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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended
March 31,
2022
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from
to
Commission File Number:
001-39515
American Well Corporation
(Exact name of registrant as specified in its charter)
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Delaware
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20-5009396
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(State of incorporation)
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(I.R.S. Employer
Identification Number)
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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:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Class A common stock,
par
value of $0.01 per share
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AMWL
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The New York Stock Exchange
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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.
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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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
PART I - FINANCIAL
INFORMATION
Item 1. Financial
Statements
AMERICAN WELL CORPORATION
CONDENSED CONSOLIDATED
BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
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March 31, 2022
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December 31, 2021
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Assets
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Current assets:
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Cash and cash equivalents
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$
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176,934
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$
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746,416
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Investments
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497,972
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—
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Accounts receivable ($2,212 and
$2,054,
from related parties and net of
allowances of $1,609 and
$1,809,
respectively)
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47,146
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51,375
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Inventories
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8,025
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7,530
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Deferred contract acquisition costs
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1,250
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1,697
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Prepaid expenses and other current assets
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21,824
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20,278
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Total current assets
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753,151
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827,296
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Restricted cash
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795
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795
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Property and equipment, net
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1,892
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2,235
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Goodwill
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440,697
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442,761
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Intangible assets, net
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145,347
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152,409
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Operating lease right-of-use asset
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15,448
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16,422
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Deferred contract acquisition costs, net of current
portion
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2,577
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2,028
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Other assets
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1,891
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1,722
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Investment in minority owned joint venture (Note 2)
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—
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168
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Total assets
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$
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1,361,798
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$
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1,445,836
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable
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$
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7,496
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$
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12,156
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Accrued expenses and other current liabilities
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35,917
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58,711
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Contingent consideration liabilities
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13,870
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—
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Operating lease liability, current
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2,663
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1,918
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Deferred revenue ($1,499 and
$1,860 from
related parties, respectively)
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68,843
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68,841
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Total current liabilities
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128,789
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141,626
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Other long-term liabilities
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4,517
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5,136
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Contingent consideration liabilities, net of current
portion
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—
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16,450
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Operating lease liability, net of current portion
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13,717
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14,694
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Deferred revenue, net of current portion ($19 and
$22 from
related
parties, respectively)
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5,987
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7,055
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Total liabilities
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153,010
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184,961
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Commitments and contingencies (Note
11)
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Stockholders’ equity:
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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
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—
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—
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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
|
)
|
|
|
—
|
|
|
Net decrease in cash, cash equivalents, and restricted
cash
|
|
|
(569,482
|
)
|
|
|
(45,534
|
)
|
|
Cash, cash equivalents, and restricted cash at beginning of
period
|
|
|
747,211
|
|
|
|
942,711
|
|
|
Cash, cash equivalents, and restricted cash at end of
period
|
|
$
|
177,729
|
|
|
$
|
897,177
|
|
|
Cash, cash equivalents, and restricted cash at end of
period:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
176,934
|
|
|
|
896,382
|
|
|
Restricted cash
|
|
|
795
|
|
|
|
795
|
|
|
Total cash, cash equivalents, and restricted cash at end of
period
|
|
$
|
177,729
|
|
|
$
|
897,177
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash (refunded) paid for income taxes
|
|
$
|
(454
|
)
|
|
$
|
741
|
|
|
Supplemental disclosure of non-cash investing and financing
activities:
|
|
|
|
|
|
|
|
Additions to property and equipment included in accrued expenses
and accounts payable
|
|
$
|
—
|
|
|
$
|
23
|
|
|
Issuance of common stock in settlement of earnout
|
|
$
|
4,298
|
|
|
$
|
—
|
|
|
Repurchase of common stock
|
|
$
|
—
|
|
|
$
|
388
|
|
|
Receivable related to exercise of common stock options
|
|
$
|
4
|
|
|
$
|
833
|
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
7
AMERICAN WELL CORPORATION
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
1. Organization and Description of Business
Description of Business
American Well Corporation (the “Company”) was incorporated under
the laws of the State of Delaware in June 2006. The Company is
headquartered in Boston, Massachusetts. The Company is a leading
enterprise software company enabling digital delivery of care for
healthcare’s key stakeholders. The Company empowers our clients
with the core technology and services necessary to successfully
develop and distribute virtual care programs that meet their
strategic, operational, financial and clinical objectives under
their own brands.
Acquisitions
On
August 9, 2021
and
August 27, 2021,
the Company completed the acquisitions of
Conversa Health Inc. (“Conversa”) and SilverCloud Health Holdings,
Inc. (“SilverCloud”), respectively (together, the “Acquisitions”).
