Q3 2020 Eargo, Inc. Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the your goals third quarter 2020 earnings Conference call.
At this time all participants are in listen only mode. After the speakers presentation, there will be a question and answer session as the.
The question during the session you will meet the press star one on your telephone if you require any further assistance. Please press star zero it.
It is now my pleasure to introduce Vice President Investor Relations Nick Laudico.
Good afternoon, everyone welcome to the Ergo, the third quarter 2020 earnings conference call.
The press release on slides to accompany this call are available on our Investor Relations website at IR Dot your girl Dot com.
Please note. We have also provided supplemental historical financial information at the end of the slide deck.
As a reminder of both the slides call and the digital replay will be available on our IR website.
Joining me on today's call are Christian Gorman, President and Chief Executive Officer, and Adam on the Polish Chief Financial Officer.
Christian Adam will provide prepared remarks, and then we'll open the call to Q1 day.
Before we begin I'd like to remind you that some of the matters discussed on this conference call will contain forward looking statements regarding future events as outlined in our slots.
We wish the caution you that such statements are based on managements current expectations and beliefs and forward looking in nature and are subject to risks and uncertainties and actual events or results may differ materially.
The factors that could cause actual results or events to differ materially include but are not limited to factors referenced in our press release today as well as our filings with the FCC.
With that said I will now turn the call over to Christian.
Thank you Nick and good afternoon, everyone. We're incredibly pleased to speak with all of you today on our first earnings call for public company.
Today, I would like to send the special Thank you to our founders early investors employees all families and most importantly on now more than 49000 years, those and the U.S. for convenient AERCO and joining us on our incredible journey.
On a go with dedicated to improving the quality of life for every one of what's going on.
[noise] I also wants the fight on your investors for their support of the IPO were excited to partner with you on our journey.
Since some of you on near to the yard of stores I would like to start by giving you an overview of what the vehicle is all about on slide five.
We believe we're transforming the hearing aid industry.
This is a large well established market significant sales trend from an aging population and the focus on quality of life hearing loss can make it more difficult to work or insight with family and friends needing to feelings of isolation depression and increased stress. According to the study published in Jama here.
On the most has also been things accelerate the talk to the decline. Despite all of this every means a large unmet need driven by the stigma of hearing loss high out of pocket the cost and the comfort from an inconvenient nature of purchasing at the buys true on in person hearings on the.
That's true we address these unmet needs true of revolutionary product that is virtually invisible, but also comfortable and other lower cost to the user we provide all product and clinical support true as unique tell of care model and on.
The bottom efficient awareness to the strategy, which was sold the business that has the day about accelerating revenue growth to over 100 from 35% year over year and strong gross margins.
Moving to slide six here.
During the it's been around close to hundreds of years about many great innovations on products out there, but they have significantly the tensions the vast majority of the high end well over the years styles, but couple of most ranges of hearing loss of more comfortable but they are visible and can't be stigmatizing Bell.
Also more discrete on the less visible solutions, but many are challenged by just come for or true shouldn't off the year canal the.
Average cost of a pair of share in its true in person clinics on average 46, one for dollars had been more 'cause medic and the cost of hearing it's kind of cost up to $10000 low.
Lastly, the all hearing AIDS as defined by the series, including the ago must by law all for trial period, one of the device can be for true.
On slide seven we believe the shipping industry has failed to deliver what country of once from what in order to increase penetration.
The next brought to market have not addressed the major shortfalls for that existed for years disability ease of use come true.
The unions and cost yeah.
Yeah go addresses the short falls by offering have virtually invisible, but also comfortable product that is not of couldn't be so easy to use and get the purchase through our unique tell the care model from the comfort and safety of home.
Visible on its become for some experience of Kuwait swing in person clinic multiple times and waiting weeks to months for you at the box, we can ship and the echo device. The days of provide the free somewhat care clinical support for as long as customers on the device at approximately half the cost opportunities for.
