Q2 2020 DarioHealth Corp Earnings Call
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Hello, everyone and thank you for joining today's Dariohealth second quarter 2020 earnings call. As a reminder, all phone lines are in listen only mode, but after his prepared remarks, you will be given the opportunity to ask questions and instructions will be shared at that time to get started with opening remarks and introductions I am pleased to turn the.
Moreover, Mr. Glenn garment Investor Relations, good morning, and welcomed.
[noise]. Thank you gentlemen, good morning, everyone. Thank you for joining us today for a discussion of Dariohealth second quarter 2020 financial results, leading the call today will be a resurrect the old President and Chief Executive Officer, you'll be joined by see that's been David Chief Financial Officer, and Rick Anderson, <unk> General manager of North America and.
Of course after the prepared remarks, we'll open the call for your questions and audio recording a webcast replay for today's conference call will also be available online in the Investor section of the company's website for the benefit of those who maybe listening to the replay or archive webcast. This call is being held and recorded on August 12, 2020. This morning, we use.
Issued a press release announcing our financial results for the second quarter 2020, a copy of the release can be found on the Investor Relations page of the company's website actual events or results may differ materially from those projected as a result of changing market trends reduced demand.
Our competitive competitive nature of Dariohealth industry, such forward looking statements and their implications involve known and unknown risks uncertainties and other factors that may cause actual results or performance differ materially from those projected the forward looking statements discussed on this call are subject to other risks and uncertainties, including.
Just in the risk factor section and elsewhere in the company's annual report on form 10-Q, three quarter ended June Thirtyth 2020, additional information concerning factors that could cause results to differ materially tomorrow that students are described in greater detail in the company's press release issued today and then the company's filings with the FCC in it.
I wish it certain non-GAAP financial measures may be discussed during this call. These non-GAAP measures are used by not usually to make strategic decisions forecast future results and evaluate the Companys current performance management believes the presentation of these non-GAAP financial measures is useful for investors understanding and assessment.
The companys ongoing core operations and prospects for the future a reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in today's press release regarding the company's quarterly and year to date results and with that I'd like concerned they call over to resurrect yell Chief Executive Officer.
Yes.
Thank you Ben and thanks, everyone for joining US said this morning fall well, let me keep those comments brief this morning, well enough, but I'm fled long they'll say settle things. If you any joining me. This morning, so they've been David L., Chief Financial Officer, and Rick on the Sun, the president and the job managing well North America.
And then every quarter I wanted to eat today, the main that remain below the guiding our ongoing transformation.
Leadership position in the digital therapeutic space.
Really the transformation into a SaaS software as a service business model. The second one is that and San Oh platform into most people chronic condition beyond their beauty and the second one is the ongoing that's formation, let me direct to consumer more then into business to business to consumer enterprise.
Today I'm pleased to report that we made a significant well probably seen all three.
Well many excited on the third below and under which we made significant progress and we are getting too late stage of discussions with other I logs and is it will give us access will be five type two diabetes population. We hope we now most of the seeking.
Specifics of these contracts in the very near future.
We've been David will cover the financials, shortly but I want to give you very a a few highlights.
And fewer L financial Lake <unk> that we had the revenue side, we generated $1.78 million in revenue, which is exceeding the consensus analyst expectation. It's also 7.2% sequentially. If one does what it was 2020.
Why do we were pleased with the sequential quota as well as the year over year led growth that we had on the revenue.
Absolutely bullets in good it's not reflecting yet, though and show and we anticipate that moving forward, we gonna see much more significant growth when we're looking into Q3 in Q4 and to set a contract that we having the pipeline we feel comfortable that we can get them signed and having guys specific agreement with as well.
Yes that would make much more meaningful go well the company.
The losses side, when we strongly managed dogs and says that he is out in the lower reported net loss of 4 million dollar only this is below the analyst consensus and also a books him at the 25% low then the second quarter when I came on the margins fall on.
The gross margin declined from 46% in Q1 to 36% in Q2, you see the employee reduction you two devices that we sold them that you just see side and that and that you see something that we expect to be fully and as we move forward into the b to b to C. Given that we have you.
Well known me cool 80, 70% to 80% gross margins, who believed that we're going to be add back to track and keep our gross margins going moving forward.
Looking back in the last eight months, we feel that the last eight month, well very very thumbs formation out of fall company and we are well positioned to Scott I'll says.
The significant growth in our revenue as you know we are coming to the b to b to C market with a very compelling product with 55 active and use us on the platform most of them will generate the from the Buda Cmos and we know that we had a very good product. This is very engaging and we are so that.
Operating income so usually experience will <unk> 0.9 status on the upsell and 77 intensified promote the school.
We also managed to add to.
Very good use of <unk>, yeah that leads to a very good engagement is out in a very good clinical outcomes and we managed to show it in 15 different Gannicott OLED. If those said that we submitted then on the last few years was civic significant them all up a few though and this is something that we are providing as evidence.
