What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-12 · 105 added, 97 removed, 326 unchanged (38% of the section changed)

33 unchanged sentences

Our client-focused approach drives our success as one of the largest telehealth companies.

As of June 30 , 2021, we powered the digital care programs of over 55 health plans, which support over 36,000 employers and collectively represent more than 80 million covered lives, as well as over 150 of the nation’s largest health systems, encompassing more than 2,000 hospitals.

Since inception, we have powered over 11 million telehealth visits for our clients, including 2.9 million in the six months ended June 30 , 2021.

As of September 30 , 2021, we powered the digital care programs of over 55 health plans, which support over 36,000 employers and collectively represent more than 80 million covered lives, as well as over 150 of the nation’s largest health systems, encompassing more than 2,000 hospitals.

Since inception, we have powered over 1 2 million telehealth visits for our clients, including 4.3 million in the nine months ended September 30 , 2021.

Healthcare today faces many challenges.

8 unchanged sentences

Providers, patients and members can access this care through a full range of Carepoints ™ , including via mobile, web, phone and our proprietary kiosks and carts that support multi-way video, phone or secure messaging interactions.

As of June 30, 2021, over 70,000 of our active providers use the Amwell Platform to serve their patients and members.

As of September 30, 2021, approximately 80,000 of our active providers use the Amwell Platform to serve their patients and members.

When needed, we augment and extend our clients’ clinical capabilities with AMG, a nationwide clinical network of over 5,000 multi-disciplinary providers covering 50 states with 24/7/365 coverage.

6 unchanged sentences

We sell the Amwell Platform on a subscription basis, which with our modular platform architecture allows our clients to introduce innovative telehealth use cases over time, expanding our subscription revenue opportunity.

To support the Amwell Platform, we offer professional services on a fee-for-service basis and a range of patient and provider access Carepoints that support hospital and home use cases and access to AMG, our affiliated medical group that provides clinical services on a fee-for-service basis.

To support the Amwell Platform, we offer professional services on a fixed fee and time and material basis and a range of patient and provider access Carepoints that support hospital and home use cases and access to AMG, our affiliated medical group that provides clinical services on a fee-for-service basis.

The combination of the platform, services and Carepoints allows our clients to deploy telehealth solutions across their full enterprise, deepening their relationships with existing and new patients and members through improved care access and coordination, cost, and quality.

Our contracts are typically three years in length but may be longer for our largest strategic customer partners.

Total subscription fees received from Health System, Health Plan and Innovator clients were $26.8 million and $24.5 million for the three months ended June 30, 2021 and 2020, respectively, and $51.4 million and $46.2 million for the six months ended June 30, 2021 and 2020, respectively.

Total subscription fees received from Health System, Health Plan and Innovator clients were $26.7 million and $25.8 million for the three months ended September 30, 2021 and 2020, respectively, and $78.1 million and $72.0 million for the nine months ended September 30, 2021 and 2020, respectively.

Health Systems

21 unchanged sentences

These clinical fees vary significantly from $59 to more than $800 per consultation or case based on the specialty and may require an additional module subscription, as in the case of telepsychiatry.

Fees received from AMG-related visits were $27.5 million and $36.0 million for the three months ended June 30, 2021 and 2020, respectively.

Fees received from AMG-related visits were $55.4 million and $62.5 million for the six months ended June 30, 2021 and 2020, respectively.

Fees received from AMG-related visits were $30.0 million and $28.5 million for the three months ended September 30, 2021 and 2020, respectively.

Fees received from AMG-related visits were $85.4 million and $90.9 million for the nine months ended September 30, 2021 and 2020, respectively.

Services & Carepoints

6 unchanged sentences

Our Carepoints are designed by our product development teams and manufactured through partner and contract relationships.

Fees received from the provision of services and Carepoints were $5.9 million and $8.1 million for the three months ended June 30, 2021 and 2020, respectively.

Fees received from the provision of services and Carepoints were $11.1 million and $13.6 million for the six months ended June 30, 2021 and 2020, respectively.

Fees received from the provision of services and Carepoints were $5.4 million and $8.3 million for the three months ended September 30, 2021 and 2020, respectively.

Fees received from the provision of services and Carepoints were $16.5 million and $21.8 million for the nine months ended September 30, 2021 and 2020, respectively.

We have expanded and intend to continue to expand our platform through research and development as well as the pursuit of selective acquisitions.