During the day, but it's more than that we deliver a truly exceptional customer experience, which is highly trained staff focused on changing the way people think about solving for Baker in force.
We believe the ago is the first and only the technology, that's been able to solve fitting high quality archaeological capabilities into the device that is virtually invisible non accruing and rechargeable one of the core patent. The design features of that allows for the non accrued income from the the took off of that.
Device called Flexi problems, which allow natural and sounds pass around on through the device just the way of and natural year of wants the side of it.
Resulting audio quality, it's comparable to much larger more expensive devices and you also comes with the convenient charging case, which is simple to use.
In addition, we have built high the train consultants the inside sales force all personal hearing guidance and personalized unlimited clinical support by license Karen professionals. This.
This virtual infrastructure eliminates the need to visit the brick and mortar clinic by combining of revolutionary product with the telecasts of support we have truly transform the experience of getting the hearing.
Slide nine.
With that let me touch on some of the key drivers of our performance during the first quarter by all financial and operational measures. The first quarter of 2020 watts of record breaking most importantly, we continue to help more people here of better by offering both for breadth of generic product.
And consumer experience, we delivered revenue growth of over onto from 35% growth system shifts growth of approximately 92% and other churn accrual rate of approximately 25% down over 10 points year over year.
We deliberately to sign your current business model to generate growth for the lowest cost of acquisition possible for you have achieved that efficiency by diversifying our customer base beyond traditional out of pocket payment into the insurance markets accelerating repeat customer purchase is used.
Thanks sophisticated data analytics to constantly met shine be fine on media deployment on finally, leveraging our media investments to simultaneously for each multiple customer types. The best example of leveraging the media investment isn't the.
National TV advertising, which has been a particular successful media investment generating broad awareness complementing our <unk> efforts, we expand the TV advertising in the first quarter and accelerate of the investment the each quarter. It's when it's one national TV drives yeah go awareness and the.
All of the arms the two primary of waves.
First the increases inbound calls, which our sales consultants typically convert at higher rates second the awareness and credit business of National media complements all of digital marketing efforts by making the more productive the consumer may see our AD on TV go on.
Line and review of digital content, then request the consultation of simply purchase from our website <unk>.
The salt this accelerated volume growth and significant leverage on our sales and marketing spend.
We're very confident in the scale up and then the of TV and have owned the just scratched the surface of awareness generation.
As I mentioned earlier, we deliberately leverage these investments of TV and of the awareness of media the simultaneously for each multiple customer types diversifying our business across cash paid customers insurance customers and the key customers.
Cash paid for our customers pay out of pocket, it's the traditional way the cat had hearing it but not the only way given our product service and cost advantages, we see tremendous opportunities in cash.
Insurance coverage represents a growing segment of the Jewish carrier market year ago has identified and started to rapidly penetrate pockets of consumers, which hearing it insurance benefits that come from most all of the cost the on air cool the.
These consumers may see a national Yeah go at that educates them on the possibility of the hearing it benefit and call losses of Cotwo website. The cost we distribute direct to end user we spun off on national claims processing and make it easy just give us your insurance number and redo the progress.
Overall, we estimate of approximately 12 men consumers and the U.S. over 50, who have both hearing loss and access to hearing it benefits on the certain health insurance line.
Repeat customers represent an attractive long term growth opportunity for your cash.
Once in need of hearing it didn't need it for the lights and custom of often get on your device about every five years on average we estimate repeat customers represent approximately 50% of the typical U.S. and person hearing clinics annual volume.
At the Echo our install base includes over 8001st or second generation devices, but on now over two years old well, we're just getting started marketing to repeat customers. We believe our successful efforts to generate repeat customer sales from 20. Its one of proved but yeah go consider.
Net income to shorten the upgrade cycle compared to the traditional industries like.
Insurance and repeat customers generally convert at higher rates of return at lower rates.
