Amwell, a prominent telehealth vendor, is currently exploring the possibility of divesting some of its non-core assets in an effort to streamline its business focus and enhance its financial performance. This strategic move was disclosed by company executives during a third quarter earnings call held recently.
The company is contemplating the sale of certain legacy assets that can be easily separated from the main business without causing any disruptions for customers. Mark Hirschhorn, the CFO and COO of Amwell, mentioned that these assets have distinct characteristics and a specific client base that can be isolated from the rest of the business operations.
Notably, Amwell had previously sold its virtual psychiatric care business to Avel eCare for approximately $21 million earlier this year. This divestiture reflects the company’s commitment to optimizing its portfolio and aligning its resources with its core offerings.
The decision to consider divestitures comes at a time when Amwell’s stock price has experienced a decline in recent years, particularly after the peak of the telehealth industry in 2020. To address this challenge, the telehealth vendor is striving to achieve positive cash flow from operations by 2026 and ultimately return to sustainable growth.
In line with these objectives, Amwell is focusing on strengthening its core virtual care platform and enhancing operational efficiency. CEO Ido Schoenberg emphasized the importance of leveraging artificial intelligence to streamline tasks such as patient intake and clinical program matching. This strategic approach aims to optimize resource allocation and drive value for both the company and its customers.
Furthermore, Amwell plans to reduce investment in non-core assets, such as legacy products designed for hospital automation and inpatient care. While these products are deemed valuable and reliable, the company is shifting its focus towards high-growth market segments to drive profitability and sustainable growth.
Financially, Amwell reported a revenue of $56.3 million in the third quarter, representing an 8% decrease year over year. The company also disclosed a net loss of $31.9 million for the same period, compared to a $44 million loss in the previous year. Despite these challenges, Amwell remains optimistic about its future prospects and has adjusted its revenue guidance for 2025 to reflect its strategic priorities.
In conclusion, Amwell’s strategic decision to consider divesting non-core assets underscores its commitment to optimizing its business operations and driving sustainable growth. By focusing on its core strengths and leveraging technology to enhance operational efficiency, the company aims to position itself for long-term success in the evolving telehealth landscape.
