Q2 2021 Accolade Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the Accolade second quarter 2021 earnings results conference call at this time. All participants are in a listen-only mode off the speaker presentation. There will be a question-and-answer session. Ask a question during the session. You will need the press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press * 0. I would not like to have the confidence to your speaker today and please go ahead sir.

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This is Todd Freeman. I joined Accolade last week to lead investor relations. I'm looking forward to meeting you in the weeks to come with me on the call today or a chief executive officer Rajiv Singh and our Chief Financial Officer Steve Burns Pub or chief medical officer will join for the question manager portion of the call before from the call over to my Jeep. Please note that we will be discussing certain non-gaap Financial measures that we believe are important in evaluating accolades a performance details in a relationship between these non-gaap measures to the most comparable gaap measures and reconciliations thereof can be found in the press release that is posted on our website. Also, please note that certain statements made during this call will be forward-looking statements as defined by the private Securities litigation Reform Act of 1995. Such forward-looking statements are subject to risks uncertainties and other factors that could cause the actual results for accolades differ materially from those expressed or implied in this call. For additional information. Please refer to our cautionary statement and our press release and our filings with the SEC all of which are available on our website with that Alex return the call over to our CEO.

Thank you Todd. Hi everyone. And thank you for joining us to discuss the results of our second quarter for fiscal year 2021 or excited to report another positive quarter of strong momentum across a number of core areas of the business. We will get into that detail shortly our fiscal year started in March at the outside of the pandemic hitting the country since then our service is not going to be even more critical to our customers and Prospects and we've released a number of new capabilities associated with helping our customers manage through the pandemic ensure given the nature of what we do our business has thrived during the pandemic in many ways. Even the strength of our results in sales momentum. We are raising our full-year guidance.

I'll turn the call over to Steve to provide more color on the financial results and guidance and then I'll return to talk about the business Steve. Thanks Raj. I'm pleased to report on a result for a second quarter of fiscal 2021 which ended August 31st and provide an update to our guidance revenue of 36.8 million dollars and adjusted ebitda loss of $8,000 for the second quarter of fiscal 2021. We're both ahead of our previous guidance reflecting strong growth across all segments of our business on the strength of these results and continued momentum with new customer bookings. We are raising our full-year Revenue guidance for fiscal 2021 by 1 million dollars, which I'll discuss at the end of my remarks.

I'll spend the next few minutes covering the highlights from the financial statements included in our press release and provide color on a few items.

We generated 36.8 million dollars in Revenue in the second fiscal quarter representing 24% year-over-year growth. This is 1.3 million dollars ahead of the top end of our guidance range riding during our last earnings call Revenue growth was driven primarily by strength and new customer adds and therefore members particularly in the Enterprise and mid-market segments.

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gross margin of 43.3% was roughly flat compared to 43.8% in the prior year. Reflecting Investments made a new customer new customer launches, including the defense health agency contract which launched in May

adjusted operating expenses improved to 67% of revenues in Q2 of fiscal 2021 versus 76% of revenues in the prior year.

This Improvement reflects two key factors. The first is is the scale efficiencies. We are realizing as we grow our business. The second is more specific to the current environment as wage carefully managed to spend given the uncertainties surrounding the Cove it environment. I'll revisit this point about spend during my guidance remarks adjusted ebitda loss in the second quarter of fiscal 2021 with 8.7 million dollars, which compares favorably to nine point six million dollars in the prior-year second fiscal quarter and was nearly four million dollars better than the top of guidance.

The outperformance and adjusted ebitda is primarily attributable higher adjusted gross profit in addition to the prudent management of spend and operating expenses during the COVID-19 demek.

Turning to the balance sheet cash and cash equivalents at the end of fiscal Q2 totaled 222.1 million with no debt outstanding our cash balance reflect two hundred thirty. One point two million dollars of net proceeds from our initial public offering completed in July net of fees and offering expenses and the paid out of all outstanding debt during a quarter of posts our IPO.

One item that I'll spend a minute discussing is our accounts receivable balance at the end of fiscal Q2, which increased by approximately 7.7 million dollars over the balance at the end of fiscal q1.

Since COVID-19. Both of our Airline customers asked if we would work with them to help them manage their cash needs during the pandemic we were happy to do so and to provide a payment schedule that met their name out of good partnership and in one case this allowed us to extend the underlying customer contracts. I'll note that the payment schedules are designed to keep cash receipts from these customers unchanged within our school year and both customers are current on their schedule payments.

Finally we had approximately 49.3 million shares of common stock outstanding as of August 31st.

Now turning to guidance for the fiscal third-quarter ending November 30th, 2020. We expect Revenue in the range of 36 to $37 representing 23% growth over the prior year at the midpoint and adjusted ebitda lost and the range of 12 to $14.