<unk> has some benefit managers as well we show that we can save a lot of money for them.
Building the organization, we made a significant progress what we've been a world class Im hoping anything in the U.S. that have they experience and trading into the fair market and implementing the logic was big health plans. This is something that all seem already done.
So the transformation into B to B to C. We feel that add disciplines formation and had a potential significant golfing all less has some revenue as well the generating 11 to use a whenever that age between 60 to 80 Bucks the member month as opposed to 25 Bucks that we.
Did when the B to C side, so it came.
Once we are getting this that agreement signed we believe that we can scale up how says that relatively quickly. So overall, we're very satisfied from that good feedback that really getting asked from the potential claims that we have and we feel that the competitive advantage resonates very well with health plans.
That's interesting employers like he's going to elaborate about the a and b small as we are getting through his up.
One most significant milestone that we had recently.
Is there a very a good fundraising we did a few weeks ago [laughter], we had a very successful private placement that was oversubscribed, we raised 28.6 million, though we did it in a straight to common do no warrants and no discount and we feel that are widely available.
Most of the deal well very good for the company well even more excited.
I don't mean vessels that you see fit it into doing rather respected health care and centric and institutional investors participating in the deal. So together with a $13 million that we have enhanced by the end of the acute due on June 30.
Yeah, the pro forma cash of approximately 38 million dollar the bank with no debt, we feel that these amounts of cash should take us for for the next few years and should be a a helpful. In terms of implementing and executing on all their commercial things in terms of the use of.
Prostitutes really start to build and a very strong teams that will enable us to implement the potential project that we're going to sign and we're going to also tripled the size of the status and commercial aiming to U.S. you know that leverage on built with you anything and obviously one of the important things philosophy is to keep both says.
Very competitive and they need leadership position in them. So oh right. So we are planning to invest more into all that personalization of the platform artificial intelligence and also into our ability to support <unk> chronic condition, one mall and milestone that we had the nomination Donnie Smith.
Yes. The board of Directors then he sees the President <unk> you might hill and won't be line, then was more than 850000 fathered Memphis.
He's been called including.
Leadership position in some of the largest missions health plans a in the country, including Cigna Humana and I'd, just add danny's insights and guidance I'm going to be who show for the business that is going to be around and as we move forward with that I want to hear.
And all the Nicole Threeq under some of the President and the general managers for North America Rick.
Thanks, Erez last quarter, I discussed areas competitive advantages and what any digital health companies need to be successful in a b to B model I am pleased to report that we have continued to strengthen our foundation on these key element in June at the American Diabetes Association Idiots scientific sessions, we presented new data.
From two studies. These studies increase the clinical outcome data on or digital therapeutic for diabetes, and importantly, where the first studies demonstrating significant improvement in hypertension through our platform.
And of course improve clinical outcomes translate into real and in many cases significant cost savings prepares studies such as these create the foundational support for adoption of our solutions by payers and players and providers. They also create an increasing competitive advantage in that space.
As we discussed last quarter can be 19 has created both challenges and opportunities for us and the digital therapeutic space more broadly.
During the second quarter, we saw some of our self insured employee or employee opportunities remain paused well customers dealt with the impacted the pandemic on their business and employees. However in other cases, we have seen increased interest from employers and payers and a strong provider interest in our remote patient monitoring solution digital health.
Has seen a surge if interest during the pandemic and we expect that interest to continue in the future. We're well positioned for this era of virtual care with a clinically proven digital therapeutic that provides the ability to monitor and care for patients virtually and an open platform that enables integration with virtually any provider or system.
We further enhanced our flexible powerful solution in the second quarter with our partnership with maybe Orbitz I Tele health provider specializing in chronic conditions. We anticipate we will see further partnerships in the coming quarters demand for virtual care solutions growth.
Our transition into the B to B market continued into the second quarter, we've expanded our coaching enrollment management talent to meet the needs of our new customers and give us the ability to rapidly scale up our teams to meet demand efforts to build name recognition with health plans employers and benefits consultants has paid off with opportunities to participate.
Several request for proposals are RFP and the growth of our sales pipeline to over $200 million in potential revenue across the three b to B channel.
We have made a concerted effort over the last quarter to increase our name recognition and educate benefit consultants that employers on Daria solution. These efforts have resulted in a number of milestones, including being named a shortlist or preferred vendor being added to the Mercer VIP platform, reaching that finalists round in RF piece for the first time and.
Winning business over a lot and the bango in that process.
We believe these RFP wins have validated our value proposition and competitive positioning the self insured employer market. In addition to our direct sales efforts, we started selling to employers through the vitality platform in the second quarter and have already had her first win on that platform.
These recent direct and partner wins are currently in contracting with some anticipated to launch in the second half a 2020 and some planned to start on the normal benefit cycle. In January 2021. These wins are in addition to a large employer in the northeast, which has moved into late stage contracting.
Well the contracting process has been slow we have recently started implementation with the objective of launching later this year.
