Q1 2020 Earnings Call

[music].

Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to stand I think you patients.

[music].

For standing by and welcome to the one my health care, one medicals first quarter.

Plenty earnings results conference call at this time, all participants I know listen only mode. After the speaker presentation. There will be a question and answer session ask a question during the session you'll need because star one on your telephone.

We are quite any further assistance please press star zero.

I would now like in the conference your speaker today.

But director of Investor Relations. Please go ahead man.

Thank you operator, Hello, and welcome to one medical fiscal 2021st quarter earnings call.

With me on the call today.

Rubin chair and CEO and President of one medical it'd be arent Holler, Chief financial officer of one medical.

A complete disclosure of our results can be found in our press release issued earlier today as always in our latest form 8-K furnished to the FCC all of which are available on our web site at Investor about why medical Dot com.

As a reminder, today's call is being recorded and a replay will be available on our website.

As part of our comments today, we will make forward looking statements. These statements are based on management's current expectations.

And are subject to various risks and uncertainties.

Actual results may differ materially and we disclaim any obligation to update any forward looking statements or outlook.

We refer to the risk factors in our annual report for the year ended December 31st 2019, and updated from time to time by or other reports and filings with the FCC, including our quarterly reports for the three month ended March 31st 2020.

We believe that the cobot 19 crisis grade particular complexity when it comes to providing affordable can view of the business.

We are providing our guidance like I say things for recent FCC recommendation.

We would like to specifically caution investors that are future performance will be harder to predict for the foreseeable future given the crisis.

All forward looking statements are based on assumptions that we believe are reasonable.

Today's date May 13, 2020.

No. It is one medical policies, neither reiterate our adjusted financial guidance provided on today's call unless it has also done through a public disclosure such as a press release or through the filing of a form 8-K.

Today, we will also discuss non-GAAP metrics to me, but was going to aid in the understanding of our financial results.

Reconciliations to comparable GAAP metrics can be found in today's earnings release.

Finally during the call we may offer incremental metrics to provide greater insights into the dynamic up her business.

These details maybe onetime in nature, and we may or may not provide updates in the future.

With that I'll turn the call over 20, or 30 or for their prepared remarks and to take your questions.

Thank you wrote and thank you everyone joining us on today's call.

I hope all of you in years are doing as well as can be during these extraordinary times.

We opened today by thinking our entire team for their dedication during this time of Kobin died.

Our providers have done P E and deliberate essential health care and testing services that doesn't mean, they have continued to see patients in office when appropriate and now also through scheduled remote visits.

Our team has engaged with hundreds of thousands of members digitally arranged for cobot 19 testing services collected specimens conducted video chat and virtual we followed up with patients on results and any clarity.

We have advanced or platform to launch scheduled remote visits.

Expanded our virtual behavioral health solution and stood up our one medical healthy together Worksite reentry screening program.

Our enterprise sales and marketing efforts have brought on more important accounts and members and had arranged partnerships with local governments and businesses. There people in that community with our health network partners. We've advanced our integration opened a new market and even had some of our providers volunteer to work in partner Hospital.

As the virus has impacted society, we have been there to help our members employers partners in communities to quickly get the care they need and also be positioned for Worksite re entry.

While our January IPO field, so long ago, Let me also congratulate our entire team on her first quarter as a public company.

Our momentum entering the year during ordinary times combined with our models power. During these extraordinary times drove our strong financial performance in Q1, we ended the quarter with 455000 members up 25% year over year and well ahead of our expectation.

There are two two membership guide implies we're on track to add more members in the first half of this year than any other first half in our history.

Turning to our Q1 piano, we delivered net revenue of $78.8 million also up 25% year over year.

We delivered care margin of $27.2 million and adjusted EBITDA loss of $13.5 million.

I had a very strong start in January and February and we were pleased to deliver these results. Despite the evolving impacted cobot 19.

Please keep in mind as discussed on our last call that we began to feel the financial impact would cover 19 only in the final few weeks if Q1 when government enacted shelter in place orders and also restricted non essential health care services.

It's yarn will discuss further while our Q2 guidance reflects a larger financial headwind some extended corn teams in self isolation practices.

