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Hello, everyone, and welcome to Amwell's Conference Call to discuss their Third Fiscal Quarter of 2026. Joining us on the call today are Amwell's Chairman and CEO, Dr. Ido Schoenberg, and Mark Hirschhorn, Amwell's CFO and Chief Operating Officer. Earlier today, a press release was distributed detailing their announcement. The earnings report is posted on the Amwell website at investors.amwell.com and is also available through normal news sources. This conference call is being webcast live on the IR page of the website, where the replay will be archived.

Before they begin prepared remarks, I'd like to take this opportunity to remind you that during the call, we will make forward-looking statements regarding projected operating results and anticipated market opportunities. This forward-looking information is subject to the risks and uncertainties described in the filings with the SEC. Actual results or events may differ materially. Except as required by law, we undertake no obligation to update or revise these forward-looking statements.

On this call, we'll refer to both the GAAP and non-GAAP financial measures. A reconciliation of GAAP and non-GAAP financial measures is provided in the earnings release.

With that, I would like to turn the call over to Ido.

Good evening, and thank you for joining our third quarter earnings call. This was another quarter of steady progress. We set a goal at the start of the year: reach positive cash flow from operations and positive adjusted EBITDA in the fourth quarter and build from there. We beat our guidance for the quarter on both revenue and adjusted EBITDA. That makes 9 quarters in a row of delivering our commitments to you. We are pleased with the quarter and with our progress across the business, and we have good visibility to that fourth quarter goal. Mark will take you through the numbers.

Before he does, let me cover our market, our product, and recent developments in our company. Let me start with our customers, because their reality shapes everything we do. Health plans and employers face their largest cost increases in about 2 decades. Costs are projected to rise another 8% to 11% in 2027. Last month, UnitedHealth said costs remain stubbornly high across the entire health care landscape. Premiums are not keeping pace. The easy fixes are gone. Technology-enabled care is one of the few levers left, but only if it comes with proof. That pressure is changing how health plans and employers buy. They no longer buy access. They buy engagement and outcomes. Most now tie digital health fees to performance. Nearly half of them say the programs they buy enroll fewer than 1 in 4 eligible members. Poor engagement is now the top reason they switch vendors.

Health plans and employers face 3 major challenges in digital health today. The first is vendor sprawl, dozens of point solutions, each with its own front door, costly to connect, and hard to compare. The second is member confusion. A member who does not know where to start does not start. The third is the lack of proof. It is hard to see which programs work and harder still to replace one without disrupting members. That sprawl is accelerating. AI has made it faster and cheaper to build a clinical program. Investors have backed hundreds of new digital health companies this year, many of them built on AI. Our customers feel pressure to offer these programs, but each one brings its own cost, its own integration, and its own front door. The opportunity is real. So is the complexity.

More and more, a member's journey to care begins in a conversation with an AI assistant. Three in 10 adults now use AI tools for health information at least once a month, up from about 1 in 6 2 years ago. The question for our customers is where that conversation ends. It can end with a guess. It can end with care that is wrong for the member and wasteful for the plan, or it can end with a covered in-network service that fits the member's need and has proven clinical and financial outcomes. This is the problem Amwell is determined to solve for our customers. We help them improve clinical and financial outcomes. We do it through activation, getting more of their members into technology-enabled care in place of conventional care that often costs more. We give our customers 1 platform under their brand with 1 integration. It provides reliable, scalable rails to bring in a program, exchange data with it, and tests whether it works. The member's experience stays consistent, simple, and engaging. A common data structure proves the outcomes and improves performance over time.

As AI begins to transform health care, this platform becomes even more necessary. We are not selling an AI feature. We are the trusted platform where AI-powered care runs with clinicians in the loop. We extend our clients. We never compete with them. That is why large and sophisticated organizations trust us with their members. Our customers together represent more than 90 million covered lives. We serve the 9.6 million beneficiaries of the Military Health System, and the Department of Veterans Affairs has signaled its intent to do the same. Two recent recognitions point the same way. In September, Frost & Sullivan recognized Amwell for technology innovation leadership. It cited our ability to address health care fragmentation through a unified platform. Time magazine named Amwell to its list of the world's top health tech companies of 2026.

Let me be specific about where we are focused for our customers today. There are 6 areas, and all 6 run on the platform I just described. Three are about the member, getting members in, what they see, and keeping them. Two are about the programs, our partners and our own.

The last is the data that proves what works. For each, I will describe the problem and what we do about it today. First, activation. A customer gets value only when its members use the care it has bought. Most of the health plans we talk to still see engagement in the single digits. We address that with always-on engagement, outreach to members through our customers' own channels within the rules they set. When a customer switches it fully on, members use the platform at more than three times the rate we see when it's off. Activation is where value begins. Without it, nothing else happens. With it, members get care, our customers get results, and we grow.

Second, the member experience. This quarter, we shipped a dramatically improved experience to most of our key customers. Returning members now see 3 screens instead of 12. Members rate their visits 4.9 out of 5. Behind that experience are the clinicians of the Amwell Medical Group. They provide urgent care, virtual primary care, and behavioral health, as well as nutrition and lactation programs. They are also empathetic guides through a confusing system. They help the member decide where to go next, and they are a steady source of confidence, simplicity, and a personal connection to a clinician. That is the experience we deliver.

Third, the member's ongoing relationship with a clinician. Today, most virtual care ends when the visit ends. We invest in what happens before and after the visit, so the relationship is durable and the member has a reason to come back. That matters to our customers because the clinician the member trusts is an effective referral point into the programs the customer has chosen. That is how activation compounds.

Fourth, choice. This is where the programs come in. The member should get the right program, not just the available one. Our standard process brings a partner program live in weeks. One sign-on, one eligibility file, one data connection, one report under the customer's brand. Our customers can add a program or replace one without disrupting members. That is choice without the sprawl.

Fifth, behavioral health, where demand keeps rising and supply keeps falling short. SilverCloud is our behavioral health module on the Amwell platform. It automates the delivery of evidence-based care, and it gives members a path to our own therapists and psychiatrists on the same platform. The evidence is building. Last month, we published a case study with Discovery Health, one of South Africa's largest health plans. In its first 12 months, the program activated 22,000 members. 90% of surveyed users were satisfied. Among members with moderate to severe depression, 60% to 78% showed clinically significant improvement. And in the year after use, members' hospital costs related to mental health were 6% lower after adjusting for other factors. Activation first, with measured outcomes behind it. We prove, we do not claim.

Sixth and last, data. A common data structure runs under everything I have described. It sends a member into a program with the right information. It collects outcomes back, and it reports value in the customer's own terms, whether that customer is a health plan or an employer that the plan serves. That is how a program proves its return on investment and how it gets better over time. Six areas, 1 platform. Together, they answer the 3 challenges I started with: vendor sprawl, member confusion, and the lack of proof. That is where we are focused for our customers today and where we will keep investing.

Let me turn to our government business, starting with the Department of Veterans Affairs. In September, we announced the department issued a letter of intent for us to deploy the Amwell platform across its enterprise. The department serves more than 9 million veterans. I want to be precise about what this is. The letter is not a binding contract. A definitive agreement still has to be negotiated and executed under federal procurement rules, and that work is underway. The letter followed a comprehensive evaluation. It cited scalable video consultations, interoperability, cybersecurity compliance, and support for integrated care delivery. In plain terms, the capabilities the Department evaluated are the ones we already run at scale for the Military Health System, and the Department's own scale is considerable. In fiscal 2025, more than 2.9 million veterans used its telehealth services, and it delivered more than 11.7 million video visits to the home. We are honored by that trust, and we are preparing for this work deliberately. With the Defense Health Agency, we continue to serve the Military Health System without interruption. We are negotiating the direct, longer-term contract that the agency signaled its intent to award in June.

Before I close, 2 principles guide how we run the company. The first is discipline. We are determined to keep improving efficiency and effectiveness across the business. We hold ourselves to the same standard we offer our customers. We measure results before we claim them. The second is focus. We are simplifying our efforts around a single differentiated Amwell platform. One platform is more reliable for our customers, faster to extend, and less expensive to run. It is what makes everything I described possible.

To sum up, the market is moving towards what we've built. AI is multiplying the programs our customers can offer. Our platform is the reliable way to bring those programs to members and to prove which ones work. Virtual care for the Military Health System runs on it. The Department of Veterans Affairs has signaled its intent to follow, and we are doing all of this with discipline. We have good visibility to positive cash flow from operations and positive adjusted EBITDA in the fourth quarter.

With that, I will turn the call over to Mark, who will walk you through our operational and financial results. Mark?

Thanks, Ido, and good afternoon, everyone. On today's call, I'll start with the highlights from the third quarter, walk through our financial results in detail, and close with our outlook for the fourth quarter and the full year. In the third quarter, we delivered revenue above the high end of our guidance range and adjusted EBITDA toward the high end of our range. The outperformance was driven primarily by stronger-than-expected visit volumes and continued cost discipline. These results keep us on track toward our goal of generating positive cash flow from operations in the fourth quarter of this year.

Total revenue for the third quarter was $49 million, down approximately 12.9% year-over-year, although $1 million above the high end of our guidance range. Subscription revenue was $23.9 million, down approximately 22.5% year-over-year and down approximately 6.8% sequentially. The year-over-year decline continues to reflect the previously disclosed churn we've discussed on prior earnings calls. Amwell Medical Group, or AMG, visit revenue was $23.7 million, up approximately 11.7% year over year and down approximately 3.1% sequentially, reflecting normal seasonality in visit volumes. AMG paid visits totaled approximately 301,000 visits, essentially flat year over year, with revenue per visit of approximately $79 per visit, up approximately $8 per visit, or 11% from the third quarter of last year. That increase reflects favorable pricing and volume in urgent care, along with the continued shift in our visit mix toward higher value clinical programs. Virtual primary care visits were up approximately 41% year over year, continuing its strong growth trajectory. Total platform visits were approximately 760,000 visits, down approximately 30.5% year over year, which is consistent with the portfolio changes we've discussed previously.

Gross profit was $26 million, with a gross margin of 53%, up approximately 57 basis points year over year from the 52.4% in the third quarter of 2025. The year-over-year improvement was driven by cost containment and higher clinical program revenue. As we've noted, our existing revenue mix is likely to produce a margin profile consistent with recent quarters, and we continue to expect our mix to shift toward higher margin SaaS offerings over time.

Total operating expenses, including depreciation and amortization, were $37.6 million, down approximately 36.1% year over year and up approximately 1.3% sequentially. As a percentage of revenue, operating expenses improved to 76.8% compared to 104.5% in the third quarter of last year and 71.3% last quarter. The year-over-year improvement reflects the benefit of our transformation actions, lower litigation costs, and continued cost discipline across the business.

Adjusted EBITDA for the third quarter was a loss of $3.6 million compared to a loss of $12.7 million in the third quarter of 2025. That's a $9.1 million improvement.

Operating loss was $11.7 million compared to a $29.3 million operating loss in the third quarter of 2025, an improvement of approximately 60%.

Amwell's balance sheet continues to be very well positioned. We ended the quarter with approximately $181 million in cash and investments and zero debt. We expect to be in a very similar position at year-end.

Now turning to guidance. For the fourth quarter of 2026, we expect revenue in the range of $48 million-$50 million and adjusted EBITDA in the range of breakeven to a positive $1 million. This outlook reflects the typical seasonal pickup in visit volumes as we move into the winter months, along with continued stability in our subscription base. For the full year, we are raising our guidance. We now expect full-year 2026 revenue in the range of $204 million-$206 million, compared to our prior range of $195 million to $205 million. We also now expect full-year adjusted EBITDA to be a loss in the range of $6.9 million to $7.9 million, a meaningful improvement from our prior range of a loss of $12 million to $16 million. We continue to expect full-year AMG visits at the high end of our previously communicated range of 1.32 million to 1.37 million visits. Our fourth quarter outlook reflects breakeven to positive adjusted EBITDA, consistent with our previously stated goals.

In summary, during the third quarter, we exceeded our revenue guidance with stronger visit volumes, a stable subscription base, and a leaner cost structure that positions us to finish the year on a strong note. I want to thank all of my colleagues, for they are by far the most valuable of Amwell's assets, for their continued hard work and dedication.

With that, I'll turn it back to Ido.

Thank you, Mark. Before we take your questions, let me leave you with the key points. 2026 brought clarity, focus, and urgency to solving our customers' unmet needs. Our customers face their largest cost increases in two decades. They no longer buy access. They buy engagement and outcomes. AI is multiplying the programs they can offer. It brings real opportunity and real complexity. Amwell gives them one platform under their brand with one integration. We bring members in. We give them a simple, consistent experience. We connect them to the right program, and we prove what works. We are not selling an AI feature. We are the trusted platform where AI-powered care runs with clinicians in the loop. We extend our clients. We never compete with them.

Virtual care for the Military Health System runs on our platform. The Department of Veterans Affairs has signaled its intent to follow. We run the company with discipline and focus. We beat our guidance this quarter. That is nine quarters in a row of delivering on our commitments, and we have good visibility to positive cash flow from operations and positive adjusted EBITDA in the fourth quarter. I am proud of our team and grateful for the way they rose to this challenge with agility and passion. We are more strategically and operationally focused on our mission than ever before. We have accomplished much. We have significant work ahead, and we are committed to the path we are on and to increasing shareholder value.

Now we will open the call for your questions. Operator, please go ahead.

[Operator Instructions] Our first question today is from Stan Berenshteyn with Wells Fargo Securities.

First, on the VA, can you just walk us through, what is the process of these negotiations? What are kind of the next milestones, and how should we think about this over the course of this year or maybe next year? Do you expect any sort of contract terms this year, next year? How should we think about this?

These are very detailed discussions following a very long process that resulted in the letter of intent that we have received and published. It's equally detailed to move this general direction into a full contract and work plan, but we are very optimistic that we are going to get there. I'm not going to second guess the timeline, but we don't think it's going to take too long. We covered a lot of ground already, and very importantly, the VA is very pleased to see that our platform is proven to work in an environment that has a lot of similarity to its own.

We are fairly optimistic that you're not going to wait too long for this project, and then we definitely plan to go through a fairly detailed implementation at the beginning of next year, and its duration and go-live really depends on specifications that are not fully determined at this point.

On the DHA, obviously, there's a potential new contract that's coming down the line here. I guess a two-parter here. The first is, before you maybe sign the new contract, what happens with the existing contract? Is there any runoff or any type of contingency that the preexisting contract continues to run through? Can you just help us bridge the outgoing contract and the potential new contract and how we should think about that?

Sure. We are in full production universally with the DHA. The system is operating very well since it went live without any issues, at least ones that we are aware of, and our dialogue with the customer, I think, reflects that right now. We fully expect, as Mark suggested in different opportunities before, to convert the current agreement into a different one, a longer-term agreement that may be a direct agreement per the preference of the DHA with Amwell. And of course, when that happens, we are going to share it with everyone.

Our next question is from Craig Hettenbach with Morgan Stanley.

On the commercial side of the business, as your focus has shifted toward payers, what is resonating most with these customers today, and what type of expansion opportunities do you see going forward?

You are absolutely correct that most of our significant opportunity is in this space between commercial payers and also government, that in many ways is like a payer, where risk is very, very important. Today, as I mentioned in my prepared remarks, people are very focused on clinical and financial outcomes, and that requires activation, it requires reducing the operational costs related to vendor sprawl and its translation into lack of outcomes or the fact that it could hurt outcomes. I think that it is very clear to us that when we talk to customers, existing ones and new ones, the fact that we have one platform that requires one integration, generates one simple engaging experience with great degree of flexibility to add any program and to measure whether it works or not is very, very compelling. We hear that time and time again.

As you probably know, a lot of the infrastructure of payers is now limited because of budget constraints. Vendor sprawl is big as ever. The demand from employers and others to increase programs is big, but the ability to execute it without a platform is very compromised. We fit right in into this environment.

Our growth opportunities are really twofold. One, and it is very, very significant, is sales growth. We are not scratching the surface. We are, all of us, the entire industry, in the single digits of activation, and there are so many people that could benefit from the service that is already covered for them and very available. We know they love it when they use it. They just are not aware of it and not active for various reasons. That is an area where we are seeing a lot of opportunity. The fact that our own marketing, for example, is able to produce 3x on traditional alternative options is again very, very encouraging. We fully expect to see growth in the number of members that are using our platform.

Very importantly, because of the way that the platform works with different investment, the level of sophistication and breadth and the parts of the continuum of care that we can offer is likely to grow a lot. Mark shared earlier that our virtual primary care alone, which is much broader than urgent care, traditional urgent care, rose more than 40%. This, we think, is a trend, and we think the value per member, in addition to the number of members, are very exciting growth opportunities for the company.

In addition to that, of course, we have still quite a few payers and significant number of sizable government agencies that are not a part of our client base today, where we definitely see a nice growth in pipeline and growing level of interest. These 2 combine, by the way, because as our existing customers report better outcomes and reduce costs and overall high satisfaction of members, that immediately translate into the sales cycle and level of appetite of their peers. That is really how we see it.

Then just as a follow-up, as you begin the budgeting process for 2027, can you just touch on the visibility into your growth at this time of year versus a year ago, and any other key areas of investment or efficiencies that you expect to drive?

Stating the obvious, we made some serious investments in the government sectors, and the results depend on factors that are in play right now, that we are optimistic about them concluding very, very well. We are confident that the quality of revenue is increasing in the company and the pipeline is increasing. Of course, we are not providing next year's guidance. We are probably going to do it in the next earnings call, and I think that's the right time to share more color on the exact dynamics of next year.

Our next question is from David Larsen with BTIG.

Congratulations on a good quarter. Can you comment around EBITDA expectations for the fourth quarter? It looks like you're guiding to almost break even. Do you expect that trend to continue into 2027?

