moreover, a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration, including waivers of copayments and deductible amounts (or any part thereof), that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of Medicare or Medicaid payable items or services may be liable for civil monetary penalties.
These practices enable clients to attract patients and members and drive revenue with services they offer. Visits For urgent care and walk-in clinic type use cases, patients can seek care on-demand whenever coverage is available (currently 50 states, 24/7 for urgent care).
These practices enable clients to attract patients and members and drive revenue with services they offer. Visits For urgent care and walk-in clinic type use cases, patients can seek care on-demand whenever coverage is available (currently 50 states and D.C., 24/7 for urgent care via AMG providers).
Our Products The primary product we sell is access to the Amwell Platform via recurring subscriptions. We sell additional related services and solutions via configurable modules and programs and Carepoint hardware and services, including implementation, engagement, cart fleet management and integration. These additional services can be added to any base platform subscription.
Our Products The primary product we sell is access to our enterprise platform and software via recurring subscriptions. We sell additional related services and solutions via configurable modules and programs and Carepoint devices and services, including implementation, engagement, cart fleet management and integration. These additional services can be added to any base platform subscription.
Our ESG Framework Our Products Our People Our Operations Enabling our clients to achieve their goals around: • Operational Efficiencies & Environmental Stewardship • Clinician Shortages and Burnout • Patient Experience and Outcomes • Health Equity and Access Strong Culture focused on: • Talent Development & Engagement • Mental & Physical Wellbeing • Diversity & Inclusion • Community Service Protecting client & employee data with robust processes around: • Cybersecurity & Data Privacy • Compliance & Ethics 18 Our company was founded by industry veterans, their passion, energy and expertise have contributed to our success as a leading digital care enterprise software company.
Our ESG Framework Our Products Our People Our Operations Enabling our clients to achieve their goals around: • Operational Efficiencies & Environmental Stewardship • Clinician Shortages and Burnout • Patient Experience and Outcomes • Health Equity and Access Strong Culture focused on: • Talent Development & Engagement • Total Wellbeing • Diversity & Inclusion • Community Outreach Protecting client & employee data with robust processes around: • Cybersecurity & Data Privacy • Compliance & Ethics Our company was founded by industry veterans, their passion, energy and expertise have contributed to our success as a leading digital care platform company.
Guided by our mission and values we are able to achieve excellence on behalf of our employees, clients and partners and the patients and providers we serve. Human Capital - Investing in our Employees We continually seek ways to attract, grow, develop and retain an exceptionally talented and motivated workforce.
Guided by our mission and values, we are committed to achieving excellence on behalf of our employees, clients and partners and the patients and providers we serve. 18 Human Capital - Investing in our Employees We continually seek ways to attract, grow, develop and retain an exceptionally talented and motivated workforce.
Client-Branded, Embedded Digital Experiences Our configurable Amwell Platform and its associated APIs and widgets encourage our clients to deploy digital care programs under their own brands, unlike other telehealth players who promote programs under their brands.
Client-Branded, Embedded Digital Experiences Our configurable platform and its associated APIs and widgets encourage our clients to deploy digital and hybrid care programs under their own brands, unlike telehealth and virtual care players who promote programs under their brands.
Our Carepoint portfolio supports a range of modalities, including multi-way video, phone connectivity and secure messaging to bring care teams to patients and members in the most efficient way possible. Value-Added Services We offer a full suite of paid, supporting services to our clients to enable their virtual care offerings.
Our Carepoint portfolio supports a range of uses, including multi-way video, phone connectivity and secure messaging to bring care teams to patients and members in the most efficient way possible. Value-Added Services We offer a full suite of paid, supporting services to our clients to enable their hybrid care strategy.
Driven by employees, with executive oversight, Amwell Cares works to support various causes through a variety of activities, including but not limited to company matches, sponsorship of and participation in charity walks/runs, donations and volunteer opportunities, and pro bono healthcare services delivered to communities affected by hurricane, fire or flood.
Driven by employees, with executive oversight, Amwell Cares works to support various causes, including health equity, hunger relief, and natural disaster recovery, through a variety of activities, including but not limited to company matches, sponsorship of and participation in charity walks/runs, donations and volunteer opportunities, and pro bono healthcare services delivered to communities affected by hurricane, fire or flood.
We have established systems for ensuring that our affiliated physicians are appropriately licensed under applicable state law and that their provision of digital care to our members occurs in each instance in compliance with applicable rules governing digital care.
We have established systems for ensuring that AMG and client clinicians are appropriately licensed under applicable state law and that their provision of digital care to our members occurs in each instance in compliance with applicable rules governing digital care.
In order to bring as much value to our clients as possible, Amwell is creating the ability to deliver third party and first party solutions to complement our own solutions. Payers and health systems are increasingly expressing their desire to work with fewer technology partners who can deliver more.
To bring as much value to our clients as possible, Amwell continues to enhance the ability to deliver third-party and first-party solutions to complement our own solutions. Payers and health systems are increasingly expressing their desire to work with fewer technology partners who can deliver more.
These devices are built to rigorous safety and clinical standards and have advanced features including far-end camera controls, fleet monitoring and connectivity to a variety of diagnostic scopes and examination tools.
These devices are built to rigorous safety and clinical standards and have advanced features including far-end camera controls, fleet monitoring and connectivity to a variety of peripherals, including diagnostic scopes and heart, lungs, stomach and ear examination tools.
Our differentiated approach empowers our clients to advance the look, feel and trust associated with their market-leading brands while we provide the core technology and clinical support to enable quality patient and member care. We are aligned with clients and partner with them to build tailored digital care distribution programs instead of competing with them for their patients.
Our differentiated approach empowers our clients to leverage the trust associated with their market-leading brands while we provide the core technology and clinical support to enable quality patient and member care. We are aligned with clients and partner with them to configure tailored digital care programs instead of competing with them for their patients.
We continue to expand our sphere of expertise and implement oversight structure that enhance our strategic objectives. Our management team is governed by our Board of Directors ("Board"), which works alongside them to determine our business strategy, ensure the sustainable growth of the company, and oversee our enterprise risks and opportunities and ESG initiatives.
We continue to expand our sphere of expertise and have implemented an oversight structure that is designed to enhance our strategic objectives. Our management team is governed by our Board, which works alongside management to determine our business strategy, ensure the sustainable growth of the company, and oversee our enterprise risks and opportunities and ESG initiatives.
During the fourth quarter of 2022 28% of our visits were provided on the Converge platform which was in increase from 8% in the fourth quarter of 2021. A major strategic focus for us in 2023 is to continue the migration of our health system and health plan clients onto the Converge platform.
During the fourth quarter of 2023, 52% of our visits were provided on Converge, which was an increase from 28% in the fourth quarter of 2022. A major strategic focus for us in 2024 is to continue the migration of our remaining health plan and health system clients onto Converge.
Finally, the breadth of our ecosystem has enabled a deep understanding of health system and health plan workflows and reimbursement arrangements between our clients, allowing us to tailor our capabilities to their needs.
Finally, the breadth of our ecosystem has enabled a deep understanding of health system and health plan workflows and reimbursement arrangements between our clients, allowing us to configure our platform to meet their needs.
We maintain relationships with key industry participants including media publications, industry analyst firms, benefit consultants, brokers, group purchasing organizations and health plan and health system partners. 11 Channel partners also play an important role in marketing and selling our products to our client base, primarily focusing on the Amwell Platform and Carepoint devices.
We maintain relationships with key industry participants including media publications, industry analyst firms, benefit consultants, brokers, group purchasing organizations and health plan and health system partners. Channel partners also play a key role in marketing and selling our products to our client base, primarily focusing on Converge and Carepoint devices.
In 2022, we offered numerous inclusion trainings as well as education on selective diverse populations and cultures led by our grassroots DE&I Committee.
In 2023, we offered numerous inclusion trainings as well as education on selective diverse populations and cultures led by our grassroots Committee.
The Converge ™ platform is the latest version of the Amwell Platform and is designed to be future-ready, reliable, flexible, scalable, secure and fully integrated with other healthcare software systems. The Converge platform offers state-of-the-art data architecture and video capabilities, flexibility and scalability, as well as a user experience designed around the needs of patients, members and providers.
We designed the platform to be future-ready, reliable, flexible, scalable, secure and fully integrated with other healthcare software systems. Converge offers state-of-the-art data architecture and video capabilities, flexibility and scalability, as well as a user experience focused on the needs of patients, members and providers.
Invest in Platform to Continue to Expand Capabilities We continue to invest in the Amwell Platform with the Converge platform and are developing new technologies, products, modules, programs and capabilities that meet the broadening needs of our clients. We also partner with our clients and other stakeholders to build new features, modules and programs.
Invest in Platform to Continue to Expand Capabilities We continue to invest in our enterprise platform and software, developing new technologies, capabilities and programs that meet the broadening needs of our clients. We also partner with our clients and other stakeholders to build new features, modules and programs.
Practices can be organized by clinical specialty (including primary care, behavioral health, nutrition, cardiology), by disease state (including diabetes, asthma, hypertension) or by program type (including smoking cessation, weight loss, addiction therapy). Each practice typically represents a distinct clinical use case with its own associated client branding, patient workflows, associated providers, eligibility and pricing.
Practices can be organized by clinical specialty (e.g., primary care, therapy, psychiatry, nutrition), by disease state (e.g., diabetes, asthma, hypertension) or by program type (e.g., smoking cessation, weight loss, wellness). Each practice typically represents a distinct clinical use case with its own associated client branding, patient workflows, associated providers, eligibility and pricing.
In such a case, our international operations will be subject to different, and sometimes more stringent, legal and regulatory requirements, which vary widely by jurisdiction, including anti-corruption laws; economic sanctions laws; various privacy, insurance, tax, tariff and trade laws and regulations; corporate governance, privacy, data protection (including the EU’s General Data Protection Regulation which became effective in May 2018 across the EU), data mining, data transfer, labor and employment, intellectual property, consumer protection and investment laws and regulations; discriminatory licensing procedures; required localization of records and funds; and limitations on dividends and repatriation of capital.
Our international operations are and will be subject to different, and sometimes more stringent, legal and regulatory requirements, which vary widely by jurisdiction, including anti-corruption laws; economic sanctions laws; various privacy, insurance, tax, tariff and trade laws and regulations; corporate governance, privacy, data protection (including the EU General Data Protection Regulation ("GDPR") and the UK General Data Protection Regulation ("UK GDPR")), data mining, data transfer, labor and employment, intellectual property, consumer protection and investment laws and regulations; discriminatory licensing procedures; required localization of records and funds; and limitations on dividends and repatriation of capital.
We use targeted patient and provider engagement campaigns, best practices training as well as operational support to further drive an increase in usage across our Platform. • Adding new modules and programs —Most clients begin with one or two modules or programs for digital care delivery, but then expand into additional clinical areas.
We use targeted patient and provider engagement 7 campaigns, best practices training as well as operational support to further drive an increase in usage across our platform. • Adding new solutions —Most clients begin with one or two solutions for hybrid care delivery, but then expand into additional use case.
By addressing these challenges, digital care delivery offers many opportunities to improve healthcare, which include: • Solving the access crisis driven by provider shortages and inefficient resource allocation; • Addressing increasing healthcare costs for all key stakeholders; • Promoting greater coordination of care; • Improving health equity; and • Optimizing patient experience to drive recruitment and retention.
By addressing these challenges, digital care delivery offers many opportunities to improve healthcare, which include: • Solving the access crisis driven by workforce shortages and inefficient resource allocation; • Addressing increasing healthcare costs for all stakeholders; • Enabling greater care coordination; • Improving health equity; and • Optimizing patient and member experience to drive adoption and retention.
Our Competitive Strengths Supporting the Full Continuum of Care with Synchronous and Asynchronous Capabilities The Amwell Platform enables our clients to deploy and configure care pathways that blend a range of synchronous and asynchronous services. For example, a patient may benefit from ongoing text-based therapy to assist with managing a behavioral health issue, chronic condition or post-discharge.
Our Competitive Strengths Supporting the Full Continuum of Care with Synchronous, Asynchronous and Automated Capabilities Our platform enables clients to deploy and configure care pathways that blend a range of technology-enabled care modalities. For example, a patient may benefit from ongoing digital-based therapy to assist with managing a behavioral health issue, chronic condition or recovery post hospital discharge.
Most clients start by providing a single use case, such as on demand urgent care, or start with a subset of their members or patients. As our clients expand their digital care delivery solutions, they can add modules that support additional specialties or specific use cases across broader patient and/or member populations.
Many clients start by providing a single (or several) use case(s), such as on demand urgent care, or start with a subset of their members or patients. As our clients expand their hybrid care delivery, they can add components that support additional specialties or specific use cases across broader patient and/or member populations.
Our broad range of connected healthcare providers is attractive to health plans seeking to expand their care networks, while health systems are drawn to a network with a large number of health plans that allows for the possibility to extend their services through the digital distribution of their care.
Our broad range of credentialed AMG and client healthcare providers is attractive to health plans seeking to expand their care networks, while health systems are drawn to a network connected to many health plans that allows for the possibility to extend their services through the digital distribution of their care.
In 2012, we entered into a joint venture with an affiliate of Elevance Health, Inc. (formerly Anthem, Inc.) to form National Telehealth Network, LLC (“NTN”). NTN, which is consolidated in our financial statements, is greater than 50% owned by us. NTN is managed by a six person Board of Managing Directors, with the Chairman of the Board appointed by us.
In 2012, we entered into a joint venture with an affiliate of Elevance Health, Inc. (formerly Anthem, Inc.) to form National Telehealth Network, LLC (“NTN”). NTN, which is consolidated in our financial statements, is greater than 50% owned by us.
We enable the success of the software we sell by also selling access to clinical services on a fee-for-service basis on the Amwell Platform and through our direct-to-consumer app. 8 Our Technology and Operations Our technology platform is designed to provide superior patient and provider experiences, encompassing the complete end-to-end virtual visit.