During this time, we are uniquely demonstrating the power of our model and continue to increase market awareness and accelerate our membership base.

Let me turn to Howard model has performed during both ordinary and extraordinary time.

Since our last call we have extended our digital solution expanded in person care in testing services grown or geographic reach added more members in enterprise relationships advanced or health network partnerships began new ways to support testing in the community and large star Worksite reentry programs.

Delving into our digital platform, we have long provided synchronous video chat and asynchronous assessments and messaging.

Further embedded Kobin 19, synthon assessments for members within our mobile app, providing frictionless axis the screening.

It's cobot 19 concern spike nearly a quarter of a million members thought cared digitally with us over the span of several weeks our platform allowed us to quickly digitally assess symptoms schedule specimen collection for testing is needed and follow up on test results and care plan.

In late Q1, our digital platform expanded to offer remote visits.

With remote visit members can now schedule billable video appointments with their primary care providers supporting continuity of care and social discussing while still early we have seen great initial uptake and plan on continuing these services into the future.

Sure our mindset by one medical offerings, we've expanded our virtual and in person behavioral health, we've embedded in our primary care model to serve employers seeking further support for employee stress anxiety depression and insomnia.

Turning to in person care, we've continued seeing members in our medical offices to deliver essential care. Moreover, in the midst of cobot 19 in March we opened her doors for the first time in Portland, Oregon, delivering care to a new market for it.

Across all our communities, we have designated select offices as respiratory care clinics.

Separating patient symptomatic upper respiratory infection from those with other needs.

Also well equipped to deliver outpatient cobot 19 treatments in vaccines when they should become available.

In regards to cover 19 testing as discussed on our last call we have meaningfully mobilize to serve our communities.

Our model was inherently built can do quickly we couldn't digitally screen provided pacing in person care in testing services and follow up on test results and care plan in shorts supporting our members terrific spectrum of Cobot 19 County.

Her matter of weeks, we stood up 18 mobile testing sites, along with Innophos testing locations across our markets.

In Q1, our testing services focused on symptomatic in high risk individuals in parallel with CDC guidelines in Q2 as the CDC brought in testing guideline, we expanded testing have flatline responders and essential workers. We also announced partnerships with the mayors of New York City in San Francisco to support high risk population and.

Her essential health workers. These community engagement efforts allowed us to offer free screening and testing services to those they need while extending our community presence and brand awareness.

Let me also now acknowledge the valiant effort of our health network partners community shelter in place requirements reduce not just argue that revenue, but also the primary care visit revenue or health network partners are able to generate from one medical members through our partnership arrangements with them. Moreover, as they positioned themselves to care.

So.

Influx of covered 19 patients they canceled profitable elected volumes to create surge capacity in places such as New York City, where this influx became overwhelming many of our providers signed up to volunteer in awards and emergency rooms at the hospitals of our partner Mount Sinai continuing to work there through today.

During these months, we've also advanced our clinical and digital integration with our new partner mass General Berger.

And have begun our launch efforts in Austin, Texas with our partner Ascension Health care.

Moreover, in March we launched our newest market.

Portland, Oregon in partnership with provenance Saint Joseph Health.

We also continued growing our enterprise business, we see tremendous demand from employers, both new and existing we continue to sell to a diverse set of employers and in Q1, we began new relationships in industries across financial services Transportation Health care media nonprofit sector.

Professional services.

During this extraordinary time, we launched our one medical healthy together worksite reentry programs to sporting players as they begin to transition workforces back into shared environment.

<unk> program, we could virtually screening poised for Keith Hinton and clinical risk factors offer testing services and support ongoing digital screening further testing and follow up care as needed.

Furthermore, as previously noted we expanded our mindset by one medical behavioral health services to further support employee mental and emotional wellbeing everyday and during these extraordinary times when stress anxiety depression and insomnia needs are height.

As a nation looks ahead to uncertain times, our value proposition to import has never been stronger. We recently shared the result of peer reviewed study published in Jama. The journal of the American Medical Association Jama Network Open. This study found that our membership based primary care model combining.

Virtual near site and Worksite services saved one of our employers 45% in total health care cost.

