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	)		—
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