Q4 2021 Accolade Inc Earnings Call

[music].

Yeah.

Good day and thank you for standing by welcome to the accolade <unk> 21 earnings results Conference call.

This time, all participants are in a listen only mode.

We will conduct a question and answer session and instructions will follow at that time, if anyone should be quiet on stream. The conference. Please press Star then zero on you touched on it.

One of.

As a reminder of at this conference is being recorded.

I would now like to have the conference so Richard Howes target Freedman with <unk>.

Thank you you may begin.

Thanks, Operator, and welcome everyone of our fiscal fourth quarter and year end earnings call with me today are our CEO of Rajiv sing and our CFO, Steve Barnes shutdown in India, Our Chief Medical Officer will join US for the question and answer of portion of the call. Let me first start by saying I apologize, we actually omitted the Q.

Q4 table, although the has the summary numbers on the rest of the tables are correct and the release of we'll issue an amended released shortly with the full of table details for you before turning the call over to Rajeev. Please note they will be discussing certain non-GAAP financial measures that we believe are important in evaluating accolades performance details on the relationship between these non-GAAP measures to the most comparable GAAP measures.

The reconciliations thereof can be found on the press release, that's posted on our website also please note that certain statements made during this call will be forward looking statements as defined by the private Securities Litigation Reform Act of the 1995 such forward looking statements are subject to risks uncertainties and other factors that could cause the actual results for the accolade to differ materially from those expressed or implied on the call.

For additional information please refer to our cautionary statement on our press release and the filings with the SEC all of which are available on our website and with that I'd like to turn on the call over to our CEO of Rajiv. Thank.

Thank you Todd and thank you all for joining us here today.

2021 was the year of transformation per accolade, we were extremely well positioned at the outset of a global pandemic could be a source of help and guidance for our customers and per our members and that led to opportunities for us to grow and to innovate. We took advantage of those opportunities among the highlights for the year were consistent investment in innovation, which yet again.

At incredible value for our customers and our members we delivered new offerings like accolade COVID-19 response care intelligent provider matching and a suite of integrated care offerings with partners that started with mental health with Ginger.

Additionally, it was our first full year deploying accolade total care in total benefits.

Combined these offerings dramatically expanded our solution footprint, we can meet customers wherever they are and we can grow with them as they evolve.

That innovation paid off with a strong organic growth rate across all market segments strategic enterprise and middle market, which led the strong financial performance, we doubled our customer base again to more than 100 logos covering more than $2 1 million members and annual contract value increased 31%.

Additionally, we launched our pilot program with the Defense Health Agency. This past year and very recently, we learned that we have received approval for the second year of our pilot.

This renewal is obviously a positive signal accolade will now have a chance to continue demonstrating value in order to expand our presence with the tricare select population.

We thank you for your support in our capital raising initiatives this year as well from our IPO in July two our follow on offering in October to our convertible note offering in March we were able to leverage that stronger balance sheet to close our acquisition of second M. D in March and to announce our intention to acquire plus share in April.

Second half deep doubled our addressable market and added approximately 300 customers and 7 million members to our base.

We've quickly moved to a more integrated model, where expert medical opinion is now being sold together as a part of accolade total care and an add on conversation with existing customers, we're seeing great traction with our customers for cross sell and upsell opportunities.

We're in the early days of integration and the acquisition is going as well as plant.

Upon closure of the plus per transaction will have grown our addressable market yet again to between 200 $300 billion.

More than 10 X or opportunity from the beginning of fiscal 'twenty one.

Accolade today as an even stronger company than the one that went public in July we're bigger than our size broader in our footprint and attacking a materially larger addressable market and most importantly, we're deeper with our customers on our members than we've ever been.

And that's reflected in our record fiscal 'twenty, one financial performance, Steve will of course give you far more details on the results, but a quick recap shows we came in ahead of our pre announcement on both the top and bottom lines.

For the year revenue of $174 million grew 29, 29% year over year and adjusted EBITDA was the loss of $27 million compared to a loss of $33 million in fiscal 'twenty.

While we're pleased with fiscal 'twenty, one, we see even more opportunity and growth in fiscal 'twenty two and beyond.

Our vision is clear we build long term high trust longitudinal relationships with members and their families and we improved clinical outcomes and we lower health care costs.

Those relationships are powered by our frontline care teams and an extraordinarily differentiated dataset.

Aon has now independently validated twice in the last four years that we deliver on that vision with demonstrated results.

As we add more value to those relationships via our own innovation via partnership and via M&A, We further improve outcomes and we drive better financial performance for our customers, it's as simple as that.

Yet, perhaps it simpler for accolade rather than for others because of our foundation is built on advocacy of navigation of space that we pioneered and have led for years.

Advocacy of navigation of the building blocks of services that create engagement and trust between our members and our frontline care teams.

Everything we do whether it's in our core offerings or new areas like expert medical opinion on primary care is made better by that trust.

Since our founding we've invested significantly in building long term relationships with a significant percentage of the members we serve not just the high cost of funds.

When a member suffers in acute events or experience of some condition focused inflection point and her health care journey. Our success is rooted in the fact that we were already building a relationship with that member long before that event.

It's an approach that differentiates accolade and as the bed rock of the results we deliver.

Our mission is for every person to live their healthiest life.

Our vision is to achieve the quadruple aim better outcomes lower costs and delighted members and care teams.

Our strategy for achieving that objective is the innovation partnership and M&A looks.

Looking at the year ahead, we see great opportunities on each of those factors.

Our innovation roadmap will now include new clinical programs delivered both the partnership and internally. Additionally.

Additionally, we will be adding electronic medical record data case notes on test results to our already differentiated dataset further powering our artificial intelligence driven next best action capabilities.

From a partnership and collaboration perspective, we expect our existing relationships with companies like Ginger and Berta among others to continue to thrive as we grow.

And while we're at it let's talk about collaboration with the ecosystem more broadly.

Healthcare is of three trillion dollars ecosystem, no single vendors going to solve the entire problem. Instead, our job is and always will be to do what's in the best interest of the people that we serve.

That means we'll be collaborating with brick and mortar health systems digital health providers and everything in between to get the best outcomes for our members, we will never stray from that principle.

On the topic of collaboration continued a brief aside here on carriers.

With the acquisition of second MD are already fruitful partnerships with carriers like Humana and Blue Shield of California have now been joined by partners like Optum, Aetna Cambria and others.

Increasingly our capabilities are being viewed as opportunities for carriers to differentiate themselves and we expect that trend to continue to play out in fiscal 'twenty two.

And then just on the back of that success that we're taking the next step to realize our vision of reinventing healthcare with the addition of <unk>.

Our integrated care teams now, including primary care physicians with unprecedented data at their fingertips and proven support teams behind them will be in a position to impact outcomes and deliver value for our members in a way that is unprecedented in the industry.

In the future, we expect to be able to reliably and measurably improved clinical outcomes for our customers while at the same time delivering negative trend line.

Actually eating into the waste and misuse that plagues our system today.

And we expect to share the value that we create for our customers when we do.

Our first discussions with customers regarding this pending acquisition and our offering strategy have been extremely well received and we look forward to updating you on these conversations after the transaction is approved and closed to.

To turn this vision into reality, we're focusing on integrating these capabilities tightly with our core services and on retaining the incredible people, who have joined or will join accolade is a part of these transactions. Our mission is to achieve the quadruple aim and we are on our path to doing so.

Now I'll turn the call over to Steve Barnes, our CFO to cover our results and forward outlook before returning for some closing remarks. Thanks Raj I'll start with the reported on our results for the full year and fourth quarter of fiscal 'twenty, One and then provide our first look at our fiscal 'twenty two guidance.

We generated $59 $2 million on revenue in the fourth fiscal quarter, representing 33% year over year growth and $174 million for the full year or 29% growth over fiscal 'twenty. Both ahead of our initial and updated guidance ranges provided in January and March.

As a reminder, we closed the second MD acquisition after the quarter and fiscal year ended so all of the revenue on growth reported is from core accolade performance.

Revenue outperformance and growth in the fourth quarter was largely attributable to better than forecast the achievement of performance related revenue and customer customer membership head count, including the airlines.

Fiscal Q4, adjusted gross margin of 53, 8% compared favorably to 58% in the prior year period.

Remember the fiscal Q4 gross margin was positively impacted by the recognition of performance related revenue.

Overall adjusted gross margin for the year was 45, 6% compared to 44, 6% last year.

Adjusted operating expenses increased slightly to 49% of revenues in Q4 of fiscal 'twenty, one versus 46% of revenues in the prior year period.

For the full year adjusted operating expenses improved to 61% of revenues for fiscal 'twenty, one compared to 70% for fiscal year 'twenty.

With respect of future spending fiscal 'twenty, one was an atypical year with lower than planned spending in particular, we slowed down hiring at the start of COVID-19 and <unk> spend was virtually nonexistent offset somewhat by the increase in G&A costs associated with becoming a public company.

Those areas will naturally revert back to normal on fiscal 'twenty, two including a bit higher on public company costs.

Even before we account for the integration of investments in our acquisitions I would expect spending to be higher as we catch up with that under spend in fiscal year 'twenty one.

Adjusted EBITDA in the fourth quarter of fiscal 'twenty, one with $2 7 million.

Which compares to $2 8 million in the fourth quarter of the prior year.

A significant outperformance relative to our initial guidance provided in January and was significantly driven by the over performance in PG related revenue, which carries a high margin contribution.

And for the full year adjusted EBITDA loss was $26 9 million or 16% of revenue, which compares to a loss of $33 $1 million or 25% of revenue in fiscal 'twenty.

Turning to the balance sheet cash and cash equivalents at the end of the fiscal year totaled $434 million.

After the quarter ended in March of 2021, we paid $236 million related to the second MD acquisition and received $245 million on proceeds after estimated expenses from our convertible notes offering and.

So on a pro forma basis cash cash equivalents were approximately $443 million walking into the first fiscal quarter.

Next I'll update you on our accounts receivable balance.

The decrease from the end of the third quarter to $9 1 million at the end of Q4, representing about 14 days revenue outstanding for the quarter.

This change primarily relates to a decrease in receivables from our airline customers and since the end of the fiscal year of the remainder of the airlines are balances have been collected in full.

On a go forward basis, we expect DSO to normalize on the 20 to 30 range.

