Q2 2021 Teladoc Health Inc Earnings Call
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I like to hand, the call over to your speaker of today.
Patrick Feeley, Vice President of Investor Relations.
Thank you and good afternoon today after the market closed we issued a press release announcing our second quarter of 2021 financial results. This press release and accompanying slide presentation are available in the Investor Relations section of the Teladoc health Dot Com website.
On the <unk> discuss the results of our Jason <unk>, Our Chief Executive Officer, the Mala Murthy, our Chief Financial Officer. During this call. We will also provide our third quarter and full year 2021 outlook and our prepared remarks will be followed by a question and answer session.
Please note that we will be discussing certain non-GAAP financial measures that we believe are important in the valuation.
Site, the Teladoc Health's performance details on the relationship between the non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website also please note that certain statements made during this call will be forward looking statements as defined by the private Securities Litigation Reform Act of 1095.
Such forward looking statements are subject to risks uncertainties and other factors that could cause the actual results for teladoc health to differ materially from those expressed or implied on this call for additional information. Please refer to our cautionary statement on our press release and our filings with the SEC all of which are available on our website I would now like to turn the call over to Jason.
Thank you Patrick and good afternoon, and thank you for joining us today. After the market closed we reported another strong quarter marked by continued momentum across the business and robust demand for our broad suite of integrated of whole person virtual care the.
The broad based strength across our portfolio drove revenue.
$103 million in the second quarter, an increase of 109% over the prior year, including organic revenue growth of 41%, which excludes revenue from acquisitions completed over the past 12 months.
The strong momentum across our channels and geographies.
On the competence and visibility to increase our full year revenue guidance to 2 point out to 2 point of <unk> 5 billion.
As we've discussed previously Teladoc team is to provide whole person virtual care.
It's not enough to simply Virtualized, the current health care experience.
Simply putting our doctor on the screen.
The health care system is already fragmented and virtual care Shouldnt simply mirror that problem and.
Third we need of single virtual solution that seamlessly takes care of all of a person's health care needs redefined the consumer experience.
Give us the data to improve care at scale.
On a teladoc health, we're doing that now and during the second quarter. We continued to demonstrate progress on achieving our goal of completely reimagining the health care experience of.
Our vision starts with engaging more consumers.
During.
In the second quarter, our global network of clinicians provided more than $3.5 million visits an increase of 28% over the second quarter of last year. When we were in the middle of the pandemic.
This means that even as more people are being vaccinated and restrictions are lifting in many parts of the world.
During the consumers and providers are increasingly relying on teladoc health's virtual care.
We're now on track to provide more than $13.5 million visits for the year.
The persistent strength in utilization has been driven by growth in visits non infectious diseases and specialty care.
As consumers are turning to our services for a broader array of conditions.
During the second quarter, 80% of member visits and the beat of D channel were related to non infectious diseases versus approximately 50% in the pre pandemic period.
Demand for our mental health services remains.
The specialty robust as consumers and providers recognize the benefits of the virtual modality for mental health care.
We're just starting to see the incidence of infectious diseases, such as acute respiratory on us begin to trend up for the first time in nearly a year as the usage of PPE and social distancing.
<unk> has declined.
This follows a period of historically low infectious disease transmission and gives us confidence in our second half outlook.
Turning to chronic care the number of members enrolled in the Labonte gross suite of products grew 45% year over year to 715.
<unk> thousand.
Rather than focus on 1 particular disease. Our approach is to treat the whole person in an integrated manner, which is important given that over 40% of adults in the U S are living with multiple chronic conditions.
As a result of this approach we continue to drive significant growth.
<unk> and multi program enrollment.
Over 20% of our chronic care members are now enrolled in more than 1 program up from 6% in the second quarter of last year.
The growth in chronic care members combined with the greater number of individuals enrolled in multiple programs such as members enroll.
Hold on both our diabetes and hypertension programs.
Resulted in a 60% year over year increase in the total number of chronic programs in which our members enrolled.
Most importantly, our services are driving better outcomes for.
For example in a recent survey of over 2.
<unk> thousand consumers of our virtual mental health services more than 90% of those who sought care experienced improvement with nearly 40% experiencing a significant breakthrough during treatment.
And the marketplace, our whole person approach to care continues to resonate as clients.
Clients understand the value, we deliver and are coming to us for our broad integrated suite of services.
I'm very proud to report debt during the second quarter, we signed an expansive new agreement with HCS see the.
The fifth largest health insurer in the U S.
As part of this agreement will provide our.
Chronic care solutions across their commercial fully insured members in several markets and significantly expand our products offered to their ASO clients.
Beginning in 2022, we will provide eligible hcs's members and fully insured plans with access to our diabetes.
<unk> of retention programs.
This agreement also includes bringing our full suite of chronic care products to HCS is ASO markets embedded into their well being management and health advocacy solution offerings.