Employees, who hadn't utilize the one medical model, including those with chronic condition had lower overall health spending on a risk adjusted basis equating to employers savings of $167 per member per month.

<unk> offer an effective health care home base for employees with both ritual and in person primary care, we can help eliminate avoidable inexpensive downstream care and reduce overall health benefit.

During our IPO, we highlighted our mission to transform health care for all of our key stakeholders, including consumers employers providers and health network partners and we shared how our human centered and technology powered model delivered better help better care and lower costs.

Since then we have launched cobot digital assessments remote billable visits kobin testing and expanded behavioral health services. We've continue delivering NPS score in the Ninetys, while accelerating our membership growth we've demonstrated significant imports savings into peer reviewed journal article and launched our medical.

Healthy together Worksite reentry programs, we've collaborated closely but their health network partners and even opened a new market in Portland. During this time. Furthermore, our balance sheet remains strong with ample liquidity and very little debt supporting our ability to invest in serving our members while the full extensive coven 19.

On our financial continues to be uncertain, we are even more optimistic about the impacts we can make for all key stakeholders and the long term tailwinds for our company.

With that we thank you for your continued support and partnership Intermission now, let me turn it over to be weren't our chief financial officer. Thank you Emil and good to be because every month.

Despite unprecedented times, we are pleased to deliver strong Q1 results.

Do you see reflects strong momentum in January and February and better than anticipated performance in March when coal with 19 began to impact on financials.

As previewed on I will last call <unk> 19 has driven an acceleration in membership growth.

At the same time, creating your two Om revenue headwinds.

Let me speak uncertainty, particularly in Q2.

We believe our collective initiatives and position us to emerge from depend damage was more members more brand loyalty and blog <unk> portfolio services and low capital intensity, all of which should provide long term tailwinds to both revenue and margins.

Now, let me just cost a little Q1 results in textiles, cobot, 19, or no financials and I will come out.

In Q1.

Accelerated our membership close to 25% year would yield.

Ending the quarter was 455000 members.

We go tracking favorably against our membership projection swell January and February was even stronger acceleration in March.

Oh damage acceleration highlights our value proposition to both enterprise clients and consumer members.

To be Cleo this membership count excludes any shorts true well sweet community memberships to facilitate testing.

Turning to revenue.

In total we delivered $78.8 million net revenue in Q1.

25% wheel.

This includes membership revenue or $15.2 million, which grew 27% you over you.

We delivered net patient service revenue of $34.1 million and partnership revenue of $29.5 million.

Collectively these two revenue streams grew 25% year over year, driven by I will glowing membership base and the momentum we had anything to call.

As you know both net patient service revenue and partnership revenue ultimately resolve some of the lighting prime leaky yet to our members.

And as mentioned on our last earnings call. We had strong utilization of our services in January and February was in off is utilization and corresponding revenue declining in March due to cold and community clone cheese.

Moving down the piano, we delivered Q1 Kiama channel $27.2 million was 75% off net revenue.

We did not include all material increases in Q1 expenses as soon as out of coupled with 19 I.

I mean did see a reduction over 11, you going into March as I mentioned earlier.

Although Q1 keep them out and also reflects the expansion to Portland and smell is the opening of additional offices to cost element.

In terms of operating expenses below the cost of Caroline.

Last quarter reflects the continued investments we made two fewer glow.

And final preparations to be a public company, which we became on January 31st.

As previously shared we expect these investments to be largely fixed and we expect to see efficiencies as we go though.

As a result of to covert 19 revenue headwinds and Ddos investments, although Q1, adjusted EBITDA was a loss of $16.5 million.

Lastly, following our IPO in January our Q1 balance sheet exceptionally strong.

We ended Q1 was $375.4 million off cash and short tail marketable securities and only $2.2 million on debt.

We have ample capital to continue to fuel responsible growth and to take advantage of to calm dislocation into market.

Let me know take a few minutes to discuss the Cobiz 19 impact on our financials as there are several dynamic factors.

These include the columns utilization mix of our services.

Evolving reimbursement landscape.

Smell is our capital does somebody conservation plans.

Starting with utilization.

