Good afternoon. My name is Mellissa, and I will be your conference operator today. I would like to welcome everyone to the Amwell Q3 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I will now hand the call over to Sue Dooley, Head of Investor Relations of Amwell. You may begin.

Hello, everyone. Welcome to Amwell's conference call to discuss our third fiscal quarter of 2022. This is Sue Dooley of Amwell Investor Relations. Joining me today are Amwell's Chairman and CEO, Dr. Ido Schoenberg; and Bob Shepardson, our CFO. Earlier today, we distributed a press release detailing our announcement. The release is posted on our website at investors.amwell.com and is also available from normal news sources. This conference call is being webcast live on the Investor Relations page of our website, where a replay will be archived. Before we begin our prepared remarks, I'd like to take this opportunity to remind you 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 filings with the SEC, and actual results or events may differ materially. Except as required by law, we undertake no obligation to update or revise these forward-looking statements. On this call, we'll refer to both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. With that, I'd like to turn the call over to Ido.

Thank you, Sue. Q3 was another important quarter for our company. We continue to execute well through our time of transition. The market is responding well to Converge, a platform that is designed to enable and empower the innovative healthcare organizations who are leading the way to a hybrid care future. I'll start by reviewing some highlights of the quarter. Then I'll take a moment to discuss the market for our solution. Bob will then review some key metrics, our financial results and our 2022 guidance. After that, we'll open the discussion with your questions. To begin, here are a few highlights from Q3. We are progressing well, and migrations continue at a healthy pace. Specifically, visits on Converge accelerated from 9% of total to 16% of total visits for the quarter. Feedback from Converge customers is excellent. The data coming from customers on Converge is reaching a critical mass and is very positive. I'll cover this in more detail in a moment. We announced new leaders to further prepare for our growth. Vaughn Paunovich is now on Board as our Executive Vice President of Enterprise Platforms. Matthew McAllister is our Chief Product Officer. And Tim Conway is our Chief Information Officer. As we complete some of the most strategic aspects of the build-out of Converge, we are excited to have them join our executive team. All bring the unparalleled experience leading digital transformation initiatives for some of the world's leading health and technology companies. And we announced the addition of a new member to our Board of Directors, Rob Webb. Rob is a senior industry veteran with a strong health technology leadership track record. We collaborated with Rob during his long career at Optimum Health and UnitedHealth Group. We are confident Rob will bring new perspective and intense focus on the health tech needs of our payer clients and add much value to our Board. Finally, we published our ESG framework in September. I encourage you to find this release on our website and see how our company resonates under an ESG lens. Now I'll take the time to provide a brief update on Converge development and our progress with customer migrations. I will also share some positive feedback we now have on our solution. We are close to the finish line in the development of Converge. Our R&D teams continue to work at a rapid pace in close partnership with our customers. They have made extraordinary investments to ensure we are enabling our customers to deliver reliable, coordinated, and scalable healthcare when and where it is needed most. We made great progress also in migrations in Q3. This success further validates Converge capabilities. Visits on Converge grew impressively to 16% of total visits for the quarter. Momentum continues in Q4, and in fact, we are approaching our millions visit on Converge. Converge is proving it can scale powerfully even for our largest customers. A notable Q3 migration was at M Health Fairview, a high-volume health system in Minnesota. We are supporting their entire enterprise and our solution is broadly in use across their hospital departments, including primary care, endocrinology, and other specialties. Customer feedback reflects that our platform is delivering on the