Q2 2022 Accolade Inc Earnings Call

October 7, 2021

[music].

Good day, and thank you for standing by welcome to the accolade Q2 earnings Conference call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance, please press star zero I would now like to hand, the conference over to your Speaker today, Todd Friedman Senior Vice President of Investor Relations. Please go ahead.

<unk> presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Todd Friedman Senior Vice President of Investor.

Relations. Please go ahead.

Thanks, Gigi. Welcome, everyone to our fiscal second-quarter earnings call with me on the call today are our Chief Executive Officer, Rajiv [inaudible], and our Chief Financial Officer, Steve Barnes, Jonathan [inaudible], Our Chief [inaudible] Officer will join for the question and answer portion of the call later. Before I turn the call over to Rajeev, Please note that we'll be discussing certain non-GAAP financial measures that we believe are important when [inaudible] Are you waiting aggregates performance details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website also please note that certain statements made during this call will be forward-looking statements as defined by the private Securities Litigation Reform Act of 1995, such forward-looking statements are subject to risk, uncertainties and other factors that could cause the actual results for aggravated did materially from those expressed or implied on this call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC all of which are available on our website and with that I will turn the call over to our CEO Rajiv thing Raj.

Are you waiting aggregates performance details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website also please note that certain statements made during this call will be forward looking statements as defined by the private Securities Litigation Reform Act of 1995, such forward looking statements are subject to risk.

Uncertainties and other factors that could cause the actual results for aggravated did materially from those expressed or implied on this call for additional information. Please refer to our cautionary statement in our press release and our filings with the SEC all of which are available on our website and with that I will turn the call over to our CEO Rajiv thing Raj.

Thank you to everyone for joining us. The second quarter was another strong quarter in our continuing growth and expansion is aculeate and reinvent the health-care market.

Revenue and adjusted EBITDA were both out of guidance and we added many new marquee customers across all of our solutions and segments and we demonstrated the accelerated integration of our acquired companies with the launch of two new solutions.

Steve will give you more details on our financial result, a little bit later in the call. I want to spend some time today discussing our new solution and the continued evolution of our strategy, and the growth of our targeted addressable market. Before I do let me review some highlights of our execution since last quarter.

Before I do let me review some highlights of our execution since last quarter.

The demand environment for our solutions remains strong and we added new customers across all market segments and in new sales upgrades and cross sells.

We added new customers and signed upgrades this quarter with well-known companies like Tory Burch, and artisan partners as well as a global financial services brand and a global hospitality brand to name a few and our health plan partners also continued to add to our customer base.

And our health plan partners also continued to add to our customer base.

We also signed our first customers for aculate care, the primary care and mental health solution, we announced at evolved in September.

Given that we only announced this new offering last month, we're clearly pleased with our progress and our pipeline continues to expand.

We're also excited to announce that we have two existing customers committed to be the vanguard customers for our new accolade one solution.

Since our IPO, just a year ago, we've expanded our addressable market by 10x to more than 200 billion.

That is manifesting in new opportunities for our business and represented by a growing pipeline across every market segment in in these new categories.

Two weeks ago, we challenged the health care industry at our annual customer event evolve 21, we told our customers our partners and the industry that it was time to move forward.

That simply applying new technologies to tired old business models only served to perpetuate the inefficiencies of a health care industry that now makes up nearly 20% of GDP.

And deliver subpar outcomes at rising costs for employers.

Our challenge included introducing a whole new category called personalized health care designed to deliver against the quadruple aim.

Better patient experience, improving health outcomes, giving physicians the tools they need to serve their patients and lowering health care costs.

And we announced two new solutions that specifically answer the call for personalized health care.

These new solutions accolade care and accolade, one bring together the capabilities of advocacy expert medical consoles and primary care and mental health.

Employers of all sizes recognize that a positive health care experience is critical to delivering a superior employee experience you.

You are seeing this play out loud voices across the country as millions of people leave their jobs seeking something that works better for them.

Sometimes that's a shorter commute, sometimes it's a better boss.

More than half of all people, who leave their jobs today say a poor health care experience has one of the main reasons. They quit this isn't just about cost reduction it's about employee engagement in an era, where employee engagement is a strategic imperative.

Employers need a better way.

I'd like to spend a minute now briefly outlining the category of personalized health care and then tell you more about accolade care and accolade one.

For starters, there are three key attributes for any offering in personalized healthcare.

First it's personal we have to put the humanity back into health care, we hold the view that having a long lasting personal relationship matters.

Too many have tried to replace people with technology in appropriately innovation.

Innovation and technology are good and they can make the experience better but nothing can replace the human experiences in health care.

Two or second it is data driven we must harnessed the power of data to make health care better to make smart recommendations to build personalized health plans to equip positions with the most current clinical guidance.

Machine learning and AI should be leveraged to make the experience more personal not less.

And lastly, it is value based it's time to replace fee for service health care with value based care, it's time that we measure quality outcomes and satisfaction like we do in every other industry.

Every accolade solution is built on these core tenants and these beliefs are foundational to who we are as a company and who we've always been.

With the introduction of accolade, one an accolade care, we now offer three different sets of solutions to our customers.

First advocacy solutions that we've been leading the market in for more than 10 years.

Expert medical opinion solutions like accolade expert M D, formerly known as second M D and third our new care solutions accolade, Karen accolade one.

This set of solutions unique in their breath allow us to meet customers with where they'd like to be met and serve them need most important to them in the current time.

All of these solutions are built on a next generation technology stack that allows us to seamlessly weave capabilities across all of the offerings occur.

Accordingly capabilities like a true health engine and action plan, which provides the ability to process volumes in health care data to determine the next best action for one of our members can.

It can be blended with intelligent provider matching which matches our position to a member based on cost and quality information or with benefits plan management, the ability to ingest benefits plan document at scale and translate them into plain English.

Every solution capability can be delivered via any of our core offerings. This.

This nimble technology architecture, coupled with our market, leading data set and AI capabilities make all of our individual solutions uniquely powerful.

When we choose to develop or acquire new technologies like the health reveal capabilities mentioned in our press release that will strengthen our true health action plans, our technology diligence is critical to ensuring that new capabilities will work and scale within our architecture.

We are building an operating system for the delivery of health care at scale and we believe this is a long term competitive moat for our company.

Now, let's talk about these solutions that we're so excited about accolade care represents a leap path the last generation or generation of one of the telemedicine solutions on the market. This virtual primary care and mental health solution is unique because it not only blend as primary care and mental health via a unique collaborative care model it.