Oh in office volumes continued to decline into early April before settling into a suppressed level.

Hi level, we launched billable demote visits in late March and have seen accelerating we will be adoption.

We are equally seeing increased koby 19 testing visits as guidelines have lot and.

During April I would total utilization across all billable services, which includes in office volumes remote visits and Cobiz 19 testing.

Average deposits timidly, 55%, Oh, who e. coli levels.

And beginning in early May we have seen in food <unk> increase in dose total billable visits.

Let me also quickly just cost reimbursement landscape for remote visits and Cobiz 19 testing.

With the recent regulatory changes, we moved to visit a completely embarrassed equivalent today to similar in office visits.

That said remote visits do not involved who see Joe's would you administration of services like big seems like productive killed.

For this reason the average gimoti visit typically results in lower average fee for service reimbursement.

Finally average reimbursement for cobalt 19 testing is typically lower than average reimbursement for both remote visits and in office visits.

Tony troubled capital preservation strategy.

We have you next itself a little cost saving initiatives with additional options to deploy should cobiz 19 headwinds persist for some time.

As Cobiz 19 started to emerge we had immediately caught most discretionary spending.

In addition, we have stopped hiring for almost all nonclinical goals.

And we are also judiciously, managing a valuable costs, including marketing.

Well, yes spending more on covert 19 specific P P E and materials.

We are willing to offset that with other cost saving initiatives, let's see staying true to our mission.

So don't we are actively reviewing our clinical real estate footprint.

And positive outcome of launching remote visits and changing demand patterns for ensco. Some scale is that'd be having the opportunity to feel to optimize our office footprint and Politest staffing model.

Overtime, we may increase the number of who I just to be staff to office supply does watching some shifts in office and some shifts remotely.

Long term this may reduce our physical footprint filled memo.

We now expect to open 20 to 25, new offices in 2020.

Having do you feel some offices that we would you to open in the latter half of your into 2021.

So to guidance, we expect to finish Q2 was total membership between 465000 to 475000 members, which continues to show I was long and glowing value proposition to consumers and enterprise customers.

Turning to revenue, we continue to expect an influx somebody food care and de pop which time.

Well, we cannot predict when and how sharply in office volumes really true.

Just running food care for chronic disease management cancer screening, we pulled Dr pellets behavioral health and wellness visits to name a few.

Into long term Cobot 19 May also drive an influx of demand for future makes the nation's water treatments.

Having said that some of our largest geographies, including to San Francisco Bay area, and New York City continued to have predict shelter in place orders in effect.

Yet as covert 19 has meaningfully accelerated demand for mutual services.

We expect long term tailwinds, some remote visits as Emil mentioned earlier.

Acknowledging these uncertainties, we expect to deliver Q2 revenue between $56 million and $66 million.

Just one age is based on embed the ideal scenario somebody uncertainties I, just mentioned such as to timing for and amount of pent up demand.

It's cold and duration of shelter in place orders in our markets.

In addition, some of the swing factors that could influence. Our Q2 results include reimbursement rates for cobalt 19 and mutual visits.

Compensation for the uninsured care, we continue to provide.

We turn to work screening and testing.

And the financial strain of our health network partners to name a few.

Turning to profitability, we continued to Sobi strong demand for virtual services and Cobot 19 tail end up we peeling 40, previously mentioned pent up demand for in office visits.

And continue to sign up new members.

As a result, we have not filled bode well laid off any employees.

We definitely expect to leave acute to kill margin between 1 million and $11 million in Q2, adjusted EBITDA between a loss of $76 million and a loss of $26 million.

Do you use a dangerous reflect our revenue guidance.

I will largely fixed cost profile and the incremental cost for Corbett 19 keel offset by our cost reduction initiatives.

For the full year 2020, we continue to see strong interest in all them all.

In particular, we are having conversations of is more employers than ever before.

Im very robust and growing pipeline.

As Emil mentioned, we are on track to have to strongest first half off net new members in our history.

Even with rising levels of unemployment, we remain confident in our value proposition to members.

As a result, we are raising our 2020 membership guidance and we now expect to end 20 to 20 with the membership count between 500002, five funded and 15000 members.