promise of being a best-in-class engine, driving great user experience. Our early migrations are now operating at full throttle and have been for some time; those customers are consistently praising Converge for its ease of use, speed, and reliability. We are growing the list of references for both our platform and also for our role as a trusted partner. In October, we attended important customer-facing events. First, we held a virtual customer forum for payers and employers. The event featured three large strategic customers who spoke to their choice of Amwell as their partner. In addition, at the Oracle Cerner Health Conference, MU Healthcare spoke about ease of use when digitally unifying more than 50 clinics with our platform as the backdrop. With a single text link from the EHR, MU Healthcare team members connect with a patient without any passwords or downloads. They easily screenshare documents and other instructive materials and even can include family members or interpreters in other screens. As a result, they're experiencing improved efficiencies and significantly upgraded provider, patient, and scheduler experience. NMH Health is using our solution to simplify the digital care experience of their patients, providers, and associates. In a case study, the CIO of NMH Health called unifying workflow and user experience on Converge platform life-altering for their teams regarding their automated programs. Nemours Children's Health continues to roll these out in support of their world-class care protocols and mission to redefine children's health. On a recent webinar, they shared preliminary results from our tonsillectomy and appendectomy procedure programs. It shows very high satisfaction and engagement rates. They highlighted how these programs risk analyze valuable patient-generated data, to automate next steps and alert providers to intervene when necessary. I'm pleased to convey this positive feedback flowing from our customers on Converge. In doing so, it is incredibly clear to me that we made the right decision to replatform our solution. Next, I would like to speak about how we view the current market for our solution. We believe Converge is the infrastructure to support emerging models. Purpose-built and future ready, Converge is founded on years of investing in understanding the needs of our customers. We believe the market is moving to us. In our day-to-day lives, it is incredibly apparent that digital is no longer just a side road to surrogate urgent care. It is rapidly becoming the main highway for all types of care offered by all types of providers and services. Providers are prioritizing digital care that allows them to offer an experience that improves staff retention, streamlines workflows, improves outcomes, and offers a business model to grow revenue and be more competitive. Payers and employers are scrambling to leverage digital capabilities to enable effective utilization while meeting consumer healthcare experience expectations. As we deliver on Converge and the market response, we are solidifying our role as a digital transformation partner, supporting our clients in defining and accelerating the strategies and aspirations. For example, with Converge, payers, employers, providers, and innovators can, for the first time, run on the same platform. In doing so, payers can enable members to see providers they know and trust. They can share gaps in care with providers and enable value-based care much more easily. Now, I would like to speak to the broader environment for a moment. As we see it, economic uncertainty creates both headwinds and tailwinds for us. We know hospital budgets are constrained, and yet the challenges facing providers and payers drive an urgent need to leverage technology to achieve their operational goals. At Amwell, we strive in every conversation to compel prospects and customers that our solutions are the must-have engine to resolve their pain points today and well into the future. Workflows, priorities, and timelines will vary. So customers require a platform that seamlessly enables a digital-first approach now, in scalable, and is also future ready. This is the heart of our value proposition. To conclude these opening remarks and before I turn the call over to Bob to discuss our financials, I want to thank our teams for their great work in Q3 and their commitment and contributions to delivering on Converge and ensuring our unique role in the digital care delivery ecosystem. With that, I want to turn the call over to Bob.

