Telehealth giant Amwell saw telehealth visits grow to 1.8 million in the first quarter of 2022, up 16% compared to the tail end of 2021 and up about 11% from 1.6 million virtual care visits during the same time last year.
The total number of active providers using its virtual care platform grew to around 102,000 during the quarter, up 25% compared to 81,000 a year ago.
But the company reported greater adjusted EBITDA losses than the previous year, with a loss of $47 million, 80% deeper than its reported loss in the prior-year period. Amwell reported an adjusted EBITDA loss of $26 million in the first quarter of 2021.
Amwell posted a net loss of $70 million during the quarter, or a loss of 26 cents per share, which widened significantly from a loss of $40 million a year ago, or a loss of 16 cents per share.
The company's quarterly earnings missed Wall Street estimates as analysts projected a loss per share of 20 cents.
Stock dropped 7% in after-hours trading following the earnings release.
Shares have fallen 56% so far this year.
Amwell has been making significant investments in its new virtual care platform, Converge. Announced in April, Converge makes all of Amwell’s products and programs, plus third-party applications, available in one place.
At the end of 2021, executives said it would ramp up R&D spending in early 2022 to support the new tech platform, and Amwell spent $37.5 million on R&D in the first quarter, up 11% from the fourth quarter and a big jump from $23 million in R&D spend a year ago.
"We're selling an infrastructure offering the drives long-term, high-margin subscription software growth as we pursue our path to profitability," Ido Schoenberg, M.D., co-CEO, told analysts during the company's first-quarter earnings call.
The company is in the process of migrating its customers over to the new platform. About 10% of the company’s virtual visits occurred through Converge in the first quarter, up 40% compared to the fourth quarter, said Schoenberg. The first wave of upgrades will focus on hospital systems and then move to health plans, executives said.
"The market increasingly appreciates that automation is a compelling new element of digital healthcare and they require a trusted partner to provide integrated automation into their care delivery workflows," he told analysts during the company's first-quarter earnings call Monday.
Schoenberg called the Converge platform a "Herculean effort" that will "pay off in dividends."
"We're creating something that the market really needs today because of the enormous value of an integrated care delivery system," he said.
The rapid adoption of telehealth during the COVID-19 pandemic was not a short-term trend, he told analysts. "We could perhaps zoom out for a second and realize that what we're seeing is a whole transformation of the healthcare system, one that started more than a decade ago in 2010 with the adoption of EHRs," he said.
In the first quarter, Amwell marked go-lives of the Converge platform at Westchester Medical Center, Marshfield Clinic Health System in Wisconsin and City of Hope.
Amwell's first-quarter revenue grew 12% to $64 million from $58 million in the first quarter of 2021. Subscription revenue made up 43% of overall revenue, compared to 40% a year ago. Subscription revenue came in at $29 million, up 17% compared to $25 million a year ago, and visit revenue was $31 million, up 10% compared to $28 million in the first quarter of 2020.
Amwell reported gross margin of 43% compared to 38% in the prior-year period.
In April, Amwell rolled out an expansion of its virtual specialty provider and clinical program portfolio by adding musculoskeletal (MSK) and dermatology programs.
The MSK program includes customized physical therapy plans, virtual coaching visits, a digital sensor kit to enable guided exercise sessions, engagement services and access to behavioral health resources to achieve better program adherence and clinical outcomes.
Executives said the new programs are designed to address some of the most pervasive and costly areas of healthcare and are part of Amwell's efforts to enable health plans to better care for members across a wide breadth of specialty care areas.
In March, the company announced a partnership with LG Electronics to develop new digital health solutions that target expanded patient access to care. The electronics giant will develop a healthcare platform to host services from Amwell's digital health platform, Converge-integrated services and other third-party tools using LG devices.