Q4 2020 1Life Healthcare Inc Earnings Call
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Ladies and gentlemen, todays conference discuss the game's shortly please continue the standby. Thank you for your patience.
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Ladies and gentlemen, thank you for standing by and welcome.
Two the one medical's fourth quarter 'twenty 'twenty earnings conference call at this time, all participant lines one of the listen only mode. After the speaker's presentation there'll be a question and answer session to ask the question.
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I would now like to hand, the conference over to your host well.
So I was weighted.
The writer of Investor Relations. Please go ahead.
Thank you operator.
Hello, everyone and welcome to the one medical fiscal 2024th quarter earnings call.
I am joined today by of near Dan Rubin Chair and CEO of one medical and Bjorn Thaler, Chief Financial Officer of one medical.
A complete disclosure of our results can be found in our press release issued earlier today as.
As well as in our related form 8-K, all of which are available on our website at Investor day, one medical Dot com.
As a reminder, today's call is being recorded and a replay will be available on our website.
As part of our comments today, we will make forward looking statements. These statements are based on management's current views expectations and assumptions and are subject to various risks and uncertainties.
Actual results may differ materially and we disclaim any obligation to update any forward looking statements or outlook.
Please refer to the risk factors in our most recent annual report as updated from time to time by other reports and filings with the SEC.
Leading our quarterly reports.
We believe that the COVID-19 pandemic creates particular complexity when it comes to providing of forward looking view of the business.
And we are providing our guidance on a good faith basis per recent SEC recommendations.
We would like the specifically caution investors that our future performance will be harder to predict for the foreseeable future.
Our forward looking statements are based on assumptions that we believe to be reasonable as of today's date.
February 'twenty five 2021.
Information contained in today's statements should not be relied upon as representing our estimates as of any subsequent date.
Of note. It is one medical's policy to neither reiterate more of just the financial guidance provided on today's call unless it is also done through a public disclosure such as the press release of through the filing of a form 8-K.
Today, we will discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results of his.
Reconciliation to the comparable GAAP metrics can be found in today's earnings release.
Finally during the call we may offer incremental metrics to provide greater insights into the dynamic of our business.
These details maybe onetime in nature, and we may or may not provide updates in the future.
And with that I shall turn the call over to in your in the yarn for their prepared remarks and to take your questions.
Welcome to everyone on the call and thank you for joining US today, we reported another quarter of significant outperformance across all key financial metrics. We are pleased to report a strong finish to FY 'twenty capping off our impactful first year as a publicly traded company.
Our of human centered and technology powered model continues to resonate with more consumers and more employers than ever before we ended the quarter with 549000 members growing 30% year over year.
In addition to strong consumer growth more than 8000 employers are now sponsoring memberships on behalf of their workforces compared to more than 7000 employers at the end of 2019 coming.
Coming out of our record Q3, we were pleased to hit another membership milestone in Q4, I think it was our best quarter, yet of net new member additions.
We added this record number of net new members, while continuing to deliver an elevated experience with the net promoter score of 90.
And as we've shared previously our modernized health care model has also been linked to reductions in health care spending of 8% the 45% per importers, we believe our ability to deliver outstanding experiences, while facilitating cost reductions makes our model differentiated and transformational. Moreover, we continue.
To see nine out of 10 consumer members renew with US in 2020, and also continue to retain more than 90% of our enterprise contract value.
Our ability to transform healthcare is also enabling our strong financial results, we delivered $380 million in total FY 'twenty net revenue, which grew 38% year over year in.
In Q4 alone we delivered $122 million in total net revenue growing 57% year over year nearly double our growth rate in the same quarter last year.
We delivered FY 'twenty care margin of $145 million.
Or 38% of net revenue while at the same time launching four new markets and continuing to invest across the organization.
We delivered FY 'twenty adjusted EBITDA of minus $13 9 million, which reflects an $11 1 million dollar improvement to FY 19.
In Q4, specifically, we delivered a historically high $11 $2 million of positive adjusted EBITDA were positive 9% of Q4 net revenue.
These results showcase the continued momentum in our business and serve as further indication of our ability to achieve our long term financial targets, but it's now share further highlights from 2020 and how our model continues to serve our key stakeholders, which include consumers employers and payers providers and health network.
It has been a privilege to serve our consumer and enterprise members as they entrust us with their health and care every day, especially during these pandemic days, we continued to see strong engagement in 2020, while at the same time, we served more members across our existing markets and the new markets.
Throughout the year, we demonstrated our unique ability to provide wanted you to know care across digital and in person settings, enabling record levels of engagement with our model compared to prior periods. We supported over 5 million interactions during 2020, which grew more than 80% year over year.
The 12 months of 2020, we engage with members average of 10 times, including approximately eight times digitally and twice in person our membership model and bundled digital health services enabled inbound synchronous and asynchronous interaction is what was the outbound population health interaction.
We not only address the acute care and COVID-19 needs of our members, but also their ongoing chronic care and well being needs, including support for cancer screenings, well women care family care of behavioral health and more.
Additionally, our members and providers continued to build trusted ongoing relationships through both the scheduled remote visits and convenient in person care are welcoming offices supported superior in person experiences of what.
Along with the service oriented outdoor sites, we launched for COVID-19 testing we.
