Q4 2020 American Well Corp Earnings Call
Good evening, and Welcome to our 2020 fourth quarter earning corner.
2020 was a significant year in many ways, especially in the world of healthcare.
Depend Emich stressed and challenge the entire Healthcare ecosystem.
Claude depend demek. I'm willing power the providers of Health Care to continue to deliver care to their patients and also care for greater numbers of patients in remote care.
Well terrible probably accelerated our transformation impact timetable by about three to five years.
Some members if now embraced receiving care of your choice.
Look here a constable in some cases encouraging delivering care of virtually to their patients across the care Continuum. Well, beyond rudimentary life here. We're prepared and focused.
Depend Eric did not stop doctors and nurses in many of them in practice delivering care to their patients.
For example repaired cardiologists was offices were abruptly close to enable them to continue seeing their patients in monitoring them remotely. May we help with peace C pregnant mothers is the progress of their pregnancy and enabled endocrinologists to follow up on their diabetes patients. In other words, like highlighted the power and differentiation of the Apple platform.
Were you able to demonstrate how the animal platform could enable overall till delivery in the new hybrid world?
In 2020, we delivered over $245 million in revenues and are focused in between 260 and 270 million for 20 21 representative growth of over 35% over the last two years.
In twenty-twenty our platform supported six million visits, which is about five times. The volume is sold in 2019.
Most importantly we added over 65,000 active providers to our platform bring the total number of providers to over 72000 at the end of the year.
It was incredible to see it's 68,000 of them were not arranged you providers, but rather our clients on providers.
During this transformative year, we watched with admiration the selfless work of our clients and partners, especially the health care providers in their heroic and courageous fight against codes.
Prior to depend emack and even in January of 2020 many of you tell the health is complimentary optional Replacement Service to simple here. We now proved that these utilities only small part of Telehealth.
Coffee helps solidify cameras roll as enabling digital care delivery infrastructure across the entire Healthcare continue.
It's rapidly became a parent the tailor of does not replaced in person care instead it especially through our mail. It complements it and can be instrumental in strengthening existing patient-provider relationship.
The charges group estimated that over 50% of visits were done virtually at the height of the pandemic up from less than 1% before corporate office in today. The analysis is showing that the proportion of visits conducted virtually is stabilized around 15 to 20%
Also, according to McKinsey Health system's independent practices in other providers. So virtual visits increased by fifty two hundred and seventy-five times compared to pre coffee and providers 57% Health more favorably than before. And 64% are more comfortable using it.
Our conversations with payers and providers also changed substantially in 2024 focusing on affordable complimentary service to empowering mission-critical technology.
Digital connectivity enablement became a high priority for most of our clients and partners Simplicity reliability modularity extensibility inefficiency to priority over other features and functions the ability to integrate with existing digital assets through Thursday supportable Solutions also became very important. We were very attentive to the New Market needs and took significant measures to quickly address them.
We still visit in April 2020 as high as over $40,000 per day versus approximately 5,500 in January reaction to the tidal wave of demand. We grew capacity by about ten times in 2020.
We launched a series of that for modules and Care points and to dramatically simplify connectivity and make it more accessible and affordable. We also strong integration with many other assets of our clients and partners.
These Innovations also included the super simple and popular and more now that help and is helping further accelerate provider adoption wage loss delivery Networks.
They also include the deeply integrated Hamel connect HR module the new foldable and we'll touch on tablet the animal c500 CarePoint that is both home and Hospital enabled and the Revolutionary Animal Hospital TV care point that we discussed on our Q3 call.
We experienced significant growth across all segments of our business last year.
Compared to 2019 in 2020 active client providers grew over 13 times from 5,000 to 68000.
We grew total visits five times from over 1 million to six million.
Client provider visits accounted for over 70% of our total annual visits up from 35% in 2019 in may visit for you more than doubled from 750000 to 1.6 million.
Maybe even more important within our visit results is the continued shift to Specialty visits.
Behavioral Health visits grew by 1000% surgical care grew over $2,000 percent and then this redoubled
these Trends created clear separation between almond and Legacy Tales players aiming to offer affordable and convenient alternatives to physical services off. We've always focused on enabling and empowering trusted payers and providers and not on creating alternatives to their offerings.
The transformation in the Market's view of Telehealth for my service to a platform is fast and profound.
Is different area stabilized late in 2020, most of our clients begin preparing to significantly expense their frequency and scope of use of our platform.
In reaction to this tectonic Market shift, we decided to accelerate our investment in Innovative technology that powers our platform as well as its models in Palm.
Looking ahead. You see a rapidly evolving landscape in which trusted Healthcare players develop hybrid model of care.
The increasingly Lambo to deliver an easy to use it comprehensive platform to enable the full spectrum of their Telehealth needs important with this care would be enabling the relationship between providers and patients over time as well as supporting interdisciplinary team based care delivery models.
We recognize that many of our clients and partners have their own preferences in Investments as it relates to tell if adjacent Technologies, like navigation remote patient-monitoring. We are therefore making sure that our platform does not overlap or compete with these assets, but further makes it seamless for Club in Partners to integrate in bed their own choices.
In 2021, we will continue our investment in our postcode with technology platform build out that we briefly discussed on our third quarter cord.
We named the next release of the rapidly evolving animal platform converge.
If our upcoming clam Forum on April 28th, we will present it and feature new functions and Dynamics.
In advance of the Forum and to help you frame a future and output for 20 21. I will share that the key focus of converge is the continued evolution of a guy here from episodic to longitudinal with reoccurring relationship and its core.
It also provides new possibilities for our clients partners and third parties to further expand and diversify use cases enabled. That's on the combination of our technology and it's ubiquitous adoption across the ecosystem are likely to generate significant long-term competitive Advantage for our convert capabilities will also expand our Tam by both increasing our value to existing clients and opening new markets and opportunities for us. The release of converge is an important multi-year Milestone from
Can you read the example of a new longitudinal capabilities is demonstrated individual Primary Care module, which will recently deployed.