Dave, thanks for the kind words. We do in fact have good visibility into this current fourth quarter's EBITDA. We are confident that we will achieve our now longstanding goal of being EBITDA break-even. We will likely be on that positive side, on the upward side of that range that we provided. There is a significant amount of impact that will clearly determine if we continue on a break-even pace throughout the respective quarters of 2027 based on the timing and receipt of a, hopefully, of a VA new contract and the impact of any extension of a standalone direct contract with the DHA. As Ido noted, on February 16, we will give guidance for the full year 2027. But as of now, we are executing towards and feel extremely confident about ending the year with EBITDA positive results for the quarter and a cash balance right around $180 million.

I'm sorry if I missed this, but what sort of incremental revenue do you expect from 2026 to 2027 for the VA and/or the DHA, and what are the components of that incremental increase, if any?

Right. We did not give any details around that increase. Obviously, anything with the VA is going to be additive since we have not generated any revenue from the VA in the past, and the DHA contract is in the final throes of being completed most likely this quarter.

Is the VA starts 1/1/2027?

No, that's not known yet. We are continuing the negotiations with the VA. We're far further along with the DHA, but we're hopeful that we'll obviously sign something with the VA over the next couple of months.

Congratulations on the progress you're making. Nice work.

Our next question is from Jailendra Singh with Truist Securities.

Congrats on the good quarter and the VA LOI as well. I want to ask about, last quarter you talked about supporting a return to growth without a meaningful increase in headcount. Would that still hold if the VA opportunity comes through? I am trying to figure out how much can you leverage the current federal infrastructure you already have versus needing to invest ahead of deployment? Maybe just give some color there.

Jailendra, there are a number of factors that contribute to our profitability. As you can see with our numbers, we went a very long way to focus the company on the Amwell platform, to define what is important and not important, and divest or de-emphasize anything else. We also dramatically changed the workflows and processes in the company, with and without AI, to deliver great efficiency and effectiveness. This trend is continuing, and we fully expect to continue this process going forward. We are very much restructuring the company.

To answer your question directly, we do not expect any significant growth, even with the large contracts, beyond something that is not material or dramatic, because of the efficiencies. That does not mean that we are not going to give these new contracts our full attention. We absolutely will. We have dedicated teams. We have plans to serve it and continue to serve it well. But efficiencies from other things that we stopped doing and things that we are now doing much more efficiently are going to continue a very disciplined cost structure for the company.

That makes sense. My quick follow-up on the more subscription revenue, after declining what, 7% in Q3, now Mark, you are talking about stability in Q4. Does this suggest that we have effectively reached the bottom in subscription revenue, and now we should probably I am not looking for 2027 guidance, but I mean, can you just say that directionally we should probably start seeing sequential growth going forward as all that churn is probably hopefully behind us?

Jailendra, I think the churn that we have been experiencing has been probably the components of the churn. You will start seeing far less churn from any health plan impact, but the other businesses that we have determined that we are no longer focused on and we have de-emphasized, I'm assuming we will still have some degree of natural churn.

As far as the big swings that may have been experienced in 2025 and 2024, you are certainly correct. We do not anticipate any more of that activity going forward.

Our next question is from Charles Rhyee with TD Cowen.

Congrats on the progress, guys. Maybe if I could follow-up from some of the earlier questions. Mark, I think you gave sort of a target last quarter, sort of all the opportunities in the pipeline kind of pan out. We can think of maybe mid-teens as a reasonable growth target for next year. Given the progress that you're making right now, is that still sort of the framework we should be thinking about? If not, how should we think about next year in that sense?

Yes. Charles, when we spoke last time, we were confident that we were making great progress on some of the larger opportunities. We are now closing in on the end of the year, and the commencement dates for those new opportunities are therefore pushed into 2027 as opposed to starting on Jan 1 of 2027. While we're confident we're going to be seeing some of that growth, we know that it's not going to be impacting the entire calendar year. We still have, and we remain in the best position pipeline-wise than we've ever been. We just need to see these contract start dates begin as early as possible.

Can you talk about what you gave a bunch of examples earlier of how patient experience has improved, outcomes are improving. That obviously helps with the sales pipeline for other customers to see those results and then come to Amwell. Does this also drive sort of organic, sort of same-store sales? Maybe can you talk about how the results that you're delivering has generated sort of organic sales at existing customers? How much growth perhaps this year has maybe been from that, and how much could we think about that as part of building towards next year and future revenue growth?

Charles, you're absolutely correct. Some of the investments we made are beginning to show very clearly in the numbers, and each has a lot of potential growth with it. I'll give you a few specific examples. This year, we dramatically improved our engagement capabilities, and I said that before, but it's still a very nice number. We know that when we execute that, we get 3x better engagement, which is very good. In addition to that, we just launched a new experience for members, and we saw NPS and ratings jump, as they said earlier, to 4.9 out of five. I think it's one of the highest, if not the highest, we've seen before, and that too has direct relationship with engagement. We are now with an infrastructure that is able to add a partner within short weeks, versus many months before, and we are shooting for days. That's really important because it allows our customers to really test a lot of new programs, associate them with different accounts. It's good for the relationship with the different national accounts and other employers, but it's also very good in order to optimize the outcomes. That also, together with our investment in data, allows us to make results much more transparent and easy to understand for people.

So, if you think about it, today, engagement is in the single digits. Saying it less optimistically, over 90%, sometimes 97%, 98% of the population, the addressable population, does not benefit from technology-enabled care. I'm not only talking about urgent care, I'm talking about the entire gamut. We're not talking only about AMG, which is becoming so much better and so important in navigation and trust, in relationship with the patients. I'm talking about all those many programs they can refer to. So there is a world of opportunity with 90 million covered lives. I'm not even talking about the potential growth in the government, and that's very important. I'm not going to second-guess the pace of that, but it's apparent that the upside is very, very significant.

As I said earlier, we're going to probably, almost likely, very likely, add significant new clients into the mix, and that will even grow the addressable population. I believe that the pricing mechanism will morph and change from the traditional SaaS recurring more and more into an outcome base, which is directly related to traction. The changes we made provide us an opportunity to share more of the risk with our customers, but when we perform more, it also provides a much bigger upside to take a fair share from the MLR through the savings that we generate.

Overall, I think the company today is very focused on a very clear value proposition. This value proposition resonates. It provides a path for multi-year growth that is significant. To be clear, the exact dynamics in this part, in the next few months and so on, is something we are going to talk about in the next call.

And maybe just to clarify, understanding that AMG is a volume-driven part of your business, but in the rest of your business, as engagement increases, so more of the covered lives are engaging with Amwell, does that generate more revenue for the company, or have customers are paying for sort of a fixed amount of usage?

Absolutely. Essentially, I believe that when you fast-forward into multi-years from now, most of our activity will be related to clinical services that win and deliver the outcomes. The SaaS component, although may not necessarily shrink significantly, but in proportion to the clinical revenue, the clinical services that deliver the outcome will become smaller. We believe that a lot of the upside is in utilization, where we share the results with our customers.

Our next question is from Ryan MacDonald with Needham & Company.

This is Matt Shea on for Ryan. Maybe piggybacking off of Charles' question, it seemed like member experience and the upgrade you shipped this quarter was a meaningful call-out and could be a key upgrade to drive member engagement. But curious, when did that go live at most clients? Was that earlier in the quarter versus later? And sounds like qualitative feedback has been strong, but any quantitative evidence yet, like visits per member or repeat visit rates, or what would be the best metrics to track going forward, I guess, to gauge success of the member experience overhaul?

Matt, the upgrade was fairly recent, and although you saw quite a few of our investments pan out in the numbers that Mark shared, definitely what we see is early days with very encouraging results. You do not still see a lot of this impact in the numbers today.

And best metrics you expect to track going forward to kind of gauge success?

Yes. Thank you for reminding me. Clinical revenue sometimes is through direct utilization of different AMG services, virtual primary care. We are very, very bullish about behavioral health. We talked about SilverCloud. We did so well internationally in way of outcomes. We are now investing in bringing it in fully into the United States with significant investments, and we have high hopes for that. AMG services are going to become much more efficient and much more attractive. In addition to that, partners, third-party clinical programs utilization that generates a nice margin where we generate, basically bring the traffic to them together with information, collect information, and present it back to the payer in a unified way. That part of the revenue is likely to be a very meaningful growth driver going forward, in our opinion. Both are going to, in our opinion, grow much faster than the SaaS recurring revenue in a world where our customers are very, very focused on the outcomes.

On the DHA contract, I think you had previously sized the behavioral health opportunity as 15%-20% or more of platform value, with next year being the earliest on activation with that. Is reinstatement part of the current direct contract negotiation, or should we think of that as a separate procurement opportunity afterwards? Just trying to think about how that layers into your 2027 opportunity set.

At this point, we are focused on the current infrastructure that is in play and works really well. You are absolutely correct that we proved in this environment that our behavioral services deliver very good results, but that's a full upside opportunity that we believe is separate from the current dialogue.

I am showing no further questions at this time. I'd now like to turn it back to Ido for closing remarks.

Thank you, Trace, and thank you, everyone. We appreciate your support for Amwell, and thank you for joining us this evening.

This does conclude the program. You may now disconnect.

All right, great. Well, welcome. Last day of the conference. So we'll bring it on home, Mark. So I appreciate you being here. We're pleased to have with us COO, Mark Hirschhorn. So welcome.

Thank you, Craig.

Before we get started, I do have to read important disclosures. You can find them on the Morgan Stanley website, www.morganstanley.com/researchdisclosures.

And with that, Mark, I wanted to start on the government side of your business just because I feel like that's kind of the important pivot in terms of where you're seeing a lot of activity and momentum. And perhaps just take us back to the initial kind of DHA, kind of what was required to kind of get to where you are today, and we can build off of that.

Well, I appreciate the opportunity, and thanks again for having me here. The military and the opportunity underscoring where we've pivoted over the past 2 years to principally focus on the government opportunities as well as domestic payers came about as a result of a probably 5-year-old relationship now with the DHA.

When they came to us seeking a platform that could enable all of their clinicians to reach any of the servicemen and women and their families with video compliance and security protocols that have not previously existed, it was a fresh build for us. It was undertaking that we believed we can accomplish in a period of approximately 1.5 years. And along the way, we got to understand and to know the individuals who are involved in that decision-making.

Clearly, many people in those government positions have changed, but their focus on enabling care and moving towards an innovative technological solution for all of their services, underscoring the need for the compliance with the MHS GENESIS Oracle-based platform was something that held true throughout. So our first really dipping the toe into that experience was launching with the DHS and covering now approximately 10 million service members.

We also were invited in for an opportunity that the VA, I think, very timely, of course, after we've now had 2 years of successful service past our initial implementation point, the VA came to us with a very similar need. And I think the validation from their colleagues down the hall led to us having an opportunity to present, to validate some of the ROI and the ability to launch and to rely on a platform that is going to service yet again another cohort of approximately 10 million veterans.

That's great. I do want to build on that. You've also kind of early on partnered with Leidos. So I'm just curious, kind of, given their experience in this market, are there things you learned from working with a company like that and kind of how you see this market as you go forward in terms of relationships like that versus now you're kind of direct and have exposure with these government agencies?

Well, we're certainly looking forward to being direct. But at the same time, it's somewhat of a bitter sweet change. Leidos and some of the other partners were absolutely wonderful. They essentially held our hand throughout this process and guided us towards successful implementation and launch.

Their project managers have tremendous experience, the tenure of many of the individuals on their team really helped lead us to a successful launch. And I don't believe we would be able to have done that in the time frame that we did. We would have had the normal growing pains and stumbled. And I think we were very fortunate to have had them leading us through this process.

Now that we're going direct, we're going through some of the initial challenges, going through contracting and pricing, and working on a number of things that we had hoped would have been completed about a month or two ago, but we're now getting to know people and form relationships, also the fact that there are people involved who weren't there at the initial launch. So it takes time. Relationship building is going on. The contracting is coming into place. And we hope to be in a place where we could announce a longer-term direct contract over the next several weeks.

Got it. To that point, you had announced on the earnings call kind of that letter of intent. And I'm just curious kind of how competitive that process was kind of -- it doesn't have to be specific, but just give us a sense in terms of what really appealed for them in terms of getting a sole source and providing you with that opportunity?

Well, so the letter of intent is specifically to the VA. So that was one -- that's one opportunity that I can tell you the VA had been looking at options for the past 2 years. They went through a diligence process of at least a year and then announced to us this year their intent to move forward with us. Also changes in the VA that have now led to them having to go back and essentially review and appoint new individuals to now lead in the contracting process, which they've made it clear to us they would like to have completed prior to the year-end.

Got it. And -- anything on the competitive nature of this in terms of as they kind of evaluated you and potentially others out there in the market?

Well, we certainly know there were competitors because we're constantly being critiqued or I should say, criticized in scope and optionality around the platform as well as pricing. So it's still in a very meaningful way being addressed at basic contract levels today. So we're not close to signing in the next several weeks, but we hope to be there in the next couple of months.

Got you. And you mentioned before having kind of their friends down the hall helps and you've got great proof point. So there's that. But anything else you would point to in terms of your capabilities where you feel like you kind of came out on top in this process?

Well, I think we proved that we have the technical wherewithal. And we certainly had the support teams behind us because while this is a SaaS type of relationship and a platform implementation that we do frequently for Blues plans and other payers, the level of security, the level of building production and testing style applications for the government to ensure they were ready to launch was something that we had not done in the past.

And I don't think that level of discipline and support exists with many of our competitors. We had to step it up. We had to ensure that we were able to move from implementation in a market or two to full nationwide and international availability. Again, something that we had not done before, and it took us beyond 1.5 years to get that ready.

Got it. And just building on that, you touched on the security. So I think any time working with a government agency, a very important factor. Anything else you'd point to in terms of differences in these solutions for government versus commercial?

Well, this is a far more robust platform. I would say the government cloud and a number of other requirements because of the fact that we work within the government, the number of individuals that we had to get certified, the fact that everything around our processes is specific to the DHA, we really cordoned off that area of the company, and it required significant investment, significant education and a lot of behavior change.

Got it. All right. Well, exciting momentum for you kind of in this space. I do also want to touch on just kind of commercial and really just starting with kind of what's resonating with your customers in the marketplace. You mentioned kind of more focus on payers of late within that business.

Yes. The nice thing about really refining our focus is that we speak to the payers more frequently today. And almost to a shocking extent, we have found that nearly half of those payers are looking to change some aspect of their contractual relationships with either independent stand-alone third-party providers or those who they have for years now, had a legacy relationship with on the virtual care side.

There is a -- that obviously presents an opportunity for Amwell. The unfortunate part is that most of the individuals at these payers haven't really optimized their relationships or the products, and they haven't seen the ROI they expected. When it really comes down to it, they haven't seen the level of engagement. Every one of these payers are still in that single-digit level of engagement with their members regardless of the cohort. And numbers like that were fine when the products were introduced nearly 10 years ago. And the step function that everybody expected and that significant behavior change to shift your trust to digital delivery just hasn't occurred at the pace most expected.

Yes. I mean you also have it in a very volatile backdrop for payers in the last few years with different regulations and kind of some pressures they've been under. So with that, what are some things that you feel like are resonating the most in terms of what you can offer them as they consider some of these moves?

Well, several of the payers that we're in discussion with today have engaged with us because they're disappointed with where their products sit today. They want a channel that can ensure that they can be relevant to their employer clients, to other cohorts of their membership as well. They want to ensure that they can maintain almost a surveillance over those members to ensure that they're using the most appropriate forms of care.

We're also introducing a number of our member -- or a number of our third-party products, whether that be Sword, whether that be a number of cardiometabolic solutions, they want to see those individuals not just visit those point solutions, but see it all in a very comprehensive way and follow them through that journey.

They understand that we can deliver that on the Amwell platform. So we're getting an opportunity to reintroduce ourselves to these payers who may have contracted with us 5 or 10 years ago, but came to us principally for what we had delivered specifically at that time, which was virtual urgent care. We've now matured to virtual primary care, a number of other services as well, but the core rooting has always been in that 24/7 nationwide availability of virtual urgent.

Got it. And you mentioned before on the government side, where you've done a lot of work and have expertise versus maybe some of the competitors who arguably would have to catch up. I know if I go back a few years when kind of Converge was rolling out, there's a lot of discussion in the marketplace, you have other alternatives, whether it's Zoom or Microsoft Teams. And so can you maybe just give us an update today on the commercial side, what you see in the marketplace through a competitive lens?

Yes. The interesting thing is if you bifurcate the opportunities for Amwell, our SaaS platform is effectively powering now the government solutions. Those solutions don't necessarily rely on the Amwell Medical Group, our clinicians are nationwide providers in backing up or supporting the clinicians who are employed by the federal government. In all other commercial aspects, we rely on AMG either primarily as we do through Elevance and a number of other payers, a number of other Blues payers. They can use our medical group to provide that backstop to their medical group and to their providers.

We don't necessarily have to sell technology alone. We can sell technology along with our clinical services or even stand-alone clinical programs in addition to ensuring that it is all provided over the Amwell platform. The Amwell platform is what had matured out of the initial Converge launch a couple of years ago.

Got it. And then just building on kind of you mentioned payers are going through the motions now in terms of their -- what their vision was, what the actual they want to see delivered. How do you think about kind of, if you want to call it white label solutions like an Amwell they'll use versus internal development? And again, they have a lot of things going on today in terms of managing their business. And so what are you finding that's resonating most? And are there still areas where they'll rely internally?

Well, I think the payers in general had approached us over the years with 1 or 2 common themes. It was either access for clinical programs or it was helping to bring cost of care down. Today, they're actually introducing what I think is a more relevant concept to them, which is the consumer experience.

And they're looking to us to help them channel their members through multiple steps of care coordination. And they believe that through the Amwell platform, that might be a brand-new channel for them to ensure that not only can they hand off in a very seamless way, white label behind their name and behind all of their protocols, but they can ensure that those members not -- come in not just for one specific need, but can be ensured that they could have digital delivery of multiple services, including those third-party or single point programs, but all being delivered through one entry point being the Amwell platform.

Got it. I'd love to segue just to kind of some of the business mix you touched on before, kind of the SaaS. I know that's an important driver of margins. And like you said, you still have AMG to kind of leverage in situations where customers want that. But just maybe walk us through kind of where you are in this business mix transition, kind of where it stands today and over a multiyear period, kind of that mix of business where things could be heading?

