Great! Well, good afternoon, everyone. Welcome to the afternoon of the 22nd Annual Morgan Stanley Healthcare Conference. I'm Craig Hettenbach. I cover healthcare technology and providers. Very pleased to have with us this afternoon Amwell CEO Ido Schoenberg and CFO Bob Richardson. Welcome. For investors that need to see the disclosures, they're on the Morgan Stanley website, www.morganstanley.com/researchdisclosures. So with that out of the way, I thought we'd start just bigger picture. If I think back, it's been a while since the IPO. A lot has changed in the world, and a lot has changed with Amwell. And so would you love to get an update in terms of how your strategy has evolved in the last number of years to where we are today? Sure. And you're absolutely right, so much has changed in the market, in the competitive landscape, in Amwell, for us and for our customers. Essentially, telehealth went a long way from what it was only a couple of years ago, and I would define it today as a mechanism to allow for digitally enabled care. Essentially, more and more employers and payers are convinced that there is great value in allowing people to go online, know them well, and match them with the right clinical programs in order to improve their outcomes. This is very much an exercise in enablement rather than in care provision. It's a new way that is becoming much more prevalent to think about the healthcare market as a whole versus a specific, specifically as it relates to telehealth. In Amwell, we re-platform our core systems to match this new reality, and we're very fortunate to scale it recently very significantly with some of our key customers, including Elevance, Highmark, and most recently, the DHA. Craig, as we shared a few minutes ago, we are very pleased to share with you and the audience for the first time that a week ago we went live with Converge in the DHA, and that's a major event for us and the company. That deployment demonstrates what I just said. This platform does not include any sale of clinical services. It operates as a true matchmaker between many men and women in uniform and their care providers. It's pure software, it's pure enablement of new way to access care services. I believe that role of telehealth is one that will continue to be with us for many years to come and is likely to increase quite significantly. Great, and we'll certainly dig into Converge. And since you mentioned the DHA, which was a very important win, and, you know, sometimes from the outside looking in, we don't have the same perspective in terms of what it takes for such a program and to go live. Maybe you can just give us some context there in terms of the effort at the organization to get you where you are today as kind of a jump-off point on the DHA. Absolutely. DHA is a huge organization. There are 9.6 million men and women in uniform and their families across the globe. So this work started back in when we negotiated the RFP and the process looking for something that is very, very large scale and incredibly complex. There are lots of rules and regulations to enable this, and we were lucky to develop a platform that matched what they needed. It's not only in way of scale, it's also in way of comprehensiveness. The DHA had very clear wish list on what they wanted to cover, and it include the full, whole person care continuum from different types of virtual care all the way to automated programs and behavioral health. They were very pleased to find a single partner that is able to do that, in a way that is fully embedded in their EHR choice, which is Oracle Cerner. Since then, we worked with the Leidos Partnership for Health, which is the primary contractor for this project, together with Oracle and others, in order to make sure that everything hums and integrates the right way and everything complies with this long list of rules and regulation. We had to migrate our platform to the GovCloud, which is a different AWS environment, and we had to make sure that every person in Amwell is fully certified and trained on the different requirements, security, privacy, and others of the military, which are unique to this environment. The short of it, it's a giant lift. This lift will hopefully be very much behind us by the end of the year as we complete the final step in the deployment plan, and I would be happy to report that we believe that if we move to another government customer, the company is much more ready today and able to do that than before. Great. Well, congrats on that undertaking, where things stand. Thank you. You know, maybe just going back to the overall environment and what's changed in the last few years, you know, virtual exploded through COVID. It's decelerated, but it's still above pre-COVID levels, and so can you maybe share your thoughts in terms of patients, how they're getting care, the role of virtual as you see it in the market? Absolutely. COVID was a wonderful opportunity for people to experience video conferencing in many ways with doctors they, that they trust. The promise of digitally enabled care is, of course, much broader than that. When you go online, you are able to see a much bigger choice of options in a very convenient way that have impact both on cost and on quality. Technologies like AI enable clinical programs that are dramatically more efficient and yet high quality and reproducible, providing a good hybrid mix between what humans can offer and the automation, and allowing people to benefit from the insight and smarts of some of the best academic medical centers around the world, even though some of these people don't live in the vicinity of those places. So, overall, as I mentioned earlier, we believe that