Q2 2021 Ontrak Inc Earnings Call
And even with 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.
And the question and answer session and I'd be happy question. Please press Star then 1 on your Touchtone phone I will now turn the call over to Carol and Paul Investor Relations Kelly you may begin.
Thank you and thank you all for participating in today's call joining.
Joining me today are Taryn 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, 'twenty 'twenty 1.
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 fact are forward looking statements.
The word of 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 may affect on trucks business financial condition and other operating results, which include but are not limited to the risk factors described and the risk factors section of the form 10-K and form 10-Q.
Filed with the SEC.
Therefore, actual outcomes and 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 is national nurses day, and 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.
Play a vital role and ensuring that those with the untreated behavioral health condition and medical Comorbidities and receive the care of they need and.
We will be recognizing and thanking nurses and health care workers.
As part of our new on track marketing campaign and watching this week.
What I found it on truck our mission was clear to help improve the health and save the lives of as many people as possible.
Proud that the <unk> team has been able to do the on.
Unimaginable and build a platform that uses advanced analytics to predict people, whose chronic disease.
Prove with behavior change recommend and effective care pathways.
The people are willing to follow and.
The Guy goes with unrelated untreated behavioral health needs to our network of high quality behavioral health providers.
This platform and the on track program and have enabled us to deliver cost savings of 40 to 50 per cent to help play of levers and improve the health outcomes for those suffering from behavioral health conditions and chronic disease.
Our industry, leading position and capabilities have enabled us to consistently generate revenue growth and excess of 100 per cent. These past few years.
And 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.
And I have long look forward to handling over the CEO of range for an executive of Jonathan stature and 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 of the business.
Jonathan is now 1 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.
Other 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 and to broaden our reach within the Medicare Medicaid commercial at risk and ASO membership basis.
And I'm excited to become executive chairman and it tends to focus on capital formation share holder value added transactions and.
Collaborating with Jonathan and our long term growth strategy now.
Now I'd like to hand, it over to Jonathan the share his observations and.
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 and the board of directors for the opportunity to lead on track I look forward to working with you and your new role as executive Chairman.
This opportunity was irresistible to me for 2 reasons first I understand firsthand how challenging it can be the access high quality behavioral health services.
And when families need it the most and I want to solve the inequities that to Washington, and become interim mountable 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 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 1 we are privileged to have and 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.
And that spirit and want to explore and more deeply how on tracks outstanding net promoter scores can increase member ratings of health plans and impact things like heaters scores.
Doors readings and cap scores health plans care greatly about the customer satisfaction scores for their members.
Number 2 our customers need of portfolio of solutions for high and low acuity behavioral health conditions and chronic disease.
And on track has a powerful combination of digital health and care coach supported interventions that give us the 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 the spectrum of health care needs, we must earn the right to partner with them as a partner of choice.
Number 3 we have a number of very promising opportunities and 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 and the on track program for 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 a very high level of efficiency.
Number 4 we believe the new treatment effect of study is a key milestone and 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.
Statistically significant and notable at $486 per member per month above the control group.
Remember that our members of the highest cost most vulnerable care avoidant individuals who may be using the emergency room as the general practitioner.
The members and our study cost an average of $20.779 per member per month before treatment.
In the 2 years post treatment the treated individuals' costs reduced to 1500 and $51 P. M. P M ore of 44% reduction.
And of $486 per member per month lower than the control group.
2 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 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 5 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 and remove barriers to care and guide those in need of behavioral health services to the right clinical pathways and I'd also like to rack.
And I as all of the on track team members involved and our data and analytics. They are building out the on track behavioral health system of individuals' and person centered care the connects and ecosystem of stakeholders to much needed solutions.
As Terry mentioned earlier on moving fast and anticipate participating fully and 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' and ordered or reduced.
They're medical expense and improve their health and wellbeing.
And as the pandemic subsides, we anticipate normalized non COVID-19 utilization and across our health plan customers membership basis that being said.
And 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 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 the backdrop I'd like to provide updates on the headwinds and tailwind we're seeing starting with the headwinds.
The most significant headwind remains the customer contract termination in June we disinterested, our Medicare book of business.
With this customer and 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.
Excluding the terminated contract continues to be impacted by lower utilization of non Covid 2019 health care services as we've previously discussed this lower utilization during the pandemic causes higher cost members to drop below the medical expense threshold.