Also incorporates the capabilities of accolades advocacy solutions things like driving benefit solutions adoption intelligent provider matching in care coordination.

We expect accolade care to be a solution thats appealing to both new prospects in every market segment.

And the cross sell opportunity for our existing customers.

Accolade cares available now and as noted earlier already has its first customers.

<unk> for the solution is on a P. P M basis, plus visit fees with performance guarantees consistent with our contracts in the past.

Accolade one is our most comprehensive offering delivering an integrated value based model to employers that includes a combination of nearly all of accolades capabilities, including a number of new innovations that are either available today or in development and demonstrated that involved.

We expect accolade one to be a significant upsell opportunities for customers that are already taking advantage of some of our solutions. While we will certainly present the solution to new prospects, we expect most prospects to choose to start with one of our core offerings before expanding their relationship with us.

Pricing for the solution will be built off of our existing relationships and include value based gain sharing as we deliver incremental savings and improved clinical outcomes. It will be generally available available next year and we would expect revenue contribution in our fiscal 2024.

And evolve we also announced a rebrand for accolade expert empty, which previously sold a second empty and accolade advocacy, our total health and benefits total care in total benefit solutions. The rebrand highlights the evolution of our offerings to include more capabilities and bring together the acquisitions into a more unified portfolio.

Alkylate advocacy as always we will still be sold in tiers and that bundling will continue under the <unk>.

One last note on evolve 21, it was an inspiring event, we were able to showcase both our customers and our partners as well as introducing our customers to our new integrated leadership team.

Partners like Berta Rx savings sword, carrot, and Ginger presented and a great list of customers also presented on their accolade experience.

Lastly, before I turn the call to Steve I wanted to touch on one other piece of news in our today's press release about our acquisition of materially all of the assets of health reveal.

Health reveals capabilities address one of the most critical gaps in care delivery today.

Which is trying to ensure that all physicians are working with the most current evidence based guidelines when recommending courses of treatment for their patients.

Today that is a highly manual process largely done through print guidelines or hard to access online libraries.

When delivered via accolades true health action plans health reveals recommendations will help ensure our primary care physicians are operating according to the most up to date evidence based guidelines reinforcing our commitment to high quality personalized health care at scale.

With this acquisition, we gain competitively differentiated IP and an extraordinarily talented team that we're pleased to welcome to accolade.

While this is very a very modestly sized acquisition. It's a good time to refresh on our core principles of M&A innovation and partnership.

We're building a virtual forward personalized health care platform. So our members always get the care they need when they need it our innovation engine continues to be a primary source of new capabilities and we will continue to fund that engine or.

Our partnership engine is aligned to integrate partners, who share our value orientation are interested in meaningful integration and are committed to improving clinical outcomes in chronic conditions or specialty areas.

Our M&A focus is on virtual forward solutions that either materially improve our current capabilities or add new capabilities that impact the broad populations we serve.

All of that is underpinned by a disciplined approach.

Guarding valuation and P&L profile that are the foundation of our commitment to our shareholders.

With that I will now turn the call over to Steve Barnes, Our Chief financial Financial Officer to discuss our results and forward looking guidance Steve.

Thank you Raj.

First I'll recap the results for the second quarter of fiscal 'twenty to keep.

Keep in mind that we close the second MD acquisition in Q1, and the <unk> acquisition in early Q2.

Where appropriate I'll provide color on the year over year comparisons beyond the tables in the press release and you will find additional pro forma detail in the 10-Q.

First we generated $76.0 million in revenue in the second fiscal quarter, representing approximately 100% year over year growth on a GAAP basis over the prior year period, and a $5.0 million beat against the top end of our guidance range.

In our 10-Q, we provide pro forma results for the combined businesses that showed 32% Q2 growth year over year.

As we provide pro forma results per SEC requirements for the rest of the fiscal year keep in mind that we are selling our solutions, both together and separately. So while the reported pro forma revenue growth and profitability numbers are intended to reflect the acquisitions of standalone. It may not always be a perfect representation of how we sell to.

Customers and run the business overall.

The revenue outperformance relative to guidance was largely attributable to solid execution on multiple fronts, including favorable customer member counts and positive contributions from <unk> direct to consumer business, both of which benefited adjusted EBITDA.

I'll also note that plus care achieved a significant milestone this past quarter, having crossed the threshold of 100000 subscribers on the direct to consumer platform in just two years after launching the subscription element of that offering.

We are bullish on the growth opportunity of our virtual primary care business, both via the direct to consumer model and to enterprises via accolade care and accolade one.

Fiscal Q2, adjusted gross margin of 49% compared to 43, 3% in the prior year period.

<unk> investments and staffing our frontline care teams to support growth and integration.

As stated in prior earnings calls, we expect adjusted gross margin to remain relatively flat on a full year basis compared to fiscal 2021.

Adjusted EBITDA in the second quarter of fiscal 'twenty, two outperformed guidance with a loss of $23.0 million, which compares to $15.0 million in the prior year second fiscal quarter.

Turning to the balance sheet cash cash equivalents and marketable securities at the end of fiscal second quarter totaled $384 million.

Note that during the quarter, we paid approximately $34 million net of cash acquired and working capital adjustments related to the <unk> acquisition.

Finally, we had approximately $69.0 million shares of common stock outstanding as of August 31, 2021.

This does not include approximately $9.0 million shares to be issued in calendar 'twenty two related to the second M D and crushed care earn outs.

And now turning to guidance for the fiscal third quarter ending November 32021, we expect revenue in the range of $74 five to $81.0 million and adjusted EBITDA loss in the range of $21 five to $29.0 million.

As noted in the press release revenue guidance for fiscal Q3 includes approximately $7.0 million from performance guarantees that had been earned and we expect to recognize in fiscal Q3, rather than fiscal Q4.

And for the fiscal year ending February 28, 2022, we expect revenue in the range of $303 million to $307 million.

Representing approximately 79% growth over the prior year at the midpoint.

We are reiterating adjusted EBITDA loss for fiscal 'twenty, two which is expected to be in the range of $49 million to $54 million, representing an adjusted EBITDA loss of approximately negative 17% of revenues at the midpoint.

And before we open up the call for your questions I'd like to address some of the top items, we've been getting from investors over the past few weeks.

First I'll provide some color about the macro environment, particularly around the labor market and the Delta variant impact and then I'll talk a bit about the financial model for our new solutions that Raj mentioned.