We believe that our VPC module is demonstrative of how Healthcare will be experienced in the future.
It provides patients as simple and convenient choice of online and in-person options including referrals Imaging and lab services.
It preserves the long-term and reoccurring relationships with the primary care providers and others while allowing their sponsors to control utilization patterns without compromising remember experience trust quality in value.
We are excited about the technology Innovations. We would present to the market this year encourage. You are investor Partners to attend our client Forum in April. I believe that are innovative solutions uniquely address is strong and urgent need in the market. And now I would like to tell the call over to Keith to review our financials.
Thank you. You doing good afternoon everyone and thank you for joining us for our fourth quarter call before diving into our detailed results. I want to reiterate those comments about how pleased we are with how we end of the month. I'm happy to report that we have exceeded every forecast metric and they're seeing continued momentum across all of our business lines the conversations. We're having with our current and prospective customers Hi-Life, no acknowledgement of a unique capabilities of our platform to deliver true longitudinal care coordinated by your health plan or your doctor. The theme has been the core of our strategic partnership conversations as we believe the new healthcare will require coordination of the full spectrum of care now a couple of points on our full-year 2020 performance before we dig into the quarter Thursday, we end up the are generating over $245 million in Revenue, which equates to 65% growth over the prior year in large part of this growth was due to subscription average contract values. Yep.
from 280
2002 $334,000 in 2019 to 2024 Health System customers and from $546 to $612,000 for health club customers the number of health or some customers also Grew From 140 to 158 in 2019 to 2020 and from 56 to 58 for our Health Plan customer in terms of active providers at the end of the year through over 72000 active providers on the platform delivering care to their patients.
Well, this is a 10x increase over the prior year and highlights the hard work of our team in many cases bringing Full hospital system doctor groups on the platform in Rapid fashion explosion of our customers own providers plugging into the a mobile platform is the most important long-term metric as these non am well doctors grew 13 * from 51g providers and 2019 to over $68,000 at the end of 2020 as reference during the same. The number of our own AMG providers room from home 1800 and 2019 the 4500 at the end of 2020 as we first highlighted during the IPO and then on our Q3 call this intended shift and took care delivered by our customers own providers is a critical Dynamic that has been accelerated by the pandemic to illustrate 66% of all visits and 2019 were performed.
I am rural providers in 2020 this dramatically shifted to we're almost 70% of all 5.9 million visits or four point three million will perform not by Amel providers, but by our customers own providers reminding you that one of the primary tenets of a manual is not to compete against the providers of health care, but to enable and facilitate their abilities of liver care to their patients.
It is this fundamental difference in our business model that will allow am well to capture the network effect of care delivered virtually and all that surrounds and coordinates for longitudinal care.
Now turning to our fourth quarter Financial results. I'm happy to report total revenue of 60.4 million dollars, which is a 34% increase this quarter last year. Our subscription Revenue came in at 26.3 million the 15% increase over the previous year can be attributed to new customers expanded programs within the health plan populations and an increase in the volume of platform visits performed by our health system and Health Plan customers own providers in terms of visits or visit volume remains elevated in comparison to preach COVID-19 level driving a steep increase in our visit Revenue, which total 26.2 million this quarter of 75% over the previous year.
And this quarter alone 1.6 million visits were performed on our platform bringing our total visits in 2022 over 5.9 million. This is up 11% sequentially versus the one point four million visits performed on the platform in Q3 as we forecasted. We saw AMG visits declined 5% sequentially from Q3, but within a thousand visits, it's notable that we continue to experience significant growth an AMG specialty visits, which is on top of the dramatic increase in Q3 over and above to 2, which was the peacock demek.
This shift and more specialized visits versus simple Urgent Care has driven our average price per visit up to $73 per visit in 2020 versus $54 per visit in 2019 long as I stated earlier. We continue to experience outside usage of our platform by our customers own providers and seventy 7% of all visits performed on the platform were conducted by our plan and health system customers phone providers recall. This percentage was 73% last quarter. So the dynamic and Q4 was similar to the peak of the pandemic and Q2 and overall trend that we see continuing throughout twenty Twenty-One as health care Delivery Systems moved to more hybrid care models combining physical and virtual care.
Our services and Care points were Avenue of 7.9 million was an increase of 10% year-over-year but a decrease of 5% compared to last quarter where if you recall from our third quarter of all, we discussed some pull forward buying in the Q3 due to the expiration of the cares Act and the spending of these remaining funds in Q3 gross. Margin for the quarter was 37.5 or compared to 32.7 last quarter vs. 44.7 last year vs. Last quarter. We continue to realize additional high-margin subscription Revenue due to those contracts that contain volume components you over your margin decrease was a direct result of Revenue mix shift to more visits versus 2019.
GNA expense experienced a 36% decline versus last quarter as our IPO occurred in Q3 and there were related one-time non-cash stock-based, Ford Store Executives that were triggered by are successful IPO with the IPO now behind us Q4 GNA resembles a more normalized spend level in the mid $20 range. We are reporting an adjusted ebitda loss of 35.4 million compared to sixteen point nine million loss last year on a macro-level. This was due to revenue mix shift to lower and visits continued investment in the platform and expenses incurred typically of a public company versus last year. When we were private from a balance sheet perspective. We ended the year with cash payments of approximately a billion dollars in Emerald continues to have no debt.
Now turning to forward guidance for the full year 2021. We expect Revenue to be in the range of 260 to $270 million representing a 35% compound growth over twenty five fifteen similar to 20 20. We are expecting visit Revenue to account for approximately 50% of overall Revenue driven by forecasted visit volumes between 1.5 and 1.7 million AMG visits. We are forecasting and adjusted ebitda lost between 157 and 147 million.
