Q2 2021 DarioHealth Corp Earnings Call
[music].
Greetings and welcome to the Dario Health Corporation's second quarter 2021 results conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone.
I'll keep that as a reminder, this conference is being recorded it is now my pleasure to introduce your host Chuck. Thank.
Thank you Chuck.
Thank you operator, and good morning, everybody and thank.
Thank you for joining us today for a discussion of <unk> second quarter 2021 financial results.
Leading the call today will be arrays Raphael CEO of Dario helps.
He will be joined by Zvi, Ben David CFO, and Rick Anderson, President and General manager of North America, Ontario Health.
After their prepared remarks, we will open up the call for Q&A.
An audio recording a webcast replay for today's call will also be available online as detailed in the press release invite for this call.
For the benefit of those who may be listening to the replay or archived webcast. This call is being held and recorded on August 16th 2021.
This morning, we issued a press release announcing our financial results for the second quarter 2021.
A copy of the release can be found on the Investor Relations page of <unk> website.
Actual events or results may differ materially from those projected as a result of changing market trends reduced demand and competitive nature of Dario helps industry.
Such forward looking statements and the implications involved may involve known and unknown risks uncertainties and other factors that may cause actual results or performance to differ materially from those projected.
The forward looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factors section and elsewhere in the Companys 2021 annual report and Form 10-K as well as the second quarter 2021.10-Q filed this morning.
Additional information concerning factors that could cause results to differ materially from our forward looking statements as described in greater detail in the company's press release issued today and in the company's filing with the SEC.
In addition, certain non-GAAP financial measures may be discussed during this call.
These non-GAAP measures are used by management to make strategic decisions forecast future results and evaluate the Companys current performance.
Management believes the presentation of these non-GAAP financial measures is useful for investors understanding and assessment of the Companys ongoing core operation and prospects for the future.
A reconciliation reconciliation of these non-GAAP measures. The most comparable GAAP measures is included in today's press release regarding our quarterly and year end results.
And with that I'd like to introduce our restaurant payout Chief Executive Officer of Dario L. R. S.
Thank you Chuck and thanks, everyone for joining our call. This morning.
So we are reporting this morning.
Advances in each of our three pillars the defined so I'll start the G on the multi condition fun.
We believe that we have all the right components in place and Furthermore, we also have a very good validation from customers on the acceptance of the idea on what the conditions under one platform.
On the transition to be the BTC, we see the foods that we see the bearing fruits and in terms of the transformation into a SaaS at high gross margins. We are showing a significant improvement also in this quarter. So we can myself, we'll discuss today, how the strategy that we have.
Well timed into today's healthcare market and digital health market specifically.
And given the client feedback that we see we are.
Super confident that the strategic initiatives that we will choosing is putting value in a very good position in.
In a place where we can scale and we can create a compounding growth.
And improvement of our financial results moving forward.
So looking into all the extra results for this quarter four to quarter. Two we generated approximately $5.3 million, which is a growth of <unk>.
46% over the previous quarter sequentially.
And it's almost 100%, 194% year over year increase comparing to quarter two of 2020, when the gross margins.
Drove a significant pro forma gross margin expansion and in Q2, we reported 49, 4%.
Sequential growth from 44, 7% and if we look back into the second quarter of 2020. The number was only 34, 9%. So also here we see a very nice improvement and this is due to the fact that we continue the transformation into the beta BTC.
And also launching.
Launching more membership programs and overall as we stated in previous calls the objective of the business is to go nose to 70%. So we expect that in the next few quarters, we're going to see this trend continues.
On the multi condition strategy.
We had our vision that.
When building a digital therapeutics company the deal with chronic condition, we need to deal with the Comorbidities and we will always talking about.
Amortization and we expanded it into what we are calling hyper personalization, hence when we are dealing with a patient that have one disease and have comorbidity, we need to create one integrated experience that is driven by one AI.
Engine and AI journey and this is what we did then we integrated things together and we are very excited to report today that it is.
Just that we are growing our pipeline from 700 million to $900 million. We also we pulled that 66% two third of the opportunities clients that we have in our pipeline.
Our looking into buying for the full suite so given the.
Overall transformation in the healthcare market and specifically the digital therapeutics market, we're seeing that.
By choosing this strategy and to manage multi condition under one platform one experience one HIFU personalization experience. This is something that increase our value proposition and also increase the demand for the platform and we see that with the very good.
With that we are getting from our potential clients.
In terms of the metabolic and the diabetes.
That is something that they're on.
On the level of off wherever that revenue per user and we think that this is still going to be the backbone of our pipeline and this is what we've seen when we are analyzing our pipeline, but overall.
