Good afternoon, and welcome to Amwell's First Quarter 2022 Conference Call. Today’s call is being recorded, and all lines have been muted. I would now like to hand the conference over to Sue Dooley, Head of Investor Relations. Please proceed.

Hello, everyone, welcome to Amwell’s conference call to discuss our first fiscal quarter of 2022. This is Sue Dooley of Amwell, Investor Relations. Joining me today are Amwell's, Chairman and co-Chief Executive Officer, Dr. Ido Schoenberg; and Bob Shepardson, our Chief Financial Officer. Earlier today, we distributed a press release detailing our announcement. The release is posted on our website at investors.amwell.com and it’s also available from normal news sources. This conference call is being broadcast live on the Investor Relations page of our website where a replay will be archived. Before we begin our prepared remarks, I would like to take this opportunity to remind everyone that during the course of this call, we will make forward-looking statements regarding projected operating results and anticipated market opportunities. This forward-looking information is subject to the risks and uncertainties described in our SEC filings and actual results or events may differ materially. Except as required by law, we undertake no obligation to update or revise this forward-looking statement. On this call, we will refer to both GAAP and non-GAAP financial measurements. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. With that, I will now turn the call over to Ido for his prepared remarks on the quarter. Ido?

Thanks, Sue, and welcome everyone. Q1 was an important quarter for our company as we continue to make progress on the launch of Converge, our integrated technology platform that empowers and complements leading healthcare organizations as they pursue business initiatives in a fragmented and rapidly changing digital care delivery landscape. We are proceeding according to our plan for this year and our teams are engaged and inspired by the benefits of clarity of purpose and a well-defined role in a digital-first future. I'll start by reviewing some highlights of the quarter and the full year. Then I'll take a moment to discuss the market for our solution and the key benefits assigned to patients, providers, payers, and innovators. Bob will then review some key metrics, our financial results, and our guidance. Then we'll open the discussion with your questions. First, we are making good progress on our development of Converge and the delivery of our industry-leading digital care delivery enablement platform which has been our vision from day one. With a substantial part of our platform ready for live moments, our R&D efforts are now focused on bringing Converge over the finish line with several remaining capabilities that are in high demand from customers and prospects. We continue to prioritize existing customer migrations, while sales conversations around Converge are proceeding according to our plan. We have moved past the rapid deployments of Amwell Now customers that are now beginning the most complex and innovative migrations. Work on deployments of some of our largest and most strategic customers continues on pace and these are setting the standard for digital healthcare. It solves the challenges of today and is built for the future. These close working partnerships are exciting and provide evidence of our expertise and role as the pure-play digital care delivery enablement provider of choice in this new era of hybrid healthcare. With our focus on Converge, it is clearer than ever to both existing and new clients that we will continue to support, complement, and fuel their growth and never compete with their business. In addition to successful migrations, we are seeing growing engagement across our products. Our EHR integrated solutions are a big driver of our number of active providers, which grew 27% over the year-ago quarter and 12% compared to Q4. Visits on Converge grew 40% over Q4 and accounted for 10% of total visits in Q1. Our Conversa offering has great momentum. The market increasingly appreciates that automation is a compelling new element of digital healthcare, and they require a trusted partner to provide integrated automation into their care delivery workflows. SilverCloud is off to a great start. We are hearing a very favorable response to this highly effective behavioral health program that enables our customers to reach more of their patients by combining automated features with virtual care, supporting the movement toward health equity during this time of need. Our sales leaders are gearing up armed with powerful enablement initiatives. They are going to market with a plan for Converge that highlights our well-defined role as the leading digital care delivery infrastructure as well as the value of our unified, future-ready enterprise offering that allows clients to select the modules and programs they need now and expand when they're ready. Now, I'd like to shift to some highlights from our services team. We are on track with big deployments that we talked about last quarter. Our solutions are resonating with these customers, and innovation is happening in real time. These deployments require an infrastructure that extends well beyond telehealth, to connect providers to one another and to disparate tool sets used throughout these organizations. We are breaking new ground in digital care delivery with these leaders, setting standards that inspire other customers and prospects to choose Converge for the pursuit of their own digital care delivery aspirations. Our services teams are busy migrating our customers to Converge, and the feedback is overwhelmingly positive. Many commend the experience on Converge as faster and more streamlined. They also appreciate the ability to add functionality, thanks to the ease of integration that is fundamental to our solution, and