the market is ready to connect individuals to care through going online first, and as they do that, it's really a win-win for all parties. First and foremost, for patients. When they go online and meet people that know them and have their full history, you are able to match people with the right interventions that they need. When you do that online, you make sure that you route people to not only the most effective clinical intervention, but also to most efficient financially, so that's very helpful in work productivity and savings for employers and other payers. It's also very good news for clinical innovators, people that want to expand their touch and their reach beyond their traditional catchment area. Why would only people in Cleveland benefit from the strength of a Cleveland Clinic, for example? The ability to offer second opinion and other services really throughout the U.S., and maybe even the world, is a new phenomenon that is really enabled by technology. So we are, in short, seeing a sea change in the way that people interact with healthcare. These are early days. We believe this is going to be a growth that will take many years, but we are beginning to see a very interesting recurring model that is very, very different from the early days of urgent care or telehealth that you and I talked about only a few years ago. Got it. And maybe just building on that, as Amwell's strategy has evolved around Converge and how you're playing in this market, what are your thoughts on the competitive landscape in terms of companies that you see most frequently when you're competing on business, and just change in the marketplace? This is a complex marketplace, and people often classify companies in the same basket, although they don't always need to be in the same place because they do different things. A good example is telehealth. There is a giant difference between enabling access to care and providing this care. There is a giant difference between allowing people to offer hybrid care that includes in-person automation and virtual, than only doing one of those things alone with referrals. To make a long story short, this is really hard and complex. We always, as you know, we're very consistent in our view of what needs to be built. We believe that, first and foremost, there is giant value in creating consistent and very pleasing consumer or customer acquisition experience. When you are in pain or you need care, the fact that you can go to one channel and one digital door and get what you need is very important, and actually harder to do than it sounds. The second element, which is just beginning today, is the notion of virtual primary care. Telehealth, traditionally, was transactional. You had a sore throat, you went online, you saw someone that you never met in order to provide you some care, and that was it. When you came again to the same vendor, the instance of what happened before really didn't matter because you were about to do another transaction. We now believe that the right way to do it is to offer longitudinal care in an environment that is highly personalized, by people that have access to your full record, and then they can personalize not only your experience as a patient, but also offer you the most appropriate clinical program that fits you in many ways. Many telehealth vendors compete on offering the clinical program itself. We have the best urgent care solution. Our doctors cost as much, our wait times are so and so on and so on. We believe that there is room for great diversity of clinical programs, and our role is not to sell the care itself, but rather to route you to this diversity of programs and offer payers and employers opportunity to reach that diversity. As we do that, we have very efficient customer acquisition cost. We have very efficient reporting capability over the entire person and even the entire population over a long period of time. Imagine the delight of a head of HR in a large employer when finally, out of the 20 different clinical programs that they run, they're able to run a singular report on the full cohort of their employees, to help them assess the outcome. It's important to say that people are not a therapeutic area. People are using different programs, and there are interconnections between those programs. When I treat my diabetes, the importance of my behavioral health therapy is very, very important if I'm depressed and non-compliant with my medication.... So the ability to use one gate and one reporting structure, we believe, is going to be incredibly helpful for anyone that wants to make sure that they demonstrate value on their investment in digitally enabled care. That's what Amwell does, and it's very, very different for many other people that traditionally were perceived to be in the same business. Great. Well, it'll be great to spend some time on the Converge platform. And, maybe just to invite, remind investors there's been a lot of investment that's gone into it. Yes. And just to contextualize that, whether it's cumulatively, how much you've invested, and really how that sets the stage for kind of the next stage of growth for the company. Converge is a lot about logistics rather than anything else. We see a cohort of consumers here, we see their payers and their employers, their sponsors, and we see diversity of clinical services. The magic is to create the right match, to make sure that people get the care that they need in a price that they can afford, that is fully covered by the sponsors, with an ability to demonstrate the ROI and the value of those intervention, with access to all the many benefits the digitally enabled care can offer uniquely versus other modalities of care. The