The behavioral health the physical therapy the MSA.
Components that added to.
So our overall portfolio and we believe that's something that is going to improve our win rates moving forward in terms of winning accounts.
On Davita BTC transformation, we gained considerable traction on the self insured employer market and also in the health care provider segment.
As was demonstrated by by market acceptance and the long waited health plan contract was delayed mainly for logistics reasons. Nonetheless, we remain confident that the agreement is imminent and in parallel. We also see this pipeline of health and keep going.
In some opportunities. We also have demand for the full platform and not for a syndrome condition. So also here. We are still very positive that we are heading into the right direction on the implementation side as we reported in previous quarters, we still see a very strong.
Probabilities, who in all users to the platform, we are still north of 40% enrollment rate and the retention.
We believe that our users will complete the full year with 80% retention rate, which is the numbers that we have seen for many years on the direct to consumer where we have a lot of experience. So.
So if we are considering the rapid success with employers and providers.
Judy in terms of the percentage of those clients that would like to address a multi condition onto one platform classes. The strong implementation capabilities with high enrollment rate. We are having we are very positive.
We are creating a very positive momentum into the second half of 2021 and further than that also into 2022.
So overall, we believe that they're.
Looking into the financial profile more conditions should generate.
Higher.
Average revenue per user because on average users have more than one condition.
We are also touching more users because the lead jabil members under one account that debt.
That can use one or more of our product is is much wider when we started with diabetes. It was 8% now we are looking to numbers.
As high as 40% of members under one account and eligible to all their products.
And in parallel the win rate among all the opportunities. We believe that this is something that will grow because of the.
Many of multiple condition that we have so with all these parameters improving on the same investment into sales and marketing. We believe that this is something that will improve drastically.
Financial profile of the company.
In the next few quarters with that I would like to hand over the call to Rick to elaborate more into the commercial strategy.
Thanks for as one of the keys to our success in our strategy of moving to <unk> is our ability to generate enrollment and revenue from those accounts.
<unk> has just said we've been very pleased with the operational results. So far enrollment, where we're running the enrollment program continues to be greater than 40% and as previously stated we used 35% in our pipeline calculations and our internal models current trends suggest that we remain on track to achieve 80% annual retention because.
<unk> historical trends and we have grown users on the platform to approximately 197000.
And we are seeing growth in average revenue per user these operational metrics speak to our ability to convert the contracts to revenue and continue to grow gross margin.
Last quarter, we also discussed our partnership with the telehealth firm <unk> to provide virtual care offerings directly to patients.
Orbis is providing the telehealth services, we are providing remote patient monitoring and coaching now with a quarter of experience. We have proven we can obtain patients deliver the services bill and get paid.
We've generated learning to improve the efficiency of our overall operations, which had significantly decrease the cost to onboard patients and we are even more enthused by this partnership offering now than we were a quarter ago, and we anticipate continuing to scale it in the coming quarters.
On the business development side, the pipeline is now above $900 million.
We continue to make progress in all three channels, starting with health plans as most of you know we anticipated health plan contract in the second quarter. We acknowledged this deal has taken longer than planned, but we feel great about the progress and the prospects. Despite the delay in signing by way of an update in terms of the dealer agreed we did have some unforeseen logistical day.
<unk> unrelated to any deal points, but we believe signing is now imminent.
Customer has stated that they desire to launch this year.
This is just one of several health plan opportunities that we believe could close this year and while we saw a delay in this first health plan contract. We are pleased that we are in a position to close it and others in under 18 months in a market segment that typically see sales cycles that are 18 to 24 months and sometimes longer.
On the employer side employers represented the largest growth in our pipeline since last quarter as we work our way through the sales cycle for first quarter 2022 launches. We are pleased with the traction we have gotten and anticipate we will be finalizing contracts throughout the rest of this year. We have progressed the final stage and have been chosen as the winning vendor in several competitive.
RFP processes against our best knowing competitors.
We are demonstrating that we can be competitive in the mid market and the very largest of employers on.
On the remote patient monitoring side with providers and health systems, We have recently announced two large provider contracts.
Additional contracts or pending final agreement and we expect will contribute to revenue. This year, we are seeing an increasing interest from larger health systems and more deals are moving through the pipeline faster, meaning closer to closing.
With the addition of MS K and behavioral health to our product. We believe we now have one of the most complete integrated offerings in the industry. This has given us the ability to meet the growing demand in the market for single vendor multi condition solution.
And as <unk> mentioned, while the metabolic suite remains the backbone of our offering two thirds of our pipeline is now for the full product suite.
