Q4 2020 DarioHealth Corp Earnings Call
[music].
Yeah.
Greetings and welcome to the dairy of health fourth quarter, and full year, 2020 financial results Conference call.
The time, all participants are in a listen only mode.
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And now my pleasure to introduce Glenn and Carmike of Lifesize advisors. Thank you Glen you may begin.
Thank you Daryl and good morning, everyone. Thank you for joining us today for a discussion of Dario Health's fourth quarter and full year financial and operating results, leading the call today will be of Raws Raphael Chief Executive Officer of Dario Health. He is joined by Rick Anderson, President and General manager of North America, and Zvi Ben David.
Financial officer after the prepared remarks, we'll open the call for Q&A and audio recording and webcast replay for today's conference call will also be available online as detailed in the press release and wait for this call for the benefit of those who may be listening to the replay or archived webcast. This call is being recorded on March nine 2021.
And this morning, we issued a press release announcing our financial results for the fourth quarter of 2020, a copy of the release can be found on the Investor Relations page of the company's website actual events or results may differ materially from those projected as a result of changing market trends reduced demands and the competitive nature of Dario helps industry such forward looking.
The statements and their implications involve known and unknown risks uncertainties and other factors that may cause actual results or performance to differ materially from those projected the.
The forward looking statements discussed on this call are subject to other risks and uncertainties, including those discussed and the risk factors section and elsewhere and the company's annual report on form 10-K for the year ended December 31st 2020, additional information concerning factors that could cause results to differ materially from our forward looking statements are disk.
Bribed and greater detail and the Companys press release issued today and in the company's filings with the SEC and in addition, certain non-GAAP financial measures may be discussed during this call. These non-GAAP measures are used by management to make strategic decisions forecast future results and evaluate the companys current performance.
And it believes the presentation of these non-GAAP financial measures are useful for investors understanding and assessment of the company's ongoing core operation and prospects for the future and reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in today's press release regarding our quarterly and year end results and with that I'd.
I'd like to introduce a Roche Raphael Chief Executive officer of Dario help arrest.
Thank you Glenn and thanks, everyone for joining our call. This morning also joining me today. So we've been David our Chief Financial Officer, and Rick Anderson, The President and the General manager for North America, So 2020 was an exciting year for us and.
And I think it was an exciting time for all.
All of those debt the pulse of the.
And the healthcare industry as the industry is.
And forming.
Widely these days and.
Even the Super excited to be at the forefront of this amazing changes happening and the healthcare industry and like we are doing and every earnings call I would like and I would like to refer to our progress.
The filling through our three main pillars that we keep mentioning every earnings call and thank for the last six or seven quotas and this is something that helps us to communicate the progress that we are doing with the transformation that we are having and it also helps us to focus.
And on capturing the huge opportunity is debt.
We are experiencing these days the three main pillars number one debt transformation into a SaaS software as a service where we are generating high margin recurring revenues and number two is the transformation into the BDC and number three.
Is the expansion into multi of chronic conditions.
So 2020 was very from the net.
Foundational year for us.
I'll start with the beat of B to C.
We put the a lot of efforts in 2020 in order to build the infrastructure to be not only of BDC company, but also of being a big company. We started the year with the.
Only six employees that are operating in the U S.
And in front of and.
Employers health plans and providers and as of now we are close to 30.
We also signed the different agreements along the year.
With the last three months, where we won.
The two big.
The fifth and 500.
Employers and even even further than that we managed to win over all of the fives and.
Overall the.
The main competition, which speaks to the overall offering and and then great product that we have when we started 2020 and we knew that we are of great product as it is you can all of you can see on the App store.
Amazon we are operated and we are considered one of the best products and the market, but we had the viewing 2020.
And it gets the product and a way that we can take it to the beat of B market and this is what we did and with the recent wins and.
And we will really confident that we can start and generate.
And meaningful.
Revenue in 2021, and as we started to implement these accounts and Q1, we're also getting a very good.
The first results and indication that we know how to in all and turn this accounts into into Golar and Rick will speak to that very shortly.
