What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-12 · 267 added, 141 removed, 467 unchanged (47% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

June 30, 2021

September 30, 2021

December 31, 2020

7 unchanged sentences

Total current assets

Restricted cash

Property and equipment, net

7 unchanged sentences

Accrued expenses and other current liabilities

Contingent consideration liabilities

Operating lease liability, current

2 unchanged sentences

Other long-term liabilities

Contingent consideration liabilities, net of current portion

Operating lease liability, net of current portion

3 unchanged sentences

Commitments and contingencies (Note 12)

Stockholders’ deficit:

Stockholders’ equity:

Preferred stock, $ 0.01 par value;

100,000,000 shares authorized, no shares

issued or outstanding as of June 30, 2021 and as of December 31, 2020

issued or outstanding as of September 30, 2021 and as of December 31, 2020

Common stock, $ 0.01 par value;

4 unchanged sentences

200,000,000 Class C shares authorized 5,555,555

issued and outstanding as of June 30, 2021 and December 31, 2020

Treasury stock, no shares and 1,866,675 shares as of June 30, 2021

issued and outstanding as of September 30, 2021 and December 31, 2020

Treasury stock, no shares and 1,866,675 shares as of September 30, 2021

and December 31, 2020, respectively

5 unchanged sentences

Total stockholders’ equity

Total liabilities, preferred stock and stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

($ 698 , $ 15,912 , $ 11,005 and $ 29,160 from related parties, respectively)

7 unchanged sentences

Loss from operations

Interest income and other income (expense), net

Interest income and other (expense) income, net

Loss before expense from income taxes and loss from

equity method investment

Expense from income taxes

Benefit (Expense) from income taxes

Loss from equity method investment

Net loss attributable to non-controlling interest

Net income (loss) attributable to non-controlling interest

Net loss attributable to American Well Corporation

19 unchanged sentences

Income (Loss)

Balances as of December 31, 2020

Balances as of January 1, 2021

Exercise of common stock options

15 unchanged sentences

Balances as of June 30, 2021

Exercise of common stock options

Vesting of restricted stock units

Shares withheld related to net share settlement and retired treasury stock in 2021

Issuance of stock under employee stock purchase plan

Issuance of common stock in acquisitions

Stock-based compensation expense

Capital contributed by selling shareholders of acquired businesses

Currency translation adjustment

Balances as of September 30, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

9 unchanged sentences

Balances as of January 1, 2020

Issuance of Series C convertible preferred stock,

net of issuance costs of $ 261

Issuance of Series C convertible preferred stock, net of issuance costs of $ 261

Exercise of common stock options

3 unchanged sentences

Currency translation adjustment

Unrealized gains on available-for

-sale securities, net of tax

Unrealized gains on available-for-sale securities, net of tax

Balances as of March 31, 2020

Issuance of Series C convertible preferred stock,

net of issuance costs of $ 750

Issuance of Series C convertible preferred stock, net of issuance costs of $ 750

Treasury stock

3 unchanged sentences

Currency translation adjustment

Unrealized gains on available-for

-sale securities, net of tax

Unrealized gains on available-for-sale securities, net of tax

Balances as of June 30, 2020

Exercise of common stock options

Vesting of restricted stock units

Class A and Class B shares withheld to net share settlement of loans

Conversion of Series A, Series B, and Series C convertible preferred stock into Class A shares

Issuance of Class A shares in connection with initial public offering, net of offering costs and underwriting discounts of $ 53,730

Issuance of Class A shares in connection with Google Private Placement, net of offering costs of $ 900

Stock-based compensation expense

Currency translation adjustment

Unrealized gains on available-for-sale securities, net of tax

Balances as of September 30, 2020

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except share and per share amounts)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

4 unchanged sentences

Amortization of deferred contract fulfillment costs

Accretion of contingent consideration

Noncash compensation costs incurred by selling shareholders

Stock-based compensation expense

Loss on equity method investment

Deferred income taxes

Changes in operating assets and liabilities, net of acquisition:

12 unchanged sentences

Proceeds from sales and maturities of investments

Net cash provided by investing activities

Acquisitions of business, net of cash acquired

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of Series C convertible preferred

stock, net of issuance costs

Proceeds from issuance of Series C convertible preferred stock, net of issuance costs

Proceeds from exercise of common stock options

Proceeds from employee stock purchase plan

Payments for the purchase of treasury stock

Proceeds from issuance of common stock in initial public offering, net of underwriting costs and commissions

Proceeds from issuance of common stock to Google

Payment of deferred offering costs

Net cash provided by financing activities

Effect of exchange rates changes on cash, cash equivalents, and restricted cash

Net decrease in cash, cash equivalents, and restricted cash

9 unchanged sentences

Additions to property and equipment included in accrued expenses and accounts payable

Common stock issuance costs

Preferred stock issuance costs

Initial public offering and Google common stock offering costs in accrued expenses

Treasury stock costs in accrued expenses

Receivable related to exercise of common stock options

9 unchanged sentences

The Company’s scalable technology is deployed at the enterprise level of clients, embeds into existing offerings and workflows, spans the continuum of care and enables the delivery of this care across a wide variety of clinical, retail, school and home settings.