enormity of the complexity is almost deflating. When we started to think about it four years ago, there are so many challenges that relate to privacy, and security, and availability, and state line regulations, and coverage and financial payment flows, to name a few examples. It's a giant matchmaking machine that we felt compelled to create. It took a long time. It cost a fortune. We had to IPO and raise $1 billion in order to do that, and this was not always clearly understood by many. Now that we are reaching the other end of the this effort, and this is already endorsed by some of the largest, most sophisticated clients in the market, in demonstrating value, I think we can sit in a very different position, looking forward into years of growth, having an asset that is fairly unique and is going to really flourish in a marketplace for healthcare services that is likely to develop as more and more people feel more and more comfortable to move online. One thing that we didn't really calculate accurately is the important impact of technologies like AI. AI allows you to create clinical programs that are so much more efficient than what we used to think about before, but accessing those programs require the brokerage infrastructure like Converge, in order to make sure that you create the right matches. So I know this was not an easy time for our team, for investors, even for our customers, to go through this enormous replatforming. We feel it was the right thing to do, and we are beginning to see some clear signs that it's paying off, including some of the examples of Oracle that I mentioned, or the fact that our pipeline is very clearly expanding right now, and with an offering that is resonating much better than ever in our history. Got it. And then on the back of Converge, you also kind of realigned your go-to-market strategy. So from a sales perspective, can you talk about how you're set up today and some of the things you had to do to get here? Absolutely. So what I just shared is very, very focused. We want to focus on enabling clinical service for large cohorts or consumers in a way that is fully integrated with the rest of the players. That means that we had a lot of things that don't fit into this picture. The first thing that we've done, and we accumulated over 20 years, were some customers with less of fit to what we are doing, with some business lines and areas and sub-products that don't really fit that picture. What we're doing right now is we are basically divesting some of what we do from those low-margin, less strategic activities into very clear definition of our core. The second thing that we've done is, once we defined our core, to make sure that we do that very efficiently and effectively without compromising on retention and growth, so we went through a very big effort that is beginning to be very clear when you look at our EBITDA and our profitability, in order to make sure that we touch, dispense with the layer, our old structure, the way our sales force is built, the way that we support our products, the way that we build and stop building the things that in order to support what I just said, and as a result, we have much better visibility into profitability. Our tactical role for the relatively short future is to make Amwell a profitable company with ample cash when that happens. The next thing we want to do is to show multi-year recurring growth that is feeding through the secular transformation of the way that people get care. We have still a very large market share. When you look at our customers, depending on how you count, you're talking about 90-100 million Americans that potentially could access our platform through some of the largest payers and employers in the nation. We have thousands of hospitals that use our technology, and they could participate in creating clinical programs in specialty areas, not only urgent care, that could be very, very helpful for people, both financially and clinically. So with this renewed clarity on the identity of our company, with a feeling that what we built actually matches what the market wants, and is demonstrated in large scale with very, very large partners, we believe more confident than ever in our future, and really appreciate the patience and perseverance of some of our core investors, and especially our customers and team, to persevere through this time of a transformation that is clearly very much behind us. Got it. And I'll get into some of the profitability targets with Bob in a bit, but if I think through kind of the Converge now ramping a sales force, that you've changed go-to-market, can you maybe just touch high level what that's meant for business this year, what it means for visibility going forward in terms of how it sets you up? Sure. So as Bob shared, as we completed Converge, and as we did everything I talked about, we began to see clear expansion of our pipeline and very big endorsement from our customers. This will translate to a very significant jump in our top line next year, but much more importantly, in our margins and in our profitability. The losses we see next year are dramatically smaller than what we had this year and the year before. So this is something that we are very confident about, and that places us in very good visibility into profitability as early as 2026, and we'll make every effort to accelerate it as much as we can. That's a very big shift in the way that we operate. It's done by... As a result of the focus, it's done as a result by the fact that what we created is a good fit to what clients want. And it's driven also by the completion of the build-out, plus the efficient execution that moves a lot of our revenue from