Telehealth company Amwell notched peak research and development costs related to its Converge platform in its earnings results released aftermarket Wednesday as the company focused on developing and migrating clients to its virtual care software.
Annual R&D costs for the Boston-based company were the highest since Amwell went public in 2020, topping $138 million in 2022, a nearly 30% increase compared to 2021, CFO Bob Shepardson said on a Wednesday investor call.
The company has been working to migrate clients and finish development of its Converge software, first announced in 2020 in an effort to consolidate care offerings in one platform. Visits on Converge represented 28% of total visits in the fourth quarter, up from 16% of total visits in the third quarter of last year.
Expenses tied to Converge migration and development had previously weighed on the company’s earnings. In 2022, the company posted a $272 million net loss, up more than 50% from $176.8 million in 2021.
Despite the high R&D costs, Amwell beat Wall Street expectations in its fourth quarter and hit its full-year earnings guidance. Amwell posted $79.2 million in fourth quarter revenue, a 9% increase year over year.
Shepardson said that R&D costs had peaked in the fourth quarter, but said that development expenses were expected to decline sequentially over an absolute basis this year.
In the earnings call, CEO Ido Schoenberg also acknowledged the “platform-related challenges” of migrating clients onto Converge, but said that migrating providers and payers onto the platform was a continued priority for the company.
“Turning the page to 2023, it is increasingly clear to me that we made the right decision to replatform our solution,” Schoenberg said during the call.
Total visits for the telehealth company increased 10% year over year in the fourth quarter to 1.7 million visits, driven by urgent care visits prompted by last year’s “first real flu season since the onset of the pandemic,” Shepardson said.
Amwell announced its 2023 projected revenue range between $275 million and $285 million, a conservative estimate driven by concerns on the global macroeconomic outlook and financial challenges facing hospitals, Schoenberg said.
The company announced full year 2022 revenue of $277 million, a 10% increase compared to 2021.
Amwell was silent about potential M&A activity during its earnings call. In November, Israeli business journal Calcalist reported that Amwell was in advanced discussions to acquire online therapy app, Talkspace, for $200 million.