What changed in this filing

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Item 9A. Controls and Procedures

2022-02-28 compared with 2021-03-26 · 407 added, 387 removed, 983 unchanged (45% of the section changed)

3 unchanged sentences

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officers and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

Based on this evaluation, our principal executive officers and principal financial officer concluded that, as of December 31, 2020, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting, as further described below.

Material Weaknesses in Internal Control over Financial Reporting

As of December 31, 2020, we concluded that certain material weaknesses in our internal control over financial reporting were still present.

The material weaknesses present were as follows:

We did not maintain an effective control environment as we did not maintain a sufficient complement of accounting and financial reporting resources commensurate with our financial reporting requirements.

This material weakness contributed to the following material weaknesses:

We did not have sufficient resources to appropriately record revenue transactions, nor did we did have controls in place to validate that the terms of the revenue transactions were appropriately entered into the revenue sub-ledger based on the terms of the arrangement with the customer.

We did not design or maintain effective controls over the period end financial reporting process and preparation of financial statements.

Specifically, we did not design and implement a sufficient level of formal accounting policies and procedures that define how transactions across the business cycles should be initiated, recorded, processed and reported and appropriately authorized and approved.

These control deficiencies did not result in errors that were material to our annual financial statements.

However, these control deficiencies could result in a misstatement in our accounts or disclosures that would result in a material misstatement to the annual financial statements that would not be prevented or detected.

Accordingly, we determined that these control deficiencies constitute material weaknesses.

Remediation Plans

We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to the material weaknesses.

Specifically, we have undertaken the following remedial actions:

hired additional full-time accounting resources with appropriate levels of accounting knowledge and experience, including a Chief Financial Officer in the second half of 2018, a Vice President of Accounting, Vice President of FP&A and Director of Revenue in the first half of 2019;

reallocated responsibilities across the accounting organization to ensure that the appropriate level of knowledge and experience is applied based on risk and complexity of transactions and tasks under review;

migrated to a new accounting enterprise resource planning (“ERP”) system that better meets the needs of our business;

in the fourth quarter of 2020, designed and implemented controls and continued to refine processes to validate all terms of the revenue transactions were properly considered when determining revenue recognition and that all revenue transactions were subject to thorough review from individuals with the appropriate mix of expertise and oversight to ensure accurate presentation.

We have made significant progress towards remediating the material weaknesses and will continue to review, revise, and improve the effectiveness of our internal controls as appropriate Although we have made significant enhancements to our control procedures, these material weaknesses will not be considered remediated until our controls are operational for a sufficient period of time, tested, and management concludes that these controls are operating effectively.

Remediation of Previously-Identified Material Weakness in Internal Control over Financial Reporting

We previously identified and disclosed in the audited financial statements as of and for the period ended December 31, 2019 included in the Registration Statement on Form S-1 filed August 24, 2020 as well as in our Quarterly Report on Form 10-Q for the interim period ended September 30, 2020, a material weakness in our internal control over financial reporting relating to the following:

We did not design or maintain the appropriate controls to review the work of the third party used to assist management in the accounting for taxes, including both income taxes and non-income based taxes.

Our management, with the oversight from our audit committee, has completed the following remediation steps to address the previously disclosed material weakness:

implemented controls to provide for a robust review of the accounting for taxes including the work prepared by the third party as well as identification of changes to tax regulation to ensure all tax regulation changes that impact the Company are being evaluated timely and properly;

hired additional full-time accounting resources with appropriate levels of accounting knowledge and experience, including a Vice President of Accounting, in the first half of 2019 and a Director of Tax in January 2021.

As a result of the completion of these actions, and the results of our testing over the design and operating effectiveness of the newly designed and implemented controls, our remediation efforts have been successful and that the previously-identified material weakness related to the accounting taxes has been remediated as of December 31, 2020.

Changes in Internal Control over Financial Reporting

Other than as discussed above under the heading "Remediation Plans" , there have been no other changes in our internal control over financial reporting during the quarter ended December 31, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on this evaluation, our principal executive officers and principal financial officer concluded that, as of December 31, 2021, our disclosure controls and procedures were effective at a reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

This Annual Report on Form 10-K does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

In addition, for so long as we qualify as an emerging growth company as defined under the JOBS Act, our independent registered public accounting firm is not required to issue an attestation report on our internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management , including our principal executive officers and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021 , based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013).

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2021.

We excluded Conversa and SilverCloud from our assessment of internal control over financial reporting as of December 31, 2021, because they were acquired by us in business combinations during 2021.

The total assets and total revenues of these entities, which are wholly-owned subsidiaries, that are excluded from our assessment of internal control

over financial reporting collectively represent approximately 2% and approximately 3% , respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

On March 24, 2021, American Well Corporation (the “Company”) entered into an Amended and Restated Employment Agreement (the “Agreement”) with its Chief Financial Officer, Keith Anderson.

The Agreement amends the provision of Mr.

Anderson’s equity award related to severance entitlement upon a termination of employment by him for “good reason” (the definition of which has also been amended and is defined in the Agreement) to provide that under certain specified good reason termination scenarios, Mr.

Anderson will be entitled (subject to his execution and non-revocation of a release of claims) to have his unvested equity awards vest in full and immediately settled in shares of the Company’s common stock (with any performance goals to be deemed achieved at target).

The Agreement has been approved by the compensation committee of the Company’s board of directors.

The foregoing description of the Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 10.38 hereto and is incorporated herein by reference.

Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and Corporate Governance.

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Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

March 26, 2021

Agreement and Plan of Merger by and among American Well Corporation, SilverCloud Health Holdings, Inc., Shannon Merger Subsidiary Inc, Shannon Merger Sister Subsidiary, LLC, and Fortis Advisors LLC, as the Securityholder Representative Named Herein, dated as of July 28, 2021

October 8, 2021

Agreement and Plan of Merger by and among American Well Corporation, Conversa Health, Inc., Copernicus Merger Subsidiary Inc, Copernicus Merger Sister Subsidiary, LLC, and Fortis Advisors LLC, as the Securityholder Representative Named Herein, dated as of July 27, 2021

October 8, 2021

2020 Equity Incentive Plan

70 unchanged sentences

January 12, 2021

Employment Agreement between American Well Corporation and Brendan O’Grady, dated July 19, 2021

July 23, 2021

Employment Agreement between American Well Corporation and Robert Shepardson, dated September 15, 2021

September 21, 2021

Addendum to Employment Agreement between American Well Corporation and Ido Schoenberg, dated June 29, 2021

November 12, 2021

Amendment No.

6 to Amended and Restated Vendor Agreement, dated July 30, 2021, by and among American Well Corporation and Health Management Corporation dba LiveHealth Online

November 12, 2021

Amendment No.

7 to the Amended and Restated Vendor Agreement, dated October 4, 2021, by and among American Well Corporation and Anthem Inc.

Non-Employee Director Compensation Policy

March 26, 2021

2020 Employee Stock Purchase Plan Sub-Plan for Israeli Participants

March 26, 2021

Amended & Restated Employment Agreement between American Well Corporation and Keith Anderson, dated March 24, 2021

August 24, 2020

March 26, 2021

Sub Plan to the 2020 Equity Incentive Plan Republic of Ireland and the United Kingdom

Amendment to Amended & Restated Employment Agreement between American Well Corporation and Keith Anderson, dated September 21, 2021

November 12, 2021

American Well Corporation Sub Plan to the 2020 Employee Stock Purchase Plan Republic of Ireland and the United Kingdom, dated February 8, 2022

Consent of Independent Registered Public Accounting Firm

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Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (embedded with the Inline XBRL document)

Filed herewith.

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American Well Corporation

March 26, 2021

February 28, 2022

/s/ Ido Schoenberg, MD

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Co-Chief Executive Officer

March 26, 2021

February 28, 2022

/s/ Roy Schoenberg, MD, MPH

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(principal executive officer)

March 26, 2021

February 28, 2022

Ido Schoenberg

2 unchanged sentences

(principal executive officer)

March 26, 2021

February 28, 2022

Roy Schoenberg

/s/ Keith Anderson

/s/ Robert Shepardson

Chief Financial Officer

(principal financial officer)

March 26, 2021

Keith Anderson

February 28, 2022

Robert Shepardson

/s/ Paul McNeice

1 unchanged sentence

(principal accounting officer)

March 26, 2021

February 28, 2022

/s/ Deval Patrick

March 26, 2021

February 28, 2022

Deval Patrick

/s/ Brendan O’Grady

March 26, 2021

Brendan O’Grady

/s/ Stephen Schlegel

March 26, 2021

February 28, 2022

Stephen Schlegel

March 26, 2021

February 28, 2022

/s/ Derek Ross

March 26, 2021

February 28, 2022

Toby Cosgrove

March 26, 2021

February 28, 2022

Toby Cosgrove

/s/ Deborah Jackson

March 26, 2021

February 28, 2022

Deborah Jackson

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To the Board of Directors and Stockholders of American Well Corporation

Opinion on the Financial Statements

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of American Well Corporation and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, of convertible preferred stock and stockholders’ equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Conversa Health, Inc.

and SilverCloud Health Holdings, Inc.

from its assessment of internal control over financial reporting as of December 31, 2021 because they were acquired by the Company in purchase business combinations during 2021.