On August 9, 2021 and August 27, 2021 , the Company completed the acquisitions of Conversa Health Inc.

(“Conversa”) and SilverCloud Health Holdings, Inc.

(“SilverCloud”), respectively (together, the “Acquisitions”).

Conversa is a leader in automated virtual healthcare.

SilverCloud is a leading digital mental health platform .

See Note 7 “Business Combinations”.

On August 28, 2020, the Company effected an 8.8-for-1.0 stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the Company’s then outstanding convertible preferred stock (see Note 10).

6 unchanged sentences

Since inception, the Company has incurred recurring losses.

As of June 30, 2021, the Company had an accumulated deficit of $ 708,587 .

As of September 30, 2021, the Company had an accumulated deficit of $ 762,441 .

The Company expects to continue to generate operating losses for the foreseeable future.

The Company expects that its cash, cash equivalents and investments balance as of June 30, 2021 of $ 975,187 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months.

The Company expects that its cash, cash equivalents and investments balance as of September 30, 2021 of $ 790,402 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months.

Summary of Significant Accounting Policies

3 unchanged sentences

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals and adjustments) necessary for the fair statement of the Company’s the financial position, results of operations and cash flows at the dates and for the periods indicated.

The interim results for the three and six months ended June 30, 2021 are not necessarily indicative of results for the full 2021 calendar year or any other future interim periods.

The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of results for the full 2021 calendar year or any other future interim periods.

The information included in the interim financial statements should be read in conjunction with the annual consolidated financial statements and accompanying notes included in the Form 10-K.

31 unchanged sentences

Changes in consolidation status are applied prospectively.

The aggregate carrying value of total assets and total liabilities included on the condensed consolidated balance sheets for the PCs after elimination of intercompany transactions were $ 30,207 and $ 1,929 , respectively, as of June 30, 2021 and $ 22,682 and $ 1,998 , respectively as of December 31, 2020.

Total revenue included on the condensed consolidated statements of operations and comprehensive loss for the PCs after elimination of intercompany transactions was $ 17,585 and $ 24,719 for the three months ended June 30, 2021 and 2020, respectively.

Net loss included on the condensed consolidated statements of operations and comprehensive loss was not material for the three months ended June 30, 2021 and 2020.

Total revenue included on the condensed consolidated statements of operations and comprehensive loss for the PCs after elimination of intercompany transactions was $ 35,154 and $ 43,389 for the six months ended June 30, 2021 and 2020, respectively.

Net loss included on the condensed consolidated statements of operations and comprehensive loss was not material for the three and six months ended June 30, 2021 and 2020.

The aggregate carrying value of total assets and total liabilities included on the condensed consolidated balance sheets for the PCs after elimination of intercompany transactions were $ 22,771 and $ 1,893 , respectively, as of September 30, 2021 and $ 22,682 and $ 1,998 , respectively as of December 31, 2020.

Total revenue included on the condensed consolidated statements of operations and comprehensive loss for the PCs after elimination of intercompany transactions was $ 18,356 and $ 18,206 for the three months ended September 30, 2021 and 2020, respectively.

Net loss included on the condensed consolidated statements of operations and comprehensive loss was not material for the three months ended September 30, 2021 and 2020.

Total revenue included on the condensed consolidated statements of operations and comprehensive loss for the PCs after elimination of intercompany transactions was $ 53,511 and $ 61,596 for the nine months ended September 30, 2021 and 2020, respectively.

Net loss included on the condensed consolidated statements of operations and comprehensive loss was not material for the three and nine months ended September 30, 2021 and 2020.

Investment in Minority Owned Joint Venture

6 unchanged sentences

The agreement also requires aggregate total capital contributions by the Company up to an additional $ 11,800 in two phases, which is yet to be defined.

During the six months ended June 30, 2021, the Company made a capital contribution of $ 2,548 , related to a portion of the phase one capital commitment.

For the three months ended June 30, 2021 and 2020, the Company recognized a loss of $ 722 and $ 444 as its proportionate share of the joint venture’s results of operations, respectively.

For the six months ended June 30, 2021 and 2020, the Company recognized a loss of $ 1,541 and $ 764 as its proportionate share of the joint venture’s results of operations, respectively.

Accordingly, the carrying value of the equity method investment as of June 30, 2021 and December 31, 2020 was $ 1,759 and $ 752 , respectively.

During the nine months ended September 30, 2021, the Company made a capital contribution of $ 2,548 , related to a portion of the phase one capital commitment.

For the three months ended September 30, 2021 and 2020, the Company recognized a loss of $ 554 and $ 486 as its proportionate share of the joint venture’s results of operations, respectively.

For the nine months ended September 30, 2021 and 2020, the Company recognized a loss of $ 2,095 and $ 1,250 as its proportionate share of the joint venture’s results of operations, respectively.

Accordingly, the carrying value of the equity method investment as of September 30, 2021 and December 31, 2020 was $ 1,205 and $ 752 , respectively.

Concentrations of Credit Risk and Significant Customers

9 unchanged sentences

The Company has not experienced significant credit losses from its accounts receivable.