Finally, we had about $55 7 million shares of common stock outstanding as of the end of fiscal 'twenty one.

And post the close of the second MD transaction, we have approximately $58 7 million shares outstanding.

Note that these do not include any shares related to the second empty earn out or the proposed acquisition of <unk>.

Turning to the metrics that we reported on annually, while our business continues to grow and evolve the key business measures that we use internally to track our business progress have not changed annual contract value of our ACD and growth dollar retention or GTR continue to be critical items for understanding the foundation growth and health of the <unk>.

Business.

The acquisition of second MD and the proposed the addition of virtual primary care will add new layers to the story and we'll modify our ongoing disclosure as appropriate.

And as always our goal is to provide meaningful color that aligns our disclosures to the way we run the business as well as provide visibility into the foundation of our forecasting.

One change that we will implement this year will be an update the ACB customers and member accounts that will provide on the Q3 earnings call. After the primary selling season of has concluded and we started the traditional January go lives.

And as of year end fiscal 2021, Standalone accolade ACB with $211 5 million.

31% higher than a year ago.

Second <unk> has a slightly different model with the majority of the revenue and the <unk> model like accolade and a smaller portion in a case rate model.

We will report the amount of annualized the <unk> revenue of ACD in order to align to our historical disclosure.

On that basis second MD adds approximately $36 $3 million to yield of pro forma ACB of about $248 million.

Presenting on increase of 54% over the year ago number.

And gross dollar retention was 99% equal to a year ago and above the level, we typically forecast record representing.

Another year of incredibly strong customer retention.

Finally, we had 112 customers of more than $2 1 million members at the end of the year and as we've said before second MD adds approximately 300 customers and 7 million members to our platform.

Now turning to forward financial guidance for.

For fiscal 'twenty, two we expect revenue in the range of $260 million to $265 million, representing 54% growth over the prior year at the midpoint.

Breaking this down further we said that we forecast the core accolade business at approximately 25% growth and we expect second half day to go faster than accolade.

So at the midpoint of this range that represents approximately 35% to 40% growth for second MD over their calendar 2020 revenue of $35 million, which we've reported previously.

Combining the <unk> $35 million in calendar year, 'twenty revenue with accolades of $170 million on fiscal 2021 revenue not a perfect science, but a good proxy would give you about 28% growth at the midpoint of the guidance range.

I'll comment on plus share in a moment, but we believe the addition of virtual primary care will enable us to maintain the higher growth rate beyond fiscal 'twenty two.

Adjusted EBITDA loss for fiscal 'twenty, two is expected to be in the range of $38 million to $42 million.

Representing an adjusted EBITDA loss of approximately 15% of revenues at the midpoint.

As we've stated before second MD has gross margins that are similar to accolade and has not yet profitable on a standalone basis.

And we are investing to accelerate and optimize the integration between our companies.

For the first fiscal quarter ending in May we expect revenue on the range of $54 million to $56 million per.

Representing 53% growth over the prior year at the midpoint and adjusted EBITDA loss in the range of $16 million to $19 million.

Now as you think about your models on our long term targets. Please always remember that maintaining a superlative member and customer experience is critical to our success.

When we make acquisitions, even as we invest in clinical process integration distribution alignment and other operational needs. We will always have a primary focus on our frontline care teams, making sure they're equipped to serve members and customers at extraordinarily high satisfaction levels to drive favorable outcomes and cost savings.

It means additional hiring training tools and technology to bring together multiple capabilities as we seek to reduce the complexity and cost of the health care health care system.

These investments impact gross margins, so while our long term gross margin target remains in the mid fifties. We explained we expect to remain roughly flat in the mid 40 percents for the next year or two before progressing towards that higher target.

And I'll add one more comment about adjusted EBITDA loss in the path to breakeven.

Adjusted EBITDA loss improved year over year to negative 16% in fiscal 'twenty, one from negative 25% of revenue in fiscal 'twenty.

On the strength of our revenue growth, but also positively impacted by lower spend related to COVID-19.

With the addition of a second MD and the pending acquisition of <unk>, Our Tam will increase the more than 200 billion.

And we plan to invest significantly in realizing that massively expanded market opportunity.

In pursuing this even larger opportunity we remain consistent in our bias towards top line growth with attractive unit economics, and the demonstrable path towards breakeven.

On that note, while we're not providing guidance for <unk> until our next earnings call. After the transaction closes.

Do understand that you are beginning to look at how the this will impact the model. So let us provide a few comments.

We've stated that plus cares unaudited calendar 2020 revenue was approximately $35 million and the.

<unk> will be accretive to our revenue growth rate.

So you can consider plus care about the same size and contribution at second MD on an annualized basis.

Plus care's adjusted EBITDA margin is closer to negative 20% and we have said that we intend to invest on top of that in order to build out an enterprise virtual primary care business.

Prior to including plus share our guidance for fiscal 'twenty. Two is for an adjusted EBITDA loss of 15% of revenues with the goal to improve that percentage each year to roughly negative 10% in fiscal 'twenty three and then continuing to make consistent positive progress towards breakeven each year after that.

So the addition of <unk> will likely raise those percentages slightly while maintaining that same goal of achieving attractive unit economics and consistent progress towards breakeven every year.

And as I mentioned earlier, we believe that the addition of plush care of will enable us to maintain that higher revenue growth rate for the next few years at a minimum.

Hopefully this gives you a sense of how we forecast the business run it with discipline and also show that our balance sheet of more than substantial to support our path to breakeven on a purely operational basis.

And now let me turn it back over to Raj for his concluding remarks. Thank you Steve.

Fiscal 'twenty, one was an amazing year for accolade, but we have even bigger aspirations for fiscal 'twenty, two and the years beyond it.

I'll conclude by stating what it's fairly obvious by now the acquisition of plus carrying the addition of virtual primary care of materially changes the contours of our business.

Aside from opening of huge market opportunity. It opens the door for conversations with customers that will extend our relationships and deepen the value that we provide them.

It creates a platform for us to lean hard on our track record of delivering value in the form of engagement satisfaction and cost savings and change the way healthcare works in this country for our customers.

As we've demonstrated with the innovation we've delivered this year with our fundraising activities and with two important acquisitions now our aspiration is to play of material role in improving health care in this country for the people that we serve and to build a great and enduring business.

We wake up every day and think about how to fix an industry. That's responsible for half of all personal bankruptcies in the country that represents 20% of the GDP and that grows at a rate that surpasses GDP wage growth and most corporate profit.

If youre an investor an accolade I think it's because you believe we have a chance to be that great of an enduring company and we truly appreciate the confidence you've shown on us.

The past year has presented challenges that none of us ever thought we'd face, but we remain focused on our mission and on our vision to help every person to live their healthiest life, and we are more motivated than ever to reach that goal.

But thank you very much for being here with that operator, I'd like to open the call up to questions.

Ladies and gentlemen, if you had the.

The question at this time, please spice the stew.

Florida in London on the one key on your Touchtone telephone.

The interest amounts to one question, we will take follow ups on stock comp.

Leading the team.

The question has been answered or you wish to remove yourself from the queue. Please press the patents.

Your first question comes from Michael Cherny from Bank of America. Your line is open.

Good afternoon, and congratulations on a strong end to your fiscal year.

I wanted to dive in a little bit on some of that spend dynamic I guess per company that continues to expand the Tam seeing a spend to grow mentality is not surprising at all but Steve you had some comments about remaining disciplined so as you think about that spend can you just walk us through again some of the metrics that you hold yourself against.

And making sure that the spend that youre pursuing the investments youre pursuing are paying off in terms of growth and returns.

Sure and thanks for the question Mike.

The couple of things here is how we think about it.

If you think even going back to a year ago. When we laid out the company's plan going forward, we talked about belief that we have strong belief that we could grow the accolade core core business, 25% of our more each year and we've done that over the past several years that we could take gross margins from the low <unk> three years ago into the <unk> through.

And the innovation and technology and consistently improve our adjusted EBITDA loss, which was three years ago in the forties and then progressed.

Into the 41, and then to the 25 and then this year at 16 as we just ended and now as we look in front of us and see a very large 10 times the size of Tam.

We say to ourselves we believe we can grow as we said inherent not only at the 25% core growth rate with accolade, but even faster with the addition of second MD and with <unk> and we do that with an eye towards if we can continue to do so at attractive gross margins, which today in the mid <unk> are attractive we can book we believe.

We can go higher but we're going to make some smart investments here as we add these capabilities.

And then net adjusted EBITDA loss, we can take it will remain roughly flat in fiscal 'twenty two in that 15% of on a bit higher range and then in the year after chunk down what we're seeing there Mike or the <unk>.

Following very strong attractive return rates on sales and marketing spend which you see in terms of the ACB growth rate and extremely high customer retention and when you can weave that together with the results from the on study the performance guarantees and the fact that we know we're saving the money for customers.

And this larger Tam that tells us that we're doing the right things and we're getting the right returns and we believe strongly that doing so with that continued discipline and chunking down towards breakeven over the next couple of years as we grow at that kind of rate is how we think about that overall P&L disciplined while we attack in the very early stages.

It's an extremely large market with a differentiated approach.

Got it and as you think about the the expansion of the market. You still also do have a core business is performing fairly well with a strong customer ads, how do you see the compared to the competitive dynamics playing out there in the market.

A lot of companies coming in from different angles, but appears to be coming increasingly competitive.

Hey, Mike This is Raj thanks for the question and thanks for being here.

Here's the way, we think about the competitive dynamics and always have.

We're in a category that we think that we largely invented 10 years ago and in that category. We've seen a number of companies over the last four of five years pivot into the space.

Looking at the value of that's being delivered in the space of.

Ultimately our view is that in order to really deliver high quality advocacy of navigation services and then we've in the incremental capabilities like second opinions and primary care that we're talking about today.

Need to be able to invest in building long term relationships on the longitudinal basis with individuals but with the.

The wide.

Majority of that population.

By and large we think we're unique in our capacity to do that reliably with high percentage of the population leveraging of differentiated data set that we've that we've pulled together over the years and then in turn reliably prove the cost savings via the fee of things like the on study that Steve referenced we put.

The percentage of our fees at risk with every customer that we serve it's because we know we can deliver cost savings on an ongoing basis, there will always be and particularly any time of the leader in the space is growing at.

At attractive rates will always be new competitors in the market. Our job is to continue the set the pace as it relates to the value that we delivered from our members of our customers.