And 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.
And there are 3 primary reasons for this number 1 our remaining outreach pool is refreshed buyer customers far more often than it has historically been.
Number 2 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 1 of our customers. We believe it will continue to grow.
Number 3 after the unfortunate reduction in force after a customer contract loss and 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 2 as expected we signed the national contract with life stance, which adds more than 3000, and 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 3 we have maintained high member satisfaction levels demonstrated by industry, leading Q1, 2021net 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, 1 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 and.
Terna said previously we're the clear industry leader and our ability to significantly improve the health and the lives of our target the care and treatment of weight in populations and yet on track has been the least known and best kept secret and 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 and.
The on cohorts of members, who are extremely costly and very difficult to engage and among those who are actively seeking care and.
And 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 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% increase over last year and this included a full quarter of members from our last customer.
Deferred revenue increased to $24.9 million and 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 and the program or 9 months.
At the beginning of the quarter, we had 15702 enrolled members and ended the quarter with 14868.
The decrease of 834 and.
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, and Q1 and 2020.
Recall that with our loss of customer business in particular, they were subject to co pays and coinsurance when the members plan and your changes, which typically impacts our per enrolled member per month rates and 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 co insurance.
Breaking down the Q1 enrollment of a bit more we enrolled a total of 5900 members during Q1 compared to 6000, and 714 and Q4 or 12 per cent decrease sequentially due to the termination notice.
But still 26% more than the 4006 hundred 93, gross enrollments and the first quarter of last year.
The right in Q1 gross enrollment by our outreach pool, which averaged approximately 115000.115000 and for the quarter.
Which was partially impacted by the lots of of the major customer and annualize as 2 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 annualize the enrollment rate for Q1 was 56% up from 55% and the fourth quarter, reflecting the enrollment tailwind of the Jonathan discussed earlier.
Or just enrollment rate averaged approximately 10% per month during the quarter <unk>.
The resulting and it's just enrolling a total of 4902 enrolled members during the quarter.
This compares favorably to the 13% average monthly rate we saw in Q1 of last year.
Further we graduated 1008 hundred 22 enrolled members during the quarter, which equates to about 12% of the enrolled members and the program at the beginning of the quarter.
The net impact of all of that was a net enrollment decrease of 834 and 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 and 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 will graduate audits and the role by the end of Q2.
Yeah.
Our gross margin for the first quarter of 55, 6% increased sequentially from 54, 1% and compared to 41, 4% and the first quarter of last year and all.
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 and response to the customer loss.
So up 13% from 269 at the same time last year.
The team members and cost of sales of primarily made up of care coaches and member engagement specialists.
Turning to the balance sheet and cash flow.
The cash flow from operations, and the first quarter, and a positive $6.4 million compared to negative $4.6 million and 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 and our technology and operations. We do not expect the experienced the significant level of positive operating cash flow and 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 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 her and lender and we'll be working with them during Q2 and line of our updated revenue and EBITDA projections and the near term.
Regarding our outlook for the remainder of the year as Jonathan indicated, we're targeting revenue and the 80% to $85 million range.
While we're proud of that 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 lost 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 and subsequent quarters.
And now I'd like to turn the call back to Jonathan.
Thank you Brandon and summary, I'm encouraged by our accomplishments and the first quarter and I'm confident that we're well positioned for continued growth and the years to come.
We're executing on our strategic plans to expand our addressable market.
Further investing and our platform and increasing our brand recognition for those who serve individuals with behavioral health and chronic conditions.
Our continued execution and intense focus on our growth initiatives will drive us toward greater predictability, while also expanding our impact.
And 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 1 and you touched on the phone.
If you wish to be removed from the queue. Please press the pound sign of our the hash key.
And with any speaker phone and you may need to pick up the handset first before pressing the numbers.
Once again I'd be happy question. Please press Star then 1 on your touch the telephone.
And the first question comes from Richard close from Canaccord Genuity.
Yes, thanks for the questions.
Jonathan and welcome and look forward to working with you going forward.
I was curious if you could dive in and a little bit deeper on the some of the topics that you observations that you made and in terms of exploring how you can work with your payer customers in terms of improving scores.
What do you mean by debt exactly is that.
And the opportunity to monetize.
That works somehow and how is that different from what you guys are doing now.