We have also excluded Conversa Health, Inc.

and SilverCloud Health Holdings, Inc.

from our audit of internal control over financial reporting.

Conversa Health, Inc.

and SilverCloud Health Holdings, Inc.

are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent approximately 2% and approximately 3%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition - Platform Subscription and Visits

As described in Notes 1, 2 and 3 to the consolidated financial statements, the Company generates revenue primarily from contracts with customers who purchase subscriptions to access the Company’s hosted telehealth platform.

Customers can also purchase access to the Company’s co-branded telehealth practice hosted on the Company’s shared services platform.

The Company also generates revenue when either the enterprise telehealth platform or the shared services platform is utilized to conduct a medical visit.

The Company’s revenue for platform subscription and visits was $224.9 million for the year ended December 31, 2021.

The principal considerations for our determination that performing procedures relating to revenue recognition for platform subscription and visits is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to accuracy and occurrence of revenue transactions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to revenue recognition, including controls over the accuracy and occurrence of revenue transactions.

These procedures also included, among others, evaluating the accuracy and occurrence of a sample of revenue transactions by obtaining and inspecting source documents, including sales contracts, project access approvals, medical records and cash receipts from customers, when applicable.

Valuation of Customer Relationships and Technology Intangible Assets - SilverCloud Health Holdings, Inc.

As described in Notes 1 and 9 to the consolidated financial statements, on August 27, 2021, the Company completed the acquisition of SilverCloud Health Holdings, Inc.

The total purchase consideration transferred was $226.2 million.

The preliminary purchase price allocation included identifiable assets acquired of a customer relationships intangible asset and a technology intangible asset of $32.4 million and $35 million, respectively.

The estimated fair value of the customer relationships intangible asset was determined using the excess earnings method and the estimated fair value of the technology intangible asset was determined using a relief from royalty method.

Determining the fair value of assets acquired and liabilities assumed, and the allocation of the purchase price, requires management to use judgment and estimates, with regards to the selection of valuation methodologies.

Critical estimates in valuing the customer relationships and technology intangible assets include, but are not limited to, significant assumptions related to estimates of future revenue and cash flows, expected long-term market growth, expected revenue growth rates, future expected operating expenses, earnings before interest, taxes, depreciation and amortization margin, and discount rates.

The principal considerations for our determination that performing procedures relating to the valuation of the customer relationships and technology intangible assets from the acquisition of SilverCloud Health Holdings, Inc.

is a critical audit matter are (i) the significant judgment by management when determining the fair values of the customer relationships and technology intangible assets acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to expected revenue growth rates and discount rates for both the customer relationships and technology intangible assets, as well as earnings before interest, taxes , depreciation and amortization margin for the customer relationships intangible asset;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships and technology intangible assets.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for determining the fair values of the customer relationships and technology intangible assets acquired;

(iii) evaluating the appropriateness of the excess earnings method for the customer relationships intangible asset and the relief from royalty method for the technology intangible asset;

(iv) testing the completeness and accuracy of the underlying data used in the excess earnings method and the relief from royalty method;

and (v) evaluating the reasonableness of the significant assumptions used by management related to expected revenue growth rates and discount rates for both the customer relationships and technology intangible assets, as well as earnings before interest, taxes, depreciation and amortization margin for the customer relationships intangible asset.

Evaluating management’s significant assumptions related to expected revenue growth rates and earnings before interest, taxes, depreciation and amortization margin involved evaluating whether the significant assumptions used by management were reasonable considering (i) the current and past performance of SilverCloud Health Holdings, Inc.;

(ii) the consistency with external market and industry data;

and (iii) whether the significant assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the excess earnings and relief from royalty methods and (ii) the reasonableness of the significant assumptions related to the discount rates.

Valuation of Technology Intangible Asset - Conversa Health, Inc.

As described in Notes 1 and 9 to the consolidated financial statements, on August 9, 2021, the Company completed the acquisition of Conversa Health, Inc.

The total purchase consideration transferred was $118.6 million.

The preliminary purchase price allocation included an identifiable asset acquired of a technology intangible asset of $20.4 million.

The estimated fair value of the technology intangible asset was determined using a relief from royalty method.

Critical estimates in valuing the technology intangible asset include, but are not limited to, significant assumptions related to estimates of future revenue and cash flows, expected long-term market growth, expected revenue growth rates, future expected operating expenses, earnings before interest, taxes, depreciation and amortization, and discount rates.

The principal considerations for our determination that performing procedures relating to the valuation of the technology intangible asset acquired from the acquisition of Conversa Health, Inc.

is a critical audit matter are (i) the significant judgment by management when determining the fair value of the technology intangible asset acquired;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the technology intangible asset.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for determining the fair value of the technology intangible asset acquired;

(iii) evaluating the appropriateness of the relief from royalty method;

(iv) testing the completeness and accuracy of the underlying data used in the relief from royalty method;

and (v) evaluating the reasonableness of the significant assumptions used by management related to expected revenue growth rates and discount rate.

Evaluating management’s significant assumption related to expected revenue growth rates involved evaluating whether the significant assumption used by management was reasonable considering (i) the current and past performance of Conversa Health, Inc.;

(ii) the consistency with external market and industry data;

and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and

knowledge were used to assist in evaluating (i) the appropriateness of the relief from royalty method and (ii) the reasonableness of the significant assumption related to the discount rate.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

March 26, 2021

February 28, 2022

We have served as the Company’s auditor since 2016.

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Investment in minority owned joint venture

Liabilities, Convertible Preferred Stock and Stockholders’ Deficit

Liabilities and Stockholders’ Equity

Current liabilities:

5 unchanged sentences

Other long-term liabilities

Contingent consideration liabilities, net of current portion

Operating lease liability, net of current portion

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Commitments and contingencies (Note 16)

Convertible preferred stock, $0.01 par value;

no shares authorized, issued or

outstanding as of December 31, 2020 and 17,744,445 shares authorized

14,061,508 shares issued and 14,012,935 shares outstanding as of

December 31, 2019;

aggregate liquidation preference of $0 and $608,449,

Stockholders’ deficit:

Stockholders’ equity:

Preferred stock, $ 0.01 par value;

100,000,000 shares authorized, no shares

issued or outstanding as of December 31, 2020, and no shares authorized,

issued or outstanding as of December 31, 2019

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

Common stock, $ 0.01 par value;

1,000,000,000 Class A shares authorized,

201,488,097 shares issued and 200,751,168 shares outstanding,

100,000,000 Class B shares authorized, 30,427,128 shares issued and

29,297,382 shares outstanding, 200,000,000 Class C shares authorized

5,555,555 issued and outstanding as of December 31, 2020;

220,000,000 common stock shares authorized, 42,338,679 shares issued

and 42,302,845 shares outstanding as of December 31, 2019

Treasury stock, 1,866,675 shares and 35,834 shares as of December 31, 2020

and as of December 31, 2019, respectively

1,000,000,000 Class A shares authorized, 229,402,453 and

201,488,097 shares issued, and 229,402,453 and 200,751,168 shares outstanding,

respectively;

100,000,000 Class B shares authorized, 26,913,579 and 30,427,128 shares

issued, and 26,913,579 and 29,297,382 shares outstanding, respectively;

200,000,000 Class

C shares authorized 5,555,555 issued and outstanding as of December 31, 2021 and

December 31, 2020

Treasury stock, no shares and 1,866,675 shares as of December 31, 2021

and December 31, 2020, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Accumulated deficit

Total American Well Corporation stockholders’ equity (deficit)

Total American Well Corporation stockholders’ equity

Non-controlling interest

Total stockholders’ equity (deficit)

Total liabilities, convertible preferred stock and stockholders’

equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

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

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Loss from equity method investment

Net income (loss) attributable to non-controlling interest

Net loss attributable to non-controlling interest

Net loss attributable to American Well Corporation

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Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on available-for-sale investments

