Q4 2019 Earnings Call
Welcome to tell talks fourth quarter 2019 earnings conference call and webcast. At this time all participants have been placed in a listen only mode and the floor will be opened for your questions. Following management's prepared remarks, if you would like to ask the question that that time superstar one on your Touchtone phone.
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It is now my pleasure to turn the floor over to Patrick Feely, Vice President of Investor Relations you may begin.
Thank you and good afternoon today after the market close we issued a press release announcing our fourth quarter and full year 2019 financial results. This press releases available on the Investor Relations section of the Teladoc Health Dotcom website on this call to discuss the results are Jason Gorevic, Our Chief Executive Officer, and Molla Murphy, our chief financial.
Yes, Sir during this call. We will also provide our first quarter and full year 2020 outlook and our prepared remarks will be followed by a question answer session. Please.
Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating Teladoc health performance details on the relationship between these non-GAAP measures to the most comparable GAAP measures reconciliations there can be found in the press release that is posted on our website.
Also please note that certain statements made during this call will be forward looking statements as defined by the private Securities Litigation Reform Act at 1995, such forward looking statements are subject to risks uncertainties and other factors that could cause actual results for teladoc health to differ materially from those expressed or implied on this call for additional information please refer to.
Our cautionary statement in our press release, and our filings with the FCC all of which are available on our website I will now turn the call over to Jason.
Thanks, Patrick it's great to have you onboard and thank you everyone for joining us this afternoon.
2019 was an important year for Teladoc health and today, we're reporting record performance as the robust growth trajectory we experience in the first three quarters continued through the fourth quarter.
The benefit of our diversified growth strategies across multiple channels continues to pay off enabling us to meet or exceed our expectations across key metrics in 2019.
And it gives us great confidence in our ability to deliver even stronger results in twentytwenty.
You see that confidence reflected in the guidance that we issued this afternoon, which will discuss later in our remarks.
We ended 2019 with 36.7 million U.S. paid members, adding another 1.8 million members in the fourth quarter.
This brings our total to approximately 14 million new paid members in 2019, the largest number of new member adds in company history, representing a 61% growth rate over 2018.
Visit fee only access increased to 19.3 million individuals at year end more than doubled the prior year.
The pace of new client wins and expansions reflects how our competitive and comprehensive virtual offerings are resonating in the marketplace.
Visit growth was a highlight again in the fourth quarter with total visits growing 44% over the prior years fourth quarter, resulting in over 4.1 million visits for the full year 2019.
We continued to see accelerating adoption across specialties as our clients are increasingly embracing our engagement strategies.
This is particularly evident among our largest clients with multiple products as our diversified product offering helped drive over 50% visit growth from our top 10 clients versus the prior years fourth quarter.
Visit volume has also impacted by the flu season, although the flu is not as meaningful to our overall operating results as it was in the past given the diversification of our business.
According to the Teladoc health flu tracker, which gives us a look at flu trends in real time, even before CDC data is available. This year's flu season has been more severe than the prior year.
We have experienced more than doubled the number of flu cases this season versus the prior year and during the peak of the flu season in early February approximately one out of eight of our US General medical visits was flu related.
We also see that once members use our services for the first time, they're much more likely to use us again.
About half of our visits completed in the month of January came from users who had not previously utilized our services.
We expect a strong flu season to continue to benefit us and help drive increased adoption of our products as new users look to Teladoc health for more of their healthcare needs.
Mental health continues to be a strong driver as we see increased adoption and momentum in both the b to B and D to C channels.
On the Buda beside mental health has been a significant contributor to our multi product adoption.
Bookings that include mental health more than doubled in 2019, reflecting accelerating client demand for our mental health solution.
In fact, the fourth quarter was one of the strongest we've experienced for new mental health product ads.
On the D to C side are better help product continues to outperform.
Not only is better helped significantly improving our members lives, but it has consistently exceeded expectations extending our leadership position in the direct to consumer channel.
During the fourth quarter, we continued to expand our product offering with the launch of Teladoc nutrition offering personalized nutrition counseling combined with specialized care.