will empower them to adapt as digital care evolves and expands. In Q1, we had recent go-lives at Westchester Medical Center, Marshfield Clinic Health System in Wisconsin, and the City of Hope, to name a few. I'd like to speak to a couple of other customer examples in more detail. First, El Camino Health is fully migrated to Converge, and early feedback is great. They are seeing significantly improved speed and user experience, as well as powerful in-visit features that deliver seamless collaboration with colleagues. El Camino views provider and patient experience as crucial to their efforts to build trust in digital healthcare, a key initiative among the Silicon Valley system's operational goals. The CIO of MMH Health echoed these comments. After going live on Converge, the team at MMH Health immediately recorded much better speed and greater ease to instantly connect with patients, eliminating the headache of managing disparate credentials across disconnected systems. We're delighted to be providing the core functionality supporting MMH Health's strategic initiatives around efficiency and outcomes, and it's our honor to have been chosen as their partner in pursuit of true digital-first care delivery. In a great example of Amwell as a chosen partner in true digital-first healthcare, we recently announced a partnership with LG. By combining LG's extensive product portfolio and market presence with Amwell's deep digital healthcare knowledge, we aim to unlock the last mile for patients and providers and deliver greater access to health services through devices they use every day. Our goal is to simply and intuitively connect providers to patients, leveraging the LG user experience while relying on the extensive capabilities of Converge to do much of the heavy lifting behind the scenes. As in-person, virtual, and automated modalities converge to create significantly improved healthcare experiences, unlocking the last mile, connecting to patients is more important than ever. Moving on to modules and programs that enhance the value of our platform and set the stage for us to expand our presence within our customer base, we had a few exciting announcements recently that I'd like to highlight. We recently announced two new programs to add to our arsenal. We are bringing to market a compelling new musculoskeletal program designed to keep treatment on track with digital interactions. This program provides access to physical therapy, virtual coaching, a digital sensor kit, and engagement services to achieve better program adherence and outcomes. We partner with SWORD Health for this program, which is a great example of growing our ecosystem of innovators and the extensive power of Converge integration. Our new dermatology program offers quick and easy access to quality care with Board-certified dermatologists who can treat nearly 3,000 conditions, helping to solve for the nationwide shortage of dermatologists. The program provides a more convenient alternative to traditional in-person dermatology care with faster turnaround times, allowing members to identify and address issues early and potentially mitigate future costs. These programs address two of the most pressing pain points among the cost containment initiatives of health plans. The augmental list of well over 40 modules and automated programs that deliver hundreds of powerful use cases will drive the expansion of high-margin recurring revenue within our existing customers and also provide the motivator for new customer adoption. To wrap up Q1 highlights, I want to add that I'm proud of the way our teams are executing, putting in place the crucial elements of our solution, landing new names, driving engagement, and executing toward our mission to define and deliver the fundamental infrastructure enabling the future of healthcare. Next, I'd like to spend some time briefly reviewing what we are seeing in the market for our solution. In my many conversations with leaders of healthcare organizations, they describe the challenges they're facing. They speak to the need for a true long-term partner to support and accelerate their aspirations for digital care delivery, and it's clear that the market is moving to us. Q1 was a busy quarter for our industry with big events like Vive and Hims. Our booths were busy with lots of lead generation traffic, and it was great to be back to in-person meetings. Perhaps the biggest challenge cited in these discussions is the enormous fragmentation of technology that characterizes digital health technology today. It's a very confusing world with telehealth being a small element of a world in which digital healthcare is a certainty. Healthcare industry CIOs currently have hundreds of tools that are being used by disparate populations of users, most of which are not connected, and an endless stream of new tools is on the way. While some may choose to build custom components and integrations in-house, I believe in the end healthcare will choose to specialize in the business of care, and its leaders will choose to leverage trusted partners who complement, not compete with them, to ensure best practices for digital healthcare are enabled and future-ready. We are fortunate to be entirely complementary in empowering these large players and further assisting them to assume their important role in the future of care delivery. The current crisis in care team burnout is making the resilience of clinicians and staff a top priority, and the struggle to unify disparate solutions to create more efficient workflows is very real. With our solution built on years of mindshare with our customers, we are bringing the electronic glue, the connector, to organize and create a secure, safe, and seamless experience. I'd like to take a moment to describe how our solution benefits the full care continuum. First, our solution is designed to improve patient experience and outcomes. Today, each