Q1 2020 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Van Gogh Health first quarter 2020 earnings Conference call. At this time, all participants lines are not listen only mode. After the speakers presentation. There will be a question unanswered question to ask the question. During the session you any depressed star the one on your telephone you require any further assistance.
Please press start is zero Oh now like to hand, the conference over to Mr. John Howard vice-president corporate communications.
First quarter 2020 earnings call. This call is being broadcast live over the web and it'll be accessible on the Investor Relations section of the longest website www dot long ago Dot com.
Joining me this afternoon to discuss the results <unk> Chief Executive Officer, Dr. Jennifer Snide, our President Lee Shapiro, Chief Financial Officer, and Glenn Coleman are found or an executive chairman.
Are prepared remarks will be fallback, q. and a session.
Please note that given recent macro events, we are all participating from different locations. During the course of this call. The longest management team will make projections and other forward looking statements regarding future events or a feature financial performance, including our outlook for the second quarter in full year 2020, our assumptions underlying that outlook and are actually.
Locations regarding achieving profitability in 20 2100, adjusted even our basis.
We wished akashi you that such statements are simply predictions based on internal assumptions on a subject to risk and uncertainties that may cause actual beg to differ materially in particular, we are currently in the midst of the cold in 19 pandemic extend of its continued impact on our business will depend on several factors, including the severity duration to an extent of the pandemic.
This was actually is taken by governments businesses and individuals, including our clients and members in response to the pandemic, all which continue.
Two a ball to remain uncertain at this time, you discussion obese and additional rescind uncertainties can be found in the earnings Presley's that we issue today under the section captioning forward looking statements as well as in documents that we file from time to time for the <unk> Securities and Exchange Commission specifically the respect your sections that are most recent filing form.
10, K. interrupt coming filing and form 10, Q. east documents identify important factors that could cause the actual results are different materially from those contained in our projections or forward looking statements.
No obligation nor do we intend to update any forward looking statements made during this calls the result of new information for future events.
I also want to and former listeners that management will make some reference to non gap find mutual measures. During the call you will find supplemental dater in our press release, which includes reconciliations of benign gap measures to the comparable get measure results.
In addition to assist with the financial portion of this earnings call you will find supplemental slide sorry, best relation site.
I'd like to now turn the call over to our Chief Executive Officer Zane Burke.
Thanks, John and thank you everyone for joining us this afternoon.
We hope you're all staying healthy.
Our thoughts are with those people affected by the Kobe 19 virus and our support admiration goes to the front line doctors nurses and Adler health care professionals as well as all other essential workers, who are keeping outside and cared for.
It's the team effort and we'll get through this working together.
We entered 2020 with significant Wilmington.
We outlined our strategy to deliver on our whole person approach by addressing multiple conditions throughout for diabetes pollution, and growing hypertension weight management diabetes prevention and behavior help offerings on one integrated applied how signals platform.
And we're delivering.
Well, it's challenging for many our business model and the steps we've taken a position does to help those indeed.
In particular, we believe remote monitoring is rapidly becoming a new standard in health care.
Well bongos connected technology allows our members to attract vital signs of interest and maintaining help.
We expect that the ability for both personalized care as well as broad population surveillance will become critical going forward as an early warning and monitoring system for the health care system at large and a way to efficiently deliver care to those who need it most exactly when and where they need it.
There is no question our minds that this pandemic has accelerated a more extensive virtual care delivery model.
Monitoring it's here Tuesday, and we expect it to become the standard of care for the most vulnerable inexpensive populations.
We've also been receiving feedback from highly respected and innovative h. aren't benefits professionals to believe that the Bongo is key to keeping there are people healthy also saving money and novagolds unique and that we have detailed studies to prove that lavaca improves care saves money and provides a great memory.
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As we have stated on past calls with more than 147 million Americans living with a chronic condition and 40 per cent living with more than one.
<unk> have this significant opportunity continue growing our member base.
Because of our virtuous business model, we believe the covert 19 pandemic has only reinforced the value of the service, we provide our members and clients.
In the first quarter, we added a record of 380 new clients.
Which takes us to 1252 overall clients, which is up approximately 44% quarter over a quarter.
Member enrollment was the head of expectations with over 328000 Lubanga for diabetes members as of the end of the corner.
Further we continue to see strong demand in our pipeline.
We've worked closely with regulators and legislators in Washington to reduce baggers for the user.
I've remote monitoring, which resulted in impatient access tool avago and Medicare approvals for remote patient monitoring.
Which we anticipate remaining both on a temporary and longer term basis.
Congress adapted to deliver the emergency aid in economic release Americans and businesses need to get through this phase the club in 19 pandemic.
Well that is a great first step we anticipate the government will take further actions expand to use their remote monitoring.
Managing and testing to better protect our most vulnerable populations with diabetes hypertension, keeping them at home healthy and out of Harm's way.