Hello, everyone, and thank you for joining us. I'm looking forward to sharing our financial results with you. I'll begin with some key operating metrics. We are pleased to see continued growth in our active providers, as the number of active providers on our platform is one measure we use to demonstrate the value we deliver to our provider and payer customers. We ended the third quarter with over 98,500 total active providers, representing 23% growth compared to a year ago. As a subset, providers employed by customers active on our network grew 25% versus last year. We anticipate this number will continue to rise as we deploy Converge for our largest customers. Beginning this quarter, we changed our methodology of calculating active providers due to complexities in identifying unique providers who conduct business on multiple platforms. We believe that change gives us a better way to accurately reflect our unique active providers as we unify our platform. We describe the specifics of this in our press release. To summarize, using this new methodology resulted in a slightly lower number of active providers in Q1 and Q2 of this year. Based on this new method, we still saw healthy growth in the number of active providers of 19% in Q1 and 35% in Q2. Moving on to visits: Total visits were 1.4 million in the third quarter, approximately the same as last year. Scheduled visits represented 70% of visit volume, consistent with the 70% to 75% range we have seen since the beginning of 2021 and up from approximately 30% pre-COVID. We are making steady progress on Converge development, and the migration of our customers to our new platform is proceeding according to our plan. In Q3, total visits on Converge grew nicely and comprised approximately 16% of total visits, an increase which reflects what we said previously: that visits driven by migrations are not linear and will expand as we migrate our highest volume customers. Now on to our financial results. Total revenue was $69.2 million, reflecting growth of 11% versus the third quarter of '21. The components of revenue are as follows: Subscription revenue grew 19% over a year ago and was $31.9 million, which is up 8% compared to the second quarter. This is in line with our expectations and reflects this year as a transition year. Our long-term path to profitability is grounded in our plan to drive high-margin subscription revenue growth at a rate that is faster than that of our overall business over the long run. AMG visit revenue declined 4% year-over-year to $28.8 million. Revenue per visit was $78, similar to both last quarter and the year-ago period. 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 care points revenue was $8.5 million versus $5.4 million a year ago and $5.2 million last quarter, driven largely by our services business. The outperformance this quarter was attributable to the acceleration of an international marketing services contract, which we had expected to be spread across the back half of the year and was concentrated in the third quarter. Looking towards Q4, services and care points typically have their strongest revenues in the fourth quarter as customers seek to drive engagement and use dedicated funds going into year-end. Additionally, we anticipate a healthy mix of professional services contribution to revenue in Q4 as strategic customers continue to deploy customized versions of our platform. Turning to profitability, gross profit margin was 40%, approximately 350 basis points lower than last quarter and a year ago, largely due to the temporary mix shift towards lower margin services and care points revenue I just discussed. Our gross margin can vary quarter to quarter based on dynamics. We believe as we ramp up Converge deployments, the efficiencies associated with our multi-tenant base platform will lift our gross margins. Next, regarding our operating expenses, R&D spending was similar to last quarter at $36.3 million. Converge development is on track, and we continue to plan for R&D spend to increase into Q4, peaking this year and tapering off significantly next year, as described in our profitability framework. Our adjusted EBITDA improved to negative $41.9 million from negative $42.8 million last quarter, thanks to careful expense management around headcount and ongoing synergies from our recent acquisitions. I'll speak to this further when I cover our guidance. Transitioning to the balance sheet, we're fortunate to have a substantial cash position, ending the quarter with $582 million of cash and short-term investments. Now I would like to review our outlook for 2022. As Ido mentioned, our teams are executing well; we are on track for the year, and customer feedback on Converge is very positive. We're encouraged by this; we are confident our strategy is the right one, and our market position continues to be strong. We are taking the opportunity today to refine our guidance. We believe our revenues will be within our original guidance range set at the first of the year. With only one quarter left in the year, we have clear visibility to achieving revenue at the lower end of our previously provided range of $275 million to $285 million. Next, I would like to discuss our EBITDA guidance. We are pleased to be raising our adjusted EBITDA guidance for the year. R&D spending related to Converge is in line with our original plan, and thanks to expense discipline around headcount and synergies from SilverCloud and Conversa, we believe we will deliver adjusted EBITDA of approximately $10 million better than our prior guidance. Our new adjusted EBITDA guidance range for 2022 is negative $180 million to negative $190 million. We enter the fourth quarter laser-focused on our strategic priorities. We will complete the build-out of Converge, deliver on our strategic migrations and deployments, and work to ensure the success of our customers to further demonstrate the benefits of our solution. As usual, we will provide full-year guidance for 2023 on our Q4 call in February. To summarize, our third quarter was an important and encouraging quarter for us, and we believe we are on a path to achieving the broader strategic and financial goals we have outlined. By putting our technology at the heart of our future, we believe we are on solid ground to execute through this transition year and proceed on a path toward long-term high-margin subscription revenue growth and expanding profitability.

