Amwell In Danger Of Being Booted From NYSE

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Dive Brief:

• Telehealth company Amwell is in trouble with the New York Stock Exchange for its stock price trading below the minimum standard for listing.
• Amwell was a high-flying stock during COVID-19, as the value of telehealth companies soared due to demand for virtually provided medical care. The price of Amwell’s shares peaked at $42.80 in January 2021. However, for the past 30 days, Amwell’s shares have closed at less than $1, sparking a warning notice from the NYSE.
• NYSE rules give Amwell six months to regain compliance. In a Thursday release, Amwell said it plans to effect a reverse stock split — when existing shares are consolidated into fewer but more valuable shares, boosting a company’s stock price. Amwell’s board and shareholders will vote on the proposal at an annual meeting later this year.

Dive Insight:

The notice doesn’t affect Amwell’s business operations or the immediate status of its stock. However, it’s the latest sign of trouble at the Boston-based company, which went public during the height of the telehealth craze in late 2020, but has since struggled to translate that momentum into long-term success.

Market challenges, like the return of in-person care and aggressive competition among telehealth vendors, have certainly been factors in Amwell’s decline, but a series of strategic missteps has also contributed, according to an Axios investigation published earlier this month.

Those include rushing to sign up clients for Converge, Amwell’s telehealth platform bringing together its offerings along with third-party apps. Despite Amwell leadership touting Converge as a sea change for hybrid virtual and physical care enablement, the platform was launched before it was fully built out, Axios found.

Still, Amwell CEO Ido Schoenberg told investors in February he has “high conviction” the company will reach profitability in the next few years, in part due to Amwell migrating more customers to Converge.

In February, Amwell posted a $679 million net loss in 2023, up sharply from its loss of $272 million in 2022.

To cut costs, Amwell has undergone a series of layoffs, culling its headcount by about 10% since the end of 2023.

Amwell says it should break even on adjusted earnings before interest, taxes, depreciation and amortization in 2026.

An Amwell spokesperson declined to comment for this story.

Other healthcare companies currently in hot water with stock exchanges include primary care chain Cano Health and pharmacy chain Rite Aid, which face delisting from the NYSE if they can’t effect turnaround plans. In addition, health IT company Veradigm was delisted from the Nasdaq earlier this year after failing to comply with financial reporting requirements.

If a stock is delisted, it can continue to trade over the counter, but it’s likely the market will be less liquid. In 2023, 470 stocks were delisted from the NYSE, according to Stock Analysis.