And the expansion into multi chronic conditions one of the things that we believed in is that the.
Operating as a digital therapeutics company. When we are providing a solution that is extremely user centric and consumer centric we need to provide.
And for personalization, we need to provide the very.
Comprehensive solution for our users and it doesn't make sense debt, we will operate in silos.
The traditional health care industry and compass.
Companies and the traditional health care industry will focus on one single condition, we have seen companies. The deed only the beauty is they will have the pension when moving into digital therapeutics and when dealing with the personalized solution, we need to provide multiple chronic conditions and thats what <unk>.
We put the target and we're very happy and proud to complete the acquisition of.
<unk> technologies at the beginning of February.
And and the more we are making progress with the PMI and the more confident we are about the.
And making the right decision with regards to this acquisition just as a reminder.
Upright towards acquired the company that have 90000 active paying users. This is a company that is scaled when we are looking into the muscular skeletal the space.
And looking into other companies in the space there are not too many companies that are having more than 50000 active paying users change the debt just plays the money at the $3 billion valuation is one of them next in line in terms of users.
The lease up right.
So upright is sharing the same philosophy that we have.
Combining together of hardware software and service in order to drive the other unchanged and the doing great job there.
Creating change in the behavioral fuses.
And in terms of the synergies that we've seen to the BW and market. This is a perfect match for us and we started to hear the very.
<unk>.
Barry.
Positive comments from from potential clients and existing clients. So.
So this was the very good more from our perspective and.
And the fact that we did this.
Action of acquisition.
As an equity only speaks to the fact that we go through the real partners that want to.
Walk together with us and build this company is a multibillion dollar company.
So the actual PMI the post merger integration activities.
Moving forward the great.
So if we're looking on the overall of three pillars each of them have some kind of contribution into the main parameters the define our business and.
Elements that related to recurring revenue and gross margins, we still see and the overall objective of the business.
To exceed the 70% gross margins moving forward and we're going to see and improvement in the gross margins OLED and Q1, we believe.
And then in terms of the eligible population when we started with the abilities, we had and access full of potential employers and for 8% to 10% of the population hypertension expense it into 20% to 25 with M. S. K.
We exceeded the 40% of all the conditions together so in terms of.
Accounts utilization multi.
Multi condition makes and.
Makes overall.
Overall commercial efforts much more effective and also in terms of the cost per acquisition the transformation into be the BTC.
Is something that should the.
The improve or reduce drastically the coastal acquisition per user and the fact that we are selling more conditions may because of the cost of acquisition of use the the condition is even lower so each of the spill of have its own contribution into our financial profile and our ability to grow and I think debt the combination of the <unk>.
Three of them together.
It even in a kind of exponential impact on the financial profile of the company and also on the on the overall and the.
The ability to grow and I know debt in 2020, we haven't seen a significant.
And grow in terms of the revenue between 20 and 19% to 2020.
But we should look into 2020 as a foundational year and we should look into the progress and this foundation that was done the accounts that we won and I'm sure that in 2021, we're going to see the impact of all of the three pillars and the parameters that I just mentioned.
And Ah.
Very very significant way moving forward so.
Now to drill down into the beat of BDC transformation, and I'll hand, it over to Rick to elaborate more on the X rig.
Thanks Erez.
Over the last few months, we've seen the fruition of a lot of the efforts that we've been making for the last years per the last year and announced several wins in our <unk> market two fortune 500 companies, including those one in the competitive RFP situation and we've also signed several RPM contracts, including a significant one with an integrated health system.
In the Mexico, we have now launched these customers and the first quarter and are pleased with our progress to date, we have seen over 30% enrollment within the first month of commencing our outreach and were continuing to owner of approaches and anticipate that that will go higher on the business development side. The pipeline is now more than 600 million.
And across all of the market segments and just as a reminder, we calculate our pipeline as the lives and an opportunity.
Times, 10% for the prevalence of diabetes, so we're not even including the other condition.