time a plan member seeks care, the experience is different and disconnected. Virtual visits can be inconsistent and delayed with multiple logins and disparate portals made even more confusing by referrals to specialists. Patients struggle with a lack of information on what is covered and how to follow up. With Converge as their foundation, our customers will deliver a seamless patient experience, one that is also electronically unified. A best-in-class telehealth experience will be table stakes. Patients who will take rapid seamless connectivity as a given, and through a streamlined user experience driven by our infrastructure, will be able to navigate across various providers and through one unified experience in the payer portal, they will know what is covered, which provider is in-network and can make payments on an ecosystem empowered by Converge. Second, our solution is designed to address care team burnout and the struggle providers face as they cope with mountain workloads and fragmented disconnected digital healthcare tools. Whether a provider sees a patient in person or virtually, the experience will be fast and seamless, because many points along the continuum of care are connected to the platform. Converge is designed to connect the care team to the information they need, help them coordinate for consults, accelerate next steps, and deliver better outcomes. Converge offers options for managers to load balance and offload cases during peak times and can improve the standard of care by simplifying integrations with new automation programs that enhance continuity between visits. Designed to do the heavy lifting, Converge incorporates rules and regulations, as well as documentation and payment systems that make digital care delivery so complex. Our solution can unify the care team's resources and drive new efficient workflows to achieve sought-after efficiencies so that the teams can focus on the delivery of care. Turning to payers, our significant installed base and close partnership with payers have informed the development of Converge, which is optimized around their needs. Converge is designed to accelerate payers' efforts to unify disparate operations that include member services, provider networks, employer clients, PBMs, and care management requirements. Beyond the hard work of connecting today's digital resources, we enable payers to further optimize their models, with add-on modules across additional use cases and with automated care. With our ecosystem further expanded by programs like SilverCloud, payers can offer their members best-in-class behavioral health, driving substantial benefits in both savings and improved patient experience. All of this can be done on the payers' existing platform in a white-label experience that maintains their close connection with their members. In a digital healthcare reality built on the Converge infrastructure, the participants and their digital resources will always be connected and informed; care will be customized and optimized. Like Amazon's distribution framework, there's the heavy lifting of integrating disparate sellers, customers, and payers with fulfillment technology and security; the role of Converge is clear. To be the engine to empower providers, patients, and the industry that supports them by connecting the tools they require to realize a better overall healthcare experience. The most important element of Converge is not a single program, but the intersection and integration of all of this and the opportunity to begin with specific instances and add-on functionality over time. In summary, as digital care is rising as a priority across the industry, there is a growing need for enterprise-grade care delivery infrastructure, and our solution is leading the way. The challenge is fragmentation of technologies and tools, and the goal is to improve outcomes by allowing care teams and payers to leverage the best of in-person, virtual, and automated care across the continuum. As analytic point solution telehealth vendors, we're enabling, not competing by providing a powerful connected infrastructure layer that extends well beyond telehealth. We are helping the various players on all sides of the equation to leverage our platform to design and deliver the method of care they choose and the tools they select. In pursuing the strategy to deliver the leading digital care delivery infrastructure, we are building on our deep knowledge of healthcare, leading with technology first. At Amwell, our future is about supplying the infrastructure to accelerate our customers' own unique vision for digital care delivery. And that means selling an infrastructure offering that drives long-term high-margin subscription software growth as we pursue our path to profitability. Before turning the call over to Bob, I wanted to highlight an important development. We recently announced the arrival of our new Chief Marketing Officer, Susan Worthy. Susan is replacing our outgoing CMO, Mary Modhal, who is retiring after 10 years leading our marketing organization. Mary has been a great partner over the years and we wish her the very best. Susan is a tenured marketing executive with more than 25 years of experience as a leader in enterprise-level healthcare services and technology companies. She possesses a deep understanding of healthcare and technology, and she brings to Amwell a creative, data-driven approach and experience that comes from years of leading world-class marketing organizations. We welcome Susan and believe her skills will be instrumental in returning the page from telehealth to Converge. Now, I'd like to close my commentary by saying we think Q1 represents a good start to a very strategic year for Amwell. At Amwell, our role in our industry is clear; our opportunity is large and expanding, and our mission has never been more relevant. Now, I'd like to turn the call over to Bob. Bob?