I'll start with a broad remark about accolades business.

We have never felt better about our company our solutions, our people our customers and our market opportunity.

Coming off of about we are hearing feedback from customers that not only validates the personalized health care category that tells us that our relationships are going to progress and a significant and positive way over the coming years.

We'll continue to invest against that opportunity balanced with financial discipline as we've consistently said.

And with all of that said, we see the same things that you do in the macro environment.

Labor market is tight in many areas and the Delta variant is still creating an unusual health care spending environment.

We've seen virtual care continue to grow as people avoid doctors' offices and become more accustomed to virtual care.

But we've also seen pressure on second opinion volumes as people defer elective procedures.

As you can see from our guidance, we raised our top line to reflect the Q2 outperformance, but much as we did last year in the early days of the pandemic. We will continue to take a measured approach to our outlook through the end of the year.

Now with respect to our new offerings accolade, one an accolade care, we'd like to outline some key points on our revenue and pricing models.

Raj address the pricing models for these solutions and I'd like to give you some quick model color.

First in our view there is no need for changes to models at this time.

From a timing perspective, we have initial pilot customers for accolade, one that won't be marketing accolade, one an accolade care as part of our portfolio during calendar year 2022 for what we'd expect to be January one 2023 launches.

So we expect no impact to the current fiscal year and our relatively small financial impact in fiscal 'twenty, three and then growing in fiscal 'twenty for <unk>.

Albeit still relatively small compared to the full accolade business and our core advocacy solutions.

We expect over time that as we drive this incremental value, we will earn more revenue per customer and contribute to our goals of gross margin expansion.

And second we reiterate our expectations for the long term operating metrics that we've outlined previously.

Particularly revenue growth in the 25% range.

Gross margins greater than 50% and long term operating margins as measured by adjusted EBITDA in the 15% to 20% range.

On pricing accolade care will consist of <unk> revenues and visit fees from virtual primary care visits mental health support and some advocacy services and include performance guarantees.

Accolade, one will go a step further employing a value based care model that will include upside elements to our revenue that will allow us to share in the benefits of improved outcomes and incremental savings that we expect to drive for our customers.

This is consistent with our history of putting a portion of our fees at risk.

As you know our current contracts for accolade advocacy generally include about 10% of fees at risk for cost savings and then an additional 20% at risk for the achievement of various value drivers such as member engagement levels and satisfaction.

We've consistently demonstrated success in these measures having historically earned more than 95% of that total <unk> opportunity in our advocacy offerings and through third party validation of our cost savings, including two in depth studies.

Uh huh.

We have strong conviction based on our past success that weaving together primary care mental health support expert medical opinion, and other clinical programs will enable us to drive materially higher cost savings for customers via accolade one.

And with that I'll turn the call back over to Raj.

Steve I'm going to close the call by thanking our newly formed team six months ago, we were three completely separate businesses executing against different strategies and different objectives.

To see this come to this team come together, so quickly and deliver a three day customer events speaking is assumed single team with integrated solutions in a single voice validated not only the strategy behind the acquisitions, but more importantly, validated our judgment about the quality of the people across these organizations.

Thank you to the team.

Operator, I'd now like to open the call up to questions.

Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press Star then one on you touched on the telephone again to ask a question. Please press Star then one we do ask that you limit yourself to one question and a follow up.

Our first question comes from and then just staying with credit Suisse. Your line is open.

Yes. Thank you.

And thanks for the color on the economics, but I want to better understand the economics for Equinix, one around how value based pricing is going to work. So will you be taking any downside risk or is it going to be all upside potential and I know you talked about accurate one will not contribute until fiscal 'twenty four but I was wondering if any early feedback or interest.

Level, you can share from your customers at this point.

Hi, Joe and Steve Let me, let me start off with the pricing model in <unk>.

<unk> in a bit on some of the early customer feedback and we can we can hit some of the expectations on when we would expect that that revenue to flow so think of accolade.

One is the comprehensive offering with the integration of all of our capabilities, Okay and as Raj mentioned in his comments. This is likely to start with an up sell to customers that are already taking advantage.

Advantage of some of our solutions the revenue model, let's compare it.

To accurately total health and benefits because I think that's a good way to start.

Importantly, we want to note. We want you to think of this as a fees at risk model. This is not to be thought of as a.

Fully carpeted medical risk model like a Medicare advantage model think of it more of this way.

If you think of our typical total health and benefits customer, having something like 70% of our PCM fees fixed with 30% on a performance basis and about 10% of that on our savings basis.

We're looking to do is as we drive more savings for the customer to have accolade participate in that additional savings to be upside now to your point on the downside we think about it roughly this way we may go something like 50% fixed instead of 70% fixed and then had some upside to call. It 100.

25% to 130% to take advantage of additional savings on top of the 100%. If you want to think of it that way on a gain share basis importantly, John we.

Go back to the point that we have a track record of earnings were 95% of RPM fee <unk>.

And view that downside risk is highly manageable and on the upside the opportunity to participate in additional savings that we would expect to occur because we're going so much farther beyond just the advocacy offering into clinical areas around virtual primary care mental health expert medical opinion that we think are that drive that addition.

Savings.

Just a follow up to you litigate it great to talk to you thanks for being here.

This is Raj just jumping in on the customer interest. We obviously have two customers already that we've announced as vanguard customers.

Those two customers are actually in process preparing for deployment going into the pilot period. We also have significant interest coming out of evolve where a number of our customers have reached out to us and schedule a time to go through what accolade. One is how the integration will work and how the model will work and so it's a little early to give you a.

Much color on how many customers will embrace it but what we can tell you is feedback from evolved interest in terms of generation of pipeline has all been positive.

Okay and then my quick follow up on the EBITDA guidance update can you provide more details on what are the new new incremental costs youre, reflecting in second half, which is resulting in full year guidance unchanged. Despite EBITDA coming in better in the quarter.

Is it related to all.

The labor market saturation or something else going on and just help us understand the EBITDA guidance update.

Sure.

Merrily John reflects additional investments as we're making it thinking about the combined offerings and taking them to market. So you will see in the fiscal second quarter results. When you look at the Opex line, you'll see the sales and marketing line growing a bit into the low <unk> low to mid 20% range as a percentage of revenue that reflects.

Go to market investments that we're making you'll also see some of that spend and the product.

Perhaps in the technology line and certainly there are some impacts around wages and labor that are flowing through there as well.