As we did during our IPO in an effort to be transparent and given all the moving parts and uncertainty of missed the COVID-19 crisis. I want to provide a few high-level thoughts on framing 20-26. Most notably. We are projecting in 2021 AMG visit volume at level similar to during the pandemic with the midpoint of our range at one point six million visits the same volume as we delivered in total in all of twenty twenty. Now that is an important data point it said differently. We see visit volumes coming out of the pandemic is foundational and not exotic the underlying data supports that both our provider and Health Plan member customers have embraced delivering and receiving care virtually in or doing so on the envelope platform while we're projecting more normalized flu season later in 2021. We continue to observe a mix shift towards specialty visits first Urgent Care and thus are forecasting Revenue per visit to continue to increase wage.
To around the $80.
For visit range versus $73.20 and $54.29 subscription revenue from our innovator customers and revenues from sales of our care points services are projected to return a more normalized levels as discussed during our IPO regarding are indeed spend as either discussed earlier and we highlighted on the third quarter call spect R&D expenses as a percentage of Revenue to continue throughout 2021 at the same levels as the fourth quarter of 2020. This temporary increase is driven by foundational changes in Cusco Edelman to use digital connectivity as part of mainstream health care and thus we have decided to accelerate the converge platform project in advance of these longitudinal care type products. We'll talk more about this at our upcoming client form in April.
For the first quarter twenty Twenty-One. We were expecting Revenue will be lower than in the fourth quarter of 2020 and parts simply because of a fewer number of days but more so the turn of two large contract due to m&a that we identified and discussed during our IPL also the Run of care points in Q3 and Q4 of last year pulling Revenue forward into those quarters and out of the first quarter of this year and finally specific educational marketing campaigns by the health plans that occurred in the fourth quarter of last year.
Looking Beyond 20 21 the converge platform will expand our Tam through expanded Partnerships and functionality and is the basis of some of our inorganic strategic discussions related to launch to do I want to highlight though that while we have accelerated this platform investment into twenty Twenty-One our timeline to achieve ebitda profitability remains unchanged.
And closing and like to reiterate how pleased we are to report yet another strong quarter as this is only our second quarter since becoming a public company. I look forward to reporting progress toward our goals in life is here in 20 21. We are well-capitalized for growth and position to maintain a leadership position in the Telehealth market and I went forward to supplementing this foundational growth with our inorganic structure with that. I'll turn the call back to Edo for his closing remarks.
Thank you Keith. I want to thank all our incredible team members for their hard work over the year supporting our customers and partners during their challenging time. It is clear to me that our platform enhances providers abilities to deliver high-quality care to their patients today the Investments. We are making with us continue that well into the future with that operator will open the call to questions.
Thank you. Can I ask a question? You will need to press star one on your telephone to withdraw your question. Press the pound key again. We ask that you limit yourself to one question. Please stay on a while we compiled the Q&A roster.
Your first question comes from the line of Ricky goldwasser with Morgan Stanley your line is open.
Yeah, hey good evening, and in in congrats in 2/4 and and guidance, you know, clearly there's a lot of demand for your services you are putting forward the Investments and and and a product development when we think about your long-term guidance of twenty to thirty percent top-line growth that you provided at IPO. Is that the right way for us to think about jumping here to 22, but just think about age twenty-two or and Beyond or are you now seeing sort of a step up in demand that is shaping how you think about it long-term Revenue agent unity and then somewhat related, you know, Keith you talk about the revenue per visit Assumption of $80. What are the underlying assumptions that you're making regarding reimbursement for Telehealth visit in any potential changes in the parody versus in person?
Or or basing it to a different level.
Ricky I think there was about five questions and better than that. I'll take the first couple and then I'll hand it over to eat out, you know to talk about reimbursement and then you know some of the more conceptual uh answers to to your last question. Yes, we are seeing so I mean, you're the dancer your first two questions. We are seeing a step up and demand that we are going to stick with what our IPO Revenue growth targets were right now, but we look forward to updating you, you know throughout the year, you know, especially coming out of the client Forum in April that I'm hoping you'll attend, you know, we are seeing the Tam expand, you know through the platform expansion, you know, and we're already achieving as as I mentioned, you know, if you if you normalize for you know, the two contracts we actually are in the mid-20s percent growth this year for subscription. So, you know, yes, we are we are sticking to what we said during the
The IPO, you know in terms of long-term growth, but we will update that. You know, as we as we go through the year in terms of the price per visit was saying around the $80 range, but you know, it's the the shift that happened in Q4 is continuing in q1, you know, two more specialty and going back to what the overall mission statement of the business is and what our strategy is. It's to provide backup supplemental care and really empower the the providers, you know of care your doctor your health plan on the health plans and providers to deliver that care. So we're seeing you know, Urgent Care become more secondary Specialty Care, you know become more primary long as we support those providers of care. So, you know, we're seeing as you know, you know quoted some explosive growth on our specialty side, you know, it's now making up about birth.
of our overall visit
You know, which is exciting and that's what's driving, you know, the the $80 range Revenue per visit, you know in this last quarter. We saw significant growth on our platform providers. Those are non am well doctors, you know delivering Care on the platform, you know, sequentially that was north of 15% quarter-over-quarter. So the shift, you know, we saw in Q4 and we're seeing continued in the queue one of this year. You don't think I could hear your voice one cannot overstate the enormity of what happened in the 2020 and I think it will take years to fully understand it.
The trend is very palpable. Although the velocity of the change is hard to predict. Therefore. We are very comfortable with our reiterating a growth assumption. They're going out Ford not ignoring the enormous upside it still exists. If you need to summarize the trend Telehealth moved from an alternative Acute Care Service into an enabling platform, which is part of everyday Healthcare. We've talked about it only a year ago as a vision package has become a reality. We believe especially with the release of converge that our technology Gap is an enabler is significant wage and we think that the number of providers adopting it is a great indication of what's going to happen going forward, so we are very wage.
Double stating that we believe that there'll be a preference towards technology Revenue. Uh, that is obviously infinitely more efficient in much more scalable a going forward and we're going to learn a lot this year about the velocity of this change and when we have more data, we could come back and reanalyze the future guidance.