We have completed multiple acquisitions since our inception, which we believe have expanded the channels that we serve and our distribution capabilities as well as broadening our service offering.

Our acquisitions of SilverCloud and Conversa add proven longitudinal care and behavioral healthcare capabilities to our digital care enablement platform.

SilverCloud is a leading digital mental health platform.

Conversa is a leader in automated virtual healthcare.

For further information, see Note 7, “Business Combinations” of the Notes to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Key Factors Affecting Our Performance

15 unchanged sentences

We continue to experience these levels of telehealth adoption and usage of our platform and products.

In both the six months ended June 30, 2021 and 2020, our clients completed 2.9 million visits on the Amwell Platform.

Visits in the six months ended June 30, 2020 were driven by the height of the COVID-19 pandemic while visits in the six months ended June 30, 2021 were driven by expanded utilization of the platform evident by a larger number of clients’ own providers using the Amwell Platform.

During the six months ended June 30, 2021 our clients’ own providers performed over 77% of the total visits performed on the Amwell Platform versus 70% of total visits performed on the Amwell Platform during the six months ended June 30, 2020.

In both the nine months ended September 30, 2021 and 2020, our clients completed 4.3 million visits on the Amwell Platform.

Visits in the nine months ended September 30, 2020 were driven by the height of the COVID-19 pandemic while visits in the nine months ended September 30, 2021 were driven by expanded utilization of the platform evident by a larger number of clients’ own providers using the Amwell Platform.

During the nine months ended September 30, 2021 our clients’ own providers performed over 75% of the total visits performed on the Amwell Platform versus 70% of total visits performed on the Amwell Platform during the nine months ended September 30, 2020.

Comparatively, throughout 2019 and through February 2020, or pre-COVID-19, clients’ own providers delivering care represented 40% whereas AMG providers typically performed more than 60% of the total overall visits on the Amwell Platform.

3 unchanged sentences

Performed by Customer Providers

September 30, 2021

June 30, 2021

3 unchanged sentences

June 30, 2020

March 31, 2020

Active Providers

1 unchanged sentence

We define “Active Providers” as providers that have delivered a visit on the Amwell Platform at least once in the last 12 months.

Active Providers demonstrate the prevalence of telehealth within our clients in both home and hospital

environments.

Active Providers demonstrate the prevalence of telehealth within our clients in both home and hospital environments.

We believe Active Providers is a measure of our success in delivering on our mission of enabling access to care.

W e expect that the overall number of Active Providers will increase over time as a result of several factors:

We expect that the overall number of Active Providers will increase over time as a result of several factors:

the number of modules and use cases deployed within health systems

4 unchanged sentences

A significant number of providers were added to the platform in Q2 and Q3 of 2020 by our Health Plan but predominately by our Health System customers to handle the anticipated extraordinary increase in COVID-related consultations.

Amwell also added additional AMG providers for additional capacity to absorb COVID-related spikes in care.

As the 12 month measurement period for “Active Providers” advances beyond the peak COVID periods of Q2 and Q3 of 2020, we expect these extraordinary COVID-related additional AMG and customer providers to cycle out of the Active Provider count.

We continue to experience growth in core active providers but are expecting a reset period to the core base in Q2 and Q3 of 2021

Additional AMG providers were also added to absorb COVID-related spikes in care.

As the 12 month measurement period for “Active Providers” advanced beyond the peak COVID period of Q2 2020, these extraordinary COVID-related additional AMG and customer providers cycled out of the Active Provider count thus we experienced a reset to the core base in Q2 2021.

We continue to experience growth in core active providers as seen in our most recent quarter, Q3 2021, where approximately 9,000 active providers were added to our platform all coming from our Health System and Health Plan customers.

Total Active Providers

2 unchanged sentences

Customer Providers

September 30, 2021

June 30, 2021

3 unchanged sentences

June 30, 2020

March 31, 2020

Regulatory Environment

22 unchanged sentences

We calculate adjusted EBITDA as net loss adjusted to exclude (i) interest income and other income, net, (ii) tax benefit and expense, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) public offering expenses, (vi) acquisition-related income and expenses, (vii) litigation expenses related to the defense of our patents in the patent infringement claim filed by Teladoc and (viii) other items affecting our results that we do not view as representative of our ongoing operations, including direct and incremental expenses associated with the COVID-19 pandemic.

