Amwell, the telehealth platform formerly known as American Well, released its second quarter earnings on Tuesday in which it reported better margins from its cost-cutting measures and the divestiture of its psychiatric care division.
Executives said the company is focused on the potential of AI to transform care, and the industry’s move towards financial savings. The company is making progress towards its goal of having a positive operational cash flow by 2026.
Amwell reported a quarterly revenue of $70.9 million from a total of 1.2 million visits. The majority of its revenue came from its subscription business while Amwell Medical Group visit revenue was $22.8 million.
Chief Financial Officer Mark Hirschhorn reported on the call that Amwell’s software revenue has grown 47% since last year, and it represents nearly 60% of Amwell’s total revenue. Executives boasted the more favorable revenue mix and explained that the company is moving away from expensive, one-time customizations for customers and towards a more centralized and standard platform experience.
The company reported a gross margin of 56.1% and an adjusted EBITDA of 4.7 million, compared to 12.2 million in the first quarter of 2025. The company had a net loss of $19.5 million, compared to $18.4 million in the first quarter.
Executives discussed the company’s across-the-board cost-cutting measures to achieve its break-even goal in 2026. The company cut its research and development expenses by 12.2% in the second quarter compared to Q2 2024. It has also slashed its sales and marketing spend by 32.4% and laid off staff to improve its margins.
Amwell decreased its full year guidance range from $250-$260 million to $245-$250 million; it expects to end the year with $190 million in cash. Its third-quarter revenue expectations are $53-$56 million with an adjusted EBITDA of negative $15 million to negative $13 million.
On the second quarter earnings call, CEO Ido Schoenberg touted the renewal of a contract with the Defense Health Agency (DHA), which oversees services for the Military Health System. With Amwell, the DHA has been able to disconnect its legacy video visit system, and telehealth visits have tripled in number.
Amwell expanded its services to the Coast Guard and said its video visits are being used in combat zones connected to military hospitals in the U.S.
DHA renewed its Amwell contract for one year but discontinued its payment for behavioral health and automated care services. Schoenberg said the discontinuation of services and the limited contract expansion was due to the Department of Defense’s general cost-cutting measures as directed by President Donald Trump—not the department’s satisfaction with the services.
Schoenberg said the new administration is negotiating contracts differently, and Amwell was not in the room when the decisions were being made. Schoenberg said he expects Amwell to continue to do business with the Department of Defense and that there would likely be opportunities in the future to expand the number of services they offer.
Executives also promoted a new contract with Florida Blue, the state’s Blue Cross Blue Shield plan, for its white label telehealth services.
The healthcare sector is bracing for reduced income over the next several years because the number of uninsured people is likely to rise with federal cuts to Medicaid and the Affordable Care Act. Amwell is positioning itself as a cost saver for health systems.
“If at times in the past, member experience and clinical outcomes were discussion starters, in the market today, it is cost savings. If we are able to create a much more efficient experience that results in better not only clinical but financial outcomes, that wins the day.“
Vendors are struggling with high customer acquisition costs, Schoenberg said. Amwell is working to continue to bring third-party vendors into its fold to offer customers more vendor options through its integrated platform. This is good for vendors to get access to more customers and makes it easy for Amwell clients to try new solutions without locking themselves into the vendor.
“The market today is very focused on cost, there’s no question about it, the need for a platform that is very efficient in the way that it engages with consumers and retain them and matches them with the most optimal clinical programs with the ability to track the savings and make amendments and optimizations is suddenly something that people pay attention to,” Schoenberg said.
He continued: “Our clients are also very aware of the enormous potential of using AI to achieve those goals, and our ability to embed it liberally pretty much in everything we do in an iterative process is something that we believe is a factor that really is helpful in the conversations in the market today.”