Thanks for your next question comes from the line of Robert Jones with Goldman Sachs. Your line is open.
Good evening. Thanks for taking the question Keith. I appreciate all the data points you shared particularly as it relates to twenty Twenty-One. But but I was hoping to get maybe even a better sense of what you're expecting long as it relates to the health systems and Health Plan expectations for for new ads and revenue if I heard you correctly. It sounds like you're You're Expecting AMG will make up about fifty percent of revs. Sounds like the innovator rep be a little bit better than what you saw. And so looking at that what that means on just projections for subscription seems like, you know a little bit of a deceleration if if I'm if I'm thinking about that right anything else you're willing to share just around what you know, what underpins the assumptions on the health system and Health Plan subscription assumptions for the guidance.
I mean, it's a it's it's for the health.
And that's adding new Health Systems as well. As you know, the expansion of the average contract value. So, you know, you saw our average contract value expand nicely, you know, as I said on the call back see, you know, both of those Dynamics continuing to happen into into 2021. So, you know the name of the game there is you know land and expand so Landing new hospital system logos expanding the current customers that we have through, you know, both the rollout of additional modules as well as getting back to you know, the cell phone plan. We want their providers to do or more care virtually. So, you know those visit counts adding into the subscription that was part of the increase in Q4. So we're seeing that happen on the health plan something just to be complete, you know, there is more expansion through the population expansion, you know of new programs like virtual Primary Care, you know, in other programs out to the membership club
So, you know, it's it's it's land and expand on the the system side and expansion through the population on the health plan side.
Okay, so if I'm hearing you correctly not not a big deviation from what you had talked about before as far as new editions for health systems or or health plans in twenty-one.
We would say that our conversations are are really exciting, you know, in terms of pipeline in terms of you know, the and I guess, you know converge if you look up the announcement a converge, you know, that was after reflection of the level of conversations were having with our partners, you know, these are the biggest players in the space and it shows the demand their jobs over the Care on the platform. So, you know, they were bringing forward their designs for you know, longitudinal care and what they wanted to do virtually on the platform. So we had to accelerate our extension on the platform. So, you know, we're we're really encouraging excited about you know, the level and and depth of the conversations we're having
Okay, great. Thank you. Sorry, go ahead and just to detail when you analyze what is subscription Revenue subscription is recognized Thursday for an Enterprise implementation of a hospital or a delivery Network safe to assume that in 2020. Everybody was focused on their day job and I didn't implement the new infrastructure was really far and foreign for everybody. It's also they've safe to assume that everybody is up right now. Everybody realizes that you have to suck digital connectivity infrastructure really in order to survive and in order to grow and that's the conversation the teeth was alluding to the discussion. There is not about the price of AMD doctors or the capacity of doctors that we have the whole discussion is about Simplicity integration with hilarity scalability and other many other features that are functioning.
where we believe we have a significant Advantage around so
Overall when you think about subscription Revenue, we're actually fairly bullish when we look into the future.
Got it. That's helpful. Thank you both.
Your next question comes from the line of Sean Wieland with Piper Sandler your line is open. Thank you. So what can you tell us about virtual Primary Care launch with United that you announced. Can you size that for us and with respect to the 21 guidance and give us a little bit more detail on that launch?
So you hear your voice and thank you for joining the call, you know, it cannot discuss any specific clients details the numbers off that is something that we really care deeply about. However, I'm glad that you brought the topic of virtual Primary Care modules and programs which we believe are very important in life. They said on the court earlier it really a way that most people in our opinion would experience Health Care going forward. So for those on the call that are less familiar. This is the technology in service infrastructure that allow people to start their interaction with the healthcare system. Not only Telehealth but the entire Healthcare System they online so you go online and then you have highly personalized experience using artificial intelligence and very sympathetic people that offer you a choice of the entire spectrum of services from birth.
Online programs in the people two Labs Imaging and physically referrals. This infrastructure is redesigned from the get-go to encourage and support reoccurring a longitudinal relationship. So for the consumer, it really is a wonderful way to experience Healthcare. It's rusted immediately personal. It has an element of of choice for the payer sponsor for the risk bear. It's an opportunity to really pray negotiate the the network and the options that you see in to make it also very efficient Financial. We are very glad that very large client Bots chose it as it's a big long and we will let you know this client and others tell the market when they're ready about their experience.
But when you talk about the superiority of our technology, whether it's converging future primary different be part of that family part of our platform and when it said there was talk about the future. This is definitely part of what I meant so I can yeah, I mean to go a level deeper for your model so long, you know, there's there's two parts that I I see a revenue coming out of you know on Virtual Primary Care there's direct and indirect, you know on the direct side, there is a month fee that is either paid in per member per month or a blanket access fee, you know, depending on the plan that we are we are working with there's a transaction fee wage in this is you know, the interaction with the member by the plan provider and this is real really where it's all going and what got, you know, those those plans that we have been a noun.
as well as plans were talking to get them really excited and then there's the
Coffee because this is a new way. I mean this is full longitudinal full-spectrum fully Coordinated Care that is being delivered on our platform. And so that takes time to bring their doctors up to speed on how the coordination of care is going to impact them where they need to plug in where they need to have, you know, a primary node coordinator, you know, so as backup we had doctors, you know at the ready that if someone has a bad experience using, you know virtual primary care for the first time, they're not going to use it again. So our doctors, you know, and I'll get to do is attempt act in a second our doctors. You know, we are assuming are going to be helping out in the beginning a lot and tapering off as more and more of their doctors become part of life, you know, the care coordination plan, then there's the indirect part, you know, this is fully coordinated longitudinal care or at least that's the thesis of our partnership with you know, the one customer that yep.