We believe the extensive engagement we saw in 2020 highlights our ability to provide responsive as well as proactive care and to provide acute as well as the longitudinal health care across the range of delivery modalities.
Our impactful relationships with our members fueled us to reach out to more people and enterprises across the existing and more new markets.
Last year, we entered Portland, Oregon, and the Georgia, Orange County, California, and most recently Austin, Texas as we previously announced we plan to enter Raleigh, Durham, North Carolina, Columbus, Ohio, Milwaukee, Wisconsin, and Houston, Texas within the year.
Well there continues to be a tremendous opportunity for significant growth in our existing market ex.
Spansion into new geographies further advances our network the attractiveness to multimarket employers and consumers. Accordingly. In addition to our National digital health coverage and one medical now reach our expansion into four new markets. During 2021 will take us the 17 markets by the end of this year. This.
At present, 30% growth in market count during 2021 of well.
Collectively our 17 plant markets represent of total addressable market opportunity of $44 billion in the commercial primary care segment alone before considering any expanded populations or services.
In addition to growing within existing markets and into new markets with consumers. We continue to see outstanding growth in our enterprise business across the organizations of various sizes industries and geographies. During Q4, we began new relationships with the organization and manufacturing technology education.
<unk> services biotech Med Tech non-profit financial services real estate amongst others.
Throughout the year, we also continued to grow alongside existing clients expanding coverage with dependent and further extending into additional services, such as pediatrics and behavioral health.
With our high engagement retention and satisfaction levels. We believe we can continue to see great opportunities to further grow within our existing client base.
In addition to being a highly engaging benefit that employees and dependents tell us. They love we delivered value based results to employers and payers as we help manage the health and cost of care of our member population.
Our technology platform membership model and clinical team and enable us to proactively reach out to members for preventive care screenings and chronic disease management, we develop personalized care plans and engage members to act on these plans because of the modality of their choosing whether that's in person and an office and the drive through site remote.
Lease reschedule, the virtual appointments or digitally through asynchronous or synchronous on demand virtual care.
You may recall, our model is linked to employer savings, including over 8% and a case study in up to 45% as per the seminal study published last year in Jama network opened as.
As discussed in the Jama article savings included 54% lower spending on specialty care, 43% lower spending on the surgery, 33% lower spending on emergency department of care and 26% lower spending on prescription.
By acting as a low friction healthcare home for employees, we can engage our members and improving their ongoing levels of health and wellbeing and help reduce expenses and avoidable downstream medical costs.
Now even if their membership based and technology powered model delivers outstanding impacts to consumers employers and payers. It also provides a more fulfilling way for providers to practice medicine.
That isn't driven by piecemeal fee for service compensation that is so endemic in the healthcare ecosystem of language. It alleviates desktop medicine burdens from cumbersome technology for providers and the way, which streamlines the manual coordination of insurance authorization and specialty referral.
Promoting burnout and physicians across the nation.
Our model supports our clinical teams in developing ongoing relationships with our members to help close those gaps and preventive and chronic care are salary based compensation approach supports providers and delivering the right care at the right time irrespective of whether that carries delivered in person or virtually.
Our purpose built technology platform can help reduce 40 per cent of the tasks providers often experience and other electronic health record systems and the organization. Accordingly, we believe that our model enables a more professionally rewarding and impactful experience, while also reducing the factors driving burnout supporting our efforts to attract.
Tract and retained more and more of the best providers anywhere.
During the quarter, we also advanced our health network partnerships to further build the clinical and digital integration from.
More seamless specialty care and to further support of providers in coordinating care across the continuum of settings.
In December we were delighted to launch in Austin, Texas, alongside our partner of Ascension, Texas Healthcare, we celebrated the launch of four new partnerships in 2020, as well, including mass General Brigham Emory healthcare Medstar health and Ascension Health. In addition to expanding into two new markets with our existing partner of Providence, St. Joseph Health.
Building on our momentum in 2020, we have already announced partnerships across all of our planned new markets, including with Duke University Health system, Ohio State Medical Center, and Houston Methodist Health system.
Now, let me acknowledge our entire team for the support given to our members and point of clients partners and communities. During this past year, they have been delivering such outstanding and compassionate care as we reached more members clients and communities than ever before in the most extraordinary of times.
While we do not completely know what lies ahead as the result of the pandemic. We do know that our employees will continue to be there to serve our members employees and communities as.
As we've described our team's collective efforts.
Art here to help transform healthcare by serving the needs of key stakeholders consumers employers and payers providers and health networks, We're delighting consumer and employee members with seamless digital health and inviting in person care, enabling millions of engagement points per year, we are serving more than 8000 employers with a highly engaged.
The benefit while at the same time lowering costs by promoting population health value based care and improve productivity.
We are creating a more fulfilling weight of practice primary care with the salaried model with modern technology that emphasizes relationships and minimize the transactional burdens and friction we're building connectivity with distinguished Health network partners to further digitally and clinically integrate care across primary and specialty settings to help.
One of the complexity of navigating care for our members and providers.
The result of these efforts we have the weighted members as seen in our 90 net promoter scores. While also demonstrating we can reduce up to 45 per cent of health benefit costs.
We believe the opportunities of the white members and reduce the cost of healthcare is truly transformational and I've never been more excited about the opportunity ahead for our organization.