Thank you, Bob. With Q3 behind us, we aim to execute well and close out a strong year. It's early days in the evolution to digital care delivery. Our differentiated solution, our unique role in a large opportunity inspires us every day to be the partner to enable and empower customers as they seek to evolve their organizations to a digital-first future. With that, we are ready to conclude our prepared remarks. Thank you for listening today. Operator, we are ready to open the line for questions.

Your first question comes from the line of Charles Rhyee with Cowen.

Yes, thanks. Thanks for taking the questions. Ido, you talked about providers, payers and employers all embracing virtual. And, obviously, what we're seeing today in utilization compared to several years ago, is much greater. But we're down from the peaks during the COVID period. How do we think about where does utilization go and not just speaking just, let's say a visit itself, but sort of just the broader adoption of virtual as a core part of care delivery? What do you think tips it over the line where providers more broadly embrace it? And clearly you've brought up the idea of budgets being constrained in the macro environment? How much of that do you think is more of a headwind versus the tailwind that you described being, it's also an answer to help solve for that as well?

So sorry. Good evening, Charles, and thank you for your very good question. We are using the methods of the past to try to measure the future in some way. Telehealth was synonymously connected to counting the number of visits as a token of the progress, and we do that as well. But it's very important to understand that the adoption of digital delivery enablement is much broader than that. A lot of the utilization we see does not necessarily result in visits. Having said that, by creating this exceptional member experience or consumer experience, where my interaction with the healthcare system is digital first, and allows me to really interact and secure physical visits, virtual visits into a great degree automated visits is a trend that is definitely here to stay, and the other participants, namely payers, employers, and certainly providers are also participating in this transformation. So, I can't imagine a future where this platform is not really necessary or a must-have for the future. Any sudden going to use methods that more relate to the improvement of clinical and financial outcomes that it delivers because rather than to the very relatively narrow metric of visits. Let me give you just one example maybe to illustrate that. So on September 29, UCSF, one of our clients issued a very interesting case study where the user technology as part of a new pre-listing program to manage their kidney transplant patients. They are one of the renowned centers in the U.S. maybe in the world, and their list is extremely popular with that grew to more than 4,300 patients. That requires an enormous amount of interaction, not only with the people on the list but growingly, with the people that could be potential candidates on the list. That was a toll on the organization. With our technologies, the backdrop, they have created this pre-listing program that really allows navigators, and in any digital envelope, really powered by AI, really no visits there in the platform, to really engage with this very large population with great emphasis not on the people on the list alone, but really on the people that would be potential candidates to join this list. With less than a year in play, they were able to report that 67% of the patient enrolled routinely engaged on the program, which is fairly high. More importantly, the waitlist has been reduced by 30%, and they were able to show significant savings of more than $0.5 million annually by reducing the FTEs and reducing the listing and testing costs. Most importantly, they said that they got some really great feedback from both their own staff, and staff retention is very important today, and most importantly, their patients. So this is just one example to show that digital care delivery will be measured in a much broader way going forward. And we certainly do see a very healthy appetite in the market for different use cases and broad adoption of our offering.

Appreciate that. And if I could just sneak another one in as, Bob, you talked about visibility into the fourth quarter or the full year coming in towards the lower end. Can you talk about what kind of things maybe didn't happen that might have gotten you to the pop end of the range? Maybe just a sense for sort of the puts and takes that occurred in the back half of this year? Thanks.

Sure, Charles, thank you. We're pleased to be reporting within the revenue range we set at the beginning of the year and to discuss exceeding our EBITDA expectations for the year. We provided a range for a reason, as we are in the midst of a strategic transition and reformatting our business. At the time we offered guidance, we identified our primary focus areas for the year, including building out Converge, completing the development of the platform, implementing our strategic customers, migrating customers, and ensuring those customers have an excellent experience throughout this process. We believe we are on track with all of these initiatives. The environment when we established the range was different from what we are experiencing today. That said, we are very satisfied with our current outcome and confident that our market approach is the right strategy for achieving long-term performance. I would say that there are factors we can control and some we cannot. We believe we are managing very well, particularly with the factors within our control.

Your next question comes from the line of Craig Hettenbach with Morgan Stanley.

Sorry. Can you hear me now?

Yes.

Well, perfect. Apologies. So just a question on the overall spending environment, and particularly the dichotomy between health systems and some of the pressures they're under versus health plans. And then maybe also, you can tie into the point of future-proofing the technology and what that means and the type of backdrop we're in today?