How many piano perspective, we are not providing 2020 guidance given the uncertainties surrounding coated.

However, we believe Q2 will represent a tall and at both she went to the and Q4 will sequentially improve.

Yeah, I mean, a unique each time to demonstrate the power of our model.

Accelerating our membership growth, increasing brand loyalty and driving diverse product adoption.

We believe these factors will provide long term tailwinds to our revenue in mountains.

We are equally remain confident that he can deliver the attractive long term financial targets it'd be previewed during our IPO.

Before I close I want to express my sincere gratitude to all of our team members, who have been watching under ever changing conditions.

Some of them side by side resolve a hospital system partners some of them on different lines of Colby 19 testing and Kale.

And other seamlessly adjusting to remote work environments.

There is no other team I would not to navigate these times was 10 to one medical team.

Thank you for joining our call today.

With that we'd be happy to take your questions.

Thank you as a reminder to ask a question you will need to cut star one on your telephone.

Sure withdraw your question Pester Conkey, please stand by what we come out of the kinda roster.

My first question comes from Ricky Goldwasser with Morgan Stanley. Your line is now open.

Yeah, Hi, I'm good afternoon, and thank you for all the details and for all the work you are keep doing these days [laughter]. My question is around to Q Guide I mean, obviously, it's a wide range and there's HM.

Brain Joseph potential scenarios here in a highly dynamic environment.

But maybe you could give us some context, when we think about high enough to guidance of 66 million.

What are the recovery assumption.

But you're making it if it's at the high end versus no. It.

Yeah.

Vicki Thanks, and it's been a it's been in Ah interesting a couple of weeks certainly outflow friends in New York. So Oh, It's also I'm with you in your plans as well.

So I think you bought the guidance obviously, there are lots of different swing factors here that could get us to the highland off to guidance moves as to the low end off the guidance and we acknowledge some of those in the calls I, obviously, when I think about a wall largest markets which includes.

Ladies San Francisco and also a new York still under could you speak shelter in place a guideline. So obviously, how and when do you just get lifted a is certainly one of the swing factors, yet and we think about.

And then the other things as well likely to onto works testing.

That could move to numbers, one way or the idle and Dan or last but not least as you know we have a big relationships with the city of San Francisco, which the city of New York.

To really help them I mean community perspective to get as many folks tested as possible and do we endorsement for <unk> dose tests.

Thankfully batteries by geography, and values by member or for some of those we get paid through their local municipalities.

The locations, we feel insurance.

And then we also opened doors for many folks who don't have insurance and said this is about getting tested and we'll figure out the reimbursement between the federal government and a and to states into local governments later, so down a lot of different swing factors that could move us Sinovel Q.

Guidance, one way or do you all.

Okay. So you know maybe in understood. So maybe help us I'm going to fall off just kind of I think about it will go through the p. and they'll come into care margin Dicker mortality came in below where we were we understand kind of like the fixed cost component of the business but.

What type of utilization increase do you need to see in order.

To go.

To see care margins going coming back.

To a more normalized levels given your commentary also about how you rethinking footprint versus a number of physicians.

Yeah, Great Great question, and actually let me a hold I didn't live in more detail deal on a on sort of to fill squad and our mountain Danielle. So it's I think about Stifels quarterly impacts I know and I will last call.

We talked about six to 8 million dollar impact of cool bid on Q1 expected.

The reality is to be probably came in and you know it's hard to estimate, but we probably came in towards the low end often change so to some extent if you wanted to understand if I'm laid off the business going into Coates.

You'd probably have to a two hour to think about normalizing for the cool it impacts having said that most of our headwind, but I'm right now is coming from the lower fee for service revenue as we just costs. So most of the impact on our key a margin.

Really simply to resolve to reduction in revenue.

Okay. Let me go past due to the end of the queuing.

Some other people opportunity to ask question, but thank you.

Thank you.

As a reminder to ask a question you will need to cut star one on your telephone.

Just a timely asset your please limit yourself to one question.

Next question comes from Shire Mirren with Piper Sandler Your line is now open.

Hi.

Thanks, so much.