As I discussed in last quarter's call. We only recently started selling to health plans.
Well helplines typically have very long sales cycles, we have been very pleased to have generated significant traction in a short period of time.
As in the employer market. We believe this high level of interest is attributable to our competitive positioning and value proposition.
We previously noted that we are in late stage discussions with a large health plan and that plan has now moved into late stage contract negotiations and the implementation process has begun we anticipate being in a position to launch this customer later this year.
Encouraging lead momentum in this market segment continues beyond this early traction with the addition of payers that have already moved into late stage discussions or contracting setting except for additional launches in late 2020 or early 2021.
At the same time, we have seen acceleration interest and adoption of remote patient monitoring or RPM.
Particularly in providers and patients who are justifiably hesitant to visit a hospital or provider office. During the current endemic in June we announced our first two RPM contracts and another in the UK in July RPM lottery integrate the company's existing open platform.
Allocation technology, and our Daria engage coaching platform to provide physicians health system and large provider groups with a turnkey solution to leverage the recently approved Medicare remote patient monitoring reimbursement cuts RPM as the new offering for us and needless to say, we're very encouraged by early momentum.
At this point I'd like to turn the call over to be for a review of our financial TV.
Thank you Laurie.
I will not provide the brief overview of how financials additional details on our results can be found in all form 10-Q, five yesterday evening.
Revenues for the second quartile well, one was $78 million, an increase from one $167 million into full sport Gulf Twentytwenty.
Revenues with a gun derived mainly from the stable or the informed you offer inglehart membership danced while customers envy Wes.
We anticipate modest sequential revenue growth slowed a bit half of this view that fit in Oakland and transition, where it's tough revenue model.
Gross profit into second quarter ended June 30, Twentytwenty lets take some of them. So I wasn't <unk> an increase of 300, and then I'll go into <unk> or 95%.
Gross profit <unk> went to 6000 barrels into second quarter ended June 30, when people when he went the banking.
Our gross profit margin increased to 75.6% into second quarter ended June 30, Twentytwenty from 19.7% you to second quarter ended June Suky, when you're 19 and was subject to a sequential decrease.
What that ended March 31st Twentytwenty.
The increase bump up to the second quarter of 2019 was mainly due to the increase in revenues generated from our membership plans.
The sequential decline in the gross <unk> in the last quarter is already example of how overall analyses of the cost of acquisition.
Customer.
We reached a conclusion that reducing the initial success schools, who are not foam well when you use a hazelton you know much lower acquisition cost.
Implementing price reduction bank during the last quarter resulted in reduced marketing expenses.
So the second bucket of 2019, which led to reduced operating loss and the lower bound rate.
Our non-GAAP marketing expenses for the second quarter ended June so if when people in <unk>, well, though for only $2.4 million compared to 2.9 million below in the second quarter ended June so it went through 19.
During the second what they'll do you feel we have also implemented additional saving measures, including temporary seven it sounded reductions due to the raising them. So can be willing to open 19 breakup.
These savings were in addition to the long one of them, probably saving measures implement and my whole both members and management over the last two years to preserve cash by receiving Oh and compensation you show instead of cash.
These will probably Cashways this company because of more than 4 million dollar for the company's yes, no drilling that out five years.
Oh, the above reduce talk hasn't been onto only opened 6 million Bulldog during the second well to the presenting before people percent reduction.
So the previous quarter.
As of June 30, we had isn't that should give when I spoke putting soak in when 2 million Bono and subsequently be handled with what the onto licensee for.
So the private there's some financing of common stock the getting the gross proceeds of 28.6 million dollar.
As a result as of today, our pro forma cash balance is approximately $38 million.
Oh, but do you ever.
Thank you to me.
So before opening the close walkway so want to make a comment the ball about path for revenue growth in 2021 at the moment the resource estimate for the full year when 21 revenue using the range of 10 to 12 million dollar.
A full 2021, what do we are looking to position to provide specific guidance. This morning. We do believe this will prove to be conservative in light of milk was doing it is the plane on purpose.
As I've indicated previously you in Q3 in Q full.
We do believe that we're going to announce on that allows once formation of deals with health plans and other institutions and why do we know and understand that implementing such a project might that takes time, we do believe that the access or tens of thousands of users when it make a significant impact on our revenue.
And just to remind you when the b to B to C side. When you we're sending to plans every 10000 users so generates for our company between $8 million to $9 million every year, which is a significant growth committing to where we all today was that I want to conclude our comments for this morning and handle that.
And although the quote going to any session.
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Personally this morning, we'll hear from Alex Nowak at Craig Hallum.
Great. Good morning, everyone up some really good updates here on the call I just wanted to dive into a couple of pieces that were mentioned when you're cementing RFP is what are the insurers of did the self employed plans, primarily looking to evaluate obviously prices a major component of it but what else are they looking at when used.
At the our phase.