We enable the success of the software we sell by also selling access to clinical services on a fee-for-service basis on our platform and through our direct-to-consumer app. Our Technology and Operations Our platform, software and services are designed to provide superior patient and provider experiences.
We also are subject to applicable anti-corruption laws of the jurisdictions in which we operate. Violations of the FCPA and other anti-corruption laws may result in severe criminal and civil sanctions as well as other penalties, and the SEC and the DOJ have increased their enforcement activities with respect to the FCPA.
Violations of the FCPA and other anti-corruption laws may result in severe criminal and civil sanctions as well as other penalties, and the SEC and the DOJ have increased their enforcement activities with respect to the FCPA.
The Platform now hosts and operates applications created by outside developers, whether to serve their own organizations or offer innovations to our large ecosystem.
The platform can host and operate applications created by outside developers, whether to serve their own organizations or offer innovations to our large ecosystem.
In addition to HIPAA and state health information privacy laws, we may be subject to other state and federal privacy laws, including laws that prohibit unfair privacy and security acts or practices and deceptive statements about privacy and security and laws that place specific requirements on certain types of activities, such as data security and texting.
In addition, state laws are changing rapidly, and there is discussion of a new federal privacy law or federal breach notification law, to which we may be subject. 15 In addition to HIPAA and state health information privacy laws, we may be subject to other state and federal privacy laws, including laws that prohibit unfair privacy and security acts or practices and deceptive statements about privacy and security and laws that place specific requirements on certain types of activities, such as data security and texting.
Yet, this patient can also be escalated to a live provider via video using rules that we can configure or patient choice. The mix of automated and virtual care capabilities offered by Amwell is unique in digital care and enables our clients to operate more efficiently while adhering to their own clinical pathways.
Yet, this patient can also be escalated to a synchronous session with a care provider via video using algorithms our clients configure and/or patient choice. The mix of automated, 5 digital, and virtual care capabilities Amwell offers is unique and enables our clients to operate more efficiently and effectively while adhering to their own clinical pathways.
Item 1. B usiness. Overview Amwell is a leading enterprise software company enabling digital care for healthcare’s key stakeholders. We empower health providers, payers, and innovators to achieve their digital ambitions, enabling a hybrid model of in-person, virtual and automated care.
Item 1. B usiness. Overview Amwell is a leading enterprise platform and software company digitally enabling hybrid care. We empower health providers, payers, and innovators to achieve their digital ambitions, enabling a coordinated experience across in-person, virtual and automated care.
Employees also are encouraged to volunteer on their own and are given a designated volunteer day to allow them time to give back in their local community. In 2022, Amwell donated more than $160,000 in cash and pro bono healthcare services to support our local communities. Social Responsibility Social responsibility is deeply embedded in our mission-oriented corporate culture.
Employees also are encouraged to volunteer on their own and are given a designated volunteer day to allow them time to give back in their local community. In 2023, Amwell donated more than $140,000 in cash and pro bono healthcare services to support our local communities.
For example, a large health plan is using the Amwell Platform in a program that seeks to close 20 gaps in care commonly seen across different high priority populations. Our ecosystem benefits from scale in our client base across each stakeholder vertical.
For example, a large health plan client is using Converge in a program that seeks to close 20 gaps in care commonly seen across different high priority populations. Our ecosystem benefits from scale in our client base across each stakeholder vertical. For example, we currently provide product and services to many Blues plans.
The AMG network includes a clinical entity with care capabilities that have been accredited by the National Committee for Quality Assurance (“NCQA”) and a separate clinical entity with care capabilities accredited by the Joint Commission.
The AMG network includes a clinical entity with care capabilities that have been accredited by the National Committee for Quality Assurance (“NCQA”) and a separate clinical entity with psychiatric care capabilities accredited by the Joint Commission. The Converge ™ platform ("Converge") is the latest version of our enterprise platform software.
The Converge platform delivers the digital care capabilities that health systems and health plans care about — for example, virtual primary care, post-discharge follow-up, chronic condition management, remote patient monitoring — and aligns them into a single digital care operating system that aggregates all of the data from these care experiences to provide real-time insight.
The telehealth of yesterday has grown to encompass hybrid care delivery models and the flow of data that drives healthcare. 2 Converge delivers the digital capabilities that health systems and health plans care about — for example, virtual primary care, post-discharge follow-up, chronic condition management, virtual nursing — and aligns them into a single digital care operating system that aggregates all of the data from these care experiences to provide real-time insight.
By providing a single platform for the digital distribution of care, the Converge platform will accelerate innovation and interoperability for health system and health plan clients as well as other healthcare innovators who aim to offer a seamless experience for providers, patients and members. 2 Our Industry Opportunities Healthcare today is inefficient, expensive, complicated and fragmented, resulting in substantial challenges for providers, payers and patients.
By providing a single platform for the digital distribution of care, Converge will accelerate innovation and interoperability for health system and health plan clients as well as other healthcare innovators who aim to offer a seamless experience for providers, patients and members.
We continue to prioritize our diverse recruitment strategy to build a strong pipeline for women and people of color in our management and leadership roles. Growth and Development We promote the continued growth and development of our employees.
As of December 31, 2023, women represented nearly 48% of our global employees, and 33% of our employees are non-white. We continue to prioritize our diverse recruitment strategy to build a strong pipeline for women and people of color in our management and leadership roles. Growth and Development We promote the continued growth and development of our employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOf particular importance are: • the federal physician self-referral law, commonly referred to as the Stark Law, that, unless one of the statutory or regulatory exceptions apply, prohibits physicians from referring Medicare or Medicaid patients to an entity for the provision of certain “designated health services” if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including an ownership interest or a compensation arrangement) with the entity, and prohibit the entity from billing Medicare or Medicaid for such designated health services.
Biggest changeOf particular importance are: • the federal physician self-referral law, commonly referred to as the Stark Law, that, unless one of the statutory or regulatory exceptions apply, prohibits physicians from referring Medicare or Medicaid patients to an entity for the provision of certain “designated health services” if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including an ownership interest or a compensation arrangement) with the entity, and prohibit the entity from billing Medicare or Medicaid for such designated health services; • the federal Anti-Kickback Statute that prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by any federal healthcare program, such as Medicare and Medicaid.
For example, our amended and restated certificate of incorporation and amended and restated by-laws collectively: • authorize three classes of common stock with disparate voting power, the Class A common stock that is listed on the NYSE, the Class B common stock that provide the holders thereof with the ability to control the outcome of matters requiring stockholder approval, even though such holders own significantly less than a majority of the shares of our outstanding Class A, Class B and Class C common stock, and the Class C common stock that do not have a vote on director elections; • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to prevent a takeover attempt; • authorize the classification of our Board of Directors into separate classes of directors to be elected on a staggered basis; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent, thereby requiring all actions to be taken at a duly called meeting of the stockholders; • require the approval of holders of at least 75% of the total combined voting power of the outstanding shares of our common stock to amend our amended and restated by-laws and certain provisions of our amended and restated certificate of incorporation; and • provide for notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
For example, our amended and restated certificate of incorporation and amended and restated by-laws collectively: • authorize three classes of common stock with disparate voting power, the Class A common stock that is listed on the NYSE, the Class B common stock that provide the holders thereof with the ability to control the outcome of matters requiring stockholder approval, even though such holders own significantly less than a majority of the shares of our outstanding Class A, Class B and Class C common stock, and the Class C common stock that do not have a vote on director elections; • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to prevent a takeover attempt; • authorize the classification of our Board of Directors into separate classes of directors to be elected on a staggered basis; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent, thereby requiring all actions to be taken at a duly called meeting of the stockholders; 50 • require the approval of holders of at least 75% of the total combined voting power of the outstanding shares of our common stock to amend our amended and restated by-laws and certain provisions of our amended and restated certificate of incorporation; and • provide for notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • HIPAA, which also imposes certain regulatory and contractual requirements regarding the privacy, security and transmission of PHI; 47 • the federal False Claims Act that imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits; • the federal Civil Monetary Law prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; • reassignment of payment rules that prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs; • similar state law provisions pertaining to Anti-Kickback, self-referral and false claims issues, some of which may apply to items or services reimbursed by any third party payer, including commercial insurers or services paid out-of-pocket by patients; • state laws that prohibit general business corporations, such as us, from practicing medicine, controlling physicians’ medical decisions or engaging in some practices such as splitting fees with physicians; • the Federal Trade Commission Act and federal and state consumer protection, advertisement and unfair competition laws, which broadly regulate marketplace activities and activities that could potentially harm consumers; • laws that regulate debt collection practices as applied to our debt collection practices; • a provision of the Social Security Act that imposes criminal penalties on healthcare providers who fail to disclose or refund known overpayments; • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; and • federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to provide physician and other professional services, to enroll and participate in the Medicare and Medicaid programs, to report certain changes in their operations to the agencies that administer these programs, as well as state insurance laws.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • HIPAA, which also imposes certain regulatory and contractual requirements regarding the privacy, security and transmission of PHI; • the federal False Claims Act that imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits; • the federal Civil Monetary Law prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; • reassignment of payment rules that prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs; • similar state law provisions pertaining to Anti-Kickback, self-referral and false claims issues, some of which may apply to items or services reimbursed by any third party payer, including commercial insurers or services paid out-of-pocket by patients; • state laws that prohibit general business corporations, such as us, from practicing medicine, controlling physicians’ medical decisions or engaging in some practices such as splitting fees with physicians; 45 • the Federal Trade Commission Act and federal and state consumer protection, advertisement and unfair competition laws, which broadly regulate marketplace activities and activities that could potentially harm consumers; • laws that regulate debt collection practices as applied to our debt collection practices; • a provision of the Social Security Act that imposes criminal penalties on healthcare providers who fail to disclose or refund known overpayments; • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; and • federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to provide physician and other professional services, to enroll and participate in the Medicare and Medicaid programs, to report certain changes in their operations to the agencies that administer these programs, as well as state insurance laws.
The market price for our Class A common stock may be influenced by many factors, including, but not limited to: • the success of competitive products or technologies; • developments related to our existing or any future collaborations; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning our intellectual property or other proprietary rights; • the recruitment or departure of key personnel; 55 • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems; • general economic, industry and market conditions; and • the other factors described in this “Risk Factors” section.
The market price for our Class A common stock may be influenced by many factors, including, but not limited to: • the success of competitive products or technologies; • developments related to our existing or any future collaborations; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning our intellectual property or other proprietary rights; • the recruitment or departure of key personnel; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems; • general economic, industry and market conditions; and • the other factors described in this “Risk Factors” section.
While we strive to comply with all applicable privacy and security laws and regulations, as well as our own posted privacy policies, legal standards for privacy, including but not limited to “unfairness” and “deception,” as enforced by the FTC and state attorneys general, continue to evolve and any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others, or could cause us to lose clients, which could have a material adverse effect on our business.
While we strive to comply with all applicable privacy and 46 security laws and regulations, as well as our own posted privacy policies, legal standards for privacy, including but not limited to “unfairness” and “deception,” as enforced by the FTC and state attorneys general, continue to evolve and any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others, or could cause us to lose clients, which could have a material adverse effect on our business.
Any potential security breach could also result in increased costs associated with liability for stolen assets or information, repairing system damage that may have been caused by such breaches, incentives offered to clients or other business partners in an effort to maintain our business relationships after a breach and implementing measures to prevent future occurrences, including organizational changes, deploying additional personnel and protection technologies, training employees and engaging third-party experts and consultants.
Any potential security breach could also result in increased costs associated with liability for 48 stolen assets or information, repairing system damage that may have been caused by such breaches, incentives offered to clients or other business partners in an effort to maintain our business relationships after a breach and implementing measures to prevent future occurrences, including organizational changes, deploying additional personnel and protection technologies, training employees and engaging third-party experts and consultants.
In addition, any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, security or disclosure of our users’ content, or regarding the manner in which the express or implied consent of users for the collection, use, retention or disclosure of such content is obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete and may limit our 51 ability to store and process user data or develop new services and features.
In addition, any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, security or disclosure of our users’ content, or regarding the manner in which the express or implied consent of users for the collection, use, retention or disclosure of such content is obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete and may limit our ability to store and process user data or develop new services and features.
The failure of AMG to maintain or to secure new cost-effective provider contracts may result in a loss of or inability to grow our consumer base, higher costs, healthcare provider network disruptions, less attractive clinical services for our clients and/or difficulty in meeting regulatory or accreditation requirements, any of which could have a material adverse effect on our business, financial condition and results of operations.
The failure of AMG to maintain or to secure new cost-effective provider contracts may result in a loss of or inability to grow our consumer base, higher costs, healthcare provider network 28 disruptions, less attractive clinical services for our clients and/or difficulty in meeting regulatory or accreditation requirements, any of which could have a material adverse effect on our business, financial condition and results of operations.
The foregoing provision does not apply to claims arising under the Securities Act, the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction Additionally, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
The foregoing provision does not apply to claims arising under the Securities Act, the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction 51 Additionally, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
These provisions may facilitate management and board entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders. 54 We are a “controlled company” within the meaning of NYSE rules and, as a result, we qualify for, and rely on, exemptions from certain corporate governance requirements.
These provisions may facilitate management and board entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders. We are a “controlled company” within the meaning of NYSE rules and, as a result, we qualify for, and rely on, exemptions from certain corporate governance requirements.
In the event that we must remedy such violations, we may be required to modify our services and products in a manner that undermines our solution’s attractiveness to our clients, consumers or providers or experts, we may become subject to fines or other penalties or, if we determine that the requirements to operate in compliance in such jurisdictions are overly burdensome, we 46 may elect to terminate our operations in such places.