The 35% enrollment rate $10 $59 per month times 12 months of course, we use actual numbers. If we have actual numbers for that and that calculates our annual revenue opportunity, which is the amount that we're saying is our pace.
We continue to make progress and all three channels for employers. We are now starting the sales cycle for self insured employers that are on an annual cycle and a significant portion of the employers are on this cycle, which runs from January one to December 31, the <unk>.
We will see Rfps for the next few months contracting and the third quarter and the launch of these new opportunities and the first quarter of 2022.
We are seeing the benefits of the progress we've made and increase the name recognition and increasing our relationships with benefit consultants, which are currently driving the RFP volume and RFID volume that we're seeing.
We anticipate that this will increase the pipeline and contracts later in this year.
And in addition to that we still have opportunities that are on the different cycle closing in the middle of the year or have no cycles. So can closed throughout the year.
For health plans, we continue to rapidly grow the pipeline of opportunities.
And we are working the handful of plans that we have late stage contracting their vendor management through the process. We anticipate closing many of these contracts over the next few months.
And that they will add additional revenue and the second half of 2021.
For remote patient monitor we have a growing pipeline of near term opportunities with providers recall the RPM enables providers to bill CMS for codes that went into effect at the beginning of 2020, thereby halving of top line revenue opportunity as well as improving clinical quality.
We did see some headwinds and completing contracts with providers that have been distracted by the COVID-19 surge and the vaccine rollout, but things have picked back up and the last month and we are continuing to see things moving towards closure.
We have several agreements that are and contracting and believed that RPM will contribute to significant revenue and 2021. We're also working on and interesting partnership that will enable our direct to consumer Medicare members to take advantage of virtual care and received their membership through and RPM model with significantly higher average revenue.
Per user.
We've also made great progress growing the team. This year, we've added management product and sales talent from Labonte and the amount of Mercer Optum.
And the other significant digital health companies.
These folks are joining us because they are seeing the differentiated opportunity at <unk> and the ability to do great things. These key hires are also helping us accelerate across our business.
As there as discussed we have expanded in the MSA and are actively looking at other conditions.
To round out our offering.
Our overall strategy is to leverage the expertise of condition specific point solutions for our customers with an integrated front end and back and and we will also integrate with third party.
Chosen must K, because it's consistently and the top five priorities to reduce costs and improve outcomes for our customer it expand the proportion of the population that we address the threat said to approximately 40% and M. S. K can add to our average revenue per user we estimate up to an additional $35 a month.
And there are significant comorbidity with MSA and our existing condition.
This acquisition makes our platform one of the most robust and the industry and that's already paying off the customers are expressing interest and our <unk> solutions, even before we had gone in the market and some of our current pipeline now includes and MS Kay opportunities.
With that I'll turn it over to Zee.
Thank you Laurie.
I will provide a brief overview of our overview of our results for the fourth quarter. The additional repairs on the quarterly results can be found in our press release published earlier today.
Revenues for the fourth quarter ended December 31st plenty plenty of.
The $1 million the.
One of 9% sequential increase from the.
Third quarter ended September <unk> and 'twenty.
And the 15, 7% increase from the $1 8 million in the fourth quarter ended December 31st 2019.
Revenues generated during the fourth quarter and deal and.
And of the December 31st 2020 will mainly from the sales of medical device.
The offering and from our membership plans to our customers and the U S.
Gross profit for the full in the fourth quarter of.
And <unk> was 549000 and decrease of $299000 or 34, 6%.
The gross profit of $840000 and the fourth quarter of 2019.
Gross profit as a percentage of revenues decreased from $46 seven and the fourth quarter of 2019 to 26 and full and the fourth quarter of plentiful and cheap.
The decrease resulted from the price reductions of our medical devices sold.
As part of our direct to consumer promotion campaigns.
That said as we scale and implement all of transitioning to sales of monotherapy and we believe we can drive the gross margins to 70% and the higher.
The longer term.
Total operating expenses for the fourth quarter of 2020, with $9 $6 million compared with $5 million and the fourth quarter of 2019.