Conversa is a leader in automated virtual healthcare. SilverCloud
is a leading digital mental health platform.
See Note 7 “Business Combinations”.
Liquidity and Capital Resources
The Company expects that its cash, cash equivalents and investments
balance as of March 31, 2022 of
$674,906
will be sufficient to fund its operating expenses and capital
expenditure requirements for at least the next twelve
months.
2. Summary of Significant Accounting Policies
There have been no material changes to the significant accounting
policies described in the Company’s Form 10-K for the fiscal year
ended December 31, 2021, that have had a material impact on the
consolidated financial statements and related notes.
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles in the United States of America (“GAAP”) and
applicable rules and regulations of the Securities and Exchange
Commission (the “SEC”) regarding interim financial reporting. In
the opinion of the Company’s management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments
(consisting of normal recurring accruals and adjustments) necessary
for the fair statement of the Company’s the financial position,
results of operations and cash flows at the dates and for the
periods indicated. The interim results for the three months ended
March 31, 2022 are not necessarily indicative of results for the
full 2022 calendar year or any other future interim periods. The
information included in the interim financial statements should be
read in conjunction with the annual consolidated financial
statements and accompanying notes included in the Form
10-K.
The unaudited condensed consolidated financial statements include
the accounts of American Well Corporation, its wholly-owned
subsidiaries, those of professional corporations, which represent
variable interest entities in which American Well has an interest
and is the primary beneficiary (“PC”), and National Telehealth
Network (“NTN”), an entity in which American Well controls fifty
percent or more of the voting shares (see Note 4). Intercompany
accounts and transactions have been eliminated in
consolidation.
The Company’s reporting currency is the U.S. dollar. The Company
determines the functional currency of each subsidiary based on the
currency of the primary economic environment in which each
subsidiary operates. Items included in the financial statements of
such subsidiaries are measured using that functional currency.
Foreign currency denominated monetary assets and liabilities are
remeasured into U.S. dollars at current exchange rates and foreign
currency denominated nonmonetary assets and liabilities are
remeasured into U.S. dollars at historical exchange rates. Gains or
losses from foreign currency remeasurement and settlements are
included in interest income and other income (expense), net in the
condensed consolidated statements of operations and comprehensive
loss.
For consolidated entities where American Well owns or is exposed to
less than
100%
of the economics, the net loss attributable to noncontrolling
interests is recorded in the condensed consolidated statements of
operations and comprehensive loss equal to the percentage of the
economic or ownership interest retained in each entity by the
respective non-controlling party. The noncontrolling interests are
presented as a separate component of stockholders’ deficit in the
condensed consolidated balance sheets.
8
Use of Estimates
The preparation of condensed consolidated financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at
the date of the condensed consolidated financial statements and the
reported amounts of revenue and expenses during the reported
periods. Significant estimates and assumptions reflected in these
condensed consolidated financial statements include, but are not
limited to, revenue recognition, the estimated customer
relationship period that is used in the amortization of deferred
contract acquisition costs, the valuation of assets and liabilities
acquired in business combinations, the useful lives of intangible
assets and property and equipment and the valuation of common
stock. The Company bases its estimates on historical experience,
known trends, and other market-specific or other relevant factors
that it believes to be reasonable under the circumstances. On an
ongoing basis, management evaluates its estimates, as there are
changes in circumstances, facts and experience. Changes in
estimates are recorded in the period in which they become known.
Actual results may differ from those estimates or
assumptions.
Due to the COVID-19 global pandemic, the global economy and
financial markets have been disrupted and there is a significant
amount of uncertainty about the length and severity of the
consequences caused by the pandemic. The Company has considered
information available to it as of the date of issuance of these
financial statements and has not experienced any significant impact
to its estimates and assumptions as a result of the COVID-19
pandemic. On an ongoing basis, the Company will continue to closely
monitor the COVID-19 impact on its estimates and
assumptions.
Segment Information
The Company’s chief operating decision makers (CODMs), its two
Chief Executive Officers, review financial information presented on
a consolidated basis for purposes of allocating resources and
evaluating financial performance. The Company operates and manages
its business as
one
reportable and operating segment. In addition, substantially all of
the Company’s revenue and long-lived assets are attributable to
operations in the United States for all periods
presented.