Bongo also has an important role to play in a covert 19 pandemic solution given that our members represent some of the most vulnerable populations with diabetes and hypertension.
As a C.D.C. recently reported 78% of the covert 19 related ice you admissions.
Where people with preexisting or chronic conditions.
In order to serve our members we've been actively insuring that health and safety of our own team.
<unk> well positioned given that over one third of our people, including all of our health coaches and certified diabetes educators already worked remotely.
We are well equipped for a remote operations long before the pandemic.
We're also already ahead on limiting disruption of our supply chain, including multi sourcing production locations far connected devices.
Having our own team well cared for has allowed us to focus on our members and client.
We have taken a number of actions, including offering a covert 19 specific behavioral health module nationwide to our members clients and prospects at no cost through the end of June to get them over the hump, all we flatten the curve.
More importantly, we're being asked to accelerate launches to deliver services to clients, who wanted their most vulnerable populations protected sooner and taken steps to position longer well past cover 19.
As you know we provider members with real time blood glucose and blood pressure data.
This allows us to offer a general supportive care recommendations like Reston fluids.
As well as personalized specific recommendations like medication adherents. So our members that boy exposure to more rich by entering overwhelmed health care settings.
We had been proactively and sharing information with our members on how best to handle any potential illness and manage their condition.
Dr. Snyder, we'll talk about that's more in a bit.
Two other important headlines for the core.
First as the number of employee health management programs continue to grow.
Large employers are increasingly challenge to organizing manage these programs for their employees.
They want one partner to work with.
This trend was already underway before cover 19, but the pandemic accelerates it.
We expect that larger multiproduct, well capitalised organizations will have an increased vantage.
In March we announced the health transformation Alliance for H.T.A. and wealth Hawk, it's consumer engagement platform created a new curated marketplace focus on digital health to help make it easier for their membership.
Which includes over 50 large employers starting 7 million employees independence selecting contract with digital health providers.
Tidy to again share <unk> first partner for this new program.
And we see this is a promising new channel for the company.
We're already meeting with many the H.T.M. members to identify and served they're eligible populations.
Second after a highly competitive process during most of 2019.
I'm proud to announce what Bongo was elected by the government employee Health Association noted G.A.J.
And not for profit provider of medical and dental plans for federal employees, covering more than 2 million federal employees retirees and their dependent.
Recognizing the importance of helping at risk population stay healthy eligible G.H.A. members well now receive our diabetes hypertension diabetes prevention programs as a covered benefit.
G.A.J. represents one of the largest contracts in our history.
And as our second major government contract signing and a year.
And the first of its size to validate our whole person approach.
This contract signing demonstrate Labonte goes blank presidents and success and the government and labor markets.
And the importance of our solutions.
This is a very significant deal and check all the boxes validating our strategy scale Multiproduct news sector expansion and a competitive when based on our years of experience, which we believe that no other consumer digital help company house.
We begin 2020, well positioned to pursue our mission at the park people with chronic conditions to live better and healthier lives.
Today, let bongos, even more strongly position.
Increasingly everyone is really I mean that our remote monitoring solutions and our focus on the most critical vulnerable populations are necessary to support our members through this pandemic in the near term and longer term as the market continues to shift to a virtual care model.
And we're proud to be there to support our members during this challenging time.
And that part of the teacher of our new health care system going forward I will now turned to call overage doctors Snyder to discuss the progress we are making with our whole person approach.
Thank you thing good afternoon, everyone.
Last year, we doubled down on our whole person approach investing heavily in an integrated product experience expanding to behavioral health and enabling exhaled inclined canes to share the importance of offering one platform, which solutions to manage multiple chronic conditions to the market.
We believe that today, where the only company that country, but we are changing the behavior people living with multiple chronic condition and had the broad based data and outcomes. Just the course, that's that's gal.
The G. eight eight contact which covers multiplication Dawson is evidence this approach is working.
We are proud to be delivering truth in clinical results across our product suite at style for all their client.
In addition, my team is delivered more than 100 analyses that demonstrates year, one financial return on it.
That strident continued demand side platform.
All works because our members lover and look to us to continue finding new ways to make it easier for them with healthier at home.
Particularly in this current environment, you're hearing just how important <unk> acquiring it along with the health of their employees in numbers.
Are there what do you get to their financial return a client that's prior to cultivate 19 was critical.
This crisis has reaffirmed in value and positive impact and move on both the client.
Raffle partner in its leaders throughout the value came to add to our already substantial realtime member data to better in former.
Data engine.
Early in 2020, we announce our partnership with leading Tdm makers decks com. We're at the request of our members became mouse tune data from there <unk> sorry data on some.
The combination of the text Council meeting C.D.N. technology and move on both applied has signaled class farm. Most further assign to have continuous learning <unk>, providing new insights to deliver personalized information empowering our members to effectively manage their diabetes and many aspects of their house.