Sure, thank you, Craig. So there's no question that everybody is seeing the macro trends right now. And there's also no question health systems seem to be even tighter than health plans as we speak. That type of environment really requires us to very much focus with our customers on value and ROI. So when we talk about that, as we expand, as we migrate, we really try to understand the business priorities of our customers and find a way that our platform can serve their short-term needs. In the case of health systems, obviously, the key leaders are staff retention, improving efficiency, and diversifying the revenue, and allowing them to better compete and increase the top line with payers. A similar trend relates to the member experience, improving financial and clinical outcomes, and creating much more sticky, meaningful relationships with our customers, whether it's members or in some cases, the government. The second point, I think you alluded to, relates to the modularity of our platform. In this type of environment, it's even more important than ever. You should remember, in the past, we had really one giant offering, and you either bought it or you didn't. Today, you can just buy the component that you need today. But really benefit from the fact that when you're ready to expand the use cases, the utilization of the platform can really scale not only in terms of frequency of use but also in terms of the scope of the services. And when this was not lost, first and foremost, on our strategic customers. We are proud to have some of the largest organizations across the United States as partners; for the next few years, initially in the market, we saw less appreciation for the future readiness, in the mid part and the lower end of the market. It was very much price-based. That is changing. I cannot overstate the importance of that. But it's very difficult to measure exactly how it's going to pan out. Growingly, the sophistication is going down in market size, and even smaller clients realize that there is much more that they can do. The pain of switching a platform after a year or two is significant. We see that as an argument for buying.

That appreciate the color.

Your next question comes from the line of Stan Bernstein with Wells Fargo Securities.

Thanks for taking my questions. I want to go back to maybe a couple of comments that were made in the prepared remarks. I think, Ido, you referred to certain market environments, pressure on health systems. And then Bob, I think you mentioned that migrations are on track. I'm just trying to understand whether you are seeing any actual buying as health systems or maybe contemplating certain types of module operates. As I think about next year, maybe without giving us actual guidance for next year, are you seeing any types of pressures?

Well, there are many reasons why people buy Amwell, stay with Amwell, or expand their financial. That's a fairly comprehensive platform. But as I mentioned earlier, there is a clear common trend. The number one, I think for health systems today is staff retention; improving provider experience is key. The fact that we are fully integrated in a growing number of EMRs that the interface is very fast, very modern, highly personalized, and context-sensitive. The ability to work not only with your patients but also with other providers, and really expand your reach in a number of ways seems to be very important in helping retain staff. We also see that other features of our platform really in the area of automation more than anything else, using AI, natural processing and other technologies is very, very helpful. Many of those providers are very tired. There's enormous pressure on them today. If you can help them in data collection, managing the relationship with good patients with reminders, providing some kind of longitudinal envelope, so they can manage them better, that seems to be appreciated by our customers. Overall, these are the common levers. Of course, there is a very large list of examples as it relates to the management of your emergency room, all the way to avoidance of readmission, the integration of behavioral health, when it comes to creating giant bottlenecks, very openly managing strokes are just some examples of very specific use cases that we see with literally hundreds of those today, and clients are rediscovering them as we go.

Thanks. Maybe a quick one here. On the go-to-market strategy, I think this year indicated that most kind of an all-hands-on-deck to drive a Converge upgrade cycle. Is that changing next year? Just would be great to get a sense of how your sales strategy may evolve in 2023. Thank you.

Sure. This year was really all about the deals more than anything else. That was the number one effort for the company. As Bob and I mentioned earlier, we are in good shape. We have the lion's share of our planned development behind us very soon, by the end of the year. Next year is obviously about refining that and further improving; we will really never stop doing that going forward as part of our offering to our customers. It's all about completing this migration. So the immigration plan was public; we talked about it very clearly. The first line of defense was to protect our low-end customers, which we were quite successful early on with our ramp. Then we moved to our providers that were hurting, and we did that and continue to do that very well. Now we are turning into the last segment of our offering, which are payers. CBS announced they're going live, and they had a payer component obviously to their offering January 1. The other example. We definitely plan to see a lot of migrations also next year. So if the focus of this year was development and the initial migration in strategic market segments, next year, the focus is really on migration that will generate opportunities for same-store growth. It will create opportunities for strengthening our relationship with our customers and retention. Very importantly, this is a very close market. Newcomers are really looking at existing customers and their success. When we have a network effect of more and more clients demonstrating that in various ways, that will be a strong tailwind also for other customers. I'd like to caution people that this growth is a very heavy trend; it takes time to move. We recognize revenue not only when we sign the deal and then we implement it, but also as we go live in counties through the length of the agreements. But the trend is very much there. It is very encouraging.