We're honored to have earned the trust of HCC and extremely excited.
<unk> about working together to empower more people living with chronic conditions, and we see tremendous opportunity to expand with Acs in the future.
Our vision to re imagine primary care also continues to gain traction our primary 360 product delivers a fully integrated.
And hedge solution of mental and physical health.
Leveraging technology and data, bringing together a full virtual care team for the consumer and integrating into the physical delivery system to get consumers the right care at the right time.
During the second quarter, we signed several new deals to launch of.
<unk> 360.
I am pleased to report the just this week, we signed a significant primary 360 contract with the National payer and we are in late stage discussions with several other health plans.
As we turn to hospitals and health systems. It is evident that we are uniquely positioned to help.
Them improve outcomes and reduce costs.
During the second quarter, we signed multiple new chronic care agreements and the health system market, including a significant contract with a large Florida based health system to bring our whole person diabetes and cardiovascular programs to their at risk population.
Primary items.
Our pipeline on the health system market continues to grow and we see further opportunities to expand these relationships as we deliver value for our clients and members.
This represents a significant validation of our thesis that Teladoc health's broad distribution would open.
Spin up new channels for the low van Gogh chronic care solutions.
In the international market during the second quarter, we signed an agreement to expand our relationship with Telefonica.
The new partnership makes our telemedicine services available to more than 60 million customers of vivo.
Telefonica is Brazilian subsidiary and the leading telecom company in that country.
This partnership allows telefonica to provide more value to their customers and enables teladoc to connect millions of consumers with the care and resources they need to stay healthy.
Expenses.
National presence, our differentiated global footprint allowed us to collaborate with Cigna International.
Local populations in India during the recent and humanitarian crisis.
We worked with Cigna international to rapidly set up live clinical support for hundreds.
Thousands of individuals facing challenges in accessing the country's overwhelmed health care system.
I am extremely proud to say that we were able to quickly assist U S. Multinational corporations to meet the health needs of their employees in India. During a time of great need.
Grids of FLIR. This month, we also announced the new partnership with Microsoft We're working in conjunction with Microsoft to integrate our solo platform for hospitals and health systems directly within Microsoft teams.
The combination will allow clinicians to access the solo platform, including at the virtual.
Earlier, workflows data and tools without having to leave the teams environment.
The combination of our clinical leadership and purpose built medical grade technology with Microsoft Communications architecture will enable us to deliver a seamless experience to providers and.
Patients.
The integration of solo enter teams represents the first step in this partnership and together, we will look for further areas to develop and leverage technologies to improve the healthcare experience.
We're making great progress on our roadmap for innovation.
Earlier this month.
We launched our first integrated Teladoc low bango product my strength complete.
Which combines care from Teladoc therapists and psychiatrist with the Labonte go digital mental health capabilities to deliver of differentiated market leading solution that provides personalized targeted care.
Care to individuals in a single comprehensive experience.
The launch of my strength complete represents another example of the power of Teladoc differentiated data and behavioral science capabilities to deliver clinically relevant insights that empower consumers and enable clinicians.
<unk> to deliver high quality care.
Our ability to transform data into the App.
<unk> allows us to provide a highly personalized experience and deliver longitudinal virtual care at scale, which positions us to realize our vision of becoming consumers trusted destination.
And Asian for whole person health.
We look forward to sharing more about our vision and growth strategy at our Investor Day later this year.
With that I will turn the call over to Mala for a review of the second quarter.
The guidance.
Thank you, Jason and good afternoon, everyone.
During the second quarter total revenue increased 109% to $503 million.
On a 41% excluding acquired revenue.
Total U S revenue for the quarter was $465 million representing growth.
<unk> of 121% over the prior year's quarter.
Total international revenue of $38 million increased 24% over the prior year.
Access fee revenue for the second quarter increased 138% year.
Year over year to $434 million and represented 86% of total revenue.
Up from 76% in the prior year's quarter.
The increase on access fee revenue as a percentage of total revenue is primarily due to the acquisition.
<unk> grown the bango and Intouch health.
A lot of mid generate the majority of the revenue from subscription access fees as well as growth in direct to consumer mental health, which is sold on a subscription basis.
Visit fee revenue for the second quarter of 59 million.
<unk> increased $5 million sequentially, and zero point $5 million year over year, despite a difficult COVID-19 related comp in the prior year.
Turning to membership on access we ended the quarter with U S paid membership.
<unk> 2 million members, an increase of 500000 members sequentially over the first quarter.
Individuals with visit fee only access was $22 million at the end of the second quarter.
Total unique members enrolled in 1 or more of our chronic care programs.
Of 715000 members as of the second quarter of 45% increase over the 493000 members as of the prior year's quarter pro forma for the merger with <unk>.
And an increase of 57000 members sequentially.
<unk> second quarter.
Average revenue per member per month was $2.47 in the second quarter.