As an innovative leader in a C.D.M. market, yeah, very excited to partner was that.
Last month, Yeah, well partnered with <unk> help aggregate clinical laboratory data that.
The longer members <unk> test results from the weedy laboratories, with my mom ball on and off in baseball.
No health has the largest source of clinical diagnostic information across over 50 condition.
Medical records hundreds of millions of people.
Clinical laboratory, including blood glucose levels hemoglobin anyone fee with it and Korea mean are important health markers and <unk> indicators for people with chronic condition.
Due to fragmented data certain practices. It is challenging for people to access a comprehensive view of their personal labs data.
Partnering with Prognosed Mumble members were eligible lab results are automatically notified within the van Gogh platform, enabling them to up then the aggregate these results using the van Gogh.
<unk> opportunity to see their laps data and health data on one.
In addition to move on with Yeah, Yeah, I'm doing it now powered by lab tests values.
<unk> more personalized color, how how soon and their options how fragile.
I think he mentioned like clothing, 1910 that make impacts nearly all aspects of our lives.
John goes in the position of providing services the population at the greatest <unk> I've covered 19 complication.
Chronic conditions like diabetes and hypertension.
Solutions and remote monitoring capabilities add the extra layer hair and members need by providing 24 by seven by 365 support through digital in her mouth coach at the exact moment 80 that.
To address heightened the heat they'll help needs lovano for behavioral health powered by my strength is now offering specific hobin 19, and social isolation module to manage stress and anxiety keep all people nationwide.
Oh, the 19 modules make a 3% of the content with him a platform, but are still driving over 25% of member of yet.
This show is that users are not only interested in but actually need our content.
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And just the past month, we've seen increase utilization of the love Van Gogh program with Wesun cohort, showing a 10% increase across our devices in mobile.
In addition, the number of members tag dress I'll checking their blood glucose has nearly doubled which is especially important in light of our weekends peer reviewed findings demonstrate into clear correlation between stress.
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This shows the importance of our platform Draney challenging time.
Another piece of evidence accordion that you came in April when we announced that after an extensive evaluation process.
Hi, there permanently one of the largest integrated care delivery networks and the country selected Lovano for behavioral health for their entire population, which we just mine.
This is the largest behavior will have contracted our history, which will roll out over the next five years and we feel it serves as a major validate are far behavioral health offering in the marketplace.
Further demonstration along the unique offering and capabilities. We are excited to now set the F.D.L.I.P. request of a member of health system has granted emergency period waiver for awhile any impatient facility in the country you for Bongo cellular unable diabetes, neither allowing people with television.
Team to use our remote like this post meter within the hospital setting.
Originally F.D.A. cleared for at home you in 2014, I meet or use a cellular technology upload likely post readings to the clouds were there and then processed through live on that yeah <unk> to offer a real time personalized clinical insights and health Center.
Bongos technology in the in patients studying and now health providers better managed to people with diabetes, who are being treated for Kobe 19.
Without the help hospitals running out of personal protective equipment I'm facing staffing shortages. So we can better help protect those who are in the direct finds a fire.
And while we do not currently planned to sell the Lavaca for diabetes solution to this specific impatient market long time.
Capability demonstrates the flexibility you buy solutions to meet member and quiet needs. During this time.
He's noteworthy event than enhancement to the lovano platform or making a tangible difference in the lives of a number.
Definitely during the current World Health crisis.
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I want to share a quick story.
Recently, I Love Van Gogh member with type one diabetes contracted hope that night.
As we shared earlier people with chronic conditions are at a higher risk of complications due to cope with my ticket. So this diagnosis was especially concerning to the individual.
She informed her endocrinologist up her illness, but due to physical distance scene and other constraints.
Not received much support or feedback in return.
The member immediately scheduled a weekly calls with her love Van Gogh College and used are behavioral how solution to manage her mental well now.
I'm happy to report that the member and her family are healthy in well she thanked the entire live on the team and appreciate the additional support Lavaca they'll provide during this challenging time.
The growing number stories like that inspire I mean every day and solidified the importance of caring for the whole person and all aspects of their house.
When you deliver a valuable service and make the difference in People's lives They love it and they stay with you.
That's right stronger Corinne revenues and financial results.
R.C.F.L.V. Shapiro, well now share our financial results with Ya.
Thank you Jenny and good afternoon, everyone.
We had very strong results in our first quarter.
Driven by a record number of 380 client launches.
Define clients as business entities that have at least one active paid contract with us at the end of a quarter.
Historically, we have included as individual clients entities that access to our platforms, who are channel partners.
Let me see benefit managers and resellers and we do not count our channel partners P.B.N.'s or resellers as clients unless they also separately have active paid contracts for our solutions.
We had also treated our partnerships with health plans as a single client.
Multiple employers contracted for services, great given health plan.
In evaluating our first quarter quite launches.
And the increase in the number of employers were in bowling through health plans.