Unrealized loss on available-for-sale investments

Foreign currency translation

Comprehensive loss

Comprehensive income (loss) attributable to

non-controlling interest

Comprehensive loss attributable to non-controlling interest

Comprehensive loss attributable to American Well Corporation

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Income (Loss)

Balances as of January 1, 2018

Issuance of Series C convertible preferred stock,

net of issuance costs of $6,274

Issuance of Series C convertible preferred stock

in connection with Avizia acquisition

Repurchase of Series A convertible preferred

stock, net of purchase costs of $20

Exercise of common stock options

Vesting of restricted stock units

Stock-based compensation expense

Currency translation adjustment

Unrealized gains on available-for

-sale securities, net of tax

Equity (Deficit)

Balances as of December 31, 2018

Preferred Stock

Comprehensive

American Well

Stockholders’

Noncontrolling

Stockholders’

Income (Loss)

Issuance of Series C convertible preferred

stock, net of issuance costs of $ 1,318

Issuance of Series C convertible

preferred stock in connection

with Aligned acquisition

Issuance of Series C convertible preferred stock

in connection with Aligned acquisition

Exercise of common stock options

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Vesting of restricted stock units

Shares withheld related to net share

Shares withheld related to net share settlement

Conversion of Series A, Series B, and

Series C convertible preferred stock

Issuance of common stock in connection

with initial public offering, net of

offering costs and underwriting discounts

Issuance of common stock in connection with

initial public offering, net of offering costs and

underwriting discounts of $ 54,242

Issuance of common stock in connection

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Balances as of December 31, 2020

Exercise of common stock options

Vesting of restricted stock units

Retirement of treasury stock purchased in 2020

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

Unrealized loss on available-for-sale

securities, net of tax

Currency translation adjustment

Balances as of December 31, 2021

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

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Depreciation and amortization expense

Provisions for doubtful accounts

Provisions for credit losses

Amortization of deferred contract acquisition costs

Amortization of deferred contract fulfillment costs

Deferred rent amortization

Noncash compensation costs incurred by selling shareholders

Stock-based compensation expense

Loss on equity method investment

Write-off of obsolete inventory

Deferred income taxes

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Proceeds from sales and maturities of investments

Acquisition of business, net of cash acquired

Net cash (used in) provided by investing

Acquisitions of business, net of cash acquired

Net cash (used in) provided by investing activities

Cash flows from financing activities:

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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 the issuance of common stock to Google

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

Proceeds from the issuance of common stock to Google, net of issuance costs

Payment of deferred offering costs

Repurchase of Series A convertible preferred stock, net of costs

Net cash provided by financing activities

Net (decrease) increase in cash, cash equivalents,

and restricted cash

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

Net (decrease) increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period

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Restricted cash

Total cash, cash equivalents, and restricted cash at

end of period

Total cash, cash equivalents, and restricted cash at end of period

Supplemental disclosure of cash flow information:

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Supplemental disclosure of non-cash investing and financing

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

Series C preferred stock issued in connection with Avizia acquisition

Series C preferred stock issued in connection with Aligned acquisition

Issuance of common stock in acquisitions

Unsettled issuance of Series C preferred stock

Receivable related to exercise of common stock options

Common stock issuance costs in accrued expenses

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The Company is headquartered in Boston, Massachusetts.

The Company is a leading telehealth company that enables the digital distribution and delivery of care for healthcare’s key stakeholders.

The Company is a leading enterprise software company that enables the digital distribution and delivery of care for healthcare’s key stakeholders.

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.

The Company is subject to a number of risks similar to other companies of a similar size in the high technology industry, including, but not limited to, uncertainty of progress in developing technologies, new technological innovations, dependence on key personnel, protection of proprietary technology, uncertainty of market acceptance of telehealth and the need for additional financing.

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 “August 2021 Acquisitions”).

Conversa is a leader in automated virtual healthcare.

SilverCloud is a leading digital mental health platform .

See Note 9 “Business Combinations”.

Initial Public Offering

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The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business.

Through December 31, 2020, the Company has primarily funded its operations with proceeds from the initial public offering, the sales of convertible preferred stock and revenue from customers who purchase access to the Company’s telehealth platform.

Through December 31, 2021, the Company has primarily funded its operations with proceeds from the initial public offering, the sales of convertible preferred stock and revenue from customers who purchase access to the Company’s Platform.

On September 21, 2020 the Company closed on the IPO raising $ 822,267 in gross proceeds.

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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported periods.

Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition, the estimated customer relationship period that is used in the amortization of deferred contract acquisition costs, the valuation of assets and liabilities acquired in business combinations, the useful lives of intangible assets and property and equipment and the valuation of common stock.

The Company bases its estimates on historical experience, known trends, and other market-specific or other relevant factors that it believes to be reasonable under the circumstances.

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Items included in the financial statements of such subsidiaries are measured using that functional currency.

For substantially all of the Company’s subsidiaries the functional currency is the U.S.

Foreign currency denominated monetary assets and liabilities are remeasured into U.S.

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Gains or losses from foreign currency remeasurement and settlements are included in interest income and other income (expense), net in the consolidated statements of operations and comprehensive loss.

During the years ended December 31, 2020, 2019 and 2018, the Company’s gains or losses from foreign currency remeasurement and settlements were not material.

During the year ended December 31, 2021, the Company’s gains (losses) from foreign currency remeasurement and settlement were $ 445 .

During the years ended December 31, 2020 and 2019, the Company’s gains or losses from foreign currency remeasurement and settlements were insignificant.

Segment Information

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

As of December 31, 2020, one customer accounted for 19% of outstanding accounts receivable.

As of December 31, 2019, no customer accounted for 10% or greater of outstanding accounts receivable.

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

For the years ended December 31, 2021, 2020 and 2019, sales to one related party customer represented 25 %, 22 % and 23 % of the Company’s total revenue, respectively.

For the year ended December 31, 2018, sales to two related party customers represented 21% and 13% of the Company’s total revenue.

Cash Equivalents

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Restricted Cash

As of December 31, 2020 and December 31, 2019, the Company maintained letters of credit totaling $1,095 and $1,143, respectively, for the benefit of the landlord of its leased property and performance surety bonds.

As of December 31, 2021 and 2020, the Company maintained letters of credit totaling $ 795 and $ 1,095 , respectively, for the benefit of the landlord of its leased property and performance surety bonds.

The Company has classified $ 0 and $ 1,095 as current as of December 31, 2021 and 2020, respectively, and $ 795 and $ 0 as non-current on its consolidated balance sheet as of December 31, 2021 and 2020, respectively.

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The Company periodically evaluates its investments for other-than-temporary impairment.

When assessing investments for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, the Company’s ability and intent to retain investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general.

original cost, the Company’s ability and intent to retain investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general.

If any adjustment to fair value reflects a decline in the value of the investment that the Company considers to be “other than temporary,” the Company reduces the investment through a charge to the consolidated statement of operations and other comprehensive income (loss).

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Accounts receivable primarily consist of amounts billed currently due from customers.

Accounts receivable are presented net of an allowance for doubtful accounts, which is an estimate of amounts that may not be collectible.

Accounts receivable are presented net of an allowance for credit losses, which is an estimate of amounts that may not be collectible.

In determining the amount of the allowance at each reporting date, the Company makes judgments about general economic conditions, historical write-off experience and any specific risks identified in customer collection matters, including the aging of unpaid accounts receivable and changes in customer financial conditions.

Account balances are written off after all means of collection are exhausted and the potential for non-recovery is determined to be probable.

Adjustments to the allowance for doubtful accounts are recorded as general and administrative expenses in the consolidated statements of operations and comprehensive loss.

Adjustments to the allowance for credit losses are recorded as general and administrative expenses in the consolidated statements of operations and comprehensive loss.

The Company values all of its inventories, which consist primarily of raw material hardware components, at the lower of cost or net realizable value on a first-in, first-out basis (“FIFO”).

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Transaction costs related to business combinations are expensed as incurred in general and administrative expense in the consolidated statement of operations and comprehensive loss.

Determining the fair value of assets acquired and liabilities assumed, and the allocation of the purchase price requires management to use judgment and estimates, especially with respect to intangible assets.

Critical estimates in valuing certain identifiable assets include, but are not limited to, estimates of future revenue and cash flows, expected long-term market growth, future expected operating expenses, and appropriate discount rates.

Determining the fair value of assets acquired and liabilities assumed, and the allocation of the purchase price requires management to use judgment and estimates with regards to the selection of valuation methodologies, especially with respect to intangible assets.