Up from a dollar and 2 cents in the prior year second quarter and $2 on 24 in the first quarter of 2021.
Or the leading drivers of the 23 sequential increase in revenue per member per.
The growth in direct to consumer mental health and chronic care program revenue.
Okay.
Turning to visits.
During the second quarter, we provided $3.5 million visits.
So our network of clinicians representing 28% growth over the prior year's quarter.
During the height of the pandemic in the U S.
Platform enables sessions, which represents encounters facilitated by our license platform and provided by our clients on clinicians.
True, where an additional $1 million in the quarter.
The annualized utilization rate for our members was 21, 5% in the second quarter, a 550 basis point increase over the prior year's quarter.
And the 190 basis point increase.
Sequentially over the first quarter of this year.
Adjusted gross profit, which excludes depreciation and amortization of intangibles increased to $343 million.
Adjusted gross margin was 68, 1% for the quarter compared.
Compared to 62, 3% in the second quarter of 2020.
The 580 basis point improvement in adjusted gross margin is primarily attributable to the increased mix of subscription fee revenue versus the prior year.
Gross.
<unk> profit and adjusted gross profit in the second quarter of 2021 include the benefit of approximately $6 million in the lower expenses on the longer devices attributable to purchase accounting adjustments related to the merger.
Adjusted EBITDA was.
The $6.8 million on the second quarter.
Per to $26.3 million in prior year's quarter.
Adjusted EBITDA in the second quarter of 2021 includes the benefit of approximately $6 million attributable to purchase accounting adjustments mentioned previously.
Was the adjusted EBITDA outperformance in the second quarter was driven in part by operating expense performance as we continue to make progress against cost synergies Inc.
<unk> integrating back office functions and consolidating vendors.
Net loss in the second quarter was 1.
The $34 million compared to a net loss of $26 million in the same quarter last year.
The larger net loss was primarily attributable to increased stock based compensation.
Loss on extinguishment of debt and.
Amortization of acquired intangible.
On a per share basis net loss was <unk> 86 for the second quarter compared to a net loss of 34.
The prior year's quarter.
Net loss per share includes stock based compensation expense of 53.
The Englishman of debt of 20.
100, and amortization of acquired intangibles of <unk>.
We ended the quarter with $786 million in cash and short term investments.
While our total record of debt outstanding as of June 30 was $1.2 billion.
Zinc cash flow in the second quarter was $52 million.
Now turning to forward guidance.
For the full year 2021.
We now expect revenue to be in the range of $2 to $2.0 billion to $5 billion.
Operating.
We continue to expect adjusted EBITDA in 2021 in a range of 255 to $275.9.
Including an approximately $20 million benefit from lower expenses on Levonne low devices attributable to purchase accounting adjustments.
Related to the long low merger.
As discussed previously during the second half of the year, we do anticipate reinvesting cost synergies back into the business to fuel long term growth.
Including the rollout of new capabilities and new products.
As my strength complete and prime retreat.
<unk> hundred 60.
Continued integration of <unk> will.
Enhancements to our integrated data platform and.
And expansion into new markets.
We now expect total visits in 2021 to be between 13, 5% and 14 million visits representing growth.
And on 27% to 32% over the prior year.
For the third quarter of 2021, we expect revenue of $510 million to $520 million representing growth of 77% to 80% over the prior year's quarter.
We expect total paid membership in the range of 52 to 53 million and.
And anticipate total visits during the third quarter of between 3.4 and $3.6 million visits.
Which represents year over year growth of 20% to 27%.
We expect third.
Third quarter, adjusted EBITDA to be in the range of $60 million to $65 million.
With that I will turn the call back to Jason for closing remarks.
Thanks, Mala as you've heard the second quarter was marked by exciting new client wins product launches and tremendous progress on.
On our quest to be the category defining provider of whole person virtual care.
We're incredibly excited to be uniquely positioned to revolutionize virtual care and transform the healthcare experience.
That opportunity was on full display last week at our 15th annual.
<unk> Teladoc Health Forum, the preeminent gathering of leaders from across the industry focused on the advancement of virtual care within the health care system.
We set a record for attendance this year with over 4000 registrants hearing from over 100 industry leaders across the health care system on.
On topics ranging from the evolving consumer expectations to hospital based strategies for virtual care.
I am grateful and humbled that so many industry leaders joined us in this effort.
As always thank you for your continued interest in Teladoc health and with that we'll open the call for questions.
Operator.
As a reminder to ask the question he will need the gross for 1 on the telephone to the dry question press the pattern.
Once again to ask the question. Please press star 1 on your telephone.
Your first question is from Sean William.
Of Piper Sandler Your line is now open.
Hey, thanks, very much and the congrats on the great quarter I was hoping we could go into a little bit more detail on the my strength complete launch.
I know, it's early but if you can.
Tell us a little bit about what the dialog with the prospects of like if there is any.
