10-Q 1 amwl-20220331.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 March 31, 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 April 30, 2022, the number of shares of the registrant’s Class A common stock outstanding was 233,359,518, 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 March 31, 2022

TABLE OF CONTENTS

 

 

 

Page

 

PART I

Financial Information

3

Item 1.

Financial Statements

3

 

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

3

 

Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited) for the three months ended March 31, 2022 and 2021

4

 

Condensed Consolidated Statement of Stockholders’ Equity (unaudited) for the three months ended March 31, 2022 and 2021

5

 

Condensed Consolidated Statement of Cash Flows (unaudited) for the three months ended March 31, 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

34

Item 4.

Controls and Procedures

34

PART II

Other Information

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

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)

 

 

March 31, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

176,934

 

 

$

746,416

 

Investments

 

 

497,972

 

 

 

 

Accounts receivable ($2,212 and $2,054, from related parties and net of
   allowances of $
1,609 and $1,809, respectively)

 

 

47,146

 

 

 

51,375

 

Inventories

 

 

8,025

 

 

 

7,530

 

Deferred contract acquisition costs

 

 

1,250

 

 

 

1,697

 

Prepaid expenses and other current assets

 

 

21,824

 

 

 

20,278

 

Total current assets

 

 

753,151

 

 

 

827,296

 

Restricted cash

 

 

795

 

 

 

795

 

Property and equipment, net

 

 

1,892

 

 

 

2,235

 

Goodwill

 

 

440,697

 

 

 

442,761

 

Intangible assets, net

 

 

145,347

 

 

 

152,409

 

Operating lease right-of-use asset

 

 

15,448

 

 

 

16,422

 

Deferred contract acquisition costs, net of current portion

 

 

2,577

 

 

 

2,028

 

Other assets

 

 

1,891

 

 

 

1,722

 

Investment in minority owned joint venture (Note 2)

 

 

 

 

 

168

 

Total assets

 

$

1,361,798

 

 

$

1,445,836

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,496

 

 

$

12,156

 

Accrued expenses and other current liabilities

 

 

35,917

 

 

 

58,711

 

Contingent consideration liabilities

 

 

13,870

 

 

 

 

Operating lease liability, current

 

 

2,663

 

 

 

1,918

 

Deferred revenue ($1,499 and $1,860 from related parties, respectively)

 

 

68,843

 

 

 

68,841

 

Total current liabilities

 

 

128,789

 

 

 

141,626

 

Other long-term liabilities

 

 

4,517

 

 

 

5,136

 

Contingent consideration liabilities, net of current portion

 

 

 

 

 

16,450

 

Operating lease liability, net of current portion

 

 

13,717

 

 

 

14,694

 

Deferred revenue, net of current portion ($19 and $22 from related
   parties, respectively)

 

 

5,987

 

 

 

7,055

 

Total liabilities

 

 

153,010

 

 

 

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 March 31, 2022 and as of December 31, 2021

 

 

 

 

 

 

Common stock, $0.01 par value; 1,000,000,000 Class A shares authorized, 232,746,662 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 March 31, 2022 and as of December 31,
    2021

 

 

2,658

 

 

 

2,620

 

Additional paid-in capital

 

 

2,076,605

 

 

 

2,054,275

 

Accumulated other comprehensive income

 

 

(10,555

)

 

 

(6,353

)

Accumulated deficit

 

 

(881,321

)

 

 

(811,284

)

Total American Well Corporation stockholders’ equity

 

 

1,187,387

 

 

 

1,239,258

 

Non-controlling interest

 

 

21,401

 

 

 

21,617

 

Total stockholders’ equity

 

 

1,208,788

 

 

 

1,260,875

 

Total liabilities and stockholders’ equity

 

$

1,361,798

 

 

$

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 March 31,

 

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

( $1,215 and $8,845 from related parties, respectively)

 

$

64,232

 

 

$

57,599

 

Costs and operating expenses:

 

 

 

 

 

 

Costs of revenue, excluding depreciation and amortization of intangible assets

 

 

36,765

 

 

 

35,705

 

Research and development

 

 

37,481

 

 

 

23,040

 

Sales and marketing

 

 

21,154

 

 

 

13,732

 

General and administrative

 

 

32,716

 

 

 

21,354

 

Depreciation and amortization expense

 

 

6,598

 

 

 

2,506

 

Total costs and operating expenses

 

 

134,714

 

 

 

96,337

 

Loss from operations

 

 

(70,482

)

 

 

(38,738

)

Interest income and other (expense) income, net

 

 

108

 

 

 

61

 

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

 

 

(70,374

)

 

 

(38,677

)

Benefit (Expense) from income taxes

 

 

332

 

 

 

(309

)

Loss from equity method investment

 

 

(211

)

 

 

(819

)

Net loss

 

 

(70,253

)

 

 

(39,805

)

Net loss attributable to non-controlling interest

 

 

(216

)

 

 

(617

)

Net loss attributable to American Well Corporation

 

$

(70,037

)