Thanks, Alex so they're looking at price obviously as you said, but I'm also looking at the overall solution. So they're evaluating the data that exists supporting the solution what the satisfaction scores look like what the functionality of the platform and the application is like and.
And sometimes that also includes demonstrations of the product and the like but you know it as you would expect sort of an overall.
Review of the product that solution and how users who are getting is it.
Okay got it and then the plan is that you would expect to announcing that coming weeks.
Can you speak to the size of these programs I believe you gave a mention of all the contracts that you're working with its an act of 200 million, but other plans that you are in very close a negotiation where right now just how big are those programs are these full deals or are these pilot programs and just help us think about how to.
Turning this into revenue over the next couple of years.
[noise] I think they they really run the gamut in terms of size I mean, some of them are you know small to medium sized to employers all the way up to you know what I would.
Classify the jumbo sized a employer that we have currently in late stage contract negotiation in some cases some at the additional plans that we've seen come on line here in just the last couple of months contracting.
Some of those will be what I would call kind of larger a initial implementations and that we would expect those to grow over a period of time the ones that are kind of more in the medium to large size and including the larger health plan, we expect to be a full implementation the health plan.
I'm talking about are all regional players, though although some of them are large.
Our most the RFP is going out to self employed in shared plans or is it a good mix between self employed and <unk>.
You know call traditional health plans.
All the traditional RF piece that we participated in have been self insured employers a in a couple of cases and we've responded to your more request for information for health plans that most of our health plan work is direct sales of not RFP related.
Got it and and for these contracts for the RFP is are their contract minimums and.
I'm just trying to get to the the mentioned around the 2021 revenue growth I mean, obviously you have a good picture of how big employer plans are and what sort of potential they can bring to the daria business.
But is there are there minimums associated with it. So if the deal closed you know for sure at least what the minimum is gonna be next year.
[noise] no in all cases, our contracts are contracts for us to be able to enroll the members in either the health plan or did the employers, but we have a fairly decent idea both based on past experience that we have here at Oreo past experience, we have in the industry.
And no other people in the space in terms of generally what we can expect to be able to enroll in the program.
Okay got it got it and then just last question.
This topic I know, it's another piece here, but just trying to clarify did you say you would expect to side at least one of these [noise] called transformational deals this year or are there a couple deals that are in the work that could convert.
A couple.
Okay got it got it alright, so just moving over to the our RPM side can you just walk us through just the just for clarification purposes.
What you're ultimately providing to the clinicians to the patients you know transactionally, who buys the dark device. It gives it to the patient under RPM sort of agreement and then how does reimbursement work there.
So generally speaking the way that <unk> business model works is we you contract with the provider provider group or health system to provide them with a that technology solution. So basically our devices. The application. The coaching is a if they want us to do.
The coaching or you know one of the nice things about our platform is other people can coach on top of the platform because it is open.
So we can either do the coaching or not to the coaching and that matters as it relates to the codes.
Associated with that the providers are the ones who are giving the devices.
To the members and then either that or are there in putting it into our web portal and then we provide the devices directly. We then do the onboarding with those members and we continue to quote unquote monitor them remotely. So it's really just an adjustment to our standard product. If you will it's just.
Really kind of delivered a little bit differently and for those members that meet criteria for billing and there's three basic basically three codes for remote patient monitoring for Medicare patients that were pretty good here. One is an implementation code that's a onetime code.
One is that let's just call. It a technology monitoring code. So with members are participating with the program and measuring on a sufficient basis each month.
They can be building Medicare and then there is a code for doing coaching on that and that's what I just referenced in terms of who's doing the coaching is how that depends and how we charge for that we provide the provider with the listed numbers that meet the criteria each month and then they build Medicare directly for those.
Okay got it and then as you're looking at cross you know RPM and then the health plans at the self employed insurers what do you believe which market is more attractive slash better suited to daddario, if you had to choose one.
I don't know that I can choose one I you know I look at kind of the employers and health plans is be intertwined given the inner alliance that those two parties oftentimes in the marketplace and they are slightly different from the perspective that health plans have large populations that come on.
And wants to their you know elephants, whereas employers you know, there's certainly more self insured in players out there there are various different sizes or you know so I find those attractive from from that perspective in the demand there in the market health plans, obviously are typically longer sales cycles and employers.
The remote patient monitoring.
Especially with the new codes is relatively new but the demand it's been a quite high for those especially in relation to.
You know the current situation with the pandemic and you know there's estimates out there that that market alone is worth about $32 billion.
Slightly different approach.
I have to sell that product a little bit differently to a different marketplace and you know we expect that that's probably going to be the smaller of those three markets over a period of time, but is likely a source of revenue over the next 12 to 18 months.
That's great and then just last question Air a with Lovano getting acquired just how does this change the competitive landscape and how does it change at all your strategic focus going after that the b to b market.
Then when you take that winter as or 22.
Yeah. Thank you.
