10-Q 1 amwl-20220930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number: 001-39515

 

American Well Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

20-5009396

(State of incorporation)

(I.R.S. Employer
Identification Number)

 

75 State Street, 26th Floor

Boston, MA 02109

(Address of registrant’s principal executive offices)

(617) 204-3500

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A common stock,
par value of $0.01 per share

 

AMWL

 

The New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

As of October 31, 2022, the number of shares of the registrant’s Class A common stock outstanding was 242,463,684, the number of shares of the registrant’s Class B common stock outstanding was 27,390,397 and the number of shares of the registrant’s Class C common stock outstanding was 5,555,555.

 

 

 


 

American Well Corporation

QUARTERLY REPORT ON FORM 10-Q

For the period ended September 30, 2022

TABLE OF CONTENTS

 

 

 

Page

 

PART I

Financial Information

3

Item 1.

Financial Statements

3

 

Condensed Consolidated Balance Sheet as of September 30, 2022 (unaudited) and December 31, 2021

3

 

Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2022 and 2021

4

 

Condensed Consolidated Statement of Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2022 and 2021

5

 

Condensed Consolidated Statement of Cash Flows (unaudited) for the nine months ended September 30, 2022 and 2021

7

 

Notes to the Unaudited Condensed Consolidated Financial Statements

8

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II

Other Information

37

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults Upon Senior Securities

38

Item 4.

Mine Safety Disclosures

38

Item 5.

Other Information

38

Item 6.

Exhibits

38

 

 

 

 


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN WELL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

332,601

 

 

$

746,416

 

Investments

 

 

249,008

 

 

 

 

Accounts receivable ($164 and $2,054, from related parties and net of
   allowances of $
1,568 and $1,809, respectively)

 

 

45,730

 

 

 

51,375

 

Inventories

 

 

7,969

 

 

 

7,530

 

Deferred contract acquisition costs

 

 

1,338

 

 

 

1,697

 

Prepaid expenses and other current assets

 

 

20,598

 

 

 

20,278

 

Total current assets

 

 

657,244

 

 

 

827,296

 

Restricted cash

 

 

795

 

 

 

795

 

Property and equipment, net

 

 

1,079

 

 

 

2,235

 

Goodwill

 

 

425,196

 

 

 

442,761

 

Intangible assets, net

 

 

127,291

 

 

 

152,409

 

Operating lease right-of-use asset

 

 

14,412

 

 

 

16,422

 

Deferred contract acquisition costs, net of current portion

 

 

3,064

 

 

 

2,028

 

Other assets

 

 

1,920

 

 

 

1,722

 

Investment in minority owned joint venture

 

 

773

 

 

 

168

 

Total assets

 

$

1,231,774

 

 

$

1,445,836

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

6,175

 

 

$

12,156

 

Accrued expenses and other current liabilities

 

 

45,181

 

 

 

58,711

 

Operating lease liability, current

 

 

3,623

 

 

 

1,918

 

Deferred revenue ($338 and $1,860 from related parties, respectively)

 

 

50,151

 

 

 

68,841

 

Total current liabilities

 

 

105,130

 

 

 

141,626

 

Other long-term liabilities

 

 

2,673

 

 

 

5,136

 

Contingent consideration liabilities, net of current portion

 

 

 

 

 

16,450

 

Operating lease liability, net of current portion

 

 

12,208

 

 

 

14,694

 

Deferred revenue, net of current portion ($13 and $22 from related
   parties, respectively)

 

 

6,914

 

 

 

7,055

 

Total liabilities

 

 

126,925

 

 

 

184,961

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares
   issued or outstanding as of September 30, 2022 and as of December 31, 2021

 

 

 

 

 

 

Common stock, $0.01 par value; 1,000,000,000 Class A shares authorized, 242,304,366 and
   
229,402,453 shares issued and outstanding, respectively; 100,000,000 Class B shares authorized,
    
27,390,397 and 26,913,579 shares issued and outstanding, respectively; 200,000,000 Class C
    shares authorized
5,555,555 issued and outstanding as of September 30, 2022 and as of December 31,
    2021

 

 

2,753

 

 

 

2,620

 

Additional paid-in capital

 

 

2,133,614

 

 

 

2,054,275

 

Accumulated other comprehensive loss

 

 

(31,056

)

 

 

(6,353

)

Accumulated deficit

 

 

(1,020,865

)

 

 

(811,284

)

Total American Well Corporation stockholders’ equity

 

 

1,084,446

 

 

 

1,239,258

 

Non-controlling interest

 

 

20,403

 

 

 

21,617

 

Total stockholders’ equity

 

 

1,104,849

 

 

 

1,260,875

 

Total liabilities and stockholders’ equity

 

$

1,231,774

 

 

$

1,445,836

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

AMERICAN WELL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

($729, $698, $3,106 and $11,005 from related parties, respectively)

 

$

69,209

 

 

$

62,223

 

 

$

197,957

 

 

$

180,039

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Costs of revenue, excluding depreciation and amortization of intangible assets

 

 

41,507

 

 

 

35,184

 

 

$

114,769

 

 

 

104,778

 

Research and development

 

 

36,254

 

 

 

27,399

 

 

$

110,802

 

 

 

72,817

 

Sales and marketing

 

 

18,493

 

 

 

16,370

 

 

$

58,368

 

 

 

44,891

 

General and administrative

 

 

37,682

 

 

 

34,380

 

 

$

105,309

 

 

 

79,946

 

Depreciation and amortization expense

 

 

6,397

 

 

 

4,340

 

 

$

19,719

 

 

 

9,330

 

Total costs and operating expenses

 

 

140,333

 

 

 

117,673

 

 

 

408,967

 

