Q4 2020 Teladoc Health Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Teladoc Health fourth quarter 'twenty 'twenty Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. The ask a question during the session.
You'll need to press star one on your telephone please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to Mr. Patrick Feeley, Vice President of Investor Relations. Please go ahead.
Thank you and good afternoon today after the market closed we issued a press release announcing our fourth quarter and full year 2020 financial results. This press release is available on the Investor Relations section of the Teladoc Health Dotcom website on this call to discuss the results of adjacent Garlock, Our Chief Executive Officer, and Mala Murthy, our chief financial.
During this call. We will also provide our first quarter and full year 2021 outlook and our prepared remarks will be followed by a question and answer session. Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating teladoc health's performance details on the relationship between these non-GAAP measures to the most comparable GAAP measures.
Reconciliations thereof can be found in the press release that is posted on our website also please note that certain statements made during this call will be forward looking statements as defined by the private Securities Litigation Reform Act of 1995, such forward looking statements are subject to risks uncertainties and other factors that could cause the actual results for teladoc health to differ material.
Lee from those expressed or implied on this call for additional information. Please refer to our cautionary statement in our press release and our filings with the SEC all of which are available on our website I would now like to turn the call over to Jason.
Thanks, Patrick and thank you everyone for joining us this afternoon.
20th of transformational year for Teladoc health and for the role of virtual care within the broader health care industry.
We delivered needed health care to millions of consumers in the midst of the Corona virus pandemic and completed two significant acquisitions debt together under Teladoc health are defining a new category of whole person virtual care.
Taken together, we dramatically accelerated our mission to empower all people everywhere to live their healthiest lives by transforming the health care experience we.
We delivered over $1 billion in revenue for the year provided over 10.5 million virtual visits.
And our license platform solution enabled an additional 3.9 million visits for our clients' own clinicians pro forma for Intouch.
We on boarded a record 15 million new paid members in 2020 and over the last 18 months. We've added 25 million paid members and 11 million members with B F O access a remarkable results.
During the fourth quarter, we saw broad based strength across our business, which drove revenue of $383 million, an increase of 145% over the prior year and organic growth of 79%, excluding the additions of Intouch health and Labonte ago.
The strength across our channels products and geographies combined with a robust pipeline of new opportunities gives us tremendous confidence in the near term and long term outlook for the business.
As we enter a new year, we've never been better positioned to meet the increasingly sophisticated expectations of consumers clients and providers.
We are heartened by the progress that has been made in delivery of the Corona virus vaccines and expect some return to normalcy, coupled with strong continued demand for virtual care.
Well exceeding pre pandemic levels.
The strategic investments, we made during 2020 to expand the breadth and depth of our capabilities have uniquely positioned us to serve the growing client and consumer demand for virtual care and have accelerated our path to realizing our vision of becoming consumers trusted destination for whole person health.
Yeah.
The expansion of our capabilities in the hospital and health system market, including the acquisition of Intouch positions us as the leader in that channel.
Our enterprise solution enables the full suite of virtual care, regardless of the consumers' needs across any location.
Whether through one of our over 11000 facility based care locations or directly to the consumer's home via mobile device. Our platform enables our clients to provide virtual care for a broad spectrum of use cases from high acuity critical care in the ICU to post discharge follow up an urgent care.
Our visits.
We see growing demand as health systems around the globe look for an enterprise wide secure integrated virtual care solution.
During the fourth quarter, we continued to make strong progress in bringing our platform solution to international markets with multiple new deals, including a new contract supporting critical care programs for a large network of hospitals in Germany.
Our expanded capabilities in the management of chronic disease have uniquely positioned us to deliver on the promise of whole person care.
The combination with Labonge go extends our leadership position and enhances our opportunity to redefine the future of virtual care, leveraging technology and data at unmatched scale to drive better outcomes and lower costs, while delivering a better consumer experience.
We have the capabilities to deliver in managed care of virtually across the spectrum for consumers ranging from wellness and prevention to coordination of care for people living with chronic conditions to high acuity for those dealing with critical illness.
The combination is resonating in the marketplace and we have signed multiple cross sales since closing the Labonge go transaction we.
We highlighted the guide well and Tyson foods deal on our last earnings call as well as of regional Health plan Cross sale last month, we have now signed over a dozen new cross sales since the close of the transaction and the pipeline of new opportunities has more than doubled in just the past three months.
The early indicators give me tremendous confidence that we will deliver on the revenue synergies that we highlighted when we announced the transaction.
Our industry, leading breadth and depth of capabilities comes together to underpin our innovative virtual primary care offering teladoc primary $3 60.