I wouldn't point to that as a material factor I would really point to the investments, we're making around the new offerings.

Thank you. Our next question comes from Michael Cherny of Bank of America. Your line is open.

Afternoon, and I appreciate again, all the details as well as Raj you spent some time at the beginning talking about some of the marquee wins you had both within the core and then obviously you're talking about the Vanguard Windsor and accolade care.

Give us a little bit more qualitative big picture overview on what was going on in the selling season, what activity levels tended to be like versus previous years and at least in terms of how you were thinking about the rollout and some of the wins that you've been able to generate do you feel happy comfortable with.

How things shook out versus where you planned your team your sales force was incentivized to go.

Mike first of all great to talk to you thanks for making time for us.

We're about now a little bit into the third quarter of the year and what we found I think a couple of things that I tried to call out.

And some of my prepared remarks first.

By entering the care delivery space, we materially expanded our marketed so we actually both saw two vanguard customers Gratulate, one, but also to customers directly to care and offering that we actually just announced in late September and so the idea that we're seeing that pipeline develop we're also seeing expansion.

And to that pipeline, we're really excited about.

Also in pointing out that we actually saw customer signings in every core segment across every one of our markets. Every one of our products are offering also pointing to the fact that we're looking at the demand environment seeing an expanding pipeline seeing continued wins with major customers one of the major customers I mentioned, a major hospitality Corporation.

We just got approval to say their name, it's a higher corporations just happened a little bit before we publish our press release and so we're seeing great wins with marquee brands and what we're really seeing Mike in my mind is an increasing alignment with with large employers and small looking at.

The idea of a platform to weave together everything that they do with an acknowledgement that the demand was there.

The point solutions in the market are somewhat overwhelming for buyers to manage our capacity and weave together that personalized health care platform. We think is boding really well for us today, and we'll do even more for us tomorrow.

And do you actually dovetails nicely into what my follow up question was going to be regarding that complexity youre seeing on the digital health benefits, obviously accolades historically been focused on your ecosystem partners trusted supplier at the terms that you use as you think about a go forward basis, how is that evolving.

Terms of parties that want to work with you versus parties that might want to go out on their own and how does that factor into the value proposition.

You are able to deliver in terms of the pitch forward for ongoing new customer wins.

I'm going to take the first half of that question, Mike and Im going to let Sean and under our Chief Medical Officer really drives all of our clinical partnerships.

Take the second part of that question or.

To speak to how we're how we're selecting partners and working together.

From our perspective this is.

This is very much a customer driven need customers are coming to us and saying what we want is.

A <unk> set of partners that you can bring to bear where you can a warrant for us the engagement levels that will be driven clinical outcomes that'll be driven.

And our sense of stability or capacity from a financial stability security perspective et cetera.

That particular vendor and so we're not seeing a lot of partners. They want to go I wanted to do something separately in fact, the demand for partners into the platform is pretty high shopping.

Add a little around how we're thinking about partners moving forward, yes, absolutely.

Great question, when we think about the personalized healthcare Amy.

<unk> idea.

Third pillar on value.

That's really our north star right. So I think as we think about the different categories. We're looking at what are the cost driver right.

Employers are dealing with we're thinking about.

What are the clinical outcomes that they are able to warrant.

Also looking at that number it's Brad.

That's really critical and a key challenge.

Top of mind for employers is I think more and more about the employee experience and so that's really driving a lot of our partner flush decisions.

And allowing us to continually warrant better clinical outcomes.

Thank you.

Next question comes from David Grossman of Stifel. Your line is open.

Thank you.

Maybe I can just start with a quick financial question.

Don't know if I did my math right, but it looks like the.

Implied fourth quarter revenue guidance implies a pretty significant deceleration in year over year growth. Even if you do add that two and a half million dollars performance shoes.

Is my math right or if not if it is can you just provide some color on kind of what may be going on that maybe.

Impacting the comparison.

Sure David Thanks for the question and absolutely will walk you through how to think about that.

First of all when you think about the first half of the year.

Since we had solid execution raising the guidance.

We did pull forward that $7.0 million. We also last quarter pulled forward about $1 million. So if you think that pro forma growth rate and add that and add that $8.0 million.

Get back up into the territory of where I think you would probably be expecting to see.

That all said one of the very important things. We're doing here today is similar to where we were this time last year. Unfortunately, given the delta variant in tight labor markets. We are taking a measured approach to the full year to the rest of the year and given sometimes the lumpiness of the quarterly revenues in the bookings really.

Do guide you to think about the full year growth rate.

And when you look at it from that perspective, we're looking at high <unk> on a pro forma basis call it 28% growth rate, which gets it to that point, we've talked about before 25% per accolade.

The legacy plus care and <unk> business is growing on a plus 30 basis.

But what youre seeing there kind of playing out for the fourth quarter is that bit of.

Our view to take a pragmatic approach while the markets are a bit volatile right now and that's where you see that that guide coming in.

Got it. Thank you very much for that clarification, and then maybe if I could just step over to some of the conversation about accolade one and then just curious.

You only have.

A short window of experience and talking to customers about this product and it sounds like you have a couple that are going to go into a pilot phase but.

As you're talking to them how does this impact.

When they talk to you about the product how they view their traditional payer relationships because so much of what we're really offering.

Really.

A new and different way.

<unk> way of delivering something very similar so.

Just curious if you have an issue back thus far.

Absolutely David.

And one of the things that we're most excited about.

Is that we're able to approach our customers with a value proposition that checks a lot of boxes that they've been thinking about for a number of years.

When you think about accolade, one we're improving access to care.

We're improving the affordability of care.

We're solving some help equity issues associated with that access to care issue in markets where.

It's been a profound problem for most of the customers that we serve.

In all of those respects, David I would say.

We're solving that problem in a brand new way and not in a way that they perceive.

Sponsor ability of their carrier, meaning they're looking for broader more holistic solutions that we have together longitudinal relationships solve access to care problems on the front end and Thats all clinical outcomes on the backend.

That's a shift in the mentality of buyers moving away from transactional care moving away from condition focused care and moving to that longitudinal model.

We think that more and more those very same customers are coming to us and saying what youre doing is giving me the capacity to.

To deliver on the hypothesis of value based care without changing the fundamental rails of the system I've already built my entire ecosystem on.