Purchase, so there's a lot more programs. This is you know a goal for us and a goal for them bringing more programs bringing more coordination and bringing more holistic care to the front of you know to deal with these members. There's also maybe RPM, you know, I mean to to be able to regardless of the age and you know, add some of the RPM functions that you know, unless you do comment about in a second but as it relates to the visit, you know, this is an important point, you know, we are projecting or forecasting the same number of visits in 20 21 as twenty-twenty, but the components are really different, you know, there was a significant number of visits that were performed and you know, March April May that were just simple fact of urgent care demand. Okay. I think I have COVID-19.
Are being replaced by our specialist being replaced by you know, they're they're uh, provider doctors, you know, your doctor plugging in and delivering care to you so often, you know, a big part not a big part but a component of you know the visit forecast the the same number zip code AS twenty-twenty includes those virtual Primary Care off Backup care our AMG doctors. So either do you want to do you want to talk about some of the other components that we see coming in as the indirect Revenue that we've been talking about God? Yes. Absolutely. Thank you Keith. I mean Sean just in a I wish we could talk more freely. But but they said earlier we limited about we what we can say about some specific clients but to help you understand the Dynamics implementing virtual Primary Care is a no-brainer for repair for obvious reasons. It's so efficient. It's so member friendly and things of that nature dead.
the way we monetize that infrastructure is a by technology subscription be by the
But how often this technology is being used and then by the scope of services more modules more programs than there are clinical. So all these are direct fees that relate to the scope of deployment. No one is deploying this overnight National you deployed overtime state-by-state it staged you add more modules add more programs, but the direction is is very steady. And we know this is going because it adds so much value for a former. The indirect effect is even more profound because you remember I'm like others we have one platform and it's all connected. So imagine that the option that you'll see on the virtual primary platform are excellent centers that are also am reclines and because we allow them to change the business model in participate in very large pear program.
Become more sticky and we become more available to them as well on the flipside the ability to tie this service with additional Services scheduled the Urgent Care visit a million other things that we're doing with people on One platform is extremely valuable for us others because it's not in the loan the fact that our system is modular the fact that we don't compete with our clients and partners is very important. We don't try to push our AMG providers and replace them with other song writers on the country. We use them as a support mechanism to really Foster existing patient a provider relationship and therefore the exception the likelihood to offer a great choice in Greater capabilities on our platform is much greater versus versus other people that are trying to do with this.
Thank you for that. Very quick follow-up is all of the above material or immaterial to the 21 Revenue guidance.
Well, it's included in the guidance and we have certain assumptions that we have. We are very comfortable with our guidance is it said there is always a possibility to sometime do more but we're not we're not ready to go there yet. A lot of the progress of deployments like that depend on factors that we think you don't control they are driven by the client by the market by other factors and we really want to make sure that our guidance is extremely robust. And that's what I mean the rolling it out state by state were very comfortable with our guidance. I guess. I guess that's our response to the question Sean.
Okay. Thank you very much.
Your next question comes from the line of Kevin Caliendo with UBS. Your line is open great. Thanks. Thanks for taking my call. I'd love to get your your guys take off the market consolidation. We've seen in the last couple of months in the Telehealth space. There's been a couple of higher-profile deals in any way shape or form. Does that impact landscape for your competitive positioning or how you think about the opportunity set? And also, you know m&a was was always going to be a big part of of the story. I thought going forward and we still expect it to be would love to hear your take on on your m&a pipeline the valuations in the marketplace currently to that end. Thank you.
Hi Kevin, and again, but doesn't really count like question but I'll take it to the as one we took we we are very clear about who you are. And what are a strategy for example in order to be an efficient connector. You cannot be owned by one of the part. It doesn't really work. It creates by us. And it does create a problem. So when when you tell us operator is get acquired but by health plan that offers helpful Dynamic for a competitive situation because obviously many of the target clients are less comfortable interacting with that band or know that the ownership of necessarily is corporal for a for healthcare it plate unless you believe that if utility or service place, so that's that's good on the other hand wage.
See some m&a activity with people that are trying to construct a new matutinal solution in the sense of doing more than one thing doing tell with in doing navigation and transparency. For example, we think that while it may look impressive in the world numbers and and then scale that's a mistake when we talked to many of our customers. They have strong opinions about the different components. They want to build digital connectivity platform is definitely a clear option and hopefully they choose as often as possible. But then they have a strong opinion about other elements that they want to pile on top of it the ability of the platform to interact with those Solutions is much more important than bringing the entire solution yourself and there are many examples where you see that one carrier company began to sell longitudinal program to run chronic illness and things of that nature in several clients really had her dog.
Time swallowing the entire thing. We believe that the whole point of integration is is diversity and inclusion in the sense that you let others excited what they do and you remain incredibly be true to yourselves going forward as far as the m&a we will we are in will continue to look at options to further improve the value and competitive advantage of our platform in our technology. That's the most important thing for us. We help our clients improve patient outcomes a clinical and the financial. I'm sure that it's not lost on anyone on the call that a few months from now valuations were much higher than they are today. And that's a good day off. Some of the stacks activity is a little different than it was before and that's a good Dynamic. We are going to be incredibly careful as we look for a job.
great opportunities to grow organically inorganic
Please phone is pathetic length, but also from evaluation in monetary length, and we are very encouraged by the fact that the market is the service going back to to reality in some cases in the opportunities. They become a much more attractive.
You know as head of m&a we're having a lot of conversations, you know, that's the beauty of the platform is, you know, you can plug them in you can integrate them quickly, you know, some of the different areas that you do it on his prepared remarks, you know of the Tam expansion, you know, we are focused internationally. We are focused on different functionality aspects of the platform so that it can be used in a more settings. You know, the partnership with Google is opening up opportunities that you know are beyond what we had when we went public last year. So, you know, we look forward to to confirm even execute on the inorganic strategy and making, you know announcements at the appropriate time.