Primary $3 60 as of full credit differentiated whole person solution that leverages, our capabilities to provide and coordinate care using a team based approach and brings together health care providers across multiple specialties.
The primary $3 60 goes beyond just enabling virtual visits rather it's a re imagining of the entire primary care experience and it positions us to become the trusted health care destination for the consumer regardless of what they need for both their mental and physical health.
The results of our first virtual primary care pilot launch during the second quarter of last year have been highly encouraging.
We're seeing over 30% consumer engagement and incredibly high satisfaction with an NPS of over 90.
Over 40% of hypertension, and pre hire hypertension diagnoses and over 25% of diabetes and pre diabetes diagnoses made by our clinicians have been first time diagnoses.
This allows our clinicians and members to begin addressing the progression of disease and creates an opportunity for us to introduce the Levonne go capabilities to those consumers early in their journey.
Which will ultimately drive better outcomes for consumers and lower the overall cost of care.
Last month, we launched additional primary $3 60 pilots with multiple new partners and the amount of interest from new potential clients has been incredibly strong.
We have a pipeline of well over 100 opportunities ranging from fortune 1000 employers to large payers looking to partner on virtual first health plans. In fact, just last week, we signed another new partnership with the very large employer expected to launch later this year.
We are making excellent progress on our integration efforts.
Our commercial organization is now fully integrated and our teams responsible for cross selling have been collaborating for months.
A few weeks ago, we virtually hosted our annual global growth summit.
Bringing together over 700 teammates across our commercial organization, including our new teammates for an Intouch health on La Bongo.
This annual summit is of great opportunity to not only equip our commercial teams with the tools they need to effectively communicate our leading value proposition in the marketplace, but to share best practices and learn from one another.
The integration of our data platform and the assets also continues to progress as we work to unlock the power of our combined datasets.
We are now capturing 2 million blood glucose data points per week, and our clinicians are responding to over 100000 patient messages via text and chat and providing over 30000 visits on average every day.
We are also making significant investments to integrate our products and services.
For example, we see a tremendous opportunity for our new integrated behavioral health product that combines the capabilities of both of the bango and Teladoc.
This innovative offering will per the highly scalable personalized self directed digital care programs of La Bond goes my strength platform with access to the expertise and convenience of Teladoc the virtual network of clinicians.
With this integrated offering we will create a new digital front door to behavioral health care further breaking down barriers to mental health by allowing consumers to find the right care at the right time, increasing access and improving outcomes.
We are already seeing tremendous excitement from clients globally for the next generation behavioral health offering and expect to launch it more broadly in the market by the end of the year.
Before I turn the call over to Molla to discuss our results and forward guidance in more detail I wanted to talk briefly regarding our outlook for 2021.
Following a transformative 2020.
And with the significant momentum we have entering this year, we feel extremely confident in our outlook for 2021.
For the full year, we expect revenue to be in the range of one point 95 to 2.0 billions of dollars representing growth of 80% or approximately 40% to 43% pro forma for the acquisition of Levonne go.
This robust growth is the result of the broad based momentum we continue to see across our business including growth in utilization.
A robust and growing pipeline of multi product sales, including strong demand for our whole person chronic care programs.
Continued strength in the direct to consumer channel.
Increasing demand for our license platform and the health system market growth in international markets and new member additions.
With that I'll turn the call over to Mala for a review of the fourth quarter as well as detailed 2021 guidance.
Thank you, Jason and good afternoon, everyone.
Before I get into the details of the results I would like to note that following the close of the law of transaction. We are streamlining some of our reported metrics.
Our revenue disclosure will continue to be broken out between access fee revenue visit fee revenue and other revenue.
Each of those revenue buckets is further broken out into U S and international.
Our visit volume metrics are aligned with our revenue disclosure, including both the U S and the international visit volume, which is aligned with how we manage the business.
We are also adding a new metric chronic care enrollment mix.
Which captures the total unique individuals enrolled in the la Bomba suite of chronic care programs.
This metric is based on a count of total unique members. So members utilizing multiple solutions are only counted once cash.
Turning to fourth quarter results total revenue increased 145% to $383 million or 17, 9% on an organic basis.
U S access fee revenue for the quarter was $283 million representing growth of 188% over the prior year's quarter.
Total international revenue of $34 million.
Grew 16% versus the prior year.
This is a fee revenue for the fourth quarter increased 80% year over year to $53 million and comprised 14% of total revenue.
Per to 19% of revenue in the prior year's quarter the.
The decrease in visit fee revenue as a percent of total revenue is due to the acquisitions of <unk> and Intouch health, both of which generate a significant majority of revenue from subscription access fees.