As of June 30, 2021 and December 31, 2020, one customer accounted for 14 % and 19 % of outstanding accounts receivable, respectively.

During the three months ended June 30, 2021 and 2020, sales to one customer (who was a related party during the 2020 period noted) represented 25 % and 22 % of the Company’s total revenue, respectively.

During the six months ended June 30, 2021 and 2020, sales to one customer (who was a related party during the periods noted) represented 25 % and 22 % of the Company’s total revenue, respectively.

As of September 30, 2021 and December 31, 2020, one customer accounted for 21 % and 19 % of outstanding accounts receivable, respectively.

During the three months ended September 30, 2021 and 2020, sales to one customer (who was a related party during the 2020 period noted) represented 26 % and 22 % of the Company’s total revenue, respectively.

During the nine months ended September 30, 2021 and 2020, sales to one customer (who was a related party during the periods noted) represented 25 % and 22 % of the Company’s total revenue, respectively.

Emerging Growth Company Status

25 unchanged sentences

The guidance was adopted effective January 1, 2021 and did not have a material impact on the condensed consolidated financial statements and disclosures.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts.

Generally, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements.

For public entities that are Securities and Exchange Commission filers, excluding entities eligible to be smaller reporting companies, ASU 2021-08 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2022.

Early adoption is permitted.

The guidance was adopted effective July 1, 2021 and impacted the accounting of acquired deferred revenue for the Conversa and SilverCloud acquisitions that occurred in August 2021.

Recently Issued Accounting Pronouncements

11 unchanged sentences

ASU 2019-05 provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis.

For public entities that

are Securities and Exchange Commission filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.

For public entities that are Securities and Exchange Commission filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.

For all other entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted.

Th e guidance will be adopted in the 2021 annual condensed consolidated financial statements.

The guidance will be adopted in the 2021 annual condensed consolidated financial statements.

The Company is currently evaluating the impact that the adoption of ASU 2016-13 will have on its condensed consolidated financial statements.

The following table presents the Company’s revenues disaggregated by revenue source:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Platform subscription

7 unchanged sentences

Changes in the allowance for doubtful accounts were as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

Allowance for doubtful accounts, beginning of the

2 unchanged sentences

Unbilled receivables are classified as receivables when the Company has the right to invoice the customer.

The amount of unbilled accounts receivable was $ 3,387 and $ 3,376 as of June 30, 2021 and December 31, 2020, and has been included within accounts receivable on the condensed consolidated balance sheet.

The amount of unbilled accounts receivable was $ 6,826 and $ 3,376 as of September 30, 2021 and December 31, 2020, and has been included within accounts receivable on the condensed consolidated balance sheet.

Deferred Revenue

1 unchanged sentence

Such amounts are recognized as revenue over the contractual period.

For the three months ended June 30, 2021 and 2020, the Company recognized revenue of $ 21,238 and $ 18,985 , respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented.

For the six months ended June 30, 2021 and 2020, the Company recognized revenue of $ 39,146 and $ 41,731 , respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented.

Significant changes in the Company’s deferred revenue balance for the six months ended June 30, 2021 and the year ended December 31, 2020 were as follows:

Six Months Ended June 30,

For the three months ended September 30, 2021 and 2020, the Company recognized revenue of $ 16,912 and $ 43,656 , respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented.

For the nine months ended September 30, 2021 and 2020, the Company recognized revenue of $ 56,058 and $ 61,775 , respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented.

Significant changes in the Company’s deferred revenue balance for the nine months ended September 30, 2021 and the year ended December 31, 2020 were as follows:

Nine Months Ended September 30,

Total deferred revenue, beginning of the period

3 unchanged sentences

Transaction Price Allocated to Remaining Performance Obligations

As of June 30, 2021 and December 31, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 190,413 and $ 192,238 , respectively.

As of September 30, 2021 and December 31, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 184,001 and $ 192,238 , respectively.

The substantial majority of the unsatisfied performance obligations will be satisfied over the next three years .

As it pertains to the June 30, 2021 amount, the Company expects to recognize 47 % of the transaction price in the 12 month period ended June 30, 2022, in its condensed consolidated statement of operations and comprehensive loss with the remainder recognized thereafter.

As it pertains to the September 30, 2021 amount, the Company expects to recognize 48 % of the transaction price in the 12 month period ended September 30, 2022, in its condensed consolidated statement of operations and comprehensive loss with the remainder recognized thereafter.

National Telehealth Network

8 unchanged sentences

However, because the Company owns less than 100 % of NTN, the Company recognizes net loss attributable to non-controlling interest in the condensed consolidated statements of operations and comprehensive loss equal to the percentage of the ownership interest retained in NTN by the respective non-controlling party.

The proportionate share of the loss attributed to the non-controlling interest amounted to $ 277 and $ 1,562 for the three months ended June 30, 2021 and 2020, respectively.

The proportionate share of the loss attributed to the non-controlling interest amounted to $ 894 and $ 2,405 for the six months ended June 30, 2021 and 2020, respectively.

The carrying value of the non-controlling interest was $ 21,171 and $ 22,065 as of June 30, 2021 and December 31, 2020, respectively.