That's really helpful. If I can have a quick follow-up you pulling forward the R&D spend per converge. Is it fair to assume R&D should maybe decline in 2022 off maybe without got you in for like guidance? Yeah twenty two, but maybe just thinking about it as a temporary temporary increase, you know, it took was being driven by our our customers, you know what I mean? And it's a reflection of our conversations with them. So we were looking to methodically roll out these different functionalities off, you know over a longer period you know over the next two to three years, but you know virtual Primary Care is one example, the functionalities that you know beyond, you know, the 1,000 plan we're working with the other ones that were in conversations with, you know asking for these things to be enabled on the platform So based on all of those we've accelerated. Yep.
The the the different aspects of the platform, you know into twenty Twenty-One. It is temporary and it'll go back to you know, more normalized levels and 20-22 I guess.
Your next question comes from the line of Jalandhar thing with Credit Suisse your line is open. Thank you. Keep you just touched up on this Google partnership. I was just trying to ask that more broadly. You have these several interesting Partnerships going on in terms of Google Cleveland Clinic on expert opinion Services was wondering if you could provide some color around how much money Revenue contribution or marginal benefit is captured in your 2021 Outlook or even just more broadly maybe elaborate more on your Google partnership in terms of some more tangible benefits to expect the company to start realizing in the coming quarters of years.
So hard, you know, it's good to hear your voice. We we did not include any assumptions that related to the Google or Cleveland Clinic relationship in a model. It was too early and too less specific in order to do that. However, that is not to say that we don't accept suck pretty wonderful things coming down the pipe from those relationships and as I mentioned earlier you can you're welcome to join our client Forum in April to begin to see with your own eyes. The launch of converge is related to to some of the relationships relationships that you mentioned converge. Like any one of our platform is one codebase. That's fairly unique. There is nothing like it in the market or the same platform is serving Affairs provide birth.
the integrated with devices with quiz
Zoomer facing is structures in the other things. It's designed to do transaction and longitude, you know in support hybrid care people that you see in person and online deeply integrated which is very hard for large the companies to do with in long list of assets including many many electronic health records and other platforms. I'm in very importantly in related to your question. It is open. So most platforms especially tell us platform are closed days. Whatever you see is what the vendor has busy. We are a platform also in the sense that you you can see the converges opening up to third parties. It allows our clients and partners to also offer them are Innovations on our platform and that's enormously helpful because it offers the much bigger array of use cases much more diversity in much more flexible.
Ability for our clients and partners the convert is modular. So it really allows you to build and pay for what you need today getting very comfortable. It will be there for you in the future and the future is going to be fairly fairly fairly sizable in the sense of speed and enormity of oil change that we believe we're going to experience. So it's a platform is designed to truly offer comprehensive array of capabilities. But at the same time it's incredibly simple. It's simple in the way that it's running a context-sensitive way. You only see what you need at the time that you see it and the user experience is truly a unique. It's blown not ready. It's available and it's incredibly efficient in way of Hosting cost in other ways. And that's also very very important when we look into the future and log
numbers that can we can see going forward
I guess you go more specifically into the model Jill sent her. You know, we're we're we're cautious. This is only our second quarter is a public company. So until those relationships put points on the board beyond what they're currently doing. We're not going to put them in the model the guidance or the forecast so our relationship with Cleveland Clinic is fantastic, you know, we are generating Revenue both from Cleveland Clinic as well as from home, you know, the JV what they were doing in Q4. Yes, we have that in the model. So we're waiting for a points to be put on the board before we're comfortable putting them in the the forward guidance, you know, as well as some of the efficiencies that we're realizing from, you know the partnership with Google, you know, there was some of that Dynamic and aspect in Q4, you know, that is in the model it is not happening. I can touch it, you know, and so then it made it into our into our guidance, you know, we're just conservative in terms of okay. There's a lot of opportunities that Google partnership gets me is to see if very dead.
you know in terms of the operational efficiencies and then you know, the whole executive team in terms of you know, the opportunities globally but you know, we don't have those in the model yet because I need to see some points put on the boardwalk or you know, they make it into
for forecast
great. Thanks guys.
Your next question comes from the line of Charles with Calvin your line is open. Yeah, thanks for taking the question. Maybe maybe I can ask them this question about you're talking Keith the visits this year. It's kind of a new base level and this is where you expect to grow off of and and you guys were talking about the shift to Specialist Care being greater than 50% of visits in the past year. Does this change or affect how you recruit providers for the AMG Network? And and in fact, maybe following up to someone else's question regarding m&a is this an area where where you could deploy Capital to help expand this quicker or is that not necessarily where you would be looking too long to do use the balance sheet. Thanks. There's a lot of it's a great question. There's on the m&a side. There's a lot of interesting models out there using providers more efficiently wage.
You know until that is you know, that is far and away our biggest area of God. That is one that you know through different Technologies different processes, you know. Yes, we can become more efficient that is one that you know gets gets me excited a lot gets me excited. I guess that that one, you know, especially in terms of the mix shift, you know, it was around half and in 2020. We're we're Specialists. We see that continuing into twenty Twenty-One, you know, as more of the straight-up Urgent Care has shifted to them, you know, the health plans own providers delivering care and the health systems your own doctor delivering care to you. We see that, you know continuing we saw it into for you know, that is driving of you know, the revenue or the the price per visit to you know, the $80 range from you know, $54 and $74, you know in 20 20 in terms of recruiting, you know.
It's the pandemic has really a Neato said this in his prepared remarks, you know obi's cardiologist those Specialists have now embraced delivering care off to their to their specific patients. So, you know, if they're doing it those Specialists delivering care to their patients, you know, it's natural for them to want to supplement their practice wage plugging into our platform and delivering care. So, you know from a part of the reason why we bought a lined in 2019 is you know, there is a psychiatrist shortage out there and you should be the need is going the other direction so, you know for health system customers, we wanted to make sure that we had, you know the right team on the field, you know to be able to support their own no need but you know for the overall AMG providers on the platform. Yes. We are seeing more of a shift to you know, the specialist, you know, if you want to take you know, the overall wage
aspects of AMG but you know
Within the model that is that is what we're seeing in Q4 and what we are forecasting that continuation, you know throughout 2021.
