Q1 2022 American Well Corp Earnings Call
Pleasingly appreciates that automation is a compelling new element of digital health care in their required the trusted partner to provide an integrate automation into their care delivery workflows.
Also silver cloud is off to a great start.
We are hearing a very favorable response to this highly effective behavioral health program that enables our customers to reach more of their patients by combining automated features with virtual care supporting the movement towards health equity during this time of need.
Our sales leaders are gearing up armed with powerful enablement initiatives.
There are going to market with a plan for converge the highlights are well defined role as the leading digital care delivery infrastructure as well as the value of our unified future ready enterprise offering that allows clients to select the modules and programs they need now and expand.
When they are ready.
Now I'd like to shift to some highlights from our services team.
We are on track with the big deployments that we talked about last quarter.
Our solutions are resonating with these customers and innovation is happening in real time. These.
These deployments requiring infrastructure that extends well beyond telehealth to connect providers to one another into disparate tool sets used throughout these organizations.
We are breaking new ground in digital care delivery with these leaders setting standards that inspire either customers and prospects to choose converge.
A suite of their own digital care delivery aspirations.
Our services teams are busy migrating our customers on to converge in the feedback is overwhelmingly positive.
Many command experience from converge is faster and more streamlined.
I also appreciate the ability to add functionality.
To the ease of integration that is fundamental to our solution and it will empower them to adapt as digital care evolves and expense.
In Q1, we had recent go live at West Chester Medical Center, Marshfield Clinic Health system in Wisconsin, and the city of hope to name a few I would like to speak to a couple of other customer examples in more detail.
First El Camino health is fully migrated to converge and early feedback is great.
There are seeing significantly improved speed and user experience as well as powerful in visits features that deliver seamless collaboration with colleagues.
El Camino views provider and patient experience is crucial to their efforts to build trust for digital health care, a key initiative among the Silicon Valley systems operational groups.
The CIO of an image health echoed these comments.
After going live on converge the team at the NIH health immediately recorded much better speed and greater ease to instantly connect with patients.
<unk>, the headache of managing disparate credentials across disconnected systems.
We're delighted to be providing the core functionality supporting element health strategic initiatives around efficiency and outcomes and are honor to have been chosen as their partner in pursuit of true digital first care delivery.
And a great example of onward is the chosen partner in true digital first health care, We recently announced a partnership with LG.
By combining <unk> extensive product portfolio and market presence with <unk> deep digital health care knowledge, we aim to unlock the last mile for patients and providers and deliver greater access to health services two devices they use everyday.
Our goal is to simply and intuitively connect provider to patient leveraging the LG user experience, while relying on the expenses capabilities of converge to do much of the heavy lifting behind the scenes.
As in person virtual and automated modalities converge to create significantly improve health care experiences.
Looking at the last mile connecting to patients is more important than ever.
Moving onto modules and programs that enhance the value of our platform and set the stage for us to expand our presence within our customer base. We had a few exciting announcements recently that I'd like to highlight.
We recently announced two new programs to add to our Arsenal.
We are bringing to market a compelling new musculoskeletal program designed to keep treatment on tract with digital interactions.
This program provides access to physical therapy virtual coaching digital sensor kit and engagement services to achieve better program adherence and outcomes.
We partner with Sward held for this program, which is a great example of growing our ecosystem move innovators in the expensive power of converge integration.
And our new Dermatology program offers quick and easy access to quality care with board certified dermatologists, who can treat nearly 3000 conditions, helping to solve for the nationwide shortage of dermatologists.
The program provides a more convenient alternative to traditional in person dermatology care and faster turnaround times, allowing members to identify and address issues early.
Potentially mitigate future costs.
These programs address two of the most pressing pain points among the cost containment initiatives of health plans.
They augment our list of well over 40 modules and automated programs that deliver hundreds powerful use cases that we will use to drive expansion of high margin reoccurring revenue within our existing customers and also provide the iwai motivator for new customer adopt.
Sure.