Turning to membership and access we ended the quarter with U S paid membership of 51.8 million members, an increase of 41% year over year.
Individuals with visit fee only access was $21 3 million at the end of the fourth quarter.
Total chronic care enrollment, which includes individuals enrolled in one of our chronic care program with 596000 members an increase of more than 40000 members sequentially.
We provided 3 million visits in the quarter to our Teladoc network of clinicians representing 139% growth versus the prior year.
The platform enables sessions, which represents encounters facilitated by our license software platform and provided by our clients own clinicians with an additional $1 1 million in the quarter more than four times. The number of sessions in the same period last year pro forma for the acquisition of.
The Intouch health.
As I mentioned earlier, we have streamlined our visit metrics to better align with how we manage the business and our focus on driving utilization and delivering value for clients of members regardless of payment model.
The annualized utilization rate for our paid members was 17, 7% in the fourth quarter.
825 basis point increase over the last year's fourth quarter and.
And a 120 basis point increase sequentially.
P. M. P. M was of $1 76 in the fourth quarter up from 91 cents in the prior year's fourth quarter.
For half of the increase driven by the inclusion of <unk> in our consolidated results.
Adjusted gross profit, which excludes depreciation and amortization of intangibles increased to $260 million, an increase of 157% as compared to the prior year's fourth quarter.
Adjusted gross margin was 67, 9% compared to 64, 6% in the fourth quarter of 2019.
Gross profit and adjusted gross profit include the benefit of $5.4 million in lower expenses on the volatile devices attributable to purchase accounting adjustments related to the merger.
Okay.
Adjusted EBITDA increased to $54 million in the quarter compared to $15 $2 million in the fourth quarter of 2019.
Fourth quarter adjusted EBITDA margin of 13, 1% increased by 340 basis points year over year.
Adjusted EBITDA includes a benefit of $5 $4 million attributable to purchase accounting adjustments mentioned previously.
Net loss in the quarter with $394 million compared to a net loss of $19 million in the fourth quarter of 2019.
Fourth quarter net loss includes $57 $6 million in transaction costs as well as $331 $7 million of noncash accelerated stock based compensation expense related to the merger of Pitt La Mancha.
Yes.
On a par share basis net loss was $3 seven for the fourth quarter compared to a loss of 26 cents in the fourth quarter of last year.
Fourth quarter net loss per share includes 45 cents of transaction costs as well as $2.59 of noncash accelerated stock based compensation related to the merger of the telephone, though excluding all transaction related costs.
Tax benefits.
The per share loss in the fourth quarter would have been 27 cents.
We ended the quarter with $787 million in cash and short term investments, while our total reported debt outstanding as of December 31st was one $4 billion.
Now turning to forward guidance.
For the full year 2021.
We expect revenue to be in the range of 195 to two points here of $1 billion as Jason mentioned.
Representing growth of 78% to 83% over the prior year.
Our 42, 43% fully pro forma for the acquisition of the Banco.
Our confidence in that strong revenue growth is underpinned by.
First <unk>.
Growth in utilization, particularly among non infectious disease related visits such as hypertension, lower back pain anxiety and depression.
During the fourth quarter, approximately 75% of our visit volume was related to non infectious diseases.
Up from 50% in the fourth quarter of last year as our visit mix continues to diversify a trend that has continued.
Into the new year.
Okay.
We've also seen tremendous growth of new registrations over the past year with newly registered individuals growing at twice the rate of new member additions.
Registered member growth creates opportunity for deeper engagement and as a leading indicator of forward of utilization.
Growth in specialty visit has been particularly strong led by growth in behavioral health, which experienced visit growth of over 500% in 'twenty 'twenty as the growth in visits accelerated throughout the course of the year.
All of that comes together to give us tremendous confidence in our visit volume outlook and you can see that reflected in our strong visit volume guidance.
We expect total visit volume to be between 12, and 13 million visits for SCR Rep.
The representing growth of 13 to 23 per cent.
Second.
We have built a robust and growing pipeline of multi product sales, including strong demand for our whole person chronic care programs in 'twenty 'twenty two thirds of Teladoc. The deals who are multi product deals and our experience shows that client retention member engagement and P. M P.
<unk> growth are all significantly stronger for clients that use more than one of our products.
Next in the direct to consumer channel our better held brand has also continued to significantly outperform delivering over $300 million of revenue in 2020.
We expect another year of robust growth of at least 50% in 'twenty 'twenty, one as we continue to gain scale and expand our leadership position in that channel.
For continued new member additions at both existing and new clients.