Variable Interest Entities
The Company evaluates its ownership, contractual and other
interests in entities to determine if it has any variable interest
in a variable interest entity (“VIE”). These evaluations are
complex and involve judgment. If the Company determines that an
entity in which it holds a contractual or ownership interest is a
VIE and that the Company is the primary beneficiary, the Company
consolidates such entity in its condensed consolidated financial
statements. The primary beneficiary of a VIE is the party that
meets both of the following criteria: (i) has the power to make
decisions that most significantly affect the economic performance
of the VIE; and (ii) has the obligation to absorb losses or the
right to receive benefits that in either case could potentially be
significant to the VIE. Management performs ongoing reassessments
of whether changes in the facts and circumstances regarding the
Company’s involvement with a VIE will cause the consolidation
conclusion to change. Changes in consolidation status are applied
prospectively.
The aggregate carrying value of total assets and total liabilities
included on the condensed consolidated balance sheets for the PCs
after elimination of intercompany transactions were
$23,753
and
$1,556,
respectively, as of March 31, 2022
and $29,770
and $1,485,
respectively as of December 31,
2021.
Total revenue included on the condensed consolidated statements of
operations and comprehensive loss for the PCs after elimination of
intercompany transactions was
$18,392
and $17,569
for the three months ended
March 31, 2022 and 2021, respectively. Net loss included on the
condensed consolidated statements of operations and comprehensive
loss was not material for the three months ended March 31, 2022 and
2021.
Investment in Minority Owned Joint Venture
The Company and Cleveland Clinic partnered to form a joint venture,
under the name CCAW, JV LLC, to provide broad access to
comprehensive and high acuity care services via digital care
delivery. The Company does not have a controlling financial
interest in CCAW, JV LLC, but it does have the ability to exercise
significant influence over the operating and financial policies of
CCAW, JV LLC. Therefore, the Company accounts for its investment in
CCAW, JV LLC using the equity method of accounting. The joint
venture is considered a variable interest entity under ASC 810-10,
but the Company is not the primary beneficiary as it does not have
the power to direct the activities of the joint venture that most
significantly impact its performance. The Company’s evaluation of
ability to impact performance is based on Cleveland Clinic’s
managing directors and Cleveland Clinic’s ability to appoint and
remove the chairperson who has the ability to cast the tie breaking
vote on the most significant activities.
In 2020 the Company contributed $2,940
as its initial investment for a
49%
interest in CCAW, JV LLC. The agreement also requires aggregate
total capital contributions by the Company up to an additional
$11,800
in
two phases, which is yet to be defined.
9
During
the three months ended March 31, 2021, the Company made a capital
contribution of $2,548,
related to a portion of the phase one capital commitment. In April
2022 the Company made a capital contribution of
$1,960
related to a portion of the phase one capital commitment. For the
three months ended
March 31, 2022 and 2021, the Company recognized a loss of
$211
and $819
as its proportionate share of the joint venture’s results of
operations, respectively. Accordingly, the carrying value of the
equity method investment as of
March 31, 2022 and December 31, 2021 was
$(43)
and $168,
respectively. As the share of losses exceeds the carrying amount of
the investment, the carrying amount as of
March 31, 2022
it is included in the balance of accrued expenses and other current
liabilities on the condensed consolidated balance sheet.
Concentrations of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash, cash
equivalents, investments and accounts receivable. The Company
invests its excess cash with large financial institutions that the
Company believes are of high credit quality. Cash and cash
equivalents are invested in highly rated money market funds. At
times, the Company’s cash balances with individual banking
institutions are in excess of federally insured limits. The
Company’s investments are invested in U.S. government agency bonds.
The Company has not experienced any losses on its deposits of cash,
cash equivalents or investments. The Company does not believe that
it is subject to unusual credit risk beyond the normal credit risk
associated with commercial banking relationships.
The Company performs ongoing assessments and credit evaluations of
its customers to assess the collectability of the accounts based on
a number of factors, including past transaction experience, age of
the accounts receivable, review of the invoicing terms of the
contracts, and recent communication with customers. The Company has
not experienced significant credit losses from its accounts
receivable. As of March 31, 2022 and December 31, 2021, one
customer accounted for
14%
and
19%
of outstanding accounts receivable, respectively.
During the three months ended March 31, 2022 and 2021, sales to one
customer (who was a related party during the 2021 period noted)
represented
26%
and
25%
of the Company’s total revenue, respectively.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12,
Simplifying the Accounting for Income Taxes
(“ASU 2019-12”), which simplifies the accounting for income taxes
by removing certain exceptions and clarifying and amending existing
guidance. The guidance was
adopted
effective
January 1, 2021
and did
not
have a material impact on the condensed consolidated financial
statements and disclosures.