Yes. The company really went through a very challenging period about 2, 3 years ago when it found itself somewhat of a bespoke development shop, providing both platform, services, hardware and also bespoke therapy and therapeutic solutions for hospitals, for health systems, for payers and for employers. You can't be everything to everyone. And in health care, it's extremely hard finding a center of excellence in one alone, but looking for 5 channels is as close to impossible as you could get.

So the focus and the discipline that we decided to pivot with 2 years ago, I think, has dramatically changed the face of the company. While we had to part ways with more than half of our colleagues, we were also able to resource the development and the standardization around the platform that is now powering government health solutions and payer health solutions.

We certainly have deemphasized our other channels. And again, as a result of that, I think we have found our sweet spot, and we continue to not only see improvement in our financial picture, but we also see greater interest from the payers. I think our message has been resonating because we are more focused, and we can pay greater attention to and be more responsive to payer needs. Instead of trailing behind them and trying to be responsive to their needs, we're coming at them today in a joint -- in a very, I think, strong way of partnering and providing in a conciliatory tone, recognizing where their challenges are and to some degree, knowing that we've walked the walk with them for these past several years, but coming up with novel approaches.

Got it. So like you said, a pretty meaningful change across the organization. And I would echo what you said, you've seen some stability in the business, which is great after a couple of kind of rocky years...

That's for sure...

Maybe just give us some context in terms of the organization in terms of not exactly behind the scenes, but just how it's responded and the position you're in today kind of coming out of this period of the pivot.

Well, in all sort of dramatic transformations that companies go through, you like to believe that you've created a team that has the camaraderie, has the mental capacity and also has the emotional capacity to move forward with fewer resources. And in this case, in certain ways, we've actually identified as a result of narrowing our focus and reducing the footprint of the business.

In many ways, the individuals who are focused on these sort of two remaining, but very focused channels, they're getting more resources. So they feel energized. We've got management meetings going on in Manhattan right now for the past couple of days. And there's a renewed surge of confidence in our ability to deliver. Of course, with the Budding VA opportunity and as we're transitioning to a prime vendor for the DHA, these opportunities present people with new business challenges, but also additional resources. So as we had to pare down some of our colleagues' teams, we're also now hiring, and we're hiring aggressively in areas that we know are going to create value for us and for shareholders over the next several years.

That's great. And when you think about the model transition and shift more towards SaaS, what does that mean to just the visibility of your business on a go-forward basis?

Well, as you know, the visibility is going to be far more reliable. While we still rely in a material way on visit and visit volume and seasonality, the more that we can clearly invest in and ensure that clients are engaged with us on the broader opportunities of taking on our SaaS platform, the more opportunity we have to forecast spend in the future, return on investment and also just pure investment back into that platform.

We know that it had been extremely innovative and sort of bleeding edge at the time of launch, but we can't be naive to believe that it doesn't require continued investment. And that's something that we have to do today as we're listening to our clients. I think in the past, we weren't listening as well as we could have, and I think we're doing a better job of that.

Got it. And so bringing this together, how do you size the potential kind of market opportunity that you're selling into? And as you've kind of rebase the business, once you get back to growth, what's a reasonable kind of longer-term growth algorithm for Amwell?

Yes. Growth has definitely been a challenge over the past several years, again, with a lack of primary focus on the areas that are identified now or where we will be investing. I believe that the market, if we're sitting in our position today with the opportunities with the government and the several payers that we've had for many years now, the tenure with those payers, again, provides us with the right to sit at the table with those payers who we know are looking at opportunities.

We've been engaged in proposals and also invited into some of the largest payers in America. We think the opportunity ahead of us is in the hundreds of millions over the next several years, and that can underscore and really help to substantiate where we believe a return to growth should be back in the low single digits. Clearly, we have a ways to go, but we have line of sight into a number of opportunities that we've already discussed here and those that the sales team is maturing in their pipeline.

Got it. And if we can just build on that, if I think about kind of hundreds of millions of opportunity and kind of return to low single-digit growth from a margin profile perspective, and again, there's been a big reorg and I think you have the organization in a place where you need to be. How do you think through -- you're on the doorstep of breakeven, which, by the way, you've come a long way in terms of getting there. But just as we get to breakeven and beyond, what are some of the important levers to drive margins?

Well, we recognize getting to breakeven is a validation of our, I'll say, management's promise to the shareholders, to the Board that we can control costs and obviously also project out our revenue over the 8 quarters where that promise and that objective was made. Going forward, we're not shy acknowledging that growth was somewhat nonexistent for the past 2 years when you think about churn and think about divestitures, net-net growth just didn't materialize.

And we understand that growth is, first and foremost, we'll spend in order to ensure that we have a relevant product in the marketplace, and we continue to drive value for our payers and for the government. But growth is the #1 objective for the company, and that's been made very clear to all who have responsibility in the company.

Got it. And when you get back to growth, is there an element of whatever you're growing, it's x percent from an OpEx relative to that ratio? How do you think about that in terms of the investments required versus what can maybe drop down to margins?

No, that was a question that was posed in our management meetings because there are a number of opportunities to monetize some of the resources, some of the assets that we have. We have to say no more frequently these days because top line growth obviously comes at a cost. If we're not delivering growth within a margin profile that we've communicated to the team, we're not interested in doing it. So that has enabled us to once again narrow our focus and ensure that this is durable growth, and this is along the lines of what our platform needs to do in delivering value to payers.

So it sounds like it won't fall back on the -- you mentioned before, you're doing a lot of things. You can't be everyone to everything. Just the bar is high in terms of whatever you're going to pursue that makes sure it's economical.

That's right. We have a big team of very gifted colleagues, both in development and product. And I think over the years, it was very difficult for our leaders to say no. And there were innovators who came in looking for solutions, and we knew that out of all of those companies in the field, we were likely best equipped to foster a new innovation and to deliver something over a 6- or 12-month period. And quite frankly, that once again led to very fragmented goals and opportunities within the business. And as a result of the discipline that sits in the business today, we go through a very, very diligent oversight with those teams, and we ensure that we stay aligned.

Got it. And maybe just sticking on the operating leverage. Anything you would point out internally use of technology or AI that is -- will help you run the business more efficiently on a go-forward basis?

Yes. We are delicately and -- but very opportunistically launching AI throughout the entire company. There are objectives that have been communicated to the company that we believe are going to help us scale. So when I refer to that low double-digit growth over the next several years, it's going to come at a much more profitable and a far more meaningful contribution to the bottom line, principally as a result of using technology, AI-supported AI-backed technology throughout the company's administrative first and then, of course, through the technical and program design features of the company.

We're going through a dramatic change right now. We're educating all of our colleagues. We're investing in that education, but we're actually forcing our colleagues to adapt to what we believe needs to be an AI-powered Amwell.

And I do want to touch on just kind of capital allocation. The company was well capitalized. So you've been able to kind of invest through this period of a pivot. As you get to breakeven, what do you see in your seat as the best uses of cash? Are there tuck-in capabilities? Could there be a return of cash? How are you thinking about that?

Well, the Board wants us to ensure that we have a durable business for the next several years. Our 3-year business plan and the investments required still enable us to sit on a very meaningful amount of cash. We've got certain investors who have asked us to initiate a buyback. We've got a number of individuals who have come to us with some very interesting M&A opportunities. I think we need to get past the end of this year where these two very meaningful contracts need to be behind us. The opportunity and the visibility into the duration of those contracts will, I think, help to ensure that the opportunities for cash allocation, capital allocation are informed by how much visibility we have into our business for the next several years.

I'm sure you hear no shortage of feedback in terms of what you could be doing, but it makes total sense in terms of kind of get on the right track and let that dictate kind of the opportunity set. How do you think about just as we go into next year, just strategic priorities of what you really want to execute on and make sure you hit on the next 12 months or so?

We have a number of product road map priorities. We've got known deliverables for 2 or 3 of our largest clients who, again, make up nearly 70% of our revenue. We have a number of key positions that we need to build. So we've got our work ahead of us, and it's been clearly delineated in a budget and a formation of the business plan for the next couple of years, but it needs to be refined over the next several months. And again, the clarity around those pending contracts will give us what we believe is necessary to now solidify those plans.

Got it. And how do you think about just risk factors, other than just general macro kind of type conditions? I know for the VA, I'm sure you want to kind of get to that contract and see that through. But any other risk factors to be aware of that's top of mind for you?

Well, dealing with the government is always a risk factor. That's why we like to see longer-term contracts. We were very disappointed almost to the degree of being shocked last year when our behavioral health solution was pulled out of the solution for the DHA. We'd love to see that brought back into the conversation. We'd like to see that again have the VA entertain that as well.

We have a number of other solutions that have been market tested with larger payers with populations that are significantly higher than the government's population. And we think, again, we've earned the right to sit at that table and not just pilot those, but engage in a meaningful way in distributing those services over the entire 9 million to up toward -- or 9.5 million to up towards the 19 million beneficiaries of these services.

Got it. And as we wrap up here, so as we've discussed, a lot of change with the company, I would say, a better foundation in terms of where you've got the business to, and now it's about execution and scaling. But from the outside looking in for investors that are now taking another look at Amwell, what are some of the things that you think would be overlooked or really most important to kind of observe and make sure you're hitting on the next year?

Yes. So Craig, as you know, we became an underappreciated company as a result of duly deserving the penalty box for the years that we sat in it. We're lifting our head above the water. We've delivered on a few things that I think you asked me the same question a year ago, it may have even been 2 years ago. At the end of the day, we have to execute. We have to deliver on those things that we said we would.

We told everybody that we fully intended to be the partner for the DHA. We succeeded in that. We suggested we'd have additional opportunities for meaningful use within the government as a result of successful implementation and creating value and most critically, delivering care in a reliable and secure way to those dependents.

The other thing was curtailing our R&D and wrapping up a year or two of financial results that we had stated at the beginning of the year, we were committed to deliver. I think we've done that 8 quarters in a row. We've done so while protecting cash. And we're coming out of this with an intent to return to growth. And I think if you find that the objectives around securing those longer-term contracts, having greater visibility on a SaaS platform-driven P&L, ensuring that our platform remains technologically relevant and continuing to grow and offer additional opportunities for payers, then we're doing what we said we would do. So execution is key, growth and execution being the two primary objectives.

Excellent. Well, I think we'll wrap there. Really nice to see kind of the progression towards some of the things we've talked, like I said, in the last year or two. And thanks for spending time with us today.

I appreciate it. I would not have been able to do this without a great team behind me. And once again, we appreciate the opportunity to be here again.

Perfect. Thanks so much, Mark.

Thanks, Craig.

All right. Thanks.

Thank you. Hello everyone and welcome to AMWEL's conference call to discuss their second fiscal quarter of 2026. Joining us on the call today are AMWEL's Chairman and CEO, Dr. Ido Schoenberg and Mark Hirshhorn, AMWEL's CFO and Chief Operating Officer. Earlier today a press release was distributed. Thank you. statements regarding projected operating results and anticipated market opportunities. This forward looking information is subject to the risks and uncertainties described in the filings with the SEC. Actual results or events may differ materially.

Except as required by law, we undertake no obligation to update or revise these forward looking statements. On this call, we'll refer to both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in the earnings release. With that, I would now like to turn the call over to Ido.

Good evening, and thank you for joining our second quarter earnings call. As recently announced, we reached an important milestone. The Defense Health Agency issued an intent to award notice for a sole source contract directly with Amwell. We are thrilled by the DHS decision, which signals an opportunity to strengthen and expand our relationship for many years to come. This is a deliberate choice by the government to build its core platform around the partners it depends on. DHA's decision aligns with its policy direction to achieve long-term improvements in cost efficiency. This transition to direct contracting ensures uninterrupted continuity of operations. and ensures interagency continuum of care remains stable and undisrupted.

We are honored by their trust. Our platform is already built into MHS Genesis, which operates as the platform that anchors the unified federal health IT ecosystem. The Amon platform has connected deployed units in combat zones to hospitals back home. We are proud to serve the 9.6 million service members, families and retirees of the military health system and we are committed to delivering for them every single day. More broadly, our strategy is simple. Everything centers on the unified Amwell platform. give our clients the premier infrastructure for technology-enabled care. It is one platform, not many.

Through it, government, payers, and health systems offer patients a simple, streamlined experience. members connect to a growing range of clinical programs. they do so with measurable improvements in both clinical and financial outcomes. This focus is showing up in our revenue mix. subscription revenue has grown to more than half of our total revenue. That is recurring, stable, high-quality revenue. It is the foundation of a healthier, more predictable business. Throughout 2026, we are delivering a better user experience. We've also greatly enhanced our ability to engage members and activate them into care. platform brings clinical partners online quickly, turns the data into useful insight, and runs with the reliability and compliance our customers depend on. In short, we are easier to adopt, easier to build on, and easier to trust.

Let me be specific about the value we create. because it is the heart of our story. Payers are under real pressure. premiums are not keeping pace with the rising cost of care. Technology and AI-powered care are among the best tools they have to control costs and improve outcomes. The demand is there, but acting on it has been hard. Most pairs are buried in vendor sprawl, dozens of separate point solutions that are costly to connect and impossible to measure against one another. Tired of that fragmentation, payers and employers increasingly want fewer, deeper partnerships. One partner who can meet many needs through a single relationship.

This is the problem Amwell solves. We give customers one unified platform, so they no longer must stitch dozens of vendors together themselves. They put a single AMWOL gateway behind their own brand and their own front door. Members get one simple place to reach the programs they need, and our customer keeps the member relationship. Behind that gateway, customers can mix and match programs, ours, a partner's, or their own, and swap them in quickly, without disrupting the member experience. And because every program runs on the same platform, we bring all the data together. For the first time, customers can see clearly what is working, prove the clinical and financial results, and adjust in real time.

We are not selling an AI feature. We are the trusted environment where AI Power Care runs. We saw a clear illustration of this in Dario's recent announcement that it will bring a new program to the Amwell Healthcare Marketplace in Arizona. One more market shift makes this even more important. Customer increasingly focus on actual use. Engagement is no longer a soft metric. It is a financial driver. value comes from getting members into the right care, improving their health, and avoiding expensive downstream costs.

That is exactly what our platform is built to do. One front door makes services easy to find and use. our data and analytics power targeted personal outreach. And working closely with employers and health plans, we turn members into active users. And we can prove it. This quarter, a randomized trial of our Silver Cloud behavioral health program was published in Nature Human Behavior. It was funded by the National Institute of Mental Health and led by investigators from Washington University, Penn State, and UCLA. It followed more than 6,200 students The rate of traditional care. They had lower rates of mental health disorders over two years. and the study pointed to about $1.2 million in avoided costs in the study group alone.

Better engagement, better outcomes, lower cost, independently validated. That is exactly what payers are looking for. Our market momentum is building. Our pipeline is growing. Renewals are strong. We are engaged in encouraging discussions with new prospects across both the commercial and government sectors. This quarter, we also moved closer to a goal we have been clear about. positive cash flow from operations by the fourth quarter of 2026. We are on track. And this is not a one-time result. It builds a durable foundation for healthy growth in 2027 and beyond.

Our path here has been deliberate. In 2025, we reduced our losses by roughly $100 million. In the second quarter, our adjusted EBITDA loss of approximately $1 million is the closest we have been to break even as a public company and gives us increased confidence in achieving our goal of positive adjusted EBITDA in the fourth quarter. We did this while holding more than $195 million in cash and carrying no debt. We have the runway to execute and a team focused on doing it with discipline. We are achieving all of this with a linear cost structure. Our focused platform strategy and our operational discipline make that possible, including the integration of AI across our workflows.

And underneath it all is something harder to replicate, a purpose-driven culture that attracts and motivates exceptional people. Let me close with why this matters now. As AI-driven care accelerates, the pressure on payers only grows. In that environment, a single, reliable infrastructure layer becomes essential. That is what Amwell is. We have completed our transformation from a telehealth vendor into the infrastructure for AI-powered care programs. We have a mature platform, a focused operation, financial stability, and independent proof that what we deliver works. We are confident in our path to adjusted EBITDA break-even in Q4 of this year and in the coming years. and we are excited about the growth that follows.

With that, I will turn the call over to Mark, who will walk you through our operational and financial metrics.

Mark. Thanks, Ido. And good afternoon, everyone. On today's call, I'll start with a few highlights from the second quarter, walk through our financial results in detail, and close with an update on our third quarter and full year 2026 outlook. In the second quarter, we delivered revenue results in line with our expectations, reflecting continued subscription stability and a favorable mix shift within our visit portfolio. Adjusted EBITDA was slightly ahead of our expectations. The EBITDA was slightly ahead of our expectations, but the EBITDA was slightly ahead of our expectations. driven primarily by continued cost discipline across the organization. These results build on the momentum we discussed last quarter and reinforce our confidence in reaching cash flow break-even in the fourth quarter of this year. Total revenue for the second quarter was $52 million, down approximately 26.6% year-over-year.

Subscription revenue was $25.7 million, down approximately 36.5% year-over-year, though up approximately 3.2% sequentially from the first quarter. first quarter. The year-over-year decline continues to reflect the previously disclosed churn as well as a one-time subscription revenue benefit recognized in last year's second quarter related to the deployment of our platform across the DHA. Encouragingly, sequential improvement reflects the flexibility we've continued to see in our core payer and government subscription base. Amwell Medical Group, or AMG, visit revenue was $24.4 million, up approximately 7.4% year over year. AMG paid visits totaled approximately 315,000 visits flat year over year, with revenue per visit of approximately $77 per visit, up approximately $4 or 6% per visit year over year. This is reflected by the continued shift in our visit mix toward higher acuity, higher value clinical programs, and virtual primary care. Virtual primary care visits were up approximately 30 percent year over year, continuing their strong growth trajectory.