We had no such other items during the three and six months ended June 30, 2021 and 2020.

The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

We had no such other items during the three and nine months ended September 30, 2021 and 2020.

The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Depreciation and amortization

Interest income and other income (expense), net

Expense from income taxes

Interest income and other (expense) income, net

Benefit (Expense) from income taxes

Stock-based compensation

5 unchanged sentences

COVID-19-related expenses include non-recurring provider bonus payments, emergency hosting licensing fees and non-medical provider temporary labor costs related to on-boarding non-AMG providers incurred in response to the initial outbreak of the COVID-19 virus as Amwell attempted to scale quickly to meet unusually high patient and non-AMG provider demand.

Public offering expenses include non-recurring expenses incurred in relation to our initial public offering for the three and six months ended June 30, 2020 and our secondary offering for the six months ended June 30, 2021.

Public offering expenses include non-recurring expenses incurred in relation to our initial public offering for the three and nine months ended September 30, 2020 and our secondary offering for the nine months ended September 30, 2021.

Some of the limitations of adjusted EBITDA include (i) adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these capital expenditures.

6 unchanged sentences

Components of Statement of Operations

The Company has demonstrated continued revenue growth as a direct result increasing acceptance of telehealth, our penetration of the market, and the successful launch of new product enabling expanded applications of settings for care delivered virtually.

The Company has demonstrated continued revenue growth as a direct result increasing acceptance of telehealth, our penetration of the market, and the successful launch of new or expanded products that enable broadened applications of settings for care delivered virtually.

Revenue performance is reflective of the strong foundation that has been built, focused around health plans, health systems, our provider network and a consistently increasing visit base.

40 unchanged sentences

Provision for Income Taxes

The income tax provision and benefit were primarily due to state and foreign income tax expense.

The income tax provision and benefit were primarily due to state and foreign income tax expense, offset by a partial release of the valuation allowance.

Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized.

2 unchanged sentences

Consolidated Results of Operations

The following table sets forth our summarized condensed consolidated statement of operations data for the three and six months ended June 30, 2021, and 2020 and the dollar and percentage change between the respective periods:

Three Months Ended June 30,

Six Months Ended June 30,

The following table sets forth our summarized condensed consolidated statement of operations data for the three and nine months ended September 30, 2021, and 2020 and the dollar and percentage change between the respective periods:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

11 unchanged sentences

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

For the three months ended June 30, 2021, the decrease in revenue was substantially driven by a decrease in visit revenue.

Visit revenue earned from AMG patient visits decreased by $8.5 million, or 24%, from $36.0 million in the three months ended June 30, 2020 to $27.5 million in the three months ended June 30, 2021.

For the three months ended September 30, 2021, overall revenue was relatively similar to the prior period with increased subscription and visit revenue of $0.9 million and $1.6 million, respectively, offset by a $2.9 million decrease in hardware revenue caused by higher levels of care points purchases in the prior period attributed to Health Systems spending time constrained, government grant program funds, and also in the current 2021 period, customers waiting on completion of their transition to the new Converge Platform before expanding their care point footprint.

For the nine months ended September 30, 2021, the decrease in revenue from the prior period was substantially driven by a decrease in visit revenue.

Visit revenue earned from AMG patient visits decreased by $5.5 million, or 6%, from $90.9 million in the nine months ended September 30, 2020 to $85.4 million in the nine months ended September 30, 2021.

The decrease was primarily driven by reduced visit volume versus the height of the COVID-19 pandemic experienced in the second quarter of 2020, but was slightly offset by the overall increased utilization of telemedicine as a part of now normal delivery of healthcare.

The decrease in visit revenue was offset by an increase in subscription revenue from $24.5 million for the three months ended June 30, 2020 to $26.8 million during the three months ended June 30, 2021, an increase of 2.3 million, or 9%.

For the nine months ended September 30, 2021, the decrease in revenue was also driven by a decrease in hardware revenue of $5.3 million.

The decreases in revenue were partially offset by an increase in subscription revenue from $72.0 million for the nine months ended September 30, 2020 to $78.1 million during the nine months ended September 30, 2021, an increase of $6.1 million, or 7%.

Subscription revenue grew as a result of new customers subscribing to the platform and existing customers expanding their use of the platform through increasing the number of members they provided access to the platform, increased number of programs, increased modules and increased volume of care delivered on our platform by our customers’ own providers.