The proportionate share of the (income)/loss attributed to the non-controlling interest amounted to $( 562 ) and $ 1,515 for the three months ended September 30, 2021 and 2020, respectively.

The proportionate share of the loss attributed to the non-controlling interest amounted to $ 332 and $ 3,920 for the nine months ended September 30, 2021 and 2020, respectively.

The carrying value of the non-controlling interest was $ 21,733 and $ 22,065 as of September 30, 2021 and December 31, 2020, respectively.

Fair Value Measurements

1 unchanged sentence

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Valuation techniques used to measure

fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

3 unchanged sentences

The following tables presents the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

June 30, 2021

September 30, 2021

Money market funds

Total financial assets:

Contingent consideration

Total financial liabilities:

December 31, 2020

Money market funds

Total financial assets:

The Company’s cash equivalents were invested in money market funds and were valued based on Level 1 inputs.

3 unchanged sentences

government agency bonds, the Company relied on quoted prices for similar securities in active markets or other inputs that are observable or can be corroborated by observable market data.

During the six months ended June 30, 2021, there were no transfers between fair value measurement levels.

As of June 30, 2021 and December 31, 2020, the fair value of the Company’s investments by type of security was as follows:

June 30, 2021

The Company has classified its net liability for contingent earnout considerations relating to the Acquisitions within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs, which included the Monte Carlo method that uses key assumptions to model future revenue and costs of goods sold projections.

The income approach method involves calculating the earnout payment based on the forecasted revenue and the revenue discount rate of 1.3 % and 3.2 % for SilverCloud and Conversa, respectively.

A description of the Acquisitions is included within Note 7.

The contingent earnout payments for each acquisition are based on the achievement of certain revenue and integration thresholds.

Nine Months Ended September 30,

Beginning Balance as of January 1

Initial estimate of fair value related to SilverCloud contingent consideration

Initial estimate of fair value related to Conversa contingent consideration

Accretion of contingent consideration

Ending Balance

During the nine months ended September 30, 2021, there were no transfers between fair value measurement levels.

As of September 30, 2021 and December 31, 2020, the fair value of the Company’s investments by type of security was as follows:

September 30, 2021

U.S government securities

1 unchanged sentence

U.S government securities

Business Combinations

On August 27, 2021 , the Company completed the acquisition of SilverCloud through a merger in which SilverCloud became a wholly-owned subsidiary of the Company.

The cash consideration paid was $ 105,195 net of cash acquired of $ 12,239 .

The stock consideration was comprised of 8.1 million shares of the Company’s Class A common stock valued at $ 85,571 , and escrow share consideration of $ 6,376 .

SilverCloud is a leading digital mental health platform.

The Company is obligated to pay an earn-out of up to $ 40,000 contingent upon SilverCloud achieving certain revenue thresholds for the year ending December 31, 2022.

The Company estimated the fair value of the contingent consideration as of the acquisition date to be $ 29,360 .

The contingent consideration is subject to remeasurement at each reporting date until December 31, 2022, with the remeasurement adjustment reported in the consolidated statement of operations and comprehensive loss.

The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from this acquisition is not tax deductible.

The total acquisition related costs were $ 5,571 which included transaction costs from financial and legal advisors and other transaction related fees, as well as $ 717 of noncash compensation costs, and were recognized as incurred in the Company’s consolidated statement of operations and comprehensive loss in general and administrative expenses.

The noncash compensation costs related to the SilverCloud acquisition are for additional noncash compensation costs incurred by the selling SilverCloud shareholders for certain employees that have continued employment after the transaction date and through the earn-out period, and will be a reoccurring cost until the payout of earn-out in 2023 .

On August 9, 2021 , the Company completed the acquisition of Conversa through a merger in which Conversa became a wholly-owned subsidiary of the Company.

The cash consideration paid was $ 51,331 net of cash acquired of $ 9,735 .

This consideration was comprised of 4.7 million shares of the Company’s Class A common stock valued at $ 52,160 .

Conversa is a leader in automated virtual healthcare.

The Company is obligated to pay an earn-out of up to $ 30,000 contingent upon Conversa achieving certain integration thresholds in the first quarter of 2022, and certain revenue thresholds for the year ending December 31, 2022.

The Company estimated the fair value of the contingent consideration as of the acquisition date to be $ 15,230 .

The acquisition was considered a stock acquisition for tax purposes and accordingly, the goodwill resulting from this acquisition is not tax deductible.

The total acquisition related costs were $ 2,435 which included transaction costs from financial and legal advisors and other transaction related fees and were recognized as incurred in the Company’s consolidated statement of operations and comprehensive loss in general and administrative expenses.

The Acquisitions were accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date.

The results of the Acquisitions were integrated within the consolidated financial statements commencing on the aforementioned acquisition dates.

Actual revenue and losses of the Acquisitions since the acquisition date as well as pro forma combined results of operations for the Acquisition have not been presented because the effect of the Acquisition was not material to the Company’s consolidated financial results for the periods presented.

The following table summarizes the preliminary fair value estimates of the assets acquired and liabilities assumed for the SilverCloud and Conversa acquisitions at the respective acquisition dates.