Critical estimates in valuing certain identifiable assets include, but are not limited to, significant assumptions related to estimates of future revenue and cash flows, expected long-term market growth, expected revenue growth rates, future expected operating expenses, earnings before interest, taxes, depreciation and amortization margin, and discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

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The Company’s goodwill impairment tests are performed at the enterprise level given the Company’s single reporting unit.

The Company’s goodwill impairment analysis first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude it is more likely than not that the fair value of the reporting unit is below its carrying amount.

If the Company determines that it is more likely than not that the fair value of the reporting unit is below the carrying amount, a quantitative goodwill assessment is required.

In the quantitative evaluation, the fair value of the reporting unit is determined and compared to the carrying value.

The fair value of the reporting unit is estimated using quoted market prices in active markets of the Company’s stock.

Declines in market capitalization are assessed to determine whether they would indicate a triggering event.

As part of the Step 1 analysis the Company considers assumptions such as control premium, market data and expected future cash flows, as needed.

An impairment charge is recognized for the excess of the carrying value of goodwill over its implied the fair value.

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The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value.

To date, the Company has not recorded any impairment losses on long-lived assets.

To date, the Company has no t recorded any impairment losses on long-lived assets.

No events or changes in circumstances existed to require an impairment assessment during the years ended December 31, 2021 and 2020.

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In February 2021 the Company made a capital contribution of $ 2,548 related to a portion of the phase one capital commitment.

For the year ended December 31, 2020, the Company recognized a loss of $2,188 as its proportionate share of the joint ventures results of operations.

Accordingly, the carrying value of the equity method investment as of December 31, 2020 was $752.

For the year ended December 31, 2021 and 2020, the Company recognized a loss of $ 3,132 and $ 2,188 as its proportionate share of the joint ventures results of operations, respectively.

Accordingly, the carrying value of the equity method investment as of December 31, 2021 and 2020 was $ 168 and $ 752 , respectively.

Advertising Costs

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Generally, the Company issues stock options and restricted stock units (“RSU’s”) to employees with only service-based vesting conditions and records the expense for these awards using the straight-line method.

Stock option awards and restricted stock units issued to the co-CEOs prior to the IPO or as a result of the IPO (“IPO RSUs”) are expensed when granted as the requisite future service of the awards is not substantive for accounting purposes.

Stock option awards and restricted stock units issued to the co-CEOs prior to the IPO or as a result of the IPO (“IPO RSUs”) were expensed when granted as the requisite future service of the awards is not substantive for accounting purposes.

The Company classifies stock-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award’s recipient’s payroll costs are classified.

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The Company determines whether costs should be deferred based on its sales compensation plans if the commissions are in fact incremental and would not have occurred absent the customer contract.

Sales commissions paid upon the initial acquisition of a contract are amortized over an estimated period of benefit of five years.

No sales commissions are paid on customer renewals.

Sales commissions are paid upon the initial acquisition of a contract and are amortized over an estimated period of benefit of five years.

Amortization is recognized on a straight-line basis commensurate with the pattern of revenue recognition.

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Platform subscription

The Company generates revenue primarily from contracts with customers who purchase subscriptions to access to the Company’s hosted telehealth platform which includes access to the Company’s affiliated medical group.

The Company generates revenue primarily from contracts with customers who purchase subscriptions to access the Company’s hosted telehealth platform which includes access to the Company’s affiliated medical group.

The Company’s customers do not have the right to take possession of the Company’s software operating its telehealth platform at any time.

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Customers typically have the right to terminate their contracts for cause if the Company fails to perform in accordance with the contractual terms.

For customers who purchase access to the enterprise telehealth platform (the “Amwell Platform”), the Company hosts a dedicated instance of the telehealth platform, white-labeled under the customer’s own name, branding, and with customized workflows and operating choices.

For customers who purchase access to the enterprise telehealth platform (the “Amwell Platform”), the Company hosts a dedicated instance of the Amwell Platform, white-labeled under the customer’s own name, branding, and with customized workflows and operating choices.

The implementation services for the Amwell Platform are not distinct within the context of the contract because the Company’s promise to perform the implementation services are not separately identifiable from the access to the Amwell Platform.

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Revenue recognized from the per member per month variable consideration does not represent a significant portion of total revenue for the years ended December 31, 2021 , 2020 and 2019 .

Some contracts with customers contain a renewal option which allows the customer to continue access to the Company’s hosted telehealth platform for a stated price after the initial contractual term has ended.

Some contracts with customers contain a renewal option which allows the customer to continue access to the Amwell Platform for a stated price after the initial contractual term has ended.

These renewal options are evaluated on a case-by-case basis but generally do not provide a material right as they are priced at or above the price for the same service that the Company offers to similar customers and, as such, would not result in a separate performance obligation.

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Therefore, the Company recognizes the visit fee on a gross basis upon completion of the visit.

Other revenue primarily represents professional services associated with the Company’s hosted telehealth platform.

After implementation of the hosted telehealth platform has been completed, some customers purchase other professional services, which are designed to help customers enhance their ability to use the Company’s telehealth platform.

Other revenue primarily represents professional services associated with the Amwell Platform.

After implementation of Amwell Platform has been completed, some customers purchase other professional services, which are designed to help customers enhance their ability to use Amwell Platform.

For the majority of arrangements, the Company prices these professional services on a time and material basis, has standalone selling price for these services, and recognizes revenue as services are performed.

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Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as a current liability and the remaining portion is recorded as a noncurrent liability on the consolidated balance sheet.

Accounting under ASC 840

The Company leases its corporate headquarters under noncancelable lease agreements which are accounted for as operating leases.

Rent expense is recorded on a straight-line basis over the lease term.

Certain of the operating lease agreements contain rent holidays and rent escalation provisions.

For these leases, the Company recognizes the related rent expense on a straight-line basis over the lease term.

The difference between cash rent payments and the recognition of straight-line rent expense is recorded as deferred rent and amortized over the lease term.

The Company records deferred rent in accrued expenses on the consolidated balance sheets.

Accounting under ASC 842

Prior to January 1, 2019, the Company accounted for leases under ASC 840, Leases (“ASC 840”).

The Company adopted ASC 842, Leases (“ASC 842”), effective January 1, 2019 using the modified retrospective transition method.

Under this method, financial statements for reporting periods after adoption are presented in accordance with ASC 842 and prior-period financial statements continue to be presented in accordance with ASC 840, the accounting standard originally in effect for such periods.

In accordance with ASC 842, the Company determines at the inception of a contract if such arrangement is or contains a lease.

The Company determines at the inception of a contract if such arrangement is or contains a lease.

A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

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Non-lease components may include maintenance, utilities, and other operating costs.

Subsequent to the Company’s adoption of ASC 842 as of January 1, 2019, the Company combines the lease and non-lease components of fixed costs in its lease arrangements as a single lease component.

Variable costs, such as utilities or maintenance costs, are not included in the measurement of right-of-use assets and lease liabilities, but rather are expensed when the event determining the amount of variable consideration to be paid occurs.

The Company combines the lease and non-lease components of fixed costs in its lease arrangements as a single lease component.

Variable costs, such as utilities or maintenance costs, are not included

in the measurement of right-of-use assets and lease liabilities, but rather are expensed when the event determining the amount of variable consideration to be paid occurs.

Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term.

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The amounts determined for the Company’s right-of-use assets and lease liabilities generally do not assume that renewal options or early-termination provisions, if any, are exercised, unless it is reasonably certain that the Company will exercise such options.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the JOBS Act.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e., lessees and lessors).

The standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.

This classification will determine whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases.

In addition, a lessee is required to record (i) a right-of-use asset and a lease liability on its balance sheets for all leases with accounting lease terms of greater than 12 months regardless of whether it is an operating or finance lease and (ii) lease expense in its statement of operations for operating leases and amortization and interest expense in its statement of operations for finance leases.

Leases with a term of 12 months or less may be accounted for similar to prior guidance for operating leases under ASC 840.

In July 2018, the FASB issued ASU No.

2018-11, Leases (Topic 842), which added an optional transition method that allows companies to adopt the standard as of the beginning of the year of adoption as opposed to the earliest comparative period presented.

In November 2019, the FASB issued guidance delaying the effective date for all entities, except for public business entities.

For public entities, ASU 2016-02 was effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years.

For non-public entities, this guidance is effective for annual periods beginning after December 15, 2020.

Early adoption is permitted.

The Company adopted ASC 842 effective January 1, 2019 , using the modified retrospective transition method.

