Boston-based American Well Corporation, known for its telehealth solutions, has announced a reverse stock split of its shares at a 1-for-20 ratio. This corporate action took effect after the market closed on July 10, 2024, and the company's Class A common stock commenced trading on a split-adjusted basis from the next trading day.
The reverse stock split also applies to the company's Class B and Class C common stock. Following the split, the trading symbol for American Well's Class A common stock remains "AMWL" on the New York Stock Exchange. Additionally, the CUSIP number, an identifier used to record and track securities, has changed to 03044L 204 post-split.
This strategic move is detailed in a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation, which was filed with the Secretary of State of the State of Delaware.
The reverse stock split is a mechanism often used by companies to boost their stock price by reducing the number of shares outstanding, which can potentially lead to increased interest from investors who may perceive the higher price as a sign of value.
In other recent news, American Well Corp., also known as Amwell, disclosed the results of its annual shareholder meeting, where key proposals were approved, including the election of directors, ratification of the company's independent auditor, executive compensation, and a reverse stock split.
In terms of financial performance, Amwell reported a 7% decline in total revenue to $59.5 million for the first quarter of 2024, but anticipates a shift towards subscription software expected to drive gross margin expansion. The company also forecasts revenue growth and improved adjusted EBITDA for 2025.
On the leadership front, Co-founder Roy Schoenberg will transition from his dual role as president and co-CEO to become the Executive Vice Chairman of the company's Board of Directors, with Ido Schoenberg taking over as the sole Chief Executive Officer.
Piper Sandler, an investment firm, maintained a neutral stance on Amwell, emphasizing the need for stabilization in subscription revenue and clearer signs of the company's projected return to double-digit growth in 2025.
InvestingPro Insights
In the wake of American Well Corporation's recent reverse stock split, a closer look at the company's financial health and market performance may provide investors with a clearer picture. According to InvestingPro data, American Well holds a market capitalization of $111.42 million. Despite the reverse stock split's intention to enhance stock appeal, the company's valuation metrics reveal challenges, with a negative P/E ratio of -0.3 and a decline in revenue growth of -8.08% over the last twelve months as of Q1 2024.
InvestingPro Tips suggest a mixed outlook for American Well. On the positive side, the company holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations, indicating a degree of financial stability. Additionally, two analysts have revised their earnings upwards for the upcoming period, offering a glimmer of potential optimism. However, the company is not expected to be profitable this year, and its valuation implies a poor free cash flow yield. Furthermore, the stock has experienced significant volatility, with a notable return over the last week but a substantial price decline over the past year.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/AMWL that could further inform their decisions. To access these insights, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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