For the six months ended June 30, 2021, the decrease in revenue was substantially driven by a decrease in visit revenue.

Visit revenue earned from AMG patient visits decreased by $7.1 million, or 11%, from $62.5 million in the six months ended June 30, 2020 to $55.4 million in the six months ended June 30, 2021.

As stated above, the decrease was primarily driven by reduced visit volume versus the height of the COVID-19 pandemic experienced in the second quarter of 2020, but was slightly offset by the overall increased utilization of telemedicine as a part of now normal delivery of healthcare.

The decrease in visit revenue was offset by an increase in subscription revenue from $46.2 million for the six months ended June 30, 2020 to $51.4 million during the six months ended June 30, 2021, an increase of 5.2 million, or 11%.

to the platform, increased number of programs, increased modules and increased volume of care delivered on our platform by our customers’ own providers.

Costs of Revenue, Excluding Amortization of Acquired Intangible Assets

For the three months ended June 30, 2021, the decrease in cost of revenue was primarily due to a decrease of $6.5 million in provider related costs due to decreased visit volumes.

The decrease in visit volume also resulted in the need to utilize a lower level of non-clinical contractor resources to properly service visit demand.

The Company also experienced a $1.7 million and $2.0 million decrease in employee costs and hardware costs, respectively.

For the six months ended June 30, 2021, the decrease in cost of revenue was primarily due to a decrease of $5.5 million in provider related costs, with some portion of these provider costs due to decreased visit volumes.

The decrease in visit volume also resulted in the need to utilize a lower level of non-clinical contractor resources to properly service visit demand.

The Company also experienced a $2.2 million decrease in hardware costs.

For the three months ended September 30, 2021, the decrease in cost of revenue was primarily due to a decrease of $2.8 million in costs related to marketing provided to customers.

The Company also experienced a $2.1 million decrease in hardware costs due to low margin hardware unit sales.

For the nine months ended September 30, 2021, the decrease in cost of revenue was primarily due to a decrease of $6.3 million in provider related costs due to lower visit volume but also technology and process efficiencies realized in our AMG visit processes.

The Company also experienced a $4.3 million decrease in hardware costs due to lower hardware unit sales volume.

Research and Development Expenses

For the three months ended June 30, 2021, the increase in research and development expense was primarily driven by an increase of $3.4 million in employee-related costs (inclusive of stock compensation expense).

The increase in research and development expense was further driven by a $1.9 million increase in consulting services primarily driven by increased spend related to our new Converge telehealth platform.

For the six months ended June 30, 2021, the increase was primarily driven by an increase of $7.8 million in employee-related costs (inclusive of stock compensation expense).

The increase in research and development expense was further driven by a $5.6 million increase in consulting services primarily driven by increased spend related to our new Converge telehealth platform.

For the three months ended September 30, 2021, the increase in research and development expense was primarily driven by an increase of $2.5 million in employee-related costs (inclusive of stock compensation expense) offset by a decrease of $0.4 million in consulting services.

For the nine months ended September 30, 2021, the increase was primarily driven by an increase of $10.3 million in employee-related costs (inclusive of stock compensation expense).

The increase in research and development expense was further driven by a $5.2 million increase in consulting services primarily driven by increased spend in the first half of the year related to our new Converge telehealth platform.

Sales and Marketing Expenses

For the three months ended June 30, 2021, the increase in sales and marketing expense primarily consisted of $1.9 million in employee-related costs (inclusive of commissions and stock compensation expense).

There was also an increase in marketing expenses of $0.4 million.

For the six months ended June 30, 2021, the increase primarily consisted of $3.9 million in employee-related costs (inclusive of commissions and stock compensation expense).

The increase was offset by reduced travel expenses of $0.6 million and reduced marketing expenses of $0.4 million.

For the three months ended September 30, 2021, the increase in sales and marketing expense primarily consisted of $1.3 million in employee-related costs (inclusive of commissions and stock compensation expense).

There was also an increase in marketing expenses of $0.5 million and consulting expense of $0.5 million.

For the nine months ended September 30, 2021, the increase primarily consisted of $5.2 million in employee-related costs (inclusive of commissions and stock compensation expense).

The increase was offset by reduced subcontractor expenses of $0.4 million.

General and Administrative Expenses

For the three months ended June 30, 2021, the decrease in general and administrative expense was driven by a decrease in stock-based compensation expense of $59.8 million (predominantly related to awards granted to the co-CEOs).