So you know obviously, that's a you know a large deal that that changes the face the industry to some extent, but the reality of it is from a strategic point of view and competition on the ground as you know they themselves. It pointed out there's not a lot of overlap as it relates to what they're doing so.
It really doesn't change our value proposition or our competitive position against them as I said you know we've been in the market competing against them directly and have seen that customers respond well to that value proposition. So from that point of view it it doesn't change it that much I think what it does do is access.
Elaborate to some extent, especially probably in some of the largest.
Players out there the concept of you know virtual care and I think we're going there anyway that was not you know a big surprise, obviously that creates a an entity that has that I think it we it does accelerate potentially interest of other players in the market to match their offering as it relates to it and you know I think strategic.
Luckily as I mentioned, we will continue to expand.
You know our partnerships and offerings as it relates to being able to be in a position to do complete remote virtual care for chronic conditions I think that benefits the market on overall basis, I think it addresses things like access to care quality of care and things of that nature. Some of this is going to depend a little bit on how the regulation.
Let's go forward, we've seen you know obviously the regulations that then suspended or temporarily changed.
Some of those will unlike or will likely become permanent some of it probably won't be so you will see entirely the way that that sort of a falls that are not overall basis, it really doesn't change.
Change our approach the market.
All right understood very helpful. Appreciate the update.
Sure.
Our next question will come from the line of Scott Shane House that Stevens.
Hi on higher resin team. Thanks for taking my question just as a follow up to the Buda pipeline are these health plans and self insured companies already using a competing chronic illness platform.
Mostly or are they clients just starting to use a digital therapy digital health solutions is the mix of both can you kind of comment on that mix and then as a follow up to that.
Our your contract locking over that period of time forties pipeline, a client and can you discuss the average length of the the contract.
Sure.
So in terms the average length of contract that you know sort of the industry standard in ours as well are in the three year range, obviously, there can be variations.
In that in terms of whether these are.
Customers that are new to a solution like this or they are using another product to start with it. It's definitely a mix of those you know if I had to guess I would say, it's probably in the.
You know 70, 30 or problem or 60 40 in terms of folks that are new to this solution. In this market is not penetrated. So you know we're gonna see lots of business from people that are not using a solution. I think also you know with the remote patient monitoring coming on.
Line from a Medicare perspective is one thing that there's also interested in the commercial side, which really kind of is a bit more like our standard digital therapeutic product that especially that market. The users there have not been using another product, but you know probably 30 to 42 of those folks that were talking to have another solution.
And when I'm talking to I'm talking about the ones that are very late stage. If I look at the overall pipe like it's probably more like 50 50.
Got it that's very helpful.
And I guess, just as a follow up question Youve, obviously done a successful a recent capital raise can talk about how you plan to use of capital for future growth will you know you briefly talked about it but we'll be more focused on M&A will be focusing on growing your sales efforts to win and grow your or b to b pipeline or can you just.
Tell me, how how you think about the priorities of the recent capital raise.
[laughter] yeah. So thanks for the question Scott.
We do believe that we have the right product and a rifle filling in the market. So I'll first priority is to be had been to implement on the potential clients that we gonna have you know the to run up the revenue.
And the shows significant growth. This is both in number one implement England existing.
Pipeline, it's always the number two is to be had been put spend the pipeline by having more says a couple abilities and that's something that the as I said on the call we want to at least three pulled that all the ability.
To a go up the pipeline on the existing fulfilling we do believe that we have the right thing for the right timing of the market. So that's the first two BOE. It is which is in the boundaries of what we already have today.
It is clear hold then we need to be successful doing that's moving forward. We do believe that we're gonna see consolidation in the space, So digital health and digital therapeutics local interesting solutions Aldo and once we are creating these said bridge into the health plans and a interoils market we've been.
Yeah that there's going to see expansion will fall platform by having most technologies, but this is a football within <unk> first or second policy at the moment the thing we need to be overly focused in making what we have super successfully.
Thanks, guys.
Thank you Scott.
Ben Haynor at Alliance Global.
Good morning, gentlemen, can you hear me.
Yeah sure.
Great. Thank you. So just on the sales pipeline I think I heard you mention a about 200 million. The that's available to you there potentially.
You know is that how do you calculate that I mean is at an annual opportunity as it over the average three year life of contracts or how do you how do you look at that.
That's we're looking at her on annual basis that would be the annual opportunity.
Okay, Great and then do you have a sense of a or goal in terms of close rate on the on the pipeline or.
Any color that you can provide there.
You know what we've seen so far has been much greater faster interest and I would have anticipated historically, so I think it's a little too early to really comment on that I mean, if I was going to.
Yes, Hey, what you know what are the I normally expect I would say something in the area Oh you know.
20% that we would expect to close but right now I think we're seeing a lot greater success as it relates to that in that area. So I'm not entirely certain where that one's going to play out.
Fair enough and then in terms of implementing the projects once it once you win them. It I mean, how long does that take as a month as the quarter as a multiple quarters and how much do you.