Okay.
Richard Thank you for the call and thank you for the question I appreciate the opportunity to work with you as well I just you know.
And so much of the Medicare advantage and and and the Medicaid markets are driven by not just medical expense reductions, but the revenue that's associated with.
Customer satisfaction scores on.
Demonstrating that a health plan has the ability to direct people to the care settings that drive 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 diagnostic information and information that our nurses are capable of obtaining to help drive those scores and.
And and and I think just create another value opportunity 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 and the 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.
1 of the areas that just seems.
To be.
And 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 hold or hopefully yeah. That's that's helpful with.
With respect to our guidance 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.
And secured business with that and client at some point and the future.
I I sure hope so I I.
And my responsibilities at the organization did.
It did not have any and in indirect contactor and sort of.
<unk> to the decisions that were made.
I respect the decision that the organization made I I, obviously no of the people well.
We have mutual respect for.
And 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 and.
Extremely well focused on the transition of care.
And then once we're through those transition of care arrangements.
And 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 the number of dimensions.
And you 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 and and the timing of the transition to go have those conversations.
That makes sense, thank you and and.
Then I just wanted to hit the quickly on the study because the results there are pretty I'm 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.
And how important is something like this.
I mean, I'm happy to give you my my perspective, and and and welcome Brandon and inherent.
You know comments and perspective, as well, but I think.
And it it it's foundational right I mean, just the.
And 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 and even if I take you up to maybe 20000 feet and then come back down and out like power of customers Digest. This you know it it. It's it's fundamentally suggest if you invest and 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.
The preventative behavioral health services, because its a real and tangible cost of debt you absorb in the short term to offset really expensive on you know conditions and the future and I think that Theres policy implications right. If we can continue to drive.
Society and.
The large and small players around.
Around.
Providing support.
And for ships and behavioral health interventions that 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 as social determinants and the industry. There's a lot that we can do right that the study with.
Suggest go foundational each of what it takes to really treat people, who or are stressed and distressed with right of disease burden.
And of comic and common and 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 2 right as we go and introduce the program to our customers.
And it gives us a lot to model off of.
New relationships, right and and for the existing customers.
It adds credibility to.
The level of conservatism some specificity there'll be helpful.
Yeah and.
Hi, there. This is the this is Brandon I would say there's 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 our our automated.
No expectation of launch of that particular program, we're still waiting to hear back and 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 and just as you said there was there was some elements of the impact on the way of utilization. The you know, it's a little bit hard the model what that's gonna look like for the year, it's been up and the air.
We we do want to be conservative, there and and to the extent of it you know if utilization Pops back and and we see you know big lifts and the average pool, resulting then I would think you would expect to see you know changes in our and our future and.
Okay, and and just maybe you could touch on and I remember last quarter.
You guys talked about launching tiered products any update there and in terms of timing of launch maybe and indicate occasions of interest and the market.
Any customers maybe are indicated to you guys that they plan to sign on for this offering.
Yeah.
And I wouldn't want I would say yes.
Yes, if you want take that.
Hum.
I think you know what we've heard from our customers is you know.
On a real need for us to take.
The very comprehensive program of today, that's focused on a 12 month duration for a you know a population that you know might look to be 3% to 5% on the commercial and maybe as high as you know high single digits for for the government programs.
Programs.
With the kind of impactful spend that debt that I know we've highlighted a lot.
And their.
It is of 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 <unk> and in person and digitally engage at the front end and throughout the course of treatment.
It will only make our program of increasingly more effective at it and 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.
Mm ranges and you know I think as we start to do that obviously and improves our addressable market opportunity. It starts to have us collide with on some.
Some of the digital and the lower.
Acuity, and <unk> and lower touch programs, and and and I would tell you from you know sort of 4 weeks of observation and and and a lot of conversations with our stakeholders. 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 and 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 reach ability and 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.
Helpful.
Okay.
And next question comes from Sean Dodge from RBC capital markets.
Hey, good afternoon and for some color on for Shaun.
And welcome Jonathan and thanks for taking the question.
And you could have taken the burden.
Can you give us a sense of how that's tracking and the relative to the $40 million expected and the first year.
Any update on timing of expansions and the new states or traction on the commercial side would be helpful.
I'm going to ask for Allergan to the Kara.
The times we were.