Before I turn the call over to our CFO of Bjorn, Let me take a few moments to update you on our COVID-19 vaccination effort, our national presence digital tools and scaled infrastructure support us in these efforts with limited quantities of vaccines. Currently available we are partnering with department of public health to serve vulnerable community numbers for example, in New York City, where it.
Providing vaccinations at homeless shelters and in other markets. We are vaccinating frontline health care workers teachers and other essential workers were also providing complementary telehealth services, the individuals' referred to us by local departments of public health.
During the court with the vaccination services. These individuals' can leverage our platform for vaccine appointments at the second dose reminders, but also for follow up video chat and messaging to address their healthcare needs and concerns during this time.
Well it is early days in the vaccine rollout one vaccine eligibility opened the broader population, we believe that our multimodal service model positions us well to continue to support our communities our members and our employer clients.
To those joining us today, we thank you for your continued support and partnership and our mission now over to you Gordon.
Thank you Emil and Hello to everyone on today's call.
First let me Echo Neal's comments and say that we are pleased to resolve of financial and operating performance in Q4, and fueling 'twenty to 'twenty two.
Throughout the year.
Tim you to see our modernized primary care model resonates strongly as we signed up more members than ever before so it was more enterprise customers than ever before.
Drove better than expected financial performance.
Abel bed of health and Medicare for all the members.
We ended the quarter with 549000 members up 127000 members year over year Force.
Per cent.
Q4, specifically of that presented the strongest quarter of net new membership additions in our history.
And it's doing the 8000 net new members.
This comes the quarter off the we recorded our previous high watermark in terms of net new membership adds.
This increase is being supported by continued strength across both our consumer as well as enterprise offerings.
It's the enterprise channel continuing to show particular strength.
As a result, and some of your into 'twenty and 'twenty. Our membership included 58% enterprise members and 42% consumer members.
This compares to 52 per cent and 48% at the.
End of 2019, respectively.
Please keep in mind that our membership count continues to exclude the means of important groups.
So anyone who downloads, our app or registers with us by using the complementary community coach.
Which provides temporary free use of our on demand telehealth services.
We launched the East coast last summer to support community COVID-19 testing and the expanded Tam of recently to anyone we feel to us from the local department of public health for COVID-19 vaccines.
This is cost of meaningful increase in total redemption.
Second we also exclude any page short two of them enterprise contracts did of less than 12 months.
So we exclude any virtual only one medical now users, which is the service offering that is available to employers and geographies, where we don't have issues like the footprint.
Turning to revenue in total we didn't live up to $121 8 million in net of revenue in Q4 up 57 per cent year over year.
Our Q4 of membership revenue was 18 point of $2 million and grew 29% year over year approximately in line because of our membership clubs.
Our Q4 net patient service revenue was $51 4 million up 24% deal with you.
This growth was driven in part by our continued strong membership growth of smell isn't the lot of children expects the demand by our Memphis. The COVID-19 testing in November and December.
It also reflects increased the revenue year over year from the successful flu vaccination campaign in Q4.
Partially offset by a mix shift from fee for service of the embarrassment to partnership with revenue.
As a reminder, we experienced this mix shift as we signed up additional health network partners did the reimburse us on the per member per month basis in markets, where we previously had no partner.
As all of our members are now covered by health network of partnerships. We expect this mixed shift to abate going forward.
Yeah.
Well Q4 partnership with revenue of 52 point of $1 million increased 140 per cent deal with you.
This growth was driven not just by our store of membership growth and the aforementioned shift from fee for service revenue of two partnership revenue.
But also by the strong results of our healthy together workplace reentry program, where we partner of the enterprise clients, such as employers schools and universities to help them in the COVID-19 response.
For example in Q4, our partnership revenue included approximately $7 million.
Related to dis onsite testing services.
<unk> two of $3 million in Q3.
How long of revenue results in Q4 capped off an incredibly strong year.
Moving full fiscal year 'twenty 'twenty net revenue of 380 points of $2 million.
Which was up 38% year over year.
As a reminder, our fiscal 'twenty to 'twenty results include $2 $6 million of an income grant related to the provider when the fund established under the Cares Act, which we report as a distinct line items on our P&L.
At this point, we cannot predict how much if any additional funds we may receive in the future.
Moving down the P&L, we delivered Q4 care margin of $56 million or 42% of net revenue.
This was our second consecutive quarter of achieving a 42% kill them all of them.
For the year.
<unk> was $145.3 million or 38 per cent of net revenue compared with $108 6 million or 39% of net revenue in 2019.
We were pleased to deliver these strong results while at the same time, making continued investments to fuel our future growth.
Which included opening four new markets this year.
Third of investing in existing markets and in preparing for our new markets.
In total we opened 24, new offices in 2020, expanding our physical footprint by about 30% year over year and taking US 207 total offices at year end.
Moving below cost of care all of them.
Q4 operating expenses, excluding noncash charges, such as depreciation and amortization and stock based compensation.
$39 $4 million and really approximately flat to our Q. So you spent.
For the full year of these operating expenses grew $159 $2 million.
Up 19% year over year.
This annual increase included some growth <unk> of our public company readiness costs that we have discussed on prior calls.
And it reflects our strong ongoing commitment to expanding our service offering and supporting our strong growth.