Total platform visits were approximately 835,000 visits, down approximately 28.4 percent year over year, but consistent with the portfolio changes we've previously discussed. Our gross profit was $27.6 million, with a gross margin of 53 percent, down approximately 50 basis points year from the 56.1% in the second quarter of 2025, but it is up approximately 200 basis points sequentially. Existing revenue mix is generating a margin profile broadly consistent with recent quarters, and we continue to expect our revenue mix to shift toward higher margin. margin SAS offers in this time. Total cost is $25, which is approximately 53% year over year. Now turning to the balance sheet, we ended the second quarter with $196 million in cash and marketable securities with zero debt. Now on to guidance. For the third quarter of 2026, we expect revenue in the range of $46 million to $48 million and an adjusted EBITDA loss in the range of negative $5 million to negative $3 million. This outlook reflects normal seasonality and visit volumes as we move throughout the remaining summer months, along with the continued seasonality of the stability we're seeing in our subscription base.

The step down in adjusted EBITDA from 2Q to 3Q reflects the impact of certain costs associated with the completion of internal projects that we expect to complete prior to the end of this year. For the full year, we are narrowing our revenue and raising our adjusted EBITDA range to reflect our year-to-date performance. We now expect full-year 2026 revenue in the range of $200 million to $205 million, raising the low end of our previously communicated range from $165 million to $200 million, a meaningful improvement from our prior range of $1.32 million to $1.35 million. to 1.37 million visits. In summary, Q2 was another step forward on our path to right-sizing the company and working towards achieving profitability. continued subscription stability, a favorable visit mix, and a leaner cost structure give us confidence that we remain on track to achieve our cash flow break-even goal in the fourth quarter. I want to thank the entire Amwell team for their continued hard work and dedication. These results reflect their dedication and tremendous efforts. With that, I'll turn it back to Ido.

Thank you, Mark. Before we open the call for your questions, I leave you with the takeaways that matter most. First, EHS's intent to award a sole-source contract directly to Amwell is a powerful vote of confidence. It deepens the partnership at the heart of the military health system and affirms our position as core infrastructure for the unified federal health IT ecosystem, an opportunity we expect to build on for many years. Second, the quality of our business keeps improving. Subscription revenue is now more than half of total revenue and grew sequentially this quarter. That reoccurring, stable foundation is what makes Amwell more predictable and more valuable. over time. Third, our strategy is resonating in the market.

Pairs want fewer, deeper partnerships. And our single unified platform is built precisely for that. and we no longer just claim results, we prove them. The independently run study, published in Nature Human Behavior, showed more than double the engagement, better outcomes, and meaningful avoided costs. That is the evidence payers are looking for, and it's powering a growing pipeline and strong renewals. And fourth, our discipline is delivering. An adjusted EBITDA loss of roughly $1 million, the closest we have ever been to break even as a public company. Raised full-year adjusted EBITDA guidance. Nearly $200 million in cash and no debt. We are firmly on track for positive adjusted EBITDA and positive operating cash flow in the fourth quarter and that milestone is not the finish line.

It is the foundation for healthy, durable growth in 2027 and beyond. AMWEL has completed its transformation. We have the platform, the proof, the partnerships, the financial strength to lead as AI power care accelerates. I want to thank the Amul team for their exceptional work and our shareholders for their continued trust. With that, we are now happy to open the call for your questions.

Operator, please go ahead. Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. stand by while we compile the Q&A roster. Our first question comes from the line of Ryan McDonald of Needham. Your line is now open.

Hey, this is Matt Shea on for Ryan and thanks for taking the question. Maybe start on the DHA contract. Not really sure what the best way to ask this is, but ultimately just help us kind of bridge the difference between the DHA's intent. Sounds like you guys are kind of in the pole position, but the bridging from the intent to actual implementation, what's left from here. what does that kind of timing look like from here to kind of close out the contract? And then I think last quarter you had talked about the opportunity for there to be an inclusion of additional programs that weren't in the prior implementation, notably the mental health program. Where does that opportunity kind of stand today and how do you kind of foresee that timeline playing out as well?.

Hi, it's Mark. So this is where we stand with the current negotiations. The DHA in June, put out a release calling for a direct sole source contract with Amwell and four other vendors. We are all currently negotiating with the DHA They dropped the deadline of July 30th, 2020. of this year with an intent to get some of those contracts live, but as is almost expected in these cases, all the parties required some additional information and some time. Their drop dead date is July of next year, but their intention from our, last conversations, even this past week, was that they need a couple more months to negotiate. So we're currently in those negotiations. They've noted that they would like to transition over as soon as possible. So we're working very closely with our trusted partners over at Leidos and also with the DHA in order to make this as smooth of a transition as possible.

Okay, that's helpful. Yep, and the second part of your call, I think, likely references our behavioral health Silver Cloud offering, which we did have active enforce in that area. that environment for several months last year. It was decided after the after the issues with DOGE and a number of other things that affected our ability to continue at that service level that we would reintroduce that offering in conjunction with having our direct sole sourced contract. So that conversation also is underway and we would expect that the opportunity to turn those services on, the soonest opportunity would be in 2027.

Okay, great. That's super helpful, Mark. I appreciate that. And then maybe switching gears to the payer segment, I believe it was last quarter you talked about reintroducing AMWEL to several health plans and that part of the mandate is to come back into the market as you think the relevance of AMWEL was lost. But with Elevance and DHA, I think that's implementations, you know, that credibility is coming back. So maybe first, how important is the DHA renewal to support that credibility narrative? And then second, and really more the meat of the question is, it sounds like there's some marketing efforts behind this reintroduction to health plans. So it would be helpful to maybe hear how you're positioned positioning and donating so far and then our efforts enough to translate to Jan 1, 2027 wins or is this more of an evolving opportunity that might not take root until say next selling season? Sorry, I know there's a lot there, but just think it's an important topic.

I'm going to have Ido take the first part of that. Can you hear me now? Can you hear me? Yes. Okay. Matt, great question, and thank you. So there is no question that the DHA relationship, which we are super proud of, is an important milestone and a great proof point. They're certainly not the only one, not that it's published and not that it's coming. So it definitely creates momentum. The infrastructure of the DHA is very common across the entire government system. And our ability to work so well for such large audience in such scale with such result that is demonstrated very importantly with the decision to do so source, which usually also means, and they said as much, very long-term agreement, three to five years at least, is an indication. of how things are going and it's totally not lost on the rest of the government market.

But in many ways, what government players are dealing with is very similar in some ways to commercial pairs. Essentially, the problem today, more zooming out for a second, is that the cost of care is rising through the roof. Activating members to engage in technology-enabled care is extremely inefficient and ineffective. And when they do engage, the ability to understand and prove the outcomes is increasingly complicated. In a scenario where there are so many vendors, there is vendor fatigue, piecing together data is so hard and so on and so forth, and that's exactly where we come in. The reason we see this market receptivity is fairly simple. One, Almost all our customers and potential customers have vendor support and vendor fatigue.

They hire more and more people to manage more and more relationships. They don't always pan out in the pressure because of rising cost of care and inability to raise premium accordingly, where the margin are distressed is very much to try to improve efficiency of care and that's really our business. The technology in AmberCare is a fantastic experience for members, so it's also a way to attract and retain members and comfort clients. So the fact that the platform is built inside their infrastructure and it's inside the trusted brand is very important. They are very open in this time of distress to talk about consolidation and simplification of what could be an important lifeline for them to try to improve financial and clinical outcomes. That's exactly us. Less integration under a non-break. which is their brand, not losing the patient-member relationship to anyone. We've proven at the DHA and elsewhere that, that you're fairly effective in attracting people to their digital door, to their infrastructure.

But we're not only there. We are activating members using technology and clinical measures. The infrastructure of AMG, for example, is a very important technology-enabled care piece of what we do. that allows to form long-standing recurring relationship between doctors and patients that is not a dead end, but rather an orchestration layer to growing array of AI-powered care. And that works really, really well as a gateway, gateway, as an enabler. When we talk about this care, we are offering our own native programs and there are so many of them urgent care, primary care, behavioral health. Mark talked about the growth there, nutrition, psychiatry and so on. But also a rapidly growing roster of partners, SORD, Hello Heart, VIDA, Dario, Dermatologists on Call, to name a few. But much more importantly, the pressure is to prove outcome.

So we build a data infrastructure that allows to piece together the results and really understand what's working and not working. And when something doesn't work or doesn't work as well, we have the ability to switch over programs very easily. So our customers are able to accommodate their own client very dynamically in an era where new programs show up every day. So this entire solution of Amwell is very differently received from the way that traditional telehealth was received. And it's working. And I'm not going to name all the names because most of the people on the call know our clients. They are very, very big. You mentioned the marketing... to those pairs and government. We have a very seasoned team and our customers are sizable.

We don't need an army in order to engage in those platforms and no one buys those platform in a seasonal way. You don't buy an infrastructure or a database in the summer. What we do is a strategic solution for our customers that is essential today more than ever and is working. Our two decades of experience is showing. They know they can trust us. They know they can trust us to take off a lot of weight have off their shoulders and manage this zoo, this dynamic array of clinical programs without new integrations, without multiple contracts, without piecing different pieces of data together, and with protecting their data outside in areas like cybersecurity and privacy and compliance, which are also very, very important. So I know it was a mouthful.

It was a relatively long answer to a short question. But these are the reasons why you see the results you see, and this is the reason why I said, I'm so optimistic about our growth in 27 and beyond. We are seeing it right now. There is good receptivity. The pipeline is growing. There is a lot of activity on the sales side. But much more importantly, we see the impact on our existing customers. When you think about some of them, We're talking about people with tens of millions of potential members.

And across the board today, only few members actually enroll, less than half in some cases, and only 4 or 5%, and I'm optimistic, actually engage and bring outcomes. We are changing that. And the financial impact and value to payers and their customers is enormous. I don't think we've ever been as optimistic as we are. I don't think we've ever been as focused as we are. And it's a delightful experience to be in the market today with our existing customers and with new ones and see the twinkle in their eyes as we solve something that is a high-priority problem for them.

That's great to hear. Appreciate all that, Colorido. Thank you.

One moment for our next question. Our next question comes from the line of David Larson of BTIG. Your line is now open.

Hi, can you talk about the progression of EBITDA from 2Q to break even 4Q sort of how you're you're planning to get there and just sort of maybe an update on your cost restructuring efforts thanks very much yes certainly you know we communicated at the beginning of the year that we would have a cycle of costs that would end or would bring us to the point where.

have a number of quarters working towards a break even at the end of the year. There's some project work that we had commenced at the end of last year. It brought us through to the beginning of this year. It's cycling down now in the third quarter. While we will have a quarter that's going to have a small degree of losses, we have great visibility and a certain degree of conviction around where those costs will be over the next several months. And that's why we are very confident that we will hit our. cash flow breakeven and adjusted EBITDA breakeven in Q4. As you likely just saw with the release, we came very close to that this quarter.

So conservatively, we've given a range for full year EBITDA. Obviously, it's our internal goal to beat that. We've been successful over the last several quarters doing that and coming in with with better bottom line and top line results, and I believe we're very conservative in the top line as well. Assuming we have a status quo with our existing clients, we have not incorporated any new revenues, just a little bit of seasonality in Q4 for our clients.

for visit volume. Okay. And then as we think about like 2027, can you provide us some color around maybe like backlog metrics? Is that a number you sort of track, bookings, anything like around expected retention levels basically at a high level without guiding. Is your revenue going to grow year over year in 27? Thanks. Yes, we will obviously share much more visibility on expected 2027, perhaps,.

perhaps earlier than the end of this year, if the prospects that we're currently speaking to on the government side do in fact come to fruition and we have signed contracts, that will give us a great degree of visibility into revenue growth for 2027. Internally, again, we would like to see the company return to a level of double-digit growth. We think that is very attainable with the consummation of the contracts that are currently under discussion. with those clients that form the majority of our pipeline.

One more quick one for me, please. With the DHA contract, the intent to award AMIL a sole source deal, number one, was that a renewal? So will there be any incremental revenue tied to that? And then number two, I think I heard you say there were four other vendors included in that. Can you sort of correct me? When I hear sole source, it sounds to me like Amwell is the only vendor that was awarded something, but then I heard you say that there were four other vendors who may have been awarded something. And then do you know what the revenue is that you will realize under that deal or –.

Is that all kind of getting worked through? Thanks. Yes. So, the release I'm referring to is under the new model, the DHA stated they're going to contract directly with proprietary solution providers for their core system capabilities rather than going through pass-through entities and in these cases or in this particular case that was Leidos now Leidos has been a wonderful partner we may end up obviously working with Leidos and a number of other things but in relation to this particular contract these services are provided by four distinct companies Amwell Oracle health Phillips, oh, five actually, Silventum, which was that former 3M subsidiary, and Henry Schein. So the DHA's intent prior to the end of July next year is to create and... execute contracts with each of these five companies. Will we end up seeing a little more revenue for additional services that we may have to take on in lieu of the third-party systems integrators and others? That's absolutely a likelihood.

Okay, so you're the only sort of telehealth platform of those handful that you mentioned. These other ones are important, but they are basically providing different pieces of the overall project. Okay, thanks very much. Absolutely, David. Absolutely.

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. moment for our next question. Our next question comes from the line of Jalendra Singh of Truist Securities. Your line is now open.

Thank you and thanks for taking my question. So just to make sure I understand that the DHA contract, so is there any change to the annual revenue compared to what the current arrangement is or is the primary benefit here is that we have now greater contract visibility and duration? Just trying to understand the change here. Thank you.

Yes, there is obviously an opportunity to create more services being directly provided by AMWEL to the DHA. There are a number of things that are currently in discussion, so we would expect that there will be opportunity for for a broader scope of services.

And then my follow-up on your comment about strong renewal and a growing pipeline. Anything you can share in terms of is the current pipeline is expanding with your existing customers versus you are seeing now new logos, new customers coming through? And how much of these pipeline discussions are involving some of your AI focus and investment you're doing? Just trying to understand the AI focus.

versus non-AI and also the existing versus new customers. Hi, Jalandhra. Yes. Yes to all. So basically many of the market players are now in search of platforms. Vendor fatigue, cost of engagement, things I discussed earlier. So the market is definitely alive and kicking to change platforms. They want to change platform also because they want or sometimes are forced to add more programs because some of the new programs are just very effective. Some of them are dangerous and ineffective, and it's hard to tell which is which.

One thing for sure, managing yourself is incredibly taxing, super expensive. super complicated, super hard, and that's what we've done for a really long time, and that's what a platform does. So there is enormous interest by new players in what we have, but their interest is really driven very much because of the success we see with our existing customers. The DHA elevants are, you know, they're quite a few others that are basically performing and performing very well you see it in renewal. As it relates to AI, AI changes everything. It's hard for me to overstate the enormity of the revolution that touches everything, not only in healthcare, of course. So first, we, and boringly, we're using AI across the company in everything we do. Better deliverables, better workflows, better data-driven storage. strategy, better everything.

And you saw the dramatic change in our cost structure that was simply not possible without AI. And we are nowhere near done. We are going to be dramatically more effective only because we have AI. And I assume that many companies are doing the same. It's not a great thing. necessarily differentiate her, but not doing it is existentially dangerous in our opinion. Much more importantly in way of our infrastructure and product. Of course, we have also AI investment in our own product in managing data analytics, data science engagement, and all those things.

But zooming out on the big picture, our biggest contribution is to basically free our customers from the need to diligent, to integrate, to piece together a lot of new programs. They turn to us to do their job. And our platform is designed to do that. And we do it quite well. The fact that we have a national network of thousands of doctors around the clock with short waits. that are extremely experienced and high clinical quality with very, very high NPS, that are all connected and engaged to this platform is incredibly important. You need a clinical human in the loop in order to enable a lot of the greatness that new and existing clinical programs are offering. offering. So the fact that we saw recent renewals on very large audiences, and the fact that we are much better in marketing to individuals, members, patients, beneficiaries, employees, regardless of how you call them, and we are able to dramatically improve the engagement pair individual that results in measurable outcomes that we can prove and the ability to switch over and monitor is something that is fairly basic, and fundamental to our customers and could drive and is already driving, and you saw some of the numbers today, drive a higher utilization with our existing customers.

The wide space of same-store growth is hard to exaggerate on. And that growth and that success will definitely have already have and will continue to have a great impact in our ability to sell. We sell what works and what works, works with our existing customers. So our priority is to maximize the value to them. And that's the best sales and marketing. marketing tool for new ones in a time where there is great distress and great need. We are not viewed as extra SaaS expense. are viewed as a tool to consolidate, save, simplify, and achieve results in a very meaningful way.

Great. Perfect. Thanks a lot. One moment for our next question. Our next question comes from the line of Craig Heddenbach of Morgan Stanley. Your line is now open.

Yes, thank you. Understanding the opportunity set has been kind of shifting to the government programs you've been talking about. Can you just touch on what you're seeing at your health system customers? What's resonating with them today? What are some areas that they're focused on most versus maybe cutting back?.

Sure, Craig. So essentially everybody is trying to do what I said, right? Everybody has addressable population that they need to engage to use more technology enabled care powered by AI to improve the outcome and prove them. And then if it doesn't work, fix that. That's true across the board. The government obviously is a huge infrastructure or huge container of a lot of people that is very impacted by the value that we can create. And you see the momentum there, but it's almost the same momentum with commercial pairs. We see it very clearly. are the same. Their clients, employers, especially self-insured employers, are demanding that type of infrastructure, that type of agility and ability to improve. The health systems issue is different.

We used to have have a very wide net of products across different areas. Some of them are growingly occupied by the traditional EHR players. Urgent care, for example, telepsychiatry that we sold recently and so on and so forth. So while we see and we have a loyal base of customers in health systems and we are proud of that relationship, and we believe the providers have a very important role in also in the future in enabling AI care, AI enabled care, the financial opportunity right now that moves our needle is is very much in the government and payer sector as priorities. But we are certainly not discounting the health systems per day. They are smaller, they move in different dynamics, and our focus area today is much better defined than it was before, which I think is very positive for everybody. We're not doing things that we are not great at.

We do one thing and we think we are very, very good at that. It has a very clear implication on all players, but our priorities were as said it was.

Got it. And then just to follow up for Mark, in a scenario where you are able to get back to double-digit revenue growth, can you talk about just the operating leverage in the model at this point? I know you guys have done a lot of kind of cost reductions and have tightened up. So, in that double-digit revenue scenario, how would you envision operating leverage? in terms of headcount or just things, even if it's at kind of a high level.