Members utilizing the service work directly with the registered dietician to develop a personalized program based on the latest science based guidelines consistent with the academy of nutrition and dietetic.
This latest expansion of our comprehensive virtual offering will allow us to improve long term health outcomes for our members and ultimately reduce overall medical costs, particularly for individuals with chronic conditions.
Before I turn the call over Tamala to discuss 2019 results in 2020 guidance in more detail.
I wanted to talk briefly about our outlook for 2020.
Following a robust selling season and the significant momentum we saw exiting 2019, we feel confident in our outlook for 2020 revenue growth.
For the full year 2020, we expect revenue to be in the range of $695 million to $710 million.
Representing 26% to 28% growth toward the upper end of our long term, 20% to 30% target range.
We expect visit revenue growth to accelerate as we activate the large populations. We added in 2019, and we're very pleased with a broad based momentum were seeing across the business, including continued strength in mental health and in the international marketplace.
We also expect Medicare advantage to begin to become a more meaningful contributor to our growth.
As we've said previously we expect that opportunity to play out over a multiyear period as M&A plans begin to adopt virtual care strategies.
As of January 30, Onest, we have more than 15, Medicare advantage clients with over 1 million lives and a robust pipeline of new opportunities that will benefit us in the future.
I also would like to highlight a proposal from CMS released last month, which would ease network adequacy requirements for Medicare advantage plans that contract with Tele health providers.
We view this as further evidence of CMS encouraging the adoption of virtual care in the Medicare population and we continue to see a significant avenue for growth within the Medicare program.
Finally, as previously announced we expect to close the Intouch health acquisition at the ended the second quarter.
Only six weeks of passed since signing the deal, but our teams have hit the ground running and we could not be more pleased with the progress being made on the combined commercial strategy and integration planning.
We have signed a commercial agreement with then touch that allows us to jointly sell the combined Intouch health and Teladoc health offerings ahead of the transaction closing and the feedback from our collective health system clients has been extremely positive.
In fact, we already have our first committed health system cross sale and contract.
We see a tremendous opportunity for cross selling upselling and Virtualizing care across our collective customer bases and I'm extremely excited to welcome the Intouch team, so that Teladoc health family.
With that I'll turn the call over Tamala for a review of our fourth quarter and full year financials as well as detailed 2020 guidance.
Thank you, Jason and good afternoon, everyone I.
I would like to Echo Jason comments regarding the broad based momentum that the business is experiencing and we're very pleased with the 2019 performance.
I will now review the fourth quarter and the full year at a more granular level.
Total revenue increased 27% to $156.5 million in the fourth quarter.
That revenue growth was entirely organic but for the small impact of the medicine direct acquisition.
For the fully are up 29 key total revenue increased 32% to $553.3 million or 24% on organic basis.
We continue to see a stronger us dollar versus the prior year, resulting in an FX adjusted revenue growth approximately 96 basis points above I reported full year revenue growth.
Global subscription access fees revenue for the quarter of $127 million grew 24% versus the prior year and accounted for 81% off our consolidated revenue.
With visit fee revenue comprising the remaining 19%.
You asked subscription access fees revenue of $98.1 million grew 25% in the quarter versus last year and international subscription revenue grew 19% to $28.9 million demonstrating accelerating momentum as we exited the.
Okay.
This fee revenue for the quarter increased to $29.5 million representing growth of 47% over the prior year off which revenue from individuals with visit the only access was $8 million in the quarter representing 100.
12% growth versus the prior year.
Turning to membership and access as Jason highlighted U.S. paid membership increased this quarter to 36.7 million members up 61% versus the prior year, reflecting the increased adoption of virtual care and demand for our comprehensive service offering.
As a reminder, the U.S. paid membership includes only members associated with the PMPM and does not include individuals with visit the only access.
Individuals that visit the only access the increased to 19.3 million at the end of the fourth quarter up approximately 9.9 million versus the prior year and point 3 million sequentially.
Turning to visit total visit volume was a million 239000 in the quarter, representing a 44% increase versus the prior year.
