How telehealth giant Amwell went from stock market darling to dud

The big picture: Amwell overpromised on technical capabilities, bungled product rollouts with key clients, and missed a chance to build an adaptable telehealth strategy that would have kept its revenue growing beyond the height of the pandemic, per multiple interviews and a review of internal documents.

What they're saying: "We remain confident in our path to growth and will continue to calibrate our team, fine-tune our strategy, and, when necessary, pivot to meet the needs of the health care organizations we serve," Amwell stated in a written exchange with Axios.

For this story, Axios interviewed four former Amwell employees, several of whom held high-level roles, and three others familiar with the company.

• All seven asked to remain anonymous for fear of reprisal.
• We reviewed quarterly financial reports and internal documents including one incident report.

Flashback: Founded in Boston in 2006, Amwell rose to prominence in telehealth and went public in September 2020 at a $4.1 billion valuation with backing from Google.

• COVID was a boon for Amwell and telehealth at large.
• But competing telehealth tools proliferated at breakneck pace and the company's path to success became muddied.

What they're saying: "We were trying to boil the ocean," says one former high-level employee. "Rather than doing one thing really well, we were spreading ourselves thin, which made rolling out new product features a lengthy process."

• "Clients felt they were sold vaporware," another former high-level employee added.
• "If Amwell ... had had more time to evolve and create moats, they could have created more competitive platforms," an analyst familiar with the matter tells Axios.

Inside the room: Delays plagued the rollout of key Amwell features and technical integrations with big-name partners such as CVS Health and Memorial Hermann, per all seven of Axios' sources and an internal incident report document viewed by Axios.

• Meanwhile, limited staff time was frittered away building bespoke products outside Amwell's wheelhouse, five of the sources say.
• Those products included two different tools for promoting clients' medications that one former high-level employee says lagged for months because of issues with the underlying technology. Also included was a women's health symptom tracker that was live for about three months before the client expressed dissatisfaction with it.
• Despite staff and client complaints about such issues, managers and executives failed to streamline product efforts — including investing in the right technology, avoiding over-customization, and hiring and firing the right areas of talent, the seven sources said.

Those issues led to significant staff departures beginning around 2021, including several high-level people who had played key management and implementation roles at the company, according to five sources.

• Amwell also laid off roughly 50 employees in March 2023 and again in January 2024, per multiple sources and a February earnings call in which Amwell executives said the company had reduced its headcount by 10% since the end of 2023.

Failure to launch

Amwell rushed to sign up clients for its signature telehealth product, Converge, before the platform was truly ready, six of the sources say.

The company overcommitted to customizations that ultimately slowed the endeavor's overall progress, and to projects outside the company's range of expertise, they say.

• Billed in April 2021 as a suite of unified telehealth offerings for Amwell's clients, Converge has yet to fully materialize three years later, per the sources and analyst notes.
• Data from analyst notes shows only about half the company's client visits took place on the platform in Q4 2023, but the Amwell spokesperson said the figure was higher at the end of January.
• "The whole purpose of Converge was to have everyone on this system," one former high-level employee said, noting that many clients had declined to use it.

Converge currently enables synchronous video chat, but few of the other features described in its public materials — including what co-CEOs and brothers Roy and Ido Schoenberg pitch to analysts as an advanced care ecosystem housing a suite of linked apps that allows for functions like shared note-taking across providers.

• With Converge, Amwell is providing a "unified, fully integrated hybrid care enablement platform, which glues together payers, providers, innovators and patients," Ido Schoenberg said on a Q1 2023 earnings call.
• In the company's SEC filing dated Feb. 15, 2024, Amwell lists as risk factors "our clients' acceptance of Converge and our ability and the costs to further develop this platform."
• It also lists Amwell's "inability to adapt to rapid technological changes."

Between the lines: While Amwell was rolling out Converge, it was also contending with various customizations of the platform for each of its clients.