The Company, with the assistance of a third-party valuation expert, estimated the preliminary fair value of the acquired tangible and intangible assets with significant estimates such as revenue projections.

The allocation of the consideration transferred to the assets acquired and the liabilities assumed is preliminary.

be revised as a result of additional information obtained due to the finalization of the valuation inputs and assumptions as well as completing the assessment of the tax attributes of the business combination.

Additional adjustments that could have a material impact on the Company’s results of operations and financial position may be recorded within the measurement period, which will not exceed one year from the respective acquisition date s .

Identifiable assets acquired and liabilities assumed (in thousands):

Conversa Health

Purchase consideration:

Cash consideration, net of cash acquired

Stock consideration

Contingent consideration

Escrow share consideration

Working capital adjustment

Total consideration transferred

Allocation of Consideration transferred:

Accounts receivable

Identifiable intangible assets

Total assets acquired

Current liabilities

Deferred revenue

Other long-term liabilities

Total liabilities assumed

The amount allocated to goodwill reflects the benefits the Company expects to realize from post-acquisition cross selling opportunities from integrating customer relationships and from the growth of the respective acquisitions’ operations.

The following are the identifiable intangible assets acquired in the Acquisitions and their respective weighted average useful lives, as determined based on initial valuations:

Conversa Health

Customer relationships

Goodwill and Intangible Assets

Goodwill consisted of the following:

Six Months Ended June 30,

Nine Months Ended September 30,

Beginning Balance as of January 1

Goodwill acquired

Currency translation adjustments

Ending Balance

Identified intangible assets consisted of the following:

June 30, 2021

September 30, 2021

Customer relationships

3 unchanged sentences

Contractor relationships

Amortization expense related to intangible assets for the three months ended June 30, 2021 and 2020 was $ 1,928 and $ 1,938 , respectively.

Amortization expense related to intangible assets for the six months ended June 30, 2021 and 2020 was $ 3,856 and $ 3,877 , respectively.

Estimated future amortization expense of the identified intangible assets as of June 30, 2021, is as follows:

Amortization expense related to intangible assets for the three months ended September 30, 2021 and 2020 was $ 3,819 and $ 1,940 , respectively.

Amortization expense related to intangible assets for the nine months ended September 30, 2021 and 2020 was $ 7,675 and $ 5,817 , respectively.

Estimated future amortization expense of the identified intangible assets as of September 30, 2021, is as follows:

Accrued Expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

Six Months Ended June 30,

Nine Months Ended September 30,

Employee compensation and benefits

6 unchanged sentences

In November 2017, the Line of Credit was amended to increase the maximum borrowings to $ 7,000 .

As of June 30, 2021 and December 31, 2020, the Company had no outstanding borrowings under the Line of Credit.

As of September 30, 2021 and December 31, 2020, the Company had no outstanding borrowings under the Line of Credit.

During any period that the Line of Credit is in effect, the Company can request the financial institution issue a letter of credit with a maximum maturity not to exceed twelve months.

Any letters of credit issued by the financial institution reduce the maximum borrowings available under the Line of Credit.

As of June 30, 2021, the maximum borrowing available to the Company is $ 6,205 based on the outstanding letters of credit of $ 795 that have been issued by the financial institution.

As of September 30, 2021, the maximum borrowing available to the Company is $ 7,000 based on the outstanding letters of credit of $ 795 that have been issued by the financial institution.

As of December 31, 2020, the maximum borrowing available to the Company was $ 5,905 based on the outstanding letters of credit of $ 1,095 that have been issued by the financial institution.

19 unchanged sentences

Shares of Class C common stock will be convertible at the option of the holder upon determination that a Hart-Scott-Rodino Antitrust Improvements Act (“HSR”) filing is not necessary prior to the holder’s conversion of such shares or, if required, upon expiration or termination of the HSR waiting period.

In the six months ended June 30, 2021, 3,351,035 shares of Class B common stock were converted to Class A common stock.

As of June 30, 2021, the par value of the Class A, Class B and Class C shares was $ 2,099 , $ 267 , and $ 56 , respectively.

In the nine months ended September 30, 2021, 3,865,035 shares of Class B common stock were converted to Class A common stock.

As of September 30, 2021, the par value of the Class A, Class B and Class C shares was $ 2,272 , $ 267 , and $ 56 , respectively.

1,000,000,000

1,300,000,000

As of June 30, 2021 and December 31, 2020, the Company had reserved 66,187,346 and 61,392,747 shares of common stock for the exercise of outstanding stock options, the vesting of restricted stock units and the number of shares remaining available for future grant, respectively.

As of September 30, 2021 and December 31, 2020, the Company had reserved 61,572,141 and 61,392,747 shares of common stock for the exercise of outstanding stock options, the vesting of restricted stock units and the number of shares remaining available for future grant, respectively.

Stock Plans and Stock Options

11 unchanged sentences

Outstanding as of January 1, 2021

Outstanding as of June 30, 2021

Outstanding as of September 30, 2021

Vested and expected to vest as of December 31, 2020

Vested and expected to vest as of June 30, 2021

Vested and expected to vest as of September 30, 2021

Options exercisable as of December 31, 2020

Options exercisable as of June 30, 2021

No options were granted in the six months ended June 30, 2021.