We have solutions covering most of the conditions in high demand from employers and health plans and it has expanded our opportunities to penetrate customers and compete for business that would otherwise have been possible.
As we look back the half of this year and to 2022, we are even more confident that we will see strong growth in the <unk> segment. We are starting to see the efforts, we put into building product and brand awareness translate to contract our operational results with our first few customers are building reference customers on which we are already seeing a benefit first customers.
There are always the hardest and happy reference customers increased momentum of the overall business and contracting.
We see strong growth in members on the platform from a business already contracted and deals anticipated. This year in all segments. We continue to grow our commercial teams with a significant number of new team members coming from competitors and large health plans, which speaks to the quality of our offering and how they see our prospects in this market.
We continue to see wins in competitive RFP processes against the most established competitors in the space.
Most importantly, with the expansion of all of our channels employers providers health plans and RPM with many orbis, we have multiple growth engines, we are not dependent on any individual channel to achieve our growth objectives. During the rest of 2021, we expect at least a few health plans several additional employers.
Some launching this year and many more in 2022.
Several providers and health systems, a handful of partnerships and potentially an interesting strategic deal and most of the deals to include more than one condition.
With that I would like to hand, it over to <unk>.
Thank you alright.
Revenues for the second quarter ended June 32021, wells $5 million to $6 million.
46% sequential increase.
First quarter ended March 31st 2021.
And the 194% increase from $1.8 million in the second quarter ended June 32020.
Gross profit in the second quarter, we'll split <unk>, one was $1.5 million an increase.
$172000 or.
137%.
Compared to a gross profit before only $656000 into the second quarter.
2020.
Gross profit margin was 28, 7% in the second quarter of 2021 as compared to 35, 6% in the second quarter of 2020.
Pro forma gross profit, excluding $1.1 million of amortization of expenses related.
The acquisition of App by technology, and the way forward was $2.6 million.
Pro forma gross profit margins, excluding amortization of expenses relating.
Those acquisitions was 49, 4%.
Second quarter of 2021, a sequential increase from 44, 7% in the first quarter of 'twenty one.
Operating loss for the second quarter was 2021 was $18 million, an increase of $13.9 million or.
137% comparable full funding.
Operating loss in the second quarter of 2020.
This increase was mainly due to an increase in our operating expenses.
Net loss was $17.8 million and boil off into second quarter of 2021, an increase of $13.8 million.
Other than 43%.
Compared to the $4 million net loss in the <unk>.
Second quarter of 2020.
Adjusted non-GAAP net loss, excluding stock based compensation acquisition amortization.
Cost.
Costs as detailed in the reconciliation attached to the press release, we issued today was only $10.6 million in the.
The second quarter of 2021, an increase of $7.5, million% to 139%.
Compared to $3.1 million barrels in the second quarter of 2020.
And cash equivalents totaled $63.9 million on June 38.
<unk> eight to one.
Erez.
Thanks, Larry.
So as a way of summary, I would like to reemphasize that.
In this quarter, we will keep validating and.
The strategy of the company in terms of wins.
On debater BTC transformation, we've seen we've seen employers and providers.
And on the health plan as we stated we believe it's imminent.
It is imminent.
And and we expected very shortly in terms of.
The multi condition.
The idea is something that is getting a very positive validation from the market.
Represented by 66% of the pipeline is full with clients that want to embark on the full platform.
And on the implementation side of the accounts that were already signed we still.
Getting a very very strong.
Nonetheless in terms of enrollment than adoption and retention. So we feel very positive that we know how to convert accounts into dollars.
So overall given the SEC.
Positive.
Validation of this strategy, we believe that we are building momentum into the second quarter of this year and also into next year. So on that and we do feel very comfortable that we're going to.
Grow and even accelerate the growth.
In terms of the cash.
Physician.
Three point, we ended the quarter was almost $64 million.
Sure.
In cash and if we are looking on the adjusted.
And adjusted the loss.
After our stock based compensation.
The loss was.
$10.6 million.
Overall, we believe that we have.
Good position in terms of cash we have the runway and moving forward and we do.
Still we are going to stay very cash effectively in order to operate on our current plans.
That I would like to pose to handover the.
Yeah.
On the call.
The Q&A.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Press Star two if you would like to remove your question from the queue.
<unk> speaker equipment, they may be necessary to pick up your handset before pressing the star one.
One moment, please while we poll for questions.
Okay.
Thank you. Our first question comes from Alex Nowak with Craig Hallum Capital Group. Please proceed with your question.