relatively low-margin services into a much higher margin and much more scalable technology offering, as demonstrated by our subscriptions. Got it. So, Bob, maybe we can stick on kind of the targets. In last call, you increased your EBITDA margin target, so kinda maybe touch on that, and then I know there's kind of midterm targets as well as we kind of go into 2025. Yeah. We first half of the year, Craig, beginning of the year, really, we did a deep dive on cost structure. We're implementing cost savings programs across the company. As a result, if I think back to where we were from a headcount perspective last year and where we're gonna be once we're through all of this, we're gonna see headcount down circa high teens%. It's not just that, it's also you know, as we you know as we think about how we're architecting our engineering organization, we have, as we've discussed in the past, relied a lot on contractors because we could ramp up and ramp down the spend as the Converge project came to an end. We'll be replacing that component of our cost structure with much lower cost engineering talent offshore, notably down in Colombia, at a rate that's, you know, 30, 35, 40% cheaper than our. Or I'm sorry, at about 30-40% the cost of what we pay our contractors. So headcount's coming down, and we're ramping headcount to replace the contractor force that we've been using. So, you know, effectively, headcount's coming down even more. So the cost side of things has been a real focus, and that's been behind the improvement in our outlook for this year, in terms of our EBITDA guide. And then there's also, you know, obviously, a very heavy focus on non-comp expenses as well. Got it. And I know you haven't guided for 2025 yet. You did kind of provide a bridge, high level, how to think about kind of revenue, $335 million-$350 million, and then the EBITDA loss going to a $35 million-$45 million loss. And again, understanding that's not specific guidance, but just how did you get to those numbers? What's the confidence in terms of the trajectory from here? I would say, again, we're not trying to update that every quarter. That's something that we came out with to really highlight how powerful this contract with the DHA is, and the impact on our financials. You know, we've talked about the components of that. We feel very good about the revenue side of things, especially the subscription component of that, the software component of that. You know, there's always variability around visits that can influence where you come out on that, but you know, as we think about what's contracted, which would be the software piece of it, we feel very good about it. And then on the adjusted EBITDA front, given what we've seen and been able to accomplish this year, on the cost side, we feel incrementally more confident in what we talked about from an adjusted EBITDA perspective for next year. Got it. I wanna touch on a couple of the other operating lines. You gave some color about R&D and contract labor, which is very helpful. Ido also talked about kind of mix, you know, some of the low-margin business kind of fading off. Can you talk on just gross margin- Mm-hmm ... as the business evolves, what that means kind of today, where it could go over time? And then also sales and marketing, what type of leverage you see in that line item? Yeah. So we sit here today, and I've talked about our target for the year being in the area of high 30s% in terms of gross margin, which is about, you know, similar to where we were last year. Business mix next year is gonna drive a dramatic change in that. So we're gonna go from, call it, mid-40s% in terms of our percentage of revenue from software subscriptions to mid-50s%. So that brings with it a dramatic shift in gross profit margins that will go from the high 30s% to over 50% next year, and we expect that to accrete over time. On the other line items, you know, longer term, I would expect gross profit margins to be in the, call it, 55-60% area, and operating expenses aggregating up to 40-45% for adjusted EBITDA margins longer term, you know, in the, in the mid-teens, conservatively, and that split, you know, similar percentages between sales and marketing and R&D, in and around, 15%, and a little bit lower for our G&A. Got it. Maybe we can shift gears or probably part of the discussion about investments, but just AI remains very topical for the investing community. You mentioned before in terms of maybe some of the unforeseen things that Converge in terms of capabilities. Can you guys just touch on just some of the important investments that you're making and just anything tangibly you feel like for the business model to consider over the next couple of years as you leverage technology broadly? Sure. AI will transform almost everything we do, both in the way that we operate our own products, the products we integrate with, and the way our company operates, and we are not unique. I think that's true for almost every company I know. The specific areas that could benefit from AI are areas of consumer engagement, obviously. The second element is the management of longitudinal relationship and routing, making sure that you match people to what they need at the right time in the most efficient way, and of course, the clinical programs themselves benefit a lot from AI. A good example is the automated programs that we sell and many others sell as well. Of course, there are benefits of AI in how we run the company. Bob mentioned offshoring, but today, surprisingly, a part of our code is generated with AI. So AI is helpful to be much more efficient in what you do. There are elements that we work with in the way that we think about RFPs and our sales