Dive Brief:
- Amwell has extended a contract with the Defense Health Agency to support virtual care at the military health system, one of the company’s most significant growth initiatives, for another year, the telehealth vendor said Tuesday.
- However, the deal cut out deployments for Amwell’s behavioral health and automated care programs “due to budget restrictions being broadly enforced by the Department of Defense,” CEO Ido Schoenberg said during a second quarter earnings call on Tuesday.
- The contract change led the telehealth firm to revise its guidance for 2025. Amwell now expects revenue from $245 million to $250 million this year, down from its previous outlook of $250 million to $260 million.
Dive Insight:
The virtual care company, in partnership with technology firm Leidos, first won the contract worth up to $180 million with the DHA in 2023.
Amwell’s platform for scheduled virtual visits has now been deployed across the DOD, including to the Military Entrance Processing Command and the Coast Guard. Since going live on Amwell’s platform, virtual visits have nearly tripled compared with the military’s legacy system, Schoenberg said.
However, the original deal with DHA was set to expire in July, leading analysts to pepper Amwell executives about the contract’s renewal in recent earnings calls. In May, leaders said rollouts for its automated and behavioral health programs would be delayed due to leadership changes at the DHA.
Now, those products have been excluded from the latest contract after the Trump administration enacted spending cuts across the federal government — including at DOD.
Still, the programs could be added back to a future contract, given they were well received and had a positive impact on costs, Schoenberg said.
“We have every reason to believe that the lack of inclusion of those programs at this stage is related to broad budget reasons much more than anything else,” he said.
The telehealth vendor also narrowed its guidance range for adjusted earnings before interest, taxes, depreciation and amortization in the wake of the contract renewal and cost cuts made earlier this summer, including streamlining its workforce, CFO Mark Hirschhorn said.
Amwell expects adjusted EBITDA for 2025 between a loss of $50 million to $45 million, compared with earlier guidance of a loss of $55 million to $45 million.
Overall, Amwell reported a net loss of $19.5 million during the second quarter, compared with a loss of $50.6 million during the same period last year. Revenue was $70.9 million, rising about 13% year over year from $62.8 million in 2024.
The telehealth vendor also reiterated its plans to achieve positive cash from operations next year by cutting costs and utilizing artificial intelligence.