Thank you, Ido. And thank all of you for joining the call this evening. As in our last call, I will highlight some of our key operating metrics, then take you through our first quarter 2022 financial results. Active providers on our platform, specifically providers who are employed by our customers, is an important signpost of the value they derive from using our software. We continue to see healthy growth here and ended the first quarter with over 102,000 active providers. This represents 12% growth compared to the fourth quarter, marking the third consecutive quarter of double-digit growth in this metric. Active providers grew 27% compared to a year ago, demonstrating the continued acceptance of virtual visits as a standard of care. Total visit growth remained strong at 1.8 million in the first quarter, representing 15% growth versus last quarter. Scheduled visits grew 23% in the quarter and comprised 75% of our total visit volume, a new high for Amwell. As Ido discussed, we are making steady progress on Converge development, and the migration of our customers to our new platform is proceeding well. In the first quarter, total visits on Converge were healthy at 40% quarter-over-quarter and comprised 10% of total visits, which is in line with our fourth quarter. Our plan for this year calls for continued healthy growth in visits on Converge. And now, I'll turn to our financial results. Total revenue was $64.2 million, reflecting growth of 12% versus the first quarter of 2021. The components of revenue are as follows; subscription revenue was $28.7 million, reflecting growth of 17% year-over-year. Compared to Q4, subscription revenue declined 5%. This decline reflects an expected level of churn that was not yet balanced by new platform subscriptions given the timing of our new platform release. This was in line with our plan and already accounted for in our annual guidance. AMG visit revenue grew 10% year-over-year to $30.7 million. The number of AMG visits actually grew faster than this to 16% year-over-year, and part of the growth in the number of visits was due to a change in how we count visits in our Amwell Psychiatric Care business. Absent this change, visit growth would have been 10%. Revenue per visit was $79, 5% below last year primarily due to the addition of this previously not included pool of behavioral health visits. Our AMG business is an important differentiator in the market and critical to many of our clients; we view the offering as an important supporting element of our Converge strategy. Our Services and Carepoints revenue was $4.8 million versus $5.2 million a year ago and was $7 million lower than the seasonally strong Q4. Turning to profitability, which was a real positive this quarter. Gross profit margin was 43%, 500 basis points higher than Q1 2021 and up 300 basis points versus the fourth quarter of last year. The year-over-year increase was driven by a higher mix of subscription revenue and a larger percentage of higher-margin urgent care visits in our AMG business. Our gross margin can vary quarter-to-quarter based on mix dynamics. For instance, the increase in Q1 over Q4 was due primarily to the Q4 seasonal mix shift away from lower-margin Services and Carepoints revenue in Q1. We believe as we ramp up Converge deployments, the efficiencies associated with our multi-tenant SaaS-based platform will lift our gross margins. Turning to operating expenses and in support of our Converge strategy, R&D spending increased 11% versus last quarter to $37.5 million. As we indicated in our annual guidance, we expect R&D to ramp up in the first half of 2022 as we complete the more intensive development work on the platform, then flatten and decline in the second half. Sales and marketing spend was flat versus Q4. Adjusted EBITDA of negative $47.1 million is in line with our plan and our guidance for the year. Transitioning to the balance sheet, we are fortunate to have a substantial cash position, ending the quarter with $675 million of cash and short-term investments. This reflects a $14 million cash contingent payment to Conversa shareholders upon achieving their platform integration milestone early in the quarter. Conversa is now largely integrated into Converge and we also announced a month ago the accelerated settlement of the remaining component of the Conversa earn-out. With the earnout behind us, we have the benefits of cultural alignment and our teams are working well together with a unified sales message. We're on track to benefit from the long-term synergies in ease of product integration and new product development plus the cost efficiencies we've already outlined in our long-term model. Turning to our outlook for 2022. We are off to a strong and strategic start to the year. Converge migrations are in progress. Development of Converge is proceeding on pace, and as a result, we reiterate our previously issued annual guidance. To summarize, our first quarter was an important and encouraging quarter for us on many fronts. Our teams are executing well, united with a shared vision. Our role is clear; we aim to be the infrastructure provider in the rapidly evolving and fragmented digital healthcare landscape, empowering and complementing our customers' business initiatives. By putting our technology at the heart of our future, we believe we are on solid ground to execute through this transition year and put our company on a path toward long-term high-margin subscription revenue growth. As such, we believe we are very much on a path to achieving the broader strategic and financial goals we outlined in February. With that I will turn it back to Ido for some closing comments before taking your questions. Ido?