The pushback, how its price expected uptick and maybe anything else you want to share.
Yes, Thanks, Sean.
Were excited about my strength.
Complete and as we mentioned we have several sales for our new clients, especially among large employers that we've just.
Just recently launched with the launch of that product. We also have a tremendous pipeline that spans across both employers as well as health plans in fact I was recently on on.
A video call with the senior team from a very large health plan that sees.
This is of significant opportunity for stepped care rate, which is the opportunity to bring the right solution to the consumer that not only delivers better outcomes. But also is the most efficient delivery of care using digital technology assets, where appropriate and then supplementing with both coaches.
Coaching as well as therapy and if necessary psychiatry.
On the under the underpinnings of all of this are the data science right. So engaging the consumer with the personalized approach that uses all of those capabilities to optimally manage.
Manage the mental health care needs and deliver the best care for the consumer and the most senior team at this health large health system and health plan.
He is very excited about using the full breadth of those assets and of <unk>.
Way that can improve mental health care that also.
<unk> improves the physical health care as and does it in a very efficient manner. Because we all know that there is a struggle to find enough psychiatrists.
And we want to use people, especially the mental health professionals at the top of their license so.
We're seeing this pipeline it was robust to begin with.
And it's building as we go into the back half of the year.
And then lastly, I would say it is 1 of the first and most tangible market facing integration points that brings together the best of <unk>.
Bongo and Teladoc.
The next question is from Lisa Gill of Jpmorgan. Your line is now open.
Very much of good afternoon, Jason can.
Can we just spend a couple of minutes talking about primary free fixed fee I know.
You said that you have a significant national payer.
Can you maybe just give us an idea of how many members that is are they currently on your platform or the new members and then also can you just give us an idea of.
Services that will be rendered and how the payments will work will it just be kind of of traditional collect the.
P. M. P. M. And then have the visit fee or is it something thats going to be different with this national payer.
Yes. So thanks Lee So we're really excited about primary of $3.60, and we're poised and ready to launch several large national employers Fortune 1000 employers in the back half of this year.
<unk> as well as having signed a significant national agreement that you mentioned and we're in very very late stage discussions with several other large payers. So this is an area that we have leaned into because it capitalizes on the full breadth of our capabilities.
We believe that we are unmatched in the marketplace and what we're hearing from prospects is that thats really validated.
And they are excited by the combination of our virtual primary care relationship of tea.
<unk> approach to care using data and technology.
And for the best care and also to do it in a way that aligns with a virtual first plan design that really in <unk> care.
For virtually the.
It gets to the consumer to seek virtual care first such that we can make sure that they get the optimal care whether they need.
Delaying in person or it can be taken care of virtually with respect to the pricing model.
I think the early pricing models, you'll see will be a P. M. P M likely of higher <unk> than we've seen historically.
For for example, our general medical or any of our individual services.
And then a wide array of visit fees that reflected the value that we bring so for example.
30 minutes.
Introductory visit with the primary care physician, obviously is worth a lot more than our virtual urgent care visits to take care of some of them on strep throat.
Or sinus infection for for example.
So we expect to see Inc.
And the <unk> side as well as on the visit fee side as we look into the future. We're excited about more value based reimbursement structures.
Net reward jesper delivering better outcomes as.
That was reducing the cost of care to where we ultimately see ourselves sharing and risk with the payers and our clients and so that will be an evolution over time.
But we are actively talking to clients about debt evolution, even at the beginning of our relationships with them. So we're very very.
Well I would say stay tuned relative to announcements and details about the new clients that we expect to launch.
Obviously, I can only say as much as I can say and I think we've gone about as far as we can at this point, but stay tuned for some exciting announcements.
Okay.
Just 2 punch 1 point, how the pipeline for primary 360 that we're seeing is very very strong if I look at the growth in the pipeline sequentially.
Seeing real strength in the pipeline on that to me is 1 of the line.
Courtney markers of our confidence in.
And then with the Athene, Oklahoma.
Your next question is from Sandy Draper of true Securities. Your line is now open.
Thanks, very much I guess, maybe just a clarification on the relationship with <unk>.
Growth is clear.
That is more of you now have the relationship and you are now going to go to members and.
And try to sign business on or do you have actual business in hand in there you talked about opportunity expand just true.
Additionally, a hunting license into that large base or is.
Of this business the contract signed and then the expansions of our with additional services such as I just wasn't clear on how the relationship with starting out but it sounds like an interesting 1.
Yes. Thanks, we're incredibly excited about the HCS see relationship in fact, I would call. It a landmark deal for us.
We.
We will be rolling out into.
The significant and multiple of commercial fully insured markets of theirs. So when you ask what signed in terms of of contract we have signed contracts to rollout to those populations.
Good visibility into the revenue that will come from that.
That.
And so that is.
Essentially locked and loaded.
We also work with HCS.
To then engage with their self insured clients.