Visit volume from paid members in the U.S. grew 40% to 850000, which represents an annualized utilization rate of 9.5% a 125 basis point decrease over last year's fourth quarter.
Excluding the impact of the large health plan Onboardings during the third quarter annualized utilization during the fourth quarter would have been 11.9% up 110 basis points over the fourth quarter of 2018.
For the full year, we completed over 4.1 million visits representing growth of 57% over the prior year.
PMPM in the quarter was 91 cents compared to $1.16 in the prior years quarter.
As we've previously discussed we expect to see a dampening effect on average PMPM when we onboard large new health plan member population.
Excluding the impact of the large health plan populations added during the third quarter fourth quarter PMPM would be $1.19 cents.
Gross margin percentage for the quarter was in line with our expectations at 65% compared to 67% in the fourth quarter of last year.
The year over year decline in percentage gross margin reflects the strong visit growth and visit fee revenue performance in the quarter.
As visit fee revenue comprised 19% of total revenue in the fourth quarter compared to 16% in the fourth quarter of last year.
For the full year gross margin percentage was 67% compared to 69% in the previous year.
Dollar gross margin increased 28% for the full year two $369 million.
Operating expense for the quarter totaled $116.7 million or 74.6% of revenue compared to 81.9% in the fourth quarter of last year.
Excluding noncash charges, such as depreciation and amortization stock compensation, and one time acquisition and integration related expenses.
Quarterly adjusted operating expenses were $85.9 million or 55% of revenue.
Compared to 63% in the fourth quarter of last year.
Adjusted EBITDA increased to 15.2 million for the quarter compared to $5.8 million in last year's fourth quarter.
Reflecting our strong revenue growth and ability to drive operating leverage EBITDA, including stock compensation and onetime acquisition costs was a loss of $5.7 million for the quarter compared to eight $8.3 million loss in the same period last year.
For the full year, adjusted EBITDA increased to $31.8 million.
More than doubling versus the prior year as adjusted EBITDA margins expanded over 250 basis point.
Our net loss in the quarter was $19 million compared to do a net loss of $25 million in the fourth quarter of 2018.
On a per share basis, our net loss was 26 cents for the fourth quarter compared to 35 cents in the fourth quarter of last year.
For the full year net loss per share was $1.38 in 2019 compared to $1.47 in the previous year.
At the outside of the are one of our key financial goals was to achieve positive cash flows from operations.
And we have delivered on that generating nearly $30 million up operating cash flow for the full year 2019.
As a result, we ended the quarter with $517 million and cash and short term investments and improvement of nearly $39 million versus the prior year and $26 million sequentially.
Our total debt outstanding as of December 31st was $562.5 million, which consists of our two convertible note.
Now turning to forward guidance.
Please note that all forward guidance will exclude the impact of the recently announced Intouch health acquisition until the transaction closes which is expected at the end of the second quarter.
As Jason noted for the full year 2020, we expect revenue to be in the range of $695 million to $710 million, representing 26% to 28% growth versus the prior year, which again is substantially all organic.
We expect total us paid membership off approximately 43 to 45 million members, representing 17% to 23% growth in new membership as compared to 2019.
And visit fee only access to be available to approximately 19 to 20 million individuals.
We expect total visits to be between 5.5 million and 5.9 million.
Representing total visit growth of 33% to 43% over the prior year.
We expect an EBITDA loss in the range of $15 million to $5 million.
Adjusted EBITDA in the range of positive $60 million to $70 million, which is more than double 2019, adjusted EBITDA at the midpoint.
The expected EBITDA improvement reflects operating leverage as we grow topline in conjunction with our continued focus on operating efficiency, while still allowing us to continue to make significant investment against future growth opportunities.
Net loss per share is expected to range from a loss off a dollar and 19 cents to a dollar and six cents per share based on 73.7 million weighted shares outstanding.
We expect cash flow from operations to grow consistent with adjusted EBITDA growth.
For the first quarter of Twentytwenty, we expect total revenue of 169 million to $172 million.