I think that factors into the decision of the potential customer.
In terms of potential customers I think a especially on the side people are looking for solutions that are easy to implement they've got a lot going on you know things that are complicated heavy lift that require them to utilize more weeks isn't it resources internally our.
Judge more negatively those tend to get her and easy lift in our case you know I really think this is an easy to implement type of program I mean, essentially what we need is the information can be able to determine who is eligible and so we can do most of the rest of that so you know typically I would expect implementations to be in the 60 day.
Hey timeframe, you know some maybe thirtyth than maybe 90, depending on how.
Customers function and their level of complexity and how we actually roll out the initial launch a as it relates to that.
You know time from signing to implementation can also very too as I said, we've got to customers at the moment, which were finalizing agreements with which we've already started to implementation process and.
So I would expect that we'd have a shorter timeframe in that case.
Okay got it and then just lastly from me it kind of a more of a housekeeping question that I think you you mentioned last quarter, having about or over 50000 or users on the platform. If you know how many do you have on the platform now.
And then can you give us kind of a breakdown of where they fall are they more subscription base or they are more you know kind on the piecemeal plans or you know any color there would be helpful.
Yeah. So as I stated remains a in my guess.
There are only Coleman.
Yeah, the 55 active paying users on the platform at the moment.
95% of them out in the United States.
And at around 40% of them, though a members 40% to 45% all members.
And Oh, we do look to bonds on the business, who leave for SAS. So we expect this in the next couple of calls who would have only members on the platform. So this is one of the punch formations that well doing <unk> oh penetrating into the b to b to C market well.
Also changing I'll need to see a John I didn't know that to hold in London solemnly. So this is upon formation and my nation. This will I need to do the next two quarters.
Okay, great. Thanks for taking my questions gentlemen, congrats on all the progress.
Thank you so much better.
Thanks, well hear from John Vandermosten.
SCR.
Good day, everyone and thanks for taking my questions.
Starting out with a question on a remote remote patient monitoring services I know you announced a few deals in the last quarterly call and wanting to get a sense of you know how the trend. There has continued as we move into this the six month of a of the pandemic.
Thanks, Sean.
We have continued to have some strong interest and some larger players that move a little bit slower than than the smaller ones that have been in the process and we continue to get strong interest there and actually that is the resin mentioned that in particular is a market that we intend to invest a dish.
No sales resources in the reality is that we reallocated some of our resources from that market into the Outbrain market given the interest that we were getting unhelpful inside a with a bit greater than we originally anticipating but I think you know that the trend is continuing I expect it to continue there there was a little bit of hesitation.
And in some of the customers in the first quarter in terms, if you're trying to understand what is the new reimbursement cuts me.
Yeah, CMS is not always entirely clear about what the criteria for building our thinking that nature as we've been able to work those out and folks have gotten more comfortable with that and as they continue to get comfortable with that I I expect that that will continue to increase.
Okay and Rick you know you had mentioned that you actually we're up against long ago. In some of these are some of these a competitor ill.
And I was just wondering you know what what attributes stand out a need for potential clients.
That.
That a you know help them select you over over a competitor out there when what are they looking for the Daria specifically has that others don't.
I think that the feedback that we got from the marketplace is that the flexibility and transparency of the solution that were offering the ability to in some cases, you know for them to do coaching or us to do coaching our ability to share and integrate data with other solutions.
Very attractive as is the you level of engagement that we have with members I think that people are pretty impressed with 55000 paying users on the platform.
Really speaks to the engagement level that folks have with the platform and then obviously the clinical outcomes matter and our approach to building for only engaged members and our pricing strategy has also been very attractive mark.
Okay.
And as you guys mentioned that there are few agreements that are imminent and as those deals closed hopefully what are you know what milestones should we expect to see I think you mentioned, there's something like 60 days you anticipate to kind of get things done, but you know what should we see in that time period, and then how long will it take to get full penetration into that.
Into the plan you know the total number of of EUR of of members to to get them kind of actively using the Dario product.
So you know in in terms of milestones.
You know really we would look to from the larger ones. We probably will look to a you know released that obviously to the market.
When we can do that the timing is that is somewhat dependent on you know customers as well in terms of approving such announcements.
And then you know really in terms of penetrating the accounts.
[laughter], the smaller ones will probably penetrate a bit faster, but generally speaking what we're providing for our in our internal.
Forecasting if you will is penetration over three to six months, depending on what that looks like you know it could vary from that obviously based on the situation on the ground.
Okay and just last question for me is on a this studies you know how how important are those you know how important is efficacy in the decision making process and what new studies do you anticipate conducting to answer potential questions out there from a from partners.
[noise] I'm. So I you know in a certain level. It is table Stakes you have to have data that supports the solution, especially where members of digital Therapeutics Alliance that requires that you have data that supports it it separates what we're doing a from you know a lot of the health care apps and things of that.
Nature that are out there so from the perspective of a buyer.