Yes, Greg, we've completed the vast majority of our cost reductions coming to the latter half of this year. Our margin profile will likely pick up about a thousand Looking at 1,000 basis points between where we are today and run rate Q4 of 2027 as we achieve a significant improvement on the subscription revenue line. The costs to manage and to continue to grow and support that line, are considerably less than where we had been with services the larger component. So we would likely look at our headcount to be somewhat similar between years with I would say mid-teens growth projections if all came, if all All of our prospects that we believe have a high probability of coming in between now and the end of next year do materialize.

Got it. Thank you. Welcome. One moment for our next question. Our next question comes from the line of Stan Berenstain of Wells Fargo Securities. Your line is now open.

Hi, good evening. Thanks for taking my questions. I apologize if I'm re-asking anything. I did hop on a little late here. But, you know, given your comments related to the pipeline growth, are there any changes in R&D or sales or marketing focus for you or reinvestment as we think about the next six to 12 months? And then, you know, furthermore, I'd just wanted to get a follow-up. Are you looking at any opportunities to further rationalize any of your non-core assets? Thank you.

Hi, Stan. I think the two parts of your question really complement each other perfectly. We are laser-focused. We have one platform that does what I said earlier on the call, and that means that we are divesting assets that are non-core. and are going to reinvest our efforts in doing what I said earlier on the call. Our R&D team is much more efficient today. It's much smaller than it was, but it's more productive in many ways. mostly because of the strategic focus, but also because of the layering and reorganization in different processes and liberal use of AI and other tools. That's really what's going to continue to allow us to be very effective. Some of the contracts that we are looking at or some of the opportunities may require some investment, but these are going to be a creative investment that are not going to change our position as we talk about growth and profitability. So we are very, very disciplined now, much more than before, in only engaging in opportunities that do not require us to defocus and do not require us to do any custom development or things that their profitability is unclear.

It's one engine. It has something very specific. It is customizable, but we are not creating any different variation of it for different customers. They're all using the same backbone in the same way and that allows us just to be much more impactful. I think in many ways, some of the pipeline growth that we see, some of the reason our story is resonating is the fact that it's truly trustworthy. There are so many casualties right now, also different programs, especially new AI programs and so on that are not necessarily panning out, that experimenting with them is a must, but experimenting with them... on a trusted platform that does consistent member experience, that spits consistent reports in the same format, that requires one integration, that reduces the number of contracts and relationships that you have to manage, and in addition to that, enables a flywheel where the same patient can actually get multiple types of service that reinforce each other and work in harmony is the reason where the revenue per employee, the impact of the company, its profitability is going to, in our opinion, continue to grow over the next few years.

Appreciate the caller. Ito, it seems like you agreed that perhaps there might be some non-core assets that might be divested. Is there anything from a timing standpoint that you can haircut here and suggest that maybe there's something on the horizon, or is this more of just a theoretical thing that may or may not happen? Thanks.

I wouldn't call it theoretical. We did divest quite a few things already and we care deeply about our customers. So that's our number one priority. Whatever we do, we're going to do in a responsible way to make sure that we maintain important relationships in the market and not leave anyone in trouble. in any type of an issue. So we are actively working on that. You should expect us to continue to defocus. It may come with some revenues or income, not revenues, I'm sorry. But the main benefit is the laser focus of the company.

Our plan is to be left with one platform, one platform, product, one type of service for everyone that we serve. Great. Thanks so much.

I am showing no further questions at this time. I would now like to turn it back to Ido for closing remarks.

Thank you, operator, and thank you, everyone, for joining. Have a good evening.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Hello, everyone, and welcome to Amwell's conference call to discuss their first fiscal quarter of 2026. [Operator Instructions] Joining us on the call today are Amwell's Chairman and CEO, Dr. Ido Schoenberg; and Mark Hirschhorn, Amwell's CFO and Chief Operating Officer.

Earlier today, a press release was distributed detailing their announcement. The earnings report is posted on the Amwell website at investors.amwell.com and is also available through the normal news sources. This conference call is being webcast live on the IR page of the website, where a replay will be archived.

Before we begin prepared remarks, I'd like to take this opportunity to remind you that during the call, we will make forward-looking statements regarding projected operating results and anticipated market opportunities. This forward-looking information is subject to the risks and uncertainties described in the filings with the SEC. Actual results or events may differ materially. Except as required by law, we undertake no obligation to update or revise those forward-looking statements. On this call, we'll refer to both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in the earnings release.

With that, I would like to turn the call over to Ido.

Thank you, operator. Good evening, everyone. Over the past 12 months, we focus on what matters most, solving clear urgent customer needs. We deliver dependable, unified platform, and the market is responding. Elevance renewed for 3 years. DHA deployed globally. Our pipeline is growing. CMS is increasingly making telehealth flexibilities permanent.

And in 2025, we reduced losses by $100 million. We also significantly grew our subscription revenue mix. We have ample cash, no debt and a clear path to cash flow breakeven in Q4 with real confidence in multiyear growth beyond it. Amwell entered 2026 with one focus, consolidate our platform and deliver what payer and provider customers need most today and in the future.

The market opportunity is real and urgent. Payers are under serious margin pressure. Premiums are not keeping pace with the total cost of care. Technology-enabled care and AI-powered clinical programs, in particular, are now one of the most critical levers payers have. They help control costs. They help improve outcomes. They help payers compete for members and sponsors. This is no longer speculative. It is a survival imperative, but adoption remains hard.

Despite strong demand, customers are struggling. Vendor sprawl is a real burden. Legacy tech stacks and internal silos make it expensive to integrate point solutions. The result, fragmented member experiences and very limited visibility into what actually works. Customers cannot easily measure performance across their programs. Switching between them or optimizing member attribution is slow, expensive and painful. That is exactly where we step in.

Amwell solves this. We offer a trusted, proven technology-enabled care infrastructure, a unified digital stack that lets health care sponsors act as their own system integrators. Customers white label and embed the clinical programs their members need directly within their own digital front door. They control navigation, they monitor results. And those results go to the heart of their business, lower costs, better outcomes and stronger market share.

With Amwell, customers get one unified engagement and navigation platform. It reduces acquisition and retention costs. It matches each patient with the most effective program based on client-defined rules. And it aims to deliver unified analytics across every program, so clients can see what works, document outcomes and adjust quickly. Clients can adjust service attribution by member, group or cohort.

They can add Amwell native clinical programs, third-party programs or their own preferred programs. That level of control and agility is highly valued and desired. The Amwell platform is built for where AI is going next. The industry is moving fast from generative AI to agentic AI. These are systems that don't just create content. They execute tasks autonomously across complex workflows. Our customers are preparing for this shift.

The Amwell platform is positioned to be the governed environment where these agents operate safely, effectively and at scale. We are not positioning Amwell as an AI feature. We are the infrastructure layer where AI-powered care becomes operational and measurable. A critical enabler of effective AI is data. Because our platform serves as a common infrastructure across all programs, we aim to maintain a unified data structure that is unique in our industry.

Before care begins, we look to share relevant member information with clinical programs, which the patient has selected so they can engage effectively from the first interaction. After care is delivered, we aim to collect and consolidate outcomes data across all programs. That data improves attribution, drives personalization and makes every AI-driven program more effective over time. This unified data foundation may create a significant and durable competitive advantage for us. We also have powerful validation at scale.

Elevance Health, one of the largest payers in the country, has renewed with Amwell for 3 more years. That is a strong vote of confidence in our platform and the value we deliver in one of the most sophisticated operating environments in the market. We also have powerful validation on the government side. The military health system contract extension in August 2025 put our platform in front of 9.6 million military beneficiaries across the globe, connecting deployed units in and outside combat zones with military hospitals.

That level of security, scale and mission-critical reliability is exactly what other government entities, payer and health system clients are looking for. The regulatory environment is now working in our favor. CMS has made telehealth permanently accessible. Rural geographic restrictions are gone. Home-based telehealth is extended through at least 2027. Virtual behavioral health is now a permanent part of Medicare.

New reimbursement code for advanced primary care management and behavioral health integration are creating further incentives to shift care into virtual and community-based settings. This is a direct tailwind for our platform. We have also transformed how we operate. Alongside strengthening our platform, we made meaningful operational improvements, sharper focus, significant organizational changes and more efficient ways of working.

In 2025, we reduced net loss and adjusted EBITDA losses by approximately $100 million. Subscription revenue grew to 53% of total revenue, a recurring stable income stream. And the market is responding. Renewals are strong, pipeline growth is significant. Our offering is resonating with existing customers and new ones alike. We enter this next phase with $182 million in cash, no debt, a clear path to cash flow breakeven in Q4 of this year and a view towards multiyear growth beyond that milestone.

We have a clear strategy, a mature and highly relevant platform, an efficient operation and financial stability that gives us the runway to execute. We are excited about what is ahead.

And now I would like to turn to Mark for a closer review of our performance. Mark?

Thanks, Ido, and good afternoon, everyone. On today's call, I'll start with a few highlights from the first quarter, walk through our financial results in detail and close with an update on our second quarter and full year 2026 outlook. In the first quarter, we delivered strong results across revenue, gross margin and adjusted EBITDA. The outperformance was driven by strong visit volumes in urgent care and clinical programs with continued cost discipline.

These results demonstrate continued progress on our path toward profitability and reinforce our confidence in the trajectory of our business. Total revenue for the first quarter was $54.9 million, down approximately 18% year-over-year. Subscription revenue was $24.9 million, down approximately 23% year-over-year, driven primarily by previously disclosed churn. Encouragingly, renewals and retention were higher than budgeted in the first quarter, providing greater confidence in the stability of our subscription base going forward.

Amwell Medical Group, or AMG visit revenue was $28.9 million, up approximately 9% year-over-year. AMG paid visits totaled approximately 382,000 visits, up slightly year-over-year with revenue per visit of approximately $76 up approximately $5 per visit year-over-year, reflecting the growing contribution of our clinical programs and the broader shift in our visit mix toward higher acuity, higher-value care.

Virtual primary care continued its strong growth trajectory with visits up approximately 57% year-over-year, underscoring the increasing adoption of our VPC offering across our client base. Total platform visits were 1 million visits, down approximately 19% year-over-year, which is in line with the portfolio changes we have previously discussed. Gross profit was $28 million with a gross margin of 51%, down approximately 180 basis points year-over-year from 52.8% in the first quarter of 2025.

Near term, our existing revenue mix will likely generate a margin profile similar to what we just generated. We continue to see our projected revenue mix shifting toward higher-margin SaaS offerings, which we believe will support margin expansion over the next several years as our scale improves. Total operating expenses were $45.4 million, down approximately 31% year-over-year. As a percentage of revenue, operating expenses improved to 82.6% from 98.3% in Q1 of 2025, reflecting the benefits of our transformation actions and continued cost discipline.

Adjusted EBITDA for the first quarter was a loss of $3.1 million compared to a loss of $12.2 million in Q1 of 2025, representing a $9.1 million improvement. Operating loss was $17.4 million compared to $30.4 million in Q1 of 2025, an improvement of approximately 43% year-over-year. Now turning to the balance sheet. We reported cash burn of approximately $3.1 million, down from $19 million last quarter. We ended the quarter with $179 million in cash and investments with 0 debt.

Now turning to guidance. For the second quarter of 2026, we expect revenue in the range of $48 million to $52 million and an adjusted EBITDA loss in the range of negative $4 million to negative $2 million. This Q2 outlook reflects normal seasonality in visit volumes and the continued step down in subscription revenue impacted by previously discussed churn. Additionally, for the full year, we are reiterating our revenue outlook and updating our expectations for adjusted EBITDA. The revised adjusted EBITDA range reflects the progress we've made in the first quarter and that which we expect to continue throughout 2026.

We now expect full year 2026 to generate revenue in the range of $195 million to $205 million and adjusted EBITDA loss of $16 million to $12 million compared to our previous range of a loss of $24 million to $18 million. The strength of Q1 gives us increased confidence in our goal of achieving positive cash flow from operations in the fourth quarter of this year.

In summary, Q1 was a promising start to the year. Visit volume momentum, stable subscription revenue and a leaner cost structure give us confidence that we are on the right path. I want to thank the entire Amwell team for their hard work and dedication. These results reflect their efforts.

With that, I'll turn it back to Ido.

Thank you, Mark. We are encouraged by our progress. It was made possible by the amazing team at Amwell. We feel privileged to help improve care for millions of patients and especially for the men and women in our military and their families around the globe. Amwell is playing an important role in transforming health care. What we do matters, and we believe it will only become more valuable going forward. We are proud of what we've accomplished, and we are truly excited about the road ahead.

With that, I'd like to open the call for questions. Operator, please go ahead.

[Operator Instructions] Our first question comes from the line of John Park of Morgan Stanley.

On the DHA relationships, could you remind us or help us understand if there's any dependencies on the broader DHA's GENESIS or partners like Leidos and if that ecosystem dynamic would influence any renewal decision in the near future?

I believe, Ido, may be having some tech problems.

I'm sorry, I'm back, I apologize for this. Can you hear me now?

Loud and clear.

Okay. So essentially, when we take this incredibly important customer, the DHA, we really focused on delivering on their very specific and high expectations. We are privileged to have many other players involved, but our focus remains on making sure that first and fore, we put the customer first. There are many changes happening in different areas, but the service that we are providing and the integration into the backbone of the DHA remains constant.

From where we sit and we strongly believe that based on our performance and relationship, we would likely hope and believe we are going to renew and continue to serve this customer for many years, recognizing that not all the players -- other players may or may not continue in the same format, but we are fairly confident and hopeful that we will, although we can never take it for granted and we work every day to continue and justify their trust.

Got it. My just follow-up would be, you talked about perhaps the broader pipeline. I remember perhaps the broader government pipeline you talked in the past. When you think about the rural health transformation initiative, I was wondering if you see any opportunities that this program could serve as a diversification lever relative to the broader government portfolio?

You're absolutely correct, John. In general, as we focus our efforts on our single platform and related products, I mentioned in my prepared remarks that people have great clarity. about the value that we bring and see the urgency in fulfilling that value that we believe we provide fairly uniquely. That's true for health system. It's certainly very true for commercial payers. And now that we have demonstrated in very large scale in a very unique and challenging environment of the GovCloud, our ability to operate there, that's not lost on government entities.

From where we see it, we certainly believe that we are going to continue to grow in the commercial space, but also in the government space going forward. We are trying to submit RFPs to many of the opportunities that you mentioned in rural health. This is a long process. We believe we are well positioned, but the jury is still out as to the results, and we'll just have to wait patiently with everybody else. That's not the only opportunity in government that we are pursuing. We're pursuing other opportunities as well. And that's certainly part of the pipeline I talked about and Mark mentioned as well.

Our next question comes from the line of Corey DeVito of Wells Fargo.

This is Corey on for Stan Berenshteyn. Two questions on my end. One, any update on upselling the scope of the current DHA contract? And then the second one, what's the driver of the sequential increase in deferred revenue? I believe it's up $7 million quarter-over-quarter.

I'll take the first, and Mark will answer the second part of your question, Corey. Thank you. As it relates to the DHA, we are laser focused, as I mentioned earlier, on renewing our agreement for the current scope, and we are hopeful that, that's going to be the case. As it relates to further expansion, especially behavioral health, what we know is that we did deploy that successfully in the past, quite significantly in different demonstrative regions.

And we know that it delivered on the value. The decision, of course, lies with the customer, and we hope they will expand at some point, but we don't have any specific information as to if and when at this point. And with that, I'll turn to Mark for the second part of your question.

Yes. The deferred revenue is purely a result of timing based on the renewals of some of our largest clients, those which took place in the first quarter as compared to prior year, which took place at the end of the calendar year.

Our next question comes from the line of Charles Rhyee of TD Cowen.

Congrats on all the progress that you've made so far. Ido, you made the comment earlier that the pipeline is growing and obviously, where subs and renewal and retention better than expected. So kind of giving you confidence in sort of the model as it goes forward. But maybe to dive into the pipeline a little bit more. Can you give us a sense on the mix of what that pipeline is maybe from a -- maybe a dollar standpoint to think through how much is health plans, health systems, government?

Because when we look at 2025 revenues, Elevance obviously, is your largest customer, a fairly significant mix. DHA is not too far behind. And then there's a decent concentration in the top 10 as well. So just trying to understand, as we think forward, as we get through this period and we think about where growth is coming from, if you could help us understand where the opportunities you think are sort of the easiest to go after and sort of what that -- and how does that pipeline kind of reflect that?

Absolutely, Charles, and thank you for joining. Good to hear your voice. As it relates to the pipeline, as we mentioned earlier, it is significant and very different from the past years. I'll talk about it a little bit qualitatively. Essentially, the exciting news is that our new platform, the Amwell platform resonates really, really well across the market. And that's a tool that allows us not only to have subscription revenues, but also to grow the related clinical services, Amwell and non-Amwell services that we also generate revenue from when we do that.

I mentioned earlier that while this technology and these services are relevant to health systems, to payers and to government entities across the board, we really believe that the most pressing need, obviously, is with large payers. They clearly need an infrastructure like that. And when that happens, 2 things happen. One, we have some new logos, but much more importantly, as they deploy our platform, it contributes to same-store growth, as it becomes more and more efficient in creating engagement with more members, and it is built to increase same user utilization of the clinical programs I discussed, encouraging the sponsors to continue and finance both engagement and coverage as we are able to demonstrate and prove outcomes, financial and clinical outcomes that also drive success in open enrollment and market expansion.

So I believe that it's very refreshing for us to see a product mix that used to be many, many products across vast markets narrowed down to essentially one platform and related services and still generates a very healthy growth in pipeline and a healthy level of enthusiasm by existing in a new potential customers.

Is there any way -- can you share maybe sort of what that kind of growth looks like? Are we talking double-digit growth in the pipeline maybe since last year? Or anything you can share in terms of sort of the growth outlook?