The full year ending February 28th, 2021. We expect Revenue in the range of $159 to $162 million dollars of 1 million dollar increase for the range previously provided representing 20% growth over the prior year at the midpoint and adjusted ebitda lost in the range of 30 to 236 million dollars unchanged from previous guidance.

I'd like to

Provide two quick comments about the full-year forecast. Our team has continued to execute very well during the pandemic and demand for our offerings remain strong fiscal year-to-date customer and bookings are positive across the variety of Industries and product offerings, which will cover in more depth. We are raising our full-year Revenue guidance to reflect the outperformance this quarter off while still maintaining conservative approach to Arco between Reserve as a reminder this Reserve accounts for potential employment-related impact due to covet particularly relating the recent announcements from our Airline customers about expected reductions to their employee headcount absent further government assistance.

Let me expound on that a bit because we appreciate that. There are significant focus on the airline's with respect to our Revenue guidance.

Our Revenue guidance fully considers the airlines guidance for their planned Workforce reductions. If an additional federal assistance program for the airlines is amount that could have a positive impact on North Avenue, but I would caution that we would need to spend time understanding any such bail out and our customers plans.

At the same time as mentioned earlier in my remarks. We have carefully managed spend given the uncertainty surrounding covet as a result of operating expenses in the second fiscal quarter. We're lower than our guy named as we ran hiring later than planned this approach contributed to the outperformance and adjusted ebitda in the second quarter. We expect to catch up on that spend in the second half of the fiscal year the same except the adjusted ebitda in line with prior guidance.

A guidance for fiscal 2021 reflects year-over-year Revenue growth of about 21% over the long term. We expect a faster growth rate than our current fiscal year given the demand we see for our offer and the value we create for members and customers which drives customer acquisition and retention as well as opportunities to grow the business across multiple vectors. I'd like to reiterate that we expect to achieve a top-line growth rate of 25% or more on an annual basis for the foreseeable future Beyond fiscal 2021 with that on that alternate back over to Raji.

Thank you Steve in detail. And I mentioned earlier in the call. Our business has performed well through through a difficult economic and Health Care crisis in the country. We believe the dream is the best form. It's part clear first. All our core Services have a fundamental value proposition of helping consumers whom we refer to as our members make better Healthcare decisions home, and I'm like today our services could not be more Idol.

Fiscal Q2 our momentum for new customer acquisition continued. We saw a new customer acquisition in every core segments strategic Enterprise and middle-market wage. I highlight a couple of those wins for you here in the Strategic account space Board of Regents for the University system of Georgia made the decision to deploy Accolade Total Health and benefits wage currently overseas 26 colleges and universities in Georgia. USD was looking for a new solution for their members that would deliver improved Health Care outcomes through provider quality steerage an office space Services after performing a thorough analysis of the market. They chose Hackle a total health and benefits.

In the Enterprise segment the city of Fort Worth joins our family.

We have customers as the second major municipality after the city of Seattle.

Additionally we continuously Traction in our Market segment defined as companies with between five hundred and five thousand employees across the country that traction is fueled by the relationship developing with the broker Community across the country as well as the continued success of our joint offering with Humana called Humanity impact with accolades.

Further we're pleased to report that Humana has also become an Accolade customer this quarter for its own employees. We expect to rollout are offering to Humana employees and their families in calendar 2020 wage has the outline last quarter. We saw wins it every Major Market segment and across each of our product lines in fiscal Q2.

Second our Innovations platform allows us to flex our capabilities to the needs of the market in a way that makes us unique in our industry in fiscal q1. The release of academic COVID-19 here in May was a direct response to the needs of customers and Prospects. It essential industry that needed to get their employees back to work safely in fiscal Q2. We added a customer feedback offering we expect to see demand for that service continue through the remainder of the year and into next year.

In September, we demonstrated this capacity for Innovation again with the release of Mental Health Integrated care with ginger offering is a response to a significant need for our club. Is there an employee's only made more significant by the impact of the pandemic on challenges like depression and anxiety. Our integration with ginger allows us to leverage our strong engagement levels and our private area data set to identify high-risk populations wrestling with both physical and mental health challenges and offer them the care that they need when they need it.

We're over the care of these members. Then the seat is deeply integrated and holistic. The collective actually Ginger care team stays on the same page and coordinate a comprehensive Suite of services off of a primary care BJP and brick-and-mortar options when needed

With Mental Health Integrated care, we're bringing collaborative care a model supported by Decades of research to the employer space for the first time.

The clinical and economic case for our solution is clear people with chronic physical illnesses are twice as likely to suffer from anxiety or depression as they're physically healthy peers and for certain medical conditions, the rate is even higher Studies have estimated it can cost three times as much to treat the physical health of a patient with underlying behavioral health issues than it does does to treat the same vehicle health issues can a patient without a behavioral health disorder?

Integrated Coordinated Care is the answer our first customer this offering Temple University Health Systems will launch in the next few weeks. And we look forward to this solution being available more of our members in the quarters to come especially in this time of such pronounce needs.