And rollout into their self insured clients, which are.
Obviously.
Yes.
Multimillion member population and we rollout with the broadest array of our chronic care solutions or what we call our whole person chronic care solutions that wraps in diabetes management with the weight management diabetes prevention and and mental health care for example.
Hypertension.
That does the same that brings in.
Our stress management.
And mental health solutions, along with the weight management solutions, because those are the sort of the full array of capabilities that we need in order to be able to manage the whole person.
Who are living with those conditions. So so we see the opportunity not only to go penetrate that self insured population and we have already signed several large self insured clients through that relationship. But also then to continue to expand the scope of the services that we bring.
Both of their fully insured as well as self insured markets.
Your next question.
On the chance right of Cowen Your line is now open.
Yes, thanks for taking the question.
Jason maybe.
The following up there on.
On <unk> when you say on a multimillion lives is that something we would expect at the start of the year or was that more.
Where you expect to be maybe as you roll out and it is that.
Over the course of the maybe the first year or is that over a multiyear period and then just a follow up on earlier question.
Western around my strength can you kind of the.
Kind of describe sort of what the difference between the milestone complete platform with the versus better health and is there any any thoughts to kind of integrate those 2 at some point down the road. Thanks.
Yes, Charles nice job sneaking in 2 questions there.
With respect.
Respect HPLC.
We will see a significant.
Set of growth in the first quarter and the beginning of 'twenty, 2 but I would say that will grow and continue to grow over at least 2 probably 3 years time so.
That's an opportunity.
Charity that we're very excited about we'll begin to harvest that opportunity at.
At the beginning of 'twenty, 2 but we will continue to see growth out of that over the course of at least 2 or 3 years and as I mentioned I think we have significant expansion opportunity beyond what we've contracted for today.
And then with respect to my strength complete my strength complete is really a <unk> offering that brings together the best of the Levonne go digital of mental health assets.
And underlying data science with the Teladoc health therapy.
Therapy, and psychiatry network to deliver virtual visits.
Got it.
It is not delivered on our direct to consumer basis.
And we are very excited and continue to be extremely positive about the better health brand.
The growth of better health.
And the direct to consumer markets.
And we think debt.
There is a very very strong.
Sort of complementary nature to our direct to consumer offerings and our <unk> offerings.
And the step the care that we bring into the <unk> markets helped.
To deliver more efficient care for the payers, who are buying those services on behalf of their members and I would also add.
You look at on the growth in specialty business that we are seeing in our business right.
It has more than doubled and so and that is a.
Of that has continued on for the last several quarters.
And particularly within the specialty if you look at the growth in mental health both on the beach vs side and the direct to consumer side.
Unsurprisingly there is a massive pent up demand for such services.
So I would.
Back.
The deep wrote a cross mental health and specialty to continue and you know we are really excited by the launch of my strength complete it is.
As Jason talked about a few minutes ago.
Really important proof point for the coming together of the assets and capabilities across.
The tell the Doc and the legacy low Bongo.
Your next question is from Joe Lenders Singh of Credit Suisse. Your line is now open.
Alright. Thank you I wanted to go back to your chronic of enrollment numbers disclosure.
At.
57000 additions on the quarter, you kind of embedded on our expectation, but clearly there was some confusion at all on what is the right consensus figure. There just curious if you can talk about how did that free goods.
In terms of competing head on expectations and any breakdown between more of enrollment on the stroller previously.
What's the new account and anything you can share I know you don't guide on that metric, but any directional commentary for second half how do you think about that enrollment metric for the for the outlook.
Look.
Yes, Thanks, Joe Android, we're really happy with the.
The new enrollment I appreciate you're asking about that because we had a new commentary around.
On that to make sure we gave as much transparency as we can.
We're excited about the fact that we saw a 45% year over year of growth and unique members were also equally excited to see the expansion.
Of those the incidence of members who are enrolled in multiple.
Multiple chronic care solutions, having gone from 6% a year ago, the 20% of the.
Enrollees being enrolled in multiple programs in the second quarter and Thats, what translates to overall enrollment.
Expansion of 60% right. So if you look.
Look at each enroll each enrollment into each program as the unique incident that we would've seen 60% growth, but we think the best metric is to give the unique users as well as what percentage of users are the are enrolled in multiple programs.
It was in line with our expectations.
Yes.
And so.
Yeah.
The historically low <unk> was are always sort of first half of the year oriented in terms of its new enrollment.
As clients frequently come on.
The first 2 quarters of the year or about general.
<unk> new enrollment.
And then there is modest increases over the course of the year historically about 70% to 80% of.
The of the Levonne go growth in enrollment.
Came in the first half of the year I think that's a reasonable proxy for for this year.
And so I wouldn't want to get ahead of the.
That in terms of expectations.
And.
That's what's built into our modeling and our guidance.
I'd also add Andrew Great question.
As the has said for the past few quarters on when we guided on the year.