Don't have to change my carrier I don't have to change by plan design I don't have to change my network and I can get all this value and so I might flip that on its head a little bit David and say in fact, what we're really doing is enabling for our customers and their payer relationship the opportunity to let the status quo remain while delivering our.

It comes and result that materially improve the status quo.

Thank you. Our next question comes from Ricky Goldwasser of Morgan Stanley. Your line is open.

Yeah, Hi, good afternoon. Thanks for taking my question. So I wanted to unpack a little bit more sort of some of the near term trends are seen so first maybe if I can start I think.

Seen 32% year over year revenue growth on a pro forma basis can you just give us the color on opex, 32% year over year growth core versus the year over year that you've seen.

From the acquisition engine.

Convenient that can count as my follow up question.

Clearly there are things that.

We are better in the quarter.

They trended better than you expected and hence the upside.

But then you go.

To your comments Youre seeing headline headwinds from deferral of.

Surgeries, that's impacting second opinion, it sounds like potentially retention at least in the near term and employers could be an issue. So can you just help us unpack and maybe kind of like help bridge between like quantify on what.

The upside was and then kind of like the offsets I think that would really help us as we think about our modeling not just for the second half of the year, but also the comparisons into next year.

Sure Hey, Raj.

A couple of things. So when you look at the 30, 32% pro forma growth rate, it's actually healthy across the three businesses, you'll see in the Q, where we unpack that for.

<unk> core business, it's in the range of that.

30% to 32% number and for each of the second <unk>.

30% as well so very strong performance that way across the board.

Meaning when.

When we reflect on those comments about membership and labor markets, that's really thinking prospectively, when we think about the second half and where we may.

We may see some impact of the variant.

The.

Labor markets now with respect to expert medical opinion, I will note that into that point with.

Some of those expert medical opinions are down a bit as we're seeing fewer elective procedures happening in parts of the country. So there is some there that youll see the second sequential quarter growth is fairly flat on the flipside virtual primary care visits we saw very strong through the bus care.

Direct to consumer.

Platform and as Raj was just noting the bullish view, we have towards the opportunity with the enterprise around virtual primary care comes from that as well so.

Interestingly, our diversification a bit within the platform is showing up in the sense that the virtual primary care visits have been positive where theres been a bit of headwind on the expert medical opinion side at the moment.

For those reasons.

Thank you.

Thank you. Our next question comes from Ryan Daniels of William Blair. Your line is open.

Yes, thank you for taking the questions.

It is a little bit of a follow up on an earlier, one but I'm curious there's a lot of the point solutions appear to be coalescing around the navigation space and providers I think it's driving a lot of M&A in the space I think there's some virgin today by well talk in some other M&A activity. So I'm curious what you are seeing if you go to the sales pipeline on the competitive front.

It's changed a lot or if your acquisitions and continued innovation have really allows you to stay ahead of the curve there.

Thanks for the question Ryan.

We do fundamentally believe that this concept of personalized health care and the idea of personalized healthcare platforms that are built forward on human relationship powered by data and everything that that implies around artificial intelligence and machine learning.

And measurable around value based outcome of that that is fundamentally differentiated and continues to be differentiated in the marketplace. The way. We've always talked about this and I know you might have heard this from us before Ryan the breakup or the competition in multiple forms you mentioned well talk there are those companies out there that are digital.

Forward solutions really.

Year at around driving digital only are highly digital engagement.

And there are a category of solutions like that traditionally drive lower engagement levels and arent willing to warrant real cost savings on a on a population basis.

There are also.

Companies in the traditional navigation space.

Who have focused on navigation of the whole, but not necessarily woven together some of the other components of the story around provider selection around the virtual primary care and mental health and around things like downstream expert medical consultations.

In those regards we think we have an opportunity to materially improve the performance of the delivery of value based care and savings and in engagement levels.

There is also a category of competitors out there as you mentioned there is a there's a wide variety of players in the space.

Who are episodic in nature or looking at transactional care or looking at.

Moments in time, where consumers are entering the healthcare system and attempting to help those consumers. During those moments. We think those episodic solutions have value, but are unable to manage population health and long term cost reduction on a population basis.

And then finally, there is onsite onsite near site providers in this space. We're also really in our view.

Focused on those transactional moments, where without access to claims data without access to the dataset underneath that longitudinal journey. They are unable to provide the longitudinal care necessary.

So.

In.

Summarizing all of that Ryan the categories of competitors have certainly expanded different companies are acknowledging the value of navigation the value of a data set that we've spent 10.12 years accumulating in the value of longitudinal relationships.

We are pleased with the idea that.

Many of these concepts are ones that we've been talking about for the last 10 years.

And now we're building everything that we've acquired and built on our own on top of those principles.

That's very helpful color I appreciate that and then maybe as a follow up and taking a different twist on this does it actually open up with your broader capabilities new market potential for you you mentioned near site and on site.

<unk> talked about value based care and some of the providers, taking on risk or provider groups entering into acos or commercial shared savings as they take on that risk.

Evolve their models they may look to someone like an accolade that can help them with engagement and second opinions and network management kind of everything that you do for your core employer customers. So do you see that as a market that could also open up for you longer term given the capability set and some of the needs that they have to stay competitive.

Yeah, I think it's such a great question Ryan.

Because it.

It really points to the fact that what we really when we really put together both through our own innovation and the innovation of the companies that we've now made it part of the accolade family is a suite of capabilities that range from primary care to finding the best Doctor using cost and quality data to consuming benefits data at scale. So that we can.

Make you aware of the benefits programs in your in your ecosystem to.

Being able to process millions of claims.

Per day per week, so that we can understand where you are in their journey and understand what the financial impact of all of these these.

Healthcare incursions are.

Each of those capabilities are interesting to our partners on a standalone basis and for some of our partners. They are interested in our offerings as a whole.

You've seen from us over the course of the last two or three years is we've gone from a company that really sold exclusively directly to employers to now a company that derives a material portion of our customer relationships from relationships with health plans and others, who are looking to take advantage of those capabilities in a way that.

That that give us significant value to the remainder of the ecosystem Davis nimble for their customers.

No.

Speaking specifically to the examples that you gave Brian but we've built an architecture and a set of capabilities that will allow us to be extremely partner friendly.

With partners, who share our value orientation, and this year, our desire to make health care and so.

That was a long winded way of saying yes.

And I appreciate it thank you.

Thank you. Our next question comes from Richard close of Canaccord Genuity. Your line is open.

Yes, thanks for the questions congratulations on the results.