Platforms ability to flex to the varying needs of the changing Healthcare landscape is unique and valuable to our customers in early October. We announced a partnership with pixel by LabCorp to bring at home collection to actually the numbers in their families.

Building on our Accolade care solution this partnership allows us to provide at home test collection kids to support employers and their teams through the next phase of this pandemic walk through this partnership. We're now able to offer the convenience of that Hotel Collection instead of having to take a test in a lab or doctor's office or traveling to another testing location. The added bonus is that home test collection can be more cost-effective for the employer than on-site testing.

Finally periodically, we will highlight new capabilities that we are delivering to our customers that demonstrate our continued commitment to Innovation. You may recall that a little over a year ago. We had a company called MD Insider in that acquisition. We gained a differentiated data set that has allowed us to bring data-driven quality insights to Bear when connecting our members with providers office, which we refer to as intelligent provider matching in early October. We announced an exclusive partnership with the global appropriateness measures group a group of experts who have developed a set of appropriate care measures to identify practice patterns across Medical Specialties to improve health outcomes and reduce costs. We will use these appropriateness measures to augment our intelligent provider matching capabilities.

All the benefits of getting members to high-quality doctors are likely intuitive. I do think a real example can be helpful to demonstrate how this service becomes relevant to our members and ultimately benefit package.

Recently a member who is newly diagnosed with endometrial cancer message asking for help finding an ecologist to diagnose a month prior, but hadn't been able to find and schedule with a quality provider.

No, she did not trust the blonde. Her primary care doctor had originally referred her to

Broccoli nurse ran a search and so many specials in the area weren't accepting new patients. The nurse was able to identify high-quality in network provider close to the members home.

Diligently on the members we have to iron out coverage and scheduling issues engaging directly with the cancer center and educating the intake person on the members Network status page. So it's hitting and sharing between the members primary care doctor and the cancer center. This this is actually nerves actually found the member a new PCP because the member was not pleased with original care and Cancer Center was required a PCP visit and pre-appointment blood work.

Of course the Accolade team also knew that a strong relationship with a trusted primary care provider would be critical to this members ongoing health and well-being.

It was ultimately seen by the recommended oncologist thanks to the coordinated efforts of our accurate health assistant and nurse 1 months here that she would have otherwise and she's now scheduled for surgery tomorrow. She's been an ongoing contact with you actually team as she prepares for a surgery and we'll of course be here for afterwards to support her through a journey of recovery in there after office number in our thoughts as she gets ready for surgery. Her story is like so many of our members who have been fortunate to be able to help in their Healthcare Journey.

Whenever we talk to our own employees about our financial results and the momentum across our business. We always relate our success to the real challenges faced by the people. We serve COVID-19 has created significant challenges in both health care and the economy, but it is also helped us demonstrate that powerful combination of Rich data and human support when it comes to getting a member in this case one facing a daunting diagnosis to the right care as efficiently as possible.

In addition to the appropriateness of care data to our algorithm will enrich our output and better position our front lawn care teams to comprehensively support our members. This is how our commitment to Innovation plays off the thoughtful application of our technology to the pain points that riddle our members characters were Relentless and seeking opportunities to do this and always will be our vision for every person to live their healthiest life Remains the Same and is more important than ever I speak for all the employees of Accolade when I say we feel very fortunate to be in a position to help our members and customers when the need is so pronounced with that operator. We'd like to open the call up for questions.

Thank you. As a reminder to ask a question. You will need to press star one on your telephone to withdraw your question. Press the pound key. Please stand by while we compiled the Canada Ross. Our first question comes from Sean Wieland with Piper Sandler. Line is now open.

Hi, thank good afternoon. So figured I'd start with this the airline contract changes that you talked about. What was the extent? You said extended the underlying contract. Can you give us kind of the nature of that extension and you you refer to some COVID-19 reserves? Where where am I? Where where does that come into the office X?

Why don't I take that one? Good afternoon. So first of all, let me speak to the reserve and then I'll talk to the to the airline contract extension that I I mentioned in the in the remarks. Um, as we talked about in the prior quarter, obviously the impact of prove it and given RPM p.m. Revenue model can have that impact on on our revenues. We are fortunate that we have a very Diversified customer base. And so the airline's really are the area that uh, create some concern down in our book. And so what we've done is we've modeled, uh, essentially a reserve against our revenues for the rest of this fiscal year and frankly going forward based upon the guidance that the young ones had given, uh about their own employment. We've talked about it in the past, you know, that that amounts to somewhere in the range that would take our growth rate up to that normalized wage.

Percent growth rate if you were to factor in our revenues essentially without that Reserve in it.