We are going to give you metrics on membership and unique and release as the talked about but remember we've also said that as we think about our growth and our drivers of growth. It's not just 1 lever right. It's not just about more members on more annually. It's also about growing our revenue per member and you can.
See in what the just said on our prepared remarks, the have actually shown nice expansion and increase in <unk>.
<unk> P M P M. So it's.
It is about absolutely growing enrollees and members of which we are focused on you can see the success, we're having in on cross sell.
In the pipeline strength that we're seeing.
And the.
Given you all the transparency over the client wins have been having which will result in membership growth and enrollee growth as we look into the months of the years ahead, but I would also remind you all it is also about growing our.
Our revenue per member.
Your next question is from Ryan Daniels with William Blair. Your line is now open.
Yes, thanks for taking the questions Jason maybe a big picture question for you I am curious with the timing here following your <unk>.
The annual Forum, if you could talk a little bit about some of the key areas of focus among the client base are industry leaders and how that is perhaps different than a few years ago or perhaps how it.
To change some of your investment opportunities going forward to capitalize on what the client base is looking.
Looking forward. Thank you.
Yes.
Yes. Thanks.
It's a good question and I appreciate it because it gives us a chance to step back a little bit.
The big themes at the forum, where around whole person virtual care.
Virtual.
Primary care.
And what I would call of the blending of the different customer channels right. So.
On.
Payers and providers looking sort of more of like each other and being interested in.
The sort of similar sets of product.
Nations relative to where they were historically, which was very distinct.
And I think our what it what it really reinforced for me was the value of the breadth of our capabilities.
The value of our presence in leaders.
<unk> position across customer channels, whether you are talking about hospitals or health systems.
Payors domestically or internationally and a good example of that is the success that we're seeing in bringing chronic care solutions through hospital system.
Channels.
The Florida health system that we talked about today.
And I think there was a lot oriented to what does it really take to do whole person virtual care at scale.
And we heard from large.
International Telecom companies.
We heard from industry luminaries.
Whether they're coming from a government perspective of payer perspective.
Our consulting perspective, or a provider perspective.
And.
The other sort of big underlying theme, which I think is underscored in.
These results that we just announced it.
On.
On to stay right I mean, I think everybody asked us for a year are you going to be able to live up to the comp that you've set in 2020.
And I think I'm really proud of the team.
And that are.
In the rest of our accurate when we said this is here to stay its going to continue to shift to whole person multi product multi specialty embracing of virtual care across the entire our entire health care system and it really reinforced our strategy so coming out.
Forecast feel even more committed to.
Making the investments that we've committed to making in the underlying data science in delivering on whole person virtual care and in doing it at scale for all of the constituents and that includes <unk>.
Think about whole person care.
Out of it.
Loans, we've talked about.
Investing in an integrated data platform. It's also about integrating on consumer and provider experience.
That's important so that would be on area of focus for us from an investment standpoint.
And as the only global.
The provider of virtual care today. It is also about investing.
Really in any of those in a disciplined way on international assets.
Your next question is from George Hill of Deutsche Bank Your line of Michael.
Good evening, guys and thanks for taking the question I'll say, Jason I can't believe this 1 fell all the way to me, but is it too early to start talking about the selling season for 122 starts and I'm going to try to 1 of the Charles and say H CSC aside.
We look forward, how should we be thinking about where growth comes from going forward is it more of.
So all of things like primary care of $3.60 of my strength.
The new footprints of our visit growth and the question I'm really trying to get to was like the evolving growth algorithm of the company whether when in the past we were looking for new footprints and visit growth and now it seems to be more about wallet share gains I, just kind of love to hear you talk about that.
Yes, Thanks George.
The upside I'm happy to talk about the selling season.
Short of giving exactly sizing the pipeline, but I do want to give some color on that.
And let me, let me walk back to the beginning of the year on what we were saying from the beginning of the year and how thats evolved the.
Last couple of quarters.
At the beginning of the year, we talked about the fact that our.
The line was robust and it represented 50% growth in the pipeline relative to the same time the year before but we also said that the pipeline was weighted toward more early stage deals right. So it was.
Quarter. It was earlier in the process, but the gross size of the pipeline.
It was significantly larger since then as you can see many of those deals had progressed to closing rate, including the east coast Blue plan that we talked about on.
On the last quarterly call, including HCS C, including.
The.
The large health system in Florida that we talked about rolling out of chronic care management with and so those deals are coming to fruition as well as the primary of $3.60.
Signature that we just talked about so those are coming to fruition, we're happy to see those close and they've moved through the pipeline.
Okay.
But we've also seen as I look at our pipeline today.
Our late stage pipeline as those deals of progressed through the pipeline on our sales force.
It has made progress on those our late stage pipeline at this point is 20% greater.
<unk> was last year right. So we're now at a point, where we have great visibility into what that's going to look like because we've successfully moved those those deals through the pipeline.