Hi, congratulations on a good quarter. Without getting too specific, you did previously provide sort of long-term objectives in terms of revenue growth and EBITDA margin. What are going to be some of the positive drivers for 2023? How is the CVS deployment progressing relative to expectations? Is revenue for CVS being recognized now? Or does that start to roll on January 1? And can you give any color around the pace of newly signed deals in calendar Q4 of '22? Given sort of the somewhat challenging economic environment that we're in, are they trending relative to expectations at a high level? Thanks very much.

So, Dave, maybe I'll just take the first part of your question as it relates to appetite in the market. The appetite is healthy; there's no question about it. People are paying attention and we are fairly confident that if the trend continues, we will see a nice mix of same-store growth, we have a very large market share. That's incredibly important. Also, a new commerce; we shared some of them, and others we didn't share yet. Overall, I think what we see is encouraging. I'll let Bob complete the answer.

I believe the core of your question is about where the positive growth will come from next year. For the past 18 months, we've been somewhat limited in our efforts due to the replatforming of our business. Our sales team has managed to retain customers despite not being able to showcase a fully functional platform. They have done an excellent job maintaining customer relationships during this transition, but acquiring new clients is understandably challenging under these circumstances. We have successfully signed new customers and secured upgrades, which is commendable given the situation. Looking ahead, we feel optimistic about our position for next year's bookings growth compared to the trends we've seen over the previous quarters. Once customers feel comfortable with the migration and are active on the network, we expect our existing clients to begin purchasing more services. Additionally, as I noted in our prepared remarks, our strategic customers are increasingly seeking more functionality from Converge, which is a great sign. This demand should lead to additional professional services revenue as we provide more customized solutions. Expect to see some of this develop in the first half of the year, and we anticipate that bookings will build momentum throughout the coming quarters, resulting in more implementations, go-lives, and ultimately, increased revenue.

Hi, this is actually Eduardo Ron on for Jalindera. We're just curious to hear your thoughts about client feedback, particularly those that obviously you mentioned the ones that up to Converge, but those that either delay making a decision to update the offering or don't, and what drives that decision. Are they looking for something else within the module that you're offering?

So again, a great question. I'm sure that we don't have 100% penetrance in the market and some clients obviously go with the competition which is fine. As far as what we see, we have a very good success rate in getting people excited about our offering. That should not be confused with the readiness to make a decision or implement the decision. Those two factors are really influenced by the macro in some ways, and it influenced by the priorities of the organization. We understand the venue of the offerings, and feel that obviously many of them are ready to jump in and commit. But then when it comes to implementation and staff availability, things of that nature, there is always a queue and factors that are beyond our control. We don't see material impact of that to be fair, some organizations, especially the larger ones, have a clear sense of urgency. They want to go much faster than we can even deliver. Others have more challenges, especially when connected to health systems. But these challenges eventually may push the original timeline by a quarter or by a month or two; it's not something that we feel is going to have a dramatic impact on our plan and on our future. That is very much thanks to the realization that you actually need a platform like ours; it truly matters.

Next question comes from the line of Jack Wallace with the Guggenheim Securities. Hi, this is John on for Jack. I wanted to ask to see if on terms of guidance or visit volumes, are you seeing any impact from the flu season? Are those negative impacts embedded within the 4Q guidance? Thank you.