Total operating expenses, excluding stock based compensation for the fourth quarter of 2020 with all of the seven 5 million.
Compared to $4 6 million.
In the fourth quarter of 2019.
Net loss was $9 million for the fourth quarter of 2020 and increase of $4 8 million.
And compared.
The $4 million.
The $4 2 million net loss and the fourth quarter of 2019.
As of December 30, <unk> growth is equivalents per cash and cash equivalents totaled $28 $6 million and all in.
Net proceeds from the private centers closed on February the first.
The 21 was $64 $9 million and with that I'll return the call back Aquila.
Thank you.
Yes.
So we are super excited to be at the forefront of all front of this amazing changes that are happening and the healthcare industry and the.
And a few cases and we've talked with investors.
We are getting the question, whether this kind of transformation for the.
And on the health care is going to disappear of course.
The <unk> 19 from.
Our perspective the.
COVID-19, and accelerated the change that should have happened anyway in terms of digitalized. The space. So it created no doubt a huge acceleration and this transformation into digital space.
All of this transformation is here to stay and we see when we talked with clients and and that's something that we expect.
To stay here.
And when we are looking on the overall opportunity.
And if we're looking on the biggest competitors out there that are doing chronic condition management to the abilities of potential and others and we aggregate all of the penetration into the market together.
And we're going to get to somewhere around 2%. So the opportunity is huge and the opportunities there and we believe that we are going to be.
The very important player in the.
The space, so in 2020 and we put all of the foundation from of <unk> to see the.
Active multi condition.
And we believe that deferral.
The foundation that we put out of the in terms of the three pillars that I mentioned.
Going to contribute to exponential improvement in our financial profile and also and our growth and we're going to start seeing this kind of results and this impact in 2021 and.
And the most significant way.
When we're looking on where we are from the capital market standpoint, and balance sheet standpoint.
And I would just like to.
And to emphasize and to remind everyone that we did two important fund raising and one in July and the number one by the end of January.
And overall, the 100 million.
The funds all of these activities.
So overall, we are very well funded the company of no debt.
And the balance sheet and when we are looking on the run rate is going to go deep into 2023.
So with debt.
The kind of funding and even more important the profile of and vessels and.
Shareholders that we have today.
It's very different than what we had like two years ago, we have and vessels of that understand the space and understand the strategy of the company and the overall plan that we have moving forward and.
As we are in a very late stage of Q1, and typically we don't give any financial guidance.
And do we plan to do so going forward.
In light of the transformative upright the acquisition.
And we'd like to highlight that we expect.
The consecutive quarter of double digit percentage growth in both MSA and.
And base business between Q4 of 2020 to Q1 of the 'twenty 'twenty. One we believe this is just the beginning of the positive trend that we expect to see in 2021. So.
So with debt I would like to hand over the call to the operator for a Q&A session.
Thank you we will now be conducting a question and answer session.
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One moment, please what we call for your questions.
Got it.
Hi.
Our first questions come from the line of Alex Nowak with Craig Hallum. Please proceed with your questions Greg.
Greg.
Every one of <unk>.
I wanted to touch on that point that you mentioned at the and around the sequential growth. So double digit sequential growth into Q1 here, but just kind of run through the rough math, assuming a 10% growth off of 2 million debt annualized is close to about $1 million.
So is it fair to say that the deals that you signed the three big deals that you signed the two fortune 500 companies the RPM.
Piece of the business those deals signed in Q4 is good the lead to a roughly annualized 100 million or when the million dollar sort of net bump to the business is that the right way thinking about it.
Yes, I think that although your calculation is not so accurate definitely the right.
The direction.
Similarly, and the numbers that we're talking about and.
And as we stated before.
The employers so Jon and I think for the company is somewhere between the quarter of familiar and too.
And 215 2 million.
And a year.
Your calculation is.
And is.
In the and the.
And generally it's in the on the right direction. So yes.
Okay, very good and mental math, so totally understand that so many of the deals that you've signed so far what is the total contract value of those and if you go through the math that Rick mentioned on how you think about contract value. What is the total contract value of the deals that you've signed so far and then of that pipeline number the 600 million.