And what we're most excited.
Exciting to me is whereas last.
At year, 50% of our bookings were multi product bookings. This year at this point, we're up over 75% in terms of our multi product bookings.
And.
After seeing an explosion of our and our average deal size last year, our average deal size in our pipeline now.
The ended up another 10% versus where it was last year. So when I put all of those things together, that's what gives us confidence as we look into 'twenty, 2 and beyond and certainly some of the deals that we've announced already are part of that but I would say on at least as optimistic.
And excited about what's still in our pipeline as what we've already closed so I feel very very good about that.
While on anything you want to add on the pipeline otherwise we can try to squeeze in Georgia as a follow up question now I think that at all so.
With respect to the growth algorithm.
Adam I appreciate the question and certainly we've we've given a lot more insight into the growth of our pnp on the importance of multi product growth the importance of multi product enrollment for chronic care members.
And all of that really lends itself to our competitive advantage with respect to.
Delivering on the whole person virtual care as opposed to all of those point solutions out there that can only deliver 1 thing and I think what youll see is that we'll continue to be reinforced as we continue to execute on converting that pipeline into bookings and converting those bookings.
<unk> into revenue.
And what I would say is hold tight a little bit for us, we anticipate having an investor and analyst day.
Towards the end in the fourth quarter.
Where we expect to give much more insight into the long term growth algorithm.
On the levers for growth and why we feel so confident about continuing to deliver on both the topline and bottom line growth over the next several years of.
I'd also add George just a couple of additional points.
Haven't talked too much on this call about utilization and the very significant.
The second expansion on utilization, we deliver again on the quarter on by the way we have been delivering every quarter for the last several quarters.
You know people were asking us last year.
Do you think the strength in your visit the momentum will sustain and as you can see from the results the via the dry.
We are seeing strength and we are seeing very strong growth in our visit volume. Despite the fact that infectious disease volumes are down year on year right with with all of the.
Pandemic measures in place.
And so what we're seeing is a strong growth.
<unk> on infectious disease volume, you're seeing very strong growth in our specialty volume and those are fueling.
On station expansion.
I would also say.
With the growth in specialty we are seeing more stickiness.
The <unk>.
Not that we are seeing.
And our pizza visits growing whether it is that we are seeing more of our members are doing multiple visits or using multiple services. So all of that to me is the.
That in conjunction with what Jason talked about in terms of multi products from a booking standpoint being over.
75 per cent. The fact that we are really penetrating and growing enrollment in multiple chronic conditions to me. It is actually about the growing relevance we have to serve the health care needs of our members on our clients and you will see all of that in.
In terms of how we talk about our growth and.
The years ahead later this year.
Your next question is from Richard close of Canaccord. Your line is now open.
Yes. Thanks, Congratulations I appreciate all the details here, maybe you could just dive in a little bit.
Core on George's question the <unk>.
<unk> like 58 million members.
I guess estimate for next year and it sounds like.
You made good progress with HCS see but is that a.
Call it 9% year over year.
The more Boston, maybe ratchet that down and increase the wallet share is that something you would recommend.
Okay.
So Richard we're going to stop short of giving guidance for next year total.
Early for that.
What I would say is we are we.
We have.
2 rocking a lot about the expansion of our revenue per member.
The fact is the breadth of our capabilities drives the expansion of revenue per member and the expanding.
Expanding the role that we play in the health care system drives expanding revenue per <unk>.
Remember right. So as I talked about our primary 360 is a perfect example of where we will see higher <unk> and higher visit fees the.
The fact that were delivered were up to 20%.
Of chronic care enrollees accessing multiple chronic care solutions drives higher revenue.
Revenue per member the fact that our sales are now 75% plus multi product drives high higher revenue per member. So if you're asking me will of 9% expansion of membership get us to the numbers.
The that we aspire to.
Expect to deliver the answer is no right will a an expansion of our P. M. P. M drive across the 70 million people, who currently have access to our service.
Certainly that has a big lever.
Paul.
And we expect to continue to add to that so it's going to continue to be a mix of more people.
Accessing more products.
With more visits.
And in new payment models that drives higher revenue and we'll try to get into more detail around that.
<unk> and give you all enough that you can build out your models as we get into our Investor day later in the year, yes. The good thing is of a check we are not reliant on 1 lever right as our results demonstrate in different years, we pulled on different level of ours to drive on growth and I would say the results on.
On the revenue growth that we are delivering this year in totality and on on organic basis.
Is in line with what we had when we gave you a preliminary outlook early last year and then we followed it up with more specific guidance of the year.
It is absolutely in line with what we had expected.
Net.
So as Jason said, a few minutes ago.
Please.
Please of the accurate in our forecast and how we expected our growth.
To be.
Given the fact that 86% of our revenue is access revenue.
The second quarter of this year and Thats, you know thats going to continue to.