For the three months ended September 30, 2021, the decrease in general and administrative expense was driven by a decrease in stock-based compensation expense of $23.1 million predominantly related to awards granted to the co-CEOs related to our IPO in 2020.

The decrease was offset by an increase related to employee-related costs (excluding stock compensation expense) of approximately $1.8 million.

The decrease in general and administrative expenses was offset by a $1.9 million increase in insurance costs for our directors and officers and $0.9 million in increased legal costs.

The decrease in general and administrative expenses was offset by a $2.1 million increase in insurance costs for our directors and officers, $2.8 million in increased legal costs largely related to the Teladoc litigation and $4.3 million in consulting costs largely related to the Acquisitions.

The decrease in general and administrative expenses was further offset by a $1.5 million increase in system costs to enhance administrative processing.

For the six months ended June 30, 2021, the decrease was driven by a decrease in stock-based compensation expense of $58.0 million (predominantly related to awards granted to the co-CEOs).

For the nine months ended September 30, 2021, the decrease was driven by a decrease in stock-based compensation expense of $81.1 million predominantly related to awards granted to the co-CEOs related to our IPO in 2020.

The decrease was offset by increases related to employee-related costs (excluding stock compensation expense) of approximately $2.7 million.

The decrease in general and administrative expenses was further offset by a $3.8 million increase in insurance costs for our directors and officers and $2.2 million in increased legal costs.

The decrease in general and administrative expenses was further offset by a $5.9 million increase in insurance costs for our directors and officers, $4.6 million in consulting costs largely related to the Acquisitions and $5.0 million in increased legal costs largely related to the Teladoc litigation.

The decrease in general and administrative expenses was further offset by a $3.1 million increase in system costs to enhance administrative processing.

1 unchanged sentence

Depreciation and Amortization Expense

Depreciation expense and amortization expense remained consistent for the three months ended June 30, 2021.

Depreciation expense increased by $0.2 million and amortization expense remained consistent for the six months ended June 30, 2021.

Interest Income and Other Income (Expense), net

For the three and six months ended June 30, 2021 and 2020, interest income and other expenses consist entirely of interest income and gains from our cash equivalents and short-term investments.

Expens e from Income Taxes

Income tax expense was $0.1 million for the three months ended June 30, 2021, compared to $0.3 million for the three months ended June 30, 2020.

Income tax expense was $0.4 million for the six months ended June 30, 2021, compared to $0.3 million for the six months ended June 30, 2020.

Depreciation expense remained consistent for the three and nine months ended September 30, 2021.

Amortization expense increased by $1.9 million for the three months ended September 30, 2021 and for the nine months ended September 30, 2021.

The increase in amortization was related to the intangible assets acquired in the Acquisitions.

Interest Income and Other (Expense) Income, net

For the three and nine months ended September 30, 2020, interest income and other (expense) income, net consist entirely of interest income and gains from our cash equivalents and short-term investments.

For the three and nine months ended September 30,

2021, interest income and other (expense) income, net consist of accretion of $0.6 million on the contingent consideration related to the A cquisitions, as well as interest income and gains from our cash equivalents and short-term investments .

Expense from Income Taxes

Income tax benefit was $5.5 million for the three months ended September 30, 2021, compared to income tax expense of $0.1 million for the three months ended September 30, 2020.

Income tax benefit was $5.0 million for the nine months ended September 30, 2021, compared to income tax expense $0.3 million for the nine months ended September 30, 2020.

The increase in the benefit is due to a $5.1 million release of the valuation allowance in the U.S.

due to the Acquisitions.

Loss from Equity Method Investment

2 unchanged sentences

Therefore, the Company accounts for its investments in CCAW, JV LLC using the equity method of accounting.

During the three months ended June 30, 2021 and 2020, the Company recognized a loss of $0.7 million and $0.4 million, respectively, as its proportionate share of the joint venture results of operations.

During the six months ended June 30, 2021 and 2020, the Company recognized a loss of $1.5 and $0.8 million, respectively, as its proportionate share of the joint venture results of operations.

During the three months ended September 30, 2021 and 2020, the Company recognized a loss of $0.6 million and $0.5 million, respectively, as its proportionate share of the joint venture results of operations.

During the nine months ended September 30, 2021 and 2020, the Company recognized a loss of $2.1 and $1.3 million, respectively, as its proportionate share of the joint venture results of operations.