In the event that we must remedy such violations, we may be required to modify our services and products in a manner that undermines our solution’s attractiveness to our clients, consumers or providers or experts, we may become subject to fines or other penalties or, if we determine that the requirements to operate in compliance in such jurisdictions are overly burdensome, we may elect to terminate our operations in such places.
We serve all of our U.S. based clients and consumers from two geographically dispersed data centers. While we control and have access to our servers, we do not control the operation of these facilities. The owners of our data center facilities have no obligation to renew their agreements with us on commercially reasonable terms, or at all.
We serve all of our U.S. based clients and consumers from two geographically dispersed data centers. While we control and have access to our servers, we do not control the operation of these facilities. The owners of our data center facilities 32 have no obligation to renew their agreements with us on commercially reasonable terms, or at all.
Although we maintain a security and privacy damages insurance policy, the coverage under our policies may not be adequate to compensate us for all losses that may occur related to the services provided by our 34 third-party vendors. In addition, we may not be able to continue to obtain adequate insurance coverage at an acceptable cost, if at all.
Although we maintain a security and privacy damages insurance policy, the coverage under our policies may not be adequate to compensate us for all losses that may occur related to the services provided by our third-party vendors. In addition, we may not be able to continue to obtain adequate insurance coverage at an acceptable cost, if at all.
If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the 28 marketplace or to grow our revenue could be impaired and our results of operations may suffer. Even if we are successful, we cannot assure you that these relationships will result in increased client use of our applications or increased revenue.
If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our results of operations may suffer. Even if we are successful, we cannot assure you that these relationships will result in increased client use of our applications or increased revenue.
These clients may not renew their contracts, seek to terminate their relationship with us or renew on less favorable terms. Moreover, negative publicity related to our client relationships, regardless of its accuracy, may further damage our business by affecting our reputation or ability to compete for new business with current and prospective clients.
These clients may not renew their contracts, seek to terminate their relationship with us or renew on less favorable terms. Moreover, negative publicity related to our client relationships, regardless of its accuracy, may further damage our business by affecting our reputation or ability to compete for new business with current and prospective 35 clients.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant sanctions authorities. Our provision of 44 services to persons located outside the United States may be subject to certain regulatory prohibitions, restrictions or other requirements, including certain licensing or reporting requirements.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant sanctions authorities. Our provision of services to persons located outside the United States may be subject to certain regulatory prohibitions, restrictions or other requirements, including certain licensing or reporting requirements.
Were this to occur, there is no guarantee that we would be able to compensate for the loss in revenue from employers by increasing sales of our solution to health insurance companies or to individuals or government agencies. In such a case, our results of operations would be adversely affected.
Were this to occur, there is no guarantee that we would be able to compensate for the loss in revenue from 26 employers by increasing sales of our solution to health insurance companies or to individuals or government agencies. In such a case, our results of operations would be adversely affected.
Other companies, including those with substantially greater financial, marketing, sales, 43 technology or other business resources, may compete with us for these opportunities or arrangements. We may not identify, secure, or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all.
Other companies, including those with substantially greater financial, marketing, sales, technology or other business resources, may compete with us for these opportunities or arrangements. We may not identify, secure, or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all.
The failure to adequately comply with these future laws and regulations may delay or possibly prevent some of our products or services from being offered to clients, or their members and patients, which could have a material adverse effect on our business, financial condition and results of operations.
The failure to adequately comply with these future laws and regulations may delay or possibly prevent some of our products or services from being 44 offered to clients, or their members and patients, which could have a material adverse effect on our business, financial condition and results of operations.
AMG carries professional liability insurance for itself and each of its healthcare professionals, and we separately carry a professional liability insurance policy, which covers medical malpractice claims and covers our existing subsidiaries. In addition, professional liability insurance is expensive and insurance premiums may increase significantly in the future, particularly as we expand our services.
AMG carries professional liability insurance for itself and each of its healthcare professionals, and we separately carry a professional liability insurance policy, which covers medical malpractice claims and covers our existing subsidiaries. In addition, professional liability insurance is expensive and insurance premiums may increase significantly in the future, particularly as 38 we expand our services.
HIPAA also implemented the use of standard transaction code sets and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities associated with the billing and collection of healthcare claims. 49 Violations of HIPAA may result in significant civil and criminal penalties.
HIPAA also implemented the use of standard transaction code sets and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities associated with the billing and collection of healthcare claims. Violations of HIPAA may result in significant civil and criminal penalties.
For example, our Founders will be able to control the amendments of our amended and restated certificate of incorporation or by-laws, increases to the number of shares available for issuance under our equity incentive plans or adoption of new equity incentive plans and approval of any merger or sale of assets for the foreseeable future.
For example, our Founders will be able to control the amendments of our amended and restated certificate of incorporation or by-laws, increases to the number of shares available for issuance under 49 our equity incentive plans or adoption of new equity incentive plans and approval of any merger or sale of assets for the foreseeable future.
Moreover, we may not be able to successfully complete these growth initiatives, strategies and operating plans and realize all of the benefits, including growth targets and cost savings, that we expect to achieve or it may be more costly to do so than we 29 anticipate.
Moreover, we may not be able to successfully complete these growth initiatives, strategies and operating plans and realize all of the benefits, including growth targets and cost savings, that we expect to achieve or it may be more costly to do so than we anticipate.
Accordingly, we may face claims from others claiming ownership of, or seeking to enforce the license terms applicable to such open-source software, including by demanding release of the open-source software, derivative works or our proprietary source code that was developed or distributed with such software.
Accordingly, we may face claims from others claiming ownership of, or seeking to enforce the license terms applicable to such open-source software, including by demanding release of the open-source software, derivative works or our proprietary source code that was developed or 36 distributed with such software.
The extent to which each state considers particular actions or contractual relationships to constitute improper influence of professional judgment varies across the states and is subject to change and to evolving interpretations by state boards of medicine and state attorneys general, among others.
The extent to which each state considers particular actions or contractual relationships to constitute improper influence of professional judgment varies 43 across the states and is subject to change and to evolving interpretations by state boards of medicine and state attorneys general, among others.
Accordingly, our results of operations will depend in substantial part on our ability to deliver a successful experience for clients, as well as their members and patients, and persuade our clients to maintain and grow their relationship with us over time.
Accordingly, our results of operations will depend in substantial part 30 on our ability to deliver a successful experience for clients, as well as their members and patients, and persuade our clients to maintain and grow their relationship with us over time.
In addition, we may not be able 37 to prevent the unauthorized disclosure or use of our technical know-how or other trade secrets by the parties to these agreements despite the existence generally of confidentiality agreements and other contractual restrictions.
In addition, we may not be able to prevent the unauthorized disclosure or use of our technical know-how or other trade secrets by the parties to these agreements despite the existence generally of confidentiality agreements and other contractual restrictions.
The ownership of a corporation’s stock for U.S. federal income tax purposes is generally based on the substance of a transaction, rather than the ownership of legal title, based on a determination as to which entity has the benefits and burdens of the ownership of a corporation’s stock.
The ownership of a corporation’s stock for U.S. federal income tax purposes is generally based on the substance of a transaction, rather than the 39 ownership of legal title, based on a determination as to which entity has the benefits and burdens of the ownership of a corporation’s stock.
Our Board of Directors is briefed periodically on cybersecurity and risk management issues by our Chief Information Officer and General Counsel and we have implemented a number of processes to avoid cyber threats and to protect privacy.
Our Board is briefed periodically on cybersecurity and risk management issues by our Chief Information Officer and General Counsel and we have implemented a number of processes to avoid cyber threats and to protect privacy.
In addition to remediating newly identified vulnerabilities, previously identified vulnerabilities must also be continuously addressed. Accordingly, we are at risk that cyber-attackers exploit these known vulnerabilities before they have been addressed.
In addition to remediating newly identified vulnerabilities, previously identified vulnerabilities must also be continuously addressed. Accordingly, we are at risk that cyber-attackers exploit these known vulnerabilities before they have 34 been addressed.
As a result, if our clients do not allocate the internal resources 36 necessary to meet their implementation responsibilities or if we face unanticipated implementation difficulties, the implementation may be delayed.
As a result, if our clients do not allocate the internal resources necessary to meet their implementation responsibilities or if we face unanticipated implementation difficulties, the implementation may be delayed.
If we are not able to 33 manage the risks related to our international operations, our business, financial condition and results of operations may be materially adversely affected.
If we are not able to manage the risks related to our international operations, our business, financial condition and results of operations may be materially adversely affected.
Among these important risks are the following: • our history of losses and the risk we may not achieve profitability; • our limited number of significant clients (including our largest client by revenue, Elevance Health, which accounted for 22%, 25% and 23% of our revenue for the years ended December 31, 2020, 2021 and 2022, respectively) and the risk that we may lose their business; • weak growth and increased volatility in the digital care market; • inability to adapt to rapid technological changes; • increased competition from existing and potential new participants in the healthcare industry; • our clients’ acceptance of the Converge platform and our ability and the costs to further develop this platform; • changes in healthcare laws, regulations or trends as well as our ability to operate in the heavily regulated healthcare industry; • slower than expected growth in patient adoption of digital care and in platform usage by either clients or patients; • the impact of seasonal viruses on our business or on our ability to forecast our business’s financial outlook; • inability to grow our base of affiliated and non-affiliated providers sufficient to serve patient demand; • our ability to comply with federal and state privacy regulations and the significant liability that could result from a cybersecurity breach or our failure to comply with such regulations; and • holders of our Class A common stock have limited or no ability to influence corporate matters due to the multiple class structure of our common stock and the ownership of Class B common stock by Ido Schoenberg and Roy Schoenberg (the “Founders”), which will have the effect of concentrating voting control with our founders for the foreseeable future.
Among these important risks are the following: • our history of losses and the risk we may not achieve profitability; • our limited number of significant clients (including our largest client by revenue, Elevance Health, which accounted for 25%, 23% and 24% of our revenue for the years ended December 31, 2021, 2022 and 2023, respectively) and the risk that we may lose their business; • weak growth and increased volatility in the digital care market; • inability to adapt to rapid technological changes; • increased competition from existing and potential new participants in the healthcare industry; • our clients’ acceptance of Converge and our ability and the costs to further develop this platform; • changes in healthcare laws, regulations or trends as well as our ability to operate in the heavily regulated healthcare industry; • slower than expected growth in patient adoption of digital care and in platform usage by either clients or patients; • the impact of seasonal viruses on our business or on our ability to forecast our business’s financial outlook; • inability to grow our base of affiliated and non-affiliated providers utilizing the Amwell Platform to a number sufficient to serve patient demand; • our ability to comply with federal, state and foreign privacy regulations and the significant liability that could result from a cybersecurity breach or our failure to comply with such regulations; and • holders of our Class A common stock have limited or no ability to influence corporate matters due to the multiple class structure of our common stock and the ownership of Class B common stock by Ido Schoenberg and Roy Schoenberg (the “Founders”), which will have the effect of concentrating voting control with our founders for the foreseeable future.
Based on our analysis of changes in the ownership of our stock through December 31, 2022, we do not believe that any such changes prior to such date resulted in significant limitations under Section 382 of the Code on our ability to utilize NOL and credit carryforwards generated prior to that date.
Based on our analysis of changes in the ownership of our stock through December 31, 2023, we do not believe that any such changes prior to such date resulted in significant limitations under Section 382 of the Code on our ability to utilize NOL and credit carryforwards generated prior to that date.
We currently generate most of our revenues from clients who purchase access to our enterprise software. These contracts generally have stated initial terms of three years. Most of our clients have no obligation to renew their subscriptions for our solution after the initial term expires.
We currently generate most of our revenues from clients who purchase access to our enterprise platform. These contracts generally have stated initial terms of three years. Most of our clients have no obligation to renew their subscriptions for our solution after the initial term expires.
Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, including, without limitation, the following: • the addition or loss of large clients, including through acquisitions or consolidations of such clients; • seasonal and other variations in the timing of the sales of our services; • historically, a significantly higher proportion of our clients’ members and patients use our services during peak cold and flu season months, and due to the COVID-19 pandemic, there were other variations in the timing of the sale of our services in the periods of peak COVID cases; the future impact of COVID-19 on seasonality is unknown as there could be additional surges and demand on digital care visits; • the timing of recognition of revenue, including possible delays in the recognition of revenue due to sometimes unpredictable implementation timelines; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • our ability to effectively manage the size and composition of our proprietary network of healthcare professionals relative to the level of demand for services from our clients’ members and patients; • the timing and success of introductions of new products and services by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, clients or strategic partners; • client renewal rates and the timing and terms of client renewals; • the mix of products and services sold during a period; and • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies.
Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, including, without limitation, the following: • the addition or loss of large clients, including through acquisitions or consolidations of such clients; • seasonal and other variations in the timing of the sales of our services; • historically, a significantly higher proportion of our clients’ members and patients use our services during peak cold and flu season months, the future impact of seasonal viruses is unknown as there could be additional surges and demand on digital care visits; • the timing of recognition of revenue, including possible delays in the recognition of revenue due to sometimes unpredictable implementation timelines; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • our ability to effectively manage the size and composition of our proprietary network of healthcare professionals relative to the level of demand for services from our clients’ members and patients; • the timing and success of introductions of new products and services by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, clients or strategic partners; • client renewal rates and the timing and terms of client renewals; • the mix of products and services sold during a period; and • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies.
In addition, we have invested, and will continue to invest, significant resources in research and development to enhance our existing solution and introduce new high-quality digital care products and services such as our Converge platform.
In addition, we have invested significant resources in research and development to enhance our existing solution and introduce new high-quality digital care products and services, such as our Converge platform, and intend to continue to invest resources to enhance our existing solution and introduce new products and services.
However, changes in the ownership of our stock after December 31, 2022, some of which are outside of our control, could result in an ownership change under Section 382 of the Code after such date, which could significantly limit our ability to utilize our existing and future NOL and credit carryforwards arising at any time prior to such ownership change.