To wrap up Q1 highlights I want to add that I'm proud of the way our teams are executing putting in place the crucial elements of our solution lending new names driving engagement and executing towards our mission to define and deliver the.
It'll infrastructure, enabling the future of health care.
Next I'd like to spend some time briefly reviewing what we are seeing in the market for our solution.
In my many conversations with leaders of health care organizations, who described the challenges they're facing these speak to the need for a true long term partner to support and accelerate their aspirations for digital care delivery.
And it's clear that the market is moving to us.
Q1 was a busy quarter for our industry with big events like Vive enhance.
Our booths were busy with lots of lead generation traffic and it was great to be back to in person meetings.
Perhaps the biggest challenge cited in these discussions is the enormous fragmentation of technology curve.
<unk> digital health technology today.
It's a very confusing world with telehealth is small element overworld in which digital health care.
Is a certainty.
Health care industry Cio's currently of hundreds of tools that are being used by disparate population of users most of which are not connected.
And then endless stream of new tools is on the way.
While some may choose to build custom components and integrations in house I believe in the end health care will choose to specialize in the business of care.
And its leaders will choose to leverage trusted partners, who complement not compete with them to ensure best practices for digital health care are enabled and future ready.
We are fortunate to be entirely complementary to empower these large players and further assist them to assume they are important tool in the future of care delivery.
The current crisis and care team burnout is making the resilience of clinician and stuff it top priority of hospital Ceos.
And the struggle to unified disparate solutions to create more efficient workflow is very real.
With our solution built on years of mind share with our customers, we are bringing their electronic glue the connector to organize and create a secure.
<unk> and seamless experience.
I'd like to take a moment to describe how our solution benefits the full care continuum.
First our solution is designed to improve patient experience and outcomes.
Today, each time it planned remember six care the experience is different and disconnect.
Virtual visits can be inconsistent and delayed with multiple logins and disparate portals made even more confusing by referrals to specialists.
Patients struggle with lack of information on what is covered and how to follow up with converge as their foundation, our customers will deliver a seamless patient experience. One that is also electronically unified.
A best in class Telehealth experience will be table Stakes.
Patients will take rapid seamless connectivity is a given.
And through a streamlined user experience driven by our infrastructure will be able to navigate across various providers.
<unk> hundred one unified experience in the payer portal. They will know what is covered which provider is in network and can make payment on an ecosystem empowered by converge.
Second our solution is designed to address security and burnout and the struggle providers face as they cope with mountain workloads and fragmented disconnected digital health care tools.
Whether a provider sees a patient in person virtually the experience will be fast and seamless because many points along the continuum of care are connected to the platform.
Converge is designed to connect the care team to the information they need help them coordinate for consults accelerate next steps and deliver better outcomes.
Converged offers options for managers to load balance and offload cases during peak times.
Can improve the standard of care by simplifying integrations with new automation programs that enhance continuously between visits.
Designed to do the heavy lifting converging cooperates rules and regulations, plus the documentation and payment systems the tumor.
Make digital care delivery so complex.
Our solution can unify the care teams resources and drive new efficient workflows to achieve sold after efficiencies. So that the teams can focus on the delivery of care.
Third turning to Payors are significant installed base in close partnership with Payors.
Inform the development of converge, which is optimize around their needs.
Convert is designed to accelerate payers' efforts to unified disparate operations that include member services provider networks employer clients Pbms and care management requirements.
Beyond the hard work of connecting today's digital resources, we enable payers to further optimize their models with add on modules across additional use cases and with automated care.
With our ecosystem further expanded by programs like silver cloud players can offer their members the best in class be able health driving substantial benefits on both savings and improved patient experience.
None of this can be done on the payers existing platform in a white label experience.
Maintains their close connection with their members.
In a digital health to reality.
<unk> built on converged infrastructure.
Participants in their digital resources will always be connected and informed.
There will be customized and optimized.
Like Amazon's distribution framework does the heavy lifting of integrating disparate sellers customers and payers with fulfillment technology and security the role of converge is clear.
To be the engine to empower providers patients and the industry that supports them by connecting the tools they require to realize a better overall health care experience.