Appreciate the comments on being bullish on the virtual primary care I'm curious, how you're thinking about the competitive environment in this sub segment.

You said you were selling all the products on a standalone and I'm curious, whether you're bumping into the likes of teladoc or any others and how these conversations are going with potential customers.

Thanks for the question and I appreciate you being here.

I think the.

The let me give you let me give you a color on the on the competitive landscape certainly in the virtual primary care and mental health Bae.

Which is where we play with accolade fare.

We would be bumping into the competitors that you might expect who have who have to take the claim in EBIT telemedicine urgent care or in primary care in some way shape or form so.

So that list of competitors is unlikely to be different than the one you might expect it to be where we differentiate in that respect is at our core we have added to the capability to deliver primary care and mental health a set of capabilities underneath that that you might more often equate or or associate with navigation.

We can help you understand what's your benefits are and then actually prescribed those benefits right from the Doctor as best that we can help you understand which position you're supposed to see using data so that when we when we send you to that position and we book that appointment for you. We know we're getting into the best possible Doctor those capabilities, which previously had been under the cover off the season.

Our navigation tools are now also available in our care and our accolade care offerings, that's fundamentally differentiated and so to us what we're really excited about is the pipeline growing there.

We're finding we signed our first couple of deals.

Faster than we expected, which has now happened twice the same thing happened with expert medical opinion a quarter ago.

We're seeing demand from new prospects and this is this is very exciting we are seeing customers, particularly after our evolve conference just two weeks ago.

Raising their hand, and saying they want to know more.

And their familiarity with our existing solutions in those existing navigation capabilities.

Make the accolade care offering even more sensible to them and so.

That pipeline continues to grow and I think maybe to your point.

Those are a set of transactions or deals that we didn't get to play in in 2020. So here. We are in 2021, that's a brand new category and we're excited about the fact that we're starting to see victories in that brand new category.

Thanks, very helpful. There and I guess my follow up going back to <unk>.

One and the two companies that are going to pilot that.

I respect that you guys arent announcing who those.

Actual clients are but can you give us a little bit of a description.

Maybe like the scale of the companies are.

Sort of any characteristics specific to them.

Absolutely.

Two parts of that story, because there's two customers one.

We're unable to give you the exact name, but we can tell you. It's a it's a company that you would call in the Fortune 500, very large business.

That's leveraging the solution they are an existing customer who chose to to be one of our vanguard accolade, one customers and really leveraging it and this is maybe a little bit more color than we've previously provided leveraging it not just for all the capabilities that we've talked about but leveraging it is at its core as a part of an initiative within their business.

To address healthcare and equity.

And that's something really exciting for us. This idea that are our solutions can be at the at the APA.

Upon the end of the sphere for a company that has a corporate initiative around an equity and addressing an equity and healthcare equity being right at the front of that for them because one of the drivers of them embracing accolade won the second customer I can actually named today, because they've begun talking about publicly it's a company called meta source and so it's a smaller company with.

Call it several thousand employees.

Smaller than this obviously this global 500, not a small company, but what we tried to do with these vanguard customers was pick one large customer and pick one mid sized customer so that we could demonstrate this value with it.

With the different needs of customers of those sizes.

What we're hearing in terms of interest from our customer base, though is across the book and so we'd see mid market enterprise and strategic customers raise their hand to learn more about where we are.

Thank you very much that's very helpful. Thanks.

Thank you.

Our next question comes from Jeff Garrow with Piper Sandler Your line is open.

Yeah, good afternoon, and thanks for taking the question I wanted to ask about your channel partners. So two parts. The first is just if you could give any color on the contribution this selling season from channel partners.

<unk> is looking forward our channel partners excited about offering equity, one and accolade, Karen and what kind of education is needed to really arm those partners for success there.

Thanks for the question, Jeff Great to talk.

We are seeing continued traction so when you talk about partners. There are for multiple varieties of partners that we work with we certainly work with plans who are offering our solutions to their customers.

We also work with brokers and consultants, who are who are recommending us to their clients and or working with us to educate their teams on the value proposition that we deliver.

Our.

Health plan channel continues to strengthen we continue to see value in working with plans to accentuate or.

Or drive value to their solutions by leveraging our engagement and clinical capabilities and.

And we expect that that part of our business to continue to grow over time.

I think the core of your question. Jeff is are those health plans or other partners finding value and accolade one in an accolade care.

And what we can tell you definitively is the need from our partner community to find virtual forward health care solutions that address things like access and affordability of care alongside longitudinal care journeys is very very real and so.

Absolutely the interest in that partner channel has expanded.

In part because we've got a brand new value proposition that we can deliver to them with expert medical opinion and virtual primary care and mental health. Those are conversations we could not have with many of our plan partners and other partners.

Just six or nine months ago.

Those conversations have opened up brand new paths for us to add value and we're excited about where that might be.

That help.

So my follow up to switch gears a little bit.

It's been another interesting year in terms of health care utilization. So I'm, just curious where visibility is towards achieving performance fees related to the calendar 'twenty one period that will impact your fiscal fourth quarter at this point in the year and how that's been factored into the guidance.

Sure Hey, Jeff.

Quick reminder, for everybody that for our total health and benefits customers that point of call it 10% or so of the <unk> savings base, then you've got another 20% on performance based guarantees performance base excuse me operational.

<unk> are things like clinical outcomes <unk>.

We've got about six months or so of data here halfway through the year claims data lagged by a couple of months they were looking at six or seven months of data.

What we're doing in our guidance there Jeff is factoring in taken a really pragmatic approach again to the end of the year, knowing we've got a track record of earning at 95% of the whole ppm fee typically in high spend and low spend environment.

And in the prepared remarks.

It's been unusual with health care spending going on right now in the world. So we are going to just factor that in.

Yes.

With a bit of <unk>.

Measured approach to the year.

Again similar approach to what we would have taken this time last year.

Got it thanks Vince.

Thank you again.

Our next question comes from Ryan Macdonald Needham Your line is open.

Hi, Thanks for taking my questions Raj, maybe first one for you.

Honestly, you're servicing a lot of inbound demand right now for the new products and the rebrand, but given how much the portfolio of offerings has evolved over the past 12 months as you start to think about next year and proactively going out to market and youre getting past that inbound demand servicing how are you educating or.

Structuring our sales organization in terms of what there'll be leading with with this greatly expanded use cases.

That's a great question Ryan. Thank you. Thank you for being here.