However, changes in the ownership of our stock after December 31, 2023, some of which are outside of our control, could result in an ownership change under Section 382 of the Code after such date, which could significantly limit 40 our ability to utilize our existing and future NOL and credit carryforwards arising at any time prior to such ownership change.
In addition, many of the companies with which we compete for experienced personnel have greater resources than we have. In addition, in making employment decisions, particularly in high-technology industries, job candidates often consider the value of the stock options or other equity instruments they are to receive in connection with their employment.
In addition, many of the companies with which we compete for experienced personnel have greater resources than we have. In making employment decisions, particularly in high-technology industries, qualified personnel often consider the value of the stock options or other equity instruments they are to receive in connection with their employment.
European data protection law also imposes strict rules on the transfer of personal data out of the EEA to the United States; for example, in July 2020, the Court of Justice of the European Union limited how organizations could lawfully transfer personal data from the EEA to the United States by invalidating the EU-US Privacy Shield and imposing further restrictions on use of the standard contractual clauses, which could affect our ability to efficiently process personal data from the EEA.
Further, European data protection law also imposes strict rules on the transfer of personal data out of the EEA to the United States; for example, in July 2020, the CJEU limited how organizations could lawfully transfer personal data from the EEA to the United States by invalidating the EU-US Privacy Shield and imposing further restrictions on use of the standard contractual clauses, which could affect our ability to efficiently process personal data from the EEA.
In addition, during times of economic instability, it has been difficult for many companies to obtain financing in the public markets or to obtain debt financing, and we may not be able to obtain additional financing on commercially reasonable terms, if at all.
In addition, during times of economic instability, it has been difficult for many companies to obtain financing in the public markets or to obtain debt financing, and we may not be able to obtain additional financing on commercially reasonable terms or at times that we require such financing, if at all.
If our enterprise software does not currently support a client’s required data format or appropriately integrate with a client’s applications and information systems, then we must configure our enterprise software to do so, which increases our expenses. Additionally, we do not control our clients’ implementation schedules.
If our enterprise platform and software as a service does not currently support a client’s required data format or appropriately integrate with a client’s applications and information systems, then we must configure our enterprise platform and software as a service to do so, which increases our expenses. Additionally, we do not control our clients’ implementation schedules.
As of December 31, 2022, the Company had 32,945,952 shares of Class A common stock reserved for issuance upon conversion of Class B and Class C common stock.
As of December 31, 2023, the Company had 32,945,952 shares of Class A common stock reserved for issuance upon conversion of Class B and Class C common stock.
The Amwell Platform provides our consumers and providers with the ability to, among other things, register for our services; complete, view and edit medical history; request a visit (either scheduled or on demand); and conduct a visit (via video or phone). Proprietary software development is time-consuming, expensive and complex, and may involve unforeseen difficulties.
Our enterprise platform and software as a service provides our consumers and providers with the ability to, among other things, register for our services; complete, view and edit medical history; request a visit (either scheduled or on demand); and conduct a visit (via video or phone). Proprietary software development is time-consuming, expensive and complex, and may involve unforeseen difficulties.
Because we retain the economic ownership in and control over shares of the PCs, even though we have transferred legal title to the shares of the PCs to Dr. Cynthia Horner and Dr.
Because we retain the economic ownership in and control over shares of the PCs, even though we have transferred legal title to the shares of the PCs to Dr.
Our longer-term results of operations and continued growth will depend on our ability to successfully develop and market new digital care products and services that 26 our clients want and are willing to purchase.
Our long-term results of operations and continued growth will depend on our ability to successfully develop and market new digital care products and services that our clients want and are willing to purchase.
Sales and use and similar tax laws and rates vary greatly from state to state. For 2022 we filed sales and use tax in 46 states.
Sales and use and similar tax laws and rates vary greatly from state to state. For 2023 we filed sales and use tax in 46 states.
Additional factors that could affect our ability to sell products and services include, but are not limited to: • failure of our clients to be successful offering our products; • changes in the nature or operations of our clients; • price, performance and functionality of our solution; • availability, price, performance and functionality of competing solutions; • our ability to develop and sell complementary products and services; • stability, performance and security of our hosting infrastructure and hosting services; • changes in healthcare laws, regulations or trends; and • the business environment of our clients and, in particular, headcount reductions by our clients.
Additional factors that could affect our ability to sell products and services include, but are not limited to: • failure of our clients to be successful offering our products; • changes in the nature or operations of our clients; • price, performance and functionality of our solution; • our development and introduction of additional or improved solutions and our clients’ acceptance of such solutions; • availability, price, performance and functionality of competing solutions; • our ability to develop and sell complementary products and services; • stability, performance and security of our hosting infrastructure and hosting services; • changes in healthcare laws, regulations or trends; and • the business environment of our clients and, in particular, headcount reductions by our clients.
We may be unable to successfully execute on our growth initiatives, business strategies or operating plans. We are continually executing a number of growth initiatives, strategies and operating plans designed to enhance our business. The anticipated benefits from these efforts are based on several assumptions that may prove to be inaccurate.
We are continually executing a number of growth initiatives, strategies and operating plans designed to enhance our business. The anticipated benefits from these efforts are based on several assumptions that may prove to be inaccurate.
The federal NOL carryforwards for years before 2018 begin to expire in 2026, the state NOL carryforwards began to expire in 2022 and federal research and development credit carryforwards begin to expire in 2027. Federal NOL carryforwards totaling $541.2 million generated in 2018 and after do not expire and can be carried forward indefinitely.
The federal NOL carryforwards for years before 2018 begin to expire in 2026, the state NOL carryforwards began to expire in 2022 and federal research and development credit carryforwards begin to expire in 2027. Federal NOL carryforwards totaling $636.8 million generated in 2018 and after do not expire and can be carried forward indefinitely.
Volatility in the price of our stock may, therefore, adversely affect our ability to attract or retain highly skilled personnel. Further, the requirement to expense stock options and other equity instruments may discourage us from granting the size or type of stock option or equity awards that job candidates require to join our company.
Volatility in the price of our stock may, therefore, adversely affect our ability to attract or retain highly skilled personnel. Further, the requirement to expense stock options and other equity instruments may discourage us from granting the size or type of stock option or equity awards that qualified personnel require to join or stay with our company.
In order to support the growth of our business, we may need additional capital, which sources of additional capital may not be available to us on acceptable terms or at all.
We may need additional capital to support the growth of our business, which may not be available to us on acceptable terms or at all.
Risks Related to Our Financial Position We have a history of losses, which we expect to continue, and we may never achieve or sustain profitability. We have incurred significant losses in each period since our inception. We incurred net losses of $272.1 million, $176.8 million and $228.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Risks Related to Our Financial Position We have a history of losses, which we expect to continue, and we may never achieve or sustain profitability. We have incurred significant losses in each period since our inception. We incurred net losses of $679.2 million, $272.1 million and $176.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Our business entails the risk of medical liability claims against AMG providers and us. Although we and AMG carry insurance covering medical malpractice claims in amounts that we believe are appropriate in light of the risks attendant to our business, successful medical liability claims could result in substantial damage awards that exceed the limits of our and AMG’s insurance coverage.
Although we and AMG carry insurance covering medical malpractice claims in amounts that we believe are appropriate in light of the risks attendant to our business, successful medical liability claims could result in substantial damage awards that exceed the limits of our and AMG’s insurance coverage.
However, although many of the executive orders have expired, several states have made permanent changes to their telehealth requirements, which in most cases will result in increased access to telehealth services. Most of the federal waivers have been extended through December 31, 2024, regardless of when the public health emergency ends.
However, although many of the executive orders have expired, several states have made permanent changes to their telehealth requirements, which in most cases will result in increased access to telehealth services. Most of the federal waivers have been extended through December 31, 2024.
For the years ended December 31, 2022, 2021 and 2020, our net cash used in operating activities was $192.3 million, $141.5 million and $112.5 million respectively. As of December 31, 2022, we had $538.5 million of cash, cash equivalents and short-term investments, which are held for working capital purposes.
For the years ended December 31, 2023, 2022 and 2021, our net cash used in operating activities was $148.3 million, $192.3 million and $141.5 million respectively. As of December 31, 2023, we had $372.0 million of cash, cash equivalents and short-term investments, which are held for working capital purposes.
In general, under Sections 382 and 383 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and certain credit and capital loss carryforwards to offset future taxable income.
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations. In general, under Sections 382 and 383 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and certain credit and capital loss carryforwards to offset future taxable income.
Carrie Nelson, with respect to the Online Care Group, in order to comply with the laws of the various states in which the PCs were formed and operate, we believe that we are the beneficial owners of the stock of the PCs for U.S. federal and state income tax purposes and thus are entitled to include the PCs in our U.S. federal consolidated income tax return and file a unitary or similar basis in certain states.
Cynthia Horner, with respect to AMG entities, in order to comply with the laws of the various states in which the PCs were formed and operate, we believe that we are the beneficial owners of the stock of the PCs for U.S. federal and state income tax purposes and thus are entitled to include the PCs in our U.S. federal consolidated income tax return and file a unitary or similar basis in certain states.
Although we currently do not believe that we are or are likely to be in the near future subject to the CAMT and thus do not believe that the CAMT will impact our tax results in the near future, there are a number of uncertainties and ambiguities as to the interpretation and application of the CAMT, and it is possible that future growth in our business and AFSI and/or any future guidance with respect to the interpretation and application of the CAMT could result in the CAMT having a material effect on our liability for corporate taxes and our consolidated effective tax rate. 40 We may not be permitted to file as a consolidated group for U.S. federal income tax and certain state tax purposes.
Although we currently do not believe that we are or are likely to be in the near future subject to the CAMT and thus do not believe that the CAMT will impact our tax results in the near future, there are a number of uncertainties and ambiguities as to the interpretation and application of the CAMT, and it is possible that future growth in our business and AFSI and/or any future guidance with respect to the interpretation and application of the CAMT could result in the CAMT having a material effect on our liability for corporate taxes and our consolidated effective tax rate.
Any debt financing secured by us in the future could involve additional restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
Any debt financing secured by us in the future could require us to dedicate a substantial amount of cash for interest payments and involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital, operate our business and pursue business opportunities, including potential acquisitions.
We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including, but not limited to: • inability to integrate or benefit from acquired technologies or services in a profitable manner; • unanticipated costs or liabilities associated with the acquisition; • difficulty integrating the accounting systems, operations and personnel of the acquired business; • difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; • difficulty converting the clients of the acquired business onto our enterprise software and contract terms, including disparities in the revenue, licensing, support or professional services model of the acquired company; • diversion of management’s attention from other business concerns; • adverse effects to our existing business relationships with business partners and clients as a result of the acquisition; • the potential loss of key employees; • use of resources that are needed in other parts of our business; and • use of substantial portions of our available cash to consummate the acquisition. 42 In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which generally must be assessed for impairment at least annually.
We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including, but not limited to: • inability to integrate or benefit from acquired technologies or services in a profitable manner; • unanticipated costs or liabilities associated with the acquisition; • difficulty integrating the accounting systems, operations and personnel of the acquired business; • difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; • difficulty converting the clients of the acquired business onto our enterprise platform and software as a service and contract terms, including disparities in the revenue, licensing, support or professional services model of the acquired company; • diversion of management’s attention from other business concerns; • adverse effects to our existing business relationships with business partners and clients as a result of the acquisition; • the potential loss of key employees; • use of resources that are needed in other parts of our business; and • use of substantial portions of our available cash to consummate the acquisition.
Risks Related to Strategic Initiatives We may acquire other companies or technologies, which could divert our management’s attention, result in dilution to our stockholders and otherwise disrupt our operations and we may have difficulty integrating any such acquisitions successfully or realizing the anticipated benefits therefrom, any of which could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Strategic Initiatives We may acquire other companies or technologies, which could divert our management’s attention, result in dilution to our stockholders and otherwise disrupt our operations and we may have difficulty integrating any such acquisitions successfully or realizing the anticipated benefits therefrom.
If our or our vendors’ security measures fail or are breached and unauthorized access to a client’s data or information systems is obtained, our services may be perceived as insecure, we may incur significant liabilities, our reputation may be harmed, and we could lose sales and clients.
This could materially and adversely impact our business, financial condition and operating results. 33 If our or our vendors’ security measures fail or are breached and unauthorized access to a client’s data or information systems is obtained, our services may be perceived as insecure, we may incur significant liabilities, our reputation may be harmed, and we could lose sales and clients.
In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our results of operations based on this impairment assessment process, which could adversely affect our results of operations. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our results of operations.
In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our results of operations based on this impairment assessment process, which could adversely affect our results of operations.
Similarly, violations can result in exclusion from participation in government healthcare programs, including Medicare and Medicaid; • the criminal healthcare fraud provisions of the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their implementing regulations, which we collectively refer to as HIPAA, and related rules that prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; • the criminal healthcare fraud provisions of the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their implementing regulations, which we collectively refer to as HIPAA, and related rules that prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Future revenues may not grow at these same rates or may decline. Our future growth will depend, in part, on our ability to grow our revenue from existing clients, to complete sales to potential future clients, to expand our client, patient and member bases, to develop new products and services and to expand internationally.
Our future growth will depend, in part, on our ability to grow our revenue from existing clients, to complete sales to potential future clients, to expand our client, patient and member bases, to develop new products and services and to expand internationally.
Even if the market in which we compete meets our size estimates and forecasted growth, our business could fail to grow at similar rates, if at all. 30 Our quarterly results may fluctuate significantly, which could adversely impact the value of our Class A common stock.
Even if the market in which we compete meets our size estimates and forecasted growth, our business could fail to grow at similar rates, if at all. Our quarterly results may fluctuate significantly.
Our proprietary software may not operate properly, which could damage our reputation, give rise to claims against us or divert application of our resources from other purposes, any of which could harm our business, financial condition and results of operations.