We believe that it is more appropriate to treat health plans in the same manner that we treat our channel partners P.B.M.'s and resource.
The first quarter client number includes approximately 100 employers enrolled under health plans.
Going forward, we will include employers who enrolled in our platforms real health plan as separate clients.
We've done so in 2019, the client number as of December 31st 2019 would have been hired by 68 clients or 872 total clients.
All of this gross translated to a total of 621, new client programmed launches in the first quarter of 2020.
That resulted in revenue for the first quarter, increasing 115% year over year from $32 million $68.8 million.
This strong performance was primarily driven by growth in our cordless Bongo for diabetes solution.
End with meaningful contributions to revenues from our hypertension weight management.
Behavioral health offerings.
We believe that this growth ranks with Bongo is having one of the largest estimated compound revenue growth rates among publicly traded sash companies as cited in a recent Morgan Stanley report.
The Bongo for diabetes numbers increased 100% year over year to over 328000.
This is an increase of over 164000 members that bases from the first quarter of 2019.
Strength from our other conditions was also evident with over 18% of clients now having purchased more than one solution from a bond belt, a demonstration of our improving product density.
Estimated value of agreements or E.V.A. in the first quarter was a record $89 million compared to $48 million in the first quarter of last year and 85% increase your over a year.
As well as an increase quarter of recording.
Please note that our sales team, which is active deserted Roman team signing more opportunities earlier in the year.
Approximately 35% of the first quarters E.V.A. is expected to convert into revenue over the subsequent four quarters.
We also reaffirm our goal of profitability in 2021, and then adjusted either die basis.
Turned into gross margin.
We continue to benefit from better economies of scale and the competitive advantages provided by R.A.I.E.I. engine, which allows for more effective enrollment in coaching utilization.
Gross margin in the first quarter was 73.7% on a gap basis up 450 basis points from the first quarter in 2019.
And 74.4% on a non gap basis up 410 basis points over the same period as we continue to gain leveraging our coaching model inexperienced higher incremental margins from members who continue to stay on the love Van Gogh platform.
As we look to the remainder of 2020.
We expect full your gross margins to be slightly higher than the gross margins achieved in 2019.
Turning to operating margins.
For the first quarter operating margin was minus 10% on a gap basis and positive 1% Honey noncat basis.
Peer to minus 51% on a gap basis.
Minus 29% on a non gap basis, respectively in the same period last year.
D improved operating margins demurred scrape the operating leverage we are obtaining from prior investments in people and infrastructure.
In the first quarter, we experienced a net loss on a gap basis and $5.6 million.
Minus six cents per diluted sure.
While attending Debbie <unk> $3.9 million.
Non got basis or three cents per diluted sure.
I just didn't eat the dog for the first quarter was $3.8 million compared to weight loss of $8.6 million in the same period last year.
We plan to invest in our business in light of the massive marketing opportunity in front of us with more of this investment manifesting itself is expenses and the second half of the year.
Turning to the balance sheet.
We finished the first quarter with approximately $368 million in cash Castro equivalents and short term investments.
$10.6 million cash flow was utilized from the first <unk> <unk>.
For taxes paid related to net sheer settlement of equity awards.
With that let me turn to our full year in second quarter outlook for 2020.
First we are raising revenue guidance for the year, two 292 or $303 million.
Increase is based on the visibility we have from our predictable and high recurring business model.
Wrong first quarter performance and improvements, we are seeing and our overall business.
This new range is also reflective of our analysis of possible impacts under a variety of scenarios that we have run internally and represents what we believe is a balanced approach the guidance in this environment.
Bongo continues to closely monitored situation relating to the coded 19 pandemic for impacts on our business as some of our clients and members are experiencing economic challenges.
While there is uncertainty regarding the overall impact on member enrollment in our sales refers efforts given these unique market dynamics.
Well position due to our recurring revenue model and we have taken all of these factors into account in providing this increase guidance today.
For 2020, we now expected as I just stated revenue in the range of 290 $303 million, which represents growth of 70% to 78% for the year.
In that we had significant member ads in the first quarter.
Note that we anticipate quarter over quarter member increases will not be as dramatic as we demonstrated from the fourth quarter 2019 to this first quarter of 2020.
For the year, we expect adjusted even got lost in the range of.
Minus 14 million two minus $10 million. This implies adjusted Eva down margins of negative 4.8% two negatives 3.3%.
For an improvement of between seven points to eight and a half points over 2009 team.
We plan to continue to invest in the business and 2020.
Simultaneously marching towards or stated goal of sustained adjusted Eva Don profitability in 2021.
Again, we expect these investments will manifest themselves as expenses.
Worse, so in the second half of 2020 than in the first half.
Now to the second quarter of 2020 guides.
We expect revenue in the range of $73 million to $75 million and adjusted even in the range of zero minus $2 million.
With that I'll turn it back over designed for closing comments before we take your questions.