First of all I think the first important element for US was an acknowledgment that by virtue of the expanded capabilities of the company. It was imperative that we redefined not just who we are but what we think the industry is demanding and therefore, what we're responding to do that's personalized.

Health care and the idea of personalized healthcare is we believe all of our solutions fall into that.

All into that umbrella that umbrella.

Human forward, whether you are buying our advocacy solutions, our expert medical opinion solutions or our care solution.

Youre going to find that we're going to deliver you a human relationship we're going to power. It with data. So we're going to be very smart about leveraging that underpinning data asset that we've been building for the last 12 years to guide our actions and all of it's going to be built around this value measurable orientation everything we do whether that's performance guarantees incentive.

Our fees at risk put us in alignment with the customer which had all three of those things. We think are fairly unique in the industry and so all of our solutions are built around that idea. The reason that's important Ryan as we've been talking about this since.

Since we've been public our mission is to meet the customer where they want to be met.

And an acknowledgment that some customers are looking at access to care issues or looking at primary care deserts and thinking. This is the problem I have to solve and for those customers. Our teams are going to be really smart about positioning accolade care at the right solution for them.

Others are looking at solving other problems around more acute conditions cancer treatments et cetera, those might be customers looking at expert medical opinion.

And of course, we've been leading the advocacy navigation space for the last 10 years and we expect to continue to participate in all the Rfps and all of the evaluations that are happening in that space and really in many respects to be creating those and so we're not fundamentally restructuring the sales organization in any way shape or form Ryan we've got our sales team.

Let's focus on plans, we've got a team focused on mid market on the enterprise segment and our strategic segment.

What we've done is really given them more tools in their bag, so that as they understand our customers needs, which is what they're really trained and do discover what the customers' pain points are that they have now.

In our view the biggest bag or the largest of the greatest breadth of potential offerings for those customers to solve their problems with that orientation around those first three values that I talked about.

Very helpful. And then just a quick follow up the health reveal act.

Acquisition, the technology, they're pretty unique and differentiated just love to know a little bit more about how that functionality can expand upon what you've got with the true health engine already thanks.

Yes, that's a fantastic question, we're just starting to 90, we're super excited about this.

As you alluded to quarter accolades been our next best action capability right. So this idea of using all the data that we have.

Translating that insight and putting that right into our workflows. So that our frontline care teams can guide members on what clinically most impactful next step for them.

But help reveal does what they figured out is really how to deliver a much deeper set of clinical insight using not only claims data and some of the data that historically has had but also electronic health record data and so for US. This was a capability that was on our roadmap and for US. We really think of this as a huge accelerator to be able to.

Again, bringing a lot more of those evidence based clinical insight to our position.

And also to the rest of our frontline hurricane.

Which we think aligns really well with personalized health care the whole second pillar around being data driven.

Excellent. Thanks again.

Alright, thank you.

Again, ladies and gentlemen to ask a question. Please press Star then one in the interest of time, we do ask that you. Please limit yourself to one question or.

Our next question comes from Saturday Davis with SBB Leerink. Your line is open.

Thank you for taking my question guys I wanted to continue on an earlier thoughts if we wanted to roll forward. The idea that care navigation is becoming table stakes and to get more commonplace in general for 70, Paco platform, how the care navigation play inside of it.

Have you ever thought of taking advantage of that trend in terms of your platform and given the move that we've seen as a navigation of the surface infrastructure play or is that just.

First of all 70, great to talk to you again, thanks for being here.

I think when we talk about navigation and anytime we put an umbrella term on it on a set of capabilities. It's imperative that we kind of break that down and speak to what those capabilities are a number of companies. Yes are out there speaking about the fact that they deliver navigation today, we would say the number of companies who have.

Delivered have accumulated the claims Rx insurance information and interaction data as well as clinical data associated with medical electronic medical record data is the underpinning of the platform to be able to navigate through benefits navigate through claims drive people to the best of <unk>.

<unk> et cetera, all the things that we've been doing for the last 10 years is still a very very very small number of companies a lot of people use the word navigation not a lot of people actually deliver navigation.

That would be point number one point number two would be.

I think youre absolutely onto an idea that is that speaks to the point I think it was Brian's question earlier.

We've architected our solution around the idea of delivering capability now we have those capabilities into offerings.

Those capabilities are available to our partners know, who we partner with around those capabilities. The way, we've always thought about it Stephanie.

Is.

<unk>.

We'll partner with people who share our mission.

Who are aligned in our vision around improving health care for the people that they serve.

And who are aligned in our belief in the idea of personalized healthcare and so.

I don't know what that means in terms of potential partnerships with navigation vendors down the road.

But I can't I can tell you we believe that our capabilities architecture is unique in the industry and it gives us and gives us an opportunity to be a really productive partner for many.

Thank you. Our next question comes from David Larsen of <unk>. Your line is open.

Hi, congratulations on a good quarter.

Regards to accolade, one and accurately care it seems to me like even though the clients you have might be charged a slightly higher <unk> rates.

Overall cost of health care for them would actually decline more given that you'd have a more comprehensive solution.

Any thoughts or color around that and can you put any numbers around that like incremental percent savings that they might be able to realize.

Yes, Thanks for the question, David and absolutely we believe.

Core to the value proposition of accolade, one that we're taking to our bank our customers and then the customers beyond it is the idea that when we meet together all of these incremental values.

Above and beyond the advocacy solutions that both of those customers have purchased from us in the path that will improve clinical outcomes and that we will continue to lower costs above and beyond where we are today.

The amount of costs that we will improve on a year over year basis based on those incremental services, you're going to vary by the populations that we serve in the makeup of that population just as it does appear to buy a core navigation service today and so it might be too early for us to speak to those incremental savings.

What we can say is we feel so confident in those incremental savings that as Steve mentioned earlier, our revenue model creates the opportunity to take a little more risk, while adding upside to the opportunity that we think is really material and could be really high value high margin revenue.

Okay, Great and then just one more quick one with the Delta very it sounds to me like the impact here was with secondary some delays in elective procedures can you confirm that second MD revenue still grew by at least 30% year over year in the quarter and that there wasn't really any other drag that you saw from a delta variant in terms of like the sales cycle.

And then it also sounds to me like a telco variant will become an easier comp or a tailwind in fiscal 'twenty three just any thoughts there would be helpful. Thank you.

Hey, David Nice to talk to you.

I can confirm with with second MD year over year growth rate is in that just north of 30% range.