Our proprietary software may not operate properly, which could damage our reputation, give rise to claims against us or divert application of our resources from other purposes.
Expansion of our global sales and operations may require us to divert the efforts of our technical and management personnel and could result in significant expense to us, which could adversely affect our results of operations and growth prospects.
Expansion of our global sales and operations may require us to divert the efforts of our technical and management personnel and could result in significant expense to us, which could adversely affect our results of operations and growth prospects. We may not be able to quickly scale our capabilities when needed.
Certain U.S. state and local tax authorities may assert that we have a nexus with such states or localities and may seek to impose state and local income taxes on our income allocated to such state and localities. We file state and local income tax returns in 45 states and 3 cities.
Certain U.S. state and local tax authorities may assert that we have a nexus with such states or localities and may seek to impose state and local income taxes on our income allocated to such state and localities. We file state and local income tax returns in jurisdictions in which we believe we are required to do so.
As of December 31, 2022, we had an accumulated deficit of $1,082.0 million. These losses and accumulated deficit reflect the substantial investments we made to acquire new clients and develop our enterprise software.
As of December 31, 2023, we had an accumulated deficit of $1,757.8 million. These losses and accumulated deficit reflect the substantial investments we made to acquire new clients and develop our enterprise platform and software as a service.
Further, there can be no assurance that technological advances by one or more of our competitors or future competitors will not result in our present or future software-based products and services becoming uncompetitive or obsolete.
Further, there can be no assurance that technological advances by one or more of our competitors or future competitors will not result in our present or future software-based products and services becoming uncompetitive or obsolete. We operate in a competitive industry and may not able to compete effectively.
In addition, because of the potential for large monetary exposure under the federal False Claims Act, which provides for treble damages and mandatory minimum penalties of $12,537 to $25,076 per false claim or statement, healthcare providers often resolve allegations without admissions of liability for significant and material amounts to avoid the uncertainty of treble damages that may be awarded in litigation proceedings.
In addition, because of the potential for large monetary exposure under the federal False Claims Act, healthcare providers often resolve allegations without admissions of liability for significant and material amounts to avoid the uncertainty of treble damages that may be awarded in litigation proceedings.
We intend to continue scaling our business to increase our client, patient, member and provider bases, broaden the scope of services we offer, invest in research and development and expand the applications of our technology through which consumers can access our services. Accordingly, we anticipate that cost of revenue and operating expenses will increase substantially in the foreseeable future.
We intend to continue scaling our business to increase our client, patient, member and provider bases, broaden the scope of services we offer, invest in research and development and expand the applications of our technology through which consumers can access our services.
If a successful legal challenge or an adverse change in the relevant laws were to occur, and we or our affiliated medical group were unable to adapt our business model accordingly, our operations in the affected jurisdictions would be disrupted, which could have a material adverse effect on our business, financial condition and results of operations. 45 We are dependent on our relationships with affiliated professional entities, which we do not own, to provide physician services, and our business would be adversely affected if those relationships were disrupted.
If a successful legal challenge or an adverse change in the relevant laws were to occur, and we or our affiliated medical group were unable to adapt our business model accordingly, our operations in the affected jurisdictions would be disrupted, which could have a material adverse effect on our business, financial condition and results of operations.
In the event there is a further sustained decline in our stock price, future adverse changes in our projected cash flows, and/or changes in key assumptions, including but not limited to an increase in our discount rate, lower market multiples, lower revenue growth, lower operating margin, and/or a lower terminal growth rate, we may be required conduct additional impairment testing of our goodwill, other intangibles and/or long-lived assets and subsequently record a non-cash impairment charge.
In the year ended December 31, 2023, we incurred goodwill impairment charges of $436.5 million and, if in the future there is a sustained decline in our stock price, adverse changes in our projected cash flows, and/or changes in key assumptions, including but not limited to lower revenue growth, lower operating margin, and/or a lower terminal growth rate, we may be required conduct additional impairment testing of our other intangibles and/or long-lived assets and subsequently record additional non-cash impairment charge.
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third-parties that may not result in the development of commercially viable solutions or the generation of significant future revenues.
These acquisitions may result in significant financial losses if the intended objectives of the transactions are not achieved. 41 We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third-parties that may not result in the development of commercially viable solutions or the generation of significant future revenues.
We also are subject to the jurisdiction of various governments and regulatory agencies around the world, which may bring our personnel and agents into contact with public officials responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental regulations.
As part of our business, we may deal with governments and state-owned business enterprises, the employees and representatives of which may be considered public officials for purposes of the FCPA. 42 We also are subject to the jurisdiction of various governments and regulatory agencies around the world, which may bring our personnel and agents into contact with public officials responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental regulations.
Correction of defects or errors could prove to be impossible or impracticable. The costs incurred in correcting any defects or errors may be substantial and could have a material adverse effect on our business, financial condition and results of operations. We made significant investments in the Converge platform in 2022, which investments will continue into 2023.
Correction of defects or errors could prove to be impossible or impracticable. The costs incurred in correcting any defects or errors may be substantial and could have a material adverse effect on our business, financial condition and results of operations.
For example, because of increasing concerns about health information privacy, through guidance documents, some government agencies are taking a newly expansive view of the scope of information subject to the laws and regulations that they enforce.
The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform. For example, because of increasing concerns about health information privacy, through guidance documents, some government agencies are taking a newly expansive view of the scope of information subject to the laws and regulations that they enforce.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also maintain hardware inventory in facilities based in San Diego, California. We have instituted a remote work policy which has allowed us to reduce our office footprint, including approximately 50% of our corporate headquarters footprint, reducing the climate impact associated with our team members’ commuting.
Biggest changeWe have instituted a remote work policy which has allowed us to reduce our office footprint, including approximately 50% of our corporate headquarters footprint, reducing the climate impact associated with our team members’ commuting. We will continue to assess the need for space taking into consideration the change in workplace dynamic driven by the COVID-19 pandemic.
Item 2. Pro perties. Our principal executive office is located in Boston, Massachusetts and is a LEED certified building. We also have an office in Ramat Gan, Israel and Dublin, Ireland. We are subleasing offices acquired in acquisitions in Seattle, Washington, and Woodland Hills, California. All of our office locations are leased.
Item 2. Pro perties. Our principal executive office is located in Boston, Massachusetts and is a LEED certified building. We also have an office in Ramat Gan, Israel, Tysons Corner, Virginia and Dublin, Ireland. All of our office locations are leased. We also maintain hardware inventory in facilities based in San Diego, California.
We will continue to assess the need for space taking into consideration the change in workplace dynamic driven by the COVID-19 pandemic. We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion. 56
We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors. Item 4. Mine Safe ty Disclosures. Not applicable. 57 PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors. Item 4. Mine Safe ty Disclosures. Not applicable. 54 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph The following performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of American Well Corporation under the Securities Act or the Exchange Act.
Biggest changePurchase of Equity Securities The Company had no purchases of its common stock for any month during the fourth quarter of the fiscal year covered by this report. 55 Performance Graph The following performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of American Well Corporation under the Securities Act or the Exchange Act.
Securities Authorized for Issuance under Equity Compensation Plans The information required hereunder will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Securities Authorized for Issuance under Equity Compensation Plans The information required hereunder will be included in our Definitive Proxy Statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information Our Class A common stock is listed on the NYSE under the symbol “AMWL” and began trading on September 17, 2020.
Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information Our Class A common stock is listed on the NYSE under the symbol “AMWL”.
Holders On February 10, 2023, there were 213 stockholders of record of our Class A common stock, two stockholders of record of our Class B common stock and one stockholder of record of our Class C common stock.
Holders On February 2, 2024, there were 170 stockholders of record of our Class A common stock, two stockholders of record of our Class B common stock and one stockholder of record of our Class C common stock.
The graph assumes that $100 was invested in our Class A common stock and in each index on September 17, 2020, the date our Class A common stock began trading on the NYSE.
The graph assumes that $100 was invested in our Class A common stock and in each index on September 17, 2020, the date our Class A common stock began trading on the NYSE. The comparisons are based on historical data and are not necessarily indicative of, nor intended to forecast, the future performance of our Class A common stock.
Recent Sales of Unregistered Securities There were no sales of unregistered equity securities during the quarter ended December 31, 2022. Purchase of Equity Securities The Company had no purchases of its common stock for any month during the fourth quarter of the fiscal year covered by this report.
Recent Sales of Unregistered Securities There were no sales of unregistered equity securities during the quarter ended December 31, 2023.
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The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our Class A common stock. 58 Fiscal year ended December 31 Item 6. Reserved 59
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Fiscal year ended December 31 Item 6. Reserved 56

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeConsolidated Results of Operations The following table sets forth our summarized consolidated statement of operations data for the years ended December 31, 2022, 2021 and 2020 and the dollar and percentage change between the respective periods: Years Ended December 31, Fiscal Year 2022 to Fiscal Year 2021 Fiscal Year 2021 to Fiscal Year 2020 (in thousands) 2022 2021 2020 Change % Change % Revenue $ 277,190 $ 252,789 $ 245,265 $ 24,401 10 % $ 7,524 3 % Costs and operating expenses: Costs of revenue, excluding depreciation and amortization of intangible assets 160,422 148,474 156,790 11,948 8 % (8,316 ) (5 )% Research and development 138,487 106,594 84,412 31,893 30 % 22,182 26 % Sales and marketing 81,628 66,154 55,095 15,474 23 % 11,059 20 % General and administrative 146,353 94,624 166,246 51,729 55 % (71,622 ) (43 )% Depreciation and amortization expense 26,153 16,089 10,153 10,064 63 % 5,936 58 % Total costs and operating expenses 553,043 431,935 472,696 121,108 28 % (40,761 ) (9 )% Loss from operations (275,853 ) (179,146 ) (227,431 ) (96,707 ) 54 % 48,285 (21 )% Interest income and other income (expense), net 6,123 120 1,632 6,003 5,003 % (1,512 ) (93 )% Loss before benefit (expense) from income taxes and loss from equity method investment (269,730 ) (179,026 ) (225,799 ) (90,704 ) 51 % 46,773 (21 )% (Expense) benefit from income taxes (64 ) 5,376 (639 ) (5,440 ) (101 )% 6,015 (941 )% Loss from equity method investment (2,278 ) (3,132 ) (2,188 ) 854 (27 )% (944 ) N/A Net loss (272,072 ) (176,782 ) (228,626 ) (95,290 ) 54 % 51,844 (23 )% Net loss attributable to non-controlling interest (1,643 ) (448 ) (4,194 ) (1,195 ) 267 % 3,746 (89 )% Net loss attributable to American Well Corporation $ (270,429 ) $ (176,334 ) $ (224,432 ) $ (94,095 ) 53 % $ 48,098 (21 )% Revenue For the year ended December 31, 2022, the increase in revenue from the prior period was substantially driven by an increase in subscription revenue.
Biggest changeConsolidated Results of Operations The following table sets forth our summarized consolidated statement of operations data for the years ended December 31, 2023, 2022 and 2021 and the dollar and percentage change between the respective periods: Years Ended December 31, Fiscal Year 2023 to Fiscal Year 2022 Fiscal Year 2022 to Fiscal Year 2021 (in thousands) 2023 2022 2021 Change % Change % Revenue $ 259,047 $ 277,190 $ 252,789 $ (18,143 ) -7 % $ 24,401 10 % Costs and operating expenses: Costs of revenue, excluding depreciation and amortization of intangible assets 164,287 160,422 148,474 3,865 2 % 11,948 8 % Research and development 105,827 138,487 106,594 (32,660 ) (24 )% 31,893 30 % Sales and marketing 86,460 81,628 66,154 4,832 6 % 15,474 23 % General and administrative 126,645 146,353 94,624 (19,708 ) (13 )% 51,729 55 % Depreciation and amortization expense 31,492 26,153 16,089 5,339 20 % 10,064 63 % Goodwill impairment 436,479 — — 436,479 100 % — 100 % Total costs and operating expenses 951,190 553,043 431,935 398,147 72 % 121,108 28 % Loss from operations (692,143 ) (275,853 ) (179,146 ) (416,290 ) 151 % (96,707 ) 54 % Interest income and other income (expense), net 19,422 6,123 120 13,299 217 % 6,003 5,003 % Loss before benefit (expense) from income taxes and loss from equity method investment (672,721 ) (269,730 ) (179,026 ) (402,991 ) 149 % (90,704 ) 51 % (Expense) benefit from income taxes (3,860 ) (64 ) 5,376 (3,796 ) 5,931 % (5,440 ) (101 )% Loss from equity method investment (2,590 ) (2,278 ) (3,132 ) (312 ) 14 % 854 (27 )% Net loss (679,171 ) (272,072 ) (176,782 ) (407,099 ) 150 % (95,290 ) 54 % Net loss attributable to non-controlling interest (4,007 ) (1,643 ) (448 ) (2,364 ) 144 % (1,195 ) 267 % Net loss attributable to American Well Corporation $ (675,164 ) $ (270,429 ) $ (176,334 ) $ (404,735 ) 150 % $ (94,095 ) 53 % Revenue For the year ended December 31, 2023, subscription revenue declined $8.6 million due to customer churn during re-platforming, partially offset by growth in our existing strategic clients.
Sales and Marketing Expenses For the year ended December 31, 2022, the increase in sales and marketing expense primarily consisted of $7.6 million in employee-related costs (inclusive of commissions and stock compensation expense) due to increased headcount. Consulting expense increased $2.3 million mainly related to marketing campaigns and services for system integration.
For the year ended December 31, 2022, the increase in sales and marketing expense primarily consisted of $7.6 million in employee-related costs (inclusive of commissions and stock compensation expense) due to increased headcount. Consulting expense increased $2.3 million mainly related to marketing campaigns and services for system integration.
We believe that this non-GAAP financial measure, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook.
We believe that this non-GAAP financial measure, when taken together with 59 the corresponding GAAP financial measures, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook.