And we think we've been pretty active in doing so over the last year.

Your next question is from the line of.

Average loans.

Goldman Sachs.

The answer to your question.

Great. Thanks for taking the question I guess, just looking at the revenue guide and the disclosure about more than doubling the customer base and I appreciate the.

Insight on how to think about second MD. It does look like revenue per customer in the legacy accolade businesses is down a bit I was just hoping maybe you could share a little bit more insight into size of customer mix average <unk> what type of offerings, the newer customers might be turning on versus maybe like the legacy.

The customer base.

The around kind of bridging that gap between the overall revenue and the number of customers would be would be helpful.

Sure Bob Thanks for the question Steve.

Yes, as we've grown the business over the past couple of years and you've seen our customer number accelerate.

<unk> seen that happen across all of the segments and we've talked a lot about how we.

Segment, the market into strategic customers Middle market, and then enterprise in the middle of much of the growth has happened on a pure logo count basis in the mid market, which we consider the customers with employees of about 500 up to about 5000, as we built out those distribution capabilities form part of.

<unk> with companies like Humana, and others to reach customers of all sizes.

So you will see a bit of revenue per customer compression there by design, it's our job and our intention to be able to reach a broader set of the market. We also from over the past couple of years of introduce this multi product suite that has different price points, so oftentimes, but not always when we're reaching.

Some of those smaller customers, we might start with a total benefits or of total care that's at that lower price point.

The the part that gives us great confidence Bob about what we're doing there and the take rates as we see consistent renewals the very high retention rates that we talked about.

And the wins that we're having in the market that's showing up in terms of the growth in this year's revenue of this past year revenue on the ACB number of headed into fiscal 'twenty two.

Your next question is from the line of.

Quick.

Question from Morgan.

You May ask your question.

Yeah, Hi.

Good afternoon. So a couple of questions here first of all on second in D. C. You are talking about growth of 35% to 40% of sort of at higher than what we are modeling. So that's 35% to 40% includes includes cross selling of benefit or is it the standalone growth profile of second M. D. And then my second question really.

Debt to behavioral health I mean, our channel checks on what we're hearing from payers and employers.

There is.

We have a strong safety of post COVID-19 demand for behavioral health.

So one of what kind of demand are you seeing for your offering with the employer base is it helping you.

When the new clients.

Dan do you have any data points, maybe per share with us around.

Behavioral health of helps low.

Sure.

The medical expenses.

You always focus on we really have the kind of like quantify it into the study. So if you can share any of those that would be great.

Sure let.

Let me jump in on this one first Ricky first of all thank you for being here and thanks for the question. This is Raj and Steve maybe you can jump in if you've got anything.

To throw on top of the.

First of all as it relates to your question regarding second half day.

I think positively second MD is a.

<unk> is an attractive growth rate and it's going on its core business in large part because of the differentiated services delivered and the and.

And those capabilities of what attracted us to the company of the capacity to deliver of console within three to five days make it a live console with an expert as opposed to a written consultation like the rest of the market.

Has given the second MD team of capacity to deliver a great differentiation and competitive win loss.

Incrementally to hit that 30% to 40% growth rate.

There is a little bit of cross selling or there is a modest amount of cross selling or upselling factored into that number.

But.

No doubt, we expect that over the years to continue to grow as it relates to the the H question.

I'll, let me jump.

Jumping to give you a little color commentary on why we think it is so powerful within the context of what we do and then I'll turn it over to shop, the new to speak a little bit to the value that it delivers from a from a clinical perspective.

Our view of long been wrapped into everything that we do we've accolade core advocacy of navigation services have always included behavioral health specialist as a part of our process of one of the reasons plus care was so attractive to US was that it had embedded of behavioral health element of our mental of element into the way primary care physicians.

We're practicing all of which is geared around the idea of that higher risk populations have of higher propensity.

To deal with behavioral health issues, and if you can deal with both the physical health issue and the mental health issue in tandem we have an opportunity to materially improve outcomes chop the new let me turn it over to you to talk a little bit about about our clinical philosophy philosophy there.

Yeah, absolutely and I Love the question of core part of the strategy clinically speaking.

It was we wanted to get to the right members right, we know that with mental health one of the big challenges of that oftentimes those conditions go on recognized under under diagnosed.

And the Theres significant state of all of them. So getting the right number was a core part of it. The second was was that right decision right that debt.

Our perspective is we just wanted to get people to the best possible provider for them and so with with mental health that might be a virtual provider on that might be of brick and mortar provider.

That might require medication therapy that might not until really getting to that debt.

Yes.

The decision was critical and then finally, the right path that we know that often these flow.

Don't necessarily follow up on the net debt.

That sometimes that longitude on all support that they need to really be able to get through the entire recovery process is lacking and so we wanted to make sure that were per.

With the number of every step of the way of ensuring that the things don't fall through the cracks and.

And so what we're seeing in the very early data.

This is a new solution thats been out for us less than a year is that we're starting to see real traction amongst along those dimensions that we're pretty excited about.

And Ricky this is Steve I, just wanted to circle back to close the loop on your question about second MD and their growth rate and I think your point was cross selling.

You are right <unk>.

Thirdly growing business as well on its own.

We are.

Very deep in the integration of combining the capabilities and accolades capabilities into <unk>.

<unk>.

An offering that is receiving early strong feedback from the market, but it is early and there is a relatively modest amount of assumed cross selling and the numbers that we provided about guidance for this year.

Your next question comes from Gena Wang of guidance.

You May ask your question.

Yes, Thank you and Hello, everyone.

Thanks for all the kind of out on ACB on Standalone accolade and stick of empty.

I know you have shared in past how.

On Standalone academic side, you have captured the ACD across the various quarters on how that is split across the various buckets of fixed and operational performance of savings could you provide some of the debt for the second <unk>, how should we think about the <unk>.

Water capture of that and.

The cost of data buckets.

Sure Hi, John J its Steve.

As we mentioned in the comments second half of these model is a bit different. They don't have the same types of PGS is accolade it typically either at <unk> or in some cases case right. So the.

The P. P M model or the net $37 million that I spoke about and second Mds.

The number is similar to accolade in the sense that it's a <unk>.

That we would expect to earn.

Roughly members kinds of ppm rate on the books at the end of the year and most of their revenue is generated second of these revenue is generated from that model. There is certainly an additional part that is case rate and variable price times quantity that would be on top of that and so that's included in the <unk>.

Guidance the revenue guidance that the P&L guidance for fiscal 'twenty two.

That case rate portion would not be in the ACB number.

Your next question comes from Jeff Garro of snipers.

You May ask your question.

Yes. Good afternoon, congrats on the results of the thanks for taking the question I wanted to ask about your go to market approach with the new acquisitions on the cross selling opportunity that you've spoken about just curious how you expect to balance the full vision you have for navigation plus expert medical opinion plus virtual primary.

Sure.

Making sure your sales people don't get too far ahead of themselves on the timeline for the step by step operational and technology work to achieve that vision.

Thanks for the question, Jeff This is Raj and I appreciate you being here.

And I appreciate the question of very much.

At the core of the of.

The value, we deliver to our customers and we've talked a little bit about this in my prepared remarks is the foundation of element of building a relationship of trust based relationship with a huge preponderance of the population.

Powered by our data set that we think is extraordinarily differentiate it everything we add from there whether that second opinions primary care of our own clinical programs are all geared around adding incremental value of those populations by improving their outcomes and lowering cost and so what youll see in our integration strategy.

Is first and foremost we're investing in integration, we want there to be seamless workflows and we want the process to mirror the needs of the consumer as opposed to the silos that exist in healthcare today, Secondly, youll see us embedding primary care and expert medical opinions in each of the core platforms that are part of.

Of accolades.

On our how accolade lands with customers today, because we fundamentally believe both expert medical opinion and primary care add value to any member that we're serving regardless of the platform, they're working with us on and third.

<unk>.

We're one of the things we really looked at in both of the acquisitions that we've taken part in in the last couple of in the last year, our technology stacks that allow integration do occur at pace, meaning we talked at length about the idea that we want to teams that were culturally aligned services that were built around longitudinal.

<unk> and tech stacks that allowed us to integrate at pace at scale.

We expect that Thats true on both of the companies of one that we've already closed and the other that we expect to close next month and so.

We expect to be able to deliver these integrations that pace and obviously our sales teams are anxious for us to do so.

Your next question is from the line of Ryan Daniels of William Blair.

Sir you May ask your question.

Hey, good afternoon. This is Jared haase in for Ryan Thanks for taking the questions.

Maybe for you I was hoping to just.

If you could talk a little bit about just generally the key themes that are coming up in discussions with the client base. So curious if that.

That's still largely kind of focused on because the one of the return to work getting people back into the office post COVID-19 or if youre starting to really see kind of the shift towards more of the clinical offerings. Obviously, the you've added through M&A and things like that just any thoughts there around the the themes that you're hearing in the in the pipeline from clients.

Yes of course happy to.

Very clearly more and more of our clients are returning to work right now to be sure.

But I agree I agree with the premise of your question or the sort of the direction you were leaving me with your question around where the conversations are health care spend is returning at some level of across the country. Our customers are seeing that spend return, there's an acknowledgment that healthcare trend line in 2021 is going to be higher than the trend line.

We saw in 2020, how customers are budgeting for that and how they're dealing with what we think are at profound set of needs.

Undertreated chronic conditions or Ian in terms of behavioral health or opportunities for our clinical programs are for our enhanced clinical programs to drive material value. Its a good opportunity for me if you don't mind to kick it over to shop, the new none of the as well our Chief Medical Officer, Jonathan who actually just published a book yesterday.

Written about kind of the call care after COVID-19, that's really about how.

We're actually dealing with a new wave of needs in the healthcare system post the pandemic chunk of it that you want to talk about the clinical needs of our customers are facing that might be a little different than they were just a year ago.

Yes happy to.

Absolutely Love the question, because I think Youre right I think for a little while earlier in the year employers.

The largely focus on the pandemic and just managing with the uncertainty of that I think we're definitely seeing a turn on the conversations we're on.

Our customers increasingly sort of getting ready to get back to normal which means there are concerned about the postponed elective care and so that's where they're interested in.

The second opinion I think they are interested in getting the handle of chronic diseases, which many things sort of fell off during the pandemic, but I think the way that they are coming at those conversations in the different right I think debt during the past year, what they've seen is that.

