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, 2021

☐ 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)

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  ☒

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

As of October 31, 2021, the number of shares of the registrant’s Class A common stock outstanding was 227,489,928, the number of shares of the registrant’s Class B common stock outstanding was 26,913,579 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, 2021

TABLE OF CONTENTS

		Page
PART I	Financial Information	3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheet as of September 30, 2021 (unaudited) and December 31, 2020	3
	Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2021 and 2020	4
	Condensed Consolidated Statement of Stockholders’ Equity (Deficit) (unaudited) for the three and nine months ended September 30, 2021 and 2020	5
	Condensed Consolidated Statement of Cash Flows (unaudited) for the nine months ended September 30, 2021 and 2020	7
	Notes to the Unaudited Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
PART II	Other Information	42
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45

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, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	790,402		$	941,616
Investments		—			99,963
Restricted cash		—			1,095
Accounts receivable ($497 and $12,053, from related parties and net of    allowances of $1,497 and $1,556, respectively)		39,851			45,296
Inventories		9,100			9,128
Deferred contract acquisition costs		1,339			2,134
Prepaid expenses and other current assets		13,902			14,055
Total current assets		854,594			1,113,287
Restricted cash		795			—
Property and equipment, net		2,714			3,836
Goodwill		443,903			193,877
Intangible assets, net		159,926			55,528
Operating lease right-of-use asset		17,780			6,609
Deferred contract acquisition costs, net of current portion		1,921			1,327
Other assets		1,520			1,430
Investment in minority owned joint venture		1,205			752
Total assets	$	1,484,358		$	1,376,646
Liabilities, Convertible Preferred Stock and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	5,278		$	5,797
Accrued expenses and other current liabilities		45,910			42,135
Contingent consideration liabilities		11,850			—
Operating lease liability, current		3,121			6,357
Deferred revenue ($683 and $14,421 from related parties, respectively)		60,949			66,693
Total current liabilities		127,108			120,982
Other long-term liabilities		4,210			64
Contingent consideration liabilities, net of current portion		33,340
Operating lease liability, net of current portion		14,988			1,296
Deferred revenue, net of current portion ($26 and $486 from related    parties, respectively)		7,050			8,107
Total liabilities		186,696			130,449
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares    issued or outstanding as of September 30, 2021 and as of December 31, 2020		—			—
Common stock, $0.01 par value; 1,000,000,000 Class A shares authorized, 227,158,943 and    201,488,097 shares issued, and 227,158,943 and 200,751,168 shares outstanding, respectively;    100,000,000 Class B shares authorized, 26,650,761 and 30,427,128 shares issued, and 26,650,761    and 29,297,382 shares outstanding, respectively; 200,000,000 Class C shares authorized 5,555,555    issued and outstanding as of September 30, 2021 and December 31, 2020		2,595			2,357
Treasury stock, no shares and 1,866,675 shares as of September 30, 2021    and December 31, 2020, respectively		—			(37,568	)
Additional paid-in capital		2,038,012			1,841,405
Accumulated other comprehensive income		(2,237	)		297
Accumulated deficit		(762,441	)		(582,359	)
Total American Well Corporation stockholders’ equity		1,275,929			1,224,132
Non-controlling interest		21,733			22,065
Total stockholders’ equity		1,297,662			1,246,197
Total liabilities and stockholders’ equity	$	1,484,358		$	1,376,646

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,
	2021			2020			2021			2020
Revenue
($698, $15,912, $11,005 and $29,160 from related parties, respectively)	$	62,223		$	62,551		$	180,039		$	184,833
Costs and operating expenses:
Costs of revenue, excluding depreciation and amortization of intangible assets		35,184			42,116			104,778			118,969
Research and development		27,399			25,275			72,817			57,848
Sales and marketing		16,370			13,758			44,891			39,978
General and administrative		34,380			43,113			79,946			138,537
Depreciation and amortization expense		4,340			2,576			9,330			7,371
Total costs and operating expenses		117,673			126,838			311,762			362,703
Loss from operations		(55,450	)		(64,287	)		(131,723	)		(177,870	)
Interest income and other (expense) income, net		(382	)		255			(97	)		1,410
Loss before expense from income taxes and loss from    equity method investment		(55,832	)		(64,032	)		(131,820	)		(176,460	)
Benefit (Expense) from income taxes		5,454			(78	)		5,042			(330	)
Loss from equity method investment		(554	)		(486	)		(2,095	)		(1,250	)
Net loss		(50,932	)		(64,596	)		(128,873	)		(178,040	)
Net income (loss) attributable to non-controlling interest		562			(1,515	)		(332	)		(3,920	)
Net loss attributable to American Well Corporation	$	(51,494	)	$	(63,081	)	$	(128,541	)	$	(174,120	)
Net loss per share attributable to common stockholders,    basic and diluted	$	(0.20	)	$	(0.92	)	$	(0.51	)	$	(3.38	)
Weighted-average common shares outstanding, basic and diluted		257,283,961			68,499,106			250,115,414			51,492,988
Net loss	$	(50,932	)	$	(64,596	)	$	(128,873	)	$	(178,040	)
Other comprehensive income (loss), net of tax:
Unrealized gain on available-for-sale investments		0			(135	)		(85	)		(415	)
Foreign currency translation		(2,377	)		37			(2,449	)		215
Comprehensive loss		(53,309	)		(64,694	)		(131,407	)		(178,240	)
Less: Comprehensive loss attributable to    non-controlling interest		562			(1,515	)		(332	)		(3,920	)
Comprehensive loss attributable to American Well Corporation	$	(53,871	)	$	(63,179	)	$	(131,075	)	$	(174,320	)

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

4

AMERICAN WELL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(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
Exercise of common stock options		1,812,491			18			—			6,656			—			—			6,674			—			6,674
Vesting of restricted stock units		844,900			9			—			(9	)		—			—			—			—			—
Shares withheld related to net share settlement and retired treasury stock in 2021		(68,750	)		(1	)		—			1			—			(1,857	)		(1,857	)		—			(1,857	)
Stock-based compensation expense		—			—			—			10,726			—			—			10,726			—			10,726
Currency translation adjustment		—			—			—			—			(20	)		—			(20	)		—			(20	)
Unrealized gains on available-for-sale    securities, net of tax		—			—			—			—			(119	)		—			(119	)		—			(119	)
Net loss		—			—			—			—			—			(37,859	)		(37,859	)		(277	)		(38,136	)
Balances as of June 30, 2021		242,118,903			2,422			—			1,877,497			140			(708,587	)		1,171,472			21,171			1,192,643
Exercise of common stock options		491,598			5			—			1,872			—			—			1,877			—			1,877
Vesting of restricted stock units		3,989,239			40			—			(40	)		—			—			—			—			—
Shares withheld related to net share settlement and retired treasury stock in 2021		(211,494	)		(2	)		—			2			—			(2,360	)		(2,360	)		—			(2,360	)
Issuance of stock under employee stock purchase plan		178,021			2			—			1,597			—			—			1,599			—			1,599
Issuance of common stock in acquisitions		12,798,992			128			—			143,979			—			—			144,107