 

 

311,762

 

Loss from operations

 

 

(71,124

)

 

 

(55,450

)

 

 

(211,010

)

 

 

(131,723

)

Interest income and other (expense) income, net

 

 

1,237

 

 

 

(382

)

 

$

2,109

 

 

 

(97

)

Loss before expense from income taxes and loss from
   equity method investment

 

 

(69,887

)

 

 

(55,832

)

 

 

(208,901

)

 

 

(131,820

)

Benefit (Expense) from income taxes

 

 

(95

)

 

 

5,454

 

 

$

(224

)

 

 

5,042

 

Loss from equity method investment

 

 

(593

)

 

 

(554

)

 

$

(1,355

)

 

 

(2,095

)

Net loss

 

 

(70,575

)

 

 

(50,932

)

 

 

(210,480

)

 

 

(128,873

)

Net loss attributable to non-controlling interest

 

 

(491

)

 

 

562

 

 

$

(1,214

)

 

 

(332

)

Net loss attributable to American Well Corporation

 

$

(70,084

)

 

$

(51,494

)

 

$

(209,266

)

 

$

(128,541

)

Net loss per share attributable to common stockholders,
   basic and diluted

 

$

(0.25

)

 

$

(0.20

)

 

$

(0.77

)

 

$

(0.51

)

Weighted-average common shares outstanding, basic and diluted

 

 

277,389,730

 

 

 

257,283,961

 

 

 

272,846,985

 

 

 

250,115,414

 

Net loss

 

$

(70,575

)

 

$

(50,932

)

 

$

(210,480

)

 

$

(128,873

)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale investments

 

 

1,002

 

 

 

0

 

 

 

(360

)

 

 

(85

)

Foreign currency translation

 

 

(11,213

)

 

 

(2,377

)

 

 

(24,343

)

 

 

(2,449

)

Comprehensive loss

 

 

(80,786

)

 

 

(53,309

)

 

 

(235,183

)

 

 

(131,407

)

Less: Comprehensive (loss) income attributable to
   non-controlling interest

 

 

(491

)

 

 

562

 

 

 

(1,214

)

 

 

(332

)

Comprehensive loss attributable to American Well Corporation

 

$

(80,295

)

 

$

(53,871

)

 

$

(233,969

)

 

$

(131,075

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

AMERICAN WELL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

American Well
Corporation
Stockholders’

 

 

Noncontrolling

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

 

Interest

 

 

Equity

 

Balances as of January 1, 2022

 

 

261,871,587

 

 

$

2,620

 

 

$

2,054,275

 

 

$

(6,353

)

 

$

(811,284

)

 

$

1,239,258

 

 

$

21,617

 

 

$

1,260,875

 

Exercise of common stock options

 

 

976,644

 

 

 

10

 

 

 

2,455

 

 

 

 

 

 

 

 

 

2,465

 

 

 

 

 

 

2,465

 

Vesting of restricted stock units

 

 

1,398,305

 

 

 

14

 

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock under employee stock purchase plan

 

 

425,114

 

 

 

4

 

 

 

1,497

 

 

 

 

 

 

 

 

 

1,501

 

 

 

 

 

 

1,501

 

Issuance of common stock related to Conversa earn-out settlement

 

 

1,020,964

 

 

 

10

 

 

 

4,288

 

 

 

 

 

 

 

 

 

4,298

 

 

 

 

 

 

4,298

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

12,085

 

 

 

 

 

 

 

 

 

12,085

 

 

 

 

 

 

12,085

 

Capital contributed by selling shareholders of acquired businesses

 

 

 

 

 

 

 

 

2,019

 

 

 

 

 

 

 

 

 

2,019

 

 

 

 

 

 

2,019

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(2,951

)

 

 

 

 

 

(2,951

)

 

 

 

 

 

(2,951

)

Unrealized losses on available-for-sale
   securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

(1,251

)

 

 

 

 

 

(1,251

)

 

 

 

 

 

(1,251

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(70,037

)

 

 

(70,037

)

 

 

(216

)

 

 

(70,253

)

Balances as of March 31, 2022

 

 

265,692,614

 

 

 

2,658

 

 

 

2,076,605

 

 

 

(10,555

)

 

 

(881,321

)

 

 

1,187,387

 

 

 

21,401

 

 

 

1,208,788

 

Exercise of common stock options

 

 

1,083,571

 

 

 

10

 

 

 

1,916

 

 

 

 

 

 

 

 

 

1,926

 

 

 

 

 

 

1,926

 

Vesting of restricted stock units

 

 

1,606,976

 

 

 

16

 

 

 

(16

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock related to SilverCloud earn-out settlement

 

 

4,959,856

 

 

 

50

 

 

 

12,895

 

 

 

 

 

 

 

 

 

12,945

 

 

 

 

 

 

12,945

 

Receipt of Section 16(b) disgorgement

 

 

 

 

 

 

 

 

295

 

 

 

 

 

 

 

 

 

295

 

 

 

 

 

 

295

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

14,907

 

 

 

 

 

 

 

 

 

14,907

 

 

 

 

 

 

14,907

 

Capital contributed by selling shareholders of acquired businesses

 

 

 

 

 

 

 

 

1,974

 

 

 

 

 

 

 

 

 

1,974

 

 

 

 

 

 

1,974

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(10,179

)

 

 

 

 

 

(10,179

)

 

 

 

 

 

(10,179

)

Unrealized losses on available-for-sale
   securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

(111

)

 

 

 

 

 

(111

)

 

 

 

 

 

(111

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(69,145

)

 

 

(69,145

)

 

 

(507

)

 

 

(69,652

)

Balances as of June 30, 2022

 

 

273,343,017