In a recent SEC filing, American Well Corporation (NYSE:AMWL), a business services company, announced the adoption of a new inducement plan and the granting of awards to its newly appointed Chief Financial Officer, Mark Hirschhorn. The board of the Boston-based company approved the American Well Corporation 2024 Inducement Plan, which will take effect on November 4, 2024.
The plan, designed to comply with New York Stock Exchange inducement award exemption rules, allows for equity or equity-based awards such as non-qualified stock options, restricted stock units (RSUs), and other stock-based awards. The board has earmarked 1,222,960 shares of Class A common stock for awards under this plan.
Hirschhorn's inducement awards, part of his employment agreement, include RSUs valued at $2.5 million, vesting over a four-year period, and an additional long-term incentive award that could reach $5 million based on EBITDA and company valuation targets. The RSUs' vesting schedule is set to begin with 25% on the grant date and the remainder in quarterly installments after the first year. The additional award will vest annually over four years if performance targets are met.
Furthermore, if Hirschhorn's employment is terminated by the company without cause or by him for good reason, he will receive a portion of the awards that would have vested by the first anniversary of his termination date. In the case of a change in control, the awards will fully vest upon termination.
In other recent news, Amwell, a key player in digital healthcare, announced stable third quarter revenues of $61 million, despite a slight decrease in visits and subscription revenue. The company's adjusted EBITDA improved to negative $31 million, marking progress from the previous quarter and year. Amwell also revealed plans for the full deployment of its Defense Health Agency contract by the end of 2024 and is on track for cash flow positivity by 2026.
Amwell's subscription revenue fell by 5% from the previous quarter, and the company revised its revenue guidance for 2024 to $247-$252 million. Despite these challenges, Amwell maintains a strong balance sheet with $245 million in cash and no debt. Looking ahead, the company is exploring revenue-sharing opportunities with third-party providers to enhance service integration.
Analysts noted a decline in sales and marketing expenses, which may indicate a potential reduction in growth investments. However, new contracts are expected to contribute significantly to subscription revenue growth in 2025. These are among the recent developments that investors are monitoring as they anticipate the company's 2025 guidance, to be revealed during the next earnings call in February 2025.
InvestingPro Insights
As American Well Corporation (NYSE:AMWL) implements its new inducement plan for CFO Mark Hirschhorn, investors might benefit from additional context provided by InvestingPro data. The company's market capitalization stands at $144.66 million, reflecting its current valuation in the market.
InvestingPro Tips highlight that AMWL holds more cash than debt on its balance sheet, which could provide financial flexibility as it navigates its growth strategy. However, the company is also quickly burning through cash, a factor that may be influencing the structure of Hirschhorn's performance-based compensation.
The company's revenue for the last twelve months as of Q3 2024 was $254.03 million, with a revenue growth of -5.07% over the same period. This decline in revenue, coupled with an operating income margin of -92.51%, underscores the importance of the new CFO's role in steering the company towards profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for AMWL, providing deeper insights into the company's financial health and market position.
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