Which has the multiplying benefit of the trial I think of net revenue growth, while driving down the overall cost of customer acquisition weeks.
We expect this positive mix shift toward more insurance at the peak customers to the a key driver of growth and scale up into the going forward.
Moving to the product you're going on the on Ipi, which was launched in or the 2020 continues to perform well consistent with the receiving strong customer of yours.
During the first quarter Youre going the you know high five represented nearly 85% of our cross the switch.
The final driver of our three to performance if the accelerated consumer adoption of our telecom model. Let me briefly explain what diego the diverse fruits tell the care model on slide.
At year ago, we've been the you've got nothing is more important than the user experience from awareness through consideration the purchase support and coming back that's a good churn and customer audiology at the profession is critical for this and we do not want customers to lose out on anything but choose.
Yeah go.
At the end of the first quarter, we have surety for license hearing professionals on staff full time at the echo, but I'm very engaged with our customer base and the first nine months of 2020. These license tiering professionals provide solid care to over 80% of our customers and the for.
First of month of ownership.
The professionals provide personalized high quality care by phone video of Chad. This includes initial consultation hearing screening proper insertion charging and cleaning most importantly for the OCO meal, and hi Fi customers can.
Net or [laughter], we can help customers adjusted that audio profile settings in real time over the phone so on sharing the year goes on solving for of that individual losses.
Supporting this tell what kind of model is on mobile App, which allows you to go on you and you know.
Hi, Fi customers to adjust settings for themselves or connect with our professional when it's convenient for them.
As we observe how consumers rate that you're going to experience.
The support is consistently the highest rate at the element of the experience together with accessing the benefits for our insurance customers.
We are confident that purchasing the hearing aid in this fashion is the future of solving carrying costs.
Additionally, we think the unfortunate the price of COVID-19 has accelerated the long term consumer shift away from the traditional in person clinic distribution and some of what buying the hearing it remotely.
When we look at three to specifically we are pleased to see the shift continue despite volumes at the brick and mortar in person clinics the training for year over year growth.
According to data collected by the King Industries Association.
Private commercial sectors. The hearing aid unit sales in the third quarter of 2020 increased price.
0.5% year over year, following 58.6% year over year decline from the second quarter of 2020.
In addition, many of our customers tell us how thankful. They are to have a solution that does not fall off on my way and on mask of of personal protection equipment.
This gives us a high degree of confidence that despite the beginnings of normality and traditional distribution consumers of found a better way to get of hearing a fruit yoga.
Let me now turn it over to Adam for his review of our financial results.
Thanks for Christian on on Slide 11, and I want to add my welcome and thanks to all of our new shareholders.
Given Christian thorough discussion of revenue drivers I will start with growth system ship.
As a reminder, we define the growth system, there's two hearing AIDS of charging case and starter accessories shipped at the single unit.
Third quarter of 2020 growth system shipped for 10077.
<unk>, 91.7%, you're over here and the 11.5% sequentially driven by improve media mix expanded national advertising and continue to accelerate the consumer adoption of our telling care of model.
We saw year over year of growth across all consumer type driven by insurance and repeat customers.
Third quarter 20, twenties return of cool rate was 25.2% compared to 35.3% in the third quarter of 2019.
27.1% in the second quarter of 2020.
The 10 point year over year reduction in a return rate was driven by the mix shifting volume towards the lower returning insurance and repeat customers.
Third quarter gross margin was 70.1% compared to 53.6% in the third quarter of 2019 and.
And 67.3% in the second quarter of 2020.
The year over year gross margin expansion was primarily do the higher customer a S. P driven by the make shift and the Oh Hi Fi.
Lower return of cool rate and lower cost of goods sold.
Moving to operating expenses.
Third quarter sales and marketing expenses for 12.4 million or 67.9% of net revenues compared to $9.3 million for 120.2% of net revenue in the third quarter of 2019.