We expect to grow paid membership to 52 to 54 million members in 'twenty 'twenty, one which is net of the approximately 1.5 million COVID-19 related temporary remembers that have rolled off during the first quarter as previously disclosed.
We expect visit fee only access to be available to an additional 22 to 23 million individuals.
We also see increasing demand for our hospital and health system platform solution. As these organizations look to invest in robust secure and purpose built telehealth capabilities.
We expect organic growth in this channel at the high end of the 20% to 30% target range. We provided last year upon the closing of the Intouch acquisition.
And last but not least accelerating growth in the international market driven by increased penetration in existing geographies and expansion into new regions.
We expect adjusted EBITDA in 'twenty 'twenty, one in the range of $255 million to $275 million, representing an increase of over 100% of the midpoint.
And including an approximately $20 million benefit from lower expenses on Levonne go devices attributable to purchase accounting adjustments related to bill the bango Marcia.
The expected growth in adjusted EBITDA is driven by the contribution from a full year of <unk> as well as the overall strength of cross channel, partially offset by investments back into the business, including the integration of <unk> as well as new product development and enhancements to existing products.
For the first quarter of 'twenty 'twenty, one we expect total revenue of $445 million to $455 million Rep.
The representing growth of approximately 150% over the prior year's quarter.
We expect total paid membership in the range of $51 million to $52 million, which is net of the approximately $1 5 million temporary remembers discussed in prior quarters that have rolled off subsequent to year end.
We anticipate total visits during the first quarter of between $2 9 million and $3 1 million bad debt.
We expect first quarter adjusted EBITDA to be in the range of $45 million to $48 million, including an approximate $7 million benefit from lower expenses under the bango devices attributable to purchase accounting adjustments related to the the bango transaction.
With that I will turn the call back to Jason for closing remarks.
Thanks, Mala in closing I want to thank the entire teladoc team for their amazing commitment to serving our clients and members around the world during a challenging year.
Over the past 12 months, we've seen a monumental change in consumer expectations for the way they access and experience health care as virtual care has firmly entered the mainstream.
As a company we've responded by significantly expanding our capabilities to meet the rising demands of clients and consumers around the world, while extending our leadership position by delivering enabling and empowering virtual care.
As always thank you all for your continued interest in Teladoc health and with that we'll open the call for questions operator.
If you'd like to ask a question at this time. Please press Star then the number one on your telephone keypad. If he would like which are your question press the pound key in the interest of time, please limit yourself to one question first.
First question comes from Lisa Gill with JP Morgan.
Thanks, very much and congratulations on a great year Jason.
I, just really want to understand just a couple of really quick. Thanks Heath gave us so much information. Thank you to you of Mila, but the first would just be around U S paid members retention rates.
Competition in the marketplace I know I, usually ask you about the selling season, but I know, it's a little early for that right now, but just really want to understand you know how youre thinking about the competitive market right now.
Around you know what you found the retention side cause you clearly out of the a lot of new business and then secondly, you did talk about dozens of cross sell Levonne go.
The pieces of business in 2021 that are included in 'twenty 'twenty. One is there any way to quantify that so we can start to think about reaching that that half a billion dollar goal that you set when you made the transaction.
Yeah. Thanks, Lisa let me start with our retention rates and the competitive landscape.
And then I'll talk a little bit about the about the cross selling situation.
With respect to retention rates, they continue to be at high levels consistent with historic levels.
Which you know have always been in sort of the low to mid nineties.
We can continue to see that.
And in fact, what we're seeing is the pipeline is growing actually faster than we've seen in previous years.
When I look at our membership opportunities sort of the gross opportunities in our pipeline are the membership opportunity is up over 50% relative to the same time last year.
And I think that that's really indicative of the market and clients recognizing the value of the full solution that we have and the unique position that we occupy.
And you know I've had the number of a large client discussions over the last several weeks as we start to move into the selling season, and we start to talk about the opportunity of the full credit answer of sort of that full solution across all of our product portfolio and in it.
It is truly differentiated so you know I I was just talking to our regional Blue plan I, who I believe we will take.
Takeaway from a competitor who has a much narrower set of products.
And can't compete in the evolving landscape and sort of the the new paradigm that we've created.
With respect to the the.
The the cross selling.
I think we said is over a dozen cross sales.
Those will roll on over the course of 2021.
And I would say we'll have.
Some impact on the back half of the year, but relatively small I in the back half of this year, what we're really looking at is.
Impact on 2022, and we still feel very good in fact better than we've ever felt before about the about the <unk>.
Prospects for our revenue synergies.
You're sort of characterizing the cross sell opportunities.
We I.