 

$

(39,188

)

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

 

$

(0.26

)

 

$

(0.16

)

Weighted-average common shares outstanding, basic and diluted

 

 

268,002,110

 

 

 

243,544,647

 

Net loss

 

$

(70,253

)

 

$

(39,805

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

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

 

 

(1,251

)

 

 

34

 

Foreign currency translation

 

 

(2,951

)

 

 

(52

)

Comprehensive loss

 

 

(74,455

)

 

 

(39,823

)

Less: Comprehensive loss attributable to
   non-controlling interest

 

 

(216

)

 

 

(617

)

Comprehensive loss attributable to American Well Corporation

 

$

(74,239

)

 

$

(39,206

)

 

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

 

 

Income (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

 

 

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

5


 

AMERICAN WELL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(unaudited)

 

 

 

Common Stock

 

 

Treasury

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

American
Well
Corporation
Stockholders’

 

 

Noncontrolling

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Stock

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

 

Interest

 

 

Equity

 

Balances as of January 1, 2021

 

 

235,604,105

 

 

 

2,357

 

 

$

(37,568

)

 

 

1,841,405

 

 

$

297

 

 

$

(582,359

)

 

$

1,224,132

 

 

$

22,065

 

 

$

1,246,197

 

Exercise of common stock options

 

 

3,474,375

 

 

 

34

 

 

 

 

 

 

10,096

 

 

 

 

 

 

 

 

 

10,130

 

 

 

 

 

 

10,130

 

Vesting of restricted stock units

 

 

853,842

 

 

 

9

 

 

 

 

 

 

(9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement of treasury stock purchased in 2020

 

 

 

 

 

 

 

 

37,568

 

 

 

(15

)

 

 

 

 

 

(37,553

)

 

 

 

 

 

 

 

 

 

Shares withheld related to net share settlement and retired treasury stock in 2021

 

 

(402,060

)

 

 

(4

)

 

 

 

 

 

4

 

 

 

 

 

 

(9,771

)

 

 

(9,771

)

 

 

 

 

 

(9,771

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

8,642

 

 

 

 

 

 

 

 

 

8,642

 

 

 

 

 

 

8,642

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(52

)

 

 

 

 

 

(52

)

 

 

 

 

 

(52

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34

 

 

 

 

 

 

34

 

 

 

 

 

 

34

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(39,188

)

 

 

(39,188

)

 

 

(617

)

 

 

(39,805

)

Balances as of March 31, 2021

 

 

239,530,262

 

 

 

2,396

 

 

 

 

 

 

1,860,123

 

 

 

279

 

 

 

(668,871

)

 

 

1,193,927

 

 

 

21,448

 

 

 

1,215,375

 

 

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

6


 

AMERICAN WELL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(70,253

)

 

$

(39,805

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

6,598

 

 

 

2,506

 

Provisions for credit losses

 

 

(200

)

 

 

260

 

Amortization of deferred contract acquisition costs

 

 

391

 

 

 

335

 

Amortization of deferred contract fulfillment costs

 

 

133

 

 

 

173

 

Noncash compensation costs incurred by selling shareholders

 

 

2,025

 

 

 

 

Stock-based compensation expense

 

 

12,075

 

 

 

8,642

 

Loss on equity method investment

 

 

211

 

 

 

819

 

Deferred income taxes

 

 

(443

)

 

 

 

Changes in operating assets and liabilities, net of acquisition:

 

 

 

 

 

 

Accounts receivable

 

 

4,290

 

 

 

7,357

 

Inventories

 

 

(495

)

 

 

(238

)

Deferred contract acquisition costs

 

 

(501

)

 

 

(203

)

Prepaid expenses and other current assets

 

 

(1,838

)

 

 

(167

)

Other assets

 

 

(169

)

 

 

39

 

Accounts payable

 

 

(4,601

)

 

 

1,023

 

Accrued expenses and other current liabilities

 

 

(8,446

)

 

 

(17,666

)

Other long-term liabilities

 

 

(16

)

 

 

(19

)

Deferred revenue

 

 

(952

)

 

 

(4,195

)

Net cash used in operating activities

 

 

(62,191

)

 

 

(41,139

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(68

)

 

 

(148

)

Investment in less than majority owned joint venture

 

 

 

 

 

(2,548

)

Purchases of investments

 

 

(499,223

)

 

 

 

Net cash used in investing activities

 

 

(499,291

)

 

 

(2,696

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from exercise of common stock options

 

 

2,536

 

 

 

9,297

 

Proceeds from employee stock purchase plan

 

 

1,501

 

 

 

 

Payments for the purchase of treasury stock

 

 

 

 

 

(9,383

)

Payment of deferred offering costs

 

 

 

 

 

(1,613

)

Payment of contingent consideration

 

 

(11,790

)

 

 

 

Net cash provided by financing activities

 

 

(7,753

)

 

 

(1,699

)

Effect of exchange rates changes on cash, cash equivalents, and restricted cash

 

 

(247