With respect to the Airlines and the accounts receivable and the contract extension that I mentioned in in the remarks, um, both of the airline's when COVID-19 reached out to us and and we think other important vendors as well and ask for some assistance around their own cash flows. And so we did was we offered to move some of those cash flows, uh out of this summer months into the fall. So we restructured those but only inside of the school twenty one. So we moved from payment out of Summer into the fall and both airlines are current with those appointments. We have received cash from both of them according to the schedule. And then finally, um, the really important part of this I think Sean was that it our partnership with those are like the willingness we showed to work with them during the depths of the prices really rang, uh rang well with those customers from the standpoint that we expanded some of the service rep.

We provided to them that we do provide them online doing basis and one case extended that length of the contract, uh by a year or eighteen months.

Okay, and the increase in receivables is that entirely due to the two airlines are there others other clients that might as well it's the airlines shown as you you'll recall our receivables are typically very low single-digit DSO kind of range because our customers typically pass in advance. So the extension you see this change this quarter which takes the SOS up into the 25 26 days range is attributable to uh to the Airlines and since the August 31st date that you see on there both of those a customers have made payments towards that AR number that you see

All right. Thanks and just one more if I could slide it in is anything any update on on the the rollout of Tricare?

Hey Shawn, this is Ross. It's great to talk to you again. In terms of Tricare. We've we've now ruled out to the population. The the service levels are extremely high. We've got Thursday and satisfaction rates and really strong engagement rates. And so we're continuing it's it's early still shot. And that we we would live in May to report out on the results as it relates to suck the sort of performance measures associated with the population, but we're we're bullish on the early returns and and hopefully strong results.

All right, that's super. Thank you very much.

Thank you. Next question comes from Robert Jones at Goldman Sachs open great. Thanks for the questions. I guess maybe just to to start with guidance, you know wage and the Cadence over the balance of the year, you know looking at four Q. It does look like the implied Revenue growth would be if somewhere in the mid-teens range, which is you know, clearly, you know below where you've been year-to-date and wage you're implying three Q Revenue growth to be so just wanted to see if there was any details you could share around expectations for four Q. Is it related to the savings? Is it related to calendar 20th starts or you know anything else at play that might help explain the the back half Cadence from here would be helpful.

Sure. Hi Bob. This is Steve. What year?

In there, it's a couple of things and in terms of raising guidance. We're raising that on the strength the booking strength that we're seeing year-to-date at Raj spoke about so that's uh the first page what you're seeing in the back half is US pushing forward that code related reserve and and from the second second third and fourth quarter into the third and the fourth quarter off, you know, while we're we're on the topic, you know part of the revenue this quarter the tribute will the fact that our membership continues to remain intact on a net same-store basis through through the second quarter and up through now, so we're fortunate to not have seen any net fall off from COVID-19.

In the customer base, which again is really just primarily in the airline couple of Airlines segment outside of that on a net basis. We've seen some of our customers grow with an offset any member losses in the book.

God is so nothing negative around the ability to achieve savings that it doesn't sound like is is baked into the 40 number. That's right. We've we still have we continue to have visibility around the savings number in the range of what you've seen historically obviously it's been in an odd here in terms of utilization. But from where we sit today, we do not see any real change in our on pgs and and cost-savings great. I guess just maybe one other one if I if I could sneak it in, you know, I know relative to initial guidance. You don't bake in a year starts, you know, you shared uh, you know, some some examples of wins, you've recently had just curious if there were any midi Erwin's that are now factored into guidance, you know, I know you managing and is is a javelin start. But any of the other ones you shared or or wins that you've you've had this year are starting mid-year or is it all is it all mostly gen one starts?

Mostly John one starts, but it probably we have had twins during the year that do have off John John one starts backing up five minute rush spoke about winds across a market segment strategic Enterprise and mid-market. We've also had sales in with our Accolade code response care offering which month. It's a great example up and offering that start can start anytime outside stuff and beginning of the benefits plan. You're so what you're seeing in our uplifting guidance is some of the impacts of you know off cycle starts if you will, but the preponderance of the new ones do do begin on on January one.

Great.

See if I appreciate it.

Thanks for the questions, but

Thank you. Next question comes from Ricky goldwasser with Morgan. Stanley Carolinas are open. Yeah. Hi, good afternoon. So once we bought a question and then under stand alone question, so just thinking about the cost Savings in the fourth quarter. I know that you were saying that you haven't seen anything out of the ordinary but really when we think about health care utilization coming in lower and plan for the year. We're hearing that across-the-board. What do you expect with regards to achieving your costs am not about achieving but exceeding your cost savings and operational Targets in the fourth quarter.

Hi Ricky, it's Steve. You know the way we think about that if you step back and think about how those cost savings Agreements are structured. We are typically saving money for against a healthcare trendline whether it's an industry index or a a growth of a of a particular customer off of a baseline And so our model is designed to do better than the customer would have done without athlete. So whether it's in a lower spend environment, like we saw on the beginning of this year or as it starts to recover and we're in that now as far as utilization goes we would expect in our data is indicating that we would continue to save against what that uh friend would tell us and so um, it looks to be that we will continue to do better than uh than those customers would have done versus Trend which would result in our earning those uh, cost savings based performance guarantees.