We look at the pipeline today versus the pipeline just sort of the middle of last quarter and remember we started our commercial collaboration a long before we close the old law Bango transaction and we've more than doubled the pipeline of cross sell opportunities. So I.
Feel very very good about it.
We've taken of I would say of relatively conservative view of the contribution from the revenue synergies in 2021 and believe that those will materialize much more significantly in 'twenty two and beyond.
Great. Thank you.
Next question comes from Sandy Draper with Truest Securities.
Thanks, very much of them would also echo the congratulations on the very strong year.
Jason from a high level one of the things I know we used to talk about is you were really focused on debt the.
Higher visit fee or higher visit growth then access fee growth because back. This is pre COVID-19 you are really showing the power of your ability to drive.
Utilization and shows the dollar value of the platform.
Post Covid I'm just wondering when do you think longer term is really because you shift postcode of the plus the diversity of the model is it really more about access fee growth and that will grow faster. The membership I'm just trying to think about how you're thinking and maybe model of chime in as well thinking about that growth dynamic just because it clearly decoupled with Kobe.
But would love to just get your thoughts on you know drive new business of the growth is it around the the visit volume versus the access fee. Thanks.
Yeah No I appreciate the question and it is it's a complicated question right because I think visit volume will continue to grow at a more rapid rate than membership well, but I think what youre going to see with the the significantly increased its sort of per member.
Subscription fees that we get with the <unk> business Youre going to see.
The revenue grow faster on the subscription access fees right. So there's a little bit of of mix there.
I think one of the things that I would look at and makes me really bullish on the future of our continued visit volume growth is the fact that you know this year, we saw visits grow of 140% year over year in spite of the fact that infectious disease visit decreases.
Creased by 17%. So we have this situation where people are coming to us for a much broader array of reasons, we're seeing our mental health visits increase dramatically over 500% through our <unk> channel for example, dermatology Similarly and.
Yeah.
Where we're facing.
Historically low flu season, because of social distancing and mask wearing now we've taken that into account in the guidance that we gave for 2021 and eve and were even contemplating it as we look into the first half of 'twenty two.
And because I think it's really not until the back half of 'twenty, two that youre going to see us return to a more sort of normalized flu cold and flu season. So.
All of that's taken into consideration as we think about the long term growth. So hopefully that clarifies the little bit rate visit volume visit volume growth faster the membership and yet subscription access fees are likely to grow faster than visit fees, yeah, and sandy it's of great question, what I would add Inc.
Think about the growth of both of those revenues.
Just to reinforce what I said in our prepared remarks in terms of why do we have confidence in the growth of both access fee revenue and visit revenue it sort of for a few different factors right. One is on the access fee growth to Jason's point around it is a much bigger base with the additional from the bango and in touch.
Most of those feed our access fee revenue as we've talked about.
And so the growth there is going to be driven by our strong pipeline of multi product sales.
We've talked about our growth in specialties continued growth in our chronic condition programs.
And then the growth in HHS and in touch and our license platform solution. All of that is going to fade out of feed our access fee revenue growth.
And then the to the point that Jason made around whats driving visit revenue. It will really be the gains we continue to make in utilization you saw from our results we saw.
Saw a very strong increase in utilization in the fourth quarter, you know over 800 points relative to fourth quarter of 2019 and sequentially much over 100 points in relation to the with respect of the third quarter. So we will continue to drive growth.
And utilization and you know that will obviously feed the visit revenue growth the growth of utilization is on the backhaul the.
The significant increase in growth that we're seeing in non infectious diseases, which was about 75 per cent of our visit volume mix in the fourth quarter. So we're seeing strong growth there we've talked about the growth that we're seeing in specialty.
Whether it be mental health that would be done so that is going to continue to drive the utilization. So all of those factors is what is underpinning our confidence in both of the access fee revenue growth as well as the visit revenue growth.
Next question comes from Sean Wieland with Piper Sandler.
Hi, Thanks, so much and I guess of follow up Sandeep just to go a little bit deeper so.
Clearly the.
Membership growth is moderating in the outlook and I'd just like to know is that of factor of overall market penetration of virtual care do you think that there's opportunities longer term to continue to grow membership and then related to that.
You called out a smaller new registrations.
What percent of members today are registered members.
So let me let me speak first Sean to the question of membership growth. We added 15 million members last year and 25 million members in the last two years.
That's a staggering number.
And I think what what gives me confidence in the continued membership growth is what I mentioned earlier, which is that if you look at our growth pipeline. The membership growth opportunity is actually 50% larger than it was at this time last year, it's just the the <unk>.
Those are earlier are in.