The flu has a negative effect for those who are ill, but it is beneficial for our business. We are experiencing increased activity related to this. I’ve noticed it firsthand in New York City. The flu season has arrived early in the northern hemisphere, and while I cannot provide specific volume figures, it is clear that we are experiencing an impact from the flu and other respiratory viruses.

I just want to go back to the gross margin, to make sure I understand, are we supposed to understand that as a pull forward of low margin business that reverses and more so rebounds in 4Q? Or is this something of a margin dilutive step up that came earlier than expected? Just want to clarify that point. Thank you.

We typically anticipate an increase in marketing program activity during the fourth quarter. However, this year, we executed a significant program in the third quarter, which pulled forward some revenue that we usually expect in the fourth quarter. While the amount is not substantial, it did have a dilutive effect. Consequently, I expect the margin performance in the fourth quarter to be better than what we had initially projected.

Okay, great. If I could just ask one follow-up, whether are you seeing anything in labor costs within the AMG visits that might temporarily be weighing on margins at this point? Thank you.

No, I don't think so. I don't know whether, I wouldn't say that is going to hold for next year. We're kind of going through that process now. But as far as what we're seeing right now and what we saw in the third quarter, it was kind of business as usual from a cost perspective.

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

Hi, thanks for taking my questions. So I may have missed this. Are you guys able to give us a sense of just what percent of provider customers have either completed or accepted a Converge upgrade at this point? And then I know payer is sort of more nascent. But if you're able to provide the same step for payer, that'd be helpful too?

Just good to hear your voice, and thank you for being the first, I think, right following our release. We really try to focus on number of metrics and not expand them as much as possible; I would suggest that we see very nice and healthy migration in the health system segments, and we see some beginning of healthy migration also in the payer segments, but we really don't report what you're asking.

Okay, and do you think maybe you could just give us some examples of some of the supplemental capabilities or add-on capabilities that customers are asking you to roll out within Converge? Thanks.

Sure, when you realize the digital first experience really touches everything and every element of payer and provider organizations, it really requires enormous amounts of integration, or scheduling, the payment systems, workflows, rules and regulations, services, dynamic clinical load balancing, and many, many others. So it's really making sure that the core capabilities of the infrastructure that we've created are really embedded in everything these customers are doing. When they're big and they're complex, it requires an enormous amount of work from our end and the client end, but it's extremely effective as well. The ROI of doing that is very significant. They're really not shy or gun-shy in making those investments.

Your next question comes from a line of Cindy Motz with Goldman Sachs.

Hi, thanks for taking my question. I just want to go back to some of the numbers to make sure I understand them. So just to get to sort of the lower end of your guidance on revenues, we need to assume probably a ramp of around 6.5%-7% next quarter, which is off of a very strong fourth quarter '21. And when I just look, it sounds like the CarePoint and other revenues had some sort of pull-through this quarter because it's definitely higher than we were expecting. So, we might see some bumps next quarter with that. And then the visit revenue: I just want to check too because you said it was $78, Bob, I think revenue per visit, which I have is sequentially down from like $81 and then maybe even last year a little more. So just wondering if there was something going on there. And then I guess the expectation would be that the subscription revenue is really going to carry us in the fourth quarter, as you see it? And then I have a follow-up. Thanks.

Thanks, Cindy. Regarding the revenue per visit, your sequential number is accurate. It's down about $1, and it has also decreased about $1 compared to the same period last year. We recently modified the methodology used for our Amwell site business, so if you look at that pro forma number, it's all within $1 or $2. My main point in the prepared remarks was that it has remained consistent within that $1 or $2 range. It typically declines during times when we have a higher percentage of urgent care visits, as those have a lower revenue per visit compared to specialty services. I hope that clarifies things. Additionally, I mentioned in my prepared remarks that professional services and strategic implementations are expected to generate some incremental revenue in the fourth quarter, and I believe we'll see strength across all revenue line items in that quarter to align with the range we discussed.