The health isn't just the HR benefits.

It's also a business continuity, one and that it sort of magnified for them that the.

The core challenges we have on the supply chain of healthcare are far more stark than they had imagined even before that.

So issues like.

The access to primary care on the fact that 20% to 40% of the Americans don't have it in that the reimbursement model for primary care of makes it very fragile right. The fact that mental health is.

It is core to what they need to be able to provide their employees I think of the opportunity of the virtual provide so I think what we're seeing.

Early evidence of in the customers is a real change in mindset and sort of a larger aperture for.

Getting even more involved in care delivery and we're really connecting all of the different pieces.

Of the health care equation for four of their members.

Your next question comes from the line of high net.

Steve.

Alright.

Yeah.

Question on just a quick question on your growth in your customer base. That's on the deck. The accolade increase the target customer base from 21005 hundreds of 30000 per self in fully insured employers can you unpack the delta between these and maybe what portion is attributable to if I can add Lee. Thanks.

Oh sure.

Just an additional data source on the number of target companies in the U S. Hana as opposed to a reflection on second MD per se, it's more about the sizing of the mid market.

The target customers, which.

Has the.

Level at which you can self insure given the availability of the stop loss insurance side.

Affordable rates, even for small companies has grown that market. So today, we're sizing in a bit larger than we were.

In the back at the time of the IPO in the range of 30000 available companies.

Your next question comes from Richard close of.

Kind of client.

Your line is open.

Great. Thanks couple of questions on competition and collaboration Roger I was wondering if you could address the view that employers are overwhelmed with all of these different offerings.

Definitely referring to this week's journal article.

Are you guys hearing you stuff like that from your customers in your discussions and as the.

That something that could impact the signing of new customers, especially.

As we think about large enterprises.

Richard I appreciate the question very much and I think.

There has certainly been.

On a lot of conversation about the journal article.

I will say this when we read the headline of that article which spoke to benefits buyers being overwhelmed by the number of solutions that are being presented to them every day.

It was as if it had been pulled off of our website of our out of our out of our presentation ultimately the value proposition, we deliver for our customers and for their for their employees and their families as to give them a single place to go so if theyre unsure of what benefit they should use of our how to go about leveraging their benefit all they have to do with ask accolade.

The supplier program is built around the idea of pulling all of their disparate programs together in a way.

Net actually Leverages, our engagement engine drives the engagement and adoption of up and improves outcomes by getting people to leverage the benefits program as well and so do we agree yes, we fundamentally agree with the headline of that article benefits buyers are overwhelmed they would like to go to single placed two of single place to be able to manage their vent.

The relationships and to the degree they can reduce their vendor relationships by finding more value.

The value is the critical term here that I'll expand on in just a moment.

With the single vendor.

Like to do so but that value isn't about per se the.

Right cost price per per year.

Unit <unk> that value's about clinical value and about driving cost down it's about improving member satisfaction and if you can do those three things by weaving offerings together and the nature of that we are we think you have a winning proposition for the customer reducing the number of vendors that they are dealing with building launched two new of relationships with there.

People to make them happier.

Improving clinical outcomes and lowering cost.

That is fundamentally aligned with the value proposition accolade has been talking about for 10 years.

Your next question is from the line of gross.

Gross margin of Stifel. Your line is open.

Great. Thank you.

I'm wondering if we could just remind us of half of the integration of the second MDM plus of care get factored into the.

The risk element of your revenue model should we assume debt.

On the integrations are fully completed that in fact, you can guarantee the higher level of savings post integration.

The first of all thank you for the question I think.

When we think about.

Adding capabilities to our platform like expert medical opinion like primary care and.

And specifically with things like primary care, where we think we're adding value to a wide variety of our launch to know relationships. We absolutely assess every one of those incremental capabilities with an eye towards <unk>.

Will it improve clinical outcomes reduce costs of will it improve member satisfaction. We believe that's true for both of these capabilities and we believe when embedded with our platform. We can drive engagement for those solutions up in a way that improves our capacity to deliver incremental cost or value.

In my prepared remarks, I talked about the idea of driving negative trend line. We do fundamentally believe we can eat into the waste that exists in the system by delivering an integrated experience in the launch to the form like the one we have today, how will that manifest for our customers.

We've been putting our fees at risk since the beginning of the business, meaning we've been putting a percentage of our fees at risk since the company was founded in today for a preponderance of our customers of percentage of Rfps on a risk associated with the savings we deliver we'd expect that to continue into the future and we expect that we can yield more value from those relationships.

<unk> chips as we drive more cost savings for our customers.

Your next question comes from Anthony Keith.

Yes.

Okay.

<unk>.

Hi, Thank you for taking my question with the.

The addition of the second opinion solutions on the virtual primary care announcement I'd be curious if you're seeing any change in the market perception of your employer clients.

The two parts one are you seeing employers opened the contracting directly with you for care or is the market perceptions don't mean Tory accolade of third party navigate guide has value via its independence and secondly are you seeing customers opened of shutting off the third party virtual care on PPR yours or is it more of the.

On the component to their overall cash suite.

I'm going to I'm going to let Jonathan to jump in here because I know he's got five things that he wants to add.

Add to whatever answer I gave you so jumping to get ready.

Our strategy fundamentally is and this has been true in terms of our customers' perception of us since the beginning has been about improving clinical outcomes, reducing costs and making people and driving engaged members who are happy with the service we deliver.

And so.

Answering your question around customer perception customers expect us to continue to deliver new value to them and are quite in fact excited about the new capabilities, we've been bringing to their doorstep over the course of the last six months.

Second point I'd make there is as it relates to our care delivery vehicles, and how we collaborate with the marketplace and this is where I'll turn it to shop the new on.

Our strategy is fundamentally about.

Proving outcomes for the people, we serve and that means we will collaborate where that's appropriate we'll always going to get the peak of our members to the right place at the right time, including to our partners or to the brick and mortar health care system that exists.

And so we're not really talking about replacing things, we're talking about enhancing of system that already exists in order to drops of better outcomes chunk I know you want to jump in and speak a little bit of that model.

Yeah, absolutely I think as you said I mean, I think fundamentally our our sort of philosophy is that we want to get our members to the right doctors and help them empower the that patient and power of that doctor to get to the right decision for them and I think sometimes that may be providers that we have that might be.

Providers and brick and mortar of that might be through our partners, but ultimately our north star is really making helping numbers to make the best decisions. So that we can get them to the.

Outcomes, and I think where we see second opinion ETE.

The primary care is if you look at the health care system. When you look at where are the places that often.

The sale of patients. The most right those are the places where we see an opportunity for us too.

Connect the dots and ultimately help drive those better decisions right. When you look at how many people that have cancer or that has.

Surgeries that don't even have the right diagnosis or don't have the right treatment plan and how often the when we get a second opinion that that diagnosis or treatment meaningfully changes alright.

That's the place where we see immense leverage for us to be more part of that solution same thing for primary care right.

<unk> show rate of 20% to 40% of Americans don't have the primary care physician, but if you dig deeper into of what percentage of patients don't have.

A strong primary care relationship and then if you go on the other side I still get a chance to practice medicine and primary care of every week the.

The challenge of it I as the primary care physician has being able to provide the care of that my patients need a simple things like I don't know what medications of actually sales I don't know if they were in the hospital recently.

When I prescribe the medication I can't tell them, how much of that medication costs before they leave my clinic. Those are the places where we see a tremendous opportunity for us to leverage the navigation service that we have the data that we felt the relationship we built to really empower of those those physicians and.

Again take a part of the health care journey.

It's simply not working for enough people and again, sometimes on might be our own and sometimes that might be.

Brick and mortar Doctor then really augmenting.

And supporting them.

Getting to those better decisions.

Your next question comes from the line of Teva.

Larson of BT.

You May ask your question.

Hi, can you talk a little bit about your relationship with Tri care. It's my understanding that Tricare has about 9 million lives in total pie.

The pilot program going on about 100000 lives.

I was I was hoping to hear about sort of more in sales potential with that particular client just any any thoughts around timing will be very helpful. Thanks a lot.

Hey, David Thanks for the question we are.

Now entering the second year of our Tri care pilot you may recall, the last year, we announced we signed a three year pilot with tricare that needed to renew at the end of each year.

That renewal process has taken place and we are now into our second year, serving members and continuing to see great early indicators of the value. We can provide extraordinary satisfaction and an opportunity to guide peoples of the right outcomes.

Yes.

Our belief is to your point that we have an opportunity to extend that value to more of the tricare population with the success of the pilot and obviously the extension of the pilot for another year is of great indicator of of the opportunity to extend the relationship.

We don't have a lot to tell you today around.

The incremental opportunities of the size of the incremental opportunity beyond the fact that we have of 100000 members today Theres 9 million members on the broader population.

We do like the leading indicators associated with the surface per delivery.

Your next question is from the line of Ryan Macdonald.

Your line is open.

Hi, great. Thanks for taking my questions in regards of the second empty you, obviously talked about the mix of revenue being a combination of <unk>, but then there's also.

Sort of price times quantity.

Case case rate component as well as you look at the outlook that you've provided for <unk>, how should we think about the mix from.

The new contribution between those two and is there any potential tailwind.

Tailwind to the case quantity amount as we look at return of potential of elective procedures throughout the year. Thanks.

Hey, Ryan Thanks for the question Steve.

Yes.

The cash rate component is outside of the ACB number one while the majority of the revenue.

The second on be generates is on the <unk> basis, you could think of it as a.

Quarter quarter to 30% of third something like that of potential around case rate.

And as people are coming back into the health care system in more cases, theres potential tailwind there.

So we've included in the guidance, what we think is achievable number but.

Could be that opportunity for upside as we all know we're all trying to figure out exactly how quickly people come back into the health care system. So we're taking we think is a very prudent approach there, but certainly could be some upside on volumes as we move through the year.

I'm showing no further questions at this time I would now like to turn the conference back to Mr. Huang You May proceed.

Thank you very much on.

Operator and to all of all of our.

Investors and analysts who joined US today, we appreciate you, making the time, we're excited about the future. We look forward to catching up with you in July for our Q2 earnings call Q1 earnings call excuse me. Thanks, everyone.

This concludes today's conference call. Thank you for your participation and have a wonderful team you may now disconnect.