We expect to end the quarter with US paid membership off approximately 40 to 41 million members and visit fee only access to be available to approximately 19.2 million individuals.
We expect total visits of between 1.4 million and 1.6 million in the quarter.
We expect of first quarter EBITDA loss in the range of 9 million to $7 million.
Adjusted EBITDA positive $9 million to $11 million.
And net loss per share to be between 37 cents and 34 cents based on 73.1 million shares outstanding.
In conclusion, I'm pleased with our financial results and excited about the momentum we see across the business as we enter twentytwenty with that I will turn the call back to Jason for closing remarks.
Thanks, Molla 2019 was an important year for Teladoc health as we delivered on our commitments and exceeded our expectations across our key metrics I'd like to thank the team around the world for their commitment to our mission and contributions to another successful year.
Our diverse range of product offerings and capabilities continues to expand and are resonating with our clients as they see the unique value that teladoc health provides to them and their constituents, we see the pace of virtual care adoption accelerating and we're well positioned to satisfy the increasing needs of the marketplace.
We look forward to 20, Twond and beyond and are confident in our ability to continue to positively impact the way health care as delivered.
We also hope you'll have the opportunity to join US on March Fiveth in New York for our Investor Day, where you will be able to hear from more of our leadership team as well as CD Intouch health product offering up close which will help to demonstrate why we're so excited about this combined opportunity.
Before I turn the call over for Q in a I'd like to take a moment to welcome Kathy Jacobson to our board of Directors. Kathy is currently president and CEO of furthered health and Milwaukee based integrated delivery system.
She brings deep insight into the strategic priorities of health systems at a time when virtual care is becoming a key area of focus for these organizations and we're very pleased to have or join us.
As always thank you all for your continued interest in the Teladoc Health story.
Next we'll be seeing you all next week at Investor day, we'd like to limit everyone to one question today, please and with that we'll open the call for questions operator.
Ladies and gentlemen in order to ask a question you do need to press Star and then one on your telephone Lincoln, We do ask the please limit yourself to one question. Please standby will be compiled acuity roster.
Our first question is from the Lisa Gill with Jpmorgan. Your line is open.
Sorry mass congratulations on a great here, Jason that the outlook for 2020.
Im surprised in your prepared comments you can talk at all about Corona virus I know that the CDC have made comments around the expectation for incremental use of tele health type services as people.
Our potentially afraid of.
Being contaminated with others in healthcare facilities. So can you maybe to start there.
Impact that you would expect to see and then as you think about half of those new customers coming into that this is Doug.
Being new to Teladoc I remember last year, it was kind of something similar as well.
Through that you continue to see like Okay. Your new but do they continue to come back again to how do we think about those two elements as we think about new people coming onto the platform.
Thanks, Lisa I'm not surprised and your first question clearly we've been closely tracking the Corona virus outbreak from the beginning our clinical teams, which are comprised of thousands of physicians around the world then actively working alongside of our commercial teams and our clients to ensure that.
Our members have the most timely and relevant access to the latest information regarding this unfolding situation and the access to care, if and when they need it.
Yesterday's comments from the U.S. health officials, obviously think signal a potentially significant milestone in the progression of the outbreak.
That having been said there are still several potential scenarios and at this point.
It's still too early to be able to quantify the impact that the outbreak could have on our business. Our top priority right now is to take care of those people who are potentially affected spanning both care providers and individuals around the world.
As I said I'm not surprised by your question and so Molla and I asked our Chief Medical Officer, Dr. Lu Levy to join us for the Q on a maybe Lou you can provide just a little bit more perspective on the current a virus and our role.
Thanks, Jason as you mentioned, our clinical teams are focused on meeting the healthcare needs of our members in a potential outbreak with the same accessible high quality care. They have come to expect from Teladoc Hills.
As a result of our longstanding clinical quality leadership, there three key areas, which I'd really like to highlight where I believe we are uniquely position to make a meaningful contribution to already ongoing public health efforts first ensuring best practice for virtual Karen.
Visits for patients who think they may have been exposed to the cobot 19.