Subscription revenue may include immaterial amounts from non-health system clients whose business model acts similarly to those clients. Average Annual Contract Value: Average annual contract value is defined as total health system subscription revenue for the fiscal period divided by average number of health system clients.
Subscription revenue may include immaterial amounts from non-health system clients whose business model acts similarly to those clients. 57 Average Annual Contract Value: Average annual contract value is defined as total health system subscription revenue for the fiscal period divided by average number of health system clients.
(4) Litigation expense relates to legal costs related to the Teladoc litigation which was dismissed pursuant to a confidential settlement between the parties in 2022. 64 Some of the limitations of adjusted EBITDA include (i) adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these capital expenditures.
(4) Litigation expense relates to legal costs related to the Teladoc litigation which was dismissed pursuant to a confidential settlement between the parties in 2022. 60 Some of the limitations of adjusted EBITDA include (i) adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these capital expenditures.
Marketing expenses consist primarily of personnel and related expenses (inclusive of stock-based compensation) for our marketing staff that primarily support the sales organization and client engagement.
Marketing costs consist primarily of personnel and related expenses (inclusive of stock-based compensation) for our marketing staff that primarily support the sales organization and client engagement.
The Company has no debt as of December 31, 2022 and expects to generate operating losses in future years. We believe that our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months from the issuance date of the financial statements.
The Company has no debt as of December 31, 2023 and expects to generate operating losses in future years. We believe that our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months from the issuance date of the financial statements.
Our future capital requirements will depend on many factors including our growth rate, contract renewal activity, number of consultations on our enterprise software, the timing and extent of spending to support product development efforts, our expansion of sales and marketing activities, the introduction of new and enhanced services offerings, and the continuing market acceptance of digital care services.
Our future capital requirements will depend on many factors including our growth rate, contract renewal activity, number of consultations on our enterprise platform, the timing and extent of spending to support product development efforts, our expansion of sales and marketing activities, the introduction of new and enhanced services offerings, and the continuing market acceptance of digital care services.
The net loss was partially offset by non-cash expenses of $107.8 million (primarily stock-based compensation of $67.7 million and depreciation and amortization of $26.2 million). 70 For the year ended December 31, 2021, cash used in operating activities was $141.5 million. The primary driver of this use of cash was our net loss of $176.8 million.
The net loss was partially offset by non-cash expenses of $107.8 million (primarily stock-based compensation of $67.7 million and depreciation and amortization of $26.2 million). 66 For the year ended December 31, 2021, cash used in operating activities was $141.5 million. The primary driver of this use of cash was our net loss of $176.8 million.
Provision for (Benefit from) Income Taxes The income tax provision and benefit were primarily due to state and foreign income tax expense, and benefit related to release of the valuation allowance as a result of our acquisitions. 66 Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized.
Provision for (Benefit from) Income Taxes The income tax provision and benefit were primarily due to state and foreign income tax expense, and benefit related to release of the valuation allowance as a result of our acquisitions. 62 Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized.
We also generate revenue from the performance of AMG patient visits. Cost of Revenues, Excluding Amortization of Intangible Assets Cost of revenue primarily consists of hosting fees paid to our hosting providers, costs incurred in connection with our professional services, technical and hosting support, and costs for running our affiliated provider network operations team.
We also generate revenue from the performance of AMG patient visits. Cost of Revenues, Excluding Amortization of Intangible Assets Cost of revenues primarily consist of hosting fees paid to our hosting providers, costs incurred in connection with our professional services, technical and hosting support, and costs for running our affiliated provider network operations team.
A reconciliation is provided below for our non-GAAP financial measure to the most directly comparable financial measure 63 stated in accordance with GAAP.
A reconciliation is provided below for our non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.
Access to the enterprise software, includes the ability for clients to access the AMG network of medical professionals, as well as, in certain cases, support and maintenance and other professional services. The typical contract term is three years. Most of the Company’s contracts are non-cancelable over the contractual term.
Access to the enterprise platform, includes the ability for clients to access the AMG network of medical professionals, as well as, in certain cases, support and maintenance and other professional services. The typical contract term is three years. Most of the Company’s contracts are non-cancelable over the contractual term.
To support the enterprise software, we offer professional services on a fee-for-service basis and a range of patient and provider Carepoint devices and software that support hospital and home use cases and access to AMG, our affiliated medical group that provides clinical services on a fee-for-service basis.
To support the enterprise platform and software as a service, we offer professional services on a fee-for-service basis and a range of patient and provider Carepoint devices and software that support hospital and home use cases and access to AMG, our affiliated medical group that provides clinical services on a fee-for-service basis.
Acquisitions We have expanded and intend to continue to expand our enterprise software through research and development as well as the pursuit of selective acquisitions. We have completed multiple acquisitions since our inception, which we believe have expanded the channels that we serve and our distribution capabilities as well as broadening our service offering.
Acquisitions We have expanded and intend to continue to expand our enterprise platform and software as a service through research and development as well as the pursuit of selective acquisitions. We have completed multiple acquisitions since our inception, which we believe have expanded the channels that we serve and our distribution capabilities as well as broadening our service offering.
The combination of the enterprise software, services and Carepoint hardware allows our clients to deploy digital care solutions across their full enterprise, deepening their relationships with existing and new patients and members through improved care access and coordination, cost and quality. Our contracts are typically three years in length but may be longer for our largest strategic client partners.
The combination of the enterprise platform, professional services and Carepoint hardware allows our clients to deploy digital care solutions across their full enterprise, deepening their relationships with existing and new patients and members through improved care access and coordination, cost and quality. Our contracts are typically three years in length but may be longer for our largest strategic client partners.
(2) Public offering expenses include non-recurring expenses incurred in relation to our initial public offering for the year ended December 31, 2020, and our secondary offering for the year ended December 31, 2021. (3) Noncash expenses and contingent consideration adjustments include, noncash compensation costs incurred by selling shareholders and adjustments made to the contingent consideration.
(2) Public offering expenses include non-recurring expenses incurred in relation to our secondary offering for the year ended December 31, 2021. (3) Noncash expenses and contingent consideration adjustments include, noncash compensation costs incurred by selling shareholders and adjustments made to the contingent consideration.
For stock options granted to non-employees, the expected term equals the remaining contractual term of the option from the vesting date. • Expected Volatility —As we had no trading history for our common stock, the expected volatility was estimated by taking the average historic price volatility for industry peers, consisting of several public companies in our industry that are either similar in size, stage, or financial leverage, over a period equivalent to the expected term of the awards. • Risk-Free Interest Rate —The risk-free interest rate is calculated using the average of the published interest rates of U.S.
For stock options granted to non-employees, the expected term equals the remaining contractual term of the option from the vesting date. • Expected Volatility —As we have limited trading history for our common stock, the expected volatility was estimated by taking the average historic price volatility for industry peers, consisting of several public companies in our industry that are either similar in size, stage, or financial leverage, over a period equivalent to the expected term of the awards. • Risk-Free Interest Rate —The risk-free interest rate is calculated using the average of the published interest rates of U.S.
Health Plan Subscription Revenue: Health Plan subscription revenue consists of all Platform-related fees for a health plan, including subscription licenses, per member/per month charges and fees related to clinical programs, and primarily represents the fee to access the Amwell Platform over the contractual period.
Health Plan Subscription Revenue: Health Plan subscription revenue consists of all platform-related fees for a health plan, including subscription licenses, per member/per month charges and fees related to clinical programs, and primarily represents the fee to access the enterprise platform over the contractual period.
While our aggregated number of health systems clients has declined this has not resulted in a revenue decline as we have retained our more significant clients and these clients have expanded their use of our enterprise software.
While our aggregated number of health systems clients has declined this has not resulted in a revenue decline as we have retained our more significant clients and these clients have expanded their use of our enterprise platform and software as a service.
For the year ended December 31, 2021, interest income and other expenses consist primarily of interest income and gains from our cash equivalents and short-term investments, the decline in interest income is due to the decline in the investments held during the year.
For the year ended December 31, 2022, interest income and other expenses consist primarily of interest income and gains from our cash equivalents and short-term investments, the decline in interest income is due to the decline in the investments held during the year.
Clients typically have the right to terminate their contracts for cause if the Company fails to perform in accordance with the contractual terms. 72 For clients who purchase access to the enterprise software, the Company hosts a dedicated instance of the enterprise software, white-labeled under the client’s own name, branding, and with customized workflows and operating choices.
Clients typically have the right to terminate their contracts for cause if the Company fails to perform in accordance with the contractual terms. For clients who purchase access to the enterprise platform, the Company hosts a dedicated instance of the enterprise platform, white-labeled under the client’s own name, branding, and with customized workflows and operating choices.
These costs primarily include employee-related expenses (including salaries, bonuses, benefits, stock-based compensation and travel). Cost of revenues are primarily driven by the size of our provider network and the hosting and technical support required to service our Platform clients. Our business models are designed to be scalable and to leverage fixed costs to generate higher revenues.
These costs primarily include employee-related expenses (including salaries, bonuses, benefits, stock-based compensation and travel). Cost of revenues are primarily driven by the size of our provider network and the hosting and technical support required to service our clients. Our business model is designed to be scalable and to leverage fixed costs to generate higher revenues.
Benefit (Expense) from Income Taxes Income tax expense was $0.1 million for the year ended December 31, 2022, compared to income tax benefit of $5.4 million for the year ended December 31, 2021.
Income tax expense was $0.1 million for the year ended December 31, 2022, compared to income tax benefit of $5.4 million for the year ended December 31, 2021.
Health System Subscription Revenue: Health System subscription revenue consists of all Platform-related fees for a health system, including subscription licenses, fees related to software modules, and overage charges, and primarily 60 represents the fee to access the Amwell Platform over the contractual period.
Health System Subscription Revenue: Health System subscription revenue consists of all platform-related fees for a health system, including subscription licenses, fees related to software modules, and overage charges, and primarily represents the fee to access the enterprise platform over the contractual period.
Subscription revenue increased by $12.7 million, or 12% driven by expanded use of our enterprise software by existing clients through increased number of members they provided access to the enterprise software, increased number of programs, increased modules and increased volume of care delivered on our enterprise software by our clients’ own providers.
Subscription revenue increased by $12.7 million, or 12% driven by expanded use of our enterprise platform and software as a service by existing clients through increased number of members they provided access to the enterprise platform and software as a service, increased number of programs, increased modules and increased volume of care delivered on our enterprise platform and software as a service by our clients’ own providers.
Components of Results of Operations Revenue The Company has demonstrated continued revenue growth as a direct result increasing acceptance of digital care, our penetration of the market, and the successful launch of new or expanded products that enable broadened applications of settings for care delivered virtually.
Components of Results of Operations Revenue The Company has demonstrated the strength of our revenue as a direct result of the increasing acceptance of digital care, our penetration of the market, and the successful launch of new or expanded products that enable broadened applications for care delivered virtually.
Interest Income and Other Income (Expense), net For the year ended December 31, 2022, interest income and other expenses consist primarily of interest income and gains from our cash equivalents and short-term investments, the increase in interest income is due to the increase in the investments held during the year (investments matured just prior to December 31, 2022).
Interest Income and Other Income (Expense), net For the year ended December 31, 2023, interest income and other expenses consist primarily of interest income and gains from our cash equivalents and short-term investments, the increase in interest income is due to the increase in interest rates on investments held during the year (investments matured just prior to December 31, 2023).
We have also expanded the use of offshore resources to provide more efficient rates which are designed to offset the increased research and development spend. While we have recognized an 65 increase in the research and development expense throughout the current year, the corresponding future revenue growth is expected to result in lower expenses as a percentage of revenue.
We have also expanded the use of offshore resources to provide more efficient rates which are designed to offset the increased research and development spend. While we have recognized an increase in the research and development expense throughout the prior years, the corresponding future revenue growth is expected to result in lower expenses as a percentage of revenue.
Our Business Model We sell our enterprise software on a subscription basis, which with our modular platform architecture allows our clients to introduce innovative digital care use cases over time, expanding our subscription revenue opportunity.
Our Business Model We sell our enterprise platform and software as a service solutions on a subscription basis, which with our modular platform architecture allows our clients to introduce innovative digital care use cases over time, expanding our subscription revenue opportunity.
We had no such other items during the years ended December 31, 2022, 2021 and 2020.
We had no such other items during the years ended December 31, 2023, 2022 and 2021.
We are accelerating our multiyear technology investment to accommodate the anticipated significant growth in market demand for increasingly broad and sophisticated digital care enablement infrastructure following COVID-19 . Sales and Marketing Expenses Sales expenses consist primarily of employee-related expenses, including salaries, benefits, commissions, travel and stock-based compensation costs for our employees engaged in commercial activities.
We accelerated our multiyear technology investment to accommodate the anticipated significant growth in market demand for increasingly broad and sophisticated digital care enablement infrastructure . Sales and Marketing Expenses Sales expenses consist primarily of employee-related expenses, including salaries, benefits, commissions, travel and stock-based compensation costs for our employees engaged in commercial activities.
We empower health providers, payers and innovators to achieve their digital ambitions, enabling a hybrid model of in-person, virtual and automated care. We provide our clients with the core technology and services necessary to successfully develop and distribute digital care programs that meet their strategic, operational, financial and clinical objectives under their own brands.
We empower health providers, payers, and innovators to achieve their digital ambitions, enabling a coordinated experience across in-person, virtual and automated care. We provide our clients with the core technology and services necessary to successfully develop and distribute digital care programs that meet their strategic, operational, financial and clinical objectives under their own brands.
Marketing costs also include third-party independent research, digital marketing campaigns, participation in trade shows, brand messaging, public relations costs, and the costs of communication materials that are produced to generate awareness and utilization of the Amwell Platform among our clients and their users.