The increase was driven by an increase in commission other personal related costs and an increase in direct marketing costs, we continue to invest in sales and marketing to expand our teams and deploy new media, while generating significant leverage driven by a more efficient media spend and higher percentage of insurance and repeat customers.
Research and development expenses with $2.9 million or 15.8% of net revenue.
Compared to 3.2 million or 41.6 per cent of the net revenue from the third quarter of 2019.
We rebuilding some of her longterm orange D capabilities and personnel after slowing down beef initiative during the initial uncertainty related to the COVID-19 pandemic.
We expect to continue to increase of R&D spend going for the few of longterm growth and ensure we stay ahead of the innovation curve.
General in the administrative expenses for $5.2 million or 28.4% of net revenue compared to 3.7 million for 47.6% of the net revenue in the third quarter of 2019.
We saw an increase in G. N. A due to increased a are reserved driven by of higher mix of insurance customers.
Increase stock-based compensation.
And the higher cost associated with getting ready to become of public company.
Loss from operations was $7.6 million compared to $12.1 million from the third quarter of 2019.
Cash and cash equivalents as of September 30th 2019.
2020, where 70.2 million.
This includes $67.3 million in net proceeds from our series E equity financing completed in August of 2020.
But does not include net proceeds of approximately $148 million from the I P. O completed in October of 2020.
We also completed of debt restructuring of September of 2020, where we paid down our current get facility and entered into the new 20 million dollar debt facility of which 15 million is currently drawn.
We believe our cash on hand is sufficient to find the current operating plants as well as the investment initiatives across sales and marketing and R&D that we outlined during a recent public offering.
Now turn of the guidance on slide 12.
We expect revenue for the full year of 2020 of approximately 64.5 million.
Which represents approximately 97 per cent growth over the companies prior year revenue.
This reflects of confidence in consumer adoption of the ear ago to the fourth quarter and the holiday buying season.
I would like to now turn it back of Christian for summer and closing remarks.
Thanks for that.
The third quarter of 2020, what's truly one but such records across revenue volume growth, the turn accrual right gross margin and sales and marketing as a percentage of for having this performance the even more encouraging against the backdrop off the brick and mortar industry returning to growth when your head into the.
Close of this year highly confident that the combination of how the product for.
Cynical support and the need the man generation model places on a strong position to continue of our transformation of the large and growing hearing it industry.
We have already proven but on model tend to form through the unfortunate peaks and trials of Covid cases, and believe on broad consumer appeal will only strength in overtime.
Again, thank you for all of your support so a year ago. It is truly humbling and I would also like to thank all of our front line workers across the country, but on tirelessly battling this pandemic best.
That concludes my prepared remarks, and I would like to turn on the call back to the operator for Q&A.
Thank you and then as a reminder of ladies and gentlemen to ask the question you'll need to press star one on your telephone so let's draw. Your question press the pound key please stand by while we compiled the gona roster.
And the first question comes from the line of Robbie Marcus with J P. Morgan.
Oh, great. Thanks for taking the question on congrats on a very nice first quarter of public.
Hi, John I mean, I was I was hoping it you know it's you you had a great third quarter. It was a big step up over second quarter of.
You know, it's not a surprise to us that fourth quarter sequentially down as that's how street models were set up coming out of the I P O and it's good to see guidance a little ahead of the Street I was hoping you could just to remind US you know the rationale for a lower fourthquarter versus the third quarter.
Especially you know given that we're seeing COVID-19 trends pick up and you've got about half of quarter under your belt Alrighty I was just hoping you could run through the rationale again and what you're seeing in thinking of guidance.
Okay No no. Thanks, Robbie and yes, as you said, we had a record two three and that is V. The also the backdrop here Uhm, we're incredibly pleased with with Wherever's ended out for queue for redo expect sequential volume growth, but as we've.