Great. Good morning, everyone I wanted to start with a question with you regarding some of the remarks, you made you mentioned upcoming as a few health plans, but you also said there is an interesting strategic deal comment. So a two part question can you expand on the health insurance deal that is in the pipeline that is expected to close in Q2, just why that was delayed just a bit more color there.
And then what other health plans do you have behind that and then second can you elaborate on the strategic deal that you have in the works.
Okay.
Okay. So in terms of the health plan contract essentially there was a few different logistical things that happened one and probably the most significant.
Was that the health plan and implemented a new policy because they had brought in a new.
Ahead of their basically Chief information Officer, and we got caught in the process, we were actually the first <unk>.
Vendor that they put through that process. They were not anticipating that so when they put in their timelines to make things happen they had not.
<unk> built that into the process. The good news was we were first in line. The Bad News was we were first in line.
And we kind of got caught in that process, so that delayed us.
Several weeks.
The back of that and as I'm sure, you're probably well aware going into August.
We got caught in some of the vacations and some personal leaks that that ended up happening. So we believe that we're through those processes.
The terms of the agreement have not changed in months and we do believe at this point that the signing of that contract is eminent.
On the strategic deal Theres, not really a lot I can add to it other than to say that we've been talking to a number of different parties that are very interested in what <unk> been able to do what we've been able to achieve in the market and our overall technology. That's underlying what we're doing so that's why we think.
There might be.
Certainly not promising anything here, but there might be an interesting strategic deals still this year based on the.
Several different things that we're that we have going on.
Alright understood got it and regarding the pipeline I think last quarter.
You said that the number of deals expected to sign this year was 20 to 30 in 2021.
We've obviously seen a number of deals come in so far but what do you think that number's going to stand that analysis still 20 to 30 in 2021, and then can you give us the contracted value of the deals that are signed just so we can start to put some numbers behind.
Sort of when we see through the press releases.
I think that we're still probably in about the same place give or take in terms of number of deals by the end of the year that we'll see we're seeing a little bit of a delay in some of the processes happening. So we've got.
Processes that are running a little bit later.
But based on the activity that we've seen so far in the deals that are currently in contract and I think thats.
That's probably about right.
I think as we go forward in the quarters and a letter as common tier as well, but I think as we go forward in the quarters, we'll be providing.
Some additional detail.
Round how much.
Value, we see coming out of those contracts as we start to see that finalized for the overall book of business.
Okay.
Okay great.
Go ahead no go ahead sorry.
Oh No I was just I was just going to say I'd, rather not I know you don't provide the guidance here, but you did mentioned that growth throughout the script you mentioned the growth accelerating the street has modeled up with a pretty big ramp here in the second half of the year just given all of these deals that you mentioned the more that are coming are you comfortable with the ramp that the street has you.
And what sort of growth do you think is achievable in 2022.
Yes, so at the moment, if we are looking into the consensus of the script or the full year, yes, we comfortable with with what we see from the street.
It's very hard to provide you know in M&A.
<unk>.
Revenue from contract because it might be a small employee was 200000 points of being a health plan with $7 million and we have also health plans that might have 15 or $25 million. So.
This is why we feel it's early to talk in terms of each and every contract that we believe that that is going to take us another.
Couple of quarters before we're going to start to provide.
More value per every contract and then it will be much easier to.
Two.
To model, but if we are looking into accounts that we signed plus two two week point signing overall plenty facility before the end of the year, that's taking into account that we're going to have at least one or two implementations of health net that will start this year.
I do feel very comfortable.
The consensus that we see by the street for this year and also for next year.
That's great I appreciate the update thank you.
Thanks, Alex.
Thank you. Our next question comes from Charles <unk> with Cowen. Please proceed with your question.
Yes, thanks for taking the question guys.
Just wanted to ask.
Rick.
This first health plan, obviously, it seems like it's imminent.
You think about the the next couple of that you are in discussions with that you could give a little bit more details on is that are those ones where ah.
You are still waiting to be selected or you have been selected in our terms already said and is it also in sort of this last stage any kind of additional details around sort of those next couple that we could assume in and then maybe for the first one that you expect them to have any kind of sizing you can kind of give a sense for in terms of.
Our lives covered.
Or at least numbers within the plan. So we can kind of think about.
Penetration rates et cetera.
Yeah.
So in terms of the others that are in late stage discussions.
They're both in contracting.
We have a couple of others that were in discussions with finalizing terms. So I would say we've got a couple that are.
Terms agreed to one is probably a little bit further ahead than the other just in terms of where we are in and trading contract drafts.
Back and forth, but that's that's about where I would say that those are so that's why we feel confident that we will see more health plans.
This year the.
In terms of the one that's coming we will have more information when we announce it but it is a large regional plan. It is in one of their lines of business.