What makes a telemedicine encounter billable versus non billable and and if you could describe the the environment on.

Pricing parity on the Billables ER and the on how long you expect that to stick around thanks.

Thanks, Sean it's it's a mirror and thanks for the question in your participation today and as you know our model combined.

Digital health and in person care in testing and historically, we had an on demand digital health approach that included on demand.

I think Chris messaging and chat as structured questionnaire is like a cold the question here now as well as an on demand.

Video chat and that we had part of our membership model. We have now added scheduled.

Elective.

Remote visits with primary care providers and those we are billing to insurance.

And that's just how we've handled it in our model. There is nothing there that could not have been build previously to insurance. We have just begun that program now.

Thank you.

Next question comes from Mr., Gary with JP Morgan Your line is open.

Thanks, very much I, just I bought a follow up on that emeritus tends to understand as we think about billing for those visits and I think you made a comment that post cobot, you're looking at the business and looking out for two or care and how he'll provide personal care and the new environment is your anticipation that the health plans.

We'll continue to pay a similar rate to what you have today and that will be a combination of hey, we can do this in a virtual care setting, but I need to get my annual vaccine. So then I'm going to come into the office for that and then secondly, as we think about behavioral health and your mindset product how do we think about how you're.

Billing for that getting paid for that product as well.

Yeah, great. Thank you Lisa.

So on the remote it.

We are building them to insurance and they are being reimbursed it's hard for us to know should reimbursement change in the future but is the aren't mentioned in his comments of course during those visits one isn't doing procedure is when isn't doing insertions, one isn't doing pap smears when isn't doing others suturing.

Her suture, new role so and the overall intensity of some of those rigs out. There. This is last and that's what can be done in those remote visits is not equivalent necessarily that that.

One can do in person of course in person were also doing testing and full P.P.E. both in our drive-thru walk through an office location.

And then ultimately we hope to absent therapeutics and eventually vaccine that would also be deliberate in Peru and person but.

Okay. We we are doing today, they are tending to be less yeah and lesser intensity.

And then than other areas.

Then a in person in terms of B.

One medical mindset. This is a Sweden.

Behavioral health services that is embedded in our primary care in the nice thing here is we already have longitudinal relationships with their numbers. So our members can engage with one medical they could get on the app vacated spoken appointing what their primary care provider, including around and behavioral health issues.

We also have group business, including virtual group visits.

That or build under a medical benefit we had a health coaching including virtual coaching that is.

Typically run through claims systems for self insured imports, but also has a a case or in individual I'm doing approach. We also have therapists, including onsite at employers as well as virtual therapists that far build also typically through insurance. So we have a full range.

Which is that fit within the insurance frameworks, but in particular way it fits within the primary care model and so this is a natural.

Continuation of care and that's what we find is we can avoid actually a lot of the higher cost of referring out to specialists in sub specialist that you might see another models that are just purely sending to therapists because we can handle a lot in our model and then using our.

Our membership model in between these sessions, we can have asynchronous communications and follow up check and we also screen for anxiety and depression and so we can stay on top of kind of a population health overtime.

Thank you. Our next question comes down enough Jacoby with Citi. Your line is now open.

Thanks, Good afternoon.

Can you talk a little right your health system partners, and then any discussions or changes with the structure of the economics, but I'd imagine given the struggles with hospitals those that pay you a problem they want to revisit that or is that just not the case and.

How I'd just remind us how our contracts that are they annual or or.

How are they structure. Thanks.

Yeah. Thanks, Ralph Yeah. This this strategic premise health networks to partner with us as isn't as large as ever a we delivered 95 plus percent commercial payer mix, we put up the capital and staff to lunch offices, we build and provide the technology the virtual care the remote access we.

We do the testing services.

We attract members.

And we developed direct to employer relationships.

Our partners pay us for these services on a pay as you go.

Basis, whether that is through a fee for service arrangement for per member per month arrangements.

At Testament to the power of these partnerships is the fact that were in ongoing discussions with several new potential partners in the midst of this pandemic.

No we acknowledge that kogan has not only put a strain on our financials, but also on the financials health systems and we acknowledge that Kogan has reduced visits from our members not just to know T for service markets, but also in markets, where we collected revenue on behalf of our health network partners when they pass a P.M.P.M. So as a result, we can see.