The the flavor of our revenue profile, we do have visibility into how we will grow our revenue and it will pull on different levers.
Yeah.
Your next question is from Stephanie Davis.
<unk>, Inc. Your line is now open.
Hey, guys. Thank you for taking my question could you guys on update on the competitive dynamics kind of on market trends in the hospital business given the push pull of return to in person visits in some areas that was the variance in other geographies and just a quick housekeeping follow ups.
And 1 of the sneak 1 in is there anything to call out on the other revenue, which is a lower proportion of hardware sales in the recent winter anything like that.
So I'll talk about the competitive landscape in the hospital market Mala can speak to the other revenue.
We're really excited about our partnership with Microsoft.
The.
Debt.
What we're hearing from hospital administrators.
And really this is the C suite is they want to turn virtual care into a revenue generator of way to better manage.
They are at risk populations.
And to manage overall cost of care, because more and more they're on the hook for delivering value.
And the combination of our purpose built solutions for hospital systems.
Our chronic care solutions that help them really make an impact.
On readmission avoidance as well as the long term cost of care for populations that they are taking risk on and Microsoft deep integration into the administrative side of their business that leverages their Microsoft Communications infrastructure, We think is an unmatched.
The unmatched combination.
That's what we're hearing from our hospital clients. So when we sit down with them and talk about the combination of all of those assets and potentially being able to bring primary of $3.60 to them to be able to act as the lower cost sort of virtual of front.
<unk> front door into their health care system.
All of that together is really reinforcing.
Of our value proposition and so I think the team has done an excellent job of looking across our assets as well as what the best external partner would be and creating what.
And <unk> is going to be an unbeatable solution.
And Stephanie in answer to your question around other you know nothing really of note to talk about it and the other as you probably know.
The other revenue that we report includes hardware sales whether it be purchase on lease.
What I believe certainly are seeing with capex budgets under some stress we are seeing some movement to me, but I wouldn't say there is anything that is.
Extraordinary noteworthy in terms of share.
Your next.
Inc.
Sean Dodge of RBC capital markets. Your line is now open.
Thanks.
Jason maybe going back to the revenue per member discussion on primary of $3.16 of the pricing you said higher PMT and maybe some kind of visit piece, but maybe if you could help us better.
The next create the potential there can you give us a sense of the magnitude of the impact. It can have on P. NPM and then you said higher than just the biggest piece of it would impact the handle on increasing the number of the biggest how big of a lift can lead the programs have on utilization over the longer term. Thanks.
Thanks.
Yes, Sean.
Thanks for the question I appreciate I appreciate the sentiment behind the question I'm going to stop short of asking like of answering what the <unk>.
Total magnitude of the Pnp on increase could be because I think that will evolve as we take as we get out.
The base reimbursement as we ultimately take risks.
Because I think ultimately we have the opportunity to take primary care caps.
And potentially even beyond what a traditional primary care cap looks like but thats going to be a multi year evolution. Some clients are going to move faster some clients are going to move slower.
To that eventuality, so I. Thank.
You will see a meaningful increase for the populations or within the primary $3.60.
Product.
The ultimate question of how big of an impactful of that have across our book of business will be dependent on how fast we rollout that product.
And the evolution toward value based.
Based on reimbursement.
With respect to the the increase of number of visits I do think that has a.
Significant opportunity.
Being going from being a sort of if you look back 5 years and are in our rearview mirror of virtual urgent care provider that was.
Purely episodic to becoming someone's really virtual medical home, where they go as the first stop for all of their health care needs brings with it tremendously tremendously more frequency of interaction higher value of interaction of full care team right, which will include.
<unk>.
The <unk>.
Primary care physician specialist mental health providers physical health providers coaches registered dietician as well as digital assets and so I think the opportunity for significant increase in frequency on velocity and value.
The very real and so I think we'll be able to capture the value that we create when it comes to to those visits.
Your next question is from David Larsen of meat.
Your line.
Line is now open.
Can you talk a little bit about like the last mile of care do you have any interest or plans and getting into like I say, the visiting nurse business for example, or.
Partnering with anybody who's actually doing that you can deliver meds to the members at their home and also.
Take diagnostic.
On the test in the home and so forth.
Thanks.
So on that would be helpful. Thanks.
Yeah, David It's a great question and I would say, that's a very important evolving part of the market and 1 that I want to partner with I think the likelihood of us on.
Owning a field team that is going to be making house calls.
Pretty small I think it's much more likely that we would partner.
With those who are doing that and really importantly take advantage of the evolving technology as well as the evolving.
The FDA approval process, because as you mentioned more and more is going to be approved for.
<unk> is administration within the home so totally agree that that's an important part and we're already doing the work, especially on our primary 360 product to integrate with those solutions.
For Ingalls.
This conference call. Thank you for participating you may now disconnect.
Yeah.
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The mall.
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Your line.