And then you know when we think about Ginger it is I think a trusted partner preferred partner. Can you maybe walk us through the the revenue model? How should we think about that and contribution to the Top Line for those deals that you signed with ginger?

I don't think that let me take that start at that and then you can jump in and and jump in at any color sure. It's just great to chat with you again here to think about the way we packaged what we're doing with Mental Health Integrated care from a revenue perspective. It's important to note that we're going to the customer with a collaborative care model. We're we're actually dead targeting segments of the population that might need the service in with with a greater or more significant need and then driving an integrated care solution for them. In fact, what we're doing is actually charging an upcharge to that customer. So they're purchasing Ginger at a at a at a rate that's been pre-negotiated buy a clay and then we're charging jointly wage higher price point to that customer based on the incremental value that we're providing and then also associating ugh incentives or performance guarantees against that against that capability. So that's that's that's how long

Charging for it and I think we'd expect to if you were to look at the price points in the mental health space. We'd expect to be able to check.

Charge in app charge that that could range from twenty to thirty percent of what those charges are at achieve those in the in terms of uh, in terms of our revenue streams. It's early days. We're we're lucky enough to have signed our first customer almost immediately upon delivering the service, uh, and to do some of those kinds of rates and expect us to be able to do something.

So just a follow-up on that one just to to clarify when you try to charge it incremental or higher price point is that for a specific specific Target population was in Decline where you might have a higher p.m. P.m. Or is that across the entire base of employed? We're offering the service their entire base of employees like everything else. We offer them a great that's really helpful. And and just one quick follow-up. I know Steve you talk about the airlines as the Delta between your long-term growth rate of 25% versus actual results. So just to clarify. Is that across the entire year or is it when we think about the fourth quarter fourth-quarter month know the growth is into teens. So the difference between that and 25% will be all our lines. So just the weather it's concentrate in the fourth quarter versus the entire year.

Sure, and let let me clarify a couple of things their first of all, the reserve that we put in place is largely to support the impact from the airline's we also offer we would consider to be a general reserve for item for customers that we don't see having a specific impact yet, but we think it's smart to do that in in the Cove it environment home. So call it a pass. The majority of that Reserve is associated with the Airlines and our point about the 25% growth rate is if you if we were to not have that reserved and plus the annual growth rate. This year would be in the range of 25% or something.

Thank you.

Thank you for choosing thank you. My next question comes from Michael Turney with Bank of America does not open.

Hey, thank you so much for all the color given so far. I want to dive a little bit more into the selling season, you know, you referenced a few priests signature client wins wage and obviously going and pitching the value proposition that you have and and showing what you need to do during COVID-19.

Nothing, like if you were to think about first of all, let me let me start with on a broader context the the market momentum is strong across every Market segment. I know you heard about us already mid-market Enterprise segment of strategic account. Also new accounts closed are closed rates have also been very strong. Meaning are competitive are competitive positioning in each of the core market segments is also been really strong but to directly answer your question to the degree. We see a customer or a prospect evaluate the solution and then not do anything else often times that is often times today really driven by the complexity and the other challenges that they're facing I think in early in the year we have there was a wage assignment of our of our pipeline that said look all we can talk about is David how we're going to deal with covet and how we can deal with the impact on how we're getting health care for our employee wage.

We can't think about age limit that might happen on January 1st. And so it's less about economic value Mike and say those those prospects that chose to Kick the Can down the road. So to speak with I'll be a smaller percentage than have ever done. So in the past did so largely based on the complexity of the code environment and they're uh-huh and there'd be uh to focus entirely on a particular problem which in part led to the delivery of the code response care offering in q1 of the issue.

Thanks Raj. And if I could just ask a bit of an offshoot of of Ricky's question, especially since so many of us in the line are still learning more about your business you're clearly as as noted as the factory weird here for you ization perspective. You gave some commentary around the at-risk saving space Revenue in terms of your visibility into the fourth quarter. How does the rolling impact change in terms of how you would reset the expectations for the end-of-year twenty one? So, I guess before q22 at risk revenue. Is there any dynamic in terms of what you've learned from this year's utilization experience that would change how you would fact that it in for next year's potential targets savings for your customers.

Sure. Hi Mike. This is Steve on that yes, it is. It is a weird year in terms of the utilization. No doubt. It depends customer by customer how those gets that but generally speaking, you know the data from this year will get factored in um, and then either a baseline if if it is in a contract that are based on is getting reset off or a contract is a couple of years in the midst of being you know, in in order we will look at that Baseline, but in effect, I think what we contain to come back to it, whether it's in a high-cost how utilization environment and costs are rising more rapidly or a lower environment like we were in at the beginning of this year what we see is that the same model the the clinical and and type driven model enabling us to drive cost lower than they would otherwise be given our our model and wage.

