Amwell Q2 Results: Revenue and Earnings Improve Amid Renewal Concerns

American Well Corporation (NYSE:AMWL) reported improved Q2 2025 financial performance, with revenue up and a hold rating maintained despite concerns over DHA renewal. The company's SaaS-based healthcare platform connects patients with doctors over secure video.

American Well Corporation (AMWL), a leading SaaS-based healthcare platform provider, reported its Q2 2025 financial performance, highlighting improved revenue growth and a hold rating maintained despite concerns over the renewal of its contract with the U.S. Defense Health Agency (DHA). The company's platform connects patients with doctors over secure video, facilitating virtual care services.

Revenue for Q2 2025 was $70.9 million, marking a 13% year-over-year (YoY) increase from $66.8 million in Q1 2025 [1]. This growth is a positive indicator for the company's ability to expand its service offerings and customer base. However, the extension of the DHA contract by only one year, instead of the anticipated three-year period, raised concerns about long-term performance stability [1].

The DHA contract, a significant growth initiative for Amwell, was extended by one year due to budget restrictions within the Department of Defense (DoD). This extension excluded deployments for Amwell's behavioral health and automated care programs, leading to a downward revision of the 2025 revenue guidance from $250 million to $245 million to $250 million [1].

Despite the revenue growth, Amwell continues to face challenges in achieving profitability. The company reported an adjusted EBITDA of -$4.7 million for Q2 2025, representing a significant improvement from the -$35 million reported in Q1 2024. However, the ongoing negative EBITDA suggests that the company is still operating at a loss [1].

The company's cost reduction efforts are evident in the Q2 2025 results. Research and development spending was reduced by 12.2% YoY to $18.3 million, while sales and marketing expenses were 32% lower than last year at $12.5 million. General and administrative expenses were also reduced by 25.7% compared to Q2 2024 [1].

While these cost reductions are aimed at achieving the company's goal of positive cash flow from operations by 2026, there are risks associated with deep or sustained cuts. Reduced investment in R&D and marketing could limit the company's ability to innovate and maintain brand visibility, potentially leading to a loss of market share and customer touchpoints [1].

The addition of Florida Blue as a new payer is a positive development that could provide more predictable revenue streams for Amwell. The company also launched Amwell Navigate, an AI-powered client experience platform, during the quarter. The platform is designed to empower clients and enable cost-effective delivery of quality support at scale [1].

Despite the positive developments, the company's financial position remains a concern. Amwell reported a quarterly cash burn of $3 million in Q2 2025, and its cash reserves have been depleting year over year. The company's valuation, as measured by EV/EBITDA, is currently non-meaningful due to its negative EBITDA, contrasting sharply with the high valuation of Teladoc (TDOC) [1].

In conclusion, American Well Corporation reported improved Q2 2025 financial performance, with revenue growth and cost reductions driving the results. However, concerns over the DHA contract renewal and the company's ongoing unprofitability remain significant. Investors should continue to monitor the company's financial position and the impact of its new initiatives on future performance.

References:
[1] https://seekingalpha.com/article/4813158-american-well-q2-review-hold-rating-maintained-amid-dha-renewal-concerns
[2] https://www.healthcaredive.com/news/amwell-military-contract-extended-q2-2025-earnings/757061/