In closing I want to think are amazing a long ago team for their continue to hard work during use challenging times and unwavering supportive our members and clients.
As the shift to virtual care accelerates any adoption remote monitoring technologies becomes the new standard of care.
Congo continues to see minutes market leadership position.
Are differentiated solutions demonstrated <unk> and the growing scaled the business have allowed us to meet the challenges at the moment.
And are near and long term outlook is very strong.
With that I hope you all stay safe and healthy.
We'll all get through this time together and come out stronger.
We will now look forward to your questions.
[noise], ladies and gentlemen.
You'd like to ask a question on <unk> at this time. Please press stars in one or your telephone keypad.
If your question has been asked what are you wish to remove yourself from accuse simply press the pound key.
We asked would you please limit yourself to one question and one follow up question at this time.
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Our first question or comment comes from the line Oh, Stephanie Davis.
From S. Reevey Valley Link Bank. Your line is open [laughter].
Thank you so much.
Right.
I know it's amazing.
But congratulations guys on the recorder I was just wondering dance with this <unk>.
<unk> only raise your guidance relatively considerable amount I think it applies only a a 4 million incremental revenue benefit and second quarter basically about 8 million this past quarter.
What are the the puts and takes as their conservative then is their unemployment how should we think about this guy.
Stephanie it's great to hear from you and thank you for your kind words I. This is leigh and with regard to our guidance. Please note that it's a good point, we're growing year over year by 74% to 75% over last year.
And we feel very good about our prospects as a business for the long term, but also recognize some of the near term headwinds that might come.
To our clients and some of our members with regard to the Kobe 19 pandemic.
Oh, we ran to number scenarios internally and and factored in some of the challenges that might face us in future quarters and tried to build in some conservatism in Tibet model in light of the things that are on now.
I think what you'll see from Lovano ago is so disability due to our recurring revenue model as well as transparency.
What we're sharing with you is that we don't have full line of sight to what some of those challenges might be in the future and our guidance reflects that and we believe it's still very strong guidance for the balance sheet here.
And you said in agreed on that because he got the baking a little bit a cushion.
Now moving a little bit my follow up to two parts of your platform I've noticed you guys had been kind of that integrating more with M.T.G. you just talk a little bit about your strategy, there and I moved to see that developing.
Yeah. Thanks, so much this attending I'll take that question. The ends again, we're really excited to be partner in both with index calm and with Abbott and we're hyper focused sticking on the member experience and driving how much is incredible member experience and so we have the ability to integrate that data to look at an analyze the data and drive insights back to the end of it.
L. person, we hear delighted that P.D.N. continue to increase their presence in prevalence within the market place and you really believe that with the addition of live on the on we can have some incredibly added benefits and we're starting to see that ensure that back from our members.
Thank you then thank you can't really appreciate it.
Thank you are next question or comment comes from the line of Richard clothes from kind of core Genuity you line is open.
Great things congratulations things for everything you guys are doing right now.
[noise] government employees contract, we maybe can you help us in terms of how we should think about that is that going to be similar to F.T.P. from the standpoint.
Lower enrollment rate there in terms of how you factor that into the E.D.A.
Richard Nice to hear your voice and COBOL as well. Thank you for your question with regard to the G.D.H.A. contract in giving our guidance for the year, we are factored data in.
And in terms of how we think about enrollment word G.H.J.. We're planned on the number of members that we believe will be able to add.
That program when it starts to launch it is not yet launch and we will see kind of pick up from that in the back half of the year, but that is factored into our guides.
Just to be clear, though on the F.B.P. I think you factor Dan you know, maybe a sub 20% enrollment rate is that something similar for this contract.
It's a similar population and we expect that we'll see similar types of demographics coming forward and and so you can think about it that way for modeling purposes.
Okay and then.
Respect Kaiser Jenny I think you set up.
Role Kaiser.
Clarify that a little bit I'd start for some reason Kaiser why did they get the mental help that than my hands quickly given the current go to bed situation.
Yeah. Thanks, Richard So we're really excited and that we have the validation from Kaiser which is you know as one of the leading integrated health providers was a fierce battle to be <unk> digital healthcare offering around behavioral health and the five years actually relates to the contract link that we have with Kaiser.
Aggressively I'm pushing this out, particularly in the study and they come at night.
Okay, great. Thanks for that clarification.
[laughter].
Thank you for next question or comment comes from the line of Sean We went from Piper Salmon July is open.
Hi, Thanks, so much. So you you said they remote monitoring is becoming a new standard of care and what I'd like to better understand is what needs to happen in you know coming out of this crisis. This pandemic to kind of reengineer, what primary care looks like and.
What needs to make what needs to happen to make remote monitoring more you know in her builds the overall primary care work flow and maybe you know at the tag line on that an update on what's going on at Casey Blue.
Thanks, Sean and great to hear your voice as well and appreciate the question. So there's a couple of things that actually have already occurred from a government perspective, so we've seen some.
