Shares of Amwell fell following its fourth-quarter earnings release as the telehealth company reported greater adjusted EBITDA losses than the previous year period and projected those losses will deepen in 2022.
For the fourth quarter, the company reported an adjusted EBITDA loss of $41.1 million, 16% deeper than their reported loss in the prior-year period and bringing full-year adjusted EBITDA to a loss of $122.6 million.
During Thursday’s fourth-quarter earnings call, Chief Financial Officer Robert Shepardson attributed the increase to investments in the company’s new virtual care platform, Converge, and its acquisitions of digital health companies SilverCloud and Conversa Health, which closed at the end of August.
He dubbed the reported loss “temporary and important strategically.”
Announced in April, Converge makes all of Amwell’s products and programs, plus third-party applications, available in one place.
Amwell projects 2022 revenue between $275 million and $285 million, which Shepardson said will be impacted by health system delays as some partners have prioritized COVID-related challenges over transitioning to Converge or are waiting for the completion of Converge to seek a transition to the platform.
About 10% of the company’s visits occurred through Converge in the fourth quarter, said Ido Schoenberg, chief executive officer. The telehealth player expects that rate to “significantly increase” in 2022 led by its health system partnerships.
Amwell reported 5.8 million total visits in 2021, down from 5.9 million in 2020.
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The company expects adjusted EBITDA losses to deepen this year, from a loss of $122.7 million in 2021 to a loss between $190 million and $200 million in 2022.
That increase, Shepardson said, comes from investments in Converge-related R&D, higher spend in ensuring customers can seamlessly transition to Converge and consolidating losses associated with its 2021 acquisitions. He said the company expects these losses to be contained to 2022.
Stock dropped 4% in after-hours trading following the earnings release, after climbing 11% on Thursday following a turbulent day for the market with the Russian invasion of Ukraine.
Shares have fallen 34% so far this year.
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Amwell also reported a net loss of 18 cents a share in the fourth quarter, beating Wall Street’s estimate of a loss of 28 cents per share and bringing the company’s full-year loss to 69 cents a share compared with 2020’s loss of $2.27 per share.
The company exceeded analyst estimates on revenue at $72.8 million for the quarter, bringing full-year revenue to $252.8 million.
Analysts expressed concerns during the earnings call about competition in the telehealth market as more entrants debut specialized virtual care offerings.
While telemedicine skyrocketed in popularity out of necessity during the COVID-19 pandemic, utilization has appeared to stabilize at far higher rates than before 2020.
In a Rock Health survey, 73% of telemedicine users said they expect to continue using telemedicine at the same rate or higher in the future.
Investors have backed up the hype, devoting $29.1 billion to digital health startups in 2021.
Schoenberg highlighted Amwell’s differentiation in the market with its comprehensive virtual care platform and partnership scale.
Though the company noted that they expect many partners to delay their transition to Converge to the second half of 2022, Schoenberg said the company’s health system partners are excited to make the switch.
The company aims to achieve a composite revenue growth rate of 20% through 2025.
Amwell went public in September 2020 with a $742 million IPO.