How much of that is near term contract value of meeting those are deals that you expect the sign some sign up some time in 2021.
So the.
We're not going to go to annual contract revenue yet until we've got a little bit more traction and make sure that we understand exactly what.
The percentages are that we're going to get we'd rather talk about the way what our enrollment rates look like and how many members we have on platform and we go forward, but if you want to think about them.
In the context of just dividing the.
The employers by the number you were talking about youre going to be generally and the range for those that were anticipate once there the ramped up here and and.
And what we are pleased by is the speed at which we are seeing the ramp towards our assumed.
<unk>, 35% rate, which would be a bit lower than what we've seen historically, so we seem to be.
Trending with with what we had.
And expected in these cases.
And I'm sorry, the second part of your question again Alex.
And then I guess, the total contract value of the deal would you expect the sign up of 2021, I think kind of.
And so.
Yes, so the way that we look at it is we expect somewhere between 10 and 20% of our pipeline to close in any given year that doesn't mean that if it doesn't close this year of loan closed next year because some of those are in longer sales cycles of especially on the health plan side, but if you want to think about it and that kind of a range that that's what we would expect.
Okay that makes sense, and then maybe and health plans and now there was the one maybe two health plans that was pretty close to being signed last time, we spoke just where does that health plans stand and are they getting pushed out a little bit just due to the and.
<unk> cycled kind of restarting here.
The health plans aren't really on an annual cycle.
And they can easily lose some time in terms of just coordinate and schedules getting two processes et cetera.
But we continue the ones that were late stage continue to be including as of yesterday.
I'm, saying that we're looking at launches.
Essentially at the end of this quarter.
Or at the beginning of the third quarter is what we're anticipating at least for a couple of them and then we anticipate a couple of more contributing to revenue in 2021 and the back half of 2020.
Okay that makes sense and going back on the multi condition here. The final I think real big channel of the Dara doesn't touch the behavioral hub and Ricky obviously, you have some good experience with that business, but maybe for either Rick or for <unk> with the Oreo go into behavior and how to fill of the bag.
And how would this happen is this going to be an organic sort of bolt on and piece of the business or would you do this inorganically through acquisitions similar to operate.
I mean, obviously behavioral health is an area that is not only and significant demand by our customers, but also.
Is something that has the high comorbidity with chronic conditions that we have a strong belief that.
The <unk>.
You can't really address the underlying chronic conditions for somebody who has behavioral health conditions or at least significant behavioral health conditions without addressing the behavioral health conditions.
We have new interest in.
Building of the behavioral health.
From scratch. So this would be done either through partnership or acquisition.
Alright, thats great. Thank you.
Yep. Thanks Kannan.
Thank you. Our next question is coming from the line of Charles <unk> with Cowen and company. Please proceed with your questions.
Hey, Thanks, guys.
I just wanted to clarify.
The earlier comment around sort of the the expectation for first quarter did you say it was double of double digit sequential increase.
Yes and percentage.
And the percentage so not 50% of just.
A double digit increase okay.
And Keith I mean, it might be 10% 15 plenty of debt.
Okay.
Youre talking a lot about the opportunity here with diabetes and muscular skeletal and did you provide at all any kind of metric in terms of the overlap between our customers how much overlap and customers do you have between up right and the.
And the legacy Daria of business.
Yeah. So in terms of in terms of the chronic condition. It says 36% of those that have diabetes. One of the range, we will have an MSA issues.
From looking into the overall business. If you are booking of both clients, we do anticipate that the.
And more than 2025% of our clients who will have.
More than one product so.
And the way that we look at it is that eventually.
And between the <unk> type of attention to the <unk> K and hopefully the next one that we will have on the platform.
And eventually and we're going to get to 30% to 35% of our clients who will buy at least two conditions. That's the way that we are thinking about the business moving forward the.
And MS case, specifically is something that.
Is and <unk>.
And the very high among our clients.
Thanks.
