Amid the COVID-19 pandemic, telehealth company Amwell experienced a significant surge in its stock price. However,a sharp decline in share prices in recent months, has led to a warning notice from the New York Stock Exchange (NYSE).

Why it’s notable:

• Telehealth company, Amwell, experienced a remarkable surge in its stock price during the COVID-19 pandemic, reaching a peak of $42.80 per share in January 2021, as demand for virtual medical care skyrocketed. However, its stock price has plummeted in recent months, trading at less than $1 per share for the past 30 days, leading to a warning notice from the New York Stock Exchange (NYSE). If the stock is delisted, it retains the option to trade over the counter; however, the market is likely to be less liquid.

• The notice has no immediate impact on Amwell's business operations or the current status of its stock. Under NYSE regulations, Amwell has a six-month window to restore compliance. In response, Amwell has announced its intention to implement a reverse stock split, pending board and stockholder approval, a process whereby existing shares are combined into fewer, but more valuable, shares, with the aim of increasing the company's stock price.

Point of View: Amwell’s experience highlights a broader industry challenge of balancing growth and sustainability, following initial success during the pandemic

• Amwell made its debut on the public market in September 2020 through a $742 million IPO, offering shares priced between $14 and $16 each. The company encountered its first setback when it fell short of revenue expectations in Q1 2022. Strategic missteps, including the premature launch of its Converge platform—a telehealth solution designed to integrate its services with third-party applications—have contributed to its decline. In February, Amwell disclosed a substantial net loss of $679 million for the fiscal year 2023, a significant increase from its $272 million loss in 2022. To address expenses, Amwell has implemented a series of layoffs, reducing its workforce by approximately 10% since the conclusion of 2023.

• Market challenges, including the resurgence of in-person care and heightened competition among telehealth providers, have undoubtedly contributed to Amwell's recent struggles. However, Amwell is not alone in facing difficulties within the telehealth sector. This week, Jason Gorevic, CEO and board member of telehealth platform Teladoc Health, announced his resignation following a 22% drop in the company's stock price in February. The departure, amid a similar stock price decline suggests broader industry challenges that telehealth leaders must address. 

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