Been discussing for you to chew for is more focused on our cash pay segment, which is also really driven by more promotional activities, resulting in a low a S. P. As well as you know of different return right profile than what we see you know from our insurance on the <unk>.
And also S. S Q3 was a stall insurance quarter. So so that's really the fundamental shifts and and true well well into this quarter, but we we also built you know of his whole model looking in that you know we had an election going.
In <unk>, obviously impacting media and now we've seen are starting to see an unfortunate search and Covid, we feel of great about our guidance, where we are and you know we're quite confident that you know all business is actually the build to perform through the scenario of it when I hope it terrifies of it.
Yeah. So maybe set another way it's not like you couldn't have another great insurance quarter, and fourthquarter, but you're just not planning on the same level of of really significant strength that you saw in third quarter.
Oh, well put Robby. Thank you you have a good view at our business really what we're focusing on here and two for is driving sort of the promotional opportunities around nope Black Friday on site on Monday. So that's the emphasis all of our all of media you know, making sure that we have this opportunity.
Just the really address the no that's the man and awareness that we have created a true the here, but that has not yet converted that's typically our emphasis here on two for.
Great and and maybe one other question, we're getting ready for the year ago five launch in the first half of next year I was hoping you could run through you know some of the the benefits of that both to the patient and to the P&L and just remind us the exact time lines of one of.
We should see a soft launch and a full much. Thanks.
Right of a couple of points here, but you're right. Yeah go five is something but we've been working on for for for quite a few years. This is really the the hearing solution. We believe the can can sort of you know increase access and motivate people to get in.
She highlights this is a complete new platform, but we're both of them. So it. It's a different you know it's the different power technology. So we're moving to into a custom created lithium ion so that'd be co created with the world leader in micro batteries.
So so that's sort of onto hardware vs, allowing a smaller size so of better fit in the <unk> again impacting our return rates on providing for more more people being able to benefit from it. This new design also allows for a different speaker, but actually actually gives us a better audio fidelity as well.
The less output.
So those hours on of the mechanical benefits. Further we are also integrating insitu audiometry, and so are our future product, allowing us to actually the screen you're hearing directly through the devices. That's the <unk> the amplification.
Where does the startup of gold standard of how do we really make sure I'll be drive you know the best possible listening situation for the users.
The final piece of it a sign of every chargeable as all of our products are but where I'm moving away from contact based charging two and ducks of charging again in favor of improving the liability on that front. It also means that our next generation will actually to be you know of water the system.
You know we are IPX seven on all of next generation, allowing to actually submerge for device. So again reliability, taking that to a whole new level. So that's really the the patient benefits on what you'll see as as of user you know better product, but also of opportunity to did have a bed of personalization and bed of support you know where.
I also have a constant evolution of all of mobile App I'm. So glad we can continue to drive that.
On the piano L. One of the benefits of our new design is that we can actually.
Because we.
We don't have an any exterior context, we can actually salvage key components and reuse them. So again from of sustainability point of view. This is an important point, but it actually there's also of giving us opportunity for returns, but we're getting to we use these components for a new devices. So that's a very well established protocol and the hearing it on.
Industry that we can follow to do that so ask the rollout the product we will get benefits, we won't get immediate benefits from my piano point of view, but asked me start rolling it out of people get a warranty expenditure benefits I'm out of it.
So that's really the P&L side, and then you'll have one more piece of this I was the timeline in terms of time, we are completely on track in terms of the development and the building off the product.
Given how comprehensive this launch is going to be we're looking at a more faced approach to launching an S. We built our models on spoken with you about as well, we're really looking at going into a volume launch and chew too, but we will start testing the product is already.
Two one.
Great. Thank you very much.
Thank you.
The next question comes from the line of Bob Hopkins with Bank of America.
Oh, thanks for good afternoon.
Hey, so instead of two quick questions I'll ask from both upfront I apologize or both the little bit near term oriented but I was wondering if you could comment on two things first is you know how you plan on kind of managing the transition to five and any kind of.