Thank you, Bob. We are proud of our team and we are encouraged by the start to the year that Q1 represents. Our role in the digital care delivery landscape is clear. The opportunity in front of us is large and expanding, and we believe we are just getting started. Before we move to Q&A, I wanted to update you on one final topic, one we know has rising importance not only with investors but also in our world today—Amwell's approach to ESG. At Amwell, our values have always been core to who we are and serve as the foundation on which we strive to build a sustainable growth business and promote the long-term interests of our stakeholders. We believe we have a meaningful ESG story to tell around our people, our products, and our processes and we are eager to help the world see our company through an ESG lens. We plan to provide more information regarding our approach to ESG later this year in an inaugural report that aligns with leading reporting frameworks. We look forward to sharing it with you. Thank you for your time. Operator, please open the call up for Q&A.

Your first question comes from the line of Ricky Goldwasser with Morgan Stanley. Your line is open.

Yes. Hi, thank you. This is Craig on for Ricky. I appreciate all the color that you provided on Converge. If I can just ask from an enterprise demand standpoint more broadly, some companies have cautioned about lengthening sales cycles and uncertain macro just what you're seeing in the marketplace and how it may be the same or different for you just given you are in the midst of a product cycle and you're ramping with Converge now?

Craig, that's a great question. On the one hand, one cannot ignore the headwinds in the market at large—challenges with the economy, fears of inflation, uncertainty, and so on and so forth. On the flip side, our enabled platform is addressing most of those challenges for our clients. So if it's provider burnout, if it's growing efficiency, if it's improving access to care services that eventually improve financial and clinical outcomes, all those things are becoming more relevant and in higher demand than ever. It is also true that enterprise platforms take longer to integrate, and as a result, they have their own cycle of revenue recognition. On the fixed side, these are significantly larger deals with much greater upside. The net of it is that we reiterate today our guidance for the year, and we're not seeing any material changes to the dynamics that we included in our model that we shared with you a few months ago.

Got it. Appreciate that. Thank you.

Your next question comes from the line of Charles Rhyee with Cowen. Your line is open.

Yes. Thanks, guys and thanks for taking the question. I wanted to ask you, I guess, two items really. One is the partnership with LG. Maybe you can give us some more details around how that will work? I know you had a partnership several years ago with Samsung but that had ended. Just trying to understand what's different this time or how is it different? And how should we think about the economics there? I'm guessing revenues show up in the innovator line? And then secondly, the MSK program you're partnering with SWORD Health here. Is this an example of sort of the app store concept that you have talked about in the past that will be enabled in Converge? And just run a little bit on the economics here as well. Thanks.

Hi, Charles, thank you. Great questions. So we are really trying to create a seamless single healthcare experience that brings together all the different touch points. We believe that things like cell phones, for example, are going to be incredibly important as the trusted touch point for many patients and a growing number of providers. But one cannot ignore the television. The television is present in so many rooms in the living room of patients. As care is moving home, our ability to create a robust seamless integrated experience is a very important last-mile element. It's well known that LG is incredibly popular, so we can use their reach to interact with many more patients. That really is the promise of this relationship. While this partnership drives some licensing revenues from the get-go, the main value relates to its strategic value of connecting another very important touch point to the singular experience. So we feel great about where we are. You mentioned earlier a partnership. The world has changed. It has changed in a decade. What's possible today on an Android infrastructure and the capabilities of connected television is mild apart from what it was a decade ago. So much more is possible today and we feel great about this one element. Your second comment is also very on point in the sense that while, of course, the musculoskeletal program is very, very valuable, one of the great things here is our ability to demonstrate how an entire program created by a third-party is embedded in the singular experience that I talked about earlier. While SWORD did not really go through the App Store experience formally, the process they went through in integrating and creating a partnership with us is indeed demonstrative of our plan to include many more third parties and offer our customers and their patients and providers much more choice as they develop their own digital health strategy.

Your next question comes from the line of Cindy Motz with Goldman Sachs. Your line is open.

