American Well (AMWL) Morgan Stanley 22nd Annual Global Healthcare Conference summary

Strategic evolution and market positioning

• Shifted from care provision to enabling digitally enabled care, focusing on matching patients with clinical programs for improved outcomes.

• Re-platformed core systems to support large-scale deployments, such as the recent go-live with the DHA, emphasizing software enablement over clinical service sales.

• Emphasizes a single digital entry point for patients, enabling efficient routing and reporting across diverse clinical programs.

• Focused on longitudinal, personalized care rather than transactional telehealth, differentiating from competitors.

• Divesting low-margin, non-core business lines to concentrate on scalable, high-margin technology offerings.

Converge platform and operational transformation

• Converge platform acts as a matchmaking engine, connecting consumers, payers, and diverse clinical services while ensuring compliance and integration with systems like Oracle Cerner.

• Required significant investment, including $1 billion raised at IPO, to address privacy, security, and regulatory challenges.

• Successful deployment with the DHA, serving 9.6 million military members and families, demonstrates scalability and readiness for future government contracts.

• Migration to AWS GovCloud and comprehensive staff training ensured compliance with military requirements.

• Accelerated go-live for DHA, with enterprise rollout expected by year-end, minimizing project risk.

Financial performance and outlook

• Pipeline expansion and customer endorsements are expected to drive a significant increase in top-line revenue and margins next year.

• Losses projected to decrease substantially in 2025, with visibility into profitability as early as 2026.

• Cost structure improvements include headcount reduction and offshoring engineering talent, reducing costs by 60-70% compared to contractors.

• Gross margins expected to rise from high 30s% to over 50% next year, with long-term targets of 55-60%.

• Operating expenses targeted at 40-45% of revenue, with adjusted EBITDA margins in the mid-teens longer term.