In the selling process right. So you know we've had the sort of refill the pipeline of if you will I. After just an explosive year last year and so you know we take a relatively conservative view of the membership.
Growth given the earlier stage and yet the the gross opportunity is 50% larger than it was at this time last year. So.
I think that that gives me.
Significant confidence over the longer term, we still have 65 million members worth of white space within existing clients. So I feel very very good about continued membership growth.
And you know we look at it over you know sort of a multi year or not a not a quarter by quarter a question.
Yeah and to your second question, Sean We as you know do not break out.
What you asked we have given you a lot of information as was pointed out earlier in the call. We don't give you every piece of information. So that's not something we've broken out what we have talked as you as you mentioned about the increase in first time registrants and how that contributes to our.
Overall, the visit growth not only in the year that they first time register but also that that enters the flywheel and we get then repeat utilization, especially among multiple products, yeah, and it's important that you know of registrations as we have talked about is running well ahead of membership addition growth right. So.
That is also important as we continue to drive utilization in 'twenty one.
Next question comes from Stephanie Davis with SBB Leerink.
Hey, guys I feel everyone else congrats on the quarter Congrats on the guide.
Thank you stepping out.
Of really strong international of dynamic on your prepared remarks, I was hoping that you could talk a little bit more about maybe what pockets of geographies, where you're seeing the biggest strength and how the competitive dynamics differ net market.
Yeah, absolutely I'm really excited about our international products are proud of prospect and we're just starting to really hit our stride and activate the international channels for.
For the Intouch solutions, and we're seeing tremendous interest I in the international markets for the Levonne go products. So you know and you know how how large those opportunities are.
So with respect to the.
The the geographies, we're seeing good growth in Europe, both on the continent as well as in the U K.
<unk>, where we continue to see.
The South American markets, and especially Brazil, as very exciting opportunities you know the Brazilian market is characterized by a very tech savvy a.
Population and it's a.
And market, where private health insurance is rather prevalent.
Specifically in Europe. We are you know, we launched with Telefonica and that continues to be of very very strong relationship where we're very bullish on the prospects for a for that relationship.
And then of course, you know we launched over the past year I in the Nordic region. So right now those are probably our primary growth areas. We continue to have a strong and steady footprint I in Canada, and Australia and New Zealand.
And so from my perspective.
I'm very very bullish there the the I believe that unlocking some of those markets for a total of Bongo capabilities will be a game changer in terms of the role of the international markets.
And in our book of business.
Next question comes from Richard close with Canaccord Genuity.
Great. Thanks for the question I assume you can hear me okay.
Yes perfect.
Excellent.
So.
I was going to drill down on the membership, but that's been hammered on here, but.
Can we talk a little bit about primary care of Jason and how youre thinking about that obviously the comments on the pilots were positive.
How do we think about the business model for primary care what metrics you're focused in on there and then.
Does it shift the revenue model.
The more from an episodic type of payment or.
Two more recurring or just overall, how does that model evolve.
Yeah I appreciate the question Richard we're really excited about the prospects for primary 360, <unk>, we have a very very large and diverse pipeline of opportunities for that model and it ranges honestly for.
Higher P M P M plus of a wider variety of.
Visit fees because of course, you know of 30 minute introductory visit with a new primary care relationship is going to be worth more than I.
And annual check in or you know of symptomatic visit for example.
<unk> said that we're also talking to a number of health plans about putting in quality metrics and incorporating more value based reimbursement associated with our ability to move the needle on quality of care I, you know and I think that will start.
With small steps.
Along the lines of documented the improvement in screening.
The rates of screening and appropriate.
Preventative care and move toward more.
The impactful outcomes based measurement and ultimately the opportunity for us to enter into the risk.
Risk sharing arrangements of share of savings arrangements with some of the payers.
Already having those discussions, but we're also very cognizant that we need to step carefully into that and make sure that we have the right data to be able to enter into those relationships with eyes wide open.
And know where we can make the biggest impact so I think you'll see an evolution of that model, but in all of those cases are significantly higher revenue per member for those who we're serving with our primary 360 product.
Question comes from Sean Dodge with RBC capital markets.
Thanks, Doug and good afternoon, maybe.
On the average Pnp and the sequential change there was pretty significant even.
What you kind of excluding the lift from the long ago.
Included in there.
If we said the language side can you give us a sense of how much of that was driven by multi product sales versus.
Maybe something like the pricing or true ups related to the the visits included contracts.
Yeah. So you.
You know what we have what we've shared with you is as you said there was a pretty significant increase in the P. M. P. M. As you saw of dollars 76 in the quarter compared to a dollar of 18 sequentially and 91 cents. So a very significant increase you know the way I would think about it is.