All right. Thanks. And thanks for taking my questions. So it sounds like people like Converge—the people who have converted. And I know you said it's about 10% of the visits. Can we assume like that's about—I mean is that what percentage of clients is that? And then—with COVID slowing, I mean maybe some of the distractions going away—or I don't know, could COVID have another wave? But do you think—is the cadence that you sort of suggested last quarter, do you still see that happening? Maybe could it be a little better? And then you had said too that the path to profitability you're good with still, right? The longer term like around 20% for the out years? Thanks.

Hi, Cindy, good to hear your voice. That does not really count like a single question, but let it go. So in essence, you're absolutely right that we are very encouraged by what we see in Converge. As I mentioned, the accounting number of accounts can be extremely confusing because at the get-go we had so many accounts coming in, but their relative contribution to revenues and their level of sophistication in real value generation is very, very different for very larger payers. If you compare a small practice and Anthem, it's very difficult to compare and could be misleading. While the Converge visit growth is not an exact science, it gives you some indication that basically we're going according to plan, which is exactly the case. I'm happy to reiterate that not only our guidance for this year, but also a path to profitability plan is very much on track and represents a good mix of investment that we'd like to have with providing a path to cash flow positive for our stakeholders to reduce the risk in our company and increase value. Most importantly, the last part of your question really allows me to focus a little bit more on the point that is often missed by some. That is the fact that many people keep focusing on the number of visits that we provide or the impact of the pandemic on our future. I would like to suggest that what we are seeing is not a fashion or a quarterly trend, but something far greater than that. We could zoom out for a second and realize that we are seeing a whole transformation in the healthcare system; one that started more than a decade ago in 2010 with the adoption of the EHRs, really the start of the healthcare transformation. The pandemic added a significant contribution to the adoption of virtual care. Lots of people tried it for the first time, and that was incredibly important in a way of growing adoption. What we're seeing right now is the added component of automation coming in. The three components—access to physical care, a growing number of virtual services, and automation connected to the main path of care—are driving what we see. It didn't start yesterday and it's not going away tomorrow. If anything, we got some acceleration, but this is a trend that we have a very high degree of confidence in. It's incredibly complex but yes, incredibly valuable. I don't think there is a reason for us to second guess what we shared with you. It's not a path that happens overnight but it’s a very clear path. I'm thrilled by the choices we've made creating Converge; it’s a giant cooling effort. But in my opinion, it's going to pay off in dividends by creating something that the market really needs today because of the enormous value of an integrated care delivery system.

Great. Thank you.

Your next question comes from the line of Stephen Baxter with Wells Fargo. Your line is open.

Yeah, hi. Thanks. Just a follow-up a little bit on one of the prior questions. We're hearing from the hospitals that their financials were under a lot of pressure even before the acceleration that we've seen in inflation. So, obviously, you do see yourself as helping address the cost problem over the longer term and I get your existing customer migrations seem like they're well on track. But for new customers, it would be interesting to hear a little bit more about why you don't think there will be impacts either from competing budget priorities or just the focus of these hospital management teams? Thank you.

Stephen, a very good question, although I have to admit I didn't say there is no impact. I said that the impact we see could be balanced by other elements. There is clearly serious struggling going on because of the economic headwinds. But we definitely see—it’s important to realize that when we talk to our customers, the first thing they say is that they have—they realize the enormous potential of digital solutions but they have so many of them, and there is enormous cost not only in the direct cost of maintenance and the difficulties involved in integration, but also the impact on the provider experience and the training, things of this nature. We are able to fix a lot of these pain points. We are not only adding efficiency; we are also addressing issues of team burnout. When we talk to new clients, they really want to narrow the number of platforms they have and they expect the platform they choose to do much more for many more people. There is also a growing realization that data is incredibly important. In a world that focuses on value, you cannot have one platform that aggregates information in-house or in the patient, and another one that focuses on virtual visits, and then the third one that concentrates on automated care and programs. You need to bring all this data together in a patient-centric way, and we offer that. Of course, that is an important element that could eventually contribute to the top line and to efficiency. So, I would summarize by saying that the world has definitely got more complicated. Luckily for us, we anticipated that complexity and built an infrastructure that is just what the doctor ordered in many ways to really tackle a lot of those challenges and headwinds. We believe, and we see, that it's well understood by not only existing clients but also new clients, and all of you are going to see some real-world examples beyond what I mentioned pretty soon.

Your next question comes from the line of Jessica Tassan with Piper Sandler. Your line is open.