All of our global medical directors have provided their teams with the most up to date information regarding the appropriate way to evaluate and treat patients at potential risk for this virus. Secondly, we are enabling health systems to provide virtual care at greater scale through to the technology.
Cities of both the Teladoc health as well as the Intouch health platform.
And thirdly, the last point I'd like to raise is that in the U.S. specifically, we have been actively partnering with the CDC for several weeks now led by our clinical quality leadership team. We are equipped to provide near real time disease surveillance data as well as proliferate disease specific clinical practice.
Lines.
So so Lisa I think you'll see us continue to.
Playing an active role here, depending on which one of those scenarios plays out I expect that we'll talk more about this next week at our Investor Day, and then just to answer the second half of your question, we do benefit when we have a.
Severe flu season by bringing new people into.
Becoming active users the activating new users feeds the flywheel that drives to visit growth over time as we saw last year. Each user used the teladoc health platform about one and a half times and Stefanie will shed more on the they affect that this flywheel has.
Next week at our Investor Day.
Great CNX, we thank you.
Thanks Lisa.
Your next question is from Shawn Lynch with Piper Sandler Your line is open.
Thanks, very much so beyond the cross sell opportunity within touch.
Can you speak a little bit about the integration of of the assets in the capabilities and if you had event if we could drive venn diagram, what that what that would look like in particular.
The tell a stroke market in the and the behavioral how does that fit in with your business and also they've got a very strong.
At work backbone and I wanted to get an understanding of what you're thinking is with that.
Yeah. Thanks, Sean.
Yes, there is very little overlap between the two companies product portfolios.
And the services that we provide essentially they are providing.
Dave software hardware and the technology network as well as in some cases, the clinical resources for high acuity acuity situations, primarily in the hospital and as you know Teladoc Hell provide software and a platform that enables the.
Officials to extend out into the community.
And so there is very little overlap there is a little bit of overlap for scheduled visits that are done primarily out of provider provider basis.
Using the in touch platform.
But that is.
Tiny fraction of the overall use cases.
And so I do see a significant opportunity for integration so that the providers to the physicians who are operating on the platform have a single unified interface and the consumers who are receiving care have a single unified interface, regardless of what the services that they are received.
Yes.
And then lastly, when you put the two companies together you get this really tremendous network effect relative to the.
Physician populations of our collective clients and by enabling that entire population on the Intouch health technology network that really allows for the extension.
Of the provide our capacity to the entire client base. So I think we're very very excited and as I said in my prepared remarks. The teams are actively engaged with each other doing integration planning around all of those areas.
Your next question is from Ryan Daniels with William Blair. Your line is open.
Hey, guys. This is Nick speak out in for Brian. Thanks for taking my questions I guess.
Sorry about that might be a little bit early to tell but I was curious how.
Kind of utilization trends and activation engage we are tracking for the new United lives So far.
Yes. Thanks, Nick we're we're pleased with the progress we've made with United Our marketing teams are working very well together, we really kicked off the bulk of our activation efforts in the first quarter.
So you know we it was a relatively slow ramp through the fourth quarter, we saw a little bit of the benefit from the United business in the fourth quarter, but.
It rapidly accelerates as we head into 2020 as part of what gives us confidence around our 2020 guidance.
And we're seeing activation occur very strongly as the two marketing teams really work together and having said that we're still at the early stages of that so I think thats only going to improve and gain velocity.
Your next question is from Matthew Gilmore with Baird. Your line is open.
Hey, Thanks for the question.
To ask about better help I think Jason mentioned, it's continuing to outperform and hoping to get some details around that is that due to more new sign ups or are the members on better help just staying longer on the platform so that sort of turns lower.
Fortunately map the answer is both we're seeing all three of the key metrics continue to improve meeting customer acquisition cost continues to come down.
Duration of a member or sticking to us so to speak.
Continues to extend and therefore, a lifetime value.
The each member continues to improve.
So we continue to see that business growing at an incredibly robust pace.
And and don't see any end in sight for that.
Your next question is from Jamie Stockton with Wells Fargo. Your line is open.