Charles, I would just jump in and suggest that the pipeline is a multiple of what it had been last year. So it would be closer to triple digit as a result of those opportunities that Ido addressed. And again, primarily, it falls in line with what we believe will be principally components of government opportunities.

Okay. And maybe just one more, if I may. I think to a previous question, getting an update on DHA. Can you remind us the time lines of when you would expect to get a decision on, a, the renewal? And remind us in the off chance that there isn't a renewal, what is the fallback for the government? Because the DoD because my understanding is they don't really have one. And then lastly, can you kind of remind us what the opportunities are for expansion with this renewal? Would they come together? Or would those be 2 separate decisions?

Yes, Charles. So the renewal, we think, is going to be very straightforward. We believe that will be completed at the end of the quarter, start of the third quarter, perhaps July. We also believe that the opportunity to expand that will take place after the initial renewal. And as Ido alluded to earlier, whether that's a direct contract, whether we continue to work with our Leidos partners, irrespective of who ends up being the contracting party, we feel very confident that, that renewal is going to commence within that time frame I just spoke to.

Our next question comes from the line of Jailendra Singh of Truist Securities.

My first question is around the visit volume in the quarter, around 1.1 million. How did that track compared to your internal expectations? And what's driving the full year guidance of $1.3 million to $1.37 million? Some providers have talked about soft volume trend. They saw soft flu season, some weather disruption, which might have been a tailwind for you. Just curious like puts and takes you saw in Q1 and how we think about the trends for the rest of the year?

Hi, Jailendra, it's Mark. The trends were positive in both regards to premium-priced visits. So those that represented more higher-priced care specifically those clinical programs and virtual primary care as opposed to what had been the vast majority of our revenue-producing visits coming from urgent care in prior periods. We've also seen a nice high single-digit growth in volume.

So we did not experience what some others may have told you was soft. We actually saw a nice seasonal boost that brought us through to the end of the quarter. And now we're obviously seeing the expected seasonality set in. So it was a nice surprise. It was one that I think was supported by the fact that we've got some additional ASO clients participating in the offerings that we've introduced. So the trend is positive, and we expect it to continue throughout the year.

Great. And then my follow-up, your comments around a number of meaningful renewals and strong pipeline. How often do AI capabilities come up in your client discussions now? And is the behavior different when you're talking to a health plan versus health system? And related to that, when clients evaluate your AI capabilities, are they willing to pay explicitly for those? Or they're saying like they should be bundled in your current platform and pricing? Just how are those conversations evolving?

Hi, Jailendra, that's a great question. So essentially, the answer is a little bit complex in this -- when people buy the platform, some of the AI capabilities that we use directly relate to things like consumer experience, streamlining navigation, providing sophisticated analytics and things of -- such things. Interestingly enough, not all our customers are ready to accept those modules. Some of them actually are very cautious about those models and really focus on the reoccurring, stable, proven parts of our platform as their main interest.

However, all our customers, without exceptions, are eager and ready to test AI-driven clinical programs on our platform. And the reason is that we built the platform such that integration is very fast and the integration and replacement is even faster without changing many things like the consumer experience or the analytics. So there is a general recognition that AI clinical programs are necessary in order to achieve improved clinical and financial outcomes and they prove them.

But that does not necessarily need to be expressed in the risks related to the actual platform, but rather more to the different programs that people test. So while we have a healthy bit of AI in our own offering, which we deploy to customers who are ready to benefit from it, the most important value that we bring is the safe, reproducible, scalable way for our customers to test different options. Most of them are AI-driven, not necessarily for a full cohort, but rather to certain ASOs versus others and so on and so forth and then really manage risk while having access to all the opportunities that all those innovations bring to them.

Our next question comes from the line of David Larsen of BTIG.

Can you talk a little bit more about the Defense Health Agency contract? I think there was a component in there. I think it was mental health that didn't renew, that might renew in the future and expand. What is the annual dollar value amount of that, please?

David, we can't speak to the exact dollar value of that, but we would expect it to represent in excess of 15% to 20% of the total value of the platform today. That's based on the experience that we had at the beginning of 2025 when the DHA was actively using those services. We are fully engaged in the discussion around reintroducing those services. However, we believe that will likely take place after the effective renewal of the base services earlier this summer.

And can you please talk about the nature of those services? Is it mental health? Is that correct? And I would think there's no greater need that the military has the mental health services given sort of the nature of their roles and their jobs. And I would think that the federal government would be very sympathetic towards supplying whatever support they can to serve our men and women in uniform.

David, this is Ido. Obviously, I totally agree with you, and we are very hopeful that's going to happen. The sequence is as follows: we are very grateful to be in a position to be the backbone and the infrastructure for technology-enabled care for the U.S. military. That relates to the core connection between any member of this wonderful family and their doctors, wherever they are. So that's Amwell.

In addition to that, one of the clinical programs that fits, obviously, as a native solution, totally integrated in our solution is our behavioral -- automated behavioral health program that one of its main benefits is that it allows for a handful of therapies to reach dramatically more patients. So -- and that's a giant problem. There is a giant supply and demand in behavioral health in general, and that also includes an environment like this environment.

And this is not theoretical. I mean we've tried it in this environment. We integrated it and it works and it's needed. The customer decided because of their own reasons to defer that deployment after we've proven that it works well and fully integrated, and that's perfectly fine. Should the client decide to add that again, the speed is going to be very, very quick. We believe it's going to be very helpful, and it does make sense.

But these are totally the decisions of the customer, not our decisions. We know that it worked really well, not only in places like the DHA, but for example, in the National Health Service, the NHS in the U.K. where studies proven that we could dramatically change the ratio between therapists and patients. And that's obviously a wonderful thing, both in way of cost, but more importantly, in way of accelerating access that is such a pain point for everybody.

And then for 2027, would you expect revenue to grow on a year-over-year basis? And I understand there's been some churn. I guess, any more color around the churn that has already occurred? Why has it occurred? Is it maybe 1 or 2 clients? And then would you expect revenue to grow in '27 relative to '26?

Sure. 2026 churn has been immaterial. We would always expect low single-digit churn as we would in any business in a competitive market. We do have significant expectations for revenue growth. I had alluded to that even at the end of last year that even if a part of our pipeline converts this year, we expect to have meaningful revenue improvement in 2027 coming from these new government contracts.

And one more quick one. Mark, fantastic job getting a lot of these costs under control. Just are you sort of there? Or how much more in incremental annualized cost can you pull out of the business and nice work, by the way.

I appreciate that. Of course, I speak on behalf of all my colleagues as well because, as you know, it takes teams, essentially a village to get there. People have done much more with far less in this company over the past 18 months. We are all very pleased with where we are. However, everybody understands that the job is not finished yet. We have the next couple of quarters to ensure that we complete some of the initiatives that we've invested in over the past several quarters, but we do have a step down of costs, which means a lower operating cost basis coming out of the third quarter.

So we are well on our way. You could probably tell that we're very optimistic and excited about achieving that milestone, but we're also very excited about what we believe is going to be meaningful growth next year.

[Operator Instructions] I'm showing no further questions at this time. So I would like to return it to Ido for closing remarks.

Thank you, Ari, and thank you, everyone, for joining. We truly appreciate your many years of support in Amwell and look forward to talking with you all soon. Take care.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Hello, everyone, and welcome to Amwell's conference call to discuss their fourth fiscal quarter and full year 2025. Joining us on the call today are Amwell's Chairman and CEO, Dr. Ido Schoenberg; and Mark Hirschhorn, Amwell's CFO and Chief Operating Officer.

Earlier today, a press release was distributed detailing their announcement. The earnings report is posted on the Amwell website at investors.amwell.com and is also available through normal news sources. This conference call is being webcast live on the IR page of the website, where a replay will be archived.

Before they begin prepared remarks, I'd like to take this opportunity to remind you that during the call, we will make forward-looking statements regarding projected operating results and anticipated market opportunities. This forward-looking information is subject to risks and uncertainties described in the filings with the SEC. Actual results or events may differ materially. Except as required by law, we undertake no obligation to update or revise these forward-looking statements. On this call, we'll refer to both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in the earnings release.

With that, I would like to turn the call over to Ido.

Thank you, Operator, and good afternoon, everyone. 2025 was a pivotal year for Amwell. We sharpened our focus, executed a major transformation and entered 2026 with clear visibility towards the goal of cash flow breakeven from operations in Q4.

Today, I'll cover three areas: the market trends driving our strategy; our 2025 execution highlights; and our plan for 2026. Mark will then walk you through our detailed financial and guidance. After that, we'll take your questions.

The health care landscape entering 2026 is defined by a clear shift towards operational efficiency. Payers and health systems are aggressively pursuing platform consolidation, guaranteed ROI and industrial strength automation. Managing countless point solutions, one for diabetes, one for MSK, one for mental health, another for wellness, et cetera, creates massive administrative overhead. It creates security vulnerabilities and it creates disjointed member experiences. It forces sponsors to act as system integrators, a role for which they are often ill-equipped.

The pressures are mounting. The Medicare population is aging rapidly. Pharmacy costs are surging. Overall, health care costs keep climbing, especially in behavioral health and GLP-1 usage. Clinician shortages are worsening, Subsidies are evaporating. Payer margins are compressing rapidly. Technology-enabled care is no longer optional. It's essential.

The promise of hybrid care is now clear. combine automation with smart use of clinician time to reduce costs and improve outcomes. AI is accelerating this shift. It's transforming engagement, intake, decision support, care delivery workflows, risk certification and outcomes measurement. It creates tremendous opportunity and real risk that must be managed.

Payers and health systems get this. They're adopting technology-enabled care not as an experiment, but as their primary lever for cost reduction, better outcomes and meeting patient expectations. And increasingly, they want to deliver through a unified platform.

A technology-enabled care or tech platform delivers clear advantages. Sponsors keep their brand front and center. They have full data access. They own the relationship and get credit for the value they enable. Patient engagement becomes more efficient and effective. Our tech platform enables API-first ecosystem. It allows sponsors to consolidate the digital stack on one infrastructure. Clinical programs can be added, swapped or retired quickly. We facilitate vendor rationalization, the process of auditing digital health partnerships and aggressively cutting underperforming programs. Vendor management gets simpler. Vendors sprawl with its fragmented IT strategies, data silos and day-to-day inefficiencies is reduced.

Outcomes tracking across whole person and cohorts becomes actionable. This platformization reduces integration costs. It unifies data lakes for better analytics. It enables risk stratification to identify and intervene with high-risk members early. And it drastically improves the member experience by providing a single, simple, personalized and familiar front door for all care needs. With AI and especially agentic AI-powered clinical programs multiplying rapidly, the ability to experiment and iterate is critical, so is ensuring that authorized clinicians govern the care process through smart integration.

In 2025, we made decisive choice, focused exclusively on offering the best tech platform in the market. The benefits flow to every stakeholder. For patients, personalized, simple access to a growing array of AI-powered care programs. For payers, employers and government sponsors, reduce costs, improve outcomes and exceptional experiences while staying agile to improve ROI as programs evolve.

Member experience becomes critical in 2026 as ACA subsidies expire and drive member disenrollment, adversely impacting payer risk mix. Sponsors also obtain robust ROI using Amwell's proven platform native clinical programs, urgent care, behavioral health and virtual primary care with the flexibility to integrate any third-party solution. It also allows payers to maintain network adequacy, especially in behavioral health services, where supply-demand gap is reaching new heights.

The effective integration of partners like Vida, a digital companion to combat GLP-1 inappropriate utilization or Sword to manage MSK costs are great examples. For health systems, they can extend remote access to their own providers. They can offer services through our platform beyond their catchment area, and they can augment their care with third-party programs. All sponsors can use their tech platform as required infrastructure to unlock federal funding, programs like ACCESS, BALANCE or the Rural Health Transformation.

Finally, resilience is now a key purchasing criterion. Payers are looking for partners with Zero Trust architecture and proven resilience. Amwell's contract with the Defense Health Agency serves as a powerful validation. It demonstrates that our platform meets the most stringent security standards in the world. With tech as our sole focus, we are building deeper, long-term relationships with the payers, government and health systems. We completed our transformation from a telehealth provider to dependable, trusted enterprise infrastructure.

The Amwell Platform has become an essential utility. It solves existential needs for our customers by effectively enabling consolidation, automation and clinical ROI. This aligns our success with our clients' success and creates a path to higher quality, higher-margin growth. We expect our high-quality growth will be fueled by the powerful secular trend of tech adoption. As AI reshapes health care, we offer our customers a consistent, safe and effective framework to adopt it while remaining flexible and agile.

Following our focused commitment in 2025, we moved quickly. We divested non-core activities. The sale of APC is one example. We restructured our company and dramatically reduced our cost base. We realigned our road map and go-to-market investments.

Clients and prospects responded. 2025 brought significant commercial momentum. In the payer segment alone, we executed over 15 payer contract renewals, representing the vast majority of our existing payer subscription revenue. Coupled with our new logo wins, we validated our platform strategy, strengthened our recurring high-quality revenue base and positioned us well for same-store expansion. Examples include the DHA renewals last summer, Blue Cross Blue Shield of Florida going live this January and most importantly, our 3-year renewal with Elevance.

As we enter 2026, we have responsibly reduced non-core, lower quality activities. Our 2026 top line is smaller, but now it's primarily high-quality, high upside, sticky revenue. This gives us clear visibility to reach our cash flow breakeven goal in Q4 of this year. In 2026, we'll deploy with strict fiscal discipline, innovations that widen our competitive advantage, AI-enhanced patient experience, faster third-party integration, better clinical data utilization and faster, easier deployments.

We've assembled a strong and fresh leadership team, experienced executives with proven track records from world-class companies, united and energized around our clear mission. We have a focused execution path and a market that clearly values what we offer. We start 2026 with healthy cash reserves, no debt, a strong and dependable recurring revenue base and a clear path to multiyear growth.

Our journey wasn't short or easy. My deep appreciation goes to our team members, clients and partners for standing with us through this journey. We carry this trust with us as we execute and deliver in 2026 and for years to come.

With that, I'll turn it over to Mark. Mark?

Thanks, Ido, and good afternoon, everyone. On today's call, I'll start with a few highlights from our full year 2025, then walk through our fourth quarter financial performance and finally, provide an update on our initial guidance for the first quarter and full year 2026.

Starting with the full year, 2025 marked an important period of refocus and financial progress for Amwell. Total revenue for the year was $249.3 million. Importantly, subscription revenue continued to become a larger and more durable component of our business, representing 53% of total revenue, up from 45% in 2024. This deliberate shift reflects our strategic emphasis on higher quality, more predictable SaaS-based revenue streams. From a profitability standpoint, we made meaningful progress. For the full year, we reduced both net loss and adjusted EBITDA losses by approximately $100 million each, driven by disciplined cost actions and a more focused operating model.

Turning to the fourth quarter. We delivered solid results across revenue and adjusted EBITDA, reflecting stronger subscription retention, increased visit volume in specialty care and virtual primary care and meaningful cost efficiencies driven by the successful execution of our transformation plan. We also began to see early benefits from AI integration across our operations. Overall, our fourth quarter performance reinforces that the actions we initiated at the start of 2025 are translating into durable financial improvement and accelerating operating leverage.

Starting with revenue. Total revenue in the quarter was $55.3 million, representing a 22.1% year-over-year decline. Subscription revenue was $28.8 million, down 22% year-over-year. The decline was driven primarily by the step down in our DHA contract this past summer, churn that occurred earlier in 2024 and to a lesser extent, our reprioritization of certain parts of the business to focus on our core payer and government markets.

Amwell Medical Group, or AMG visit revenue was $23.7 million, down 18.7% year-over-year, reflecting the sale of APC as well as some remaining churn from 2024. In terms of volumes, paid AMG visits were flat at approximately 340,000 visits in the quarter. Total platform visits were 1 million visits, down 28.4% year-over-year from the 1.4 million visits in the fourth quarter of 2024, which is consistent with the portfolio changes I just described.

Cost of goods sold in the quarter was $27 million, resulting in a gross profit of $28.3 million, which was down 17.6% year-over-year. Gross margin was 51.2%, representing a 280 basis point decline year-over-year. While we experienced some near-term margin pressure, we continue to see our revenue mix shifting toward higher-margin SaaS offerings, which we believe will support margin expansion over time as our scale improves.

Turning now to operating expenses. Total operating expenses, including depreciation and amortization, were $55.3 million. That's a 30.7% reduction year-over-year. Operating expenses as a percentage of revenue improved meaningfully to 96.7% compared to 108.7% in the fourth quarter of last year, reflecting the benefits of our transformation actions and continued cost discipline.

Adjusted EBITDA for the quarter was a loss of $10.3 million. That's an improvement from a loss of $12.7 million in the third quarter of 2025, and a 55% improvement from the $22.8 million in the fourth quarter of 2024. Net loss was $25.2 million compared to $30.7 million in the third quarter, representing a 43.5% improvement year-over-year.

Turning now to the balance sheet. We reported cash burn of approximately $19 million in the fourth quarter. We ended the year with approximately $182 million in cash and marketable securities and importantly, no debt.

Now I'd like to turn to guidance. For the full year 2026, we expect revenue in the range of $195 million to $205 million. We expect AMG visits between 1.32 million and 1.37 million visits. Adjusted EBITDA loss in the range of $24 million to $18 million. And this first quarter of 2026, we expect revenue in the range of $48 million to $53 million, and an adjusted EBITDA loss in the range of $7 million to $5 million.

Based on our current outlook and continued execution, we expect the company to achieve positive cash flow from operations in the fourth quarter of this year. This guidance reflects our expectations around continued subscription stability, visit volume trends in specialty care and virtual primary care, ongoing cost discipline and incremental benefits from automation and AI-driven efficiencies across the business.

In closing, 2025 was a year of refocus and progress. We concentrated on our core markets, payers and government entities while positioning the company to return to delivering durable growth. At the same time, we made meaningful progress reducing cash burn and losses by nearly $100 million, putting us on a clear path forward to achieving positive cash flow from operations by the fourth quarter of this year.

These results would not have been possible without the hard work and dedication of our entire team, and I want to sincerely thank them for their efforts. We look forward to keeping you updated on our progress this year.