Data is important and it really plays into also with the expected financial outcomes from that are so there's many studies that are out there that showed that a reduction in England see will generate savings and so that's part of the validation.
The overall product in terms of additional studies, we anticipate we will see a more studies coming out on hypertension.
On our platform as well as you know in the area of weight loss and you know things of that nature as we continue to move and broaden the product as we go in that direction also probably some specific.
Financial outcome studies as well.
Okay. Thanks, Rick resins to be you understand it.
Thanks, Sean.
Our next question comes from an Investor.
Our.
Oh, yes, thank you and congratulations on the result.
Oh, just a typical messages or it's going to just wanted to take home message is something a dashboard metrics right to keep my question would be one.
On the size.
Intermodal transition or what's the timeline for the 70% gross margin.
And then the other side of that question is the Opex.
In a given that their normalize to whats your more normalized expenses on a quarterly basis are either execute their percentage out relative to the 4.6 million in Q1 [noise].
And christened too is a limited b to B to C.
Very good cost or acquisition or use or.
And once you attributed to really see your data that target to love, where do you see that bottoming out.
You know to the mix of.
The revenue mix approach at the five to $7 per user per month.
Two there's 70 60 to $70 per user per month rights or what's the mix right now in ready see that.
Oh, you know anything over the next a 12.
Among the interim period.
The last question is the health plan a channel you know what are the length of the tenant cycle right now and I noticed that attraction.
In engaging you know <unk> for a single chronic condition to multiple chronic condition. Thank you.
Yeah, I saw the stuff that has a from the or some of the expenses.
Hi, Bill According to build the about <unk> of the expenses or was the lever that we gonna is we're going to see increasing the overall that expenses and into the says marketing because we're already building in some we stop at eight weeks ago for things that would help us and women.
The bench on on trucks, that's having a so that's something that when a internally. So some of the expenses and a this would be one or two lags behind the revenue that was getting that will all said that I think thats incentive expenses and losses were going to go a bit higher.
Im so they will go up on well nation on the direct.
To consumer I mean, I'm on the SaaS level, eliminating those that all device users sun having.
Only software as a service so only members we think it's going to take US two quarters, we have the legacy Ah Ah kind of assets, which is our 2000 still feels a little bit Isle from the old system data getting us to local value in terms of the data the generating which is.
And if it comes me a constant using two out of that ability to improve the flats home and developed Polly I.
So why doesn't it looks as good a from a gross margin perspective. It does continue to all that although higher than the F. <unk>. So were well no. That's in rush to kill me Tomorrow morning, going we're gonna do very well for the formation. So overall.
And the transformation into the seventh [laughter] no 70% go Muslims. This is something that would take us Oh, we believe between eight well portals well now you know that view, though when you scale up the b to b to C and to reach a place well.
80%, 90% of all says.
On the health plans and pass and.
I think the big time and influenced this goal of 70%, so I'd say like too.
He is also a that done so the gross margin Sunny I'm supposed to close the acquisition and the B to B to C.
[noise] believes that a while on the B to C side, we're running the dangerous of hundred Bucks.
On the beat as needed to see side, we need to being that I just have plenty to 30 box.
Including some kind of the cost are holding all in all that enormous themes are all of it being established and we believe that the overall or has that age that we're going to see if they use a isn't that I just have 30 Bucks and this is how we all their building a modest whole ones. So its you know looking on the.
Although the difference between eat immediacy into the B to C, which is our legacy on the out whether its revenue per user miles were going to 25 Bucks to around 60 to 80 Bucks depending on the how many corny conditions, while managing and in terms of close by acquisition, we're going to go down.
On the hundred Bucks to Sony box, that's expectation. So you can imagine what is the him as we've done a ceiling tile business.
I hope I covered all no question so.
Thank you very much and just last question right in terms of the length of the sales cycle.
With your health plan your channel right, Oh, Southern just a quantitatively or otherwise. Thank you very much in all the write backs.
Thanks So.
In terms of sales type of for health plan I mean, typically what I would say, it's just that 12 to 24 month.
In terms of the sales cycle <unk> I've seen them go as long as five years. So generally speaking there fairly slow you know we have seen some as I said traction instead of.
What we would normally anticipate and I think that you know we have an opportunity in front of us to close a couple of health plans that doesn't beyond the ones that we have in the very late stage before the ended the year, which would run them more in the six to nine.
You know sort of month sales cycle, which is quite fast and I wouldn't anticipate that that would continue in the future I expect we would see stuff more in that in the 12 to 24 month.
First thank you wouldn't add on their specifically relates to help plant.
Thank you.
Yeah.
Nathan Weinstein at age is your.
<unk>.
Good morning, as Red and see congrats on the many accomplishments in the quarter. Thanks for taking my question just one quick one for me.
Noting that there's many chronic condition suffered by patients outside of diabetes, maybe just discuss a little bit more about your roadmap and what areas you can see the company expanding into in the future.