Regulatory changes from C.M.S., particularly during this emerging you know just emergency time period.
Allowing that remote patient monitoring with preexisting relationships.
That may not have a previous relationship to get reimbursed for those for those fees. That's really significant. So that's that's an important change that we're seeing from a D.C. perspective, we've seen a number of other changes with in terms of what we've seen from the.
Cost sharing <unk> and that space as well as and number item. So this is really about the reimbursement aspects the fee for service Medicare space is another area, where there's there's been significant change in the reimbursement side. So as you know in healthcare there's been so many perversities on the reimbursement asked.
Backs of of what happens and what the pandemic has done is really accelerated that rate of change dramatically, yeah under reimbursement side and acceptance and really the requirements for both tell a health services <unk> monitoring and as people look at the future of this they're really going to say how do I.
I actually stay out of that healthcare system, how do I keep people.
<unk> and out of the system those people to have the highest risk at four actually you know.
Overall into those with chronic conditions, how do we keep them out of the health system, and that's where a remote patient monitoring and specific Wheeler Bongo has a truly unique opportunity.
To to thrive and so what I would say is you're seeing the the sea change from reimbursement perspective.
We need to codify some of those pieces became permanent changes some of those are temporary changes. So when we get past the emergency time period will need to see those get fully into it but I think the genies out of the bottle in terms of remote patient monitoring.
And that that's going to be part of the future healthcare system as it moves forward.
Glen do you have anything you'd like to add to that.
Thanks same Sean I would only add that there are a number of government programs now that are actually providing funding.
For for our clients, particularly health systems, and we're working collaboratively with them a number of those organizations have been selected so we don't know the impact of that yet, but we expect that will also start to drive some of the re engineering of the system.
But Jane said it perfectly and that is that it has become over night.
Bowl tell it helps in if you like tell a house, you'll love remote monitoring because tele health is after there was a problem remote monitoring is preventing the problem in the first place keeping people out of environments that might be dangerous and if you remember back in Italy literally the doctors were begging people.
Don't come to our offices don't show up at the ours and don't go to the hospital and that has sunk in and I think one of the indications is a lot of the hospitals are actually saying now people are scared to go to the hospital no I'm not sure that's wonderful but in fact, there is a new realization that these are places where the germs.
We're the viruses are and if you can care for people remote.
That's best.
I hear that that's for sure so.
Maybe one follow up Lee you mentioned investments that are manifesting themselves as expenses in 2000, and the second half 2020, King it'd be a little bit more specific on on what areas of investments and and maybe an understanding of is that it that meant to drive gross or or.
So what other aspect your business.
Thank Sean.
Which will be in areas like sales and marketing is we lean it for good opportunity had a bus we see that there's a number of.
Of clients that we can still pursue and and be aggressive with in terms of going. After in addition, we think about our r. and D. efforts and working on additional solutions that we can continue to enhance in our current portfolio as well as bringing new solutions to market.
So we're we're also actively hiring engineers in our R. and D. group and we're doing that in in a way that that we think will positioners very well going into 2021 are for both new market expansion continued efforts in our existing markets and then do products that we can bring to market.
Thanks very much.
Thank you Oh next question or comment comes from the line of Ricky Goldwasser from Morgan Stanley Your align itself.
[noise] yeah. Thank you high they thing in in in congrats and under results into crashing into market place. So so my question is around I mean honesty. You've good results are are better than the Preannouncement in April I, you talk about faster enrollment in in in.
Inclined starts, but can you give us some more color, whereas that outside coming from the is it kinds that we're into pipeline and opted to launched earlier because off the cozy 19 environment is it that it's clients that away sign, but you're saying faster.
Rate for members in in how should we think about that at the Ram prayed. So we seeing a shift in that curve. So you can reach that pick earlier I know that we talked about the peaking to meet thirties what type of.
Oh <unk>, you see now versus what you've seen last year.
[noise] Ricky this design thanks for the good question and good here, but as well the.
The launches really are always stronger in the first half of the year. So just as a reminder, you see stronger launches in the first half of the year, particularly in the first quarter. So that parts part of what we expected as part of our results and and then you see typically we talk about higher bookings then the second half of the year the.
And higher launches in the first part, but what we saw in the first quarter wasn't acceleration in those launches because of the Kobe 19 impacts because of our our they are a wide we drive and so the value that you see as part of that we saw those those launches.
Accelerate as part of that and then the enrollment in some of those earlier up launches. The uptick was the was a bit higher in terms of the versus our expectations. As you move forward. So combination of both the the little acceleration in the launches and then acceleration I've been an acceleration enrollment rent that obviously will benefit us.
Throughout the year, but but with the poll forward.
But a handful of those launches that made a difference in the corner, but again always in the first half is or is are heavier enrollment and launched time period.
And then you see the salesman back half of the year are typically higher as we move forward.