We're not really commenting on specifics on individual customers and kind of telenor script, and a little bit and.
So.
Obviously, we.
And the absolutely recognize you know the kind of model that we represent right where people with Ah Ah Ah Ah heavy disease burden and 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 what what what 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 breath and the depth of our 15000 contracted providers, we've got nurses, who can be of the.
Hello, bold face to face Telefonica Lee.
Virtually and and so it just it becomes and easier discussion and and I will tell you this might be right and as we all sort of debate with the durability of some of the changes from Covid or if those patients were all accessing care in a primary office setting previously and now right we know they're transitioning maybe.
Back to some normal practice dynamics, but in the event that they're not if you've 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'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 of you know at significant financial risk right, because they've taken of delegated contract with a lot of pairs.
So in many respects and are closer to the patient and the member than the health plan and they've got more financial exposure or risk and the health plans have and.
And so it just creates a deeper level of integration and a virtual model and so I I I am deeply interested on US you know exploring that and and and some of these provider groups are are larger than the health plans and and in certain instances. So.
But I think the model to answer your question I think could could could could completely or or and of material way replicate a lot of of what we learned from from her health plan and operating model.
Okay, and what was able to call for it does that help yeah yeah.
The good.
Our next question cause I'm and at the sell the from be around the security.
Good afternoon, Thanks for taking my questions and and let me know if you answered any of these already I do the topic for your calls here, but just looking at the prank. It's just very clear right now that the enrolled member right out of the outreach pool is just gonna be significantly.
Hi, higher on on on a percentage bassist and it was historically I'm guessing you're just due to the dynamics of that and.
Can you give a little bit more contacts there even when the strip out the 4000 and enrolled members that you referenced and your press release it seems like you're you're you're tracking several times better and enrollment right now and then you would have previously what are the some of the dynamics there and is that sustainable and.
We go for it.
Sure I can I can take that this is brandon.
So ultimately when we look at the pool, you know without the the the the private 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 and so there's there's a lot of opportunity cost of it is a very high cost type folks and so the outreach for itself becomes and <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 and and the government side versus the commercial side. So we already start with.
Ah Ah Ah and equal sized pool and government is significant it is not only a smaller life associated with the health plan lives associated with it but a much higher enrollment rage.
Combine that with the fact that we have.
And much more focused remember getting the specialist team at this point and the that are looking at our data the the the the data as much pressure from the from our current customer base and what it used to be a witch and all of our data suggests that the the time in the pool is 1 of the biggest drivers of the.
All of it.
Combine that with and roll ability from the type of patient and then the the member of goes and a specialist and and who is actually doing the enroll the enrollment upfront all of those factors are contributing to the the high high level. So when we think about how durable was that over the long term.
We we were in were and territory's we haven't seen before I I, We've we've said and multiple times, we expect it to the normalized we've seen it and they'll continue for 2 quarters and a row and and so again when we're when we're backing out the the prior loss of contract and and.
And so we we'd like to thank the sustainable obviously, we wanted and we want to expect that it's gonna be that it's going to normalize. Some some of this has to do with the quality of the average pulling and how between us and our health plans of ultimately.
Slicing and dicing, the the ultimate inclusion into the pool itself <unk> ultimately trying to get a pool of that is <unk>.
Highly and Rollable highly successful and ultimately would would benefit most from our program at the end of the day and so we we do and you know as I sit today I I'd like to think that we can continue to see numbers like this I don't want to count on it but I 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 gonna that's gonna do a a big change the what we're seeing right now.
So on and so forth.
Correct Yep Okay.
Okay.
And then just really the last question for me.
And I.
And I understand and 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 and you you 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 still on the table or how should we think about that it seems very promising them on.
On your last quarter call.
The the way I would answer that is is yeah.
Yes, I mean, all of our customers do have budgets and when.
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 ultimately turned down and turn off 1 of our programs during the fourth quarter and as result of hitting their budget, even though we were over budget at the time of.
It became too far over budget, and so we really never know definitively where where the.
And 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 that.
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 and making sure that we're meeting their expectations.
And trying to grow the <unk>.
Business reasonably and proving our proving our business model is working for them along the way.
Okay, Great I think that's everything for me and I. Thank you very much and best of luck going for it.
Thank you.
The next question comes from team Manheimer colleague 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 it 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 and 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 and enrollment rate maybe the right.