And so there's lots of all of Q4 revenue tailwind and expense performance.
Q4, adjusted EBITDA was positive 11 points of $2 million.
One 9% of net revenue.
Compared to two and a loss of $9 4 million or <unk> 12 per cent of net revenue in Q4 2019.
For the year adjusted EBITDA was a loss of $13 $9 million or 4% of net revenue compared to a loss of $25 million.
Or 9% of net revenue in 2019.
Turning to all of our balance sheet. We ended Q4 because of strong balance sheet indicated the position with $683 million in total cash and short term marketable securities.
Riding us with ample capital to continue to fuel responsible growth.
Maybe we're pleased to deliver strong revenue growth in 2020, while at the same time, continuing our journey towards greater operating profitability.
We have signed up and does it change of more members than ever before.
Engaged them more than ever before.
Two of the Liberal 90 M. P. S and proved that we tend to reduce total cost of care.
At the same time, the continued to strategically plan and execute towards profitability.
With both Q3 and Q4 of 2020, serving as proof points of the leverage our model provides.
Turning to guidance. We are pleased to provide you with full year 2021 guidance for members of <unk>.
Revenue came out of June and adjusted EBITDA in.
In addition, we are also providing color on both members and the revenue for the upcoming quarter.
First of all of the full year guidance.
Starting with the membership we expects to finish 2021 was the total membership count in the range of 660000 to 680000.
Flexing, our strong and growing value proposition to consumers and enterprise customers.
Turning to the P&L for the full year 'twenty 'twenty, one we expect to deliver annual net revenue of approximately $465 million two of $485 million.
And while the Cam auction of approximately $170 million $290 million.
And adjusted <unk>.
Well EBITDA debt approximates a loss of $22 million.
To break even.
This guidance highlights the continued strong demand, we expect from our membership and services as well as our continued investments as we expand in existing and new markets.
For example, in 'twenty and 'twenty, one we expect to enter four new markets and open between 30 and 40, new offices, it caused both new and existing markets.
We will also increase our investments in our service offering technology and operations to further grow our business in the long term.
This is reflected in our care margin and EBITDA guidance.
But we are pleased to provide this full year guidance. We also recognize the COVID-19 continues to create a higher level of uncertainty in our outlook.
In particular, we view both COVID-19 testing aims COVID-19 vaccines as material of potential swing factors.
As it relates to the COVID-19 testing, which we perform in our offices in mass testing sites and onsite at select employers as part of our house of together services.
We expect meaningful continued the revenue contribution, particularly during the first half of the year.
While the assuming the testing volumes will decline materially in the second half of the year.
As it relates to COVID-19 mix of nations.
The revenue guidance assumes relatively immaterial the revenue contribution from administering these vaccines.
It is content, particularly hard to predict the timing and amount of exceeding supply.
In addition, shifting of local and regional rules and regulations prescribing all details. After vaccination program makes the number of people the will be able to help difficult to estimate.
The swing factors among all of those what is it.
<unk> us to continue to dynamically adapt our business and operations and maybe potentially also impacts our financial results.
As we look at Q1, we expect to finish the quarter was the total membership count in the range of 500 of 90000 to 600000 members and to deliver net the revenues in the range of $113 million to $118 million, which also reflects the dynamics.
Just noted.
In closing.
As we reflect on 2020, we had the remarkable feels to us of publicly traded company made possible by the perseverance and commitment of our incredible team.
We are in the unique time to demonstrate the power of our model and increase brand loyalty.
Continue to expand our competitive differentiation by expanding our services and the geographies. We serve we continue to enable better health outcomes for our members, while reducing total healthcare costs, which we believe will provide long term tailwind to our revenue and margins.
And we equally remain confident that we can deliver the attractive long term financial targets that we previewed during our IPO.
I want to thank all of our team members for their continued efforts in serving our members employer clients partners and communities IMAX.
I'm excited for what 2021 has to bring and I look forward to updating you all throughout the year.
We will now open up the call for your questions.
Thank you as of <unk>.
A reminder to ask the question you would need the press Star then one of your telephone to withdraw your question. Please press the pound key.
We ask that you please limit yourself to one question and one follow up.
Our first question will come from the line of Richard close with Canaccord Genuity. Your line is now open.
Great. Thank you.
The orange congratulations on a strong year in.
In difficult environments. So congratulations there.
Beyond I.
The comments on the vaccine as you closed your remarks.
I'm just curious obviously there was some articles out there.
Like the get your perspective on the vaccine.
Maybe those articles and curious too.
Hear from you, whether you think there's going to be any impact in terms of.
Membership growth or employers the.
Discussions, you're having with employers related to anything on the vaccine.
Okay.
Great Richard Thank you and thanks for the question Yeah regarding the stories that we we strongly refute the.
The gross mischaracterization.
Any assertion that we broadly of knowingly disregard eligibility guidelines are not true and in contradiction to our actual approach. So we've made great stride in vaccinating tens of thousands of eligible community members of the vast majority of been referred from departments of public health and we'd been Vaccinating high priority populations and.
We have not let any vaccines going waste and we continue the partnering with departments about withheld the today yesterday and Tomorrow for example, in Washington D. C. We're serving teacher as essential workers and the stadium, where the WNBA team plays in New York City today, whereas vaccinating and homeless shelters and vaccinating in cities across the United States.