Is that fair to say the currently though theres no overlapping clients between the two products.
And at this point.
We don't have yet and overlap between clients, but based on what we have built now and the pipeline debt.
And Rick mentioned and he did the.
And the MSA based on specific.
And interest that we've seen and the last five weeks since the acquisition because as soon as we announced from the acquisition. We started to get phone calls and we started to communicate the new offering and we believe that we will be able to sell into it and the pipeline the team mentioned.
Including the MSA just to remind you charged the <unk> solution that we have at the moment is something that we are and.
The redefining the so the product exist, but we re packaging the product into and offering that we'll be able to go into the employer market and we are planning to launch it only at the beginning of Q3.
So I wouldn't expect MSR sales.
Sales into the B to b into the employer market before Q3.
And just another short reminder, is that the MSA and upright even before the acquisition.
And we will selling the solution into clinics and then we have hundreds of cleaning the already utilizing and recommending the solution to the.
And two the two day that patients.
But the.
And the sell in to the employers and the health plan market will not happen before the beginning of Q3.
Okay. That's helpful. Maybe one last question from me is and we think about.
Our remote patient monitoring the <unk>.
Health plan business.
And the the employer market.
Of those three which do you think by the end of the year will be the biggest contributor will it still be the the employer market and.
And maybe if you can give us if you can give us sort of per.
Percentage of mix that'd be great, but if not maybe if you could rank order what do you think in terms of sort.
And sort of dollar value of between these three will be sort of the biggest contributor for the year. Thanks.
Yes, yes.
That's a tough one and at least you want to take it.
Oh sure sure.
I can't give you my my.
My Best guess Charles at this point is is that just based purely on the size of the opportunities we would anticipate debt on a run rate basis at least the.
The health claims would make the majority of the revenue by the end of the year or at least be the biggest portion of that probably followed by RPM and employer sort of.
With the balance split almost equally.
It's possible RPM could exceed employers.
In terms of total revenue, but on a run rate basis, that's what we would anticipate.
Okay. Thank you I am sorry, the you said, 3% enrollment at the beginning of the is does that include RPM, the RPM and roll the same way or is that different.
Yes, So I said, 30% and what we've exceeded the 30% enrollment within 30 days.
P M.
And as well.
Well, it's slightly depends on the contract but in the case of the ones that we are operating now.
It's actually the.
The RPM customer is identifying and blocks of patients and then we're enrolling the those blocks of patients and we're getting a very high portion of those blocks.
And be able to enroll so it doesn't enrolling quite the same way in terms of eligibility and enrollment there just saying here's 200 500000 patients we want to enroll.
And usually they will communicate first and then we will communicate with the more sometimes they just directly enroll them into the system and then they are up and operating and we are generating revenue off of them.
Just a little bit so that's over and.
And that's over 30%.
In terms of the blocks that were identify no thats more like 85% to 90%.
Okay.
But it doesn't calculate in terms of eligibility quite the same way.
Okay. That's helpful. Thanks, a lot.
Yes.
Thank you. Our next question is coming from the line of Steve Halper with Cantor Fitzgerald. Please proceed with your questions.
Hi, just as a follow up can you talk to some of the.
Changes that you have to make at upright in order to sell it into the employer market and also as a follow on.
As obviously this is the.
Big selling season for employers.
Yes.
Is that part of the conversation now as you are.
Selling the traditional.
And service.
Yes. So thanks, thanks for that question.
There is two ways that we're going about it specifically as it relates to employers that were going about the upright solution and one is the existing solution.
Has relevance in the employer market and <unk>.
Including some of the.
Sub segments of that market like health and safety.
And then on top of that what we're really doing is utilizing the existing hardware and building out a bit more robustly. The video libraries of exercises that they have so that we can connect the sensors to those video libraries and then.
Also leveraging and expanding on their existing relationships with physical therapists to provide virtual.
Physical therapy solution. So that's sort of the rest was referring to when he said that we'd be.
In a position to be launching.
Those products beginning in July of this year the.