Right to think about going forward and I'm just wondering if that can go even higher for is it primarily a function of the mix of enrollees.
Okay.
It's it's partially a function of mix.
We do have the expectation that we're gonna be launching and additional Medicare and Medicaid expansion.
You know once that comes back from and from the state.
And and that will increase our Medicare and 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 from my perspective, I don't think that that's a bad place to think about.
And but and and there is upside and there's 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 where should yes.
Yes, the airways to to derive that ultimately we we we still have to fit in with 1 of our customer expectations and and how are we how are we ultimately solution and you know for all of the different needs of.
Not just us, but our customers as well.
Makes sense, thanks very much.
Our next question comes from Bill Sutherland from Benchmark company.
Thanks.
Oh, Hello, everybody chances of Don mentioned.
The opportunities in addition to the providers of partnering and the government space and if you could just give us a little more sense of what you're referring to there.
I would say primarily you know 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 the overlapping populations for duals.
Hum.
Increases our exposure to high class members, which is.
You know the.
The foundational aspect of.
Of all of the programs Bill So I think there's other ways to try and go access those members and obviously provider groups is 1 way.
You can think about PD, EMS, and and and and where drug spend is and increasingly material part of a chronic patient spend.
We've got some pharmacy data and that debt debt, we access today through the data feeds that we receive but.
There's real value and managing chronic spend for.
For organizations other than health plans and so.
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.
And how.
The health plans as 1 way, but it's not the only way to try and add value to the same core cohort of person that.
We've demonstrated some real impact with.
And then second question I had was related to.
Because you look at the assets and place to broaden the.
The tears of care.
Personalization platform that debt, we own and so you know some of it is we have it and we watched 1 of continued to develop it on.
So that we can provide a greater assessment diagnoses matching preferences for our customers and 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 you know will bleed further insights sort of around the virtuous you know sort of aspects of of of doing that and that will all lend itself to this 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 and that personalization platform.
And if we stay right you know primarily focused in the short term around the durability of these high class. The individuals'. It gives us every right to 2 to expand.
Into the middle of acuity ranges.
But I guess you know we just want on you know if if we continue to expose ourselves to Medicare and the government programs around high acuity, we just want to be thoughtful about sort of when's, the right time to move down the acuity curve.
Right.
Okay. Thanks for that.
Yeah.
Our next question comes from Richard of Clos from Canaccord Genuity.
Great. Thanks for the follow up question here, Jonathan I'm curious of.
Since you've been there for.
I know, it's the only been for weeks, what have you been able to really scrub the pipeline and analyze it.
And is there maybe.
And maybe give your view on that.
The.
Central that's in there and you did the pipeline of essentially change at all in terms of after analyzing it if you did that and that caused some of the guidance.
The lower guidance.
So thanks for the question I appreciate it you know 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 our pipeline and I would say that.
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 it up and ultimately what we put into the outreach pool and trying to make sure that are enrolled and and and and eligible individuals and the outreach pool continues to reflect on Medicare and 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 and and sort of the the stature of if you will associated with some of the sophisticated purchasers and yeah I feel good about that you know what I'd like to see more and there for sure and I think just to pick up on 1 of the things that brand and said 1 of the things we're learning right, we like 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 on sales and enrollment and 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.
You know sort of the the higher acuity curve and the greater reach and ability and you know more individuals and higher cost thresholds that are associated with government programs. There are more steps to I wouldn't say sell it but there are more of steps to make sure that implementation and compliance and regulatory approvals our R. R.
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 and and I think we're experiencing a little bit of that right now.
And that makes sense and my final question is and obviously you've been and this AR on the health plan side for years and must have a lot of contacts or are you talking are you.
Heavily involved and the sales process in terms of talking with those the pipeline opportunities.
I am I will be and I don't know that I've had the opportunity yet to sort of open up my contacts and start driving.
Activity into the pipeline I sure hope I can do that but I I.
You never know.
But and I've spent most of my time listening to our existing customers listening to our prospects listening to some of the.
<unk> you know 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 you know of bid on of listening and learning on tour, mostly to understand the capabilities and the opportunity.
And 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 your current customers and I understand the opportunity with the customer and the pipeline instead of being cultivated to date.
And I fully expect 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 would like to say thank you very much for everybody's time this evening.
<unk>. 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.