Okay, and then just as a follow-up, you had mentioned that this year the salespeople kind of had their arms tied behind their back and because it is hard that to go with new clients and things like that when you're still working on the system and stuff, but I'm just curious because the sales and marketing costs are pretty good, like, they definitely were lower than we were expecting. Is that because they're basically not going full steam ahead? And then next year, I would think that we would have to see that ramp. You're just waiting for maybe the R&D to work out. And then again, just following up on one of the other questions, I know you're not giving guidance, but do you still feel comfortable with your sort of articulated path to profitability in the broad sense with EBITDA like getting down that loss? Thanks.

Cindy, at a high level, we are not just transforming our platform; we are fundamentally changing our company in various ways, shifting from a service-based technology model to a SaaS enterprise focus. This transformation affects every aspect of the company, including sales and marketing. The nature of a sale is evolving; it has become more advisory and technical, requiring deeper engagement. We have initiated and are continuing to implement these changes this year. While our engineers have been diligently working on this new differentiated solution, our growth organization has been preparing to take advantage of the opportunities. We approached this with caution, acting responsibly during this period while ensuring we had what was necessary to thrive and grow. Selling enterprise solutions does not require a large team; it involves a different approach. Typically, these deals are larger and take longer, catering to more sophisticated and larger clients. You can achieve more with fewer resources, and we do not anticipate this changing significantly in the future. We fully support the framework provided for achieving profitability and positive cash flow, which remains our commitment even as we move forward this year.

Yes, Cindy, I agree on the long-term path to profitability framework that we laid out. We feel very good about the way that was laid out. Our subscription revenue growing faster than the overall business is going to drive our gross profit margins up meaningfully from the low 40s to the mid-50s over the next few years, seeing operating leverage across other line items and R&D being down year-over-year, driving incremental profitability in the near term. We still feel, we see the same market opportunity we saw at the beginning of the year. We feel like we've really de-risked a lot of the concerns around Converge being delivered on time and working well because we are on time, and we're getting very strong feedback from strategic and existing customers about the quality that it's delivering. Our ability to drive market share gains over that period of time, we feel very good about and delivering on the operating leverage for getting us to EBITDA breakeven. We will be a lot obviously more specific on our guidance, our near-term guidance in February, and that's going to reflect kind of what we're seeing very near term in the markets today and our estimates for revenue and profitability.

Thanks for taking the questions. Bob, I guess one for you. You mentioned you're not seeing wage pressure in the AMG business, which is good. I guess kind of taking that from a different angle. Obviously, inflation is occurring all over the place. And if you kind of think about urgent care and behavioral, there's been some volatility I think in the average price per visit, but it looks like prices that you're charging have been relatively flat. Can you talk about the opportunity to maybe raise prices for AMG? Thanks.

It's a competitive market, Allen, and we approach this AMG on a kind of region-by-region, state-by-state basis. Really, we set our prices to accomplish a couple of things. One is to meet SLAs for provider availability for our strategic customers; that's very important. We want to make sure we have the right level of availability for wait times. We also are obviously looking to generate a reasonable return on that as well. Overall, we would love to be able to take some price here on the provider side, and we will do that to the degree we can, but we are in a competitive market. I do think that once we are further penetrated with some of our strategic customers, that volume may drive some opportunity for us, but we'll have to see. I wouldn't be building in I'm not building in a lot of increases in urgent care pricing over the next several quarters or the same on any of the specialty categories as well.

I would add just one thing, Allen. Unlike other traditional models, we're looking at the reality where Converge is putting both payers and providers on the same platform. There would be an opportunity for our very large market share of hospitals and specialty providers to participate in providing services if they have the capacity to do so. The cost of recruiting and managing those providers, counter to the current dynamics, is much lower. It also offers an opportunity for patients to see doctors they know and trust from brands that they recognize, which is really a net positive for everyone. We are seeing a long-term role as matchmaking and brokering much more than just selling services and by arranging, orchestrating these services, we can defend the variable margins, because we are not actually paying for the supply that we are enabling.

At this time, there are no further questions. I would like to turn the call back over to Ido for any closing remarks.

Thank you, operator, and I want to thank everyone for your time and interest in great questions. We really appreciate your support and look forward to continuing our dialogue.

This concludes today's conference. You may now disconnect.