The registered as of vaccine provider with more than 30 different jurisdictions and we navigate across all of the guidelines that as you may know, our unique and evolving to each jurisdiction, they're often different than the CDC or state guidelines that EBIT neighboring county guidelines.
Now in terms of eligibility checking we have numerous checkpoints in place, including online at the time of appointment booking prior to appointment schedule of scanning process that we do and in person verification at the point of care is needed.
However, it is still possible that some people either misrepresented themselves abused or trust or booked outside the specific eligibility criteria for their county, even and maybe even if they were eligible and another adjacent county, but in summary, we believe this is these articles are of growth must characterization of our outstanding work.
Our focus has been on leveraging our strength to serve our communities and partnership with Department of public Health and we'll continue to do that work and we anticipate that we're continuing to grow strongly.
With with our employers with our consumers with our partners and in conjunction with department of public health.
Okay. Thank you for that and then all of the business. So the 8000 of employer relationships great progress from 7000 last year.
Yes.
On the membership obviously the the.
Equally we're a pretty small average employee.
The account per employee.
For your employer relationships and I'm just curious.
Your line now or the one medical Mal and the benefit of parity of associated with that and then.
We're gonna be in 17 markets this year.
I'm curious whether you're seeing.
And the acceleration or an increase level of.
Our discussions with large employers signing up or potentially signing up and you see that sort.
Sort of think about is there an opportunity for accelerated member growth.
Getting the larger employers.
Yeah. Thanks for the follow up Richard.
In short, we're really excited to see that we can grow across sizes.
Industries and geographies.
As we noted we've grown in everything from manufacturing to tack to schools to professional services biotech Med Tech.
Financial services nonprofit real estate in some of these are growth companies smaller companies.
We also continued to grow in our consumer enrollment and I think to your question I think as we continue to expand into 17 markets. This year and along with our one medical now digital health everywhere services.
We started becoming more and more interesting and attractive to multi market employers and consumers. So we actually feel very positive about the range of employers and enterprises and consumers we can serve an increasingly.
Within more markets and then those that span multiple markets.
Okay. Thank you very much.
Okay.
Thank you. Our next question kind of from the line of Daniel Gross line with Citi. Your line is now open.
Hi, guys. Congrats on the strong end to two of great year.
And thanks for taking the question.
For 2021 guidance.
It's kind of of 2% to 3% growth in our revenue.
The revenue per member.
Around 20% to 24% growth in members much of the step down.
From the very strong 2020, so I'm curious what the puts and takes around the.
The the 'twenty and 'twenty, one guidance or I know you mentioned the the.
The testing of the explanation, but more curious on the return of higher acuity visits.
And perhaps the flu season next year or this year any additional color you could provide on that would be great. Thanks.
Yeah, Thanks, Danielle and a good question I think.
Just just taping of taking a step back to your point, we all the.
The continued to grow very strongly.
We also think of where you're going to grow in a way that allows us to consistently deliver the resolves the thankfully all of the.
Our members and a lot of key stakeholders expect.
Just a broad range of example, even at the low end of our guidance. We didn't have the go on and is often the 70% of of K go in terms of revenue since the beginning of 'twenty or 'twenty one.
Yeah. When you obviously look at the.
Some of the gives and takes off the year.
As I mentioned in the prepared remarks, there are still a couple of Oh of uncertainties.
I am certain to see of particularly around Covid and what we tried to do here is the relatively.
The relatively transparent on what is in the guidance and what is not in the guidance. So it's.
As it relates to COVID-19 testing.
We certainly expect meaningful continued revenue contribution, particularly in the first half of the year.
Which we then do expect debt it will decline materially in the second half of the U.
One interesting piece here is obviously you know in 2020, yes, we had a very successful flow.
<unk> vaccination campaign actual visits related to the flu for example, the relative him off.
Just so you know of.
So this is gonna see here of sort of it and other.
The uncertainty related to COVID-19, and how the testing is going to going to progress here.
And then again the flipside is we haven't baked in any really meaningful revenue from COVID-19 vaccines in fact, they kind of new debt is baked into our tightened the guidance right now is sort of less than $2 million.
They could be in other sort of material swing factor here as we look as do the balance.
Balance of the year.
Understood. Thanks, guys.
Thank you. Our next question comes from the line of Lisa Gill with J P. Morgan.
Let's now open great. Thanks, very much and I'll add my congratulations on the quarter I just wanted to dig in a little bit deeper on membership and the amount of visibility that you have going into 'twenty 'twenty. One. So my first question would be around member conversion. So bjorn. Thank you so much for all of that detail around.
Membership and what's included and not included and as we think about those virtual one members now are today and when you think about the new markets that you're moving into what's your assumption for of converting them to a fully paid one medical members would be my first question and then secondly, I'm just sort of really understand the process of signing up.
On an enterprise customer are you utilizing the consultant community and are you going directly to those employers them, how does that relationship building and how do we think about how long. It takes two sides of that first as you know the signing of consumer who sees one of your advertisements et cetera, and end of downslope downloads the app.
Yeah. Thanks, and then maybe I'll take sort of the first question and then I'll hand, it over to EMEA on on the sales cycle. It gives you additional sort of color Dale heal.