The risks into the queue, one as people become aware of that that's coming in May delay purchases just type of you kind of manage that transition and then I was also wondering if you could just talk a little bit about the environment. We're in right now because of the the Covid environment. We're in right. Now is obviously very different than what we were in in queue to and and and the early parts of Q3, where there was.
Flare ups of regionally in the U S. You know vs now where it's kind of widespread does that have any impact on the business are you seeing anything different in purchasing trends because of that so uhm just love your comment on of those two things and and thank you.
Yeah the Zip.
Let me start with with too just to take for the current first because you're absolutely right unfortunate of we're seeing this white flare up and you know for the hearing it industry. We also saw that growth came back into for you, but it's been a lot of commentary from.
The established industries that they are seeing concerns on challenges on queue for.
I I must admit on this backdrop at we are of sad to see what's happening here.
Terms of how we built our business, we're not seeing any reversing trends on our business again, we're well decision on reproof, that's true true too as well to operate efficiently and really be of solution for users out there despite shutdowns and wherever that's regional local or night.
<unk> it doesn't have an impact on all of our business again, we don't know how how the next couple of weeks like on I of all but what we've seen so far is that the way we build our business continues to perform well and in line with the expectations, but we've been working on.
So now the last question number two let me Uhm, let me for a go straight on to the number one and sort of managing the transition to uhm two two year ago, five and I think.
Let's remember we have a great product Neil Hi Fi our current product has been on most successful product today work at a constant stream of great feedback on how the product performs so this is not on inferior products by any dimension of.
Our plan here is to to really you know roll into it as we have been doing and.
In the beginning part of 2019, we did it on 2018 uhm as well. So we've we've been through the drill two times in terms of making sure that we give people the solution that they need and if certain customers are are hesitant, we will always encouraged for him to take action on day hearing.
As soon as possible if people find out, but we have launched the product.
A month later, we do have a generous 45 day free trial period. So we will upgrade all customers within bacteria by paying any price differential. So they can actually upgrade to the new generation product if they wish to do so and what we've been doing is also having of flexible approach on.
Ultimately, we want to use those to get the best possible product, Okay I'll need.
Great. Thank you very much.
[noise]. Thank you for.
The next question comes from the line of Larry Biegel said with Wells Fargo.
Good afternoon, guys. Thanks for taking the question Uhm just just to for me just wanted to start with the competition and how your you know protecting your first mover advantage what Christian have you seen you know from of competitive response from the traditional hearing aid companies and some of the newcomers.
And if you could touch up on the the O T C rule from F D. A when that might come and what the implications might be that would be great and then I had one for awhile.
Okay.
No no as as we've spoken about before but I think it's a great question on competition. It's something that we are obviously monitoring. We are we are sort of blazing of new paff S of vertically integrated offering.
And there's nobody else, whose has the same structure as we have in terms of being vertically integrated across the technology marketing awareness sales and then support so that that makes us unique but clearly what we're seeing from the traditional players for large manufacturers uhm out there as they are basic.
<unk> continuing you know the playbook that they've been running off for the for the last decade, plus you know that's for what integration acquiring clinics right and the launching new products on two to three year cycle Uhm. That's been a couple of new product launches out there all of them are focused on behind the your.
The technology that's V D. The emphasis and lots of course of all of the majority of part of the market. So we've not seen any moves towards.
Invisible and more convenient form factors such as ours from any of the big five and in terms of distribution from the big five it continues to be the you know the the acquisition of distribution channel of clinics out there nobody has started up any direct sales efforts.
So so nothing new there and even through Covid on so on there's been no activity for them to get into directly servicing an juices.
In terms of new Commerce, nothing new has sort of come out tomorrow. Other models out there who for sure existing technologies, and then market and sell that on even support that we're not seeing them in any meaningful way in terms of media presence or sort of competing oh.