force that use AI. In effect, you can see this fingerprint all over the company. We believe that the overall market will benefit from this type of technology. There are some serious risks as well that we are aware of, and we are very careful in how we implement a new way technology, especially as it relates to providing of clinical guidance and advice. That's an area that requires some time to mature before it's ready for prime time. But overall, this is part of our DNA and is going to continue to be an important part of our future. Got it. I want to circle back to DHA, just because it's so instrumental in terms of the opportunity in front of you. We were talking briefly before. Sometimes when I think about government programs, it's usually not up and to the right, right? There's usually things like setbacks or timing and just... You know, what your experience has been so far, it appears it's going smoothly. What's maybe helped that, and then what does that mean for the future, not just with DHA or maybe other government programs? We've been incredibly fortunate to work with a terrific partner, Leidos. That is the primary relationship with the DHA and a terrific client. General Crosland herself is very involved in this project, and in fact, it raised the interest all the way up to the top, to the Secretary of Defense, because helping soldiers in their time of need, especially as it relates to behavioral health and other services, is something of great interest for lots of people. I think that was a lot behind the motivation for everybody to make sure that we deliver this on time. So far, I'm very glad to report that not only is it going on time, in fact, in some ways, we are ahead of schedule. The clients believe that access to clinical care is a big priority, and the original schedule of going live with Converge was scheduled to happen at the end of this year. The client turned to us a while ago and said: "Can we accelerate?" and we said sure, because we try to do whatever we can. There was a very big impact on our work. It was hard, but we made it. We went live in August versus somewhere in the end of Q4 for Converge, and it works very, very well. I would also like to point out that we are not alone. The Oracle Cerner implementation in the DHA is significantly better. It's actually going very well, unlike other deployments that were less fortunate. So where we sit today, with this go-live, the risk of completing our task for the year is really minimized. We have left another element of Converge, called On-Demand Visits, and some automated programs, which we've done many, many times for many customers. So we believe we're going to check all the boxes and be ready for an enterprise rollout whenever the customer is ready, which we hope and believe is going to be towards the end of this year. So far, it's going better than we expected, and we have all the reasons to believe it's going to continue to be this way. Got it. Can we spend a minute just on the overall demand environment? We've talked a lot about some change at Amwell, some of the programs you have underway, but just taking a step back as you engage with payers and providers, what's really resonating today? What are some, maybe some sticking points? What's your pulse on demand out there broadly? You know, only a few years ago, we were evangelizing telehealth. You should consider it because it could do a few things. We no longer need to do that. There is clear demand for digitally enabled care, which means that when you think about employers, they understand that if their employees will go online, there is much higher likelihood they will get what they need for lower cost and higher quality, which, of course, is very, very important for them. They expect their payers to be the facilitators of such a service, and as you know, we were siding with the payers for many years ago, as a good partner to reach large cohorts of employers, and that's actually happening. Payers are making very large investments in their member portals to enable not only explanation of benefits or things of that nature, but also actually access to care. That's very, very important because when people go online, you can make sure that what they see is relevant for them and also efficient in network. So that's one very important value point that everybody benefit from. The other point that is very important is the customer acquisition cost. Fragmentation is really hurting our industry in a very big way because people are being reached out from multiple directions, usually to cater to a very narrow therapeutic area or need that they have. The fact that you can have one digital door for all your care needs is also financially very efficient. And you mentioned AI earlier and other technology that created the floor for many, many opportunities for academic medical centers and entrepreneurs to create very effective and very efficient clinical programs that cannot be accessed other than online. So the fact that we're able now to offer all this richness to members is something that is truly a win-win for everybody I mentioned before. So I think in many ways, we went full circle from having telehealth as a new idea with enormous potential into a market maturity that defines that healthcare will be digital-first experience and will leverage the best of what technology can offer with the trust and reliability and scalability of an in-person care that is still relevant when we talk about serious illness. Got it. All right, well, that takes us, I think, right on, right on time. So, Ido and Bob, thank you so much for your time today and for all the updates on Amwell. Thank you, Craig. Thanks. Thank you for having us. Thanks.