Marketing costs also include third-party independent research, digital marketing campaigns, participation in trade shows, brand messaging, public relations costs, and the costs of communication materials that are produced to generate awareness and utilization of our enterprise platform and software as a service among our clients and their users.
Revenue performance is reflective of the strong foundation that has been built, focused around health plans, health systems, our provider network and a consistently increasing visit base. We generate revenues from the use of our enterprise software in the form of recurring subscription fees for use of our enterprise software, and related services and Carepoint sales.
Revenue performance is reflective of the strong foundation that has been built, focused around health plans, health systems, our provider network. We generate revenues from the use of our enterprise platform and software as a service in the form of recurring subscription fees for use, and related services and Carepoint sales.
If we are unable to raise additional capital when desired, our business, financial condition and results of operations would be adversely affected. Cash Used in Operating Activities For the year ended December 31, 2022, cash used in operating activities was $192.3 million. The primary driver of this use of cash was our net loss of $272.1 million.
If we are unable to raise additional capital when desired, our business, financial condition and results of operations would be adversely affected. Cash Used in Operating Activities For the year ended December 31, 2023, cash used in operating activities was $148.3 million. The primary driver of this use of cash was our net loss of $679.2 million.
General and Administrative Expenses For the year ended December 31, 2022, the increase in general and administrative expense was driven by an increase related to employee-related costs (inclusive of $23.2 million of stock compensation expense) of approximately $33.5 million, due to additional equity awards granted in 2022 and headcount increase.
There was also a decrease in insurance costs of $2.9 million. 64 For the year ended December 31, 2022, the increase in general and administrative expense was driven by an increase related to employee-related costs (inclusive of $23.2 million of stock compensation expense) of approximately $33.5 million, due to additional equity awards granted in 2022 and headcount increase.
We combine contracts entered into at or near the same time with the same client if we determine that the contracts are negotiated as a package with a single commercial objective; the amount of consideration to be paid in one contract depends on the price or performance of the other contract; or the services promised in the contracts are a single performance obligation.
We combine contracts entered into at or near the same time with the same client if we determine that the contracts are negotiated as a package with a single commercial objective; the amount of consideration to be paid in one contract depends on the price or performance of the other contract; or the services promised in the contracts are a single performance obligation. 68 In general, we satisfy the majority of our performance obligations over time as we transfer the promised services to our clients.
Health Plans: Years Ended December 31, 2022 2021 2020 Average Number of Health Plan Clients 57 58 57 Total Health Plan Subscription Revenue $ 48.7 million $ 41.9 million $ 34.9 million Average Annual Contract Value $ 862 thousand $ 723 thousand $ 612 thousand Health Plan : A health plan is an Amwell Platform client whose primary business case is managing the healthcare financial risk of its membership.
Health Plans: Years Ended December 31, 2023 2022 2021 Average Number of Health Plan Clients 55 57 58 Total Health Plan Subscription Revenue $ 49.2 million $ 48.7 million $ 41.9 million Average Annual Contract Value $ 902 thousand $ 862 thousand $ 723 thousand Health Plan : A health plan is an enterprise platform client whose primary business case is managing the healthcare financial risk of its membership.
This change resulted in an adjustment to the number of active providers reported as of December 31, 2021, the numbers included in the table above reflect the current methodology. • AMG : providers from our affiliated Amwell Medical Group • Client Providers : our Health Plan and Health System client’s own providers (non-AMG providers) that are active on the Amwell Platform • Active Providers : providers that have delivered a visit on the Amwell Platform at least once in the last 12 months Invest in Growth We expect to continue to focus on long-term revenue growth through investments in technology development and sales and marketing efforts.
The numbers included in the table above reflect the current methodology. • AMG : providers from our affiliated Amwell Medical Group • Client Providers : our Health Plan and Health System client’s own providers (non-AMG providers) that are active on the enterprise platform • Active Providers : providers that have delivered a visit on the enterprise platform at least once in the last 12 months Invest in Growth We expect to continue to focus on long-term revenue growth through investments in technology development and sales and marketing efforts.
Total sales and marketing employee headcount increased to 291 on December 31, 2022, as compared to 249 on December 31, 2021 and 185 on December 31, 2020.
Total sales and marketing employee headcount increased to 304 on December 31, 2023, as compared to 291 on December 31, 2022 and 249 on December 31, 2021.
Our goodwill impairment tests are performed at the enterprise level given our single reporting unit. When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount.
When testing goodwill for impairment, we have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount.
Visits: Years Ended December 31, 2022 2021 2020 Overall Visits 6,465,000 5,885,000 5,875,000 AMG Visits 1,640,000 1,480,000 1,595,000 Total Visit Revenue $ 124.3 million $ 116.6 million $ 117.2 million Revenue per Visit $ 76 $ 79 $ 73 (1) In the year ended December 31, 2022, we revised our methodology of how we count visits in our Amwell Psychiatric Care business which is part of our AMG visits.
Visits: Years Ended December 31, 2023 2022 2021 Overall Visits 6,290,000 6,465,000 5,885,000 AMG Visits 1,590,000 1,640,000 1,480,000 Total Visit Revenue $ 119.5 million $ 124.3 million $ 116.6 million Revenue per Visit $ 75 $ 76 $ 79 (1) In the year ended December 31, 2022, we revised our methodology of how we count visits in our Amwell Psychiatric Care business which is part of our AMG visits.
PSUs have multiple tranches each with certain market capitalization milestones and service-based vesting conditions and the Company records the expense for these awards over the estimated life of each tranche We estimate the fair value of each stock option grant using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common stock and assumptions we make for the volatility of our common stock, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield.
The Company records the expense for these awards over the estimated life of each tranche We estimate the fair value of each stock option grant using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common stock and assumptions we make for the volatility of our common stock, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield.
Liquidity and Capital Resources The following table presents a summary of our cash flow activity for the periods set forth below: Years December 31, 2022 2021 2020 Consolidated Statements of Cash Flows Data: Net cash used in operating activities $ (192,323 ) $ (141,537 ) $ (112,464 ) Net cash used in investing activities (11,630 ) (59,633 ) (66,757 ) Net cash (used in) provided by financing activities (3,612 ) 5,754 983,116 Total $ (207,565 ) $ (195,416 ) $ 803,895 Sources of Financing Our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $538.5 million as of December 31, 2022, which were held for a variety of growth initiatives and investments as well as working capital purposes.
Liquidity and Capital Resources The following table presents a summary of our cash flow activity for the periods set forth below: Years December 31, 2023 2022 2021 Consolidated Statements of Cash Flows Data: Net cash used in operating activities $ (148,343 ) $ (192,323 ) $ (141,537 ) Net cash used in investing activities (19,168 ) (11,630 ) (59,633 ) Net cash provided by (used in) financing activities 2,147 (3,612 ) 5,754 Total $ (165,364 ) $ (207,565 ) $ (195,416 ) Sources of Financing Our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $372.0 million as of December 31, 2023, which were held for a variety of growth initiatives and investments as well as working capital purposes.
We generally issue stock options, restricted stock units (“RSU’s”) and performance-based market condition share awards ("PSU's") to employees. Stock options and RSUs only have service-based vesting conditions and the Company records the expense for these awards using the straight-line method.
We generally issue stock options, restricted stock units (“RSU’s”) and performance-based market condition share awards ("PSU's") to employees. Stock options and RSUs only have service-based vesting conditions and the Company records the expense for these awards using the straight-line method. PSUs have multiple tranches each with certain market capitalization or stock price milestones and service-based vesting conditions.
Cash provided by financing activities consisted of $20.8 million of proceeds from the exercise of employee stock options. These proceeds were offset by cash payments primarily for the purchase of treasury stock of $15.0 million. Cash provided by financing activities for the year ended December 31, 2020, was $983.1 million.
Cash provided by financing activities consisted of $20.8 million of proceeds from the exercise of employee stock options. These proceeds were offset by cash payments primarily for the purchase of treasury stock of $15.0 million.
Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in “Special Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors.” Overview Amwell is a leading enterprise software company enabling digital delivery of care for healthcare’s key stakeholders.
Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in “Special Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors.” Overview Amwell is a leading enterprise platform and software as a service company digitally enabling hybrid care.
Our sales and marketing expenses will fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our advertising and marketing expenses.
We expect our sales and marketing expense to decrease as a percentage of our total revenue in future periods. Our sales and marketing expenses will fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our advertising and marketing expenses.
Total general and administrative employee headcount increased to 248 on December 31, 2022, as compared to 221 on December 31, 2021 and 159 on December 31, 2020. Depreciation and Amortization Expense Depreciation expense remained consistent for the year ended December 31, 2022. Amortization expense increased by $10.7 million for the year ended December 31, 2022.
Total general and administrative employee headcount decreased to 229 on December 31, 2023, as compared to 248 on December 31, 2022 and 221 on December 31, 2021. Depreciation and Amortization Expense Depreciation expense remained consistent for the year ended December 31, 2023. Amortization expense increased by $6.2 million for the year ended December 31, 2023.
Since inception, we have powered more than 20.9 million virtual care visits for our clients, including more than 6.5 million in the year ended December 31, 2022.
Since inception, we have powered more than 27.2 million virtual care visits for our clients, including more than 6.3 million in the year ended December 31, 2023.
During the periods presented, we did not have, nor do we currently have, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Obligations under contracts that we can cancel without a significant penalty are not included in the table above. 67 During the periods presented, we did not have, nor do we currently have, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Revenue Recognition The Company generates revenue from contracts with clients who purchase access to the Company’s enterprise software which includes access to the Company’s network of medical professionals. The Company also provides implementation and post go-live professional services for its enterprise software.
Revenue Recognition The Company generates revenue from contracts with clients who purchase access to the Company’s enterprise platform and software as a service. The Company also provides implementation and post go-live professional services for its enterprise platform and software as a service.
We calculate adjusted EBITDA as net loss adjusted to exclude (i) interest income and other income, net, (ii) tax benefit and expense, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) initial public offering expenses, (vi) acquisition-related expenses and (vii) other items affecting our results that we do not view as representative of our ongoing operations, including direct and incremental expenses associated with the COVID-19 pandemic.
We calculate adjusted EBITDA as net loss adjusted to exclude (i) interest income and other income, net, (ii) tax benefit and expense, (iii) depreciation and amortization, (iv) goodwill impairment, (v) stock-based compensation expense, (vi) severance, (vii) public offering expenses, (viii) acquisition-related expenses, capitalized software costs, (ix) capitalized software, (x) litigation expenses related to the defense of our patents in the patent infringement claim filed by Teladoc and (xi) other items affecting our results that we do not view as representative of our ongoing operations, including direct and incremental expenses associated with the COVID-19 pandemic.
The Company does not have a controlling financial interest in CCAW, JV LLC, but it does have the ability to exercise significant influence over the operating and financial policies of CCAW, JV LLC.
The Company does not have a controlling financial interest in CCAW, JV LLC, but it does have the ability to exercise significant influence over the operating and 65 financial policies of CCAW, JV LLC. Therefore, the Company accounts for its investments in CCAW, JV LLC using the equity method of accounting.
Research and Development Expenses For the year ended December 31, 2022, the increase in research and development expense was primarily driven by an increase of $14.6 million in consulting services primarily for the Converge platform (an additional $10.2 million was capitalized as software development costs).
For the year ended December 31, 2022, the increase in research and development expense was primarily driven by an increase of $14.6 million in consulting services primarily for the Converge platform (an additional $10.2 million was capitalized as software development costs). There was also a $12.2 million increase in employee-related costs (inclusive of stock compensation expense) due to increased headcount.
As shown in the accompanying consolidated financial statements, the Company incurred a loss from operations of $275.9 million and a net loss of $272.1 million for year ended December 31, 2022 and had an accumulated deficit of $1,082.0 million as of December 31, 2022.
As shown in the accompanying consolidated financial statements, the Company incurred a loss from operations of $692.1 million and a net loss of $679.2 million for year ended December 31, 2023 and had an accumulated deficit of $1,757.8 million as of December 31, 2023.
The net loss for the year was reflective of the investments made back into the Company (from both a personnel and technology perspective), partially offset by the overall growth of our business including an increase in new clients and expansion of business with existing clients.
The net loss, excluding impairment charge, was reflective of the investments made back into the Company (from a technology and infrastructure perspective), partially offset by the overall growth of our business including expansion of business with existing clients.
If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that carrying value exceeds its fair value, we perform a quantitative goodwill impairment test.
If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that carrying value exceeds its fair value, we perform a quantitative goodwill impairment test. Under the quantitative goodwill impairment test, if our reporting unit’s carrying amount exceeds its fair value, we will record an impairment charge based on that difference.
A typical health system client has many hospitals within its system. The average number of health system clients is calculated by averaging the number of such clients under contract at the beginning and end of each fiscal year.
A typical health system client has many hospitals within its system. The average number of health system clients is calculated by averaging the number of such clients under contract at the beginning and end of each fiscal year. The decline in number of health system client is due to consolidation in the market as well as churn experienced with re-platforming.
The net loss was partially offset by non-cash expenses of $63.0 million (primarily stock-based compensation of $43.8 million and depreciation and amortization of $16.1 million). For the year ended December 31, 2020, cash used in operating activities was $112.5 million. The primary driver of this use of cash was our net loss of $228.6 million.
The net loss was partially offset by non-cash expenses of $63.0 million (primarily stock-based compensation of $43.8 million and depreciation and amortization of $16.1 million). Cash Used in Investing Activities Cash used in investing activities was $19.2 million for the year ended December 31, 2023.
This increased spend represents an investment in a more scalable and economically beneficial solution that will properly position the Company to benefit in the long term. We believe the increase in spend is temporary and we expect to see a gradual decline during 2023.
This increased spend represents an investment in a more scalable and economically beneficial solution that will properly position the Company to benefit in the long term.
Following our IPO, we rely on the closing price of our Class A common stock as reported on the date of grant to determine the fair value of our Class A common stock, as shares of our Class A common stock are traded in the public market.