The most important element of converge is not a single program.
But the intersection and integration of all of this and the opportunity to begin with specific instance, and add on functionality over time.
In summary, this digital care is rising as a priority across the industry. There is a growing need for enterprise grade care delivery infrastructure and our solution is leading the way.
The challenge is fragmentation of technologies and tools and the goal is to improve outcomes by allowing care teams and payers to leverage the best of in person virtual and automated care across the continuum.
And unlike pruned solution telehealth vendors, we're enabling not competing by providing a powerful connected infrastructure layer that extends well beyond telehealth.
We are helping the various players on all sides of the equation to leverage our platform to design and deliver the method of care they choose and the tools they select.
And in pursuing the strategy to deliver the leading digital care delivery infrastructure. We are building on our deep knowledge of healthcare, leading with technology first.
At Anvil, our future is about supplying that infrastructure to accelerate our customers' own unique vision for digital care delivery.
And that means selling an infrastructure offering that drives long term high margin subscription software growth as we pursue our path to profitability.
Sure turning the call over to Bob I wanted to highlight an important development.
We recently announced the arrival of our new Chief Marketing Officer, Susan worthy.
Susan is replacing our outgoing CFO Mary Mcdowell, who is retiring after 10 years, leading our marketing organization.
Mary has been a great partner over the years and we wish her the very best.
Susan is a tenured marketing executive with more than 25 years of experience as a leader in enterprise level health care services and technology companies.
She possesses a deep understanding of health care and technology and she brings to them will at creative data driven approach and experience that comes from years of leading world class marketing organizations.
We will come soon and believe her skills will be instrumental is returned the page from telehealth to converge.
Now I'd like to close my commentary by saying, we think Q1 represents a good start to a very strategic year for him well.
Hey, Tom will a role in our industry is clear our opportunity is large and expanding and our mission has never been more relevant.
Now I'd like to turn the call over to Bob Bob.
Thank you and thank all of you for joining the call. This evening as on our last call I will highlight some of our key operating metrics then take you through our first quarter 2022 and financial results.
Asset providers on our platform, specifically providers, who are employed by our customers is an important signpost of the value. They derive from using our software we continue to see healthy growth year and ended the first quarter with over 102000 active providers.
This represents 12% growth compared to the fourth quarter, marking the third consecutive quarter of double digit growth in this metric.
Asset providers grew 27% compared to a year ago.
Demonstrating the continued acceptance of virtual visits as a standard of care total visit growth remained strong at $1 $8 million in the first quarter, representing 15% growth versus last quarter scheduled visits grew 23% in the quarter and comprised 75% of our total visit volume a new high for us.
Well.
As discussed we are making steady progress on converged development and the migration of our customers to our new platform is proceeding well.
In the first quarter total visits on converge grew a healthy 40% quarter over quarter and comprised 10% of total visits which is in line with our fourth quarter.
Our plan for this year calls for continued healthy growth in visits on converge.
And now I'll turn to our financial results.
Revenue was $64 $2 million, reflecting growth of 12% versus the first quarter of 'twenty one.
Bonus of revenue are as follows subscription revenue was $28 7 million, reflecting growth of 17% year over year.
Compared to Q4 subscription revenues declined 5%. This decline reflects an expected level of churn that was not yet balanced by new platform subscriptions given the timing of our new platform release. This was in line with our plan and already accounted for in our annual guidance.
AMG visit revenue grew 10% year over year to $37 million the number of AMG business actually grew faster than the 16% year over year and part of the growth in the number of visits was due to a change in how we have visits in our AML psychiatric care business.
Absent this change visit growth would've been 10%.
Revenue per visit was $79, 5% below last year, primarily due to the addition of this previously not included pool of behavioral health visits our AMG business is an important differentiator in the market and critical to many of our clients and we view the offering as an important supporting element.
Of our converged strategy.
Our services and care points revenue was $4 $8 million.
Versus $5 2 million, a year ago, and was $7 million lower than our seasonally strong Q4.