On sales cycle, we're going to come back to you all in at the end of the next quarter and we will give you a sense of how thats coming through.

But for second MD for sure that 30%.

Year over year growth was achieved.

Thank you.

Our next question comes from Eric <unk> with Barrington. Your line is open.

Hi, Thanks for taking my question.

Just one on accolade one.

Because it's a value based care model, that's quite new and employers benefit market I'm wondering should we expect slightly longer sales cycle and I'm also curious how much education needs to be done so that employers are comfortable with the value based model and also a higher upfront Pete in P&C.

Yes, I think it's a great question and I appreciate the opportunity to talk a little bit more about accolade. One when you think about accolade one the first thing that I think and Steve mentioned this earlier in his remarks and I think it's imperative that we point out when we talk about a value based model what we're not talking about here is a Medicare advantage sub complicated risk model.

Like some other companies are are out in the industry talking about in fact.

Self insured employers have rarely been given an opportunity to participate in a model that will warrant clinical outcomes warrant cost reduction while improving employee satisfaction. When we think about this value based model, what we're essentially going to the customer with us.

Brand, new set of capabilities, where a brand new offering but they haven't been approached with in the past that speaks to all of those vectors. The reality is self insured employers today are very rarely being approach with numbers associated with clinical improvement with numbers associated with cost reduction and measurable value.

While at the same time, improving satisfaction of employees that said I mentioned in my in my prepared remarks that Youre absolutely right.

We think that the.

Preponderance of the interest in accolade, one is really going to be in our existing customer base customers, who have taken advantage of navigation expert medical opinion, our accolade care in the past and who.

Built off of that trusted relationship in the dataset that drive that measure ability of the health care, we've delivered for them.

It will be very interested in upgrading our moving forward to a broader accolade one solution.

So in a way that implies a longer sales cycle, which I think is.

Is a little bit different and maybe I might paint that picture a little bit differently, but I think it gets to the same outcome.

Thank you. Our next question comes from Vikram have a bulk of Baird. Your line is open.

Hey, Thanks for taking the question just one quick point of clarification on health reveal I was just curious did that contribute at all to the second quarter on revenue or EBITDA and is there any impact from that contemplated in the fiscal 'twenty to guide and just anything there around the financial profile, there's something to note.

Sure Hey, Vikram, thanks for thanks for being here.

First of all the acquisition just closed so it's post second quarter and there.

There's not really any revenue to speak of there it's really about the intellectual property and the teams that we acquired in the value of that is contributing that Shaun spoke about earlier, along with Raj as existing remarks, and with the team that's coming over we're factoring that in as part of our guidance.

In fiscal 'twenty, two from a spend perspective.

Thank you I'm.

I'm showing no further questions at this time I would just turn the call back over to Rajiv Zhang for any closing remarks.

We appreciate all of you being here thanks for joining us.

Look forward to following up the post to call in and catching up with you next quarter as well. Thank you.

Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may all disconnect have a great day.

Okay.

[music].

Good day and thank you for standing by welcome to the accolade Q2 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone please.

They have advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Todd Friedman Senior Vice President of Investor Relations. Please go ahead.

Thanks, Gigi welcome everyone to our fiscal second quarter earnings call with me on the call today are our Chief Executive Officer, Rajiv <unk>, Our Chief Financial Officer, Steve Barnes sheltered in India, Our Chief Medical Officer will join the question and answer portion of the call later before turning the call over to Rajeev. Please note that we'll be discussing certain non-GAAP financial measures that we believe are important when he does.

Are you winning accolades performance details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release that is posted on our website also please note that certain statements made during this call well before they get statements as defined by the private Securities Litigation Reform Act of 1995, such forward looking statements are subject to risk.

Uncertainties and other factors that could cause the actual results reactivated materially from those expressed or implied on this call for additional information. Please refer to our cautionary statement in our press release and our filings with the SEC all of which are available on our website and with that I will turn the call over to our CEO Rajiv said Raj.

Thanks, Todd and thank you to everyone for joining us the second quarter was another strong quarter in our continuing growth and expansion as accolade reinvents the health care market.

Revenue and adjusted EBITDA were both ahead of guidance and we added many new marquee customers across all of our solutions and segments and we demonstrated the accelerated integration of our acquired companies with the launch of two new solutions.

He will give you more details on our financial results a little bit later in the call I want to spend some time today discussing our new solutions and the continued evolution of our strategy and the growth of our targeted addressable market.

Before I do let me review some highlights of our execution since last quarter.

The demand environment for our solutions remains strong and we added new customers across all market segments and in new sales upgrades and cross sells.

We added new customers and signed upgrades this quarter with well known companies like Tory Burch, and artisan partners as well as a global financial services brand and a global hospitality brand to name a few and our health plan partners also continued to add to our customer base.

We also signed our first customers for accolade care, the primary care and mental health solution, we announced at evolves in September.

Given that we only announced this new offering last month, we're clearly pleased with our progress and our pipeline continues to expand.

We're also excited to announce that we have two existing customers committed to be the vanguard customers for our new accolade one solution.

Since our IPO, just a year ago, we've expanded our addressable market by tenex to more than $200 billion.

That is manifesting in new opportunities for our business and represented by a growing pipeline across every market segment in in these new categories.

Two weeks ago, we challenged the health care industry at our annual customer event evolved 'twenty, what we told our customers our partners any industry that it was time to move forward.

Simply applying new technologies to tired old business models only served to perpetuate the inefficiencies of a health care industry that now makes up nearly 20% of GDP.

And deliver subpar outcomes at rising costs for employers.

Our challenge included introducing a whole new category called personalized health care designed to deliver against the quadruple aim.

Better patient experience, improving health outcomes, giving physicians the tools they need to serve their patients and lowering health care costs.

And we announced two new solutions that specifically answered the call for personalized health care.

These new solutions accolade care and accolade one bring together the capabilities of advocacy expert medical Council and primary care and mental health.

Employers of all sizes recognize that a positive health care experience is critical to delivering a superior employee experience.

Youre seeing that play out loud voices across the country as millions of people leave their jobs seeking something that works better for them.

Sometimes that's a shorter commute, sometimes it's a better boss.

Employers need a better way.

I'd like to spend a minute now briefly outlining the category of personalized health care and then tell you more about accolade care and accolade one.

For starters there are three key attributes for any offering in personalized health care.

It's personal we have to put the humanity back into health care, we hold the view that having a long lasting personal relationship matters.