The transition method allows entities to apply the transition requirements at the effective date rather than at the beginning of the earliest comparative period presented.

Accordingly, the Company did not restate the comparative period and its reporting for the comparative period is presented in accordance with ASC 840.

Upon its adoption of ASC 842, the Company elected to apply the package of practical expedients permitted under the transition guidance to its entire lease portfolio as of January 1, 2019.

As a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, and (iii) whether the initial direct costs for any existing leases met the new definition of initial direct costs at the initial application date.

In connection with the adoption of ASC 842, the Company recorded an impact of $ 17,022 on its assets and $ 18,446 on its liabilities for the recognition of operating lease right-of-use-assets and operating lease liabilities, respectively, which are primarily related to the lease of the Company’s corporate headquarters in Boston, Massachusetts.

The adoption of ASC 842 did not have a material impact on the Company’s results of operations or cash flows.

In January 2017, the FASB issued ASU No.

2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business , which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business.

If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of transferred assets and activities is not a business.

The Company early adopted this ASU in the year ended December 31, 2018.

The adoption of this ASU did not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment .

This ASU will simplify the measurement of goodwill by eliminating step two of the two-step impairment test.

Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.

The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

The early adoption of this ASU in the year ended December 31, 2018 did not have a material impact on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No.

2017-09, Compensation—Stock Compensation (Topic 718):

Scope of Modification Accounting , which provides clarity in applying the guidance in Topic 718 around modifications of stock-based payment awards.

The adoption of this ASU in the year ended December 31, 2018 did not have a material impact on the Company’s consolidated financial statements.

Recently Issued and Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU No.

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The other provisions of ASU 2018-13 include eliminated and modified disclosure requirements.

An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date.

For all entities, this guidance is required to be adopted for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.

Early adoption is permitted.

The Company does not expect the adoption of ASU 2018-13 to have a significant impact on the Company’s consolidated financial statements and related disclosures.

The guidance was adopted effective January 1, 2020 and did not have a material impact on the consolidated financial statements and disclosures.

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Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , which aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use-software.

The standard is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.

Early adoption is permitted.

The adoption of ASU 2018-15 did not have a significant impact on the Company’s consolidated financial statements.

The guidance was adopted effective January 1, 2020 and did not have a material impact on the consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions and clarifying and amending existing guidance.

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

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.

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.

In January 2017, the FASB issued ASU No.

2017-04, Goodwill Simplifications (Topic 350) (“ASU 2017-04”), which simplifies the test for goodwill impairment.

The new guidance eliminates Step 2 from the goodwill impairment test as currently prescribed in GAAP.

This ASU is the result of the FASB project focused on simplifications to accounting for goodwill.

The new guidance was effective and adopted in 2020 with no impact on the financial statements.

In June 2016, the FASB issued ASU No.

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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 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.

This standard will be effective for the Company on January 1, 2023.

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

For public entities that are Securities and Exchange Commission filers, excluding entities eligible to be smaller reporting companies, ASU 2019-12 is effective for annual periods beginning after December 15, 2020, including interim periods within those fiscal years.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

Early adoption of the amendments is permitted.

The Company is planning on early adopting this standard on January 1, 2021.

The Company is currently evaluating the impact that the adoption of ASU 2019-12 will have on its consolidated financial statements but does not expect there to be a material impact.

The Company adopted ASU 2016-13 and the related clarifications in 2021.

The adoption did not have a material effect on the Company’s consolidated financial statements.

Revenue and Deferred Revenue

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

The amount of unbilled receivables as of December 31, 2020 and 2019 is $3,376 and $1,622 and has been included within accounts receivable on the consolidated balance sheet.

The amount of unbilled receivables as of December 31, 2021 and 2020 is $ 5,697 and $ 3,376 and has been included within accounts receivable and as of December 31, 2021 $ 781 has been included within other assets on the consolidated balance sheet.

Contract liabilities consist of deferred revenue and include billings in advance of performance under the contract.

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However, because the Company owns less than 100 % of NTN, the Company recognizes net income (loss) attributable to non-controlling interest in the 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) income attributed to the non-controlling interest amounted to ($4,194), ($1,176) and $362 for the years ended December 31, 2020, 2019 and 2018, respectively.

The proportionate share of the loss attributed to the non-controlling interest amounted to $ 448 , $ 4,194 and $ 1,176 for the years ended December 31, 2021, 2020 and 2019, respectively.

The carrying value of the non-controlling interest was $ 21,617 , $ 22,065 and 26,259 as of December 31, 2021, 2020 and 2019.

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Money market funds

Total financial assets:

Contingent consideration

Total financial liabilities:

December 31, 2020

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As of December 31, 2021 and 2020, the Company’s cash equivalents were invested in money market funds and were valued based on Level 1 inputs.

As of December 31, 2020 and 2019, the Company’s investments consisted of U.S.

As of December 31, 2020, the Company’s investments consisted of U.S.

government agency bonds and were valued based on Level 2 inputs.

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During the years ended December 31, 2021 and 2020, there were no transfers between Level 1, Level 2 and Level 3.

The Company has classified its net liability for contingent earnout considerations relating to the August 2021 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.

A description of the August 2021 Acquisitions is included within Note 9.

The income approach method involves calculating the earnout payment based on the forecasted revenue and the revenue discount rate of 3.1 % and 1.3 % for SilverCloud and Conversa, respectively, The contingent earnout payments for each acquisition are based on the achievement of certain revenue and integration thresholds.

During the year ended December 31, 2021 the fair value of the contingent earnout consideration decreased by $ 13,740 due to shifts in the timeline of revenue forecasts.

During the fourth quarter of 2021, the contingent earnout consideration for the integration milestone was achieved and it was determined the earnout of $ 15,000 was payable to the Conversa shareholders as of December 31, 2021.

Year Ended December 31, 2021

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

Fair value adjustment

Earned amount due to shareholders

Ending Balance

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

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U.S government securities

Allowance for Doubtful Accounts

Changes in the allowance for doubtful accounts were as follows:

Allowance for Credit Losses

Changes in the allowance for credit losses were as follows:

Years Ended December 31,

Allowance for doubtful accounts, beginning of the period

Allowance for doubtful accounts, end of the period

Allowance for credit losses, beginning of the period

Allowance for credit losses, end of the period

Business Combinations

In July 2018, the Company acquired all of the issued and outstanding shares of Avizia, Inc.

(“Avizia”), a leading provider of acute care telehealth capability for more than forty clinical specialties, including tele-stroke and tele-behavioral health, through a share purchase agreement.

The aggregate consideration paid was $137,804, which was comprised of 1,115,934 shares of the Company’s Series C convertible preferred stock valued at $72,536 and $65,268 of cash.

The total acquisition related costs were $1,186 and recognized as general and administrative expense in its consolidated statements of operations and comprehensive loss during the year ended December 31, 2018.

The results of operations of Avizia have been included in the Company’s consolidated statements of operations and comprehensive loss from the acquisition date.

The Company recorded $10,839 of revenue and $9,725 of net loss from Avizia for the period from July 3, 2018 (date of acquisition) through December 31, 2018.

The final allocation of the purchase consideration of $ 137,804 as follows :

Accounts receivable

Identifiable intangible assets

Total assets acquired

Current liabilities

Deferred revenue

Other long-term liabilities

Total liabilities assumed

Total purchase consideration

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the acquisition date:

Developed technology

Customer relationships

The fair value of the developed technology was estimated using the relief-from-royalty method, a form of the income approach, which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets.

The relief-from-royalty method involves two steps:

(i) estimation of reasonable royalty rates for the assets and (ii) the application of these royalty rates to a revenue stream and discounting the resulting cash flows to determine a value.

The Company multiplied the selected royalty rate by the forecasted net revenue stream to calculate the cost savings (i.e., relief from royalty payment) associated with the developed technology.

The cash flows were then discounted to present value by the selected discount rate.

Key assumptions used in this model were revenue projections, discount rates and royalty rates, all of which were estimated by management.

The fair value of the customer relationship intangible asset was estimated using the replacement method, a form of the cost approach, which estimates the costs to replace the customer base.

The Company estimated the time to recreate the customer base and multiplied it by the estimated annual costs, which were based on Avizia’s historical sales and marketing costs and included an overhead allocation.

The key assumption in the model was the estimated time to recreate the customer base.

Goodwill represents the excess of the purchase consideration over the estimated acquisition date fair value of the net tangible and intangible assets acquired and liabilities assumed.

Goodwill is primarily attributable to expected post-acquisition synergies from integrating Avizia’s developed technology into the Company’s telehealth platform.