Happy to give a little bit more detail after we announce it.
Okay I appreciate that.
And then earlier you talked about a number of.
Direct employer wins and being out a competitive field here.
What were some of the key metrics that clients were pointing out and selecting daurio over other other solutions.
As you can imagine that's something that we have a high level of interest in and are continuing to get feedback on but the primary things that were.
<unk> seen that folks are responding to our one is the breadth of the platform that we have to as the direct to consumer experience that we have and people feel confident that we'll be able to get the engagement of the members and the members will be happy with what we're doing.
And I think just as a general bucket the third and I can go into more detail, but I think that the third is really more of the way that we've structured our arrangements as we talked about several times in the past billing for engaged members I think that there is a <unk>.
Growing understanding in the industry that.
There's a lot of people that are not necessarily engaged that are getting billed for by some of our competitors.
People are not overly thrilled with that approach I guess, that's the biggest piece of it but also our flexible approach and our ability to integrate with other solutions and work within whatever the context is that our customers want I mean, we're very clear about the fact that we do not define the digital strategies for our customers.
Whereas others really are much more rigid around the way that they approach that and I think that you know we're also seeing the market move to understanding that there's other options in the market and so it gives them a better ability to assess what really works with them.
The context of their business at this point.
It's helpful. And then last one from me gross margins, obviously strong margin performance in the quarter.
But what should we think about for maybe the remainder of the year is this sort of the right.
Level or should we expect continued improvement as we go through the year.
Maybe any kind of comments around opex any kind of uptick in investments that we're going to be putting it I know we're trying to.
Develop ahead of.
M S K getting integrated into the into the platform any any color on expenses.
With great. Thanks.
Yes, absolutely so.
<unk> will be integrated and launch by the end of the third quarter and then also there'll be ethanol health will be integrated in the fourth quarter. So we are we are.
Spending some money on R&D in order to make all these integrations in terms of the gross margins the more conditions, we add the more.
The higher the percentage of the revenue that is coming from the <unk> and the membership program that we are launching the higher the gross margins.
So I think that we should expect.
<unk> improvement this year.
Don't know if its going to happen significantly in Q3 or four but we do expect to have better margins. This is something that should give indication of the progress of the initiatives. The strategic initiative initiatives that we have.
So this year, we're going to see improvement in the gross margins next year, you're going to see a continuous improvement and we expect as I stated that the business should be in the ranges of above 70% gross margins.
<unk>.
I hope that they provided inoculate enough answer.
That's great. Thanks.
Thank you Chuck.
Thank you. Our next question comes from Ben Hayner with Alliance Global Partners. Please proceed with your question.
Good morning, guys. Thanks for taking the question.
Start off with a couple of housekeeping ones.
Can you give us the breakdown between the consumer products revenue and in the membership services revenue.
Maybe I missed it but I didn't see the table. Thank you this quarter.
Yes.
So.
Overall, if we are looking on the.
The total or users on the platform is in the 197000 users on the platform. The revenues at the moment is I would break it down like 15, 17% that is coming from the <unk> what is under considering <unk>.
<unk> versus <unk>.
We still don't see the full potential of all the accounts that we sign that theyre getting into implementation. So we expect that moving forward in Q3 and in Q4. The portion of the <unk> is going to go away or higher.
Okay, and then on the B to C.
Our effectively all of those users now.
Just product users are they are they getting subscriptions as well or not.
Yes.
So on the BTC around 50% of the users onto subscriptions.
And then on the beta Bee, everyone that is joining as part of the ABB is under a subscription <unk> P. M.
<unk>.
Fulfillment of Homer.
Does that get recognized under services revenue or is that the memberships yet.
Recognize that a product revenue as well.
We are analyzing jeep and breaking down there.
Diverse components, what can we can recognize this product was recognized.
Upon shipment or delivery and what their membership is being recognized over the membership period.
Okay. Okay. So I was just looking at it from the standpoint of you did.
Listen the filing it says $601000 and service revenue and if I look back a couple of years.
Q3.2019.
That was six 624000.
A couple of years ago. The third the services revenue was a third of revenue and now we're only looking at like 11% of revenue.
I'm just trying to understand.
How these.
All of these folks are.
Our pain.
<unk>.
What's recurring and what's product because it looks like it's gone more and more towards product.
As time has gone on.
Yes.
Over the years.
We need to remember that also the BTC revenues growing as well.
And now when we are.
When we are implementing.
<unk>, we're going to see more revenue that is getting from fuel from fuel membership and under the membership it's going to be less product and more.
And more kind of service.
So that's something that we're going to see moving forward.