Yeah. Thanks for taking my question I guess, maybe I'll ask one on the member growth. It seems like you guys saw more ads there in the fourth quarter than you'd originally expected just any color on on type of customer that was incrementally going live is that.
It may lives or just anything on that front would be great.
Yeah. It's thanks, Jamie it's primarily it's primarily health plan members, but across.
Multiple lines of business at both the government programs as well as commercial lives. We did see some a sort of early adds if you will from employers who came on in the fourth quarter rather than waiting for January 1st, but the predominant population was helped by lives.
Okay. Thank you. Our next question is from a Sean Dodge with RBC capital markets. Your line is open.
Hi, This is Tom is color on for Sean.
The question on virtual first.
You ought to help launched tenet for its integration of this a little over a year ago with the self insured payer.
Sure any data or any sort of anecdotes on how that's sort of progressed over 2019.
And then.
Continue to have these conversations with other payers can you give a sense of the an attraction around that concept.
Yes, so I would call virtual first kind of a capability or a plan design and what we've seen is that that is rapidly.
Valving into a virtual primary care.
For the full capability. So you know you're now seeing and I'm sure you've seen some of the big payers rollout plan designs that encourage virtual care as the first stop for the member.
Inc. when we look at the broader set of capabilities and the bigger trends in the market and we'll talk about this next week, we really see virtual primary care.
As stepping forward as a consumer facing capability that looks to truly re imagine how consumers access primary care and think about consuming healthcare overall and given the broad set of our capabilities and the consumer friendly.
Early interface and access we think that we're uniquely positioned for that so I think you'll see a virtual first plan design combined with a virtual primary care capability coming from us that both where we deliver that as well as enable providers in the market.
To deliver it as well.
Really transforming how consumers get care.
Your next question is from Charles Rhyee with Cowen Your line is open.
Yes, thanks for taking the question.
I wanted to ask about sort of.
What you're going to seeing so far with the in Medicare advantage.
I guess in particular.
You know, how how saturated and new business way what.
What percent of plans you know do you get ascension to market. Our started off with these additional total benefits of for their members and then I guess, particularly to yours or the 15 of any claims that you have can you kind of speak to sort of the marketing push that they are.
Using to encourage their members to to turn to tell the whole for for services and or do you see that really driving.
More from the provider side.
Yes, so Charles I. Appreciate the question I think what we said in the prepared remarks was more than 15 clients and more than a million members.
And and what we've always said is this is going to be a multi year phase and.
You know our best guess going into this year was a three year rollout.
I still feel pretty good about that we may not get to 100% of M.A. by the end of three years, but I think we'll get pretty close certainly north of 80%.
And ER and this is thus far not really a provider driven initiative.
Hey, you know the the reimbursement becomes tricky for a provider because they they don't generally differentiate what they deliver to a consumer based on the payment mechanisms. So they don't deliver different services joined I may remember than they would to a Medicare fee for service member and.
Medicare fee for service to still doesn't pay so it is really a plan driven.
Initiative, and we're working with our M&A plans almost identically to how we work with our commercial plans, but for the nuances of how we reached the consumer what the messaging as to the consumer and of course.
The sort of overall integration with the plan from a regulatory perspective, so I'm sure I would call it from a marketing.
[music].
Perspective. This is much more sort of the plan taking advantage of our K activation capabilities.
Your next question is from the Donald Hooker with Keybanc. Your line is open.
Great good afternoon.
I wanted to ask a question on the in touch.
Acquisition, I know you or you're not willing to provide forward looking guidance on that but just wondering maybe a little bit of clarity kind of looking back you mentioned that I think in touch had about 80 million of revenues in 2019, So just to confirm that and revenue growth was up I think north of 30% year, but.
No that revenue growth up 30% I would believe include some acquisitions and maybe some large onetime deals.
Where does it I mean can you maybe help us understand that sort of looking back growth that you.
Intouch health, how much of that is like or normalized.
Organic.
So.