Hi Charles. Thank you for for the great questions. So as you know, we CMG the buffer is a service to a client in notice the replacement to the wrong Services. We also try to enable not only acute care but the full spectrum. So if you think about it, the incredible growth of clients active provider between a Syrian seen the 2020 and we expect to continue and grow rapidly into the future is mostly in two thousand plus medical centers wage of them are academic most of them are specialists.
Of course in order to envelope a specialist. It is infinitely more complicated than to have a future visit with a video online and provided provided zipper on a different level of integration. The rules are much more complicated is multidisciplinary care that is required and so on and so forth. So our role is to increase in some financial and clinical outcomes. When you think of a financial clinical outcomes, you're mostly talking about the impact of chronic care and Specialists that is enabled by our platform is we try to get better supporting those specially sometimes like in the case of the line, we grow mg as the giant sandbox that also serves the buffer for a client and is we can figure out in streamline the workflow 4mg we immediately make this information available in those Technologies and services available to our ecosystem with the overarching god.
To allow them to be a successful as they can with their own resources and not necessarily with.
Okay, thank you. Thanks Charles. Your next question comes from the line of Ravi misra with berenberg capital markets. Your line is open. Hi, thank you for taking the questions. So it just maybe a little bit of an extension of that that that that visit mix shift in AMG specialty. I'm just curious how sustainable do you think that is? I mean if you're kind of institutional partners are are kind of Shifting more of their visits to urgent care or do you think over time they're also going to be doing the Specialty Care given that Revenue shift and does that put your AMG profile at Nick's there I had risked there and maybe my second question is just around the the Investments Keith next year. It looks like you know, you you're guiding above consensus on a sales level, but you're also kind of investing a little bit more is that entirely R&D with converge that's just pulled forward out of future years or
Should we think of this as The New Normal in terms of you know, the the incremental spend going through the model in the out?
Thanks.
Keith I think you're on mute. I know you're talking the second question is the easiest the answer is yes. It is R&D, you know can find a 20 21 that life goes back to a More normalized Level, you know in 2022, you know GNA goes down to you know, what typically you're seeing with us and our our competitors in terms of prestige senator of Revenue and same with sales and marketing so that question, you know, let's answer that one first in terms of the second one in terms of you know, visiting volumes. We we we where the specialist visits are actually more attractive in terms of what our our providers want, you know our our our health system and Health Plan customers want I mean the goal is again going back to the mission statement of the business to have your doctor deliver care to you.
For your health plan coordinate the care and have you know in most cases that plan doctor deliver care to you. So where the Specialists you know, are are really supplementing care York. Yes, we're going to have you know those uh, those doctors ready to go in and provide the backup care when needed but you know, if all the doctors of the doctor group, you know cardiologist's office, please endocrinologists all of them are they're providing the care and then if they can't we need to have those Specialists, you know in the warehouse ready to provide the care so that there's not, you know age gaps or any any delays. So, you know, we're seeing this shift continuing to in the 20 21, you know, you're seeing the the price per visit or the revenue per visit continue nicely from $54.19 to $74 and twenty twenty-two, you know $80 range and in 2021 that Dynamic is already happening in Q5.
You know, so we don't report on a quarterly basis price per visit. It's already happening. So, you know, there's this shift is is intentional the shift is strategic off and you know, it's it's the ultimate realization of you know, either one Roy's Vision in terms of providing backup care not competing against the providers of care, you know, we are a technology company. So, you know, we see that business, you know that Revenue shifting up into the subscription line, you know, and it's already happening. So, you know, I don't know if you have anything you want to follow up but you know that off Dynamics within the model that you know, I think you were getting it.
So I would state it maybe in another way. We are a technology company, but we complement the offering with services to provide a complete offering to our clients. So back in the day is when you build the infrastructure it became very apparent that without having a national network of providers starting with acute care and then two other dispatch. No one can operate our technology you have to have that and it took Snowmass effort to create it and it's still very valuable in way of of this buffer the next frontier life after acute care and Primary Care a specialty care. It's very hard to organize psychiatrist psychologist and different type of other Specialists on the one hand wage really enabling our customers to do that and they're doing it a lot on our platform but on the other hand sometimes in order to pay the way we also organize those Services wage.
Complete solution and use that as an add-on in the line.
The example is a good one where we found that if you can beam in a Psychiatry, if you could really be the emergency room, you can really help these translations earlier in provide the some wage. So these complementary buffer is moved from primary care in to Specialty Care. Our intent is not to build the largest hospital in the cloud or specials that will not make sense with the our role is to connect more specialist to the ecosystem through our platform, but we will create more and more examples potentially with some house programs that we are going to offer to our customers because they need it and not everybody is able to do it themselves. And because that's the best way to truly streamline a r a technology.
Great. Thank you. And then maybe just one more on converge looking forward to kind of seeing more detail on that if you have coming event, but just how do we think about that from your kind of land and expand a unit? You know this kind of a TV up sales strategies. It's something that uh that kind of enables you to just easily Implement more modules for customer or or if there's something else you just walk out a little bit more color on the on the business model around that. Thank you. Yeah, Ravi, let's 28th. You know, that's we we've got a whole day planned on it. We're going to have customers, Let's kick that to the 28th.
But the short answer is yes.
Your next question comes from the line of David Larson with btig. Your line is open. Hi. Congratulations on a good quarter. Can you talk a little bit about Amazon's bounce meant to push more services across the u.s. you know in their health care area, especially with Telehealth and one of the plans we talked to said that what's intriguing about this month is that Amazon in some cases are in some cities may have a nurse that can show up at the patient's home the next morning at 9 a.m. If they had a Telehealth visit at 2 a.m. That same night and that nurse could you know bring medications with them and then at the home like there are different device could potentially be used like a stethoscope things for Respiratory measuring, you know, breathing habits and also like lab services that can be delivered at the home any thoughts around that and do you have any, you know potential plans to get into more of like this Home Health Arena
In a digitized way. Thanks.