That's where we get confident in the earnings on the savings. But but no.

No doubt the the data from this year, um will have to get factored in as you know, almost every report is is indicating that next year's, uh cost should go up a fair amount and we think utilization of service will be even more important, uh-uh environment like that to help Mountain job comes in and costs.

Great. Thank Steve. Thank you. Next question comes from jail and dressing please God. I thank you. So just pulling up on my Excursion earlier about selling fees and experience clearly very unique in several ways. Have you guys seen or come across like health insurance companies getting more aggressive compared with last year with respect to ruling out or pushing for their own Employee Engagement or employee navigation Services offering just curious about your thoughts there that off if you have seen any changes in their approach this year versus last year.

I think by and large as we look at as at the competitive landscape, you really think about it by segment and under and in strategic account segments those large accounts. We've traditionally seen carriers with their own Solutions. Uh, we've worked with those very same carriers to implement our own Solutions when we win those accounts and that we continue to see those those carrier Solutions present in competitive evaluations in the in that strategic account space where we continue to do. Well, I think it's it's fair to say, you know also see that a high end of the Enterprise space, uh, but beyond that, um, but in terms of change in the competitive landscape, I'd say none in terms of change in win rate and our performance pack those types of solutions when we're evaluated competitively as if we continue to perform really well and perhaps even strengthened of the last year.

Okay, and then following up on your Ginger integrate partnership on Mental Health side, and I believe you have similar offering with the plush chair on telemedicine side. Are there any other areas or Specialties you are focused on which you are likely to explore for similar integrate often in future.

Is it or I think the way we've we've delivered the Mental Health Integrated care with ginger is a great example of the way. We look at the future as it relates to how we want to deliver a coordinated or collaborative care. Uh-uh. So you'll see us continue to pursue, uh to continue to see what the pursue offerings like that whether those are our own club programs or partnering with third parties to deliver that incremental value often. Now, you actually mentioned plus today are are most significant telemedicine integration. So until it off Thursday, we're we integrated and actually delivered them to a number of different customers and you'll see us continue to you that who enforce well.

Then last Quick clarification on Humana of contract.

Is that total health and benefits and is that being rolled out for all human like forty-five thousand plus employees across the country if that's true. I mean implies roughly like 11:30 million annual revenue. Does that math sound ride or will you push me back on any of that?

Let me let me let me get you on the mat and I'll I'll talk to you about the offering in the population. Yes. It's it's the entire population of the of the page think we're really excited about that and it reflects the success of the partnership and their their continued bullishness as as which mirrors are owned as relates to the value age employing something that we call Humanity impact with Accolade, which is the very same offering that we're all free with Humana to to their customers. And so it's very consistent with the offering that the partnership is taking the market and Steve all that you comment on the on the financials

Sure page Alondra. So you're as I said, yes, it's obviously very exciting to have Humanity. They offering to their own employee base without getting into too long to specifics about the contract itself. It is a total health and benefits offering we've talked about the the pricing for that ranging in the High Teens to low low 20s PE p.m. So you could think of it in that kind of range and you know, I'm trying to I'll leave it there, but we're really excited to have a human on board as a life partner and obviously now as a customer as well.

Call Humana impact with Accolade derivative of total health benefits.

Got it. Okay. Thanks guys.

Thank you. Our next question comes from Brian Daniels with William Blair. Carolina's not open. Yeah, good evening. And thanks for the color and for taking the question guys continue with Humana. That's a great day to point. Obviously that they're now using it for their internal Workforce as well as selling it to ASO accounts and and using it for self-insured. I guess the remaining piece of the puzzle Thursday is Medicare Advantage which the a huge fully insured market for them. Is there any progress there or any potential hurdles that would keep you from, you know, looking at that as a as a market opportunity as well going forward.

Hey, thanks for the question. I'll speak to the broader context of the relationship as today then and then a direct address your question about Medicare Advantage. We are actually taking the product to Market in their ASO book. We've actually also seen some success and they're fully insured with off with I think we announced it last quarter with Hillsborough County Public Schools. And sorry right? I think I've got you the wrong name. So we're seeing success both in their fully insured wage as well as if there is nothing short book and that success obviously led directly to them taking on the the offering inside for their own employees and we expect to continue to pursue new opportunities to get together. We think there's there's a there are a couple of real significant opportunities in front of us amongst them are partnering with them in the Tricare space where we've already got to put in the door. We are Tricare wage.

Island name of course. I have a significant component of that population from a carrier perspective and Medicare Advantage and to answer your question directly know we don't see any any sort of impediments to

Continuing to strengthen the relationship and over time finding a path into the Medicare Advantage space.