For awareness and bed. So so nothing new has come out that has sort of called in a major attention from our side.
I think the most new frame, but that's sort of going is on the O T C side of.
Obviously, the the dates put out have have not been met by the F. D. A I think I've I was August of 2020, when the rules were supposed to have been enacted nothing has been out for commentary yet. So there's no official news so everything else of speculation there is a lot of activity of right now.
Both of them sent us of one and.
From Congressman Grassley in terms of.
The putting more focus again on the need to create better access.
The need to create more solutions for users one we're doing it but in terms of how the F. D. A reacts to this there's no new time line out there of is definitely renewed pressure on getting clarity on on when the timing will be when OTC comes out our belief is clearly they will drive more awareness of around hearing loss.
And we see that as at net benefit so all of model because we know we have a model that the more focus that is I'm hearing, we're well positioned to capture demand on interest.
That's a very helpful. Thanks for the comprehensive answer one for for Adam on 2021 metrics, just any any color. It sounds like you know 2021 should be a good year for you with with the yoga five coming out you know any color <unk>.
Commentary on on growth and leads conversion rate you know return rate with with the new product coming out and you know any any reaction to consensus at $885 million. Thanks for taking the questions.
The Larry Thanks, and thanks, everyone that glad to ask the question I get the answer in terms of 21, it's it's still pretty early days for us and we're gonna be giving for guidance and in the in the in February time line. When we announce are cute for earnings I can say you know right now given where we are with that you know of feeling could get very good about queue for in the for.
Forecast, we put out there with you on the also very good about the setting up 21 with the continued tracking on the year ago five launch the the Christian talked about and I think the key things I'll be looking for is not just on the demand generation side, but that that refurbishment capability over the course of the year and really getting into that now can we get comfortably end of the mid seventies and gross <unk>.
<unk> by the time, we exit 21, uhm, but obviously that all comes in with the the desire to continue to stay focused on driving a fishing growth uhm throughout the business. So we're feeling pretty good about where we're coming into this.
Sounds good thanks, guys.
Thank you.
What is the reminder, ladies and gentlemen, the if you have a question. Please press star one on the telephone once again, if you have a question. Please press star one.
Our next question comes from the line of Margaret Cats or with William Blair.
Hey, good afternoon, thanks for taking the question.
Yeah. The first one for me, it's just a little bit of of detail maybe on the insurance side. You know I know it was have you say of great quarter part of that is the Mailer that you guys had kind of directed to reimbursement at the end of insurance. There. So if you could give us some idea of how big of an impact that was and really the reason I ask is as we go on.
Thank you for and it looks like Street number is maybe it say on the cash pay sequential increase off that's kind of of a an insurance sequential decline Wichita, maybe seems a little bit conservative given how early you are the kind of that that insurance uptake. So if you could walk us through those dynamics that'd be helpful.
Let the let me start Margaret on hand off to the to add him on sort of the specifics.
You know how we're thinking about it you know remember that most of our insurance business is really working off the same media, but we also used to drive cash pay right. So that's both on on the T V on on the digital but we.
Drive awareness around hearing loss of and we move that says if that's the majority of on demand generation specifically for insurance, we are looking for <unk> <unk>.
Pockets of creating the specific awareness within the relevant channel, Sir and what happened here, you know and and two three but the we had an opportunity for one of these are the I'd call. It targeted efforts to it's actually access our database for of partnerships that allowed us to mail directly.
Retired the federal employees, so that that was a great opportunity for us to go out on you know.
We're constantly expanding with a wide range of of is this one worked well for us it's not something that we can do continuously and of course that's.
Based on the relationship of the building with the provider, but at work really successful out of Adam can you comment on the specific impact here. So they look at our sequential growth in volume from queue to the Q3 and the <unk> Margaret you'd ask what's the impact of the mailing and it was it was less than a third of our sequential growth of his you know kind of that order of magnitude.