He somehow networks asking us for some consideration here given the unprecedented fluctuation and visit volumes and that's our guidance reflects this expectation yet overall the power of these partnerships and our long term financial targets remain intact.

Okay, you're all quantifying how is it a meaningful or no in terms of those that have come back sounds like some of come back and you know Watson trade off or some some money back relative to the fee upfront.

Some misunderstanding though.

Yeah, I did not say that into you know what I would say, it's just we recognize that there is a strain on their financials and say, we could see and the potential for some of them to ask for some consideration and this is reflected in our guidance.

Okay fair enough. Thank you.

Thank you next question comes from Sandy Draper with Suntrust. Your line is now open.

Thanks, very much for taking my question I guess more on the expense side of equation versus the revenue side.

Has there been any change in thought you talked about bjorn discretionary.

Expenditures and they've come down a bit higher spend topic on the sales and marketing side. It's my heart remember correctly, you had a fairly aggressive sales and marketing budget, especially in the first half of this years, you're opening up your new markets you want to drive volume. There has there been changes in terms of your thoughts on.

On the sales and marketing line and stuff. He may hold back there dial it back and push for into 2021, just sort of any thoughts about how we should be thinking about sales and marketing.

Expenditures going forward. Thanks.

Yeah. Thank you Sandy great question I think.

Of course, we are looking at all to follow expenses and as you build some email marketing was one of them well to your point, we had a a an aggressive plan, particularly earlier in deal.

Dead, we started to to look at and really we use S S coal, which increasingly impacted our financials and our revenue.

Yeah.

The model then we have obviously it does tend to feel you launch overall fixed cost basis, so as to how well revenues go down let me share mountain perspective, it's difficult to teach our immediate action and Im feeling is we actually seems to deal is going to.

Yeah, I'm onto pent up demand that we have a standing ready to serve and did before we expect to be able through a desire our relationships with our customers and build really does <unk> revenue.

So as you know staffing up to take advantage of to calm dislocation in the market obviously below the key amounts from line. This is where we are starting to out to really looks at our cost profile and as I mentioned Weve immediately just caught most discretionary spending including mountain.

Thing and we've also we use I will cost we reduced our hiring for Nonclinical staff on most to zero.

Okay, great. Thanks, not speaking.

Thank you I'm next question comes from Ryan Daniels with William Blair. Your line is now open.

You guys. Thanks for all the color for taking my question.

Wanted to speak to the 20 to 25 office locations I guess my curiosity stems around yeah.

Visiting.

So longer term need for physical footprint, given the increased awareness.

And then successes Tele health.

Worse, that's more of a near term initiative really just capital protect secure margins.

The current environment.

Yeah, I can I can start said one in EMEA feel free to to jump in here.

You know as you heard we have started to push out some leases for offices that build you to launch at the latter half off this year into 2021. So in the near term, it's definitely one of our capital preservation mechanisms that we started to deploy.

Having said that.

We always said dental offices are part of all value proposition, but they're not the only part of our value proposition.

This is why our national all all of its value our national of units isn't really the memorable and not just a number of offices.

Because our members can have virtual interactions us now increasingly billable remote visits or they come and visit any off is that they launch we continue to believe that debt is an important part of our value proposition. So as we enter new market, we will clear.

Can you too deep that'd be really state footprint that actually helps us Cabo Ddos members, if and when they want to come in to get into us and scale.

Yet at the same time.

Depending on how long.

Demand headwinds change, obviously, we are able to teach qia or more and more members.

What's release, we've been motorists. So you can easily see is scenario here, where on an average basis, we change to your or more members.

Specifics geography is less offices, because why would you be offices to be present and offered in office opportunity more and more amendments will take us up on your remote visits which means that we can have more provided dose soup is more members with the same amount of office.

<unk>.

Thank you. Our next question comes from Matthew Gilmore with Baird. Your line is open.

Hey, Thanks for the question I wanted to ask about the Jama study you did in partnership with collective health, but it seemed like that was you know some of them more robust data that you shared there's obviously fairly compelling what's the next step you take with those results does that just serve as a great marketing tool or are you in a position where you could guarantee.