The weighted-average grant date fair value of common stock options granted during the six months ended June 30, 2020 was $ 3.88 .

Options exercisable as of September 30, 2021

No options were granted in the nine months ended September 30, 2021.

The weighted-average grant date fair value of common stock options granted during the nine months ended September 30, 2020 was $ 5.06 .

The weighted-average of assumptions that the Company used to determine the fair value of the common stock options granted to employees and directors were as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

Risk-free interest rate

10 unchanged sentences

During the year ended December 31, 2020, the Company granted 13,816,885 restricted stock units which vest over the service period of one to four years .

During the six months ended June 30, 2021, the Company granted 6,409,182 restricted stock units which vest over the service period of one to four years .

During the nine months ended September 30, 2021, the Company granted 7,284,665 restricted stock units which vest over the service period of one to four years .

Activity for the restricted stock units is as follows:

1 unchanged sentence

Unvested as of January 1, 2021

Unvested as of June 30, 2021

The total grant date fair value of RSU’s granted for the six months ended June 30, 2021 was $ 127,834 .

During the six months ended June 30, 2020 the Company granted 2,616,345 restricted stock units.

The aggregate intrinsic value of restricted stock units vested for the six months ended June 30, 2021 and 2020 was $ 35,223 and $ 1,693 , respectively.

Unvested as of September 30, 2021

The total grant date fair value of RSU’s granted for the nine months ended September 30, 2021 was $ 137,604 .

During the nine months ended September 30, 2020 the Company granted 13,039,392 restricted stock units.

The aggregate intrinsic value of restricted stock units vested for the nine months ended September 30, 2021 and 2020 was $ 77,949 and $ 32,137 , respectively.

2020 Employee Stock Purchase Plan

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The purchase price of the shares will not be less than 85 % of the fair market value of Class A common stock on the lower of the purchase date, which will be the final trading day of the purchase period, or the enrollment date, which will be the first trading day of the offering period.

As of June 30, 2021, the Company had no t issued any shares under the ESPP and the total 3,084,218 shares remained available for issuance.

For the three and six months ended June 30, 2021, the Company recorded stock-based compensation expense related to the ESPP of $ 281 and $ 384 , respectively, based on elections made under the plan to-date.

There was no expense for the three and six months ended June 30, 2020.

During the three and nine months ended September 30, 2021, the Company issued 178,021 shares under the ESPP.

As of September 30, 2021 2,906,197 shares remained available for issuance.

For the three and nine months ended September 30, 2021, the Company recorded stock-based compensation expense related to the ESPP of $ 372 and $ 756 , respectively, based on elections made under the plan to-date.

There was no expense for the three and nine months ended September 30, 2020.

Stock-Based Compensation

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenues

2 unchanged sentences

General and administrative

As of June 30, 2021, the unrecognized stock-based compensation expense related to unvested common stock-based awards was $ 88,396 , which is expected to be recognized over a weighted-average period of 3 years.

As of September 30, 2021, the unrecognized stock-based compensation expense related to unvested common stock-based awards was $ 86,486 , which is expected to be recognized over a weighted-average period of 1.2 years.

Commitments and Contingencies

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In addition, the Company indemnifies its officers, directors and certain key employees while they are serving in good faith in their capacities.

Through June 30, 2021 and December 31, 2020, there have been no claims under any indemnification provisions.

Through September 30, 2021 and December 31, 2020, there have been no claims under any indemnification provisions.

From time to time, and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation.

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The Company believes that these claims lack merit and intends to defend against them vigorously.

As of June 30, 2021 and December 31, 2020, the Company did no t have any pending claims, charges or litigation that it expects would have a material adverse effect on its consolidated financial position, results of operations or cash flows.

As a result of the Company’s history of net operating losses (“NOL”), the Company has provided for a full valuation allowance against its domestic deferred tax assets.

For the three and six months ended June 30, 2021, the Company recognized an income tax expense of $ 103 and $ 412 , primarily due to estimated state and foreign income taxes.

During the three and six months ended June 30, 2020, the Company recorded income tax expense of $ 252 .

As of September 30, 2021 and December 31, 2020, the Company did no t have any pending claims, charges or litigation that it expects would have a material adverse effect on its consolidated financial position, results of operations or cash flows.

The Company’s primary lease represents the lease for its corporate headquarters in Boston, Massachusetts.

The Company modified the corporate headquarter lease during the third quarter of 2021, the future payments on the new lease are $ 17,169 .

The carrying value of the Company’s right-of-use assets are substantially concentrated in real estate as the Company primarily leases office space.

The Company’s policy is not to record leases with an original lease term of one year or less on the consolidated balance sheets.

The Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term.

The Company does not have any lease contracts with the option to purchase as of September 30, 2021.