We will give more detailed guidance upon close what I would say is we're pleased with the momentum of the business as Jason mentioned in his prepared remarks, we have working up pretty closely with them as we go to the integration planning phase et cetera, what's important is that.
On both sides of the house beat Intouch health or Teladoc health, we are laser focused on each of our own businesses through this integration period. So that we keep up the momentum we have that's all will save for now.
We'll give you much more detailed guidance at the end of Q2.
Your next question is from George Hill with Deutsche Bank. Your line is open.
Good afternoon, guys and thanks for taking the question, Jason I was hoping to revisit the Medicare advantage topic, a little bit more you mentioned that more than 15 clients and the more than million plus members I guess can you talk about.
Kind of the broader selling environment can you maybe win rate or how many RFP as you've seen in may.
I know its little early to talk about utilization in the book and I imagine this is going to be one of the targets for chronic care delivery model as you guys think about the engagement strategy.
I know, we touched on a bit, but just kind of thinking of those topics would love any more color around the M&A opportunity.
Yeah, Thanks, George I understand.
Your your interest there, we haven't and generally don't break down when rates are RFP volume by sort of sub sector.
Of the market.
I think we'll continue that I I will say that we have a very robust AA continuing pipeline in that area and as I think I said last quarter, we expect the M&A plans to roll out over the course of the year many filed for it and have a.
Sort of place marker for it in their bids to CMS and haven't yet rolled it out into the market. So I think you're going to see that that continues to roll out and expand over the course of the year.
This was not a one and done sort of Big Bang January Onest.
Season for that.
Your next question is from Matt Hewitt with Craig Hallum Capital. Your line is open.
Good afternoon, and thanks for taking the question just a follow up on Corona virus I'm curious if you factored any.
Tailwind from that into your guidance and I guess it kinda tangentially, you mentioned that you've been in.
Close contact with the U.S. regulators. The CDC have you also had contacts with international agencies. Thank you.
So let me take the first part then turns Jason we have not included the impact of that in our forward looking guidance as Jason mentioned undiluted as well it's too early for US you know with scenarios.
Will transpire.
For now we have not included in our forward looking guidance.
We have been in touch with.
A number of the international a agencies specifically we've been in touch with the WH, Joe and as Lou mentioned, we have a global network of medical directors.
Who had been actively involved locally in their markets. So yeah. This is a situation where our global presence really enables us to work collaboratively amongst ourselves and so as our U.S. team interacts for example, with the CDC, we're able to proliferate that information around the world and similar.
Similarly gather the information from the W.A., Joe or from local health authorities.
In market.
You know as as you know.
We have a presence in China.
And have for some time and so that gives us the ability to have.
Information flow to and from that market and to the rest of our a of our clinic clinical network.
Your next question is from Kevin, killing a new with UBI US Your line is open.
Thanks for the question. This is Adam noble in for Kevin I, just wanted to ask around the PMPM rate, obviously, the Fourq you number.
Impacted by the United implementation, just any thoughts on how PMPM should look next year should there be a more typical seasonal ramp throughout the year or does the UN h. implementation some of your other contracts could that dampened somewhat.
Yeah. Thanks for the question.
Absent the impact of a large population onboarding, we would we expect to see PMPM continue to grow.
In 2020.
And what I would say is we have typically again talks about PMPM growing in the expanding into five to 10 cents range.
And I would.
Continue to expect PMPM to grow in that range again normalize for the impact of the large onboarding of population.
Your next question is from Alan lets with Bank of America Merrill Lynch. Your line is open.
Thanks for taking the questions on behavioral health can you talk about the demand on the B to B side, and then how much is that contributing to multi product bookings.
[noise] yeah. So it's our strongest driver of multi product bookings right. There's significant demand we saw both demand from a b to b client perspective, as well as a behavioral health visits coming through that channel increased substantially in 2009.
Teen and we would expect to continue to see that into 2020, and you know multi product bookings has been a significant driver of our revenue growth at 50% of our 2019 bookings were a multi product bookings.
Okay, and multi product sales were on average 50% larger than single product sales, so and again behavioral health is the single biggest driver of that.