Is a lot of it was because of the addition of <unk> to be clear, but even absent of the addition of <unk>. We did see an expansion of a nice expansion in our P. M. P M in the quarter.
I don't want to break it out more specifically on how much of it came from a re rating of our visits included contracts for which by the way we had related to the year as we went through the visit volumes for the ERP, we've talked about that and that definitely did happen.
But there are a lot of other you know so I don't want to specifically break out the individual drivers, but what I will say is even excluding the impact of long ago for the two months of the quarter. We actually did see a nice expansion N. P. M. P. M. As we went through the fourth quarter.
Next question comes from Daniel growth sites with Citi.
Hi, guys. Thanks for taking the question.
I want to focus a little bit on Medicare of both on M&A and anti for service I think in the third quarter. You mentioned you had around two and a half million dollars.
As a board and and CMS mentioned I think that.
21 million beneficiaries for the plan year 2021 will have access to some type of telehealth benefits. So curious if you can give us an update on on the MAA progress you've made.
During this past AEP and then on the fee for service side, there's been some noise out of the Inspector General's office the auditing.
Some of telehealth visits and I don't know it seems like the regulatory landscape in fee for service might be a little more uncertainty. So curious to get your thoughts on that market in particular, which I suppose would go into your provider.
The segment.
And if the.
The direct contracting within Medicare fee for service is going to have any impact on on your strategy.
The strategy in that market.
Yeah, I'll take I'll take the second one first and the Mala can speak a little bit to the progress we're making in terms of our.
Our Medicare membership.
The.
I I think I continue to think that Medicare fee for service is primarily an opportunity for us with respect to our hospital and health systems business as hospital and health systems continue to lean in harder to providing virtual care for their membership and being reimbursed by <unk>.
CMS.
We continue to be very active I in terms of working with CMS.
And various state legislators for that matter on best practices when it comes to the regulatory environment.
And we're very optimistic actually we think that the winds are all blowing in the right direction.
It's a rare bipartisan issue.
And we're collaborative with respect to making sure that they are the right guardrails around it because we think that it's important to have.
Best practices proliferate with respect to not.
Not only payment models, but also the best care being delivered I am.
And to make sure that our that the consumers' needs as well as the payers needs, whether that's the federal government or a private health plan are also being looked after so.
We're very active on those fronts, where we're actually applying quite of bit of technology to that.
To be able to do things like you know our use of artificial intelligence to validate the clinical visit took place and things like that so.
I feel very good about about the direction of that is heading.
We continue to make progress in the Medicare advantage market.
I don't know that we gave the numbers are updated with respect to our Medicare advantage population.
We'll continue to keep you apprised of that as we go through the quarters, Yeah and the only other thing I would add is you know as we've talked about the 15 million member edition in 2020, we have talked about how we've seen nice growth in government whether that includes Medicare advantage.
Our Medicaid so it's so think of it more as we are seeing.
Strong growth in membership addition of cross government.
Maybe last thing I'd just mention is we're also seeing.
A private Medicare, meaning I may of Medicare populations from within large employers.
Hey, who come through the health plans are.
It's a it's part of the market that frequently isn't talked about but.
But we're seeing growth in some of those populations, where the health plans are coming to us for those populations as well.
Okay.
The next question comes from Charles <unk> with Cowen.
Oh, yeah, thanks for taking the question.
Just just to follow up a little bit on primary 360 as it relates to membership guidance is it right to think that the primary 360 members of that growth is a conversion of existing U S paid member of membership numbers or would that the incremental within the.
Membership growth and then secondly on the utilization number which was quite strong.
I know you don't give this number but in.
In the past, but can you give a sense on.
How the how much of those user of utilization is from repeat users versus bringing in for.
First time users. Thanks.
Yeah. So I'll take the primary 360 membership in the Molla can talk a little bit of about I repeat utilization and registrations, because I think really it's a question of new registrations.
The with respect of primary $3 60, I the answer is actually both.
So in some cases, we're going to existing clients to existing populations and we're making primary $3 60 available to them and so we wouldn't newly count those members right there already in our membership count in other cases, there are new populations, where we're going to them.
And making our services available for the first time and the product that we're bringing to bear for them yeah.
Maybe primary 360. It may also be primary $3 60, and other products alongside of it. So you may get some into our primary 360 driving that revenue and then other members may have other versions of the product either on a sort of as needed basis and or.
They may have a chronic condition management programs. So yeah, I think I think you'll see it show up in different ways. What you can be confident though is we're only going to count of member once.
Yeah, and Charles for that in your other question.