Turning to profitability, which was a real positive this quarter gross profit margin was 43% 500 basis points higher than <unk>, 21, and up 300 basis points versus the fourth quarter of last year.
The year over year increase was driven by a higher mix of subscription revenue and a larger percentage of higher margin urgent care visits in our <unk> business.
Our gross margin can vary quarter to quarter based on mix dynamics for instance, the increase in Q1 over Q4 was due primarily to the Q4 seasonal mix shift away from lower margin services and care points revenue in Q1.
We believe as we ramp up converged deployments the efficiencies associated with our multi tenant SaaS based platform will lift our gross margins.
Turning to operating expenses and in support of our converged strategy R&D spending increased 11% versus last quarter to $37 5 million as we indicated in our annual guidance, we expect R&D to ramp up in the first half of 2022 as we complete the more intensive development work on the plat.
Form then flatten and decline in the second half sales and marketing spend was flat versus Q4, adjusted EBITDA of negative $47 1 million is in line with our plan and our guidance for the year.
Transitioning to the balance sheet, we are fortunate to have a substantial cash position ending the quarter with $675 million of cash and short term investments. This reflects a $14 million cash contingent payment to converse of shareholders upon achieving their platform integration milestone early in the quarter.
Converse is now largely integrated into converge and we also announced a month ago. The accelerated settlement of the remaining component of the converse of the earn out with.
We are not behind us we have the benefits of cultural alignment and our teams are working well together with a unified sales message. We're on track to benefit from the long term synergies and ease of product integration and new product development plus the cost efficiencies, we've already outlined in our long term model.
Turning to our outlook for 2022, we are off to a strong and strategic start to the year converge migrations are in progress development of converge is proceeding on pace and as a result, we reiterate our previously issued annual guidance to summarize our first quarter was an important.
And encouraging quarter for us on many fronts. Our teams are executing well United with a shared vision. Our role is clear we aim to be the infrastructure provider in the rapidly evolving and fragmented digital healthcare landscape and <unk>.
Towering and complementing our customers' business initiatives by putting our technology at the heart of our future. We believe we are on solid ground to execute through this transition year and put our company on a path toward long term high margin subscription revenue growth.
As such we believe we are very much on a path to achieving the broader strategic and financial goals, we outlined in February .
That I will turn it back to <unk> for some closing comments before taking your questions.
Yes.
Thank you Bob.
We are proud of our team and we are encouraged by the start to the year that Q1 represents our role in the digital care delivery landscape is clear.
The opportunity in front of us is large and expanding and we believe we're just getting started.
Before we move to Q&A I wanted to update you on one final topic.
One we know is rising importance not only with investors, but also in our world today onwards approach to ESG.
Hey, Tom will have values have always been core to who we are.
Can serve as the foundation on which we strive to build a sustainable growth business and promote the long term interests of our stakeholders.
We believe we have a meaningful ESG story to tell around our people our products and our processes and we are eager to help the world's Seo company to an ESG lands.
We plan to provide more information regarding our approach to ESG later, this year and any negative report that aligns with leading reporting frameworks.
We look forward to sharing it with you.
Thank you for your time operator, please open the call up for Q&A.
At this time I would like to remind everyone. If you would like to ask a question. Please press star followed by the number one on your Touchtone phone.
We ask that you please limit yourself to one question.
Your first question comes from the line of Ricky Goldwasser with Morgan Stanley . Your line is open.
Oh, Yes, hi, Thank you this is Craig.
Ricky.
All the color you provided on converge.
If I could just add just from an enterprise demand standpoint, more broadly so some companies have caution about lengthening sales cycles and uncertain macro just what youre seeing in the marketplace and then how it may be the same or different for you. Just given you are in the midst of a product cycle and you are ramping with converged now.
Hi, Craig.
A question on the one hand, one cannot ignore the headwinds in the market at large.
Ken just to be the economy periods of inflation uncertainty and so on and so forth on the flip side. Our enabler platform is addressing most of those were challenges for our clients.
Condition burn out if.
If it's growing efficiency improved efficient access.