With that, I'll turn it back to Ido for his closing remarks. Ido?

Thank you, Mark. We are encouraged by the process we made in 2025. We successfully sharpened our focus on our tech platform, validated strong market demand and meaningfully improved both our efficiency and cost structure. We enter 2026 with clear visibility into continued performance improvement, position us well to achieve our goal of cash flow breakeven from operations in Q4. Equally important, the changes we've made have strengthened our revenue quality.

We now work with clients to extract even more value from our partnership, leading to longer-lasting, stickier relationships that generate higher margins more reliably and offer significantly greater same-store growth potential. With AI-driven clinical programs growing exponentially and payers, government and health systems increasingly in need of infrastructure to deploy them safely and effectively, we believe Amwell has reached an exciting inflection point. We look forward to an important year ahead.

With that, I'd like to open the call to questions. Operator?

[Operator Instructions] Our first question comes from the line of Stan Berenshteyn with Wells Fargo Securities.

This is Corey on for Stan. It's encouraging to see progress towards free cash flow breakeven despite retention challenges. As we think about 2026, how should we think about when existing client contracts would be up for renewal? And do you have any additional color related to your government opportunities?

Corey, well, as I mentioned earlier in my prepared remarks, in 2025, we signed 50 contracts, most of which are renewals. And in that, we really secured our reoccurring revenue base to a great extent. Therefore, the amount of what we renewed in '26 are significantly lower with one important exception, which is the DHA renewal that we expect to have this summer. We're very pleased with the value that we generate with the DHA and the traction and are optimistic that our performance and our strong relationship position us well for multiple year renewal also in that important segment of the market.

Our next question comes from the line of Jailendra Singh with Truist.

Ido, you talked about 2026 being a year of operational efficiencies and you spent a lot of time on AI. Clearly, AI is going to be playing a big role here, and you guys have been one of the early adopters. But what are your thoughts on some of the new AI companies entrants, which are seeing opportunities here in terms of having an impact in health care. And clearly, they are all trying to make a big push given all the inefficiency in the system. How do you see the competitive landscape evolving considering these new entrants in the market?

So we are -- thank you, Jailendra. We are very bullish and optimistic about the impact of AI on health care with the obvious asterisks and exceptions of risk management and so on. But overall, the trend is very powerful. AI can do many things. And in Amwell, we implemented AI liberally across our entire workflow and operations and inside our own product.

Having said that, the ability of AI to impact the most for our customers is in clinical programs, and they typically focus on one therapeutic area at a time, whether it's MSK, GLP-1, things with diabetes, blood pressure and so on and so forth.

The integration of those AI programs and the ability to integrate, switch and maintain multiple AI programs turned out to be a very big challenge for our customers and you need to connect them into a consistent, highly regulated infrastructure.

So for example, as you develop an entry point, a digital door for your digital assets and a workflow for your own members, you want to make it consistent and you want to not rebuild it each time whenever you change an AI program versus another. And that's really our role. Our role is to match the regulated baseline infrastructure with the tsunami of AI programs reliably. There are -- we are not aware of many or even any company that does exactly that right now. And very importantly, we are now already implemented with our new platform with a very big market share footprint right now that is proving to work very effectively. And the opportunity is really to use AI and to add AI to this infrastructure rather than replace it.

So saying it in summary, we believe that AI will be endorsed and adopted quite a bit across our client base. And we believe that our platform would be an important utility as our clients do that.

Our next question comes from the line of Dave Larsen with BTIG.

As we look towards 2026, can you talk about some of the headwinds and tailwinds that could cause either an increase or risk to the guide?

This is Mark. I think the most likely tailwind would be an earlier adoption of our technology-enabled platform [indiscernible] options. We are participating in all 50 states RFIs, RFPs right now. We've got a significant opportunity in a few other government segments as well. We expect to hear in second quarter, so only a few months from now as to how deep our participation will be and when those revenues will commence. While we have not built any of that revenue into our current 2026 plan, we certainly believe that as a result of the pipeline being larger today than it has been in the history -- in all the past history of Amwell, much of that will convert into some backlog that we'll see come to fruition in 2027.

As far as any of the headwinds, we do, of course, have a renewal with the DHA this summer. We're extremely confident that, that will be renewed again and hopefully for a longer term. But beyond that, our other material contracts are not up for renewal in 2026.

And can you remind me for the DHA renewal, what -- you mentioned like a step down in the DHA revenue. What was that related to? And then could you win that back in the summer? And if you did, how much of a step-up in incremental revenue would there be related to the DHA on the same annual run rate basis?

Yes. So the -- you're correct. We experienced, unfortunately, as a result of the DOGE, an elimination of our digital behavioral health and automated care programs in the summer of 2025. We had initially rolled that out to a select number of locations. It was doing extremely well. The uptake on those programs was very strong. But as a result of an overall cost efficiency mandate, they were not renewed as the contract and the base contract was renewed. We certainly feel very, very positive about the status of that contract and the opportunity to revisit adding those two programs to the base platform renewal coming up this summer.

As far as materiality, it's significant. It's material. While we don't disclose the total value of the contract, I think we did suggest in the past and we would going forward that adding those two components would certainly be material.

Our next question comes from the line of Craig Hettenbach with Morgan Stanley.

Ido, just keying off with your comment around kind of smaller top line but higher quality and stickier. How do you think about 2026 as a baseline in terms of the ability to kind of resume growth? And then with the business as it stands in 2026, what does the long-term growth look like? What type of growth profile can you generate with this business?

Craig, well, you're absolutely correct. In fact, 2 years ago, we sold so many products to so many market segments. The market product fit was different between one versus another. As a reminder, we had APC and we play psychiatry, sometimes in person hospitals with a very big hardware business inpatient solution, competing directly with EHRs and things of that nature. While we have some of it left and we are going to always serve our clients really well, we really essentially have now reduced all those many products into one beautiful platform, but one platform, the technology-enabled care Amwell Platform and connected to our own native services and a growing array of third-party services, out of which you can add even more.

When you look at the market right now, and I mentioned in my prepared remarks, the incredible importance and value of diverting clinical demand from brick-and-mortar into technology-enabled care, everybody is convinced you need to really have this infrastructure. So we fully expect our sponsors, our clients to invest in encouraging their members to use it more and more often in marketing and in cost attractiveness and things of that nature.

So there is a strong secular trend that is not going anywhere in the next few years to have people use our platform, not only for urgent care like in the early days, but really across the entire care continuum.

The infrastructure that we built is big and deep. You don't change it every day. Our sales cycles take for a reason 9 to 12, sometimes more months. But once implemented, they're really connected to the financial and clinical backbone of the sponsors, both in way of incoming traffic and in way of outgoing analytics and reporting. However, the middle ground, the area where you have all those AI-driven clinical programs is growing extremely rapidly. And there is real motivation to add more. And as that happens, we are going to benefit from higher-margin revenue for us.

I'll give you just one example. I don't recall any CFO leadership with any payer customer that we have that is not incredibly concerned about GLP-1 spending. The ability to very easily add Vida or other programs to the existing integrated infrastructure is extremely attractive for our customers to do, and we make it incredibly simple and easy for them to do that.

To summarize, we believe that the same-store growth presents a very meaningful revenue opportunity for us. In addition to that, as you know, we invested very heavily in penetrating the very hard-to-penetrate governance market. I'm very pleased with our performance there. And there are many other large opportunities that are very similar to the one that we presented with the DHA. So we do believe that the government sector represents an incredible growth opportunity as well, both in way of net new logos and even in same-store growth, like the example that Mark gave recently to really reinstate our behavioral health and maybe other alternatives.

The success that we have with our existing clients is not lost on others. And many of them are really under pressure to add those programs, but they do that today with an infrastructure that is much smaller. A lot of the IT departments in payers are much smaller today because of cost pressures. So their ability to serve as an integrator for all those programs and then to match them with a different ASO is becoming much more difficult. Amwell and the Amwell Platform presents itself as a very good solution, both for them and obviously, also for those vendors that can accelerate their penetration and offering into those conservative, highly regulated clients through our infrastructure.

Our next question comes from the line of Eric Percher with Nephron Research.

I'd also like to dig in a little bit more on the -- I think what comes from the improvement in revenue quality. When we look at what the guidance for this coming year holds, it sounds like some deemphasis. I know there were also divestitures that you had considered. Can you give us a little bit more on what you're deemphasizing and where those -- maybe a little bit of why the revenue is running lower than we might have expected? And does that not include any of the divestitures that you've looked at? Would those be ultimately incrementally beneficial to bottom line while perhaps taking down top line from here at least in '26?

Sure. So Eric, what we've done really is to centralize our offering around one offering, which is the Amwell Platform. And it does what we described earlier and does it really, really well. As you know, we had other offerings in market segments where the product market fit was not great. We divested APC, and we deemphasized other areas that are non-core. Essentially, our one product right now is still a very good match to all the market segments that we operated before, but there is one product across the segment versus many products across many segments.

The value proposition to payers and government is very strong and very sizable. A very big part of our revenue is derived from there. And since it connects millions and tens of millions of individuals that are motivated to use the platform more and more across the ecosystem, that also presents the most important growth opportunity for us.

Having said that, many health systems are now bearing risk. Many of them want to participate in different government programs like ACCESS. And in order to do that, they really benefit from a platform like Amwell, because you can add all those very efficient clinical programs to their current offering in a way that is integrated out of the box and is doing that very efficiently.

So that allows us to really be very efficient in focusing on one highly attractive and differentiating product, benefit from secular demand that is growing without a lot of cost to grow it once we are implemented, adding programs and seeing more traction is much less expensive than creating the platform that we've done over the past few years. And of course, there are not too many of those in the market. So we fully expect that the example we gave recently with Blue Cross Blue Shield of Florida is not going to be a singular one.

Mark, I don't know if you have anything to add.

I should have been more precise. Does the '26 revenue and EBITDA reflect full exit of the businesses we discussed could be exited?

I don't think so. There is some residual activity, but it's diminishing in percentage points and in proportion until a point where it's going to be negligible over the next 2 years.

[Operator Instructions] our next question comes from the line of Ryan MacDonald with Needham & Company.

Ido, great to hear that you got the 15 renewals done, obviously, and sort of the -- obviously, the large 3-year renewal with Elevance. I'm curious if you could talk about sort of how those renewals or those discussions in those renewals are informing your go-to-market approach for net new opportunities. And as you think about 2026, if you kind of look at sort of across government, payer, provider, where are you sort of skating to the fastest? Or where are you really focusing those go-to-market efforts in terms of bringing in net new logos to the business?

Absolutely, Ryan. So I'm pleased to share that all of our renewals, it relates to the payers that we mentioned and others were related to the same offering to the new Amwell Platform. And in many ways, while they are technically renewals, since the offering is so different than what they had in the past and our role is so different, you can consider them in many ways, a new sale or almost a net new sale. You need to remember also that when people renew and migrate their platform into the new platform, that comes with deep integration into financial and clinical backbone. So you don't to do it very quickly, you do it as a long-term investment.

The value of our existing customers is now demonstrated really well. And when we implement the new customers, it's really a very similar workflow. So reproducing it becomes much easier and simpler and much more efficient going forward. So as I mentioned earlier, when we look at multiyear growth, the most obvious and impactful area is same-store growth, benefiting from more programs to more people that we lose it more often and more efficiently and really benefiting from those secular tailwinds.

In addition to that, as Mark mentioned earlier, we have the largest pipeline we had in our history, I think, that I remember at least for now. And it's all about this. There's nothing else. It's about our one beautiful platform and its clinical services and the value it should generate as an infrastructure to adopt more and more AI-powered clinical programs. So we have a lot of proof points, a lot of success points in a very large scale.

When I look at the segments, commercial payers, obviously, is our sweet spot, Blues and others, but there's no question that our advantage in the government is even bigger. And the reason is that, that's a really high barrier of entry segment when you think about cybersecurity, regulations, things of that nature, and we have that right now. We spend enormous amounts and time and effort and resources getting there, and it performs really, really well. So we fully expect this to grow meaningfully over the next few years.

And lastly, we believe that health system will participate, but in proportion, probably their contribution is going to be smaller than the first two segments I just mentioned.

And I'm currently showing no further questions at this time. I'd now like to hand the call back over to Ido Schoenberg for closing remarks.

Thank you, operator, and thank you, everyone, for joining. We really appreciate your support of Amwell, and we look forward to talking to you very soon. Have a good evening.

This concludes today's conference. Thank you for your participation. You may now disconnect.

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" Wells Fargo Securities, LLC, Research Division

" TD Cowen, Research Division

" Truist Securities, Inc., Research Division

" UBS Investment Bank, Research Division

" Morgan Stanley, Research Division

Hello, everyone, and welcome to Amwell's conference call to discuss their third fiscal quarter of 2025. Joining us on the call today are Amwell's Chairman and CEO, Dr. Ido Schoenberg; and Mark Hirschhorn, Amwell's CFO and Chief Operating Officer.

Earlier today, a press release was distributed detailing their announcement. The earnings report is posted on the Amwell website at investors.amwell.com and is also available through normal news sources. This conference call is being webcast live on the IR page of the website, where a replay will be archived.

Before they begin prepared remarks, I'd like to take this opportunity to remind you that during the call, we will make forward-looking statements regarding projected operating results and anticipated market opportunities. This forward-looking information is subject to the risks and uncertainties described in the filings with the SEC. Actual results or events may differ materially. Except as required by law, we undertake no obligation to update or revise these forward-looking statements.

On this call, we'll refer to both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in the earnings release.

With that, I would like to turn the call over to Ido.

Thank you, Operator, and good afternoon, everyone. For the third quarter, our results compared favorably to the guidance we provided. We showed steady progress in executing our plan, which is designed to achieve cash flow breakeven by the end of 2026 and to ultimately resume profitable growth. Our plan is based on 2 main work streams. First, focusing on our enterprise-grade, mature, and well-differentiated new platform to generate considerable value in our select market segments. Second, ensuring that all our operations are extremely efficient and effective. Both efforts rely heavily on the integration and adoption of rapidly evolving technologies, primarily enterprise-grade AI infrastructure.

In recent years, we have invested significantly in recruiting exceptional talent and establishing strong governance, compliance, and operational frameworks. We have also committed substantial resources and continue to do so towards building ecosystem interoperability that enables seamless data exchange and deep integration with existing EHRs and clinical systems. These investments help position Amwell as a highly dependable, secure, and scalable technology-enabled care platform for our customers.

We enable our customers to align our technology with measurable economic value while helping them address critical challenges such as clinician burnout, staffing shortages, and operational inefficiencies. Additionally, we position them to capitalize on emerging opportunities, including the integration of algorithm-based health care services, comprehensive care coordination, and new digital therapeutic solutions. These integrations may help our customers leverage predictive AI to reduce costly interventions and hospitalizations.

Our efforts are beginning to pay off as reflected in our results, and we believe the impact will only accelerate going forward. For our first work stream in Q3, we began socializing our product focus areas through 2026 with our clients and prospects. We are committed to making the new Amwell platform the most effective and valuable hybrid care backbone we have ever offered them. Our mission is to help our customers reduce care costs, improve clinical outcomes, and offer the highest member engagement and satisfaction through exceptional user experience. We strive to achieve this through the following focus areas:

First, we are moving AI into the core workflow layer. We're responsibly implementing enterprise-grade AI and other technologies to transform patient intake, personalized dialogue, and navigation, as well as clinical program matching and onboarding. Our efforts benefit from almost 2 decades of telehealth experience and access to an incredible data and knowledge repository driven by many millions of digital-first care encounters.

Second, we are enhancing and simplifying the way we work with our own and third-party partner clinical programs. This enhanced program integration is expected to help offer our customers even more options across the care continuum while adding more value to our clinical program partners. Also, clients will be able to seamlessly integrate clinical programs they've already committed to into their Amwell platform with unprecedented ease. As noted on our earlier calls, these third-party partners represent an important high-margin flywheel growth opportunity for Amwell. Our own clinical programs are likely to be the first to benefit from these changes and further improve our offering across urgent care, virtual primary care, comprehensive behavioral health, nutrition, lactation, and more.

Third, we are investing in and will remain heavily committed to our data and analytics infrastructure. We plan to offer our customers even better ways to measure and improve financial and clinical outcomes across all programs while offering patients an even more personalized, simple, and relevant journey. As payers, employers, and health systems look to consolidate their technology-enabled care strategy, we offer a unique and reliable solution. It allows them to realize their financial, clinical, and member engagement goals while maintaining full flexibility to dynamically choose and replace the clinical programs that work best for them in the simplest, most scalable, and reproducible way.

Our second work stream is centered around relentless focus and commitment to efficiency and quality. We are further improving our platform to make it even easier to deploy, maintain, and support. Self-management and automation tools for our customers are a good example of this commitment. These tools empower clients to do more faster while simultaneously reducing our own cost of deployment.

As we carefully define what we focus on, we are decisively divesting noncore assets. Earlier this year, we announced the sale of Amwell Psychiatric Care, or APC, and are currently pursuing other actions to divert access resources away from non-core assets. It is important to note that we plan to continue to fully support and maintain legacy assets that still provide value to our customers. These customers have expressed comfort from the stability and reliability of our trusted legacy solutions. We hope to see them gradually migrate to our core offering over time when they are ready.

In parallel, we systematically analyzed our own efficiency across all our operations. We were able to find opportunities to improve efficiency, including with widespread AI adoption, while rightsizing headcount across the board. These reductions in force were made possible through various interventions, including careful reallocation of talent across the company.

Now I'll take a step back to look broadly at the macro environment. In 2025, we continue to see clear signs that the market is shifting in our favor. Consumer demand for digital health is accelerating. Mental health telehealth utilization reached 27.8% in July, according to the Epic Research data tracker. And 79% of Gen Z now use health technology monthly, according to PwC 2025 Healthcare Consumer Insight survey. At the same time, digital clinical programs are demonstrating real results.