• That meant each technological update had to be run independently for each client, causing bottlenecks and delays, per four sources.
• "Only 52%" of the company's client visits took place on Converge in Q4 2023, "compared to a similar 50% of visits" the prior quarter, per a Feb. 15, 2024, research note from BTIG senior health care analyst David Larsen.
• An Amwell spokesperson denied that this was the case, stating that all customers operated on the same multi-tenant system.

"The move to Converge brought common challenges familiar to every technology company introducing a new platform," Amwell stated.

• "We're encouraged by our success in renewing and migrating virtually all our strategic U.S. customers, including some of the nation's most sophisticated health care organizations," the company added.

All's not well at Amwell

Amwell co-CEOs Ido and Roy Schoenberg have continued to project a shiny facade internally at staff meetings and externally to clients over the last three years.

• "Roy and Ido kept painting this picture of this perfect company and when you're in the trenches and you're seeing the issues, it's frustrating," one former high-level employee said.

• Ido Schoenberg said in internal meetings and during public earnings calls — one as recent as February — that Converge was a major success.
• "We have had an excellent reception to our solution, sizable market wins, powerful client validation, and we documented compelling proof points," he said of the product.

Though Amwell seemed poised for lasting success from its start, the company has failed to meet EBITDA and revenue growth targets since going public, according to analysts.

By the numbers: In its fourth quarter, Amwell brought in $71 million in total revenue, a drop of 11% from a year ago, per a February company earnings call.

• Amwell aims to reach adjusted EBITDA break-even by 2026, later than its original break-even timeline of 2H25.
• Meanwhile, adjusted EBITDA this year is expected to sit at negative $160 million to $155 million — "well below" the negative $121 million estimate from analyst firm BTIG, per a February note.

"We are negatively surprised that guidance for adjusted EBITDA of $160 million to $155 million is well below our initial $121 million estimate," the BTIG note reads. "Our main concern with [Amwell] stock is a lack of positive EBITDA and slowing revenue growth."

• The "adjusted EBITDA guidance suggests that a very significant ramp-up would be needed to reach breakeven in 2026," the note concludes.

Amwell has a "limited number of significant clients," per its February 2024 SEC filing, and one Amwell client, Elevance Health, accounted for 24% of revenue in 2023.

• The company's February SEC filing also notes as a risk factor its "history of losses and the risk we may not achieve profitability."

Amwell said in its statement to Axios the company expects "30%+ top-line growth and 70%+ cash flow improvement in 2025," and adds, "We expect to break even in 2026 with more than $150 million in cash."

Telehealth's retrospective

Zoom out: The pandemic forced health care players large and small to embrace telehealth — a shift that initially favored telehealth generalists like Teladoc and Amwell.

Yes, but: For those early success stories to endure, however, the companies had to remain nimble and able to add new tools and technologies that would keep them competitive as other players rushed to the virtual care stage.

• "The pandemic, in my opinion, was more of a negative for the industry because it mandated overnight that health providers had to be in the telemedicine business. You had to create something," says the analyst familiar with Amwell's situation.

The backstory: Sources say Amwell's problems started to coalesce around the time the company went public in September 2020.

• The Schoenberg brothers became revenue-focused to the point of putting the company's care mission second, per five sources familiar.
• That meant core components of its offering, such as clinical quality, started to become deprioritized — a change that was reflected in leadership and organizational shifts, according to two sources.

The intrigue: Some analysts say the industry-wide embrace of telehealth forced by the pandemic should be functioning as an ongoing bolster for Amwell, as noted in research notes from BTIG and Cowen, which cite Amwell documents on the sector's size and growth potential.

• The total U.S. addressable market for telehealth "is worth well over $20 billion, and the growth rate of the industry is over 20%," reads the February BTIG research note.
• And a Cowen research note dated Feb. 14, 2024, describes the telehealth market as "highly underpenetrated."

The bottom line: Despite a pandemic-induced boost, the sources Axios spoke with say Amwell's leaders have so far failed to build a strategy nimble enough to maintain growth as more agile competitors move in.