Understood and then I saw up is around behavioral health and mental health I mean, obviously my strength is gaining traction very quickly where we're hearing some some good feedback from employers on that so how does so first of all how does that revenue model.
Look like is it still at P.M.P.M. and how do you think about like the diabetes product. How do you think about evolution of that revenue model insane what percent of he'll klein's them by more than one one offering from you right now.
<unk>.
Oh.
So I can so I can jump in and so you're starting with.
The last question first with regard to the number of clients that are.
Buying more than one more than one solution.
What's what's interesting is that we're starting to seek lines that are signing contracts for multiple solutions as seen mentioned earlier with regard to the G.E.H.A. contract that coverage multiple solutions and so there's some nifty inception, and we're seeing that are crunch many of our new.
Contract signings, we've also been going back in to our existing client base and selling through more solutions. So we're probably somewhere just under 20% of our overall client base now on that is purchase multiple solutions from us.
Your first question was ROM behavioral health.
Yes around behavioral health and kind of forgotten you're getting traction there. So how should we think about the the revenue model is a P.M.P.M.
In in the evolution there in in how should we think about the cost structure into margin in comparison to diabetes.
So so we have a very strong margins in that offering it is a per member per month in for employers resell two per employee per month there is.
Some level of of market traction that we have been a hybrid model.
It includes some per participant per month associated with the coaching that we provide but we're really now working closely as we've been rolling out a doctor Snyder is mentioned in the past we have.
Updating the offerings, putting it onto our current platform I'm looking at pricing models that will be attractive to our clients and we're we're still learning, but we're growing most of what you see in the Bayes today is a P.E.P.M. or P.M.P.M. model.
Thank you.
Thank you.
Question or comment comes from the line of Robert Jones from Goldman Sachs. Your line is open.
Oh, great yeah, thanks for the questions.
You you mentioned a range of of assumptions considerations, obviously underlying the guidance you know given all that that's going on and the <unk> unpredictability of everything I was wondering maybe just to focus on on churn and how you're thinking about that and and you guys service clients across you know many industries that you know as you think about those.
Shows clearly hardest hit like Airlines hospitality, you know what what are you anticipating from a term perspective from those clients and I guess just as it relates to that any observations you you'd be willing to share as you as you think about the trend of turn I know things are moving quickly, but what you saw kind of throughout the quarter and then than into April.
Sure. It. Thanks for the question. It's it's been a very interesting situation was with many of our clients. You mentioned some of the industries that have been hardware kit and we certainly took that into consideration is we've formulated our our views on the balance of the year.
What we're finding is that a number of the employers that we work with when they've been furloughing team members they'd been continuing to pay benefits.
And for some other employers that have laid off employees in light of the pandemic. They didn't feel it was responsible love them as employers to.
Take those benefits away, so day structured ongoing benefit payments.
For some of those members to continue for a period of time and that period of time is very but we believe that that in terms of how this environment is playing itself out we're hopeful bit as we see a rebound and in folks come back to work some of the furloughs and.
That that period now that they were still with US and then they continue with us will be there to.
Two other comments just quickly we have some clients, where we are structured inside their benefit program and so.
As the employee continues on the insurance plan, because we're baked into the insurance plan, there's still getting the benefit of love Van Gogh and then there's a very small percentage of our client base that it buys from us direct into direct to consumer model on and we do provide a way for members who might.
Lose their benefits I too by direct from a van Gogh, we provide discounted rate in light of the environment Ranch. So they can continue with the benefits so long winded answer.
To to your question, but hopefully hopefully you can see that there's a a number of ways that they can continue to work with Bongo.
Okay. Now that's helpful and then I guess in the same.
Zap drafting the one and just quickly Jane.
Thankfully said that the other pieces I would just a little more color and I agree with what Lee said the other color I would add is just you know obviously the launder they.
The negative impact on the economy at L. Avenue I can have an impact on well Bongo and so but our business model is very sound, but we've we've thought about that in our guidance and in terms of how we thought about the range of scenarios there that that as if things turn <unk> pour pour for a longer term and you know league.
Emphasize the part where where the furloughs are.
Continue on with benefits that if people if they lay offs become permanent on the benefits are dropped out would have some impact and so we've factor that into a increase a little bit of an increase in terms of.
The retention the the client retention and the member turn the great part about the client retention side is our value statement. So the fact that we have such great value.
That we're not we we have not seen an issue around client retention of wrong, we haven't seen it really around the number or attend the member churn at this point, but our our guidance factors in some of those thought process and we moved through the year.
But that's super helpful. And then just a quick follow up it sorry, if I missed it I know you guys have given E.D.A. the breakdown on diabetes versus non diabetes was wondering if you'd be willing to share that again. Thanks.
Yeah, and we did we did not share the breakdown and part of that is because it's really hard now is we're starting to show multiple contracts that are are focused his doctor Schneider it mentioned on the whole person.