We as you said, we don't break it out but I'll just give you a few facts. The first is if you think about our visit volume in the quarter about half of it actually came from first time users and as you know that's always.
It really.
Really helpful. Last do you think about driving feature of the utilization rate. They try it once and then they will repeat so that is something that is also a factor that underpins our confidence in driving utilization as we move forward. So the fact that we are seeing registry registrations, well outpaced membership petitions the fact that about half of the.
The volume came from the first time users and then the only other thing I would say is when we were at Jpmorgan in January we did talk about.
How we are seeing the flywheel dynamics fueling durable growth and we did talk about repeat visit.
Showing very nice robust growth of over the past few years.
I don't want the same more than that but I would I would sort of think about the half of our visit volume coming from first time users in the fourth quarter.
And that is true for the whole year. So that was a trend that was in the fourth quarter that was true and it was true for the whole year as well.
Next question.
<unk> comes from Jilin dressing with credit Suisse.
Thank you. Thanks for taking my questions I just wanted to follow up on the bedroom, a really strong trends there of using $300 million range expect it to grow 50 per cent.
The only one.
That business now, becoming very a sizable piece of people with all of the company I was wondering if you are willing to talk about margins on the AG business, how does the compared with the overall profit margins and long term.
Particularly the opportunity did an unrelated part of its total employers of all expanding tele behavioral and mental health services do you see that having any impact on your bedroom DTC side of the growth prospects.
So let me answer about the the market dynamics around better health and then Mala can talk to our margins and performance.
We really don't I.
Think of couple of things Joe line drove one of them.
We've actually started taking better help into some b to b arrangements in particular with respect to EAP plans and that's turned out to be of very fruitful market for us.
The second thing I would say is you know most people who are turning to better help them.
Either don't have adequate coverage or.
For decided that they don't want to use that coverage, especially for reasons of expenses honestly.
One of the value propositions of better help is that.
For a month's worth of therapy, you can get you know you can get therapy for a month.
It would otherwise cost you I in person.
About the same for a single visit or maybe a visit in the half if you're fortunate.
Instead of the value proposition is very very strong and it is it has always been the case and continues to be the case that many of the people who turned to better help them wouldn't have otherwise gotten therapy right and so we continue to see that market I would be very very.
Sort of Underpenetrated the opportunity very significant.
So we don't see any slowing down of that insight.
And from a margin standpoint gel Indra.
I am really pleased with the progression in margins that that aspect of our business has been making over the past few years I, obviously will not break out margins for any part of our business, but there has been really good progress in terms of margins and it's really on.
Of the back of a few things for me just to give you a little bit of color on what's driving the the improvement in margins.
We are seeing improvement in the lifetime value, we are seeing improvement in retention and lower churn.
We are.
Definitely.
Looking at constantly.
Innovating when it comes to different channels.
We do a lot of product improvements through the year.
We test different pricing as we go through the year. So there are.
A bunch of different levers that underpin the margin progression that you're seeing.
I have to say if you think about revenue visa the the cost of acquisition, which is something that we are very very keenly focused on but we're seeing some very strong improvement in that so overall I'm pleased with the margin progression for the better health.
Next question comes from Donald Hooker with Keybanc.
Yeah.
Great. Good afternoon, and thank you for the question.
I wanted to.
We visit the P. M P M not correct could you Gabe.
Ex Levonne go I guess at the pace.
Some of your comments Mala it appears it was about none of them.
Buck 30.
I think from your comments or somewhere in that neighborhood.
That keeps marching up as we sort.
Sort of a point in time, where that sort of the taps out.
One of the thinking ahead because of some kind of a driver for you over time is there sort of a full stack of your services, where that sort of stopped rising some some of them were out in the future or maybe another way to ask the question is there a particular client with a very very high P. M. P. M that you can sort of highlight.
You know if you think about our P N P M.
And you know the way I think about how that progresses.
It really is about a couple of things. One is we have actually shown case studies, where as the sell multiple products and services, we actually see a market increase pre post N. P. N. P. M right. So I would say the first is it is about.
Expanding our suite of products and services, which is what we have been doing over the past many of its right we've been steadily expanding our suite.
And then the second thing I would say is it's also about <unk>.
Spending Inc.
For the products and services that are more longitudinal not episodic because that drives stickiness. It drives expansion in P. M. P. M. So the way of I think about it is if I look at the progression of our business and where we what we have done and where we are headed and as I.
Think about the growth of the various pieces of our business that underpin the 40% to 43% growth that we talked about.
I actually feel we have all of the right ingredients to continue to expand the P. M. P M.
Okay.
And this does conclude the call for today you may now disconnect.
[music].
Yes.