Liquidity and Capital Resources

The following table presents a summary of our cash flow activity for the periods set forth below:

Six Months Ended June 30,

Nine Months Ended September 30,

Consolidated Statements of Cash Flows Data:

Net cash used in operating activities

Net cash provided by investing activities

Net cash used in investing activities

Net cash provided by financing activities

Sources of Financing

Our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $975.2 million and $1,041.6 million as of June 30, 2021 and December 31, 2020, respectively, which were held for a variety of growth initiatives and investments as well as working capital purposes.

Our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $790.4 million and $1,041.6 million as of September 30, 2021 and December 31, 2020, respectively, which were held for a variety of growth initiatives and investments as well as working capital purposes.

Our cash, cash equivalents and short-term investments are comprised of money market funds and marketable securities including U.S.

3 unchanged sentences

Prior to our IPO, the Company funded its operations primarily through private placements of its convertible preferred stock as well as through revenues generated through customer contracts.

As shown in the accompanying condensed consolidated financial statements, the Company incurred a loss from operations of $76.3 million and a net loss of $77.9 million for the six months ended June 30, 2021 and had an accumulated deficit of $708.6 million as of June 30, 2021.

The Company has no debt as of June 30, 2021 or December 31, 2020 and expects to generate operating losses in future years.

As shown in the accompanying condensed consolidated financial statements, the Company incurred a loss from operations of $131.7 million and a net loss of $128.9 million for the nine months ended September 30, 2021 and had an accumulated deficit of $762.4 million as of September 30, 2021.

The Company has no debt as of September 30, 2021 or December 31, 2020 and expects to generate operating losses in future years.

We believe that our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months from the issuance date of the financial statements.

Our future capital requirements will depend on many factors including our growth rate, contract renewal activity, number of consultations on our platform, the timing and extent of spending to support product development efforts, our expansion of sales and marketing activities, the introduction of new and enhanced services offerings, and the continuing market acceptance of telehealth services.

Our future capital requirements will depend on many factors including our growth rate, contract renewal activity, number of consultations on our platform, the timing and extent of

spending to support product development efforts, our expansion of sales and marketing activities, the introduction of new and enhanced services offerings, and the continuing market acceptance of telehealth services.

We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies and intellectual property rights.

7 unchanged sentences

In November 2017, the Line of Credit was amended to increase the maximum borrowings to $7.0 million.

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 instrument reduce the maximum borrowings available under the Line of Credit.

As of June 30, 2021 and December 31, 2020, the maximum borrowing available to the Company was $6.2 million and $5.9 million based on the outstanding letters of credit of $0.8 million and $1.1 million that have been issued by the financial institution.

Six months ended June 30, 2021, vs.

six months ended June 30, 2020

As of September 30, 2021 and December 31, 2020, the maximum borrowing available to the Company was $6.2 million and $5.9 million based on the outstanding letters of credit of $0.8 million and $1.1 million that have been issued by the financial institution.

Nine months ended September 30, 2021, vs.

nine months ended September 30, 2020

Cash Used in Operating Activities

For the six months ended June 30, 2021, cash used in operating activities was $67.4 million.

For the nine months ended September 30, 2021, cash used in operating activities was $96.6 million.

The primary driver of this use of cash was our net loss of $128.9 million.

1 unchanged sentence

The net loss was partially offset by non-cash expenses of $42.5 million (primarily stock-based compensation of $31.8 million and depreciation and amortization of $9.3 million).

For the six months ended June 30, 2020, cash used in operating activities was $57.8 million.

For the nine months ended September 30, 2020, cash used in operating activities was $87.9 million.

The primary driver of this use of cash was our net loss of $178.0 million.

1 unchanged sentence

The net loss was partially offset by non-cash expenses of $117.7 million (primarily stock-based compensation of $106.5 million and depreciation and amortization of $7.4 million).

Cash Provided by Investing Activities

Cash provided by investing activities was $97.2 million for the six months ended June 30, 2021.

Cash provided by investing activities consisted of proceeds from maturities of investments of $100.0, offset by a $2.5 million investment in the CCAW, JV LLC joint venture with Cleveland Clinic and $0.3 million in the purchases of property and equipment.

Cash provided by investing activities was $4.3 million for the six months ended June 30, 2020.

Cash provided by investing activities consisted of $39.4 million in proceeds from the maturities of investments, offset by $29.8 million in purchases of investments.