The the existing product, obviously, we can deliver today, but all of our existing opportunities, including those that are currently and the pipeline.
That timing will fit very well with those and for employers that are in the sales cycle right now for January 2022 launch.
Yes, we are including that and all of our Rfps, we know what the product is.
What we'll be delivering and.
And we will be able to deliver at that point well before that point.
Great. Thank you.
Okay.
Thanks Steven.
Thank you. Our next questions are from the line of David Grossman with Stifel. Please proceed with your questions.
Hi, Thank you good morning.
Wondering if you could talk a little bit more about where we are with the.
The.
Transformation of the sales force and perhaps you could integrate into those comments, how the selling efforts of upgrade are going to be.
And we're going to change that dynamic if at all.
The progress through 2021.
And.
Yeah, So I'll leave it at that for a moment.
Yes, so from a <unk> perspective, we have separate sales forces. Although there is obviously some overlap.
In each of the market segments that we're pursuing so health plans and self insured employers.
And RPM.
Doubled basically our sales force over the last few months and the RPM space.
And in also really in the employer space and we're continuing to fill out.
Some additional sales positions there we've been very pleased with the sales talent that we've been able to.
Persuade to join US as I mentioned, they are really seen the differentiated opportunity and these folks are coming from people that are very familiar with both selling point solutions into employers as well as the.
The overall market, where we're competing whether that'd be diabetes et cetera in terms of MSA as the condition.
It's just add into our existing sales force so.
Other than educating the team on the product.
Including that and our RFP efforts et cetera.
Really like just having another.
Tool and the bag if you will so we don't anticipate having to.
And sales folks.
Pacifically for that.
Have added some sales folks that have expertise and the health and safety areas.
As a way to also differentially pursue that market because we think upright has the unique opportunity in that space, but thats, the only differentiator versus just having the rest of the products like we normally do.
So are you at steady state for the moment with your sales force work or do you think you need to continue to add over the course of the year.
We're looking to fill a couple of open positions right now and then we'll reassess where we are and I would anticipate we will probably add a couple of more as we get towards the end of the year.
But we're always respond to demand so the demand starts to outstrip what are the capacity as will we will add to that.
Great and then.
In terms of selling and sorry, if I missed the <unk> and of the provider market.
And any thoughts on that at this point.
We are primarily focused on the provider market through the remote patient monitoring side. So that our targets are generally going to be large providers with Medicare members or integrated health systems. There are certainly some exceptions to that because of remote patient monitoring.
Becoming more prevalent and in demand in the non Medicare space.
But funding sources, there are a little bit different than they are and the Medicare space, where they can bill through.
And to CMS to get reimbursed for providing the services, which is usually the primary hurdle in of provider market. So we're not targeting the provider market.
And for just general adoption of the product at this point, although we do see some of that just sort of organically.
And really focused on where the providers can get reimbursement or have other revenue sources or funding sources I should say for the product.
Got it and just the.
And you talked about not providing guidance for the year.
Can you give us any sense for how you expect the cadence.
Revenue too.
Change over the course of the year, our expenses and anything that would kind of help us think about.
How you may exit the year of differently from where you enter the year.
Yes. So if you are looking into.
And the transformation from 2019 to 2020 practically we continued with all the BDC sales and we've put all of the foundation into.
Into the <unk> and in 2020. One we are looking to see to incremental on top of the BDC because of the BDC is going to stay there. This is part of the philosophy of of the company. This is that we are getting data. This is a way of improving the solution and creating a better and AI.
So I would expect that in terms of the <unk>.
Foundation, we can see B to C and.
The staying and even growing.
And at the single.
Single digit.
On top of debt, we need to add the upgrade that is also growing growing and.
And the.
And the most important part is the three channels of health plans employers.
And the providers.
At the show them, we're going to see the revenue coming from employers like and this quarter, we already signed and it's starting to get into implementation.
As well as providers. This is something that we would see.
The Q1, and also more intensively and Q2 and moving into the second half of the year, we're going to see a bigger impact that will come from the health plans because we do believe that we will have some plans and then the more we go further into the U and the more intensive the growth is going.