Three Months Ended September 30,

Nine Months Ended September 30,

The components of lease cost under ASC 842 were as follows:

Operating lease cost

Short-term lease cost

Variable lease cost

Total lease cost

Nine Months Ended September 30,

Supplemental cash flow information:

Cash paid for amounts included in measurement of

lease liabilities:

Operating cash flows from operating leases

Non-cash lease activity:

Right-of-use lease assets obtained in exchange for new

operating lease liability:

Operating leases

Nine Months Ended September 30,

Supplemental balance sheet information related to

leases is as follows:

Operating leases

Operating lease right-of-use assets

Total operating right-of-use lease assets

Operating lease liabilities, current

Operating lease liabilities, net of current portion

Total operating lease liabilities

Weighted-average remaining lease term (in years)

Weighted-average discount rate

As of September 30, 2021, minimum future lease payments for these operating leases were as follows:

Years ending December 31,

Total lease payments

Less imputed interest

Total present value of lease liabilities

As a result of the Company’s history of net operating losses (“NOL”), the Company continues to maintain a full valuation allowance against its domestic net deferred tax assets.

For the three and nine months ended September 30, 2021, the Company recognized an income tax benefit of $ 5,454 and $ 5,042 , primarily due to a partial release of valuation allowance in the U.S resulting from the deferred tax liabilities established as part of the Acquisitions consummated during the quarter.

During the three and nine months ended September 30, 2020, the Company recorded income tax expense of $ 78 and $ 330 , respectively.

Related-Party Transactions

Teva Pharmaceuticals, Industries Ltd

Teva Pharmaceuticals, Industries Ltd (“Teva”) is a related party because a member of the Company’s board of directors was the President and CFO of Teva Pharmaceuticals’ North America Commercial.

In addition, Teva is a shareholder of the Company.

As of June 30, 2021 and December 31, 2020, short-term and long-term deferred revenue from this customer was no t material.

As of June 30, 2021 and December 31, 2020, amounts due from Teva were no t material.

During the three and six months ended June 30, 2021 and 2020, revenues recognized from this customer were no t material.

Teva Pharmaceuticals, Industries Ltd (“Teva”) was determined to be a related party because a member of the Company’s board of directors was the President and CFO of Teva Pharmaceuticals’ North America Commercial through June 2021.

In addition, Teva is a non-significant shareholder of the Company.

As of September 30, 2021 it was determined that Teva was no longer a related party.

As of December 31, 2020, short-term and long-term deferred revenue from this customer was no t material.

As of December 31, 2020, amounts due from Teva were no t material.

Prior to the board member’s departure from the board of directors in June 2021, the Company recognized an immaterial amount of revenue from contracts with this customer.

During the three and nine months ended September 30, 2020, revenues recognized from this customer were no t material.

Philips Holding USA, Inc.

(“Philips”) is a related party because a member of the Company’s board of directors is the Business Leader of Philips Population Health Management.

(“Philips”) was determined to be a related party because a member of the Company’s board of directors is the Business Leader of Philips Population Health Management through June 2021.

In addition, Philips is a non-significant shareholder of the Company.

As of June 30, 2021 and December 31, 2020, the Company held short-term and long-term deferred revenue of $ 977 and $ 2,549 , respectively from contracts with this customer.

As of June 30, 2021 and December 31, 2020, amounts due from Philips were $ 547 and $ 763 , respectively.

During the three months ended June 30, 2021 and 2020, the Company recognized revenue of $ 758 and $ 368 , respectively from contracts with this customer.

During the six months ended June 30, 2021 and 2020, the Company recognized revenue of $ 1,658 and $ 708 , respectively from contracts with this customer.

As of September 30, 2021 it was determined Philips was no longer a related party.

As of December 31,

2020 , the Company held short-term and long-term deferred revenue of $ 2,549 , from contracts with this customer.

As of December 31, 20 20 , amounts due from Philips were $ 763 .

Prior to the board member’s departure from Philips in June 2021, the Company recognized revenue of $ 708 , from contracts with this customer.

During the three and nine months ended September 30, 2020, the Company recognized revenue of $ 418 and $ 1,126 , respectively from contracts with this customer.

(“Anthem”) was determined to be a related party because a member of the Company’s board of directors served as the Vice President of Anthem through February 2021.

In addition, Anthem is a non-significant shareholder of the Company.

As of June 30, 2021 it was determined Anthem was no longer a related party.

As of December 31, 2020, the Company held short-term and

long-term deferred revenue of $ 11,347 , from contracts with this customer.

As of September 30, 2021 it was determined Anthem was no longer a related party.

As of December 31, 2020, the Company held short-term and long-term deferred revenue of $ 11,347 , from contracts with this customer.

As of December 31, 2020, amounts due from Anthem were $ 8,391 .

Prior to the board member’s departure from Anthem in February 2021, the Company recognized revenue of $- from contracts with this customer.

During the three and six months ended June 30, 2020 the Company recognized revenue of $ 14,848 and $ 27,155 , respectively from contracts with this customer.

During the three and nine months ended September 30, 2020 the Company recognized revenue of $ 13,522 and $ 40,677 , respectively from contracts with this customer.

Cleveland Clinic

Cleveland Clinic is a related party because a member of the Company’s board of directors is an executive advisor to Cleveland Clinic.

As of June 30, 2021 and December 31, 2020, the Company held short-term and long-term deferred revenue of $ 451 and $ 606 , respectively from contracts with this customer.