Your next question is from Jonathan Young with Barclays. Your line is open.
Hey, Thanks for the question just on the member guidance Im curious on new members that you're adding or they single product largely multi product do you have full marketing marketing capability to these numbers just any color there would be helpful. Thanks.
Yeah. So.
About 50% of our bookings were multi product for 2019 and a yeah. We are.
A long time ago, many years ago, when we were.
Sort of scraping for any business that we could get we would say, yes, do a deal where we weren't able to actively market or collaborate for the marketing.
With our clients.
Generally walk away from those now just there's there's not not worth it for us to go through the implementation.
In the event that there's not a real activations strategy and you know to be honest most of our clients engage with us and are willing to pay a higher price because of our engagement capabilities because it drives more value and return on investment for them.
Your next question is from David Windley with Jefferies. Your line is open.
Hi, Thanks for taking my question kind of a related question Youre member add guidance is quite attractive on on the paid U.S. side Youre visit fee only lives relatively flat is that now a reflection that youre. Your pipeline your potential customers are kind of fully bought in on the PMPM model and.
And and those are the kind of exclusively the discussions you're having these days or is it perhaps idiosyncratic to the particular pipeline at this point in time.
Yeah, it's a good it's a good insight.
I would flip it around a little bit and say the visit feel only clients are anomalous. So you know there just that each one of the the handful of them is a unique very large client and therefore not representative of the overall trends.
Con the Conversely, your statement is exactly right, which is our clients understand the value that we provide and what the PMPM goes to pay for and the results that it yields and so we continue to see.
Strong demand for that.
Revenue model and pricing model.
And if I look I I can't ever say anything with the absolute 100% I, but I can't think of a single a case in our pipeline that's a visit fee only case.
Your next question is from Joe Inder Singh with Credit Suisse. Your line is open.
Hi, Thanks, or do you guys talked about some making some significant investments in twentytwenty can you elaborate more on that or are there any particular areas you up family focused on in 2020, and how should we think about the.
Impacting impact on the yielded a longtime EBITDA margin target of getting 20 person any any color on that.
Yeah. So we've given you EBITDA guidance for the full year of 20 to 20, giving revenue guidance as you can see gallons were based on the guidance. We've given you know we are expecting continued expansion of adjusted EBITDA margins in Twentytwenty, we had that.
2019, as well for the full year of 250 basis points, we're expecting 350 basis points in Twentytwenty.
It's on the back off revenue growth as well as nice operating leverage that we expect.
But we will continue to invest in our business as we said.
Investment, we will talk more about in our Investor Day next week, but if I wanted to give you just a few quick highlights of how to think about it up for many of them in a marketing spend standpoint, you should continue to see that.
Keep pace with revenue growth.
It will be invested in the kinds of things that we do today in customer acquisition in our membership marketing engine that we have.
We will expect to get efficient as we spend it we are getting smarter in terms of how we manage our channel mix et cetera. So you should continue to see that.
We will continue to me judiciously be technology investments that we need to me.
And we and so we will talk a little bit more about that in terms of our longer time again will speak more to that as we as we come onto Investor day, So stay tuned.
Since our last question comes from Brian Hoffman with Canaccord Genuity. Your line is open.
Hey, Thanks for taking my question. This is Brian on for Richard close can you give us an update on your relationship with Cvs. How many states are you in now how has the uptake and visit volume been in those states and.
Any other commentary you may have on how that rollout is progressing would be great. Thank you.
Sure Brian Hi.
The relationship with Cvs on both sides of the house is excellent and I personally spend quite a bit of time with them and we're working on some really.
Exciting strategic opportunities.
The growth has continued to every month a in terms of visit volume.
And the trajectory is very strong although still the on the on the small side. So I don't Wanna get over my skis in terms of a impact in expectations, but we're very pleased.
With their trajectory that that's on we're currently and 39 states plus DC with them and and we look forward to the continued rollout to all 50 states.
Ladies and gentlemen, this does conclude the acuity and today's conference call. We do you think you for your participation and at this time you may now disconnect.
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