He savings to some of these enterprises.

Yeah. Thanks, Matt.

[music].

Just to reiterate I think this is one of them more compelling studies out there right. So this isn't Jana this isn't a peer reviewed.

Prestigious journal that shows that we can take out 45% of the costs through our model.

So we think this is absolutely a groundbreaking study of the highest quality in in a highest quality journal showing this kind of savings and really it comes from our unique model that combines a membership model, where we engage blinded to leave with numbers which are.

Digital health with their outbound digital population health with our near site offices. In this instance, there was also an on site and the ongoing testing and virtual care and so we see this as a tremendous opportunity add to just further the value proposition to employ.

Lawyers as John said, we're on track to add more members in the first half a bit here than any Ah first half of any year in our history and now you can add on top of it very very strong compelling data. We've always had case studies that show that we can save money and include productivity now we have it kind of that the highest.

Journal level as strong publication. So we think this actually further enhances or or supports unjustified sees the value proposition to importers and shows that this model our model in particular can can save importers money, which we think will increasingly be.

An important a proof points.

Fair enough thanks very much.

[noise].

Once again, Josh if your line is music please UN mute.

Sorry about that I didn't hear you call my name I appreciate it guys taking the question.

Two questions will really for you you weren't I think I heard you say April down 55%. That's helpful versus the March numbers that you were talking about two months ago any sense on first two weeks of May and then the second is there a way to tell you guys have a sense of membership ads that were really related to testing.

Thank you made a comment around not including short term people that may have just signed up or paid a month or something I know, it's early to figure out if they're not to pay going forward, but was there up you know.

Signed up or membership at the point of testing is there some sort of wait out to gauge that number.

Yeah. Thanks, Josh.

So to your first question just too just to put a little bit okay fine point on it.

We actually saw walliams that averaged approximately 55% or pre Toby levels.

In April so you're going down, 55%, but they went down to 55%.

And then yeah in the beginning of early May we certainly have seen an increase of those now I would caution you would it be sitting here on the Sewell teams have made right so not not even not even two weeks in.

Certainly the uptick did we've seen was a was a helpful and it's incorporated in our guidance, but you know I think it's too early to really quantify that just given given where we are off I mean, let me tell into perspective.

And doing additive to your membership so again a couple of different things. One as you think you bought a whole foods twaddle did impact all saw all sort of dose short to own partner short term memberships all at the revenue ADESA sausage wisdom.

I wasn't really minimal right I mean, we really started to see cold it impacts in the last two weeks of March so a good wasn't that much of an impact Dale and even.

As we see each about as we think about.

May so fall for me revenue perspective, the impact is relatively modest and be obviously not counting men, both as a as well people who take advantage of of.

Our testing facilities as full time members in our membership colleagues frankly, we view this much more as an opportunity to show that we do that I'd seen by the communities that we so to get our name outfielder and to show people, what one medically experience can looks like.

That is much more important for us as we do dosing than than in any near term potential on the revenue side.

Yeah, I got here and maybe just a yeah. Thank you Josh maybe just to add I think.

You know really what we're seeing now is just.

One medical further strengthening its value proposition right. We always had this 90 plus net promoter score we always engage the consumers consumers often say where there most of you know loving benefit for them or import from their imports for employers. We always help employers are attract and retain employees keeping.

Productive.

And we always showed that we can save money and now we have this jama article further showing that.

Now we're also showing we can support testing and helping during these extraordinary times were so we're showing we can support returned to work we're showing that during this sheltering in place there's even more ways to have longitudinal care with your primary care provider. So I I think overall, we're showing just greater value.

Across all the key stakeholders.

That we serve.

Perfect. Thanks.

Thank you.

I'm not showing any further questions at this time I would now like to tend to call back over to America, then for closing remarks.

Well, great well I want to thank everybody for your support of one medical for your engagement with us for your great.

Research and your great questions today, and we wish you all the health are out there and a if we can help you with your health care needs when medical it is here to serve so be well everybody and we'll see you next time thanks, everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

[music].