So again, this is the in some ways David the two questions. We're not going to find about what I'm assuming doing. I would just say, you know, welcome to the club. It's much more complicated than you think and and we we encourage the the additional availability of convenient Primary Care. You cannot have enough Amazon brings enormous amount of Assets in the world drug delivery of consumer experience and things of that nature and it relates to Primary Care in certain situations. That could be a fantastic thing, which is very very different from the role of em. Well, we always talked about the fact that care is moving into the home and you need very high degree of integration with devices that are religious nuke airplanes better integration with multidisciplinary Team deep understanding of the clinical flows and the financial flows and so on and so forth. It's very
Hard we spend a decade in the house building it. It's not the gnl big tag and
Did not have a track record of doing that in way of technology in addition to that the relationship in the ecosystem are not as easy as they are us we really did that for many years with a trusted by the parties the Amazon maybe less so in in some ways, so we we think that they bring to certain employers could be very helpful and yet does not compete directly with most of the value proposition that we offer wage at this time. When you come to see converge, you will realize the enormity of complexity need to truly serve complicated patients with multiple existing relationships and financial arrangements and regulations in their most convenient location, which is the home. We certainly totally agree. Yep.
That notion, uh, we just think it's really really hard to create a solution and very importantly no one company can do that that is in our opinion is that most of them you need a very big Coalition that is tightly integrated to reach that that that outcome.
Your next question comes from the line of Eric with nephron research. Your line is open. Thank you Nan converge Health System question the delayed pending impact on subscription and we're at a point where Health Systems must now move from temporary to industrialize Solutions. So what is your view on the timeline has the health system sales cycle contracted and maybe what is the competitive environment?
So it was really interesting to see the Dynamics in 20 20 people were caught completely by surprise by the same sense that Telehealth was 1% of the visit to the beginning, but when we tend to forget that 1% of the visits were done virtually in January of 2018 and then it went up to 50% and now it's 15 to 20% So these are amazing numbers and what happened at the beginning is that people use whatever they use FaceTime to use zoom lots of products and that was very very helpful because it was very familiar both to the patient and the doctor but there is no linkage short. I mean it became very apparent to people very very quickly. So well into the year the dialogue change and people realized that the level of education is dead.
Wired for digital connectivity is much much bigger than any of the tools that they had and and and that was very opportunistic and not helpful to us. I don't know any leader of any delivery Network that is not thinking now about digital Health connectivity infrastructure. Some already do it sooner than others, but it it's not an optional thing. It's just as important as your EMR in many ways, maybe even more important in order to survive the internet future. So the urgency is there the clarity of what they want to buy is there as well the ability to implement it in the speed do a very long but we believe that in the next few years. I don't see any practice or any provider that is unable to effectively and fully integrated way. Yep.
interact with their patients both online
Any in-person through a hybrid model that probably spelled bad news to anyone that has the model of Doc in the Box in the cloud that is competing with that preferred option off Eric. I mean from from my perspective when I look at the the individual business lines product lines, you know, they're being a lot more thoughtful, you know coming out of the pandemic their doctor's office asking for this and as we discussed on the Q3 call, we're seeing happen even more they're using it as a patient recruiting tool. So if you go to the products that either mentioned, you know on his prepared remarks, you know, the c500 CarePoint can be used both in the hospital and in the home, you know, the animal hospital T same thing. So, I mean what they're trying to do or what their thoughts their plan has is a patient recruiting, you know, they want to bring more of their doctors on the peripheral into the mainstream delivering care through the hospital system. That's the animal Now product but the rep
We're trying to expand their footprint into the community with the c 500 card, you know with the the hospital TV. So the conversations were having with them asking for the functionality. They're asking do you have this capability and it's very very differentiating. So, you know, I would say versus COVID-19.
1/2 people to realize the power connectivity for the first time in a really long time many of our customers tell us so how can we providers connect with pears in Paris there to us about how can we enable our provider Network to be included in our gifts and Care in our vision? And that's very refreshing and that's a Zone where we are extremely comfortable in a very strong advantage.
Your next question comes from the line of David Grossman with stifel your line is open.
Thank you. So you guys have done a great job of covering all the big points here. So I'm just going to limit it to two quick to Quik Financial questions Keys, perhaps you could share with us with the sort of literature count is if once you start making money at least based on, you know, the options and shares that are out there and then the second quick one would be sorry if I missed this but tell us or help us understand how much the average revenue uh for health system increase would you know government module sources utilization or any other factors that made an impact of that?
So I'll come back to you on the fully diluted because I I normally quote that on a treasury stock method and so I'll I'll call you up and give you that one. But in terms of you know, where the mix is coming from on the on the systems. Like I said the name of the game there was land and expand. So I mean you can see how the average contract value expanded, you know nicely off that is being driven, you know both by the logos and by the expansion of of the contract value, so what's what's keeping the contract value down is the number, you know later that is being added, you know at a very a very good pace. So we're seeing our typical customer. I know we gave some quotes of what the typical contract looks like, you know, we met some of the larger Health Systems, you know, really getting up there in in many many millions in terms of total contract value.
Prices are daisies that you can share in terms of number of modules and how that's increasing on average or anything like that, you know per client independent of the you know, kind of gross in the denominator. If you will. Yeah, we haven't disclosed that, you know, we during the IPO we listed, you know, all of the modules, you know that we have, you know, I would I would just say what we what we need is closed during the IPO and in the S1 great. Thanks very much.
There are no further questions at this time. I will turn the call back over to dr. Schoenberg.
Thank you so much and want to thank everyone for joining many of you are dear friends and follow us for many many years. I think we appreciate the time and effort that you're making together with you helping bring care to millions of people and that's that's pretty important. So we look forward to continue the dialogue in person. There is
ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
off off off