I'm in total so if you kind of look at where we're going in queue for I I feel very comfortable that the the insurance business is again, well well within range of tracking do our forecasts, but the that ability to get other channels and activities of Christian mentioned activated could be possible sources of of upside for us either in queue for the on it.
Got it now that's very helpful. Thanks, and then one of the month of frequent question. Please we got him to Atlanta ask it here is and you guys really see yourselves from the Covid beneficiary. So far this here on meeting of the patients that are calling in or are they patience and maybe are scrambling from the traditional channel since it's close the or is this really more of a more.
[noise] acceleration, yeah market expansion story of meeting yeah, both kind of impact you guys positively next year.
Yeah, but no Margaret of as as we have already discussed right. We've we've been asking <unk>.
Question of lot. Obviously, we saw of Reelect celebration show of business timed with the emergence of Covid and two two.
Uhm, however, when COVID-19 subsided through two three we saw all of the metrics improvement hold so really how we look at our Covid beneficiary I think yes to the tune, but COVID-19 has accelerated people at the option that the at different ways of getting things done just don't.
Have to go to the clinic. So I think we've proven as of strong alternative but actually deliver the same benefits that you get from going into a clinic. So that's all the wires through two three we have not seen a slowdown at all in terms of our how we try of our business. So I think.
What COVID-19 us on it it's fundamental to change People's perspective on and I think it's help accelerate the willingness to to go to the remote care.
And I feel pretty confident that we're not gonna cycle up and down the of Covid right. We will you know we we've seen the lifts from Covid, because there's no alternative but even when the is a real alternative we're seeing that on model absolutely hold. So you can say, we get a lift one COVID-19 spikes, but we're not getting a drop.
When it subsides on again, that's also of all we want we believe that this will be most access to care.
Is the way forward right and again, we decided this before COVID-19 alright. So this has been something that we've been building all all of all I hope, but yeah, you know but.
But the sinks with what we've been talking about.
No absolutely and of it [laughter] Oh, that's always one more and just to confirm that I might be the last one here, but at the T. V. Advertising I mean, you guys have have done a ton of the T V advertising talked about it today right now so talk about how much what percentage of the AD spend maybe is going to T V.
You know where are those the that wary of those levels go in the future whether from them next for a dollar perspective, and and frankly, we've seen a ton of that it's just from the last 30 day. So can you give us some contact how this compares maybe it's the the prior quarter isn't the historical hi, Thank you very much.
No I'll, let Adam give give you the details here for it but but clearly as we said you know we we've seen through this year on acceleration of our our T V spend having set that you know we know of as a lot of room for growth right and we did slow down some of our T V. Even here in two for because of you know of rates types of.
The election, and so on so we know it's the lever, but we can you know really actively used to drive the efficiency that we want to have in our in our media. So so out of maybe you can provide the the more specific splits some more of the way I'm looking at it in the in the way I think it makes sense to think about it is we haven't really increased our.
Digital spending and the sequentially over the last three or four quarters, we've held it relatively flat and we've added on more T V with the internet into the mix and.
Look at Q3, we're talking me I'll call them roughly a third of our media spend is going towards T V. But it's one day, where it's Christian mentioned were constantly Ty trading that and when things like the election come and raised.
<unk> on certain cable news channels go up three X from what the normally are we pulled back and then there's those to get back to normal as we saw after the election cycle. We go back into those advertising. So it's a pretty fluid dynamic and it's one that we feel pretty good about using it and there's a lot of headroom there, but we're just still just scratching the surface of what T V can do for the business.
It seems like it thanks for <unk>.
Thank you.
And I'm showing no further questions so with that I'll turn the call back on <unk> for any closing remarks.
Thanks, operator, thank you everyone for joining the call. Today. This includes the you go third quarter of 2020 earnings Conference call.
Okay gentlemen, thank you for participating in today's conference is the conclude the program and you may all disconnect.
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