I think as we look at 'twenty and 'twenty, one and sort of visibility we have on the membership. We obviously feel very positive about the momentum that we have heading into 'twenty one.
As you noted we had the best teams to be in terms of net new membership adds now followed by the best Q4, net new membership adds in a very strong and facts to the steward.
Best Claude the so to speak in a in a in a row here based on our guidance for Q1.
And that's instead of really comes from our value of proposition resonating both of his employer customers and with consumers.
Well it is the ability to do same day next day appointments, whether it is the ability to interact with us digitally whether you're on the go or whether you're at home.
Yeah, I think we've really shown depaolo off the model in 'twenty 'twenty of you've pulled forward a lot of the demand curve. So to speak and I think we are now seeing the fruits of the debt into membership count and maybe I'll hand, it over now to EMEA to talk a little more about the specifics.
What we are seeing on the enterprise side.
Yeah, Great Lisa Thank you for the question.
On the on the enterprise side, a couple of reflections to your questions here.
One you were noting kind of our one medical now which is.
Our digital only offering that we offer to employers where we don't have a physical presence in those markets and so to your question could those digital only members.
The kind of full if you will one medical members, if and when we open up.
In person.
Presence in those markets and the answer is yes.
So that that does become a nice way for us to kind of seed or precede it.
The markets that we might enter into and now with one medical now we're often the turning on if you will the membership whether the one medical now of membership or the full membership for all of the employees. When we were signing up and enterprise accounts, we don't count the one medical now users as of <unk>.
<unk> in our member count.
But those indeed could be built in.
Members from membership growth and the the.
Other thing were seeing with our enterprise growth.
Is that is also built in growth from adding more dependence and from activating them.
And engaging with them more of our.
And enterprise accounts. So we are seeing more and more people are using dependence and pediatric services were also extending into the behavioral.
Services as we've mentioned as well.
In the past so those give us really nice opportunities to grow with new accounts in existing markets with one medical now with dependence with greater activation.
And and as noted of cross large.
Large medium and small accounts.
Yeah.
Yeah.
Thank you. Our next question will come from the line of Ryan Daniels with William Blair. Your line is now open.
Yes. Thank you for taking the question I wanted to continue with the little bit more commentary on the membership I think of Purion. You may have mentioned this but 58 per cent of the members. This year, our enterprise level, that's up nicely and I wanted to give a little more color on that it seems to me that that would be of positive longer term for the business in a couple of regards.
One I think the retention rates modestly higher there and then number two I assume kind of the revenue potential from enterprise customers are higher as they might use.
Use more additional services like Peter behavioral.
Then some of the D T C consumers, but I'm not sure. If that's really the case so any color on those two aspects and kind of what the uptick means for you guys.
Yeah, Great Great question and.
There's something pneumatic cloud was all of the performance on the enterprise side, that's sort of the solid performance on the consumer side I think it really goes to two.
To show.
All of the value proposition is towards the east.
Yeah, I think that the interesting thing, particularly on the enterprise side.
Is that the.
As the niches mentioned actually the couple of built in growth levels over time that are I think are really important for us to a two two point out.
It is sort of day of smoke you start out with the couple of members and in the enterprise customer and then over time you.
Get the trust from.
Benefits departments, and you can start to engage their employees more or you get the water cooler.
Paul credits virtual or in person.
Going about the Canadian experience that people had and.
Youre already pre sold in the employer.
As an employee you already have access to one medical so at the lowest nacho it'll certainly two to become a member of point.
0.1.
0.2 to your point, whether it's all of them now or some of the out of service offerings.
Dominant kind of targeted SD enterprise customer today.
And that's certainly an additional upsell potential here as well so I don't want to dismiss the consumer growth I think it is a very important part of what we're doing in and at the end of the day, but somebody comes in as the consumer or somebody comes in as an enterprise.
The employee.
We give them the same exceptional experience and we wanted the life all of them equally.
But the the enterprise certainly provides us with an additional is underway and additional visibility.
Okay, great. Thank you for that and then maybe another question for you I think over the last few quarters, you've been offering of EBITDA and care margin guidance on the quarterly basis as well, but not this quarter. So I'm just curious if there's anything we need to consider for our models in regards to the cadence this year as it relates to investments or maybe startups of that obviously.
Impacts the.
Per margin as you open new markets of any any color commentary there that we should consider as we think about the the profit cadence for the year. Thank you.
Yeah. So.
If it takes you back only a year, but what are the yield has been like would.
We talked about in terms of the IPO of what's actually there'll be planned on giving annual guidance and then the preview for two of.
Of the individual quarters and in many ways. What we tried to do here in in 'twenty or 'twenty, one is making good on debt promise and the actually expand sort of the yardstick that we gave you all to to measure all of the performance by effectively giving you six metrics as opposed to as opposed to just.
Five in the past.
Yeah.
Part of the edge will essentially also driven by us really showcasing the language that we have in the model.
Particularly in Q3 and Q4, so you know when I think about.
You know of debt and membership model way of beginning the from the membership is sort of drives the revenue and then you have the language on the care models from side, you've got the leverage on the on the G&A and sales and marketing side.
We really saw its debt the membership and the revenue I'll, probably just two of the two most important metrics that will help you all with the <unk>.
What does your model.