And in terms of the absolute numbers so.
So from my point.
We're going to start and see significant revenue already this quarter. So it's starting to go up and the.
And if we need to compare the 2020 to 2021.
We are the most providing a formal guidance.
But the.
The growth is going to be.
I would say cigna.
Significant.
Okay, great. Thank you very much.
Okay.
Thank you. Our next question is come from the line of Nathan Weinstein with Aegis capital. Please proceed with your questions.
And good morning areas, Rick and thanks.
Thanks for taking my question so.
With the acquisition of our brand and sort of your willingness to plug and very interesting hardware onto your SaaS model and I'm just thinking about your.
The M&A pipeline ahead, you think acquisitions will still be a big way that you expand your ecosystem of Ed and <unk>.
Have you seen other companies out there that are interesting as upright and maybe and other chronic conditions.
Yes so.
Thanks.
And based on for the question. So the way that we were thinking about the above.
The building this technology as the platform for digital Therapeutics is that we in advance and created the technology of what we can have the integration of other products fairly quickly.
And the open platform allows us to integrate other devices really the integrated other glucose monitors since of the platform. We are looking into the CGM.
So it's easier to integrate and easier to create one integrated the experience.
And so having said that.
And we think about the heading out of the technologies.
When we need to define whether we want to acquire or build it by ourselves and a lot of cases acquisition is the.
And <unk> as long as it's being done at the right the <unk>.
Rice with the right company and the right.
And our philosophy and DNA of company.
And so acquisition.
Something that we are considering and then the integration of a potential <unk>.
Different products into our platform is something that should be fairly easy because of the open architecture that we created.
So.
We are thinking in terms of.
Our mindset is in terms of and.
Having and kind of a quick integration and being able to absorb other technologies. So.
Something that.
The defensive so, Ohio full acquisition later than something.
And I'll sell from when we are going through the mixed condition.
Thank you.
And I suppose I understand sort of and out of the box question earlier. There was a very interesting question asked about mental health and it's obviously a large ish.
Issue and the U S and can sometimes be a gating item to fall or any employment. So four millions of people that are unemployed or underemployed and the U S. I mean is there of future scenario, where you could work with government payers to address that issue with your technology.
Okay.
And so.
In terms of government payers are you, referring to Medicare and Medicaid are you referring to something else.
Yes.
You could work with.
With the government payers, such as Medicaid to provide the service to folks who are perhaps.
Not currently employed for example.
Yes, so I mean, that's of Great question, and it's a great point and accessibility to care is obviously a significant issue.
In the U S and digital.
<unk> ability to access care is also a significant issue, but one of the nice things about digital is it allows for care at scale at a reasonable price point and.
And I think that if you look at behavioral health in general.
Have sort of I'll put it in three buckets I'm going to oversimplify it but if you think about it is you've got a larger group of people that have behavioral health issues or could benefit from behavioral health treatment that or not.
Driving significant costs in the environment and the historically.
We have not done a great job of providing services to those folks on a broad based scale.
And you didn't have sort of your middle bucket of people, who may be driving some level of behavioral cost some level of treatment cost but.
Are not generating a large amount of costs and then you have the more severe people and at the very top of the pyramid you have the.
Seriously and persistently mentally ill.
Which is a different set and you have to look at each of those general buckets differently. The.
The one year kind of really referring to is the broad group of people at the bottom and digital gives the ability to provide low cost treatment to people to help them with their behavioral health conditions, and I really see and opportunity for that going forward, whether that's working with Medicare and Medicaid plans.
Directly or through the managed area.
Or are there maybe other opportunities as well to to provide those kinds of services.
And thanks for addressing that question on the clutch of thoughtful response and thank you all for taking my questions again.
Thanks for the question.
Okay.
Thank you there are no further questions at this time I would like to hand, the call back over to management for any closing comments.
Thank you. So thanks, everyone for joining us this morning, and so on a net.
Next earning from the good day Bye bye.
Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time.
Have a great day.
Okay.