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Good day, and thank you for standing by what kind of see the accolade <unk> 21 earnings results Conference call.

At this time all participants are in a listen only mode.

We will conduct a question and answer session and instructions will follow at that time, if anyone should you crack the sense. During the conference. Please press Star then zero on your Touchtone telephone.

As a reminder, at the conference is being recorded I would now like to have the kind of been so Richard Howes target Freedman with <unk>.

Thank you you may begin.

Thanks, Operator, and welcome everyone of our fiscal fourth quarter and year end earnings call with me today are our CEO of Rajiv, saying it our CFO, Steve Barnes of charter in India, Our Chief Medical Officer will join US for the question and answer of portion of the call. Let me first start by the thing I apologize, we actually omitted the Q.

Q4 table, although it has the summary numbers on the rest of the tables are correct and the release of we'll issue an amended released shortly with the full table details for you before turning the call over to Rajeev. Please note there will be discussing certain non-GAAP financial measures that we believe are important in evaluating accolades performance details on the relationship between these non-GAAP measures to the most comparable GAAP measures the.

The reconciliations thereof can be found on the press release. It is posted on our website also please note that certain statements made during this call will be forward looking statements. At this time of the private Securities Litigation Reform Act like 95, such forward looking statements are subject to risks uncertainties and other factors that could cause actual results per accolade to differ materially from those expressed or implied in the call.

For additional information please refer to our cautionary statement in our press release and our filings with the SEC all of which are available on our website and with that I'd like to share the call over to our CEO of Rajiv.

Thank you Todd and thank you all for joining us here today.

Fiscal 2021 was the year of transformation per accolade, we were extremely well positioned at the outset of a global pandemic to be a source of help and guidance for our customers and per our members and that led to opportunities for us to grow and to innovate. We took advantage of those opportunities among the highlights for the year were consistent investment in innovation, which yet again.

And yielded incredible value for our customers on our members we delivered new offerings like accolade COVID-19 response care intelligent provider matching and a suite of integrated care offerings with partners that started with mental health with Ginger.

Additionally, it was our first full year of deploying accolade total care in total benefits combined these offerings dramatically expanded our solution footprint, we can meet customers wherever they are and we can grow with them as they evolve.

That innovation paid off with a strong organic growth rate across all market segments of strategic enterprise and middle market, which led to strong financial performance, we doubled our customer base again to more than 100 logos covering more than $2 1 million members and annual contract value increased 31%.

Additionally, we launched a pilot program with the Defense Health Agency. This past year and very recently, we learned that we have received approval for the second year of our pilot.

This renewals the obviously a positive signal accolade will now have a chance to continue demonstrating value in order to expand our presence with the tricare select population.

We thank you for your support in our capital raising initiatives this year as well from our IPO in July two our follow on offering in October two of our convertible note offering in March we were able to leverage that stronger balance sheet to close our acquisition of second M. D in March and to announce our intention to acquire plus here in April.

Second half deep doubled our addressable market and added approximately 300 customers and 7 million members to our base.

We quickly moved to a more integrated model, where expert medical opinion is now being sold together as a part of accolade total care and then add on conversation with existing customers, we're seeing great traction with our customers for cross sell and up sell opportunities.

We're in the early days of integration and the acquisition is going as well as plant.

Upon closure of the plush care transaction, we will have grown our addressable market, yet again to between 200 and $300 billion more than 10 X or opportunity from the beginning of fiscal 'twenty one.

Accolade today as an even stronger company than the one that went public in July we're bigger than our size broader in our footprint and attacking a materially larger addressable market and most importantly, we're deeper with our customers on our members than we've ever been.

And that's reflected in our record fiscal 'twenty, one financial performance, Steve will of course give you far more details on the results, but a quick recap shows we came in ahead of our pre announcement on both the top and bottom lines.

For the year revenue of $174 million grew 29, 29% year over year and adjusted EBITDA was a loss of $27 million compared to a loss of $33 million in fiscal 'twenty.

While we're pleased with fiscal 'twenty, one, we see even more opportunity and growth in fiscal 'twenty two and beyond.

Our vision is clear we build long term high trust longitudinal relationships with members and their families and we improved clinical outcomes and we lower health care costs.

Those relationships are powered by our frontline care teams and an extraordinarily differentiated dataset.

E on has now independently validated twice in the last four years that we deliver on that vision with demonstrated results.

As we add more value to those relationships via our own innovation via partnership and via M&A, We further improve outcomes and we drive better financial performance for our customers, it's as simple as that.

Yes, perhaps it's simpler for accolade.

Rather than for others because of our foundation is built on advocacy of navigation.

Face that we pioneered and have led per years abaca.

Advocacy of navigation of the building blocks services that create engagement and trust between our members and our frontline care teams.

Everything we do whether it's in our core offerings, our new areas like expert medical opinion on primary care is made better by that trust.

Since our founding we've invested significantly in building long term relationships with a significant percentage of the members we serve not just the high cost ones.

When a member of suffers in acute events or experience of some condition focused inflection point in her health care journey. Our success is rooted in the fact that we were already building a relationship with that member long before that event.

It's an approach that differentiates accolade and as the bedrock of the results we deliver.

Our mission is for every person to live their healthiest life.

Our vision is to achieve the quadruple aim better outcomes lower costs and delighted members and care teams.

Our strategy for achieving that objective as innovation partnership and M&A looks.

Looking at the year ahead, we see great opportunities on each of those factors.

Our innovation roadmap will now include the new critical programs delivered both via partnership and internally. Additionally, we'll be adding electronic medical record data case notes on test results to our already differentiated dataset further powering our artificial intelligence driven next best action capabilities.

From a partnership and collaboration perspective, we expect our existing relationships with companies like Ginger and Berta among others to continue to thrive as we grow and.

And while we're at it let's talk about collaboration with the ecosystem more broadly.

Healthcare is of three trillion ecosystem no single vendor is going to solve the entire problem. Instead, our job is and always will be to do what's in the best interest of the people that we serve.

That means we will be collaborating with brick and mortar health systems digital help providers on everything in between to get the best outcomes for our members, we will never stray from that principle.

On the topic of collaboration continued a brief aside here on carriers.

With the acquisition of second MD already proof of partnerships with carriers like Humana and Blue Shield of California have now been joined by partners like Optum, Aetna Cambria and others.

Increasingly our capabilities are being viewed as opportunities for carriers to differentiate themselves and we expect that trend to continue to play out in fiscal 'twenty two.

And it is on the back of that success that we're taking the next debt to realize our vision of reinventing health care with the addition of <unk>.

Our integrated care teams now, including primary care physicians with unprecedented data at their fingertips and proven support teams behind them will be in a position to impact the outcomes and deliver value for our members in a way that is unprecedented in the industry.

In the future, we expect to be able to reliably and measurably improved clinical outcomes for our customers while at the same time delivering negative trend line.

Actually eating into the waste and misuse that plagues our system today.

And we expect to share the value of that we create for our customers when we do.

Our first discussions with customers regarding this pending acquisition and our offering strategy have been extremely well received and we look forward to updating you on these conversations after the transaction is approved and closed the.

To turn this vision into reality, we're focusing on integrating these capabilities tightly with our core services and on retaining the incredible people who have joined our will join the accolade is a part of these transactions. Our mission is to achieve the quadruple aim and we are on our path to doing so.

Now I'll turn the call over to Steve Burns, our CFO to cover our results and forward outlook before returning for some closing remarks. Thanks Raj I'll start with the reported on our results for the full year and fourth quarter of fiscal 'twenty, One and then provide our first look at our fiscal 'twenty two guidance.

We generated $59 $2 million on revenue in the fourth fiscal quarter, representing 33% year over year growth and of $174 million for the full year or 29% growth over fiscal 'twenty. Both ahead of our initial and updated guidance range as provided in January and March.

As a reminder, we closed the second MD acquisition after the quarter and fiscal year ended so all of the revenue on growth reported is from core accolade performance.

Revenue outperformance and growth in the fourth quarter was largely attributable to better than forecast the achievement of performance related revenue and customer customer membership head count, including the airlines.

Fiscal Q4, adjusted gross margin of 53, 8% compared favorably to 58% in the prior year period.

Remember that fiscal Q4 gross margin was positively impacted by the recognition of performance related revenue.

Overall adjusted gross margin for the year was 45, 6% compared to 44, 6% last year.

Adjusted operating expenses increased slightly to 49% of revenues in Q4 of fiscal 'twenty, one versus 46% of revenues in the prior year period.

For the full year adjusted operating expenses improved to 61% of revenues for fiscal 'twenty, one compared to 70% for fiscal year 'twenty.

With respect of future spending fiscal 'twenty, one was an atypical year with lower than planned spending in particular, we slowed down hiring at the start of COVID-19 and <unk> spend was virtually nonexistent offset somewhat by the increase in G&A costs associated with becoming a public company.

Those areas will naturally revert back to normal on fiscal 'twenty, two including a bit higher on public company costs.

Even before we account for the integration of investments in our acquisitions I would expect spending to be higher as we catch up with that under spend in fiscal year 'twenty one.

Adjusted EBITDA in the fourth quarter of fiscal 'twenty, one with $2 7 million, which compares to the $2 million in the fourth quarter of the prior year.

This is a significant outperformance relative to our initial guidance provided in January and was significantly driven by the over performance in PG related revenue, which carries a high margin contribution.

For the full year adjusted EBITDA loss was $26 9 million or 16% of revenue, which compares to a loss of $33 $1 million or 25% of revenue in fiscal 'twenty.

Turning to the balance sheet cash on cash equivalents at the end of the fiscal year totaled $434 million.

After the quarter ended in March of 2021, we paid $236 million related to the second MD acquisition and received $245 million on proceeds after estimated expenses from our convertible notes offering.

So on a pro forma basis cash and cash equivalents were approximately $443 million walking into the first fiscal quarter.

Next I'll update you on our accounts receivable balance.

A decrease from the end of the third quarter to $9 1 million at the end of Q4, representing about 14 days revenue outstanding for the quarter.

This change primarily relates to a decrease in receivables from our airline customers and since the end of the fiscal year of the remainder of the airlines are balances have been collected in full.

On a go forward basis, we expect DSO to normalize on the 20 to 30 range.

Finally, we had about $55 7 million shares of common stock outstanding as of the end of fiscal 'twenty one.

And post the close of the second MD transaction, we have approximately $58 7 million shares outstanding.

Note that these do not include any shares related to the second MDA earn out or the proposed acquisition of <unk>.

Turning to the metrics that we reported on annually, while our business continues to grow and evolve the key business measures that we use internally to track our business progress have not changed annual contract value of our HCV and growth dollar retention or GDR continue to be critical items for understanding the foundation growth and health of the.

Business.

The acquisition of second MD and the proposed the addition of virtual primary care will add new layers to the story the more modify our ongoing disclosure as appropriate and as always our goal is to provide meaningful color that aligns our disclosures the way we run the business as well as provide visibility into the foundation of our forecasting.

One change that we will implement this year will be an update the ACB customers and member accounts that will provide on the Q3 earnings call. After the primary selling season has concluded and we started the traditional January go lives.

And as of year end fiscal 2021, Standalone accolade, ACB with $211 5 million, 31% higher than a year ago.

Second <unk> has a slightly different model with the majority of the revenue in the <unk> model like accolade and a smaller portion in our case rate model.

We will report the amount of annualized the <unk> revenue of ACD in order to align to our historical disclosure.

On that basis second MD adds approximately $36 $3 million to yield of pro forma ACB of about $248 million.

Representing an increase of 54% over the year ago number.

And gross dollar retention was 99% equal to a year ago and above the level, we typically forecast.

Representing another year of incredibly strong customer retention.

Finally, we had 112 customers of more than $2 1 million members at the end of the year and as we've said before second MD adds approximately 300 customers and 7 million members to our platform.

Now turning to forward financial guidance for fiscal 'twenty, two we expect revenue in the range of $260 million to $265 million, representing 54% growth over the prior year at the midpoint.

Breaking this down further we said that we forecast the core accolade business at approximately 25% growth and we expect second half day to go faster than accolade. So at the midpoint of this range that represents approximately 35% to 40% growth per second MD over their calendar 2020 revenue of $35 million, which we've reported previous.

Lee.

Combining second MD is $35 million in calendar year, 'twenty revenue with accolades of $170 million on fiscal 2021 revenue not a perfect science, but a good proxy would give you about 28% growth at the midpoint of the guidance range.

I'll comment on plus Caron of moment, but we believe the addition of virtual primary care will enable us to maintain the higher growth rate beyond fiscal 'twenty two.

Adjusted EBITDA loss for fiscal 'twenty, two is expected to be in the range of $38 million to $42 million.

Representing an adjusted EBITDA loss of approximately 15% of revenues at the midpoint.

As we've stated before secondhand day has gross margins that are similar to the accolades and is not yet profitable on a standalone basis.

And we are investing to accelerate and optimize the integration between our companies.

For the first fiscal quarter ending in May we expect revenue on the range of $54 million to $56 million representing.

The representing 53% growth over the prior year at the midpoint and adjusted EBITDA loss in the range of $16 million to $19 million NAV.

Now as you think about your models on our long term targets. Please always remember that maintaining a superlative member and customer experience is critical to our success.

When we make acquisitions, even as we invest in clinical practice integration distribution alignment and other operational needs. We will always have a primary focus on our frontline care teams, making sure they're equipped to serve members and customers at extraordinarily high satisfaction levels to drive favorable outcomes and cost savings that.

Means additional hiring training tools and technology to bring together multiple capabilities as we seek to reduce the complexity and cost of the health care health care system.

These investments impact gross margins, so while our long term gross margin target remains in the mid fifties. We explained we expect to remain roughly flat in the mid 40 percents for the next year or two before progressing towards that higher target.

And I'll add one more comment about adjusted EBITDA loss and the path to breakeven.

Adjusted EBITDA loss improved year over year to negative 16% in fiscal 'twenty, one from negative 25% of revenue in fiscal 'twenty largely on the strength of our revenue growth, but also positively impacted by lower spend related to COVID-19.

With the addition of a second MD and the pending acquisition of <unk>, Our Tam will increase the more than 200 billion.

And we plan to invest significantly in realizing that massively expanded market opportunity.

In pursuing this even larger opportunity we remain consistent in our bias towards top line growth with attractive unit economics, and the demonstrable path towards breakeven.

On that note, while we're not providing guidance for <unk> until our next earnings call. After the transaction closes we do understand that you are beginning to look at how the this will impact the model. So let us provide a few comments.

We've stated that <unk> unaudited calendar 2020 revenue was approximately $35 million and the acquisition will be accretive to our revenue growth rate.

So you can consider plus care about the same size and contribution of that second MD on an annualized basis.

Plus care's adjusted EBITDA margin is closer to negative 20% and we have said that we intend to invest on top of that in order to build out an enterprise virtual primary care business.

Prior to including plus share our guidance for fiscal 'twenty. Two is for an adjusted EBITDA loss of 15% of revenues with the goal to improve that percentage each year to roughly negative 10% in fiscal 'twenty three and then continuing to make consistent positive progress towards breakeven each year after that.

The addition of cost of care will likely raise those percentages slightly while maintaining that same goal of achieving attractive unit economics and consistent progress towards breakeven every year.

And as I mentioned earlier, we believe that the addition of crushed care of will enable us to maintain that higher revenue growth rate for the next few years at a minimum.

Hopefully this gives you a sense of how we forecast the business run it with discipline and also show that our balance sheet at more than substantial to support our path to breakeven on a purely operational basis.

And now let me turn it back over to Raj for his concluding remarks. Thank you Steve.

The fiscal 'twenty, one was an amazing year for accolade, but we have even bigger aspirations for fiscal 'twenty, two and the years beyond it.

I'll conclude by stating what is fairly obvious by now the acquisition of plus carrying the addition of virtual primary care of materially changes of the contours of our business.

Aside from opening of huge market opportunity. It opens the door for conversations with customers that will extend our relationships and deepen the value that we provide them.

It creates a platform for us to lean hard on our track record of delivering value in the form of engagement satisfaction and cost savings and change the way healthcare works in this country for our customers.

As we've demonstrated with the innovation, we have delivered this year with our fundraising activities and with two important acquisitions now our aspiration is to play of material role in improving healthcare in this country for the people that we serve and to build a great and enduring business.

We wake up every day and think about how to fixing the industry. That's responsible for half of all personal bankruptcies in the country that represents 20% of the GDP and that grows at a rate that surpasses GDP wage growth and most corporate profit.

If youre an investor an accolade I think it's because you believe we have a chance to be that great of an enduring company and we truly appreciate the confidence you've shown on us.

The past year has presented challenges that none of us ever thought we'd face, but we remain focused on our mission and on our vision to help every person on live their healthiest life, and we are more motivated than ever to reach that goal.

So thank you very much for being here with that operator, I'd like to open the call up to questions.

Ladies and gentlemen.

The question at this time, please press the star and Guangzhou number one key on your Touchtone telephone.

Limit yourself to one question per will take follow ups after completing the key.

The question has been answered or you wish to remove yourself from the key dispatched the patchy.

Keith.

Your first question comes from Michael Cherny from Bank of America. Your line is open.

Good afternoon, and congratulations on a strong end to your fiscal year.

I wanted to dive in a little bit on some of that spend dynamic I guess per company that continues to expand the Tam seeing a spend to grow mentality is not surprising at all but Steve you had some comments about remaining disciplined so as you think about that spend can you just walk us through again some of the metrics that you hold yourself against.

On making sure that the spend that youre pursuing the investments you're pursuing are paying off in terms of growth and returns.

Sure and thanks for the question Mike.

A couple of things here is how we think about it if you think even going back to a year ago. When we laid out the company's plan going forward, we talked about belief that we have strong belief the grow the accolade core core business, 25% of our more each year and we've done that over the past several years that we could take gross margins from the low <unk>.

Three years ago into the <unk> through investments in innovation and technology and consistently improve our adjusted EBITDA loss, which was three years ago in the <unk> and then progressed.

And to the 41, and then to the 25 and then this year at 16 as we just ended and now as we look in front of us and see a very large 10 tightened size of Tam.

We say to ourselves we believe we can grow as we said inherent not only at the 25% core growth rate with accolade, but even faster with the addition of <unk> and with <unk> and we do that with an eye towards if we can continue to do so at attractive gross margins, which today in the mid <unk> are attractive we can book we believe.

We can go higher but we're going to make some smart investments here as we add these capabilities.

And then net adjusted EBITDA loss, we can take it will remain roughly flat in fiscal 'twenty two in that 15% on a bit higher range and then in the year after chunk down what we're seeing there Mike or the <unk>.

Following very strong attractive return rates on sales and marketing spend which you see in terms of the ACB growth rate and extremely high customer retention and when you can weave that together with the results from the Aon study the performance guarantees and the fact that we know we're saving money for customers.

And this larger Tam that tells us that we're doing the right things and we're getting the right returns and we believe strongly that doing so with that continued discipline and chunking down towards breakeven over the next couple of years as we grow at that kind of rate is how we think about that overall P&L disciplined while we attack in the very early stages.

It's an extremely large market with a differentiated approach.

Got it and as you think about the the expansion of the market. You still also do have a core business is performing fairly well with a strong customer ads, how do you see the compared to the competitive dynamics playing out there in a market that.

A lot of the companies coming out from different angles, but appears to be coming increasingly competitive.

Hey, Mike This is Raj thanks for the question and thanks for being here.

Here's the way, we think about the competitive dynamics and always have.

We're in a category that we think that we largely invented 10 years ago and in that category. We have seen a number of companies over the last four of five years pivot into the space.

Looking at the value of that's being delivered in the space on.

Ultimately our view is that in order to really deliver high quality advocacy of navigation services and then we then the incremental capabilities like second opinions and primary care that we're talking about today, you need to be able to invest in building long term relationships on the longitudinal basis with individuals but with a wide.

The.

The majority of that population.

By and large we think we're unique in our capacity to do that reliably with high percentage of the population leveraging of differentiated data set that we've that we've pulled together over the years and then in turn reliably prove the cost savings via the fee of things like the on study that Steve referenced we.

Out of percentage of our fees at risk with every customer that we serve it's because we know we can deliver cost savings on an ongoing basis, there will always be and particularly any time of the leader in the space is growing.

At attractive rates of will always be new competitors in the market. Our job is to continue to set the pace as it relates to the value that we delivered from our members on our customers.

And we think we've been pretty active in doing so over the last year.

Your next question is from the line of.

Albert Jones.

Golden Sachs you May ask your question.

Alright, great. Thanks for taking the question I guess, just looking at the revenue guide and the disclosure about more than doubling the customer base and appreciate the.

Instead on how to think about second MD. It does look like revenue per customer in the legacy accolade businesses is down a bit I was just hoping maybe you could share a little bit more insight into the size of customer mix average <unk> what type of offerings, the newer customers might be turning on versus maybe like the the legacy.

Customer base.

Thing around kind of bridging that gap between the overall revenue and the number of customers would be would be helpful.

Sure Bob Thanks for the question Steve.

Yes, as we've grown the business over the past couple of years and you've seen our customer number accelerate the.

<unk> seen that happen across all of the segments and we've talked a lot about how we segment the market into strategic customers Middle market and then enterprise in the middle of much of the growth has happened on a pure logo count basis in the mid market, which we consider to be customers of the employees of about 500 up two of.

5000, as we built out those distribution capabilities foreign partnerships with companies like Humana and others to reach customers of all sizes.

So you will see a bit of your revenue per customer compression there by design, it's our job on our intention to be able to reach a broader set of the market. We also from over the past couple of years of introduce this multi product suite that has different price points, so oftentimes, but not always when we're reaching.

Some of those smaller customers, we might start with the total benefits or of total care that's at that lower price point the.

The the part that gives us great confidence Bob about what we're doing there and the take rates as we see consistent renewals the very high retention rate that we talked about.

And the wins that we're having in the market that's showing up in terms of the growth in this year's revenue. This past year revenue in the ACB number of headed into fiscal 'twenty two.

Your next question is from the line of.

With the.

Vicki Gold Gotcha from Morgan you.

You May ask your question.

Yes, hi, good afternoon, so a couple of questions from here.

First of all on second and D can you're talking about growth of 35% to 40% of sort of at higher than what we are modeling. So that's the 35% to 40% increase includes cross selling of benefit or is it the standalone growth profile of the.

Second M D.

And my second question related to behavioral health I mean, our channel checks on what we're hearing from payers and employers.

There is.

<unk> strong safety post COVID-19.

And from behavioral health.

So one of what kind of demand are you seeing for your offering with the employer base is it helping you.

When the new clients.

And do you have any data points, maybe per share with us around how behavioral health of helps lower.

The medical expense because I think you always focus on we really have the kind of like quantify it into the studies. So if you can share any of those that'd be great.

Sure.

Let me jump in on this one first Ricky first of all thank you for being here and thanks for the question. This is Raj in the Steve maybe you can jump in if you've got anything.

To throw on top the.

First of all as it relates to your question regarding second half day.

Doug I think positively second M DSA.

<unk> demonstrated an attractive growth rate, it's going on its core business in large part because of the differentiated services delivered and the.

And those capabilities of what attracted us to the company of the capacity to deliver a console within three to five days make it a live console with an expert as opposed to of written consultation like the rest of the market.

Has given the second MD team of capacity to deliver a great differentiation and competitive win loss.

Incrementally to that 30% to 40% growth rate.

There's a little bit of cross selling or there is a modest amount of cross selling or upselling factored into that number.

But and.

And no doubt, we we expect that over the years to continue to grow as it relates to the th question first how let me let me let me jump in and give you a little color commentary on why we think it's so powerful within the context of what we do and then I'll turn it over to shop, the new to speak a little bit to the value that it delivers from.

From a clinical perspective.

Our view of ph is a long been wrapped into everything that we do we've accolade core advocacy of navigation services have always included behavioral health specialist as a part of our process.

One of the reasons plus care was so attractive to us was that in an embedded of behavioral health element of our mental of element into the way primary care physicians, we're practicing all of which is geared around the idea of that higher risk populations have a higher propensity.

To deal with behavioral health issues, and if you can deal with both the physical health issue and the mental health issue in tandem we have an opportunity to materially improve outcomes chart. The new let me turn it over to you to talk a little bit about about our clinical philosophy the philosophy there.

Yeah, absolutely and I Love the question a core part of the strategy clinically speaking.

It was we wanted to get to the the right members.

No that was the mental health one of the big challenges is that oftentimes those conditions go on recognized under under diagnosed.

And if there is significant the taking all of them. So getting the right number was a core part of it. The second was was that right decision right that debt.

Our perspective is we just want to get people to the best possible provider for them and so with with mental how that might be a virtual provider on that might be a brick and mortar provider.

That might require medication therapy that might not and so really getting to that debt.

Yes.

The solution was critical and then finally, the right path that we know that often these flow.

Don't necessarily follow up on the net debt.

Debt that sometimes that longitude on all support that they need to really be able to debt through the entire recovery process is lacking and so we wanted to make sure that were per.

With the number every step of the way of ensuring that that things don't fall through the cracks and.

So what we're seeing in the very early data.

This is a new solution thats been out for us less than a year is that we're starting to see real traction amongst all of those dimensions and we're pretty excited about.

And Ricky this is Steve I, just wanted to circle back to close the loop on your question about second MD and their growth rate and I think your point was cross selling.

Youre right second MD of that is a rapidly growing business as well on its own.

We are.

Very deep in the integration of combining the capabilities and accolades capabilities into.

Into an.

The offering that is receiving early strong feedback from the market, but it is early and there is a relatively modest amount of assumed cross selling and the numbers that we provided about guidance for this year.

Your next question comes from Shanshan Xu of got it.

You May ask your question.

Yes, Thank you and Hello, everyone.

Thanks for all of the color on ACB on Standalone accolade and Arctic on MD.

I know you have shared in past how.

On the Standalone accolade, how do you have captured the ACD across the various quarters on how that of spirit across the various buckets of fixed on operational performance on savings can you provide similar debt part of Brooklyn, MD HCV, how should we think about the quarter capture there and that's the.

Of course, the biggest buckets.

Sure Hi, John J its Steve.

As we mentioned in the comments second Mds model is a bit different they don't have the same types of pge's of accolade typically either of P. MTM or in some cases case right. So the.

The P EPS model or the net $37 million that I spoke about.

And second Mds the ACB number is similar to the accolade in the defense that if the number that we would expect to earn the rough.

Roughly members kind of the <unk> on the books at the end of the year and most of their revenue is generated second Mds revenue is generated from that model. There is certainly an additional part that is case rate and variable price times quantity.

That would be on top of that and so that's included in the guidance the revenue guidance that the P&L guidance for fiscal 'twenty, two but that case rate portion would not be in the ACB number.

Your next question comes from Jeff Garro of snipers.

You May ask your question.

Yes, good afternoon, congrats on the results and thanks for taking the question.

Wanted to ask about your go to market approach with the new acquisitions on the cross selling opportunity of that.

The spoken about just curious how you expect to balance the full vision you have for navigation of plus expert medical opinion, plus virtual primary care, while making sure. Your sales people don't get too far ahead of themselves on the timeline for the step by step operational and technology work to achieve that vision.

Thanks for the question, Jeff This is Raj and I appreciate you being here.

And I appreciate the question of very much.

At the core of the of.

The value, we deliver to our customers and we've talked a little bit about this in my prepared remarks is the foundation of element of building a relationship of trust based relationship with a huge preponderance of the population.

Powered by our data set that we think is extraordinarily differentiated everything we add from there whether that second opinions primary care of our own clinical programs are all geared around adding incremental value of those populations by improving their outcomes and lowering cost and so what youll see in our integration strategy.

Is first and foremost we're investing in integration, we want there to be seamless workflows and we want the process to mirror the needs of the consumer as opposed to the silos that exist in healthcare today, Secondly, youll see us embedding primary care and expert medical opinions in each of the core platforms that are a part of.

Accolade.

How accolade lands with customers today, because we fundamentally believe both expert medical opinion and primary care add value to any member that we're serving regardless of the platform, they're working with us on and third.

<unk>.

We're one of the things we really looked at in both of the acquisitions that we've taken part in the last couple of in the last year, our technology stacks that allow integration to occur at pace being we talked at length about the idea that we want to teams that were culturally aligned services that were built around longitudinal <unk>.

<unk> and tech stacks that allowed us to integrate at pace at scale, we expect that that's true on both of the companies that we have one that we've already closed and the other that we expect to close next month and so.

We expect to be able to deliver these integrations at pace and obviously our sales teams are anxious for us to do so.

Your next question is from the line of Ryan Daniels William Blair You May ask your question.

Hey, good afternoon. This is Jared haase in for Ryan Thanks for taking the questions.

Maybe for you.

Was hoping to just.

If you could talk a little bit about just generally the key themes that are coming up in discussions with the client base. So I'm curious if that's still largely kind of focused on sort of the return to work getting people back into the office post COVID-19 or if youre starting to really see kind of the shift towards more of the clinical offerings. Obviously, the you've added through M&A and things like that.

Just any thoughts there around the 15 day, you're hearing in the in the pipeline from clients yes.

Yes of course happy to.

Clearly more and more of our clients are returning to work right now to be sure.

But I agree with I agree with the premise of your question or the sort of the direction you were leaving me with your question around where the conversations are health care spend is returning at some level of across the country. Our customers are seeing that spend return, there's an acknowledgment that health care trend line in 2021, it's going to be higher than the trend line that we.

Saw in 2020, how customers are budgeting for that and how they're dealing with what we think are profound set of needs in undertreated chronic conditions or Ian in terms of behavioral health or opportunities for our clinical programs are for our enhanced clinical programs to drive material value.

It's a good opportunity for me if you don't mind to kick it over to shop, the new non V as well, our Chief Medical Officer, Jonathan who actually just publish of book yesterday, that's written about call of the call care. After COVID-19, that's really about how.

We're actually dealing with a new wave of needs in the healthcare system post the pandemic chunk of that you want to talk about the clinical needs of our customers are facing that might be a little of different than they were just a year ago.

Yes happy to.

Absolutely Love the question, because I think Youre right I think for a little while earlier in the year employers were.

Largely focus on the pandemic, great and just managing with the uncertainty of that I think we're definitely seeing a turn on the conversations where.

Our customers increasingly sort of.

Getting ready to get back to normal which means there are concerned about the postponed elective care and so that's where they're interested in and the <unk>.

The opinion I think they are interested in getting kind of handle of chronic diseases, which many things sort of fell off during the pandemic, but I think the way that they are coming at those conversations in the different right I think debt during the past year, what they've seen is that.

That helped isn't just the HR benefits issue. It's also a business continuity, one and that it sort of magnified for them that the.

Core challenges, we have on the supply chain of healthcare are far more stark than they than they had imagined even before that.

So issues like the.

The access the primary care of the fact that 20% to 40% of Americans don't have it in that the reimbursement model for primary care of makes it very fragile the fab.

That mental health is.

Is core to what they need to be able to provide their employees I think the opportunity of that virtual provider. So I think what we're seeing.

Early evidence of the customers is a real change in mindset in the sort of a larger aperture.

For GAAP.

Getting even more involved in care delivery and we're really connecting all the different pieces.

Of the health care equation for four of their members.

Yes.

Your next question comes from the line of high net.

Steve.

Alright.

Question on just a quick question on your growth in your customer base. That's on the deck. The accolade increase the target customer base from 21005, hundreds of 30000 per Cellcom Israel clean.

The insurer employers can you unpack the delta between <unk> and maybe what portion is attributable to if I can Anthony thanks.

Oh sure.

The <unk>.

Just on additional data source on the number of target companies in the U S. Hana as opposed to a reflection on second MD per se, it's more about the sizing of the mid market.

Target customers, which the.

It has the.

Level at which you can self insure given the availability of stop loss insurance side of.

Affordable rates, even for small companies has grown that market. So today, we're sizing in a bit larger than we were.

In the back at the time of the IPO in the range of 30000 available companies.

Your next question comes from Richard close of Canaccord Your.

Your line is open.

Great. Thanks couple of questions on competition and collaboration Roger I was wonder if you could address the view that employers are overwhelmed with all of these different offerings.

Definitely referring to this week's journal articles.

Are you guys hearing you stuff like that from your customers in your discussions and is that something that could impact the signing of new customers, especially.

As we think about large enterprises.

Richard I appreciate the question very much and I think.

There's certainly been.

On a lot of conversation about the journal article.

I will say this when we read the headline of that article which spoke to benefits buyers being overwhelmed by the number of solutions that are being presented to them every day.

It was the ZIP had been pulled off of our website of our out of our out of our presentation ultimately the value proposition, we deliver for our customers and for their for their employees and their families as to give them a single place to go so if theyre unsure of what benefit they should use of our how to go about leveraging their benefit all of they have to do is ask accolade our cash.

The supplier program is built around the idea of pulling all of their disparate programs together in a way.

And that actually Leverages, our engagement engine drives the engagement and adoption of up and improve the outcomes by getting people to leverage the benefits program as well and so do we agree yes, we fundamentally agree with the headline of that article benefits buyers are overwhelmed they would like to go to single placed two of single place to be able to manage their vendor <unk>.

<unk> shifts and to the degree they can reduce their vendor relationships by finding more value and value is the critical term here that I'll expand on on just a moment.

With the single vendor they'd like to do so but that value isn't about per se.

The right cost price per per unit <unk> that value's about clinical value and about driving cost down it's about improving member satisfaction and if you can do those three things by weaving offerings together and the nature of that we are we think you have a winning proposition for the customer reducing the number of vendors that they are.

Dealing with building launched to build relationships with their people to make them happier.

Improving clinical outcomes and lowering cost.

That is fundamentally aligned with the value proposition accolade has been talking about for 10 years.

Yeah.

Your next question comes from the line of Ross <unk> of Stifel. Your line is open.

Great. Thank you.

I'm wondering if we could just remind us of how the integration of the second MDM plus care get factored into the.

The risk element of your revenue model should we assume the months of integrations are fully completed that in fact, you can guarantee of higher level of savings post integration.

Okay.

The first of all thank you for the question I think.

When we think about.

Adding capabilities to our platform like expert medical opinion like primary care and.

And specifically with things like primary care, where we think we're adding value to a wide variety of our launch to know relationships. We absolutely assess every one of those incremental capabilities with an eye towards <unk>.

Will it improve clinical outcomes, we will have reduced cost of will it improve member satisfaction. We believe that's true for both of these capabilities and we believe when embedded with our platform. We can drive engagement for those solutions up in a way that improves our capacity to deliver incremental cost or value.

In my prepared remarks, I talked about the idea of driving negative trend line. We do fundamentally believe we can eat into the waste that exists in the system by delivering an integrated experience in the launch to the form like the one we have today, how will that manifest for our customers.

We've been putting our fees at risk since the beginning of the business, meaning we've been putting a percentage of our fees at risk since the company was founded in today per preponderance of our customers are percentage of Rfps on a risk associated with the savings we deliver we'd expect that to continue into the future and we expect that we can yield more value from those really.

Asian shifts as we drive more cost savings for our customers.

Your next question comes from Anthony <unk>.

Yes.

Ask your question.

Yeah.

Hi, Thank you for taking my question with the.

The addition of the second opinion solutions on the virtual primary care announcements I'd be curious if you're seeing any change in market perception from your employer.

Ryan.

The two parts one are you seeing employers opening of contracting directly with you for care or is the market perception still lean toward accolade of third party navigate it has value.

And secondly are you seeing customers opened of shutting off the third party virtual care on Kpis of yours or is it more of a an added component to their overall casually.

I'm going to I'm going to let Jonathan to jump in here because I know he's got five things that he wants to add to whatever answer I gave you so something to get ready.

Our strategy fundamentally is and this has been true in terms of our customers' perception of us since the beginning has been about improving clinical outcomes, reducing costs and making people and driving engaged members who are happy with the service we deliver.

And so.

In answering your question around customer perception customers expect us to continue to deliver new value to them and are quite in fact excited about the new capabilities, we've been bringing to their doorstep over the course of the the last six months.

Second point I'd make there is as it relates to our care delivery vehicles on how we collaborate with the marketplace and this is where I'll turn it to shop the new on.

Our strategy is fundamentally about improving outcomes for the people, we serve and that means we will collaborate.

Where that's appropriate we're always going to get the people of our members to the right place at the right time, including to our partners or to the brick and mortar healthcare system that exists.

And so we're not really talking about replacing things, we're talking about enhancing the system that already exists in order to the drops of better outcomes sharpening of you want to jump in and speak a little of that model.

Yeah, absolutely I think as you said of and I think fundamentally our our sort of philosophy is that we want to get our members to the right doctors and help them empower the patient and power of that doctor to get to the right decision for them and I think sometimes that made the providers that we have that might be.

Providers and brick and mortar of that might be through our partners, but ultimately our north star is really making helping members make the best decisions. So that we can get them to the <unk>.

Outcomes, and I think where we see second opinion ETE.

The primary care is if you look at the health care system. When you look at where of the places that often sort.

The sale of patients. The most right those are the places where we see an opportunity for us too.

Connect the dots and ultimately help drive those better decisions right. When you look at how many people that have cancer or that have <unk>.

Surgeries that don't even have the right diagnosis or don't have the right treatment plan and how often the when we get a second opinion that that diagnosis or treatment meaningfully changes alright.

That's the place where we see immense leverage for us to be more part of that solution. The same thing for primary care right. The statistics show rate of $20 to 40% of Americans don't have of primary care physicians, but if you dig deeper into of what percentage of patients don't have a strong primary care relationship and then if you.

You go on the other side I still get a chance to practice medicine and primary care of every week.

The challenges that I as the primary care physician has being able to provide the care of that my patient gain a simple things like I don't know what medications of actually sales I don't know if they were in the hospital recently.

When I prescribe the medication I can't tell them, how much of that medication costs before they leave my clinic. Those are the places where we see a tremendous opportunity for us to leverage the navigation service that we have the data that we felt the relations that we built to really empower of those physicians and <unk>.

Again take a part of the health care journey debt.

It's simply not working for enough people and again, sometimes that might be our own and sometimes that might be brick.

Brick and mortar Doctor then really augmenting.

And supporting them.

Getting to the better for them.

Your next question comes from the line of that.

The Larson of BT.

You May ask your question.

Hi, can you talk a little bit about your relationship with some tri care. It's my understanding that Tricare has about 9 million lives in total pie.

Pilot program going on about 100000 lives.

I was I was hoping to hear about sort of more in sales potential with that particular client just any any thoughts around timing will be.

Very helpful. Thanks, a lot.

Hey, David Thanks for the question we are.

Now entering the second year of our Tri care pilot you may recall that last year, we announced we signed a three year pilot with Tri care they needed to renew at the end of each year.

That renewal process has taken place and we are now into our second year, serving members and continuing to see great early indicators of the value we can provide extraordinary satisfaction.

On an opportunity to guide peoples of the right outcomes.

On.

Our belief is to your point that we have an opportunity to extend that value to more of the tricare population with the success of the pilot and obviously the extension of the pilot for another year is of great indicator of of the opportunity to extend the relationship.

We don't have a lot to tell you today around.

Incremental opportunities of the size of the incremental opportunity beyond the fact that we have of 100000 members. Today. There is 9 million members on the broader population.

But we do like the leading indicators associated with the service we're delivering.

Your next question is from the line of Ryan Macdonald.

Your line is open.

Hi, great. Thanks for taking my questions in regard to the second empty you, obviously talked about the mix of revenue being a combination as the FTE PM, but then theres also.

Sort of price times quantity.

Case case rate component as well as you look at the outlook that you've provided for a second then the how should we think about the mix.

The revenue contribution between those two and is there any potential.

Tailwind to the case quantity amount as we look at return of potential of elective procedures throughout the year.

Hey, Bryan Thanks for the question that Steve.

Yes.

The case rate component is outside of the HCV number one while the majority of the revenue.

The second empty generates is on the <unk> basis, you could think of it as of quarter quarter to 30% of third something like that of potential around case rate.

And as people are coming back into the health care system in more cases, theres potential tailwind there.

So we've included in the guidance, what we think is achievable number, but there certainly could be that opportunity for upside as we all know we're all trying to figure out exactly how quickly people come back into the health care system. So we're taking we think is a very prudent approach there, but certainly could be some upside on volumes.

As we move through the year.

I am showing no further questions at this time I would now like to turn the conference back to Mr. Huang You May proceed.

Thank you very much on.

Operator, and two to all of all of our.

Investors and analysts who joined US today, we appreciate you, making the time, we're excited about the future. We look forward to catching up with you in July for our Q2 earnings call Q1 earnings call excuse me. Thanks, everyone.

This concludes today's conference call. Thank you for your participation and have a wonderful team you may now disconnect.