Okay, and Sean's much better looking than me. So I view that as how someone or is that in regards to one quick follow-up also on the response rapid response or lack of response care. You know, how should we think about that from a standpoint of selling it to existing customers for return-to-work programs versus getting new customers in in signing up for that month? And the reason I ask is, you know, either way it could potentially create an air pocket, you know, if we look back a year from now, maybe we're in a period where there's a vaccine and and the change been broken with people community whatever it might be and they no longer need that specific product. So maybe it's not big enough to impact growth year-over-year. But is there a plan in place to to make sure that you guys can convert the new club, you know two full-time customers and some of the core products if and when that ends and you know, the revenue from customers that added on to sell them other novel solutions to ensure that growth there on the same Club.

Basis can offset any of that. It's a great question, right? I appreciate you asking it. I think it's uh, if you think about our customer acquisition since we released open response here in May we've seen more than a handful of customers. Come on. Those have come on both as stand-alone athlete company response care customers and as customers who are purchasing the application who are already running one of our other Landing Point offerings. We've also seen importantly customers who purchase code response care to begin their relationship wage also purchase after after some period of time leveraging response care also purchased one of our Landing Point offerings actually total benefits actually Total Care directly to the health benefits. We think one of them one of the fundamental values of the solution actually codes response care is the idea that you get an understanding of what a front-line care team can do for you age.

In a situation of need and to the degree that's a particularly significant need for you right now demonstrating that capacity gives us a good opportunity to convert those customers. It's too early to tell you what the conversion rates going to be Ryan but we are focused on it. So we definitely have an effort on converting those customers who are not on any of our core platforms over to them over time. And you know, I think early returns would indicate that we're going to be pretty good about making that happen.

Thank you for the car. I appreciate it.

Thank you. And Matthew Gilmour your line is all open. Hey, thanks for the question. I wanted to follow up on the selling season, sounds like the momentum continues to be very strong. Can you remind us when the selling season generally concludes for you? All is it you know the next month or so and then you know, I know you don't provide the ACV on a quarterly basis, but on a on a qualitative perspective. Can you just give us some sense for the visibility you have towards whatever your internal targets are.

But first of all, thank you for the question man. I think the the way to think about our attraction from a from a new bookings perspective is Thursday. We're continuing to see traction across each market segment. And so we're that that Traction in each in each quarter that we've delivered we've delivered incremental new customers and took those market segments. And uh, and that the selling season is somewhat different by the market segments that were selling it and so you'll see largely, uh, large strategic account will be making decisions early in the buying cycle. You'll remember method most of our customers in that segment are deploying on January 1st to coincide with their plan year and therefore need time to deploy their solution. So you'll see the first six months maybe extending into nine months. That's the selling season for strategic account. You would see that that season be roughly approximate birth.

Enterprise accounts and you'd see mid-market accounts who can buy any time during the year continue to buy through the fourth Port the calendar for a quarter of the year because the deployment time frames are more compressed wage and because they tend to be less sort of biased towards January 1st appointments. So it's it's sort of a sliding scale associated with selling season a front end of the year being very off towards a strategic account the back end of the year continuing with with um middle market accounts.

Fair in Austin and maybe following up on the airline discussion. I appreciate it makes all the sense in the world to be really conservative here with with the guide. I was curious with the you know with the furloughs that have been announced. Is that more or less in line with what you had been assuming and are are the furloughed employees that you know that have that have already been announced are they keeping their health benefits for now, or are they already rolling off? Just just curious how that has been working.

Hey Matt, this is Steve. So on that point, you know, fortunately we haven't seen really a significant amount of unemployment in the base right now. What what you're hearing from home and particularly, you know, the questions earlier around the Q4 growth rate kind of all gets to this. What we're trying to do is maintain a level of conservatism in the midst of a package that we think is really smart to do while you're hearing from us a really strong underlying poor growth business and you know to come back to your earlier Point while we don't speak to a CV joint in in injure in tray year basis by raising guidance what you're hearing from us is we're we're even ahead of where we would have expected to be when we set that initial guidance. And so we are off setting that reserved. It's primarily it's hitting the fourth quarter disproportionately, which is what's compressing that growth rate. Um, but what we expect is if and when those off

Employment and or furloughs happened at the airlines. We expect there to be some take rate that we've modeled to offset. The pure unemployment that we're used.

Using both from internal models and from guidance. We're getting from those customers around their expectations of of program for those

Got it, that that's helpful. Thank you.

Thanks. Thank you. Our next question comes from Stephanie Davis open.

Thank you for taking my questions. So I figured I jumped on the selling season kind of bandwagon and ask another one on there. He pointed to a number of helping you in the Palm Within These winds. Are you seeing any change in buying activity post kovats as a shift to a different level offering or off-line volume or maybe a greater willingness or figures starts just as a result of pandemic.