Because there is also some kind of movement inside the BTC.
From selling through Facebook to selling through Amazon you see in some cases that the product is going.
So it's internal shift inside the BTC.
Okay. So before too long here, we should start to see the.
The services and the membership revenue.
Start to grow rather than latter I can see that down like it has done.
Yes, Youre, saying, yes, that's something that should happen and from connecting it to alexs question about building the momentum and accelerating the momentum.
In the next couple of quarters, we should see this.
Product side starting to.
To go higher or much more intensively yes.
Okay. Thanks, and then.
Just one more kind of housekeeping you mentioned the 197000 users.
Can you remind us what that's up year over year or sequentially I want to say it was like 185 at the end of Q1, but maybe.
Maybe you can refresh my memory there.
Yes, I need to refresh my own memory, but the thing that at the same time last year, we will somewhere in the range of 60000. So this is where we will know we are getting closer to 200000, I think that moving forward.
We are looking into the growth of the users versus the growth of the revenues.
I think that in terms of percentage of the revenue should grow.
And in higher percentage than the growth of the users because the output. The average revenue per user that we are generating on the <unk> side is higher than what we are generating on the BTC side so alongside.
I just want to make sure that the audience understand that when we are moving forward.
And we're going to have a slower growth in the membership in higher growth in the revenue because of the output average revenue per user and this is something that will the truth provide even better indication to investors because if we're going to have.
For example, a health plan or employers that are going to sign off on the full platform the app.
<unk> or the membership program can go as high as $90 per member per month, which is something that.
Sure.
Spyker, our revenues even if.
The number of users are not going into going into same pace.
Okay.
And then lastly for me.
The upright go S beams.
<unk> launched can you talk a little bit more about that product and I'll jump back in queue. Thanks.
Yes, absolutely.
So when it comes to <unk>, we have two main initiatives one initiative that we kept under the brand of upright and we call. It upright go to we choose.
And then the more advanced version of.
And of the postal product and.
This is have this is something that has.
It's a it's a it's a smaller product with a better.
Better.
Capabilities in terms of.
Challenging.
So on which so from our perspective, the next generation of that.
Of the posture in parallel we are having another initiative, which is the bigger one which is what we are calling it.
The value of move which is the <unk> K full offering that we are launching into the.
Employers in Hoffman market and Thats Ananda brand, our buy upright that will be launched by the end of this.
So I've seen some questions from investors that approached me and asked about the difference between these two it's two different products. The first one is more.
Device and App planted and the second one is for physical therapy treatment for.
So multiple MSA conditions that we're going to launch and onshore employees by the end of this quarter.
Great. Thank you very much.
Thank you. Our next question comes from David Grossman with Stifel. Please proceed with your question.
Thank you.
Erez.
I don't know if I missed this but could.
Could you, perhaps give us a breakout.
By segment I know some of the numbers may not be that large at this point purchase.
Take out between behavioral M S K.
Metabolic.
Yeah. So.
<unk>.
Let's start from the behavior.
The behavior. We ended we closed that deal very late into the quarter. So I would consider it.
As part of the revenues for this quarter is something that is close to zero. So whatever you see here.
See coming.
Coming from.
From.
<unk> and from the metabolic.
And at the moment.
Say that the MSA is somewhere in the range of 35% to 40% of the revenue and the rest is for the metabolic.
Yeah.
Yes.
Got it and then.
Obviously.
Obviously, there was a question earlier about just.
Some metrics.
Give us some tools to think about.
How we model the business going forward is there any.
Can you give us any sense of what is going into the third quarter.
Based on all the new contracts that you have several announcements in the quarter in terms of.
What's the run rate of the business looks like or looked like exiting the quarter.
Yes.
It's very hard because we are trying multiple guide.
Because we feel that.
The business need the need.
And.
More contracts and more implementation in order to.
To start and build.
Molecular it's modest at the same time, we do see a growth into the third quarter.
And this growth is mainly.
From the employers and providers that we signed earlier.
In Q2 and in Q3. So this is something that will be reflected in Q3.
In Q4, we expect to have additional business, including health plans and this is why we think that in Q4, we're going to see it.
Most significant.
Hum.
And then what we're going to see between Q2 to Q3.
Overall to Alex question.
The one thing that I can refer to as the consensus that we see.
Eight or nine analysts covering us and for the full year. The consensus of the analysts is $22.5 million, which is a number that we feel comfortable with and we do see that in most of the models and all of the models, we see a spike in Q4, comparing to Q3, which is also something that.
It makes sense to us.
And if I can provide more data points.
We had the employers that we signed that have.