The goodwill recorded as part of the Avizia acquisition is not deductible for U.S.

federal income tax purposes.

Unaudited Pro Forma Financial Information

The following unaudited pro forma information presents the combined results of operations as if the Avizia acquisition had been completed on January 1, 2017, the beginning of the comparable prior annual reporting period.

The unaudited pro forma results include adjustments primarily related to the following:

(i) removal of interest expense related to the legacy debt of Avizia that was not acquired;

(ii) amortization of the acquired intangible assets;

(iii) fair value adjustment for deferred revenue;

and (iv) the inclusion of acquisition-related costs as if the acquisition-related costs were incurred in 2017.

Net loss per share attributable to common stockholders,

basic and diluted

Aligned Telehealth, Inc.

In November 2019, the Company acquired all the issued and outstanding shares of Aligned Telehealth, Inc.

This acquisition will combine Aligned’s customer base with the Company’s telehealth platform to increase the number of hospitals and health plans utilizing telehealth.

This acquisition will combine Aligned’s customer base with the Amwell Platform to increase the number of hospitals and health plans utilizing telehealth.

The aggregate consideration paid was $ 82,948 , which consists of (i) 456,667 shares of the Company’s Series C convertible preferred stock valued at $ 34,250 ;

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The contingent consideration was subject to remeasurement at each reporting date until December 31, 2020.

The earn-out was not achieved as of December 31, 2020, with the remeasurement adjustment of $10 was recorded in the consolidated statements of operations and comprehensive loss.

The earn-out was no t achieved as of December 31, 2020, with the remeasurement adjustment of $ 10 was recorded in the consolidated statements of operations and comprehensive loss.

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

The total acquisition related costs were $ 1,494 and recognized as general and administrative expense in its consolidated statements of operations and comprehensive loss during the year ended December 31, 2019.

The results of operations of Aligned have been included in the Company’s consolidated statements of operations from the acquisition date.

The results of

operations of Aligned have been included in the Company’s consolidated statements of operations from the acquisition date.

Actual revenue and losses of Aligned since the acquisition date as well as pro forma combined results of operations for the Aligned 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.

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Goodwill represents the excess of the purchase consideration over the estimated acquisition date fair value of the net tangible and intangible assets acquired and liabilities assumed.

Goodwill is primarily attributable to expected post-acquisition cross-selling opportunities from integrating Aligned’s customer relationships with the Company’s telehealth platform.

Goodwill is primarily attributable to expected post-acquisition cross-selling opportunities from integrating Aligned’s customer relationships with the Amwell Platform.

SilverCloud and Conversa

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 $ 4,854 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 .

The stock 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 August 2021 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 August 2021 Acquisitions were integrated within the consolidated financial statements commencing on the aforementioned acquisition dates.

Actual revenue and losses of the August 2021 Acquisitions since the acquisition date as well as pro forma combined results of operations for the August 2021 Acquisition have not been presented because the effect of the August 2021 Acquisitions were 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.

In the fourth quarter of 2021, the Company recorded a $ 2,825 increase and a $ 1,268 decrease to goodwill related to the assessment of the tax attributes of the business combinations for SilverCloud and Conversa, respectively.

In addition, the Company recorded a $ 9 and $ 66 decrease to goodwill with the finalization of the net working capital adjustment for SilverCloud and Conversa, respectively.

The allocation of the consideration transferred to the assets acquired and the liabilities assumed for the August 2021 Acquisitions remains preliminary and therefore can be revised as a result of additional information obtained due to completing the final assessment of the tax attributes of the business combinations.

Additional adjustments may be recorded within the measurement period, which will not exceed one year from the acquisition date.

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 August 2021 Acquisitions and their respective weighted average useful lives, as determined based on initial valuations.

The estimated fair value of the Technology and Tradename was determined using a relief from royalty method and the estimated fair value of the Customer relationships was determined using the excess earnings method:

Conversa Health

Customer relationships

Deferred Contract Acquisition and Contract Fulfillment Costs

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The following table represents a rollforward of the Company’s deferred contract fulfillment costs:

Years Ended December 31,

Beginning balance as of January 1

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Deferred contract fulfillment costs, noncurrent

Amortization expense related to deferred contract fulfilment costs for the years ended December 31, 2020, 2019 and 2018 was $852, $707 and $574, respectively.

Amortization expense related to deferred contract fulfillment costs for the years ended December 31, 2021, 2020 and 2019 was $ 737 , $ 852 and $ 707 , respectively.

Property and Equipment, Net

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Depreciation and amortization expense related to property and equipment was $ 2,160 , $ 2,146 and $ 1,769 for the years ended December 31, 2021, 2020 and 2019, respectively.

During the year ended December 31, 2021 the Company disposed of fully depreciated assets with a gross value of $ 1,851 .

Goodwill and Intangible Assets

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Beginning Balance as of January 1

Goodwill acquired (Note 9)

Goodwill acquired

Currency translation adjustments

Ending Balance

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Professional services

Earned contingent consideration

Provider services

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

As of December 31, 2020 and 2019, 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 December 31, 2020, the maximum borrowing available to the Company is $5,905 based on the outstanding letters of credit of $1,095 that have been issued by the financial institution.

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

The Line of Credit arrangement expired during the year ended December 31, 2021.

Stockholders’ Equity

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The Company incurred $ 1,318 of issuance costs in connection with the issuance of the Series C preferred stock.

Additionally, the Company issued 1,115,934 shares of Series C preferred stock at a price of $65.00 per share in connection with the acquisition of Avizia (see Note 9).

In the year ended December 31, 2019, the Company issued and sold 628,719 shares of Series C preferred stock at a price of $75 per share for gross proceeds of $47,154.

The Company incurred $1,318 of issuance costs in connection with the issuance of the Series C preferred stock.

Additionally, the Company issued 456,667 shares of Series C preferred stock at a price of $ 75 per share in connection with the acquisition of Aligned (see Note 9).

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In conjunction with the Company’s IPO in September 2020, all shares of convertible preferred stock then outstanding, totaling 15,525,685 shares (pre-split), were automatically converted into an equivalent number of shares of Class A common stock on an 8.8-to-1.0 basis pursuant to a stock split and their carrying value, totaling $ 801,813 was reclassified into stockholders’ equity on the consolidated balance sheet.

01 per share, with rights and preferences, including voting rights, designated from time to time by the board of directors.

In connection with the IPO, the Company filed an Amended and Restated Certificate of Incorporation which authorizes the issuance of 100,000,000 shares of undesignated preferred stock, par value of $ 0.01 per share, with rights and preferences, including voting rights, designated from time to time by the board of directors.

Prior to the conversion of the convertible preferred stock in September 2020, the stockholders of convertible preferred stock had the following rights and preferences:

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After payments have been made in full to the holders of the Senior Preferred Stock and Series A preferred stock, then to the extent available, the holders of common stock are entitled to share ratably in the remaining assets of the Company.

Unless the holders of a majority of the Preferred Stock, voting together as a single class, on an as-converted to common stock basis, elect otherwise, a Deemed Liquidation Event includes a merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) or a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company.

corporation) or a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company.

Each share of Preferred Stock is convertible, at the option of the holder, at any time, or will automatically be converted into shares of common stock at the applicable conversion ratio then in effect (i) upon closing of a qualifying IPO at a price per share to the public of at least $ 6.82 , subject to appropriate adjustments (described below), and with aggregate gross proceeds of at least $ 25,000 or (ii) upon the vote or written consent of the holders of a majority of the outstanding shares of Preferred Stock, voting together as a single class and on an as-converted to common stock basis.

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The Conversion Price is subject to appropriate adjustment in the event of any deemed issuance of additional shares, stock dividend, stock split, combination or other similar recapitalization and other adjustments as set forth in the Company’s certificate of incorporation, as amended and restated.

As of December 31, 2019, each outstanding share of Preferred Stock was convertible into common stock on a 8.8-for-one basis.

Each outstanding share of Preferred Stock was convertible into common stock on a 8.8-for-one basis.

Undesignated Preferred Stock

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In September 2020, the Company sold 5,555,555 shares of Class C common stock in connection with the stock purchase agreement with Google, LLC for net proceeds of $ 99,100 , after deducting offering costs of $ 900 .

Concurrently with the IPO, the Company used $24,157 of the proceeds from the IPO to repurchased 1,340,354 shares of Class A and Class B common stock from certain executive officers and other employees, to permit such executive officers and other employees to pay taxes owed in connection with the vesting of equity awards, including the repayment of third party loans incurred to finance the payment of such taxes.