Thanks to the question Stephanie. This is Raj. I think as you look at the year and the entirety of the year, we've seen consistency consistently strong demand in each of the quarters. We've we've completed at this point across every Market segment. So so the answer to the first question is is it changed in terms of uh, in terms of demand demand of strength in terms of the customers buying criteria and where we are seeing other customers buying each of the core offerings, I'd say that so that's the tides exactly total benefits Total Care inoculate total cost and benefits of what has changed during the year is the customers some significant Focus around dead covid and the management of COVID-19 as it relates to taking care of their employees that started with a set of clinical programs that we were delivering to our customers or dead.

And talking to our prospects about that that added value to the solution. We currently deliver and then added when we delivered actually the code the response care ugly code response here clearly gave us an offering them deploy within the year and has deployed within the year for those customers particularly those in essential Industries who had to return their employees to work over the last two or three months. I think the accolades will help integrated care offering that we just delivered is another example of something that sort of directly responsive to the needs of the market right now and that we're seeing a Temple University healthsystem a deployment in year of a solution that was uh, impacting a particularly profound need for the customer and so the flexibility of our technology platform and the flexibility of our ability to deliver new offerings based on customers needs is is actually creating opportunities to to the point of your question deploy any year with some of these new-age

That makes sense kind of more of a demand for for near-term solution is just getting the pandemic. Then I have to shake modeling questions for the 1st is what happens your model Airlines do get billed out then get a big reserve a lease or do you keep it on the books until the fully out of the which vehicle did and the second is if you have any update on customer account remember account?

Hi Stephanie, it's Steve. So first on the way will think about the airline's is if there is an additional bail out, there should be some upside to the model, but we'll we'll have to look and see what that bailout looks like and how it impacts those customers can particular but essentially what we would be doing is uh taking taking away that serve and it would it would hit some time after that announcement occurs, but we'll need to analyze it but there should be some upside to it to the model if there and and that would impact potentially. Uh, I'm not sure if if at anytime soon and then secondly with respect the customer account, we will wait to 2 till end of the year is how what we said about customer account ACV and grow solid retention specifically at the end of the year, but hopefully what you've heard today in our remarks is that we've had strong winds across segments wage.

Across offering so last time we spoke about customer account is that the IPO which we said we had UH 60 customers and we've grown significantly since then.

Right, that's helpful. Thank you guys. Please open the government come together.

Thanks, Stephanie. Our next question comes from Hannibal. How do you with d a Davidson open?

Hi, thanks so much for taking the question. I want to touch on customer roll out in this environment. What's the progression of products that you were seeing was commonly a recall Johnson Controls wants with COVID-19 last quarter. Have you could you just take over the response as part of an initial land?

And we absolutely have seen it as one of the ways that customers engaged with us. So I'd say particularly the Middle Market and Enterprise segments of customers who are very focused wage often times have constrain benefits departments and and need to be very focused on one particular item particularly when it's a significant is returning their employees to work safely doing a pandemic wage is a great place for them to start maybe a little bit to the point of Rise question earlier. Once they dig in and land with us on actually code response care customers see the valve that front-line care team that can be that can help them manage through complex Healthcare issues. They see the value of our clinical programs in our capacity to guide people to the right clinical outcome. And that creates a really small launch point for them to move from a collective response care to one of our core platform offerings, and we've already seen that happen a couple of times.

Great. Thank you. And maybe just a follow-up on Ginger. What factors drove this relationship to become an integrated partnership as opposed to a solution in The Trusted supplier program.

Let me let me turn that call over to our Legion that answer over to our chief medical officer Shelton.

Yeah, great. That's that's such an important question. It takes for the opportunity to comment on that. I think, you know part of what we're seeing and I think we're all seeing and feeling on different levels is the demand environment writing it clearly may not to help the crisis in this country right now and it has been a long-standing issue on the other side, you know, we were seeing a proliferation of new virtual care options and those have been really prominent virtual therapy versus Psychiatry a lot more acceptance and adoption from patients. But what really was missing sort of as that market matures is that sort of much more whole person comprehensive orientation, right? We started hearing, you know customers say well, you know, how does virtual care link to in person care what happens? You know, how does this interplay with the investment? That would be made any AP? How does this integrate into physical health and to Primary Care and most critically, you know, will this provide incremental Clinic?

the outcomes and cost-saving

Right, which particular is important in this environment that we're in and so we saw an opportunity to really pursue a deeper type of of integration in Partnership. We're we're bringing our club capabilities to bear with Ginger's plate chemical capabilities to really answer a lot of these core questions create something that crazy incremental value that creates a much more seamless whether that experience is offline or online. That's much more comprehensive so they can manage people that have comorbid say diabetes and depression and that really helps to reach back those numbers who need it though. And so those were a large part of the motivation for why we decided to take a bigger step here.

Thank you. I'm not showing any further questions at this time. I would not like to turn the call back over to do you have seen for closing remarks?

We appreciate all of you making time to spend time with us and dig in with us on our fiscal Q2, and we look forward to catching up with you again next quarter. Thanks very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may not disconnect.

Goodbye.

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