Contact size that can be as low as 100000, NOLA and we had the employers that have a complex size that can be as high as $600.700000. This is the ranges of these accounts.
Rick mentioned also the partnership was made the obvious which is.
Which is a partnership that helps us.
Well, maybe I'll be so meaningful CPT codes of RPM remote patient monitoring this is something that might be worth.
<unk> of dollars for the company. So this is an example of something that can be as high as the health plan or multiple health plans and health plans, we can see contracts that.
It will be somewhere between $3 million to $5 million and we might have also complex for the full platform that might be as high as $50 million to 25 million.
And a lot of the things that we're talking about are getting signed as we are speaking.
You can appreciate the fact that it's very hard to provide accurate guidance.
On the short term on.
On each and every quarter, but at the same time, we have enough.
Let's say, we have enough revenue engines.
To feel comfortable with.
With the numbers that we see by the analysts across the street.
Sure.
Very helpful. Let me just maybe ASP.
Just another dimension to that is you talked a lot about the demand for.
Multi condition offerings.
And just how that's gaining momentum in the marketplace.
Can you give us any sense of what how that are pooling looks.
Across these different types of businesses that you're signing.
Yes so.
So.
You know when we will and this is this is something that appears also on our investor presentation. I mean, the Danville as revenue per user that we are getting on a typical employers.
And our health plan is.
Is for single condition $60 per member per month. Okay. This is something that thats the number that exist.
And we had at the beginning when we added more conditions.
We we.
We added another $10 globally comorbidity.
Now when we have the full integrated platform.
We feel that.
We can be.
And more competitive and we are creating bundles with our clients at this point I don't want to disclose the exact upon this because of.
Competition elements, but in general we are trading bundles.
And that we are selling for the full platform.
And this is something that is obviously above $60.70 per member per month, but under this bundle.
Our plan or an employer that is going to embark on the full suite is going to get for one price on the conditions.
And that's something that resonates very well so to your point the whole idea and if you think about the digital health market and you think about employers and health plans, specifically employers that are getting a lot of point solutions and every point solution have its own pricing and they need to deal with multiple vendors.
Each of them they need to handover eligibility file and then run the billing process.
Clients appreciate the fact that they have one vendor under which they are providing one eligibility file and where they're having one process of enrolment on the multiple conditions. We know how to identify users that have other conditions and in all of them on additional condition and window looks.
On the pricing.
The clients are looting looking into the pricing of the full suite.
When they are walking with Dario theyre going to get.
Price for the full bundle that is cheaper than what they're going to pay so heavily condition that is provided by a single vendor and I think that the combination of the easiness of the operation and the pricing and the return on investment that is that.
We know how to show from tens of thousands of users.
Timing.
Mainly on the metabolic side all of these elements together makes this whole idea of best of suite and bundle it.
A lot of sense for our clients and this is something that helped us convert a significant portion of our pipeline.
To selling the full suite.
Is it something that provide you the answer David.
Yes, no. Thank you very much for that and just one last question.
You announced this <unk>.
<unk> shipped with workplace options during the quarter.
Could you, perhaps give us a little more detail on exactly the mechanics of that relationship.
And kind of.
How you hope to see that relationship evolve.
So workplace options as a partnership that we're utilizing with the behavioral health offerings, which you will probably recall way forwards core offering is around.
And AI based screening mechanism to assign folks into one of sort of three generalized areas I mean, obviously it works a little bit differently.
User level, but.
That would be.
CVT that is provided on a self help basis would be one second.
Second would be coaching combined with that TVT modules and the third would be.
Reference or referral excuse me too.
In network provider in most cases.
We are working with the network providers that the customer has so it actually works well in a lot of situations, especially health plans because youre not disrupting.
The network, that's already there, which is key from a quality and secure a sort of approach and oftentimes there is existing relationships. So what that means is.
Way forward can integrate with any other telehealth or physical provider network. That's out there. So if an employer for example uses.
Tell a doc or another.
Telehealth provider, who can integrate directly with those however in some cases folks are looking for us to bring our provider network to the table.
One of the primary things for W. P O offering is to bring that provider network to the table. The other piece of that is the ability to supply.
AAP like services, so that we can offer a completely integrated solution that essentially goes from EAP all the way through our provider network if required or we can scale that back based on what provider needs are the other thing that WTO gives us which has been important in the last.
<unk>.
Quarter I would say is that it gives us the ability to.
Work on a worldwide basis. So it gives us the ability to compete for Rfps for employers that are looking for behavioral health services that are somewhat consistent delivered not only in the U S. But in other countries. As you know <unk> has the capability way forward has capability to work internationally and.