To start to think about breaking that out separately is.
A challenge and might.
Actually be looked at in a way that we don't break it down that way internally. So we're just providing kind of the overall E.V.A. guidance as well as how quickly we think that will convert into revenue over the next four quarters, but not breaking it out by condition.
Okay got it and.
<unk> Glen did you wind up if somebody there.
No Oh good.
No I think I'm good.
Okay.
Thank you.
No comment best friend, a line of and Samuel from J.P. Morgan.
Yeah.
Hi, guys. Thanks for taking the question you touched a little bit on how skills and advantage right now and was just wondering if you've seen any changes in the competitive landscape, maybe any opportunities for I'm. An a. is some of the smaller players in the marketplace start to face liquidity issue.
<unk> I think it's great.
And it isn't it and that obviously our scale allows us to.
Sail to clients like G.H.J.. So first off in the marketplace. I think people are going to have a flight to safety.
And and we're we're viewed as a safe twice and because of our virtuous business model you know our clients don't just like us They love US, we deliver strong clinical outcomes and a hard financial R.Y.
And that's exactly what the market is looking for but they're looking for a safe choice than no I was on the phone with one H.R. benefits director recently and and they said.
You don't get fired for buying long ago.
And that was just here recently and I and and I think that's part of where I think you're going to see the difference here and obviously, we have great scale across the ecosystem, it's different than others.
And and that allows us to whether storms and some of these different.
Markets that that may be a little bit chop your than others in terms of the short term.
But in the long run this really gives us the opportunity both from our capital position our market position the value that we provide to really accelerate.
Backside and so obvious there's nothing to talk we can't comment on any I mean, a activities, but it we are uniquely positioned in this marketplace to consider those strategies inclusive of our continued investment in the back half a year in our internal investments and so that that just means that were uniquely position and where you see.
Some competitors, who are laying people off we're going to invest in a more and more people because the opportunity to total address while market share as massive and the need is so great and the future so bright.
That's really helpful things and then maybe given your value and being able to monitor hybris patients remotely enough time are you getting any request for your clients tied incremental conditions and what what a timeline look like for adding something now.
They stand for the question and we are we're always looking and have a number of inbound request for my clients and a lot of those are driven from the three value proposition. One is that number is lucky experience. A second is sustained demonstrated published quitting cloud comes in the third is cost savings and so you know a little bit around no comments.
Exactly what or where we May go next but we are have we do have an and number of in Bonn request for us to continue to look more broadly because we've been able to demonstrated scale those three value propositions in our current you know, we're we're again hyper focused on maintaining cardiometabolic today, and ensuring that we drive that member experience in reach the millions of people.
That live in those conditions today.
Very helpful. Thank you.
Thank you are next question or comment comes from a line of Donald Hooker from Keybank. Your line is open.
Great good afternoon.
One of the sort of dive a little bit more into this big government employees Health Association contract to be clear is this.
Exclusive I guess, we're all trying to sort of think about excising deals or anything about that population there that sort of notable in terms of incidence rates are as we started thinking about how how how big of an opportunity this could be for you.
Well Lee mentioned that kind of is similar to previous <unk>.
<unk> the F.T.P. agreement that the populations are very similar and so that's how to think about.
Some of that opportunity. It is a <unk>, it's not a designated exclusive but it's across there population. It for those that are eligible they they really important note. Here is this is a full buy into our whole plan a person platform.
And so buying them the multi solutions not represents a significant difference from what we saw in.
The F.T.P. agreement and so that's that's a unique element it does and just as a longer term commitment. So it's a multi year commitment overall, so I think it's it again back to scale of a company.
Only a long ago at the end of the day is it provides that kind of safe choice that you feel comfortable signing multiple years and and given the purchase business model on the return on investment great experience in clinical outcomes.
That has allowed us to do that so what I would say is you know from these already comment on a on the.
Plays out similarly from a population perspective my comments or this is this is really great validation of the work that we are doing and the government space as well as the whole person platform and that's that's significant and unique and really represents great opportunity for us in other situations as we move forward.
Grade and do something quick follow up on that would be any any given the size of the deal.
Any any unique up front cost or whatnot that that you know leave reference so enough taken expenses and the second half of the year I guess this would be contemplated in that that are unique costs to deal with this magnitude.
No done no unique no unique costs and again, we did factored into our guides.
Thank you.
Thank you.
We reach Dan at the time a lot it for the question and answer session. At this time I would like to turn the conference back over demand for my for any closing remarks.
Well I appreciate everybody's interest animal Bongo and add in terms of.
What we're doing a remote patient monitoring for our members and I want to think all of you for your for what you're doing and stay safe and healthy out there and look forward to connecting with you in the future and keep you updated on what's going on <unk> have a great day.
[noise], ladies and gentlemen. This concludes today's presentation. Thank you for participating you may not disconnect everyone have a wonderful day.
Oh.
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