Hi. Thank you so much for taking the question. So my first—my question would just be on the payer version of Converge. Where are we in the development of that product? And then, when do you anticipate sort of migrating your payer customers onto the operated version of Converge? And then just in terms of the hospital customers that you guys have announced so far this afternoon. Can you just help us understand which of those are existing customers and which of those were new customers entirely signing on to the Converge platform for the first time? Thanks so much.

Hi, Jessica. Well, there is no payer version of Converge. There is one Converge. That's the beauty of it. It's really complex to create one Converge, but you're absolutely right that we save the best for last and the payer elements are coming last in our delivery cycle. I'm happy to share the news as we talked about also on the last quarter that in the second half, you're going to see go-lives not only of employers and delivery networks and practices, but also of payers. So, we are beginning to onboard the payers very soon. That process is going to continue in Q2 into next year. Some of those players are very large and require a long list of integration points. Yet, we are very encouraged by their determination and understanding about the new opportunities that the new upgrade will offer them. As far as the customers I mentioned, honestly, I can't swear, but as far as I remember, the few names that we mentioned on the call are all existing relationships of Amwell. Of course, we don't have only existing customers; we have some new ones, but I wanted to focus on our very impressive list of achievements that we see from existing customers. I want to make it very clear that there are many, many more names and use cases and stories that we didn't have time to mention on the call. One of the greatest benefits of creating a platform like this is that once it's there, you sort of sit back and become amazed by the value generated by the innovation of our customers and partners. So, maybe to end your question, I'll give you one more example of a delivery network that you asked about—maybe Spectrum Health. Their VP of care management recently went public about the use of automated technology by Amwell that allows them to interact with patients following their visits to the emergency room. That single modality generated a 5% reduction in ED and acute care utilization, proving value of $998,000 in care savings for that organization. Interestingly, Dr. Baird also stated that they were able to use our technology to create a new transition team that really stands between patients and the ED to buffer the demand to manage their care, resulting in not only great patient experience but also such a powerful provider experience that she referred to it as a great staff recruitment tool. As you can tell, I could sit here for a really long time and provide many more stories, but unfortunately, we don't have time today.

Got it. Thank you. That's helpful.

Your next question comes from the line of David Larsen with BTIG. Your line is open.

Hi. Total provider visits came in a little bit ahead of what we were modeling. Any sense for what drove that? And do you have an AMG provider visit count for the quarter? Thanks so much.

I'll take that. So the AMG visits in the quarter were, I think I said they were flat with what we had in the fourth quarter—390,000 paid visits, okay? What drove total visits higher I think was just continued exceptional performance in terms of the growth of visits from our software customers, right? So I think I said we had our third consecutive quarter of double-digit growth there. We're very pleased to report that that continues. I shouldn’t say it’s a surprise to the upside, but I think it continues to indicate really strong user benefits and customer benefits from the platform.

Great. And then can you talk a little bit about hospital buying patterns? I think last quarter there was some commentary around hospitals being focused on COVID and the spike in the Delta variant. There may have actually been some elongated buying decisions. What are you seeing this quarter? Are we now through that? Are hospitals more rapidly purchasing these? And do you have any color around bookings trend on a year-over-year basis or backlog trend on a year-over-year basis? Thanks.

So David, as you know, we don't really report on those metrics, but I would say this—what we see is growing interest in the most sophisticated part of our offering, namely Converge, but pretty much everyone and especially large delivery networks. The mechanics, the dynamics of the sale per design is longer. You need to assess many more parts; you need to think about your strategy and your future. Once the decision is made, it's a larger decision with larger average contract value. Typically, it takes a little longer to implement. That should influence the micro-dynamics, if you will, of our revenue, which we talked about at nauseam going forward. A general trend—we expect to see growing competition at the lower end of the market; people who just want to use a video dialer that sees for compliance. There are many players in this area. The competition is fierce. While we think greatly about our platform, our added value there is much, much smaller versus the added value in the large integrated delivery capabilities that I mentioned earlier. So, in the net of it, we are really seeing a transformation of Amwell from a service company with technology into a large enterprise delivery, also as it relates to the buying dynamics of our clients.

Your next question comes from the line of Ryan MacDonald with Needham. Your line is open.