As of June 30, 2021 and December 31, 2020, amounts due from Cleveland Clinic were $ 85 and $ 1,020 , respectively.

During the three months ended June 30, 2021 and 2020, the Company recognized revenue of $ 279 and $ 294 , respectively, from contracts with this customer.

During the six months ended June 30, 2021 and 2020, the Company recognized revenue of $ 530 and $ 490 , respectively, from contracts with this customer.

As of September 30, 2021 and December 31, 2020, the Company held short-term and long-term deferred revenue of $ 281 and $ 606 , respectively from contracts with this customer.

As of September 30, 2021 and December 31, 2020, amounts due from Cleveland Clinic were $ 497 and $ 1,020 , respectively.

During the three months ended September 30, 2021 and 2020, the Company recognized revenue of $ 286 and $ 514 , respectively, from contracts with this customer.

During the nine months ended September 30, 2021 and 2020, the Company recognized revenue of $ 816 and $ 1,004 , respectively, from contracts with this customer.

CCAW, JV LLC is a related party because it is a joint venture formed between the Company and Cleveland Clinic for which the Company has a minority owned interest in.

During the year ended December 31, 2020, the Company made an initial investment in CCAW, JV LLC of $ 2,940 for its less than 50 % interest in the joint venture.

During the six months ended June 30, 2021, the Company made a capital contributed of $ 2,548 , related to a portion of the phase one capital commitment.

During the three months ended June 30, 2021 and 2020 the Company recognized revenue of $ 412 and $ 393 from contracts with this customer, respectively.

During the six months ended June 30, 2021 and 2020 the Company recognized revenue of $ 874 and $ 786 from contracts with this customer, respectively, As of June 30, 2021 and December 31, 2020, the Company held short and long term deferred revenue of $ 840 and $ 1,496 , respectively, from contracts with this customer.

As of June 30, 2021 and December 31, 2020, amounts due from CCAW, JV LLC were no t material.

During the nine months ended September 30, 2021, the Company made a capital contributed of $ 2,548 , related to a portion of the phase one capital commitment.

During the three months ended September 30, 2021 and 2020 the Company recognized revenue of $ 412 and $ 404 from contracts with this customer, respectively.

During the nine months ended September 30, 2021 and 2020 the Company recognized revenue of $ 1,286 and $ 1,190 from contracts with this customer, respectively, As of September 30, 2021 and December 31, 2020, the Company held short and long term deferred revenue of $ 428 and $ 1,496 , respectively, from contracts with this customer.

As of September 30, 2021 and December 31, 2020, amounts due from CCAW, JV LLC were no t material.

Loans to Officers

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Basic and diluted net loss per share attributable to common stockholders was calculated as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net loss attributable to non-controlling interest

7 unchanged sentences

The Company excluded the following potential common shares equivalents presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

Three Months Ended June 30,

Six Months Ended June 30,

Convertible preferred stock (as converted to common stock)

Three Months Ended September 30,

Nine Months Ended September 30,

Unvested restricted stock units

Options to purchase shares of common stock

Subsequent Events

On July 27, 2021 and July 28, 2021 the Company entered into two separate purchase agreements to acquire Conversa Health Inc.

(“Conversa”) and SilverCloud Health Holdings, Inc.

(“SilverCloud”), respectively.

Conversa is a leader in automated virtual healthcare.

SilverCloud is a leading digital mental health platform.

By adding the technology of these two companies to its virtual care platform, Amwell is enhancing the differentiated value it can bring to current and future clients.

Under the terms of the agreement with Conversa, the aggregate purchase price of approximately $ 110,000 will consist of approximately $ 55,000 in cash and $ 55,000 in Amwell stock ( 4.7 million shares).

Under the terms of the agreement with SilverCloud, the aggregate purchase price of approximately $ 210,000 will consist of approximately $ 110,000 in cash and $ 100,000 in Amwell stock ( 8.5 million shares).

As this transaction has not yet closed, the mix of cash and stock consideration could change.

The aggregate consideration for Conversa could increase by $ 30,000 subject to financial performance over a twelve-month period paid all in stock.

The aggregate consideration for SilverCloud could increase by $ 40,000 subject to financial and operational performance over a twelve-month period paid all in stock.

Conversa closed on August 10, 2021 and SilverCloud is expected to close by the end of the third quarter of 2021.

The Company expects to determine the preliminary purchase allocation prior to the end of the third quarter of 2021.

On July 19, 2021, the Company entered into an Employment Agreement (the “Employment Agreement”) with Brendan O’Grady to become the Company’s Chief Commercial & Growth Officer, effective August 16, 2021.

Pursuant to the Employment Agreement, Mr.

O’Grady will receive an annual base salary of $ 485 and will be eligible for an annual target bonus of 200 % of his annual base salary.

In addition, Mr.

O’Grady will receive a grant of restricted stock units with a grant date value of $ 8,000 that settle in shares of the Company’s Class A common stock, with 25 % of the restricted stock units being vested on the grant date, and the remaining vesting ratably every 3 months thereafter over a four-year period (beginning on the first calendar day of the month following the date that is three months following the grant date) .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements