Q1 2021 Ontrak Inc Earnings Call
[music].
Welcome to the on track first quarter 2021 earnings call. My name is Sylvia and I'll be the operator for today's call at this time all participants in a listen only mode. Later, we will conduct a question and answer session.
The question and answer session I'd be happy question. Please press Star then one on your Touchtone phone I will now turn the call over it took care of landfall Investor Relations Kelly you may begin.
Thank you and thank you all for participating on today's call joining.
Joining me today are Terry Taser Executive Chairman, Jonathan Mayhew, Chief Executive Officer, and Brandon Laverne Chief Financial Officer.
Earlier today on track released financial results for the quarter ended March 31 2021.
Copy of the press release is available on the company's website.
Before we begin I would like to make the following remarks concerning forward looking statements.
All statements in this conference call other than historical facts are forward looking statements.
The words anticipates believes estimates expects intend guidance confidence target projects and some other expressions typically are used to identify forward looking statements. These forward looking statements are not guarantees of future performance, but may involve and are subject to certain risks and uncertainties.
Other factors that matter of fact on trucks business financial condition and the other operating results, which include but are not limited to the risk factors described in the risk factors section of the form 10-K on form 10-Q as filed with the SEC.
Therefore actual outcomes on results may differ materially from those expressed or implied by these forward looking statements.
On tract expressly disclaims any intent or obligation to update these forward looking statements.
With that I'd like to share I'd like to turn the call over to Darren.
Thank you good afternoon, everyone and thank you for joining us today.
Day is national nurses day in the first day of National nurses week, and we are profoundly grateful for all of the care coaches with the nursing background at on truck. They play a vital role in ensuring that those with the untreated behavioral health condition of medical Comorbidities The C.
Of the care they need.
We will be recognizing and thanking nurses and health care workers.
As part of our new on track marketing campaign watching this week.
What I found it on track our mission was clear.
To help improve the health and save the lives of as many people as possible.
I'm very proud that the on track team has been able to do the unimaginable the bill.
Of the platform.
Uses advanced analytics to predict people, whose chronic disease will improve with behavior change recommended effective care pathways there.
The people are willing to follow and guys those with unrelated untreated.
Behavioral health needs to our network of high quality behavioral health providers.
This platform and the on track program has enabled us to deliver cost savings of 40 to 50 per cent to help play of levers and improve the health outcomes for the.
Of the suffering from behavioral health condition and chronic disease.
Our industry, leading position and capabilities have enabled us to consistently generate revenue growth in excess of 100 per share. These past few years.
Now have an excellent team in place to lead on track through our next growth chapter.
As you know from our March press release, Jonathan Mayhew of succeeded me as CEO.
I have long looked forward to handing over the CEO of range for an executive of Jonathan stature in the on truck Board of directors and I are confident that he is the right leader to build a part of our growth trajectory and scale the business.
Jonathan is now one of the week for add on track and I'm deeply impressed by how fast he is moving.
His energy passion and strategic thinking are inspiring.
They will soon permeates the entire company and drive us to greater Heights.
Jonathan.
Under Jonathan's leadership, we will continue to capitalize on the tremendous growth opportunities ahead of us.
We are just getting started on our journey to engage not only care of avoided but also of care seeking individuals' that's of broadening our reach within the Medicare Medicaid commercial at risk and ASO membership basis.
I'm excited to become executive chairman and it tends to focus on capital formation share holder value added transactions.
Collaborating with Jonathan on our long term growth strategy now.
Now I'd like to hand, it over to Jonathan the share his observation.
Take us through a more detailed review of the first quarter and our growth initiatives for the year.
Jonathan.
Thank you Karen I'd like to start by thanking you on the board of directors for the opportunity to lead on track I look forward to working with you on your new role as executive Chairman.
This opportunity was irresistible to me for two reasons first I understand firsthand how challenging it can be the access high quality behavioral health services.
When families need it the most and I want us all of the inequities that to Washington become insurmountable barriers to care.
Second on track has a remarkable team that's dedicated to our mission and unparalleled technology, the G and insights to treat depression anxiety and substance use disorder and a host of other chronic conditions. There was a massive addressable market of those who can benefit from our.
Weighted intervention platform.
And my fourth week it on track I'm, even more optimistic about on tracks future and our ability to drive long term value for our shareholders.
I'm excited about the opportunities ahead, and we'd like to spend a moment sharing some of my early observations that will shape our priorities as we move forward.
Number one we are privileged to have an exceptional roster of health plan and employer clients, we must ensure that we listen closely to their needs and become a truly customer centric organization.
In that spirit I want to explore more deeply how on tracks outstanding net promoter scores can increase member ratings of health plans and impact things like heaters scores.
Doors ratings and cap scores health plans care greatly about the customer satisfaction scores for their members.
Number two our customers need of portfolio of solutions for high and low acuity behavioral health conditions and chronic disease.
On track has a powerful combination of digital health and care coach supported interventions just give us a strategic flexibility for the future I also see a tremendous opportunity for us to increase our value to our customers by aligning and integrating closely with their existing customer support program.
It's hard to be physically well, if you're not mentally well customers want to work with a smaller number of high value partners that meet a spectrum of health care needs, we must earn the right to partner with them as a partner of choice.
Number three we have a number of very promising opportunities in our sales pipeline.
That would diversify our portfolio and expand our did the business development approach.
My conversations to date with prospects lead me to believe that there's a strong interest in the on track program from provider organizations, who work with high acuity chronic care of populations I believe that our services are especially relevant for government lines of business, where the disease burden is greatest and we can add new valley.
Are you with the very high level of efficiency.
Number four we believe the new treatment effect study is a key milestone in further establishing impact and value to our overall program.
This rigorous study concluded that the on track program reduced inpatient utilization by 64 per cent.
The increasing office visits for preventive care and behavioral health services.
The savings for members, who completed the 12 month program also just statistically.
Stickley significant and notable at $486 per member per month above the control group.
Remember that our members are the highest cost most vulnerable care avoidant individuals who may be using the emergency room as the general practitioner.
The members in our study cost an average of 2700 $79 per member per month before treatment.
In the two years post treatment.
The treated individuals' costs reduced to 1500 and $51 P. M. P M.
Or a 44% reduction.
End of $486 per member per month lower than the control group.
Two things are really striking to me first the rigor of the methodology.
The research teams stimulated of randomized control trial by pairing propensity score matching with of difference indifference analysis to establish the treatment effect of the on track program.
Secondly, the study found that cost savings continued for 12 months. After the on track program ended which is evidence of the lasting impact.
Of our approach Dr.
The Doctor Hillary Plazic, who leads the on track research team is now developing the menu script for peer review and publication.
We will be conducting a series of briefings on the research study.
As it unfolds and we analyze specific sub populations within the treatment groups.
And number five I'm extremely impressed by the talent and the commitment of the on track care community and our member engagement specialists, who established trusted relationships with members remove barriers to care and guide those in need of behavioral health services to the right clinical pathways I'd also like to rack.
<unk> all of the on track team members involved in our data and analytics. They are building out the on track behavioral health system of individuals' and person centered care that connects an ecosystem of stakeholders to much needed solutions.
As Terry mentioned earlier on moving fast and anticipate participating fully in client.
Industry analyst and Investor forums.
Let's now turn to the first quarter results. We believe the year strongly we began the year strongly with revenue of $28 7 million, reflecting 133% growth on last year amid the ongoing mental health crisis, we continue to engage care of when individuals in order to reduce.
They're medical expense and improve their health and wellbeing.
As the pandemic subsides, we anticipate normalized non COVID-19 utilization across our health plan customers membership basis that being said.
Adjusting of our 2021 guidance to be sure we're setting expectations with the intent to overachieve, we believe of revenue range of $80 million to $85 million appropriately factors in the headwinds and the tailwind we're seeing for the remainder of the year yet provides upside should we signed and launched new logos.
Throughout the year.
With that as a backdrop I'd like to provide updates on the headwinds until wins, we're seeing starting with the headwinds the.
Most significant headwind remains the customer contract termination in June we dish enrolled our Medicare book of business.
With this customer in early April and will continue to graduate and disinterested commercial members through the end of June.
At this time, we are not anticipating services for these members beyond the end of June.
Turning to utilization of our outreach pool exclude the excluding of the terminated contract continues to be impacted by lower utilization of non COVID-19 2019 healthcare services as we've previously discussed this lower utilization during the pandemic causes higher cost.
Members to drop below the medical expense threshold for inclusion in our outreach pool.
Over the course of 2021 as vaccinations increase this headwind is expected to become a tailwind to help drive growth of our outreach pool.
Let's now turn to the tailwind that remain important to our growth trajectory.
First our enrolment statistics have never been better.
There are three primary reasons for this number one our remaining outreach pool is refreshed by our customers far more often than it has historically been.
Number two our outreach pool is now approximately 41% tied to Medicare and Medicaid government programs compared to an average of 26% in the fourth quarter.
With the upcoming Medicare and Medicaid expansion with one of our customers. We believe it will continue to grow.
Number three after the unfortunate reduction in force after a customer contract loss. The remaining engagement specialists are exceptional and perform at a higher level than our historic average.
All of these factors have contributed to enrollment rates that we've never seen before with our Q1, 2021 annualized enrollment rate hitting 56%.
And we believe bodes well for the long term success of the program.
Number two as expected we signed of national contract with life stance, which adds more than 3000 behavioral health clinicians, bringing our network of behavioral health providers to a total of over 15000.
In light of the severe national shortage of behavioral health providers accepting insurance our network is a clear differentiator for on track in the marketplace.
Number three we've maintained high member satisfaction levels demonstrated by industry, leading Q1, 2021 net promoter score of 75 for the on track program.
The net promoter score for our care coaches last quarter was an outstanding 84.
Fourth we continue to have both revenue visibility and a robust robust pipeline as evidenced by the recent renewal of our customer contracts.
Turning to our growth plan for 2020, one we've made meaningful strides towards expanding the addressable market and the value proposition.
Earlier this week, we lost the national marketing campaign to increase on tracks brand awareness through both high profile of digital advertising and media programs.
As tearing of said previously we're the clear industry leader in our ability to significantly improve the health of the lives of our target the care and treatment avoidant populations and yet on track has been the least known and best kept secret of our goal is to highlight the real world impact of our behavioral health program.
And our compelling clinical and economic outcomes.
In summary.
I'm confident in our unique ability to deliver outstanding results.
On cohorts of members, who are extremely costly and very difficult to engage and among those who are actively seeking care.
I look forward to updating you on the coming months of.
On our work to expand our addressable market and become a truly customer centric organization.
I'll now turn the call over to Brandon Laverne, our Chief Financial Officer.
Thank you Jonathan.
The congratulate you and I look forward of continuing to work closely with you and I'd also like to thank Terry for his leadership and it's been a pleasure to work together.
During the first quarter, we recorded revenue of $28 7 million 133 per cent increase over last year and this included a full quarter of members from our loss of customer.
Deferred revenue increased to $24 $9 million on the first quarter up from $21 million at year end as we continue to enroll many new members using the case rate or payment upfront.
We amortize the case rate revenues over the approximate average time on the program or nine months.
At the beginning of the quarter, we had 15702 enrolled members.
And ended the quarter with 14868 of.
A decrease of 834.
And the simple average of 15285.
That equates to revenue of about $626 per enrolled member per month for the quarter.
And compared to $527 per enrolled member per month in Q1 2020.
Recall that with our loss of customer business in particular, they were subject of co pays on coinsurance when the members playing on your changes, which typically impacts our per enrolled member per month rates in the first quarter.
Going forward, we do not expect to see that seasonality continue as none of our other customer plans reduced payments for co pays and coinsurance.
Breaking down the Q1 enrollment of bit more we enrolled a total of 5900 members during Q1 compared to 6000 and 714 in Q4 or <unk> 12 per cent decrease sequentially due to the termination notice.
But still 26% more than the 4693 gross enrollments in the first quarter of last year.
Dividing Q1 growth enrollment by our outreach pool, which averaged approximately 115100 of 15000 for the quarter, which was partially impacted by the loss of the major customer.
Annualized as two of 21% enrollment rate compared to 18% annualized rate we saw on Q4.
However, when we exclude the impact of the loss of contract on all periods the.
The annualized enrollment rate for Q1 was 56%.
From 55% in the fourth quarter, reflecting the enrolment tailwind of the Jonathan discussed earlier.
Or just enrollment rate averaged approximately 10% per month during the quarter, resulting in its just the rolling a total of 4900 into enrolled members during the quarter.
This compares favorably to the 13% average monthly run rate, we saw in Q1 of last year.
Further we graduated 1822 enrolled members during the quarter, which equates to about 12% of enrolled members on the program at the beginning of the quarter.
The net impact of all of that was a net enrollment decrease of 834 in the first quarter of 2021.
At the very beginning of the second quarter as part of the transition plan. We just enrolled all of the 2100 Medicare advantage members for the lost customer.
We are still serving their commercial members and expect to do so throughout the second quarter.
As of this call. The remain approximately 4160 members that we expect of a graduated or this is the rule by the end of Q2.
Yeah.
Our gross margin for the first quarter of 55, 6% increased sequentially from 54, 1% net compared to 41, 4% in the first quarter of last year.
It also has increased sequentially each quarter since Q1 of 2020.
We ended the quarter with 303 team members included in cost of sales down 38% sequentially from 486 at the end of the fourth quarter due to a reduction in response to the customer loss.
But still up 13% from 269 at the same time last year.
The team members on cost of sales of primarily made up of care coaches of member engagement specialists.
Turning to the balance sheet and cash flow.
We saw cash flow from operations in the first quarter of positive $6 $4 million compared to negative $4 $6 million in the first quarter last year.
This was mainly due to the timing of billing and collections of our health plan expansions combined with our positive adjusted EBITDA for the quarter.
As we continue with our plan to invest in our technology and operations, we do not expect to experience the significant level of positive operating cash flow in the near term.
On the balance sheet, we ended the quarter with cash and cash equivalents of $92 $5 million.
But including restricted cash total cash was $106 $6 million.
We remain confident that we have sufficient capital and access to future capital to manage operations and execute on the strategic initiatives we've outlined.
We are currently in compliance with the financial covenants with our lender and we'll be working with him during Q2 in light of our updated revenue and EBITDA projections in the near term.
Regarding our outlook for the remainder of the year as Jonathan indicated we're targeting revenue on the $80 million to $85 million range.
While we are proud of the we're able to achieve positive adjusted EBITDA throughout the fourth quarter and first quarter, we expect adjusted EBITDA to be negatively impacted by the loss of contract and the remaining quarters of the year as their members. This is all for my program.
We anticipated operating leverage improvements as we add additional customers and expansions to our platform in subsequent quarters.
I'd now like to turn the call back to Jonathan.
Thank you Brandon in summary, I'm encouraged by our accomplishments in the first quarter and I'm confident that we're well positioned for continued growth in the years to come we are executing on our strategic plans to expand our addressable market further investing in our platform and increasing our brand recognition.
For those who serve individuals' with behavioral health and chronic conditions.
Our continued execution of an intense focus on our growth initiatives will drive us toward greater predictability, while also expanding our impact.
On those in need across the nation.
With that we'll now open it up to questions.
Operator.
We will now begin the question and answer session I'd be happy question. Please press Star then one and you touched telephone.
If you wish to be removed from the queue. Please press the pound sign of our the hash key.
Everything Speakerphone, you may need to pick up the handset first before pressing the numbers.
Once again I'd be happy question. Please press Star then one on your touch the telephone.
And the first question comes from Richard close from Canaccord Genuity.
Yes, thanks for the questions Jonathan welcome.
Look forward to working with you going forward.
Was curious if you could dive in a little bit deeper on the some of the topics that you observations that you made in terms of exploring how you can work with.
On your payer customers in terms of improving scores.
What do you mean by debt exactly is that.
And the opportunity to monetize.
That work somehow and how is that different from what you guys are doing now.
Richard Thank you for the call. Thank you for the question I appreciate the opportunity to work with you as well I just you know so much of the Medicare advantage.
And in the Medicaid markets are driven by them not just medical expense reductions, but the revenue that's associated with customers.
Customer satisfaction scores on.
Demonstrating that our health plan has the ability to direct people to the care settings that drives improved clinical outcome.
And those of the very things that we do and I think that we have an opportunity to share.
Claims of diagnostic information information that our nurses are capable of obtaining to help drive those scores.
And I think just create another value opportunity or of value lever for our health plan partners.
I don't know that we've engaged day.
People enough given the the concentration that the organizations had around more commercial membership than the than say government Medicare in particular.
So I think as we partner more deeply understand ways that we can contribute and add value to our health plan customers.
One of the areas that just seems.
Q2 to be.
You know sort of of top area to explore with the health plans you know to date on.
His been around and exchange of information that can contribute to their heaters and stars and the caps performance.
Does that help the hopefully yeah. That's that's helpful.
With respect to a sort of feel obliged to as well.
With respect to the loss contract.
Can you just discuss your knowledge of the situation there and.
Do you think there's an opportunity to.
Secured business with that client at some point in the future.
I I sure hope so I I.
My responsibilities at the organization.
It did not have any indirect contact or sort of proximity to the decisions that were made.
I respect the decision that the organization made I I, obviously know the people well.
We have mutual respect.
For each other having worked together for for a long time and partnered with initiatives like putting clinical resources into.
Retail locations.
Well, what we've talked about the deep is first and foremost the priority that we both have a round of the transition of care of the existing members that are in our program today.
And so we will care for those individuals and the be vigilant and.
Extremely well focused on the transition of care.
And then once we're through those transition of care arrangements.
I truly hope that we'll have the opportunity to talk about what.
What we can do with our program to more deeply partner across a number of dimensions.
I, obviously have have of feeling about what some of those real opportunities to partner could look like but we just have not been I have not been permitted the opportunity just given sort.
Uhm what is the suggestion, even if I take you up to you know maybe 20000 feet in the come back down to like power of customers Digest. This.
It it it's it's fundamentally suggest if you invest in behavioral health services.
You keep people out of really bad really expensive institutional statics right and it's so easy to say that and it's so hard for the payors to invest in primary preventative care right preventative behavioral health services because.
It's a real and tangible cost that you absorb in the short term to offset really expensive you know conditions in the future and I think that there's policy implications right. If we can continue to drive on.
Society and booked up the the large and small pairs around for.
Ah Ah providing support on.
Unfortunates in behavioral health interventions that impact longterm care savings right go lower deductibles for people right take out of pocket expense limitations removed financial barriers that you know we refer to of social determinants of the industry. There's a lot that we can do right that this study would.
Suggest go foundational each of what it takes to really treat people, who are are stressed and distressed with Ah right of disease burden.
Of comic in common of chronic conditions. So I I think you know fundamentally right I don't know that there's been a study that's been you know conducted as thoroughly over of 36 month period of time on.
Number two right as as we go on introduce the program to our customers. It gives us a lot to model off of new relationships right and and for the existing customers I think it adds credibility to the.
Development of the pipelines and the outreach pools that we establish as as I know you've heard of another conversation to can take US you know months and years to build reasonable pipelines and outreach pools for some of our customers and these studies learned politically to what the savings could and should look like when we graduate of.
You know in the range that we've talked about in the study of 40 per cent of the graduate in the study completed the 12 month program and you see the the the durability that's associated with really sick people being in of behavioral health study for for 12 months.
So I I think on the number of levels. It adds credibility to our program. It creates an impetus to invest in behavioral health services and we'd love to compare you know each customer that's in the programs achievement of of financial outcome that looks something like what we can witness across on our entire book.
Okay. Thank you I'll drive in the queue Yep.
Thanks [noise].
Our next question comes I'm trials right Cohen.
Hi, This is actually the games on for Charles It's one of touch on guidance for a minute. So you know the update of guidance of 80 to 85, presumably you know assumes all contracted business.
But you know the previous guidance of 100 million assumed 88 million of contract the business, but some of the change the or is it maybe because some people didn't qualify given that you know given the the lower utilization or maybe it's just some level of conservatism some.
Specificity there'll be helpful.
Yeah and.
This isn't this the Brandon I would say it was a couple of factors. There I mean, you hit you hit it on the head as far as contracted contracted lives at the same time you know we've seen you know, we we announced that there was a a contract about a month ago or so that's that's had to be sent to the state for approval that's pushed out or.
The ultimate the X.
The expectation of the launch of that particular program, we're still waiting to hear back. It's it's due any day now so to speak and and so we've we've had to move out a little bit of of those kind of expectations.
And just as you said there was there was some element of the impact on the way of utilization. The the you know the there's a little bit hard the model what that's what it looked like for the year, it's been up in the air.
We we do want to be conservative, there and and to the extent of it you know for utilization Pops back in and we see the big lips and the average pool, resulting then I'll take you would expect to see the changes in our in our future.
So I I think that's the the best way to think about it you know as we continue to refine how each of our contracts are located.
How the enrollment right out of the the outreach pools are shaping over time and continue to evolve out of the month. This is probably are you know it's it's it's it's a good it's conservative and and we believe that it's it's reflective of all of those things that the.
Jonathan of mentioned as the headwinds of Taylor's.
Okay, Great. That's the that's very helpful. I'll also you know last quarter was state of that you know you expect to grow of 100 per cent and 2022.
This is that expected growth rates still stand you know maybe an update on that front.
I I would I would answer that this way I mean, so we were we were looking at I think we've tried to clarify along the way too that this was a you know we expect to get to that growth rate in 2022, not the 20th 22 was that growth rate for the year.
That aside though you know we were looking at our motto and how we can best be most efficient where can we grow the revenue.
Not just the fastest but the best of quality and most of sufficient. So you know all of those things that come into play Jonathan's you know obviously been here for for for weeks now and and putting his fingerprints on the organization and you know, we're we're evolving along there with it and so I would say generally speaking of and we look at our business you know it it.
True you know over the past three years of 100 per cent plus per year I think we would all look at our business you'd say that's absolutely reason it would be possible. When we look at our pipeline and and monetize that pipeline out. It's it's hundreds of millions of dollars and potential and so you've got.
Definitely the opportunity and so it's it's up to us to go in that business and and as as we launch is the sign lunch contracts throughout the year. The plan would would hopefully be that that will help us get into the the 2022 out with me more of with specificity.
The.
Okay, and and just maybe you could touch on I remember the last quarter, just talked about you know launching tiered products any update the bare in terms of timing of launch maybe in the indicate occasions of interest in the market. You know I have any customers. Maybe you know indicated for you guys that they you know <unk>.
<unk> to sign on for this offering.
But I wouldn't want I wouldn't say that yeah, yeah, if you want to take the.
I I I think you know what we've heard from our customers is you know our our real need for us to take the very comprehensive program of today. That's focused on of 12 months duration for you know of population that you know might look to be.
Three to five per cent of the commercial and maybe as high as you know high single digits for for the government.
On programs.
With the kind of impact of I'll spend it that the that I know we've highlighted a lot.
And there uhm is of deep need and desire to make sure that the digital capabilities that day I think you're referencing are connected to our care team help improve our ability to engage uhm telephonic Lee an in person and digitally engage at the front end and.
Throughout the course of treatment will only make our of program increasingly more effective at at at each of the stages right and we've heard that loud and clear and as we continue to build out the digital health and care team solutions. It absolutely puts us in a position to be able to move into the middle of acuity.
Mm range is and you know I think as you start to do that obviously it improves our our our addressable market opportunity. It starts to have us collide with some of the digital and the lower acuity uhm in the lower touch programs and and I would tell you from you know sort of for weeks observation in in a in a lot of conversations with her stay.
<unk> It seems to me that it's easier for us to move down the acuity curve right and improve the overall level of support we provide to our existing high acuity customers through the digital capabilities that we already have on the platform that we've acquired than it is for some of those other vendors to potentially move up the acuity current.
Have to deal with the clinical resource.
And the the reach of ability on the acuity dynamics that we support every day.
So it's an important part of our roadmap and and I think it can even improve you know in a nutshell, what we currently do with our care of games for the high acuity programs.
Okay, great that was very helpful.
And the next question on kind of from.
On Dodge come RPC capital market.
Hey, good afternoon, if the thumbs color on for sure welcome Jonathan and thanks for taking the question.
Is it gonna of tickets for.
Yeah can you give us a sense of how sickness tracking the relative to the 40 million expected on the first year I guess any update on timing of experiences on the new states are of tracks on the commercial side would be helpful.
I'm Gonna ask for help him to take care of.
The the times, we were Ah, we're not really commented on that specifics on individual customers. They can kind of tell on a script a little bit and so you know obviously, we you know we were talking about how how we performs you know and part.
Part of the first quarter during the fourth quarter call and you know it's contributed obviously to our results from the first quarter I'd say the you know we're we're trying to stay away from any any specific commentary on individual customer sizes. We know what their overall total budget was which was $90 million for three years.
You know in the in it and ultimately expect that believe and expect that we're gonna be you know within that range at least.
So.
You know, it's it's been a very positive contributed of course this year so far for sure.
Okay that sounds good. Thank you and then and then is out of it I think of touch on it really a little bit, but let's talk about the the the interest I just want the provider's side some of them look on the on one side of the services.
You guys give me more of thought that all of these relationships might look and kind of of the potential opportunity there.
Yeah, I mean, I'm happy to come in a little bit I, you know I think it it it could and should replicate or feels greatly similar to the health plan model I would say you know and and as we talked to some of these provider organizations, who are deep and steep into uhm the Medicare advantage in the <unk>.
Triple populations. The absolutely recognize you know the kind of model that we represent right where people with Ah Ah Ah Ah heavy disease burden Uhm will benefit for behavioral health intervention, you've got various models that these primary care organizations have tried to adopt them as it relates to putting social workers.
And you know other kinds of therapy support mechanisms in place and were of great partner right. When when you think about right you can access our services you don't have to hire those clinicians you can take advantage of the brass on the depth of our 15000 contracted providers we've got nursery.
She's can be available face to face Telefonica Lee.
Virtually and so it just it becomes an easier discussion and and I will tell you this might be right as we all sort of debate with the durability of some of the changes from COVID-19 or if those patients for all accessing care in a primary office setting previously and now right. We give me another channel conditioning, maybe the.
<unk> to some normal practice dynamics, but in the event that they're not if he's got a hired social worker. That's sitting in the office verse is a virtual model like ours.
I think it's worth really test driving right and that sort of the feedback I think that we're starting to receive is if we can demonstrate the kind of.
Cost reduction these primary care groups of as you might be aware of you know at significant financial risk right, because they've taken of delegated contract with a lot of pairs.
So in many respects, they're closer to the patient and the member than the health plan and they've got more financial exposure or of risked and the health plans have.
And so it just creates a deeper level of integration and of virtual model and so I I I am deeply interested on US you know exploring that and and and some of these provider groups or or you know of larger than the health plans in in certain instances so.
But I think the model to answer your question I think could could could could completely or an of material way replicate a lot of of what we learned something from a health plan operating model.
Okay, well the day of a call for me does that help yeah, yeah, that's the trouble.
The.
My next question on cause I'm answered the sofa from the around the security.
Good afternoon for thanks for taking my questions and let me know if you answered any of these already I I get pop between calls here, but just looking at the print. It's just very clear right now that the enrolled of remember right out of the outreach pool is just gonna be significantly.
Hi, higher on on on a percentage basis than it was historically I'm guessing just due to the dynamics of the Aetna.
Can you give a little bit more context, there even when the strip out the for a thousand enrolled members that you referenced in your press release, it seems like you're you're you're tracking several times better enrollment right now than you would have previously what are the some of the dynamics there and is that sustainable.
We go for it.
Sure I can I can take that this is brenda.
So ultimately when we look at the pool, you know without the the the the prior last customer we come up with a much more government focused outreach pool and if you think of these folks there are a lot more reachable and available to to enroll to.
Participate in the program and ultimately effectively complete the program and so there's there's a lot of opportunity costs. There. There's a very high cost types of books and so the outreach tore itself becomes an <unk> way more efficient.
And so and the and I think we've talked about this before where the the actual funnel.
From health plan lives into our outreach pool is is much much greater for people in in the government side versus the commercial side. So we already start with.
What that is.
Kylie and roll the ball highly successful and ultimately we would benefit most from a program at the end of the day. So we do as you know as I sit today I would like to think that we can continue to see numbers like this I don't want to count on it but I don't see a big reason short of US moving into you know big commercial space.
For something of that nature of that's going on that's going to do a a big change to what we're seeing right now.
Okay, that's useful context on the dynamics there is that the.
Kind of the same reason why you had a much stronger kind of.
ASP per enrolled member during the quarter.
Then you would typically have during the first quarter or was there anything else that caused that.
Well I think there's a there's a couple of factors I mean, we did.
You know, we you know coming off the Medicare space, we did have some deferred revenue the debt.
Because of the ending of the.
On the Medicare advantage program ultimately for this customer the.
It shows up for the first quarter was that it was of a small component.
But we also saw you know we've we've continued to have.
We have really good timing of the information as far as enrollments in this enrollment.
And so the key there is is it just sort of rolling people quickly enrolling people quickly to offset those the best you can sort of the win the plan change information happens we process of through and we're not.
You know basically treating people that unfortunately were not were not contractually contractually able to treat anymore.
And so I think statistically.
That's becoming a smaller part of the it's going to become a smaller it's not zero part of the program at this point to have that the the dip in the first quarter from not just the plan change, but the the bigger dip is from historically it was from the co pays on contracts until that piece of it's going to go away and so that's that's that's.
You know as we look forward should be a little bit more normalized throughout the year and more of a factor of the mix between our customer base.
Our future customer based on what we have the balance.
Okay. Okay very useful does that answer the question I went on a couple of directions. There no no no like the gave me a lot of a lot of color and it seems like it's actually going to be more durable, particularly from a seasonality standpoint is probably going to be less impacted going forward as long as it you.
The current makeup states consisting of government versus commercial and so on and so forth.
Correct Yep.
Okay.
And then just really the last question for me.
I understand now you're not really focusing on naming any specific customer. So I guess on track C. I was the program you were referencing last quarter.
And and you you've mentioned that you were running much much faster than expected and you know maybe the budget there would be increasing.
Is that something that.
Kind of it's still on the table or how should we think about that seemed very promising them on your last quarter call.
But the the way I would answer that is yes, I mean, all of our customers do have budgets and we need to be cognizant of what those budgets are.
You know we don't have you know I think we saw this last year, where where we ultimately had to.
The ultimate turned down turned off one of our programs during the fourth quarter as a result of hitting their budget, even though we were over budget at the time it became too far over budget and so we really never know definitively where where the.
What that's going to happen until it absolutely does and so this year is a little bit different because there's a lot more utilization expected that there was last year.
And so I think the the.
The tailwind of.
<unk> of what we saw in 2019 that enabled us to go far beyond certain budgets may not be there, but I'd say the conversations continue with with all of our customers and making sure that we're meeting their expectations.
And trying to grow the business reasonably and improving our proving our business model is working for them along the way.
Okay, Great I think that's everything for me. Thank you very much and best of luck going forward.
Thank you.
Our next question comes from team Manheimer Collyer of Securities.
Thanks, Good afternoon, and welcome aboard the Jonathan I wanted to ask how much of the sure how much of the sequential decline in the outreach pool.
Was driven by the loss of the large customer was it was it all of it.
It was nearly all of it it its you know our outreach pool now it was averaging around 25000 during the quarter and.
And without that particular customer and you know they they had well over 100000 of into the pool and so it was it was nearly all of it or our outreach pool has shifted a little bit with with the what I'll call everybody else.
And come down a little bit during the quarter, but nothing near what we saw with the loss of the customer.
Gotcha, Okay very helpful and Brendan I think you may have already answered this but I mean with the conversion rates are clearly going up.
As you discussed.
It sounds like the mid fifties enrollment rate, maybe the right way.
<unk> to think about going forward I'm, just wondering if that can go even higher or is it the primarily a function of the mix of enrollees.
It's it's partially a function of mix.
We do have the expectation that we're gonna be launching you know on additional Medicare Medicaid expansion.
You know once that comes back from from the state.
And that will increase our Medicare Medicaid.
Mixed that's a positive effect on on.
On the enrollment rate, which ultimately may mitigate against any what I'll call of normalization.
Of the enrollment rate as we get through some of these outreach pools with the other customers and so it's it's you know for my for my perspective, I don't think that that's a bad place to think about and but and then there is upside and downside models that you can derive from that but but it's not a bad place to think.
I wouldn't suggest that we.
Could we go higher is it if I use the word could as opposed to wheel of should.
Yes, there are ways to to derive that ultimately we we we still have to fit in with what of our customer expectations and how are we how are we ultimately solution in you know for all of the different needs of.
Not just us, but our customers as well.
Great makes sense, thanks very much.
Our next question comes from Bill Sutherland from Benchmark company.
Thanks.
Oh, Hello, everybody chances that Don mentioned on opportunities in addition to the providers on par.
In the government space right. If you could just give us a little more sense of what you're referring to there.
I would say primarily the those things right and just to pick up a little bit I guess on the time on some of the previous thread, but the more we expose ourselves to the higher acuity pools.
In Medicaid and and in Medicare and the overlapping populations for duals.
Hum.
Increases our exposure to the high class members, which is.
You know the.
The foundational aspect of some of how the program is built.
I think there's other ways to try to go access those members and obviously provider groups is one way.
You can think about P D EMS and drug spend is increasingly material part of the chronic patient spend.
We've got some pharmacy data on that debt that we access today through the data feeds that we received but.
There's real value in managing chronic spend for organizations other than health plans.
And so I just think we have a tremendous opportunity to understand what some of the other channels.
And pathways to intersect with some of these chronic individuals whose got a expression of behavioral health need.
And Hum.
Health the health plans as one way, but it's not the only way to try to add value to the same core cohort of person debt.
We've demonstrated some real impact with.
Then on second question I had was related to.
As you look at the assets in place to broaden the yeah.
The tiers of care.
<unk> do you feel like.
As of June the pieces are there or just needs to be further developed towards the you need the are there assets that you think.
Or are still needed.
Okay.
It's a really good question and I would say, it's a little bit of both right I mean, we've got up per.
Personalization platform that we that we really like and so our ability to continue to use that.
To develop more digital.
Our capabilities around how we assess our members.
When you think about what we can do digitally to help provide improved diagnoses of these individuals.
We can understand their preferences to interact whether it's by type of individual to coach with whether it's by the kinds of therapist that would be the best match.
We can really enhance our ability to do those things you know for today's product and program with enhancements around of that personalization platform that debt we own. So you know some.
Some of it is we have it can we watched one of continued to develop it on.
So that we can provide a greater assessment diagnoses matching preferences for our customers.
We can drive deeper insights into our members right. The more digital information that we possess and all of that just provides more data for us and the more data that we've got.
The green further insights sort.
Around the virtuous you know sort of aspects of of.
Of doing that and that will all lend itself to the sort of conversation that we've been having why you didnt make our outreach capabilities more effective can you be more efficient with how.
How we access of drive people into our outreach pool's can we be more effective at driving up the graduation rates I mean, all of that really should happen as we continue to build out and invest in our personalization platform.
And if we say right you know primarily focused in the short term around the durability of these high class. The individuals' it gives us every right to to expand.
Into the middle of the acuity ranges.
But I guess you know we just want to you know if if we continue to expose ourselves to Medicare on the government programs around high acuity, we just want to be thoughtful about sort of when is the right time to move down the acuity curve.
Right.
Okay. Thanks for that.
Yeah.
Our next question comes from Richard close from Canaccord Genuity.
Great. Thanks for the follow up question here, Jonathan I'm curious if you know since you've been there for the <unk>.
I know, it's only been for weeks, what have you been able to really scrub the pipeline analyze it.
And is there you know maybe.
Maybe give your view on the.
You know the.
Central that's in there and you did the pipeline essentially change at all in terms of after analyzing of if you did that and that caused some of the guidance the lower guidance.
So thanks for the question I appreciate it you know.
You always want a bigger better pipeline right. There's no such thing as sort of you know good enough when it comes to of pipeline I would say that.
That said we.
We've got of quality pipeline.
It is.
A set of marquee names.
Mark key geographies.
On the exposure to government programs in the pipeline right as the theater. It up you know ultimately what we put into the outreach pool and trying to make sure that are enrolled and eligible individuals on the outreach pool continues to reflect the Medicare Medicaid kind of dynamic.
On that that is very much true in the pipeline. So for me from a size and number of lives from a line of business being exposed to Medicare and Medicaid.
I like a lot right in and sort of the.
The stature of if you will associated with some of the sophisticated purchasers.
Yeah, I feel good about that but you know what I'd like to see more on there for sure and I think just to pick up on one of the things that Brandon said one of the things we're learning right we liked the outreach characteristics.
And the penetration rates that we're able to achieve around some of these government individuals' yet there are a number of sales and enrollment in compliance and approval steps the take us a little bit longer to stay on some of these Medicare and Medicaid programs up.
And so if theres any flipside huh.
You know sort of the the higher acuity curve and the greater reach ability and you know more individuals at higher cost thresholds that are associate with government programs. There are more steps to I wouldn't say sell it but there are more on steps to make sure that implementation and compliance and regulatory approvals are on.
All of them attended to and so that does drag out a little bit I think the close day to our you know come alive and implementation date, and I think we're experiencing a little bit of that right now.
Okay that makes sense and my final question is obviously you've been in this on the health plan side for years and most have a lot of contacts or are you talking are you.
Heavily involved in the sales process in terms of talking with those the pipeline opportunities.
I am I will be I don't know that I've had the opportunity yet to sort of open up my contacts and start driving.
On activity into the pipeline I sure hope I can do that but I I E.
You never know, but and I've spent most of my time listening to our existing customers listening to our prospects listening to them.
Some of the customers that recently left us.
I spent a lot of time listening to our employees.
Who's got a lot of great ideas about what we need to make sure were prioritized on and so I really had been a bit on the listening on our learning on tour, mostly to understand the capabilities of the opportunity.
All of the organization and and and and I welcome the opportunity to sort of shift into.
You know anything I can do to activate new prospects.
But I've been more intent on making sure I understand of our current customers and I understand the opportunity with the customer and the pipeline instead of being cultivated to date.
<unk>.
And I have to be close to what I enjoy it yeah. Thank you.
Great. Thanks.
We have no further questions at this time.
I will now turn the call over to Jonathan Mayhew for closing remarks.
Sure well I just would like to say thank you very much for everybody's.
The time this evening. Thank you for your support and I wish everybody a nice evening. So thank you very much.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
Yeah.
Yeah.
[music].
[music].
Welcome to the on track first quarter 2021 earnings call. My name is Sylvia and I'll be the operator for today's call at this time all participants on a listen only mode. Later, we will conduct a question and answer session.
During the question and answer session I'd be happy question. Please press Star then one on your Touchtone phone I will now turn the call over took care of landfall Investor Relations Caroline you may begin.
Thank you and thank you all for participating on today's call.
Joining me today, our current Taser Executive Chairman, Jonathan Mayhew, Chief Executive Officer, and Brandon Laverne Chief Financial Officer.
Earlier today on track released financial results for the quarter ended March 31, 2020 one of <unk>.
Copy of the press release is available on the company's website.
Before we begin I would like to make the following remarks concerning forward looking statements.
All statements in the conference call other than historical fact are forward looking statements.
The word anticipate believes estimates expects intend guidance confidence target project and some other expressions typically are used to identify forward looking statements. These forward looking statements are not guarantees of future performance, but may involve and are subject to certain risks and uncertainties.
Other factors that matter of fact on track business financial condition and the other operating results, which include but are not limited to the risk factors described in the risk factors section of the form 10-K on form 10-Q.
Filed with the SEC. Therefore actual outcomes on results may differ materially from those expressed or implied by these forward looking statements.
On tract expressly disclaims any intent or obligation to update these forward looking statements.
With that I'd like the true I'd like to turn the call over to Darren.
Thank you good afternoon, everyone and thank you for joining us.
Today is national nurses day in the first day of National nurses week, and we are profoundly grateful for all of the care coaches with the nursing background and on track.
A vital role in ensuring that those with untreated behavioral health condition of medical co morbidities, the see the care of they need.
We will be recognizing and thanking nurses and health care workers.
As part of our new on track marketing campaign watching this week.
What I found it on track our mission was clear to help them for the health and save the lives of as many people as possible.
Proud that the on track team has been able to do the.
Unimaginable and build the platform that uses advanced analytics to predict people, whose chronic disease.
Prove with behavior change recommended affect the care pathways.
The people are willing to follow on.
Guys those with unrelated untreated behavioral health needs to our network of high quality behavioral health providers.
This platform and the on track program has enabled us to deliver cost savings of 40 to 50 per cent to health plan members and improve the health outcomes for those suffering from behavioral health condition and chronic diseases.
Our industry, leading position and capabilities have enabled us to consistently generate revenue growth in excess of 100 per cent. These past few years.
Now have an excellent team in place to lead on track through our next growth chapter.
As you know from our March press release, Jonathan May who has succeeded me as CEO.
I have long look forward to hearing over the CEO of range for an executive of Jonathan stature in the on track Board of directors and I are confident that he is the right leader to build a part of our growth trajectory and scale the business.
Jonathan is now one of the week for add on track and I'm deeply impressed by how fast he is moving.
His energy passion and strategic thinking are inspiring.
They will soon permeates the entire company and drive us to greater Heights.
Jonathan.
And of Jonathan's leadership, we will continue to capitalize on the tremendous growth opportunities ahead of us.
We are just getting started on our journey to engage not only care of avoided but also of care seeking individuals that's of broadening our reach within the Medicare Medicaid commercial at risk and ASO membership basis.
I'm excited to become executive chairman and it tends to focus on capital formation share holder value added transactions.
Collaborating with Jonathan on our long term growth strategy now.
Now I'd like to hand, it over to Jonathan the share of his observation.
Take us through a more detailed review of the first quarter and our growth initiatives for the year.
Jonathan.
Thank you Tara and I'd like to start by thanking you on the board of directors for the opportunity to lead on track I look forward to working with you on your new role as executive Chairman.
This opportunity was the irresistible to me for two reasons first I understand firsthand how challenging it can be the access high quality of behavioral health services.
When families need it the most and I want to solve the inequities that too often become insurmountable barriers to care.
Second on track has a remarkable team that's dedicated to our mission and unparalleled technology of the G and insights to treat depression anxiety and substance use disorder and the host of other chronic conditions. There was a massive addressable market of those who can benefit from our.
Weighted intervention platforms.
And my fourth week it on track I'm, even more optimistic about on tracks future and our ability to drive long term value for our shareholders.
I'm excited about the opportunities ahead, and we'd like to spend a moment sharing some of my early observations that will shape our priorities as we move forward.
Number one we are privileged to have an exceptional roster of health plan and employer clients, we must ensure that we listen closely to their needs and become a truly customer centric organization.
In that spirit I want to explore more deeply how on tracks outstanding net promoter scores can increase member ratings of health plans and impact things like heaters scores.
Doors ratings and cap scores health plans care greatly about the customer satisfaction scores for their members.
Number two our customers need of portfolio of solutions for high and low acuity behavioral health conditions and chronic disease.
On track has a powerful combination of digital health and care coach supported interventions that give us a strategic flexibility for the future I also see a tremendous opportunity for us to increase our value to our customers by aligning and integrating closely with their existing customer support program.
It's hard to be physically well, if you're not mentally well customers want to work with a smaller number of high value partners that meet a spectrum of health care needs, we must earn the right to partner with them as a partner of choice.
Number three we have a number of very promising opportunities in our sales pipeline.
That would diversify our portfolio and expand our business development approach.
My conversations to date with prospects lead me to believe that there's a strong interest in the on track program from provider organizations, who work with high acuity chronic care of populations I believe that our services are especially relevant for government lines of business, where the disease burden is greatest and we can add new valley.
Are you with the very high level of efficiency.
Number four we believe the new treatment effect study is a key milestone in further establishing impact and value to our overall program.
This rigorous study concluded that the on track program reduced inpatient utilization by 64%, while increasing office visits for preventive care and behavioral health services.
The savings for members, who completed the 12 month program. We're also just statistically significant and notable at $486 per member per month, but both of the control group.
Remember that our members are the highest cost most vulnerable care avoidant individuals who may be using the emergency room as the general practitioner.
The members in our study cost an average of 20 $779 per member per month before treatment.
In the two years post treatment the.
The treated individuals' costs reduced to 1500 and $51 P. M. P M.
Or a 44 per cent reduction.
End of $486 per member per month lower than the control group.
Two things are really striking to me first the rigor of the methodology.
The research teams stimulated a randomized control trial by pairing propensity score matching with of difference indifference analysis to establish the treatment effect of the on track program.
Secondly, the study found that cost savings continued for 12 months after the on track program and it which is evidence of the lasting impact.
Of our approach.
Doctor Hillary Plazic, who leads the on track research team is now developing the menu script for peer review and publication.
We will be conducting a series of briefings on the research study.
As it unfolds and we analyze specific sub populations within the treatment groups.
And number five I'm extremely impressed by the talent and the commitment of the on track care community and our member engagement specialists, who established trusted relationships with the members remove barriers to care and guide those in need of behavioral health services to the right clinical pathways I'd also like to run.
You guys all of the on track team members involved in our data and analytics. They are building out the on track behavioral health system of individuals' and person centered care. The connects an ecosystem of stakeholders to much needed solutions.
As Terry mentioned earlier on moving fast and anticipate participating fully in client industry analyst and investor forums.
Let's now turn to the first quarter results. We believe the year strongly we began the year strongly with revenue of $28 7 million, reflecting 133% growth from last year amid the ongoing mental health crisis, we continue to engage care of when individuals in order to reduce.
They're medical expense and improve their health and wellbeing.
As the pandemic subsides, we anticipate normalized non COVID-19 utilization across our health plan customers membership basis that being said.
I'm adjusting of our 2021 guidance to be sure we're setting expectations with the intent to overachieve. We believe of revenue range of 80 to 85 million appropriately factors in the headwinds in the tail wins, we're seeing for the remainder of the year yet provides upside should we signed and launched new logos.
Throughout the year.
With that as the backdrop I'd like to provide updates on the headwinds until wins, we're seeing starting with the headwinds.
The most significant headwind remains of the customer contract termination in June we dish enrolled our Medicare book of business.
With this customer in early April and will continue to graduate and dis enroll commercial members through the end of June.
At this time, we are not anticipating services for these members beyond the end of June.
Turning to utilization of our outreach pool ex.
Excluding the terminated contract continues to be impacted by lower utilization of non COVID-19 2019 health care services as we've previously discussed this lower utilization during the pandemic causes higher cost of members to drop below the medical expense threshold.
<unk> for inclusion in our outreach pool over.
Over the course of 2021 as vaccinations increase this headwind is expected to become a tailwind to help drive growth of our outreach pool.
Let's now turn to the tailwind that remain important to our growth trajectory.
First our enrolment statistics have never been better.
There are three primary reasons for this number one our remaining outreach pool is refreshed by our customers far more often than it has historically been.
Number two our outreach pool is now approximately 41% tied to Medicare and Medicaid government programs compared to an average of 26% in the fourth quarter.
For the upcoming Medicare and Medicaid expansion with one of our customers. We believe it will continue to grow.
Number three after the unfortunate reduction in force and.
After a customer contract loss the remaining engagement specialists are exceptional and perform at a higher level than our historic average.
All of these factors have contributed to enrollment rates that we've never seen before with our Q1 2021 annualized enrollment rate hitting 56 per cent.
And we believe bodes well for the long term success of the program.
Number two as expected we signed the national contract with life stance, which adds more than 3000 behavioral health clinicians, bringing our network of behavioral health providers to a total of over 15000.
In light of the severe national shortage of behavioral health providers accepting insurance our network is a clear differentiator for on track in the marketplace.
Number three we have maintained high member satisfaction levels demonstrated by industry, leading Q1, 2021 net promoter score of 75 for the on track program.
The net promoter score for our care coaches last quarter was an outstanding 84.
Fourth we continue to have both revenue visibility and a robust robust pipeline as evidenced by the recent renewal of our customer contracts.
Turning to our growth plan for 2021, we've made meaningful strides towards expanding the addressable market and the value proposition.
Earlier this week, we lost the national marketing campaign to increase on tracks brand awareness through both high profile of digital advertising and media programs.
Turner said previously we're the clear industry leader in our ability to significantly improve the health of the lives of our targeted care and treatment avoidant populations and yet on tract has been the least known and best kept secret of our goal is to highlight the real world impact of our behavioral health program.
Our compelling clinical and economic outcomes.
In summary.
I'm confident in our unique ability to deliver outstanding results.
On cohorts of members, who are extremely costly and very difficult to engage and among those who are actively seeking care.
Look forward to updating you on the coming months.
On our work to expand our addressable market and become a truly customer centric organization.
I'll now turn the call over to Brandon Laverne, our Chief Financial Officer.
Thank you Jonathan.
I'd like to congratulate you and I look forward to continuing to work closely with you and I'd also like to thank Terry for his leadership and it's been a pleasure to work together.
During the first quarter, we recorded revenue of $28 7 million 133 per cent increase over last year and this included a full quarter of members from our last customer.
Deferred revenue increased to $24 $9 million on the first quarter up from $21 million at year end as we continue to enroll many new members using the case rate or payment upfront.
We amortize the case rate revenues over the approximate average time on the program or nine months.
At the beginning of the quarter, we had 15700 into enrolled members and ended the quarter with 14868.
A decrease of 834.
The average of 15285.
That equates to revenue of about $626 per enrolled member per month for the quarter.
And compared to $527 per enrolled member per month in Q1 2020.
Recall that with our lost customer business in particular, they were subject to co pays on coinsurance when the members play on your changes, which typically impacts our per enrolled member per month rates in the first quarter.
Going forward, we do not expect to see that seasonality continue as none of our other customer plans reduced payments for co pays and coinsurance.
Breaking down the Q1 enrollment of a bit more we enrolled a total of 5900 members during Q1 compared to 6000 and 714 in Q4 or 12 per cent decrease sequentially due to the termination notice.
It's still 26% more than the 4693 gross enrollments in the first quarter of last year.
The bite in Q1 gross enrollment by our outreach pool, which averaged approximately 115100 of 15000 for the quarter, which was partially impacted by the loss of the major customer it annualize as two of 21% enrollment rate compared to 18% annualized rate we saw on Q4.
However, when we exclude the impact of the lost contract on all periods. The annualized enrollment rate for Q1 was 56% up from 55 per cent in the fourth quarter, reflecting the enrollment tailwind as the Jonathan discussed earlier.
Our this enrollment rate averaged approximately 10% per month during the quarter.
Resulting in the this is the rolling a total of 4900 into enrolled members during the quarter.
This compares favorably to the 13% average monthly this enrollment rate we saw in Q1 of last year.
Further we graduated 1822 enrolled members during the quarter, which equates to about 12% of enrolled members on the program at the beginning of the quarter.
The net impact of all of that was a net enrollment decrease of 834 in the first quarter of 2021.
At the very beginning of the second quarter as part of the transition plan. We just enrolled all of the 2100 Medicare advantage members for the lost customer.
We are still serving their commercial members and expect to do so throughout the second quarter.
As of this call. The remain approximately 4160 members that we expect to of graduate or just in the rule by the end of Q2.
Our gross margin for the first quarter of 55, 6% increased sequentially from 54, 1% net compared to 41, 4% in the first quarter of last year.
Has increased sequentially each quarter since Q1 of 2020.
We ended the quarter with 303 team members included in cost of sales.
Down 38% sequentially from 486 at the end of the fourth quarter due to a reduction in response to the customer loss.
But still up 13% from 269 at the same time last year.
The team members on cost of sales of primarily made up of care coaches of member engagement specialists.
Turning to the balance sheet and cash flow.
We saw cash flow from operations in the first quarter of positive $6 $4 million compared to negative $4 $6 million in the first quarter last year.
This was mainly due to the timing of billing and collections of our health plan expansions combined with our positive adjusted EBITDA for the quarter.
As we continue with our plan to invest in our technology and operations, we do not expect to experience the significant level of positive operating cash flow in the near term.
On the balance sheet, we ended the quarter with cash and cash equivalents of $92 $5 million, but including the restricted cash total cash was $106 $6 million.
We remain confident that we have sufficient capital and access the future capital to manage operations and execute on the strategic initiatives we've outlined.
We are currently of compliance with the financial covenants with our lender and we'll be working with him during Q2 in light of our updated revenue and EBITDA projections in the near term.
Regarding our outlook for the remainder of the year as Jonathan indicated we're targeting revenue on the $80 million to $85 million range.
Well, we are proud of the we're able to achieve positive adjusted EBITDA throughout the fourth quarter and first quarter, we expect adjusted EBITDA to be negatively impacted by the loss of contract in the remaining quarters of the year as their members. This is all for my program.
We anticipated operating leverage improvements as we add additional customers and expansions to our platform in subsequent quarters.
I'd now like to turn the call back to Jonathan.
Thank you Brandon in summary, I'm encouraged by our accomplishments in the first quarter and I'm confident the we're well positioned for continued growth in the years to come we are executing on our strategic plans to expand our addressable market.
Further investing in our platform and increasing our brand recognition for those who serve individuals' with behavioral health and chronic conditions are.
Our continued execution of an intense focus on our growth initiatives will drive us toward greater predictability, while also expanding our impact.
On those in need across the nation.
With that well now open it up to questions.
Operator.
We will now begin the question and answer session I'd be happy question. Please press Star then one and you touched on phone.
If you wish to be removed from the queue. Please press the pound sign of our the hash key.
The speakerphone, you may need to pick up the handset first before pressing the numbers.
Once again I'd be happy question. Please press Star then one on your touch the telephone.
And the first question comes from Richard close from Canaccord Genuity.
Yeah, Thanks for the questions Jonathan welcome.
Look forward to working with you going forward.
Was curious if you could dive in a little bit deeper on the some of the topics that you observations that you made in terms of exploring how you can work with.
On your payer customers in terms of improving scores.
What do you mean by debt exactly is that.
And the opportunity to monetize.
That work somehow and how is that different from what you guys are doing now.
Yes.
Richard Thank you for the call. Thank you for the question I appreciate the opportunity to work with you as well I. Just you know so much of the Medicare advantage and and in the Medicaid markets are driven by them not not just medical expense reductions, but the revenue that is.
She aided with some customers.
Customer satisfaction scores on.
Demonstrating that a health plan has the ability to direct people to the care settings that drive for improved clinical outcome.
And those are the very things that we do and I think that we have an opportunity to share on.
Claims of.
The diagnostic information information that our nurses are capable of obtaining to help drive those scores and and I think just create another of value opportunity of value lever for.
For our health plan partners I don't know that we've engaged.
Deeply enough given the the concentration that the organization's had around more commercial membership than the than St government Medicare in particular.
So I think as we partner more deeply understand ways that we can contribute and add value to our health plan customers.
One of the areas it just seems to be.
You know sort of of top area to explore with the health plans you know to date on.
He has been around and exchange of information that can contribute to their heaters and stars and the caps performance.
Does that hold or hopefully yeah. That's that's helpful with respect to our.
Sort of feel obliged to ask with respect to the loss contract.
Can you just discuss your knowledge of the situation there and is do you think there's an opportunity to.
The secured business with that client at some point in the future.
I I sure hope so I I I.
My responsibilities at the organization did not have me in indirect contactor sort of per.
Proximity to the decisions that were made.
I respect the decision debt.
The organization made I I, obviously know the people well I think we have mutual respect for.
For each other having worked together for for a long time and partnered with initiatives like putting clinical resources into.
Retail locations.
Well, what we've talked about to date is first and foremost the priority that we both have a round of the transition of care of the existing members that are in our program today and.
And so we will care for those individuals and be vigilant and it.
Extremely well focused on the transition of care.
And then once we're through those transition of care arrangements.
I truly hope that we'll have the opportunity to talk about of what.
What we can do with our program to more deeply partner across the number of dimensions.
The I, obviously have have of feeling about what some of those real opportunities to partner could look like but we just have not been I have not been permitted the opportunity just given sort.
Sort of my newness in and the timing of the transition to go have those conversations.
That makes sense. Thank you and then I just wanted to hit the quickly on the study because the results there are pretty pretty impressive and.
You guys did lower guidance, so I'm, not really too surprised by that but how big of an impact do you think these studies results will have in terms of you know new opportunities with clients.
On your or how important is something like this.
I mean I'm happy to give you my my perspective and in welcome Brandon and inherent.
You know comments of prospective as well, but I think.
It it it's foundational right I mean, just the D.
For the thorough ness of looking at.
Reasonably large cohorts for.
For a proximity of 12 months before treatment the 12 months during treatment and 12 months post treatment.
It makes it a really durable right set of observations that are foundational.
What it suggests that even if I take you up to maybe 20000 feet and then come back down to like power of customers Digest. This you know it it. It's it's fundamentally suggest if you invest in behavioral health services.
You keep people out of really bad really expensive institutional settings, right and it's so easy to say that and it's so hard for the payers to invest in primary preventative care right preventative behavioral health services because of.
It's a real and tangible cost of debt you absorb in the short term to offset really expensive on conditions in the future and I think that Theres policy implications right. If we can continue to drive.
Society and bulked up the.
The large and small payers around.
Around.
Providing support.
And for ships and behavioral health interventions debt impact long term care savings rates go lower deductibles for people right take out of pocket expense limitations removed financial barriers that we refer to the social determinants of the industry. There's a lot that we can do right that the study would.
Suggest go foundational to what it takes to really treat people, who or are stressed and distressed with.
The disease burden.
Of comic and common of chronic conditions. So I think you know fundamentally right I don't know that there's been a study that's been.
Conducted as thoroughly over a 36 month period of time.
And number two right as we go on to introduce the program to our customers.
It gives us a lot to model off of new.
Chips, right and for the existing customers.
It adds credibility to.
The development of the pipelines and the outreach pool that we establish us as I know you've heard of other conversations that could take us months and years to build the reasonable pipelines in outreach pool for some of our customers and the studies lend validity to what the savings could and should look like when we.
Or wait Hum you know are in.
And the range that we've talked about on the study of 40 per cent of the graduates and the study on completed the 12 month program and you see the the durability that's associated with really sick people being out of behavioral health study for for 12 months.
So I think on a number of levels of it adds credibility to our program. It creates an impetus to invest in behavioral health services.
And we'd love to compare each customer that's in the programs achievement of our financial outcome that looks something like what we can witness across our entire book.
Okay. Thank you I'll jump back in the queue.
Thanks.
Our next question comes from Charles right from Cowen.
Hi, This is actually the James on for Charles I, just wanted to touch on guidance for a minute. So the updated guidance of 80 to 85, presumably assumes all contracted business, but you know the previous guidance of 100 million assumed 88 million of contracted business.
Did something change there is it maybe because of.
Some people.
It didn't qualify given that you know given the the lower utilization or maybe it's just some level of conservatism. Some specificity there would be helpful.
Okay.
Yes.
This isn't just the Brandon I'll say, there's a couple of factors. There I mean, you hit you hit it on the head as far as contracted contracted lives are at the same time you know we've seen we announced that there was a a contract of about a month ago or so that's that's had to be sent to the state for approval that's pushed out or are automated.
No expectation of launch of that particular program, we're still waiting to hear back of its due any day now so to speak and and so we've had to move out of little bit of of those kind of expectations.
And just as you said there was there was some element of the impact on the real utilization.
You know, it's a little bit hard to model, what that's what it looked like for the year, it's been up in the air.
We do want to be conservative there and to the extent the utilization Pops back in and we see a big lifts in the outreach pool, resulting then I would think you would expect to see changes in our in our future.
So I think that's the best way to think about it you know as we continue to refine how each of our contracts are looking.
How the enrollment rate of how the the outreach pools are shaping up over time and continue to evolve. The model. This is probably our you know it's it's it's a good it's conservative and we believe that it's.
It's it's reflective of all of those things that of the Jonathan.
Jonathan had mentioned as the headwinds of a tailwind.
Okay. Great. That's very helpful. Also you know last quarter. It was stated that you know you expect to grow of 100% in 2020 two.
Is that expected growth rate still stand you know maybe an update on that front.
I would I would answer that this way I mean, so we were we were looking at I think we've tried to clarify along the way too that this was a we expect to get to that growth rate in 2022, not the 'twenty 'twenty two what that growth rate for the year.
That aside though you know we were looking at our motto on how we can best be most efficient.
Where can we grow the revenue.
Not just the fastest but the best in quality and most efficient. So you know all of those things are coming into play jonathan's.
Obviously been here for for for weeks now and putting his fingerprints on the organization.
And we're we're evolving along there with it and so I'd say generally speaking when we look at our business. It grew over the past three years of 100% plus per year.
We would all look at our business would say that's absolutely. The reason it would be possible when we look at our pipeline.
And monetize that pipeline out it's it's hundreds of millions of dollars of potential and.
And so you've got debt.
Definitely the opportunity and so it's up to us to go in that business and and as we launch a sort of sign lunch contracts throughout the year.
Is the plan what would hopefully be that that will help us get into the 2022 outlook for more on them.
The specificity.
Okay, and and just maybe you could touch on I remember last quarter.
You guys talked about launching tiered products any update there on in terms of timing of launch maybe in the indicated occasions of interest in the market have any customers. Maybe are indicated to you guys that they plan to sign on for this offering.
Yeah.
Yeah.
Bryan I wouldn't want I would say that.
Yeah, Yeah, if you want to take that.
I think you know what we've heard from our customers is oh.
On a real need for us to take.
On the very comprehensive program of today, that's focused on a 12 month duration for a you know.
A population that might look to be three to five per cent of the commercial and maybe as high as you know of high single digits for for the government.
Programs with.
For the kind of impactful spend at the debt that I know we've highlighted a lot.
And there is a deep need and desire to make sure that the digital capabilities that debt I think you're referencing are connected to our care team help improve our ability to engage on telefonica and in person and digitally engage at the front end answer.
Throughout the course of treatment will only make our program increasingly more effective at it at each of the stages right and we've heard that loud and clear and as we continue to build out those digital health and care teams solutions. It absolutely puts us in a position to be able to move into the middle of acuity.
On ranges.
And you know I think as we start to do that obviously it improves our addressable market opportunity. It starts to have us collide with some of the.
Digital and the lower.
Acuity and lower touch programs and and I would tell you from sort of four weeks' observation and a lot of conversations with our stakeholders. It seems to me that it's easier for us to move down the acuity curve.
<unk> and improve the overall level of support we provide to our existing high acuity customers through the digital capabilities that we already have in the platform that we've acquired than it is for some of those other vendors to potentially move up the acuity curve have to deal with the clinical resource and the the.
The reach ability on the acuity dynamics that we support every day.
So it's an important part of our roadmap and and I think it can even improve you know in a nutshell, what we currently do with our care teams for the high acuity programs.
Okay great.
Very helpful.
Our next question comes from Sean Dodge from RBC capital markets.
Hey, good afternoon for some color on for Sean Welcome Jonathan Thanks for taking the questions.
Hum.
Yeah.
Both of how Cigna is tracking the relative to the $40 million expected on the first year.
Because of any update on timing of expansions on the new states or traction on the commercial side would be helpful.
I'm going to ask for held it to declare.
But the times we were.
We're not really commenting on specifics on individual customers it could be kind of telenor scripting of little bit.
And so.
Obviously, we you know we were.
Talking about how how we performed.
And part of the first quarter during the fourth quarter call.
And you know it's contributed obviously to our results in the first quarter.
Say that you know, we're we're trying to stay away from any specific commentary on individual customer sizes. We know what their overall total budget was which was $90 million for three years.
And the.
And ultimately expect that Ah I believe and expect that we're gonna be within that range of at least.
So.
It's been a very positive contributor of course this year so far for sure.
Okay that sounds good.
Thank you and then.
Jonathan I think of touch on the early a little bit but you.
You talked about some of the interest expense.
The provider side some of them looking to augment some of their services.
You guys give any more thought that all of these relationships might look and kind of the potential opportunity there.
Yeah, I mean, I'm happy to comment a little bit I, you know I think it could and should replicate or feels you know greatly similar to the health plan model I would say you know when and as we talked to some of these provider organizations, who are deep and steep into the Medicare advantage on the dual Mel.
Eligible populations.
The absolutely recognize you know the kind of model that we represent right where people without a heavy disease burden will benefit from behavioral health intervention, you've got various models that these primary care organizations have tried to adopt them as it relates to putting social workers and.
The other kinds of therapy support mechanisms in place.
And we're a great partner right. When you think about right you can access our services you don't have to hire those clinicians who can take advantage of the breadth of the depth of our 15000 contracted providers. We've got on nurses, who can be available face to face Telefonica Lee.
Virtually and so it just it becomes an easier.
Discussion and I will tell you this might be right as we all sort of debate with the durability of some of the changes from COVID-19 or if those patients were all accessing care in a primary office setting previously and now right. We know their channel positioning maybe back to some normal practice dynamics, but in the event that they're not if you've got.
The hired social worker, that's sitting in the office for.
Is of virtual model like ours.
I think it's worth really test driving right and that's sort of the feedback I think that we're starting to receive is if we can demonstrate the kind of.
Cost reduction these primary care groups of as you might be aware you know at significant financial risk right, because they've taken a delegated contract with a lot of players.
So in many respects, they're closer to the patient and the members on the health plan and they've got more financial exposure or risk than the health plans have.
And so it just creates a deeper level of integration in the virtual model and so I I am deeply interested in US you know exploring that and in some of these provider groups or in a larger than health plans and in certain instances so.
But I think the model to answer your question I think could could could've could completely or on a material way replicate a lot of what we learned from some of our health plan operating model.
Okay, Great. That's all for me does that help yeah, yeah, no. That's helpful. I appreciate it.
Our next question comes on entered the silver from B Riley Securities.
Good afternoon, Thanks for taking my questions and let me know if you answered any of these already I get a top between calls here.
But just looking at the print.
It's just very clear right now that the enrolled member right out of the outreach pool is just going to be significantly high are higher on a on a percentage basis than it was historically I'm guessing just due to the dynamics of Aetna.
Can you give a little bit more context, there even when you strip out the 4000 enrolled members that you referenced in your press release.
It seems like you're you're tracking several times better enrollment right now than you would have previously Oh, what are the some of the dynamics there and is that sustainable as we go for it.
Sure I can I can take that.
Brendan.
Ultimately when we look at the pool, you know without the the the the prior last customer we come up with a much more government focused outreach pool.
And if you think of these folks there are a lot more reachable and available two to enroll to yeah.
Participate in the program and.
And ultimately effectively complete the program and so there's there's a lot of opportunity cost there, there's a very high cost type folks.
So the outreach pool itself.
Comes in way more efficient and so well.
I think we've talked about this before where the the actual funnel from.
From the health plan lives into our outreach pool is much much greater for people in the government side versus the commercial side. So we already start with.
The equal sized pool on government is significant it is not only of smaller life associated with the health plan lives associated with it but at much higher enrollment rate.
You combine that with the fact that we have.
Much more focused a member of gives you a specialist team at this point.
And the debt are looking at our data. They they are the the data as much pressure from the from our current customer base than what it used to be.
In all of our data suggests that the the time in the pool is one of the biggest drivers of enrollment.
Combine that with enroll the ability from the type of patient and then the the member engagement specialists and who's actually doing the enroll the enrollment upfront all of those factors are contributing to the high high level. So when we think about how durable is that over the long term.
We were in were in territories, we haven't seen before.
We've said multiple times, we expect that the normalized.
We've seen it now continue for two quarters in a row.
And and so again when we're when we're backing out the the prior loss contract and.
So we'd like to think that of sustainable obviously, we want to we want to expect that it's gonna be a.
That it's going to normalize some of some of this has to do with the quality of the outreach pool on how between us and our health plans are ultimately.
The slicing and dicing.
The the ultimate inclusion into the pool itself or ultimately trying to get a pool that is.
They enroll the bull highly successful and ultimately we would benefit most from a program at the end of the day. So we do as you know as I sit today I would like to think that we could continue to see numbers like this I don't want to count on it but I don't see a big reasons short of US moving into you know big commercial space.
For something of that nature of that's going to that's going to do a a big change to what we're seeing right now.
Okay, that's useful context on the dynamics there is that the.
Kind of the same reason why you had a much stronger kind of.
ASP per enrolled member during the quarter than you.
We typically have during the first quarter or was there anything else that caused that.
Well I think Theres, a theres a couple of factors I mean, we did.
Coming off of the Medicare space, we did have some deferred revenue the debt.
Because of the ending of the.
On the Medicare advantage program ultimately for this customer.
Shows up on the first part of it was that it was of a small component.
But we also saw.
We've continued to.
Have really good timing of the information as far as enrollments in this enrollment.
And so the key there is is the sort of rolling people quickly enrolling people quickly to offset those the best you can so the when the plan change information happens we process it through and we're not.
Basically treating people that unfortunately were not were not contractual the contractually able to treat anymore.
And so I think statistically.
That's becoming a smaller part of the it's going to become a smaller non zero part of the program at this point.
Of that the the dip in the first quarter from not just the plan change, but the the bigger dip is from historically it was from the co pays on contracts and so that piece is going to go away and so that's that's that's.
As we look forward should be a little bit more normalized throughout the year and more of a factor of the.
The mix between our customer base.
Our future customer based on what we had in the balance.
Okay. Okay very useful does that answer the question I went on a couple of directions or no no no. The they gave me a lot of a lot of color and it seems like it's actually going to be more durable, particularly from a seasonality standpoint is probably going to be less impacted going forward as long as it.
The current makeup states consistent of government versus commercial and signs of life.
Correct Yep.
Okay, and then just really the last question for me.
I understand now you're not really focusing on naming any specific customer so I guess on.
On track C. I was the program you were referencing last quarter.
And and you you've mentioned that you were running much much faster than expected in <unk>.
Maybe the the budget there would be increasing.
Is that something that.
Kind of it's still on the table or how should we think about that it seems very promising them on your last quarter call.
But the the way I would answer that is yes, I mean, all of our customers do have budgets and we need to be cognizant of what those budgets are.
You know we don't have you know I think we saw this last year, where where we ultimately had to.
The ultimate it turned down turn off one of our programs during the fourth quarter as a result of hitting their budget, even though we were over budget at the time it.
It became too far over budget, and so we really never know definitively where where the.
What that's going to happen until it absolutely does and so this year is a little bit different because there's a lot more utilization expected that there was last year.
And so I think the the.
The tailwind of.
Of of what we saw in 2019 that enabled us to go far beyond certain budgets may not be there, but I'd say the conversations continue with with all of our customers and making sure that we're meeting their expectations.
And trying to grow the business of reasonably and proving our proving our business model is working for them along the way.
Okay, Great I think that's everything for me. Thank you very much the best of luck going forward.
Thank you.
Our next question comes from the team Manheimer Collyer of Securities.
Thanks, Good afternoon, and welcome aboard the Jonathan.
Wanted to ask how much of the sure how much of the sequential decline in the outreach pool.
Whats driven by the loss of the large customer was it was it all of it.
It was nearly all of it. It's it's you know our outreach pool now it was averaging around 25000 during the quarter and.
And without that particular customer and you know they they had well over 100000 moving into the pool and so it was it was nearly all of it or our outreach pool has shifted a little bit with with the what I'll call everybody else.
And come down a little bit during the quarter, but nothing near what we saw with the loss of the customer.
Got you Okay very helpful.
And Brendan I think you may have already answered this but I mean with the conversion rates are clearly going up as you discussed.
It sounds like the mid fifties enrollment rate may be the right.
Right to think about going forward I'm, just wondering if that can go even higher or is it the primarily a function of the mix of enrollees.
Yeah.
It's partially a function of mix.
We do have the expectation that we're gonna be launching an additional Medicare Medicaid expansion.
You know once that comes back from from the state.
And that will increase our Medicare Medicaid.
Mixed that's a positive effect on on.
On the enrollment rate, which ultimately may mitigate against any of what I'll call normalization.
Of the enrollment rate as we get through some of these outreach pools with the other customers.
And so it's it's.
For my for my perspective, I don't think that that's a bad place to think about.
And but and then there is upside than there is downside models that you can derive from that but but it's not a bad place to think I wouldn't suggest that we.
Could we go higher if I use the word could as opposed to wheel of should yes.
Yes, there are ways to to derive that ultimately we we we still have to fit in with what of our customer expectations and how are we how are we ultimately solutions for.
For all of the different needs of.
Not just us, but our customers as well.
The next.
Thanks very much.
Our next question comes from Bill Sutherland from Benchmark company.
Thanks.
The dog Hello, everybody.
The chances that Don mentioned.
Opportunities in addition to the providers of partnering in the gut.
Space and.
If you could just give us a little more sense of what you are referring to there.
I would say primarily the those things right and just to pick up a little bit I guess on the on some of the previous thread, but the more we expose ourselves to the higher acuity pools.
In Medicaid and and in Medicare and write the overlapping populations for duals.
It it it increases our exposure to the high cost members, which is.
You know the.
The foundational aspect of of of how the program is built so I think there's other ways to try to go access those members and obviously provider groups is one way.
You can think about PD, EMS, and and and and where drug spend is increasing the material part of a chronic patient spend.
We've got some pharmacy data that debt that we access today through the data feeds that we receive but.
There's real value in managing chronic spend for organizations other than health plans.
And so I just think we have a tremendous opportunity to understand what some of the other channels.
And pathways to intersect with some of these chronic individuals whose got a expression of behavioral health need.
And Hum.
The health plans, just one way, but it's not the only way to I'm just trying to add value to the same core cohort of person debt, we demonstrated some real impact with them.
And then a second question I had was related to.
As you look at the assets in place to broaden the.
The tiers of care.
Do you feel like.
As of June the pieces are there or just needs to be further developed towards the you need to are there assets that you think.
Or are still needed.
Okay.
It's a really good question and I would say, it's a little bit of both right. I mean, we've got up of personalization platform that we that we really like and so our ability to continue to use that.
To develop more digital.
Our capabilities around how we assess our members.
When you think about what we can do digitally to help provide improved diagnoses of these individuals when we can understand their preferences to interact whether it's you know by type of individual to coach with whether it's by us.
The kinds of therapist on that would be the best match.
We can really enhance our ability to do those things you know for two days.
Product and program with enhancements a round of that personalization platform that debt we own so you know.
Some of it is we have it and we watched one of continued to develop it on.
So that we can provide a greater assessment diagnoses matching preferences for our customers.
We can drive deeper insights into our members right. The more digital information that we possess and all of that just provides more data for us of the more data that we've got.
We will glean further insights sort.
Around the virtuous you know sort of aspects of of of doing that and that will all lend itself to the sort of conversation that we've been having right it'll make our outreach capabilities more effective can you be more efficient with.
How we access and drive people into our outreach pool's can we be more effective at driving up the graduation rates I mean, all of that really should happen as we continue to build out and invest in our personalization platform.
And if we say right you know primarily focused in the short term around the durability of these high class. The individuals'. It gives us every right to choose to expand.
Into the middle of acuity ranges.
But I guess you know we just want to you know if if we continue to expose ourselves to Medicare of the government programs around high acuity, we just want to be thoughtful about sort of when is the right time to move down the acuity curve.
Right.
Okay. Thanks for that.
Yeah.
Our next question comes from Richard of Clos, I'm kind of parts of annuity.
Great. Thanks for the follow up question here, Jonathan I'm curious if you know since you've been there for the.
I know, it's only been for weeks, but have you been able to really scrub the pipeline analyze it.
And is there you know maybe give your view on the the potential that's in there and you did the pipeline essentially change at all in terms of after analyzing of if you did that and that caused some of the guidance the lower guidance.
So thanks for the question I appreciate it.
You always want a bigger better pipeline right. There's no such thing as sort of you know good enough when it comes to of pipeline I would say.
That said we.
We've got of quality pipeline.
It is a set of marquee names.
Mark key geographies of the exposure to government programs in the pipeline right as the theater to ultimately what we put into the outreach pool and trying to make sure that are enrolled and an eligible individuals on the outreach pool continues to reflect the Medicare Medicaid kind of dynamic.
That that is you know very much true in the pipeline. So for me from a size and number of lives from a line of business being exposed to Medicare and Medicaid.
I like a lot right in and sort of the.
On the stature of if you will associated with some of the sophisticated purchasers.
Yeah, I feel good about that you know what I'd like to see more on there for sure and I think just to pick up on one of the things that Brandon said one of the things we're learning right we liked the outreach characteristics.
And the penetration rates that we're able to achieve around some of these government individuals' yet there are a number of sales and enrollment in compliance and approval steps to take us a little bit longer to stay on some of these Medicare and Medicaid programs up and so if there's any flip side.
You know sort of the the higher acuity curve and the greater reach ability and more individuals at higher cost thresholds that are associated with government programs. There are more steps to I wouldn't say sell it but there are more on steps to make sure that implementation and compliance and regulatory approvals are on.
All of them attended to and so that does drag out a little bit I think the close day to our go live at implementation date, and I think we're experiencing a little bit of that right now.
Because of that makes sense and my final question is obviously you've been in this on the health plan side for years and most have a lot of contacts or are you talking are you.
Heavily involved in the sales process in terms of talking with those the pipeline opportunities.
I am I will be I don't know that I've had the opportunity yet to sort of open up my contacts and start driving.
On activity into the pipeline I sure hope I can do that but I I E.
You never know.
But you know I've spent most of my time listening to our existing customers listening to our prospects listening to some.
Some of the customers that recently left us.
We spent a lot of time listening to our employees.
Who's got a lot of great ideas about what we need to make sure were prioritized on.
And so I really had been a bit on the listening on our learning on tour, mostly to understand the capabilities of the opportunity of the organization and and and and I welcome the opportunity to sort of shift into.
You know anything I can do to activate new prospects.
But I I've been more intent on making sure I understand your current customers and I understand the opportunity with the customer and the pipeline instead of being cultivated to date.
Yeah.
And I, probably think of them to be close to it I enjoy it yeah. Thank you.
Great. Thanks.
We have no further questions at this time.
I will now turn the call over to Jonathan Mayhew for closing remarks.
Sure well I just like to say, thank you very much for everybody's.
The time this evening. Thank you for your support and I wish everybody a nice evening. So thank you very much.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.