The assumptions and estimates are as follows: • Fair Value of Class A Common Stock —Following our IPO, we rely on the closing price of our Class A common stock as reported on the date of grant to determine the fair value of our Class A common stock, as shares of our Class A common stock are traded in the public market. • Expected Term —The expected term represents the period that the stock-based awards are expected to be outstanding.
As of December 31, 2022, we powered the digital care programs of more than 55 health plans, which collectively represent more than 90 million covered lives, as well as approximately 140 of the nation’s largest health systems, representing more than 2,000 hospitals.
As of December 31, 2023, we powered the digital care programs of more than 50 health plans, which collectively represent more than 100 million covered lives, as well as approximately 115 of the nation’s largest health systems.
Treasury zero-coupon issues with maturities that are commensurate with the expected term. • Dividend Yield —The dividend yield assumption is zero, as we have no history of, or plans to make, dividend payments. The restricted stock units issued to the co-CEOs as a result of the IPO had the fair value estimated using a binomial lattice approach.
Treasury zero-coupon issues with maturities that are commensurate with the expected term. • Dividend Yield —The dividend yield assumption is zero, as we have no history of, or plans to make, dividend payments. The fair value of the PSUs is estimated using a Monte-Carlo valuation simulation.
In addition, there was an increase in contingent consideration adjustments recorded of $14.7 million related to the Conversa and SilverCloud revenue earnouts and an increase in non-cash compensation of $3.8 million primarily related the acceleration of the bonus escrow award for the SilverCloud acquisition. 68 There was also a decrease of $5.9 million in consulting costs as there were no acquisitions in the current year and two acquisitions in the prior year.
There was an increase of $2.8 million in system costs to enhance administrative processing. In addition, there was an increase in contingent consideration adjustments recorded of $14.7 million related to the Conversa and SilverCloud revenue earnouts and an increase in non-cash compensation of $3.8 million primarily related the acceleration of the bonus escrow award for the SilverCloud acquisition.
The increase in amortization was related to a full year of amortization related to the intangible assets acquired in the Acquisitions. Depreciation expense remained consistent for the year ended December 31, 2021. Amortization expense increased by $5.9 million for the year ended December 31, 2021. The increase in amortization was related to the intangible assets acquired in the Acquisitions.
The increase in amortization was related to the amortization of the internally developed software intangible assets. Depreciation expense remained consistent for the year ended December 31, 2022. Amortization expense increased by $10.7 million for the year ended December 31, 2022.
These evaluations require significant judgment around the proper identification of performance obligations, which could affect the timing and amount of revenue recognized. Deferred revenues consist of the unearned portion of billed fees for our enterprise software access fees and related services, which is subsequently recognized as revenue in accordance with our revenue recognition policy.
Deferred revenues consist of the unearned portion of billed fees for our enterprise platform and software as a service access fees and related services, which is subsequently recognized as revenue in accordance with our revenue recognition policy.
Our research and development expenses may also fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our research and development expenses.
We expect our general and administrative expenses to decrease as a percentage of our total revenue over the next several years. Our general and administrative expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our general and administrative expenses.
Therefore, the Company accounts for its investments in CCAW, JV LLC using the equity method of accounting. 69 During the years ended December 31, 2022 and 2021, the Company recognized a loss of $2.3 million and $3.1 million as its proportionate share of the joint venture results of operations, respectively.
During the years ended December 31, 2023 and 2022, the Company recognized a loss of $2.6 million and $2.3 million as its proportionate share of the joint venture results of operations, respectively.
See “—Common Stock Valuations” below. • Expected Term —The expected term represents the period that the stock-based awards are expected to be outstanding. We determine the expected term using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options.
We determine the expected term using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options.
This change resulted in an adjustment to the number of visits reported as of December 31, 2021, the numbers included in the table above reflect the current methodology. AMG Visit : An AMG visit is a case completed by our AMG affiliate providers and visit revenue reflects fee-for-service revenue to AMG for the visit.
This change resulted in an adjustment to the number of visits reported as of December 31, 2021. The numbers included in the table above reflect the current methodology.
We believe the following metrics are useful in evaluating our business: Health Systems: Years Ended December 31, 2022 2021 2020 Average Number of Health System Clients 153 154 149 Total Health System Subscription Revenue $ 61.2 million $ 54.7 million $ 49.8 million Average Annual Contract Value $ 401 thousand $ 356 thousand $ 334 thousand Health System : A health system is an Amwell Platform client whose primary business case is the delivery of care by its providers.
Key Metrics and Factors Affecting Our Performance We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions: Health Systems: Years Ended December 31, 2023 2022 2021 Average Number of Health System Clients 129 153 154 Total Health System Subscription Revenue $ 53.5 million $ 61.2 million $ 54.7 million Average Annual Contract Value $ 415 thousand $ 401 thousand $ 356 thousand Health System : A health system is an enterprise platform client whose primary business case is the delivery of care by its providers.
The Line of Credit arrangement expired during the year ended December 31, 2021. 71 Contractual Obligations The following summarizes our contractual obligations as of December 31, 2022: Payment Due by Period Total Less than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years Operating Leases $ 15,223 $ 3,203 $ 7,477 $ 4,543 $ — Purchase Obligations $ 19,083 7,583 11,500 — — Total $ 34,306 $ 10,786 $ 18,977 $ 4,543 $ — Our existing office and hosting facilities lease agreements provide us with the option to renew and generally provide for rental payments on a graduated basis.
Contractual Obligations The following summarizes our contractual obligations as of December 31, 2023: Payment Due by Period Total Less than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years Operating Leases $ 12,006 $ 3,698 $ 8,308 $ — $ — Purchase Obligations $ 49,850 15,326 34,524 — — Total $ 61,856 $ 19,024 $ 42,832 $ — $ — Our existing office and hosting facilities lease agreements provide us with the option to renew and generally provide for rental payments on a graduated basis.
The net loss was partially offset by non-cash expenses of $134.6 million (primarily stock-based compensation of $118.4 million and depreciation and amortization of $10.2 million). Cash Used in Investing Activities Cash used in investing activities was $11.6 million for the year ended December 31, 2022.
The net loss was partially offset by non-cash expenses of $546.3 million (primarily goodwill impairment of $436.5 million, stock-based compensation of $72.2 million and depreciation and amortization of $31.5 million). For the year ended December 31, 2022, cash used in operating activities was $192.3 million. The primary driver of this use of cash was our net loss of $272.1 million.
The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for each of the years ended December 31, 2022, 2021 and 2020: Years Ended December 31, (in thousands) 2022 2021 2020 Net loss $ (272,072 ) $ (176,782 ) $ (228,626 ) Add: Depreciation and amortization 26,153 16,089 10,153 Interest and other income, net (6,123 ) (120 ) (1,632 ) (Expense) benefit from income taxes 64 (5,376 ) 639 Stock-based compensation 69,144 43,809 118,358 Public offering expenses (2) — 1,223 2,039 Acquisition-related (income) expenses — 7,289 (48 ) Noncash expenses and contingent consideration adjustments (3) 12,153 (10,987 ) — Capitalized software development costs (10,155 ) — — COVID-19-related expenses (1) — — 6,076 Litigation expense (4) 5,575 2,182 352 Adjusted EBITDA $ (175,261 ) $ (122,673 ) $ (92,689 ) (1) COVID-19-related expenses include non-recurring provider bonus payments, emergency hosting licensing fees and non-medical provider temporary labor costs related to on-boarding non-AMG providers incurred in response to the initial outbreak of the COVID-19 virus as Amwell attempted to scale quickly to meet unusually high patient and non-AMG provider demand.
The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for each of the years ended December 31, 2023, 2022 and 2021: Years Ended December 31, (in thousands) 2023 2022 2021 Net loss $ (679,171 ) $ (272,072 ) $ (176,782 ) Add: Depreciation and amortization 31,492 26,153 16,089 Interest and other income, net (19,422 ) (6,123 ) (120 ) (Expense) benefit from income taxes 3,860 64 (5,376 ) Goodwill impairment 436,479 — — Stock-based compensation 72,040 69,144 43,809 Severance (1) 4,414 — — Public offering expenses (2) — — 1,223 Acquisition-related (income) expenses — — 7,289 Noncash expenses and contingent consideration adjustments (3) — 12,153 (10,987 ) Capitalized software development costs (15,056 ) (10,155 ) — Litigation expense (4) — 5,575 2,182 Adjusted EBITDA $ (165,364 ) $ (175,261 ) $ (122,673 ) (1) Severance costs associated with the termination of employees during the year ended December 31 2023.
Other revenue increased by $4.0 million due to increased professional service revenue for new clients. For the year ended December 31, 2021, the increase in revenue from the prior period was substantially driven by an increase in subscription revenue.
Other revenue decreased by $4.7 million primarily related to a decrease in hardware and services revenue. For the year ended December 31, 2022, the increase in revenue from the prior period was substantially driven by an increase in subscription revenue.
There was also an increase in provider costs of $4.1 million due to increased visits. For the year ended December 31, 2021, the decrease in cost of revenue was primarily due to a decrease of $5.6 million in provider related costs due to technology and process efficiencies realized in our AMG visit processes as well as lower visit volume.
For the year ended December 31, 2022, the increase in cost of revenue was primarily due to an increase of $4.0 million in consulting costs and $3.0 million related to employee-related costs due to increased headcount. There was also an increase in provider costs of $4.1 million due to increased visits.
In addition, we believe additional investments in platform modules and clinical programs will allow us to continue to penetrate our products and services further into our existing client relationships. Accordingly, in the short term we expect these activities to increase our net losses, but in the long term, we anticipate that these investments will positively impact our results of operations.
Accordingly, in the short term we expect these activities to result in net losses, but in the long term, we anticipate that these investments will positively impact our results of operations.
There was also a $12.2 million increase in employee-related costs (inclusive of stock compensation expense) due to increased headcount. There was also an increase in non-cash compensation of $2.8 million primarily related the acceleration of the bonus escrow award for the SilverCloud acquisition.
There was also an increase in non-cash compensation of $2.8 million primarily related the acceleration of the bonus escrow award for the SilverCloud acquisition. Total research and development employee headcount decreased to 332 on December 31, 2023, as compared to 358 on December 31, 2022 and 347 on December 31, 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Company also has a branch with a functional currency of the New Israeli Shekel. The transactional activity for these entities in the years ended December 31, 2021 and 2022 was not considered significant. Accordingly, we believe we do not have a material exposure to foreign currency risk.
Biggest changeThe Company also has a branch with a functional currency of the New Israeli Shekel. The transactional activity for these entities in the years ended December 31, 2022 and 2023 was not considered significant. In December 2023 the Company established a foreign subsidiary in Columbia, however there were no operations in this entity for the year ended December 31, 2023.
Fluctuations in the value of our money market funds caused by a change in interest rates (gains or losses on the carrying value) are recorded in other income and are realized only if we sell the underlying securities. 75 Foreign Currency Exchange Risk To date, a substantial majority of our revenue from client arrangements has been denominated in U.S. dollars.
Fluctuations in the value of our money market funds caused by a change in interest rates (gains or losses on the carrying value) are recorded in other income and are realized only if we sell the underlying securities. Foreign Currency Exchange Risk To date, a substantial majority of our revenue from client arrangements has been denominated in U.S. dollars.
All our investments are denominated in U.S. dollars. We do not believe that an increase or decrease of 100 basis points in interest rates would have a material effect on our business, financial condition or results of operations. However, our cash equivalents are subject to market risk due to changes in interest rates.
All our investments are denominated in U.S. dollars. 70 We do not believe that an increase or decrease of 100 basis points in interest rates would have a material effect on our business, financial condition or results of operations. However, our cash equivalents are subject to market risk due to changes in interest rates.
We have limited operations outside the United States. As of December 31, 2022 the Company has one foreign subsidiary in Israel, the functional currency of that subsidiary is the U.S. dollar. In addition the Company has three foreign subsidiaries from the acquisition of SilverCloud, with functional currencies of the Euro, British pound and Australian dollars.
We have limited operations outside the United States. As of December 31, 2023 the Company has one foreign subsidiary in Israel, the functional currency of that subsidiary is the U.S. dollar. In addition the Company has three foreign subsidiaries from the acquisition of SilverCloud, with functional currencies of the Euro, British pound and Australian dollars.
However, the U.S. economy has experienced and is continuing to experience high rates of inflation, and such inflation risk may continue in 2023. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
However, the U.S. economy has experienced and is continuing to experience high rates of inflation, and such inflation risk may continue in 2024. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
As our international operations expand it will increase our exposure to foreign currency exchange risk in the future. Inflation Risk We do not believe that inflation had a material effect on our business, financial condition or results of operations in the last two years.
Accordingly, we believe we do not have a material exposure to foreign currency risk. As our international operations expand, it will increase our exposure to foreign currency exchange risk in the future. Inflation Risk We do not believe that inflation had a material effect on our business, financial condition or results of operations in the last two years.
Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Interest rates have risen and may continue to rise in 2023.
Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Interest rates have risen and may continue to rise in 2024.
Treasury bills. As of December 31, 2022 and December 31, 2021the Company held no investments. The cash and cash equivalents are held for a variety of growth and investments as well as working capital purposes. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.
The cash and cash equivalents are held for a variety of growth and investments as well as working capital purposes. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.
Item 7A. Quantitative and Qualita tive Disclosures About Market Risk Interest Rate Risk We had cash and cash equivalents totaling $538.5 million, $746.4 million, and $941.6 million as of December 31, 2022, 2021 and 2020, respectively. The Company also held investments totaling $100.0 million as of December 31, 2020 These amounts were primarily invested in money markets and U.S.
Item 7A. Quantitative and Qualita tive Disclosures About Market Risk Interest Rate Risk We had cash and cash equivalents totaling $372.0 million, $538.5 million, and $746.4 million as of December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, 2022 and 2021 the Company held no investments.

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