In October 2021, the FASB issued ASU 2021-08,
Business Combinations
(Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers
(“ASU 2021-08”), which requires that an entity (acquirer) recognize
and measure contract assets and contract liabilities acquired in a
business combination in accordance with Topic 606. At the
acquisition date, an acquirer should account for the related
revenue contracts in accordance with Topic 606 as if it had
originated the contracts. To achieve this, an acquirer may assess
how the acquiree applied Topic 606 to determine what to record for
the acquired revenue contracts. Generally, this should result in an
acquirer recognizing and measuring the acquired contract assets and
contract liabilities consistent with how they were recognized and
measured in the acquiree’s financial statements. The guidance
was
adopted
effective
July 1, 2021
and impacted the accounting of acquired deferred revenue for the
Conversa and SilverCloud acquisitions that occurred in August
2021.
In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments—Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments
(‘‘ASU 2016-13’’), which requires the measurement and recognition
of expected credit losses for financial assets held at amortized
cost. ASU 2016-13 replaces the existing incurred loss impairment
model with an expected loss model. It also eliminates the concept
of other-than-temporary impairment and requires credit losses
related to available-for-sale debt securities to be recorded
through an allowance for credit losses rather than as a reduction
in the amortized cost basis of the securities. These changes may
result in earlier recognition of credit losses. In November 2018,
the FASB issued ASU No. 2018-19,
Codification Improvements to
Topic 326, Financial Instruments—Credit Losses,
which narrowed the scope and changed the effective date for
non-public entities for ASU 2016-13. The FASB subsequently issued
supplemental guidance within ASU No. 2019-05,
Financial Instruments—Credit Losses (Topic 326): Targeted
Transition Relief
(‘‘ASU 2019-05’’). ASU 2019-05 provides an option to irrevocably
elect the fair value option for certain financial assets previously
measured at amortized cost basis. The Company
adopted
ASU 2016-13 and the related clarifications in
2021.
The adoption did
not
have a material effect on the Company’s consolidated financial
statements.
10
3. Revenue
The following table presents the Company’s revenues disaggregated
by revenue source:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Platform subscription
|
|
$
|
28,691
|
|
|
$
|
24,596
|
|
|
Visits
|
|
|
30,736
|
|
|
|
27,821
|
|
|
Other
|
|
|
4,805
|
|
|
|
5,182
|
|
|
Total Revenue
|
|
$
|
64,232
|
|
|
$
|
57,599
|
|
Accounts Receivable, Net
Accounts receivable primarily consist of amounts billed currently
due from customers. Accounts receivable are presented net of an
allowance for credit losses, which is an estimate of amounts that
may not be collectible. In determining the amount of the allowance
at each reporting date, the Company makes judgments about general
economic conditions, historical write-off experience and any
specific risks identified in customer collection matters, including
the aging of unpaid accounts receivable and changes in customer
financial conditions. Account balances are written off after all
means of collection are exhausted and the potential for
non-recovery is determined to be probable. Adjustments to the
allowance for credit losses are recorded as general and
administrative expenses in the condensed consolidated statements of
operations and comprehensive loss.
Changes in the allowance for credit losses were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2022
|
|
|
Year Ended December 31, 2021
|
|
|
Allowance for credit losses, beginning of the
period
|
|
$
|
1,809
|
|
|
$
|
1,556
|
|
|
Provisions
|
|
|
(200
|
)
|
|
|
714
|
|
|
Write-offs
|
|
|
—
|
|
|
|
(461
|
)
|
|
Allowance for credit losses, end of the period
|
|
$
|
1,609
|
|
|
$
|
1,809
|
|
The Company has rights to consideration for services completed but
not billed at the reporting date. Unbilled receivables are
classified as receivables when the Company has the right to invoice
the customer. The amount of unbilled accounts receivable included
within accounts receivable on the consolidated balance sheet
was
$4,856
and $5,697
as of
March 31, 2022 and December 31, 2021, respectively. The amount of
unbilled accounts receivable included within other assets on the
consolidated balance sheet was
$684
and $781
as
of March 31, 2022 and December 31, 2021, respectively.
Deferred Revenue
Contract liabilities consist of deferred revenue and include
billings in advance of performance under the contract. Such amounts
are recognized as revenue over the contractual period. For the
three months ended March 31, 2022 and 2021, the Company recognized
revenue of
$23,147
and $