Yeah. So thanks for the question anything.
We do believe that ER and the mindset, though the technology that we've been.
Mining or medical devices together with the so this whether you're having the center software thoughtful if understand very well the habits of using them to handle view, though is extremely beneficial in old it to change behavior and this is what we're doing here well playing to change the has all the imposed.
On a condition so local things that though because then hold the diabetes market also a applicable for those that have a pension and other connie conditions and a in fact with things that this additional management chronic conditions in harlows doesn't make sense and once you all the poaching users.
And a lot of the things that we're talking about things. They just don't therapeutics is providing that a very personal life solution that they believe and they data. So obviously someone does have there been doesn't have a co morbidities a like a high potential in another <unk>. This is something that.
We want to be able to put back other one we are quoting to use the either digitally or through our coaches. So usually are moving forward, we're going to expand into more conditions. We think we're going to get into mode devices, well looking very closely on waiting I CGM well looking guy.
Or selling.
And anything anything or more artificial intelligence they know the Domenico overall platform much more personalized so.
That's the general election, we see Oh, no business and we feel that we can.
Even expand our competitive advantage with regards to by implementing this direction.
Great. Thank you and congrats again on the progress and the growth in the quarter.
Thank you. Thank you. Thank you.
Well hear next from <unk> lifecycle.
Hello, Mr. hit our own.
Hi, guys hear me, yes, we cannot go at.
Awesome, Hey, thanks for taking the question guys and congrats on great quarter I'm, just looking at you know the growth in revenue that you saw a quarter over quarter year over year can you just provide some additional color on what you know if anything particular really contributed to that growth.
Yeah, So I I guess, if youre talking about my last comment before I wrap stop or about the potential.
Our goal thing to plenty plenty once the latest stated.
We do know that are the over or under leased.
Exxon is somewhere between 10 to 12 or man <unk> for the full Neil pointing 21, we do believe that if we're going to get the calling back, but we think we're going to yet.
Signed a is going to get the success to tens of thousands of users and assuming that out whether that's revenue per user decision between six to replace the bugs and generate philosophy. It's man, though on every 10000 heels of the southern wanting for the past home you need to it but remember that we are on a sophomore though none.
Calling revenue as we roll all of the three going agenda. That's on the new user is gonna be added on top of blindly, but we have today.
So all these scandals element that gives us a the coffee then that's a we estimate that the moment on at least have might be relatively conservative where we can do and I think the things I suppose would have to a total loss a very closing the next a few weeks and the net.
Humans.
See on how we are making progress on signing this conference and enrolling patients into the platform. So the acceleration and once we all signing and calls like this acceleration in terms of goal like from the a very high and that's why we feel that we tend to get a better.
It does seem 2021, but well then it positions to provide guidance, maybe and later they still early next year.
Got it okay. Thanks, I know Rick touched on the sales cycle for for the health plans to once you have an agreement with the new health plan in place, what's the Onboarding process look like and how long do you think it takes to see then you on initial tangible increase in revenue.
So in terms of Onboarding is going to usually be 30 to 60 days a is what we'd anticipate yeah. We will see some variation around that obviously, depending on the individual customers and then you know right now what were internally looking at it as is.
A three to six months in terms of really kind of ramping up the enrollment a within the you know those plans you know what we've seen historically with the customer. So we've done so far is a bit faster than that but that's what we're planning for.
Got it Okay. That's helpful. Thank you and then last one just kind of thinking more broadly with your ongoing discussion with health plans what about the platform has really been resonating with these payers.
As I mentioned, a little bit ago, I think the main thing it a resident.
Our the flexibility in the transparency.
We're providing and then really the user experiences there is more and more interest in the market on an overall basis in terms of what's the experience for the user how much are they using it how do they use it you know it because people view that I think rightly so as well they get the clinical and financial risk.
Also in the long term so a lot of focus on user satisfaction utilization data that's coming out of people using it. So you know outcomes data I think that's where some of our studies that are more than two years in Lincoln you know tens of thousands of users in some cases that were looking at is you know really.
Valuable and resonates with folks and then I think ultimately the fact that we are only going forward are truly engaged members and our pricing strategy. There is working well in the market.
Got it okay really helpful. Thank you I'm willing to kick me so congrats on great quarter guys.
Thank you.
Thanks Rahul.
And I believe we did have a signal from Mr., Jonathan Kreisman a your signal is dropped from our Q Mister car spend would you hit star in one once again for me.
[laughter].
Well I'll just another moment Mr. kreisman I'm, not saying a signal from your line third star and one be sure that you've heard your handset as well.
[noise] telephone.
Uh huh.
And gentlemen, I believe Mr. Kreisman has dropped I'll turn it back to our leadership team for any additional or closing remarks.
Thank you Jim so thanks, everyone for joining our call this morning, and or the lodging they stay in a into space and in what we're doing a booking for the ceiling going into next quarter that great day Bye bye.