Concurrently with the IPO, the Company used $ 24,157 of the proceeds from the IPO to repurchase 1,340,354 shares of Class A and Class B common stock from certain executive officers and other employees, to permit such executive officers and other employees to pay taxes owed in connection with the vesting of equity awards, including the repayment of third party loans incurred to finance the payment of such taxes.

In connection with the IPO, the Company filed an Amended and Restated Certificate of Incorporation which authorizes capital stock of 1,000,000,000 shares of Class A common stock, par value $ 0.01 per share, 100,000,000 shares of Class B common stock, par value $ 0.01 per share, and 200,000,000 shares of Class C common stock, par value $ 0.01 per share.

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Shares of Class B and Class C common stock will be converted into shares of Class A common stock on a one-for-one basis upon the occurrence of certain events.

Shares of Class B common stock will automatically convert on the first business day (i) after the date on which the outstanding shares of Class B common stock constitutes less than 5% of the aggregate number of shares of common stock then outstanding, (ii) after the date on which neither founder is serving as an executive officer or (iii) following seven years after the date the amended and restate certificate of incorporation becomes effective, provided that, such period may, to the extent permitted by law and applicable stock exchange rules, be extended for three years upon the affirmative vote of the holders of a majority of the voting power of the then-outstanding shares of Class A common stock entitled to vote thereon, voting separately as a class.

then outstanding, (ii) after the date on which neither founder is serving as an executive officer or (iii) following seven years after the date the amended and restate certificate of incorporation becomes effective, provided that, such period may, to the extent permitted by law and applicable stock exchange rules, be extended for three years upon the affirmative vote of the holders of a majority of the voting power of the then-outstanding shares of Class A common stock entitled to vote thereon, voting separately as a class.

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.

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No dividends have been declared through December 31, 2021.

In August 2021, the Company issued 4.7 million and 8.1 million shares of Class A common stock at a fair value of $ 11.20 and $ 10.51 per share in connection with the acquisitions of Conversa and SilverCloud, respectively (see Note 9).

In the year ended December 31, 2021 4,079,035 shares of Class B common stock were converted to Class A common stock.

As of December 31, 2021 the par value of the Class A, Class B and Class C shares was $ 2,294 , $ 270 and $ 56 , respectively.

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1,300,000,000

As of December 31, 2019, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 220,000,000 shares, of $0.01 par value common stock.

As of December 31, 2020, the Company had reserved 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.

As of December 31, 2019, the Company had reserved 157,998,948 shares of common stock for the conversion of the outstanding shares of Preferred Stock, the exercise of outstanding stock options, the vesting of restricted stock units and the number of shares remaining available for future grant.

As of December 31, 2021and 2020, the Company had reserved 61,989,749 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

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Stock options granted under the Plan typically vest over four years and expire ten years after the grant date.

The 2020 Plan became effective on August 17, 2020.

A total of 22,083,184 shares of Class A and Class B common stock were initially reserved for issuance pursuant to the 2020 Plan, which number was increased to 31,275,204 shares immediately following the IPO.

In addition, the shares reserved for issuance under the 2020 Plan include 3,710,240 shares that were reserved but unissued under the 2006 Plan as of immediately prior to its termination.

The number of shares of common stock available for issuance under the 2020 Plan includes an annual increase on the first day of each year beginning in 2021 and ending in and including 2029, equal to the lesser of (A) 5% of the number of outstanding shares of all classes of common stock on the last day of the immediately preceding fiscal year and (B) such smaller amount as determined by the board of directors.

The Company had 31,470,984 shares available for grant as of December 31, 2021.

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Executive Equity Awards

In the second quarter of 2020, the Company entered into employment agreements with the Company’s two Chief Executive Officers.

Each agreement provided for the acceleration of certain stock option vesting schedules and a grant of 2,860,880 restricted stock units, totaling 5,721,760 restricted stock units.

The restricted stock unit grants of 2,860,880 units to each CEO, have no future service period in order to vest and therefore the Company recognized $56,971, the full amount of stock-based compensation expense, in the second quarter of 2020.

The employment agreements modified the stock options that had been previously issued, 1,764,884 options each, to accelerate the vesting and to eliminate the future service period.

The Company recognized an incremental $5,659, in the aggregate, of stock-based compensation expense associated with the modification in the second quarter of 2020.

In addition, each CEO has received, and will receive additional restricted stock units, equaling up to 1.5% of the Company’s fully-diluted outstanding capital stock as a result of the IPO (“IPO RSUs”), 50% of the IPO RSUs (representing 0.75% of the Company’s fully diluted outstanding capital stock immediately prior to the IPO or 3,230,750 shares of Class A common stock) were granted on the closing date of the IPO based on the closing price per share on the IPO closing date, and 50% (representing up to 0.75% of the Company’s fully diluted outstanding capital stock immediately prior to the IPO or 3,230,750 shares of Class A common stock) was granted on the 180-day anniversary of the IPO, based on a specific range of the price per share of the Company’s publicly traded common stock prior March 16, 2021, and will vest over a three-year period, with one-third vesting on the first anniversary of the IPO’s closing date and the remaining vesting in equal quarterly installments thereafter.

Each CEO has received restricted stock units, equaling up to 1.5 % of the Company’s fully-diluted outstanding capital stock as a result of the IPO (“IPO RSUs”), 50 % of the IPO RSUs (representing 0.75 % of the Company’s fully diluted outstanding capital stock immediately prior to the IPO or 3,230,750 shares of Class A common stock) were granted on the closing date of the IPO based on the closing price per share on the IPO closing date, and 50 % (representing up to 0.75 % of the Company’s fully diluted outstanding capital stock immediately prior to the IPO or 3,230,750 shares of Class A common stock) was granted on the 180-day anniversary of the IPO, based on a specific range of the price per share of the Company’s publicly traded common stock prior March 16, 2021, and will vest over a three-year period, with one-third vesting on the first anniversary of the IPO’s closing date and the remaining vesting in equal quarterly installments thereafter.

As the issuance of the second 50% tranche is based upon events that are probable the expense related to both tranches of the IPO RSUs was recognized in the three months ended September 30, 2020.

The grant-date fair value of each of the awards issued on the IPO closing date and to be issued on the 180-day anniversary of the IPO w ere estimated using a binomial lattice approach.

The grant-date fair value of each of the awards issued on the IPO closing date and to be issued on the 180-day anniversary of the IPO were estimated using a binomial lattice approach.

The main inputs to valuing the IPO RSUs include the fair value of Class A common stock ($ 9.96 post-split), expected volatility ( 60 %) and the expected date of the IPO (September 30, 2020).

The Company recognized a total of $ 23,644 in stock-based compensation expense, which included both tranches of the IPO RSU s for each CEO, on the date of the IPO as the requisite future service of the awards is not substantive for accounting purposes.

The Company recognized a total of $ 23,644 in stock-based compensation expense, which included both tranches of the IPO RSUs for each CEO, on the date of the IPO as the requisite future service of the awards is not substantive for accounting purposes.

Restricted Stock Units

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The aggregate intrinsic value of restricted stock units vested for the years ended December 31, 2021, 2020 and 2019 was $ 90,726 , $ 73,836 and $ 1,693 , respectively.

2020 Employee Stock Purchase Plan

In July and August 2020, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2020 Employee Stock Purchase Plan (“ESPP”).

A total of 3,084,218 shares of Class A common stock were reserved for issuance under the ESPP.

The ESPP became effective March 1, 2021.

Rights granted under the ESPP will be issued only with respect to shares of Class A common stock.

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.

During the year ended December 31, 2021, the Company issued 178,021 shares under the ESPP.

As of December 31, 2021 2,906,197 shares remained available for issuance.

Stock-Based Compensation

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As of December 31, 2021, total unrecognized compensation cost related to the unvested common stock-based awards was $ 80,121 , which is expected to be recognized over a weighted-average period of 2.9 years.

2020 Employee Stock Purchase Plan

In July and August 2020, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2020 Employee Stock Purchase Plan (“ESPP”).

A total of 3,084,218 shares of Class A common stock were reserved for issuance under the ESPP.

The ESPP became effective March 1, 2021.

Rights granted under the ESPP will be issued only with respect to shares of Class A common stock.

Subject to any limitations contained therein, under the ESPP an employee will be permitted to accrue the right to purchase stock under the ESPP up to $25 worth of shares during any calendar year.

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.

The Company’s primary lease represents the lease for its corporate headquarters in Boston, Massachusetts which was entered into in December 2010 and expires in November 2021.

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.