And globally for that matter in a number of different languages and a number of different jurisdictions and WTO offers our ability to provide provider services actually in those jurisdictions as well. So those are the primary reasons for that transaction.
Yes.
Thank you. Our next question comes from Ted <unk> with Dax C. S. CR. Please proceed with your question.
Hey, Erez Z and Rick Thanks for taking my question I'm sitting in for John Brannan, Most in this morning.
To kind of.
Piggy back on earlier question on expense.
The current state of your sales force and.
Do you anticipate any changes to sales expense through 2022.
Okay.
Yes so.
So thanks for the question.
The size of the team I mean for those that are following the company know that once we announced on the transformation into the <unk> I mean, we will going intensively in terms of the size of the team. So we started 2020 as low as three or four where employees when Rick joined today we.
Have fueling nonsense.
Including the acquisitions, we have the <unk> 16 says.
<unk> entities.
And overall the number of.
Employees that we are considering them.
Shall including marketing.
Since enablement sell support and so on we are having somewhere around 40 to 45 employees, we do expect that in.
Next year, we're going to see a shift.
And.
Into spending more into the commercial that is more <unk> oriented than b to C oriented and we expect that the team is going to is going to go.
Overall as I stated average revenue that we're getting the user for the bundle that is being booked by employers or health plans is much higher than what we are generating on the BTC. So youre going to see a shift of budget and we're going to see a continuous growth of the team into <unk>.
'twenty two.
Okay. Thank you.
Shifting gears.
Earlier, you made a comment on Amazon and Facebook at your direct to customer channel has.
<unk> has served as a testbed for free.
For you since the beginning.
Any updates on the direct to consumer.
Consumer channel and do you see continued investment in this channel and we will continue to serve them.
As kind of a feedback from the user perspective.
Okay.
Think that if you think about the philosophy of the company and.
And by the way that's also the philosophy of the industry the industry of healthy at least talking about consumer realization of health getting solutions that are much more user centric.
99% of the companies out there that are talking about consolidation of health.
I'll still building solutions that are very healthy.
And our provider centric and not patient centric so it's.
Is it to say and much more complicated to implement and one of the things that we are very proud off and this is also where clients are very.
As satisfied with and this is one of the reasons why they are signing with US is the fact that we are.
Extremely consumer centric so for us.
Getting our solutions into the hands of the users and the consumer market dealing with the feedback dealing with the compliance window, our compliance and improving this is part of the philosophy of the company I think into the future we're going to see this channel keep operating but.
Based on the optimization between how good we want the product to be.
This is Hal.
And we can get our financial profile to be.
More and more.
<unk> healthy and good.
This is where we will have to make the right balance. So to your first question, we're going to see budgets moving from beta seem to be to be real second question D. To C is is here to stay at least for the next few years, where we are still.
We're working very hard on establishing the DNA of this company that is by nature consumer centric.
So.
Always.
He's telling me that few years ago plans didn't used to looking to how users sell being engage and what is the retention level and the engagement level and today. They are looking into this kind of parameters valeo without being a consumer centric company and BTC first who wouldn't be today in a place where we could sell it.
The health and this is why we're going to keep and operate with this channel and we're going to keep the DNA of the company and his consumer centric.
Wonderful Thank you and our final question.
And that's kind of a follow on.
Not for your consumer customer customers, but for your business customers.
Who are.
Obviously satisfied with the solution and referring new business.
There are some metrics that they're using internally that kind of inform their help to inform them.
The efficacy and the success of implementing your solution that's driving this satisfaction.
So that's an excellent question I think that Theres really a few different phases as we continue to expand and this would be.
True of any customer as we go forward as well some of the very early things that folks look at or how.
How easy or we would work with how easy is it to implement the solution.
And several of our customers have a look at that at this point and then they start to look at.
Things like how much do people use it how engaged are they are they getting the data that they anticipated being able to get and I think that's really the stage that we're at at this point versus true clinical outcomes.
Although they are starting to see some there's usually not enough I would say generally speaking for folks to be looking at that at this point, but what they're seeing is the pattern that we have outlined for them in terms of based on our past experience about the way that things would proceed that they were on those pathways and that the ability to work with us.
And the way that their patient <unk> employee slash members.
Our liking the solution is a lot of what their current satisfaction is based on.
That's great to hear that's a that's it for me. Thank you so much and congrats on a good quarter.
Thank you so much.
Thank you there are no further questions at this time I would like to turn the floor back over to management for any closing comments.
Thank you so much and thanks, everyone for joining our call and looking has a good day and looking forward to seeing you on our next earnings. Thanks Bye Bye.
This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.