Hi. Thank you for the question. This is Matt Shae on for Ryan. I wanted to touch on the dermatology and MSK program. Curious, if health plans will be able to roll out these programs when they adopt Converge or if it will be an upsell after the Converge implementation. And as a follow-on, was this at all motivated to better position yourself to cater to the 12 telehealth specialties that allow Medicare Advantage plans to gain a 10% network adequacy credit, or was there some other motivation that drove the launch of these programs? Thanks.

So Matt, the answer is yes and yes. Although we don't try to hit the agenda of the program always for a specific need, in the same way that Apple doesn't necessarily select apps for one reason or another, what we want to do is create comprehensive diversity to allow as many options as possible to ensure our clients are as successful as they can. So dermatology and MSK are just important topics, just as behavioral health is super important, or chronic care. You should definitely expect to see us covering a bigger and bigger part of the care continuum in all those integrated in-network physical options into virtual growing number of virtual options and a growing number of automated options. A substantial part of what we offer today is made by Amwell, but in the future, as I mentioned before, we definitely expect to have lots of other third parties contribute their own, even if they sometimes overlap or compete with our own offerings.

Your next question comes from the line of Eric Percher with Nephron Research. Your line is open.

Thank you. Question relative to model cadence this year, and it's one part revenue and one part expense. On the subscription revenue side, I heard you loud and clear in terms of the expectation for a quarterly step down and the issue here being the new platform is not ready to kind of offset what's natural churn. What are your thoughts on how that progresses over the course of the year? And when do you get to the point where you see sequential growth in subscription? And then on expense, a similar question on R&D and your expectation for continued expansion and at what point we start to see R&D contract?

I would say I have the same answer to both questions, Eric—second half. And where exactly in the second half, I don't want to get too specific. But we expect that we will start to recognize revenue from some go-lives—large go-lives—in the second half. I would expect that revenue growth on the subscription side resumes then. I think some of what we'll see in the second quarter is very similar to what we had in the first quarter just given the setup. It’s a very similar setup. And on the expense side, R&D specifically, I would expect that to continue to climb next quarter and then flatten and certainly decline by the fourth quarter. So no change there in terms of how we characterize that last quarter—more kind of growing and plateauing in the first half and then plateauing to shrinking in the second half.

Your last question comes from the line of Allen Lutz with Bank of America. Your line is open.

Hey, Ido and Bob. Thanks for taking the question. Active providers were up nicely again this quarter. I guess, is that coming from legacy customers adding new providers, or is it coming from new customers? And if it's coming from legacy customers, where exactly is that growth coming from? And then on MSK and derm, can you just talk about how that's going to hit the P&L? Is any of that going to flow through the visits line? Thanks.

I'll let Bob answer more specifically, although I'll give it a try to answer both questions. So yes, the growth is mostly coming from our existing clients. As I mentioned earlier, our platform can do things that clients are discovering, bringing in more providers. A lot of these visits are specialty visits, and many of these visits are part of sophisticated programs. It is very clear that there is ROI really across the entire care continuum. As you know this is so important to us. We believe that getting providers to trust our platform and our ability to retain them and growing the opportunity for patients to see their own doctor was always really the number one KPI in Amwell, and we are so glad to see this growing so well. In general, programs like MSK are recurring revenues, not unlike SaaS revenue. They do have an element typically over clinical visits, so it's a combo of some kind of PMPM and clinical fees as a general rule. Of course, there could be other programs that are exclusively PMT, and I am hard-pressed to think about a program that is completely visit-exclusive; that's less likely.

I don't have anything to add really to Ido's comments. Definitely, our customers are the legacy customers that are adding these. I would say it kind of goes hand-in-hand with what's going on from a scheduled visit perspective as well. I mentioned that scheduled visits were 75% of our total visit volume which was a new high for us. So, I think it's just when you see the number of active providers growing on the network and the composition of visits shifting to scheduled visits meaningfully over the course of the last year it just kind of speaks to how this is very natural growth, normal growth, and this is not driven by any COVID-type dynamics or anything like that; this is the evolution of the offering.

That is all the time we have for questions. I'd like to turn the call back to Dr. Schoenberg for closing remarks.

Well, thank you so much everyone. I'm very pleased to see the growing level of understanding of Amwell and Converge and how we differ from some other business activities in the market. What we do is exciting and has an enormous upside. We really appreciate the time to understand our mission and where we're going. We look forward to seeing you again soon.

This concludes today's conference call. Thank you for joining. You may now disconnect.