Research shows digital disease management can reduce 30-day readmission rates by 50%. This effectiveness is driving significant investment. AI start-ups, many of which could be considered clinical program themselves, capture 60% of all digital health funding in Q1, according to the AHA Center for Health Innovation. However, payers, employers, and health systems are struggling with fragmentation. Employers now manage an average of 4 to 9 point solutions, yet only 22% trust these vendors to act in their best interest, according to Evernorth Insights. This fragmentation carries real cost. For example, inefficient data exchange costs healthcare organizations up to $20 million annually. As a result, integration has become a strategic imperative. 62% of health plan leaders identify integrated solutions as a top 2025 priority according to HealthEdge's annual survey.

Organizations need help managing technology, engagement, reporting, and the commercial burden of multiple vendors, and that's exactly the gap we are positioned to fill. In that setting, the Amwell platform promises much-needed relief by maintaining future-ready flexibility with the efficiency, effectiveness, and peace of mind of offering one relationship, one user experience, and one data and reporting infrastructure across a dynamic and open-ended array of clinical programs and vendors.

Our unique business model never forces our clients to only use Amwell clinical programs. This aligns our interests and positions us well as their long-term partner. While many of our competitors feature their brands to members, we enable our customers to use their own white-labeled experience. Their Amwell platform inside allows them to offer a unified customer-branded gateway to all their covered programs.

Finally, and importantly, our ability to supplement automated programs with trusted in-network certified providers at scale enables and accelerates the safe and effective adoption of these new AI-driven solutions. Our special architecture is helpful in making customer acquisition costs more effective and in improving the customers' overall brand value and stickiness by associating it with a wide array of helpful services and exceptional platform experience.

Our ability to help customers obtain a clear view of whole-person and cohort outcomes and offer them tools to continuously improve results by switching programs and matching them with the right cohorts is highly desirable and appreciated. In our conversations in the market, our strategy resonates. As we look forward, we fully expect our competitive advantages to become increasingly visible and compelling as we continue to roll out our new Amwell platform. We believe that our long journey is in many ways only beginning, and we are excited about what the future brings to our loyal and sophisticated supporters, our customers, and our company.

With that, I would like to turn the call over to Mark for a review of our financials and our guidance. Mark?

Thanks, Ido, and good afternoon to everyone on the call. On today's call, I will walk through a few key operating metrics and financial results from the third quarter and then provide an update to our guidance for the remainder of this year. In the third quarter, we delivered results ahead of expectations for both revenue and adjusted EBITDA, reflecting stronger subscription retention, increased visit volume in specialty care and virtual primary care, and meaningful cost efficiencies driven by the successful execution of our restructuring. Our progress this quarter reinforces that the actions we began earlier this year are translating into durable financial improvement and accelerating operating leverage.

Today, I will walk you through our quarterly performance, highlight the financial impact of these strategic actions and provide an updated view on our guidance for the balance of 2025. Total revenue was $56.3 million, which represents an 8% decrease year-over-year and includes the step-down in contribution from Leidos and the divestiture of APC. Normalizing for the sale of APC, Q3 revenue would have increased 1.3%.

Subscription revenue of $30.9 million increased 18% year-over-year and represented 55% of total revenue compared to 43% of total revenue a year ago. Total visit volume of approximately 1.1 million visits in the third quarter was down 21% from a year ago, although in line with our expectations. Amwell Medical Group, or AMG visit revenue was 23% lower than last year at $21.2 million. Normalizing for the sale of APC, however, visits were down 3.5% from a year ago. Average revenue per visit was $71, which is 14% lower this quarter compared to last year's Q3. But when normalizing for the sale of APC, average revenue per visit was 3.5% higher, driven by a continued mix shift to higher-priced virtual primary care and specialty care visits.

GAAP gross margin expanded to 52% compared to 37% a year ago as a result of greater software and services revenue generating stronger margin contribution than last year's comparable quarter revenue mix and divestiture of APC. Our operating expenses totaled $58.9 million in the quarter, a decrease of 16% compared to last year, comprised of a 6% reduction in R&D, a 46% decrease in sales and marketing and a 14% decrease in G&A expenses. We remain focused on optimizing our resources, and we are clearly moving in the right direction and getting closer to our foundational cost basis.

Adjusted EBITDA was a loss of $12.7 million for the quarter, which compared favorably to a loss of $31 million a year ago, evidence of our acute focus and execution of our cost containment initiatives. In terms of cash and liquidity, we reported a cash burn of approximately $18 million in Q3 and ended the quarter with approximately $201 million in cash and marketable securities with 0 debt.

Finally, to wrap up my comments today, I'll share our revised guidance outlook. With just 2 months remaining in the year, we now expect our full year revenue to be between $245 million and $248 million versus the prior range of $245 million to $250 million. Adjusted EBITDA in the range of a negative $45 million to negative $42 million versus the prior range of negative $50 million to negative $45 million. Our range for AMG visits remained steady between 1.3 million and 1.35 million visits. Our full year guidance assumes the reduction of R&D expenses by more than 10% this year versus 2024 as we streamlined and completed the bulk of our software configuration to our existing build and integration commitments.

At the same time, we continue to expect sales and marketing costs to decline more than 25% year-over-year and G&A expense to decline at least 20% for the year as we continue to organize the company around a new lower cost structure. We now project Q4 revenue in the range of $51 million to $54 million and adjusted EBITDA between negative $15 million to negative $12 million. We have made meaningful progress rightsizing the cost structure while diligently working to position Amwell for longer-term success. We have quite a bit of work left to do, but we remain committed to our goal of generating positive cash flow from operations during 2026. I want to thank our entire team for their commitment and passion to our overarching mission of increasing access to affordable, high-quality health care. Thank you all for your time and attention.

I'd now like to turn the call back to Ido for his closing remarks. Ido?

Thank you, Mark. We're seeing a remarkable transformation in our market. As AI health care solutions proliferate both within and beyond Amwell, they're delivering significantly better patient outcomes with greater accessibility and affordability. In this evolving landscape, Amwell's role as an integrated backbone has never been more vital. Our unique ability to seamlessly blend intelligent automation with certified trusted clinicians provide a safe, effective pathway to superior care outcomes today and tomorrow.

Our clients value our proven track record of delivering measurable economic value while ensuring compliance and providing essential support to overburdened health care providers. Through enterprise-grade workflow automation, we're enhancing both access and operational efficiency. We are proud of our mission and firmly believe it's more relevant now than ever before.

With that, I'll open the call for questions. Operator?

[Operator Instructions] Our first question comes from the line of Stan Berenshteyn of Wells Fargo Securities.

A couple for me. First, I actually wanted to go back to the prior quarter where you had announced a Florida Blues plan win. I was curious if you can give us some color regarding how you won that? Was that a competitive takeaway? And are you seeing any similar opportunities for you going forward?

Stan, yes, we are very pleased with this important win. It was a competitive situation, and we are deinstalling a major competitor in this setting. The drivers for this really demonstrate everything I spoke about in the prepared remarks. I believe that Florida Blue, like many other payers understood that there is enormous fragmentation, enormous opportunity in AI programs, but they need to create one infrastructure under their brand that will allow for one efficient consumer engagement solution that will be able to drive care with their own choices of clinical program, including maybe different choices for different ASOs or different cohorts and one report and one infrastructure.

They, like many other people, existing customers and people that we talk with during our dialogue with the pipeline, really talk about vendor fatigue and complexity. There is a tami of amazing programs, some are better than the others. Many of them have enormous opportunity, but many of them are risky, and there is real need for one technology-enabled care infrastructure, which is an integrator and a distributor, if you will, for members. So all those important value points based on our dialogue with this very important customer, in my opinion, we're leading to this win and are indicative of a future demand that is likely to grow as more AI-driven program proliferate.

And then a follow-up for me here.

Regarding the comments you made in the prepared remarks around potential further divestiture of noncore assets. Can you give us any insight as to what those assets might be? And are you in any active discussions here? Or is this more of a theoretical process?

So this is very practical. Let's start there. The key conclusion is that the opportunity we spoke about with Florida Blue and many others is very, very exciting. And because of that, we decided to focus all our efforts around it because we believe that's the best ROI for Amwell and the best way we can create value for our customers. We do have a long list of legacy products that do the job but do the job well. Examples are automated programs for hospitals or inpatient solutions and so on and so forth. These are good products that are secure and reliable and dependable, and we plan to continue and use them, but we are going to spend less, significantly less in growing these market segments in comparison to this very clear enormous opportunity that I shared earlier. And that's really part of our strategy that we are implementing as we speak.

Our next question comes from the line of Charles Rhyee of TD Cowen.

You talked about AI and implementing that across the enterprise and other technology to sort of inform patient intake, navigation, et cetera. Can you talk a little bit about how that can be monetized? Is that something that you are charging extra for? What is sort of the model as we think about that? And maybe, Mark, I know it's still probably a little early. How should we think about maybe any kind of guardrails to think about when looking out to '26 at all, at least from a top line perspective?

Absolutely, Charles. So suffice to say that AI is influencing everything we do and everything that happens in our ecosystem. It's very, very dramatic. Let's start with the product, and let's start with third-party partners. When you think about someone like Sword, for example, their ability to predict with AI likelihood of someone getting surgery very soon is incredibly important. Our ability to route this patient to Sword and then document these savings and report it back to the likes of Elevance and others is incredibly, incredibly valuable. The same is true for other partners like HelloHeart that is able to use predictive modeling to manage medication adherence better, and there are many other such examples.

So first and foremost, AI is influencing both Amwell and non-Amwell clinical programs themselves. In addition to that, AI is allowing us to create a dramatically different experience for consumers. It can be highly personalized. You can get immediate attention as a person and have a very simple, easy, attentive, personalized navigation to programs that are likely to be helpful for you. So that's another area where AI has enormous value. The monetization of such value, both things actually really increase ROI for our customers and increase traction. So when a great experience is leading to a virtual primary care experience at over 30 days saving $500 for our customers, that's very good for Amwell. That's very good for our customers as well.

In addition to that, using of AI for data analytics so you can push information about outcomes in a very coherent way across different programs for a whole person and whole cohort is allowing our customers to choose the right programs and refine them over time. It also allows us to further personalize the experience for consumers and getting more use -- even more use and more higher NPS over the next. So all those examples in program essentially increase the value and the traction of our platform. We don't necessarily charge more for our platform directly in order to do that, although we may be able to do that in the future. But much more importantly, as we share the value of this traction in this traffic, each time we refer someone to Sword, for example, we get some rev share from this company, which is good for us and much better than the alternative customer acquisition cost.

So overall, all those investments are really creating more value for our own platform. In addition to that, like any other company, we brought some wonderful talent from big tech, people like Amazon and others. And we are looking at every part of our operation, whether it's core generation, QA, product management, sales, deployment, support and so on and so forth. And like many others, we are investing much in order to implement those solutions in order to be better, more effective, more efficient. And that work is ongoing and has more and more impact. I would just suggest that if you need to quantify the most important financial impact, and our relevance going forward, I would suggest that our ability to tie together hybrid solution between certified humans like our national network and other solutions together with AI-driven programs that as a result, create much better financial and clinical outcomes with much lower cost and much higher engagement is the heart of the influence of AI on our financial performance.

But I guess it sounds like then maybe, Mark, in terms of how should we think about next year? And also if we're not necessarily charging more for these innovations and obviously demonstrating more ROI for customers, how should we think about margins at least? Is the current rate, I think it was 52% here in the quarter. Is that sort of the right level we should be thinking about next year? Or maybe any kind of thoughts there would be helpful.

Yes. Charles, I don't believe the introduction of the AI features and the attributes that we're looking to implement throughout the year are going to have any meaningful impact on our margins. What's going to lead to the margin probably variation from '25 to '26 will be exactly what we saw in '25, which was the greater ability to bring more software revenues into the top line. Clearly, we had significant to the tune of tens of millions of dollars of implementation revenues generating very high margins. They impacted the margin profile tremendously. And that's why we're exiting at these stronger margins compared to '24. '26, I believe, will be consistent with the '25 margin profile.

And maybe one last one, if I could. You talked about sort of divesting sort of noncore assets. Obviously, APC was an example. Is there a lot of other assets still that you would consider in that noncore bucket? And is there a sense for timing? Is this something that we'd like to do very soon? Or is this when you can get something a good value for it?

It's more the latter, Charles. We're not in the market with either of these, what I would suggest are a couple of defined assets that can be bifurcated from the rest of the business without losing any focus, without challenging any of the clients right now with removing some of these. These are distinct assets that have a certain profile of clients that we could, in fact, cordon off, we could run them separately. But I think throughout '26, we will try to, again, narrow our focus in those areas that Ido shared in his prepared remarks.

Our next question comes from the line of Jailendra Singh of Truist Securities.

This is Jenny on for Jailendra. Just had a question around macro with all the macro noise, tariffs and economic uncertainty. Have you seen any impact on your sales pipeline as health systems continue to evaluate their IT budgets? Just curious how that conversation has been going in terms of the last couple of months? And related to that, can you talk about your direct tariff exposure?

Jenny, well, essentially, what we see in the market is that our solution is serving very important pain points that many of the customers using the new ones see as obligatory in the sense that if you think about it for a payer, the ability to have reliable, effective solution around hybrid care and technology-enabled care is a tool that is demanded by the sponsors, by employers and others and generate enormous savings. Implementing effective AI-driven care programs is not a question of if, it's really a question of how. You must do it, and that's very clear for our customers.

That's very dangerous. It's very confusing. It's error-prone. We offer our customers an ability to create less noise by having one platform that is embedded in their infrastructure and much less vendor fatigue by allowing us to do the heavy lifting of connecting to more and more solutions and making it still part of one experience and one report. So when we talk to them, that's not a line item they are likely to pass upon even if pressed. As it relates to health systems, we definitely believe that when we look at things like workflow automation, inpatient solutions, hardware solutions, things of that nature, there's definitely some resistance right now and some caution because of the economical impact. And that's one of the reasons why we are moving away resources from promoting such solutions into our core offering.

At the same time, when you look at delivery network that are implementing value-based care, when you look at their competition for patients, their need to add, for example, behavioral health to their core offering, things of that nature, their ability to expand their reach beyond catchment areas, all these things directly influence revenues, directly influence their livelihood and are considered as essential. And therefore, we see that we still have an offering that resonates and is relevant right now.

As it relates to tariffs, very minimal impact. We have a tiny business line that still has some hardware outside the United States. And that, of course, is impacted, but it has a negligible impact on our performance. We are proudly creating our software as a U.S. firm and therefore -- and our businesses in the U.S. as well. So we don't see any meaningful impact -- direct impact as it relates to tariffs. Of course, it may influence the market and the macro like everyone else, but it's not Amwell specific.

Our next question comes from the line of Kevin Caliendo of UBS.

This is Jack Senft on for Kevin. I wanted to go back to the comments on diverting resources away from the noncore assets. So just to clarify, this is something that's not embedded in guidance this year, correct? And then maybe as a second part to that, is this -- if it's not, is this something that could move up your time line on being cash flow breakeven next year? Or is this something that could even meaningfully move up cash flow expectations? If you can just comment on kind of what your expectations are there, that would be great.

Yes. This is not included in any of the guidance that you've seen throughout 2025 or the new guidance we provided for the final quarter this year. The impact that it would likely have would not be substantial to the degree that it would change our perspective on cash flow breakeven from operations in the end of 2026.

And then maybe just a quick follow-up. I know your sales and marketing expense, it took a nice step down sequentially this quarter. I know you're still targeting the declines of at least 25% plus this year. But maybe as we look at each like kind of line item in the operating expenses here, are these kind of good run rates to think about going forward? Or is there still additional leverage that you can pull next year? I think you touched on it a little bit briefly, but if you can just talk a little bit more about it, that would be great.

Yes, sure. As you pointed out, right, we had we really optimized the spend and reduced significantly the sales and marketing costs quarter-over-quarter, but obviously, compared to last year, that's material. I think there's still some meaningful opportunity to take out some costs in 2 other areas, probably G&A. We -- another significant area, probably the most from an absolute dollar perspective was in our costs and the delivery functioning. That's where we're likely going to be benefiting from the implementation of AI tools, both clinical operations, clinical delivery. We'll be able to scale the growth at a lower cost. And I think that will be visible throughout 2026 and beyond.

Our next question comes from the line of John Park of Morgan Stanley.

I know you guys talked about the cash flow breakeven target in '26. And also given the noncore divestitures that are conversations that are going on, if you had to prioritize or rank the factors going into this -- going into that target, factors such as customer renewals, perhaps price increases, service mix, maybe some other factors that I'm not considering right now, how would you rank those?

Are you asking how we would rank those in consideration of our target for cash flow breakeven next year? Or how do we rank them purely from a top to bottom priority?

Yes. Like how would you prioritize those things? Obviously, the divesting noncore assets is probably going to get you a decent chunk there, but just wondering how -- any other factors to consider to reach that target?

Yes. The divestiture of those noncore assets will certainly help to focus the company on our core initiatives and would obviously provide some additional dry powder for the balance sheet on top of our $200 million that we just ended the quarter with. And again, we have no debt. So that gives us a little bit more leverage. But I think we primarily have to focus on client retention, ensuring that our platform is delivering and our teams are handling the requests, the growth, the other opportunities for ROI that our clients are demanding. So I'd probably tell you retention is #1. And then, of course, some of the growth initiatives on the product side would then likely be ranked as the #2 priority

I know you mentioned Sword as kind of a way to implement more partners. Is there any areas or topics that you would not want to partner where you would want to just own outright versus integrate with third party?

So our service to our customers is the ability to help them under the brand, create one customer acquisition cost gateway connected to programs of their choosing. The fact that we come out of the box with a very long list of solutions across the full continuum doesn't hurt. But even more exciting is the fact that we can very easily add anything they want to or their clients want to implement. So as long as our customers believe that the solution is logistic, it's secure, it's compliant with different regulations, things of that nature, we will gladly implement it as part of their solution so they can benefit and monitor the value of such implementation.

I'm showing no further questions at this time. I would now like to turn it back to Ido for closing remarks.

Thank you, everyone, for joining. We really appreciate your time. It's interesting to see how relevant Amwell is in a time of great change, and it's exciting to see how this will grow even more as we go forward. Thank you again, and have a good evening.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thank you.