And then a little bit to the second part of your question on on the sort of where the investments.
Will will certainly continue to to invest in our geographic footprint will continue to invest in all the services will continue to invest in our technology and we'll we'll try as best as we can to slash debt throughout the year, but obviously there will be quarterly fluctuations.
Thank you. Our next question comes from the line of Ricky Goldwasser with Morgan Stanley. Your line is now open.
Yeah, Hi, good afternoon, everyone.
So I'm I have a question on the.
A member of gross profit because I think about it sort of the good measure off of the unit economics and when I think about your 2021 guide beside the fact that they are opening new centers in your regions and we're gonna have let's call the testing in 2021.
And you're not assuming much for a vaccine when we think about sort of the upper end of the guidance you are assuming nice growth of that unit economics and the gross profit per member. So can we talk about these growth drivers of can we talk maybe part of.
The impact of the fact that you now have of new product right. The video.
True.
And how should we think about the contribution of that how should we think about that contribution to the market's trunk true going forward.
And then I have a follow up on the vaccine because I start with us the one.
Yeah.
Sure so.
Yeah I think.
A total of all those are all great questions and it goes a little bit back to the conversation we had earlier alone.
The opportunity that some of our enterprise businesses provide us, but sort of providing additional services, whether it's <unk>, whether it's healthy together.
Whether it's all of the behavioral health program. So those are certainly policy of what we.
We'll continue to to device desktop revenue per member.
We also as I mentioned on the on each of the prepared remarks still assume a material amount of COVID-19 testing, particularly in the first half.
Which is another thing too to to consider and.
Yes, I think if it's just sort of and then certainly last but not the least you also have the global wealth from the us entering into additional hospital system partnerships throughout 2020.
Which again as you look at the annual numbers.
All of US obviously to consider here.
But when I take the step back.
We feel very good about the ZIP code of offering into the service offering does we have today for our clients, but of the only the enterprise side or the consumer side EMEA talked a little bit about earlier about the fact that we engage our members on average 10 times twice of which are sort of in India office.
And that engagement ultimately drives the value of Clos are not just our P&L, but also is what drives the value for our enterprise clients and our low and our consumers because that is what keeps them healthier that is where the helps reduce the cost for them and yeah, I think of things that value proposition.
Is.
Is what we should be able to to.
To really capitalize on.
But the day on is it fair to say that because now you can get reimbursed for telehealth and video visits debt.
The pre Covid you couldn't that each of that interaction with the member and I'm thinking about it from the profit side not the revenue side is the higher margin interaction.
It's it's it's definitely higher margin the until the accident in east coast sent from the percentage perspective, so what happens to your life.
To your point the introduction of billable remote visits really helped us take care of our members.
Not just in our offices, but also frankly in all of our members to have a longitudinal relationship with the of provider. So I'm just safety of day, a sofa and from the safety of all of the poem items Sofa right. So what that does is certainly it helps us.
Become more efficient with our own operations as it helps us become more efficient resolve of footprint and it helps us so of our Memphis battle of so that the relative costs associated with some of those visits.
The margin out of low.
Now at the same time I also want to point out of the average fleet embarrassment for those of us know of true.
You are.
The idea of certain things did you simply cant do remotely.
You cant give people COVID-19 mixed gene symbolically Yukon yeah.
Stitch scale are they are they all are stitched them back up together if they have if they have the at need for example, right. So.
There are puts and takes in debt sort of why we need.
We keep mentioning that the average reimbursement.
All of our visit types, such as India office of the moat and college.
Certainly is still below the average of embarrassment that we saw pre COVID-19, but on a on a relative margin basis, I think you're absolutely right.
And can I just ask is that the vaccine question.
I appreciate it that theres not a lot of visibility around supply.
On the occasions, it seems that you're assuming.
The very low contribution which is $2 million.
Maybe help us frame it I mean, I would I think about the J&J vaccine, which seems to be more suitable for the primary care setting can we may be booked to the your share in COVID-19 testing.
Is to help us reframe, what maybe your share of the J&J vaccine opportunity kind of looks like you just remind us what percent of total of Covid testing them.
Your share is.
Yeah.
I don't know debt Thats net.
<unk> the number that I wouldn't over rotate on at this point right.
What I would probably say, though is that just like in Covid testing, we are not just COVID-19 testing our members.
We are testing for Covid debt mass testing sites early on independent makes we sent.
Everybody can can come in and get tested with us and thanks.
Thankfully we are the staying the same thing now relative to a two two vaccines within the guidelines of the states and the department of public health and.
Talk to you a little bit about the.
The dynamics of Dale.
So yes, we certainly think debt we have.
The strong platform that is the lending.
Lenny willing enables to us to estimate not just tens of thousands of people, which is what we've done today, but many many more.
Those are members of our non members and.
We will continue to work with the federal and state and local governments.
The other two two.
Vaccinate as many people as we can because it's because I seem to do for the communities.
That's the first and foremost Parliament then yes.
The revenue associated with that that's think of it comes also with the expense right.
Running Doe sites is Knoxville free it does take labor does take all the additional startup costs. So as we've been saying last year to me. That's that's less of an opportunity of the revenue per se, it's really more of an opportunity off of.
Of showing people with one medical can do.
Thank you.