Rent expense for the year ended December 31, 2021 was $ 5,870 .

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Supplemental cash flow information:

Cash paid for amounts included in measurement of

lease liabilities:

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:

Right-of-use lease assets obtained in exchange for

new operating lease liability:

Operating leases

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

As of December 31, 2020 and 2019, the Company did not 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.

During the years ended December 31, 2020, 2019 and 2018 the Company recorded an income tax expense (benefit) of $639, $(803) and no income tax benefit, respectively.

As of December 31, 2021 and 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.

During the years ended December 31, 2021, 2020 and 2019 the Company recorded an income tax (benefit) expense of $( 5,376 ), $ 639 and $( 803 ), respectively.

The December 31, 2021 income tax benefit is primarily due to a partial release of valuation allowance in the U.S resulting from the deferred tax liabilities established as part of the August 2021 Acquisitions consummated during the year (see Note 9).

The December 31, 2020 income tax provision primarily represents amounts related to foreign taxes related to equity awards issued in the fourth quarter.

The December 31, 2019 income tax benefit primarily represents the release of a portion of the Company’s deferred tax asset valuation allowance in connection with the acquisition of Aligned (see Note 9) offset by foreign and state taxes.

For the years ended December 31, 2020, 2019 and 2018, the Company’s loss before income taxes is primarily generated in the United States as the pre-tax income from the Company’s foreign subsidiary is not significant.

For the years ended December 31, 2021, 2020 and 2019, the Company’s loss before income taxes is primarily generated in the United States as the pre-tax loss from the Company’s foreign subsidiaries is not significant.

The components of our current and deferred portions of the provision for income taxes are presented in the table below:

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Significant components of the Company's deferred tax assets and liabilities were as follows:

Years Ended December 31,

As of December 31,

Deferred tax assets:

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Right-of-use assets

Total deferred tax liabilities

Net Deferred tax assets

Total deferred tax assets (liabilities)

Net deferred tax liabilities

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets.

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Since its formation, the Company has raised capital through the issuance of capital stock on several occasions.

These financings, combined with the purchasing shareholders'

subsequent disposition of those shares, could result in a change of control as defined by Section 382.

The Company conducted an analysis under Section 382 to determine if historical changes in ownership through December 31, 2020 would limit or otherwise restrict its ability to utilize its NOL and R&D credit carryforwards.

These financings, combined with the purchasing shareholders' subsequent disposition of those shares, could result in a change of control as defined by Section 382.

The Company conducted an analysis under Section 382 to determine if historical changes in ownership through December 31, 2021 would

limit or otherwise restrict its ability to utilize its NOL and R&D credit carryforwards.

As a result of this analysis, the Company does not believe there are any significant limitations on its ability to utilize these carryforwards generated through December 31, 2021 .

However, changes in ownership occurring after December 31, 2021 , could affect the limitation in future years, and any limitation may result in expiration of a portion of the NOL or R&D credit carryforwards before utilization.

The Company does not have an unrecognized tax benefits related to uncertain tax positions.

The Company does no t have unrecognized tax benefits related to uncertain tax positions.

The Company recognizes both accrued interest and penalties related to unrecognized tax benefits in income tax expense.

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Teva Pharmaceuticals, Industries Ltd

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

In addition, Teva is a shareholder of the Company.

As of December 31, 2020 and 2019, short-term and long-term deferred revenue from this customer was not material.

As of December 31, 2020 and 2019, there were no amounts due from Teva.

During the years ended December 31, 2020, 2019 and 2018, the Company recognized revenue of $36, $33 and $14,561, respectively, from contracts with this customer.

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 was a non-significant shareholder of the Company during the year.

As of December 31, 2020, short-term and long-term deferred revenue from this customer was not material.

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

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 years ended, December 31, 2020 and 2019, the Company recognized an immaterial amount of revenue from contracts with this customer.

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.

In addition, Philips is a shareholder of the Company.

As of December 31, 2020 and 2019, the Company held short-term and long-term deferred revenue of $1,458 and $2,549, respectively from contracts with this customer.

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

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

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 $ 1,458 from contracts with this customer.

As of December 31, 2020 amounts due from Philips were $ 763 .

As of December 31, 2019, amounts due from Philips were not material

During the years ended December 31, 2020, 2019 and 2018, the Company recognized revenue of $2,441, $1,021 and $719, respectively, from contracts with this customer.

(“Anthem”) is a related party because a member of the Company’s board of directors is a Vice President of Anthem.

In addition, Anthem is a shareholder of the Company.

As of December 31, 2020 and 2019, the Company held short-term and long-term deferred revenue of $11,347 and $11,561, respectively from contracts with this customer.

As of December 31, 2020 and 2019, amounts due from Anthem were $8,391 and $2,499, respectively.

Prior to the board member’s departure from Philips in June 2021, the Company recognized revenue of $ 1,658 , from contracts with this customer.

During the years ended December 31, 2020 and 2019, the Company recognized revenue of $ 2,441 , $ 1,021 , 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 March 31, 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 $ 7,218 from contracts with this customer.

During the years ended December 31, 2020 and 2019, the Company recognized revenue of $ 55,180 and $ 34,095 , respectively, from contracts with this customer.

2 unchanged sentences

As of December 31, 2021 and 2020, the Company held short-term and long-term deferred revenue of $ 456 and $ 606 , respectively from contracts with this customer.

As of December 31, 2020, amounts due from Cleveland Clinic were $1,020.

As of December 31, 2019, amounts due from Cleveland Clinic were not material.

As of December 31, 2021 and 2020, amounts due from Cleveland Clinic were $ 441 and $ 1,020 .

During the years ended December 31, 2021, 2020 and 2019, the Company recognized revenue of $ 1,301 , $ 1,357 , and $ 1,262 , respectively, from contracts with this customer.

1 unchanged sentence

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 year ended December 31, 2020 the Company recognized revenue of $1,825 from contracts with this customer.

As of December 31, 2020, the Company held short and long term deferred revenue of $1,496 from contracts with this customer.

As of December 31, 2020, amounts due from CCAW, JV LLC were not material.

During the year ended December 31, 2021 the Company made a capital contributed of $ 2,548 , related to a portion of the phase one capital commitment.

During the year ended December 31, 2021 and 2020 the Company recognized revenue of $ 1,841 and $ 1,825 from contracts with this customer.

As of December 31, 2021 and 2020, the Company held short and long term deferred revenue of $ 1,426 and $ 1,496 from contracts with this customer.

As of December 31, 2021 amounts due from CCAW, JV LLC were $ 1,613 and as of December 31, 2020, amounts due from CCAW, JV LLC were not material.

Loans to Officer

During the year ended December 31, 2019, the Company entered into secured promissory notes with the Company’s Chief Financial Officer in the amount of $1,781.

During 2020, the Company entered into additional secured promissory notes with the Chief Financial Officer and other executive officers in the amount of $16,441.

During 2020, the Company entered into secured promissory notes with the Chief Financial Officer and other executive officers in the amount of $ 16,441 .

These loans were to fund the taxes associated with the restricted stock units and were collateralized by all of the capital stock of the Company that the employee owned or would own in the future and the employees’ personal assets.

9 unchanged sentences

Years Ended December 31,

Net income (loss) attributable to

non-controlling interest

Net loss attributable to American Well

Weighted-average common shares outstanding

Net loss attributable to non-controlling interest

Net loss attributable to American Well Corporation

Weighted-average common shares outstanding, basic and diluted

Net loss per share attributable to common stockholders,

basic and diluted

Net loss per share attributable to common

stockholders—basic and diluted

The Company’s potential dilutive securities, which include stock options, convertible preferred stock and unvested restricted stock units, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

6 unchanged sentences

Options to purchase shares of common stock

Subsequent Events

On January 4, 2021, the Board of Directors of the Company voted to retire all capital stock that has been repurchased by the Company or that the Company will repurchase in the future.

As a result all treasury stock was retired and has a status of authorized but unissued.

On January 14, 2021 the Company announced the pricing of a public offering of 11,280,647 shares of its Class A common stock by certain stockholders (the “Selling Stockholders”) at a public offering price of $27.50 per share, as well as underwriters option to purchase of 1,692,097 additional shares of Class A common stock at the public offering price, which was exercised in full, less underwriting discounts and commissions, from the Selling Stockholders, which closed on January 20, 2021.

The Company did not receive any proceeds from this offering.

On February 1, 2021, the Company contributed an additional $2,548 investment in CCAW, JV LLC.

There was no change in ownership percentage after the additional investment.

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-K

Item 9A. Controls and Procedures