Cash Used in Investing Activities

Cash used in investing activities was $59.3 million for the nine months ended September 30, 2021.

Cash used in investing activities consisted of $156.5 million in acquisitions of businesses, a $2.5 million investment in the CCAW, JV LLC joint venture with Cleveland Clinic and $0.2 million in the purchases of property and equipment offset by proceeds from maturities of investments of $100.0 million.

Cash used in investing activities was $96.7 million for the nine months ended September 30, 2020.

Cash used in investing activities consisted of $69.1 million in proceeds from the maturities of investments, offset by $159.6 million in purchases of investments.

Further, cash used in investing activities included a $2.9 million investment in the CCAW, JV LLC joint venture with Cleveland Clinic and $3.3 million in the purchases of property and equipment.

Cash Provided by Financing Activities

Cash provided by financing activities for the six months ended June 30, 2021, was $3.5 million.

Cash provided by financing activities for the nine months ended September 30, 2021, was $4.5 million.

Cash provided by financing activities consisted of $18.5 million of proceeds from the exercise of employee stock options.

These proceeds were offset by cash payments primarily for the purchase of treasury stock of $14.0 million.

Cash provided by financing activities for the six months ended June 30, 2020, was $148.5 million.

Cash provided by financing activities consisted of $146.8 million of cash proceeds from our issuance of Series C Convertible Preferred Stock, net of issuance costs.

Cash provided by financing activities for the nine months ended September 30, 2020, was $1,005.1 million.

Cash provided by financing activities consisted of $146.0 million of cash proceeds from our issuance of Series C Convertible Preferred Stock, net of issuance costs, $772.9 million of cash proceeds from our IPO, net of underwriting commissions and $100.0 million cash proceeds from the issuance of Class C common stock to Google, LLC in a private placement offering.

These proceeds were offset by cash payments for the purchase of treasury stock of $18.4 million.

Off-Balance Sheet Arrangements

2 unchanged sentences

Contractual Obligations and Commitments

As of June 30, 2021, there have been no material changes from the contractual obligations and commitments previously disclosed in our Form 10-K.

As of September 30, 2021, there have been no material changes from the contractual obligations and commitments previously disclosed in our Form 10-K.

Critical Accounting Policies and Estimates

6 unchanged sentences

Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements in our Form 10-K and Note 2, Summary of Significant Accounting Policies to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

There have been no significant changes to these policies during the six months ended June 30, 2021.

There have been no significant changes to these policies during the nine months ended September 30, 2021.

Recently Issued Accounting Pronouncements Adopted

9 unchanged sentences

Interest Rate Risk

We had cash and cash equivalents totaling $975.2 million, and $941.6 million as of June 30, 2021 and December 31, 2020, respectively.

The Company also held investments totaling $0 million and $100.0 million as of June 30, 2021, and December 31, 2020, respectively.

We had cash and cash equivalents totaling $790.4 million, and $941.6 million as of September 30, 2021 and December 31, 2020, respectively.

The Company also held investments totaling $0 million and $100.0 million as of September 30, 2021, and December 31, 2020, respectively.

These amounts were primarily invested in money markets and U.S.

1 unchanged sentence

The cash and cash equivalents are held for a variety of growth and investments as well as working capital purposes.

Our investments are made for capital preservation purposes.

Our investments are made for

capital preservation purposes.

We do not enter into investments for trading or speculative purposes.

8 unchanged sentences

We have limited operations outside the United States.

As of June 30, 2021 and December 31, 2020, we had one foreign subsidiary.

The functional currency of our foreign subsidiary is the U.S.

As of September 30, 2021 and December 31, 2020, we had four foreign subsidiaries.

The Company also has a branch with a functional currency of the New Israeli Shekel, however activity in the New Israeli Shekel is not considered significant.

Prior to the Acquisitions the Company had one foreign subsidiary in Israel, the functional currency of that subsidiary is the U.S.

In the third quarter of 2021, the Company acquired three foreign subsidiaries from the acquisition of SilverCloud with functional currencies of the Euro, British pound and Australian dollars.

The activity for these entities in the nine months ended September 30, 2021 was not considered significant as only one month of operations is included in the consolidated statement of operations.

Accordingly, we believe we do not have a material exposure to foreign currency risk.

5 unchanged sentences

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 2. Management’s Discussion and Analysis