Ladies and gentlemen in the interest of time, we ask that you. Please limit yourself to one question. Our next question comes from the line of George Hill with Deutsche Bank. Your line is now open.
Hi, Matt.
George Thanks for taking the question. So the guidance implies per margin. He is going to stay relatively flat or slightly lower in 2021. Other any other factors. Besides the investments in technology and expanding into new markets and could you provide some more color on the mix dynamics that will impact margins next year. Thank you.
Yeah.
At the right.
Well I was just kind of briefly add as we noted and thank you for the question. Yeah, we will be going from 13 to 17 markets. We just opened at the end of last year in Austin, Texas, and we'll be watching.
Watching in in Houston, Texas, Raleigh, Durham, North Carolina.
No Milwaukee, Wisconsin, Columbus, Ohio, and so yes, we will be expanding those.
Those new markets and as Darren mentioned in his prepared remarks, we will also be expanding including physical footprint significantly in our existing markets and continuing to growth.
Our services and our digital platform. So all of that is assumed in that caremark.
Thank you.
Our next question comes from the line of Jessica.
So start with Piper Sandler Your line is now open.
Hi, it's.
Jeff on for Sean Thanks for taking the question of I think we're interested in now and on some of the new markets that you guys are opening this year like rally.
On Colombia, it how should we think about the cadence of these openings over the course of the year and then where do you see all of the things open with kind of ex or an employer accounts in place and the spell those go live and then in 'twenty and 'twenty, one or not till 2020.
Thanks for the question Jeff.
We will roll these out throughout the year with each partner.
The the ability to open a physical sites.
Aries by market given the <unk>.
<unk>.
Put in offices and ramp up staff and and frankly also some delays with COVID-19, but those of those typically will be.
The spread more in the back half.
In terms of new new new markets.
Of the year.
So that's how you might think about that in terms of employer opportunities, yes, but what is exciting is we have current.
Employers that have presence in some of those markets and we do have the opportunity to if you will turn on those lives are as full one medical members. When we enter those markets and there is also of opportunity as we discussed before to convert some of those when medical now kind of the virtual only.
The members into kind of multi Audi and members so.
This adding addition of markets.
Kind of furthers the network of attractiveness of ourselves not only to capture this current business, but now as we come to more and more multi market employers were more likely to hit more of their employee bases with with our presence.
Yeah.
Thank you.
Think of Colorado.
So as you guys look to maybe of 17 city footprint.
It is that if the MSA target that you've laid out around the IPO still viable or are you guys kind of looking into the thing, but frankly, I'm thinking that it might be more attractive to try to grow penetration with and.
The sort of.
Yeah, well the need of the thing like that.
Oh, we could we think we can grow and 50 and even much much bigger than that we're just scratching. The surface. We were just using that number as an example of just what the total addressable market is but as you and as we mentioned here today I mean, we have 10 engagements with their members. This year eight of them were digital right and two and of course and and that.
The infrastructure that we've built that technology is highly scalable and Leverages Bowl.
And even the the investments of in markets as you know.
It's reasonably nominal given the overall base that we're growing on top of so.
We would expect to continue to grow.
But also we've only scratched the surface in existing markets.
We have you know massive opportunities in existing markets and will continue to grow there. So it's a big.
Big opportunities existing markets, new markets existing employers new employers consumers expanded services expanded populations are a lot of opportunity ahead of us.
Thank you.
I'm. The last question kind of from the line of the lenses Singh with Credit Suisse. Your line is now open.
Thanks, guys. Thanks for squeezing me in there.
I was wondering if could you kind of comment on the competitive landscape, especially of several telehealth companies to employers of players investing heavily in the virtual primary care platform would you characterize those offerings at trying to compete in the large market.
You described are the would you consider the you at all the things like complementary to those virtual care of electoral crime. They could all things from employer's perspective.
Yeah. Thanks, Joe Indra, Yeah, I I think what we're doing is is quite powerful and we're simultaneously addressing the needs of multiple key stakeholders I'd say in a very unique way. So you know from a consumer perspective, we're delivering 90 net promoter scores and delivering outstanding heaters and quality.
Of course, and then simultaneously for employers and payers were taking down the cost of care right and published publication in Jama that reduce the cost of care up to 45% as well as engaging our members 10 times in a year, that's really quite different.
And then in addition to that kind of demand side innovation on the supply side, we took the physicians off the fee for service treadmill, that's burning them out and is generating more and more utilization right. So we have of salaried model and we're showing we can not only reduce specialty visits and hospitalizations and referrals, but we're also reducing.
The physician burnout, which allows us the differentially attract and retain great providers and then finally, we're very differentially clinically and digitally integrating with the major health systems across the United States. We can get that referral we can get that authorization. We can digitally collect the medical record information. We can help get that appointment we can get that pushed in.
Post discharge coordinated back into the follow up care and really own the complexity of navigating that system on the on behalf of the consumer and we're doing this through our own.
The fabulous providers on the salary model and our purpose built technology.
We think that is really quite differentiated.
Okay. Thanks, a lot.
Thank you. Thank you.
There are no further questions at this time I will now turn the call back to Amir Rubin for closing remarks.
Well. Thank you everybody so much for joining us today. Thank you for your continued interest of the great questions. The great discussion and we look forward to seeing the next time have a great evening. Thanks, everyone.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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