Carrier services that eventually improved financial and clinical outcomes all of those things are becoming more relevant giving higher demand than ever.
It is also true with enterprise platforms take longer to integrate.
As a result, they have their own cycle of revenue recognition on the <unk>.
<unk> side.
Significantly larger deals with much greater upside the net of it that we reiterate today our guidance for the year.
Seeing any material changes to the dynamics that we put in our model, which we share with you a few months ago.
Got it I appreciate that thank you.
Your next question comes from the line of Charles <unk> with Cowen Your line is open.
Yes, thanks, guys and thanks for taking the question.
I wanted to ask you.
I guess two items really one is the partnership with LG.
Maybe you can give us some more details around what the.
How that will work I know you had a partnership several years ago with Samsung.
That had ended just trying to understand what's different this time or how is it different.
Now how we should think about the economics there.
I'm guessing revenue show up in the innovator line and then secondly, the <unk> program.
Our partner was sort health here.
This is an example of sort of the App store concept that you had talked about in the past that will be enabled through converge.
Trying to understand a little bit on the economics as well thanks.
Hi, Charles Thank you great great questions.
So we are really trying to create a seamless single health care experience that brings together all the different touch points.
We believe that things like California. For example are going to be incredibly important as a trusted the touch.
Touch point for many patients and growing number of providers, but one cannot ignore the TV. The TV is present in so many rooms in the living room.
<unk> and then the carriers moving home our ability to create a robust seamless integrated experience is a very important the last mile.
It's well known that the LG is incredibly popular so.
So we could use their reach to interact with many more.
Patients and that really is the promise of this relationship while this.
Partnership really drive.
Licensing revenues from the get go.
Main value relates to strategic value or connecting another very important touch point to the singular experience.
So we feel great about where we are you mentioned earlier partnerships.
This change will this change in a decade with possible today on an Android infrastructure and the capabilities of connected TV miles apart.
What it was decade. It goes so much more is possible today and we feel great about this one.
Your second comment is also very.
On point in the sense that while of course in this kind of character of our program is very very valuable one of the great things here in our ability to demonstrate how an entire program created by a third party.
Embedded in the singular experience that I talked about earlier, while sworn not to really go through the App store experience.
For me.
The process they went.
Through integrating and creating a partnership with US is indeed amongst all of our plan to include many more third parties and offer our customers and their patients and provider much more choice as they develop their own digital health the quantity.
Your next question comes from the line of Cindy Motz with Goldman Sachs. Your line is open.
Hi, Thanks, and thanks for taking my questions.
Sounds like people like confirms the people who have converted and I know you said, it's about 10% of the visits can we assume that thats about it I mean is that how what percentage of clients is that and then.
With Covid slowing I mean, it maybe some of the distractions going away and I don't know Covid, maybe have another wave, but do you think is the cadence that you sort of suggested last quarter. I mean, do you still see that happening maybe could it be a little better.
And then you had said too that the path to profitability, you're good with still the longer term like around.
It wouldn't be point per year, but like around 20% for the out years. Thanks.
Hi, good to hear your voice.
And it sounds like it's taking a question about the let it go.
So in essence.
When you're absolutely right that we are very encouraged by what we see in converge as I mentioned, the accounting group number of accounts can be extremely confusing because of the get go we had so many I'm going now accounts coming in but they're relative contribution to revenues and their level of sophistication will.
Value generation is very very different from very large payers. If you compare with more practice and anthem, it's very difficult to compare and could be misleading. So while the concurrency visit growth is not an exact science. It does give you some indication that basically we are growing according to plan.
It is exactly the case.
I'm happy to reiterate that not only our guidance for this year, but also our path to profitability plan is very much on check and represent a good mix of investments that you'd like to have with providing.
Back to you.
Cash flow positive.
For our stakeholders to reduce.
Risk.
In our company and increase the increase.
Most importantly, the last part of your question.
It really allows me to maybe focus a little bit more about the point that is often missed by.
And that is the fact that many people keep focusing on the number of visits that we provide or the impact of the pandemic on our.
Our future I would like to suggest that what we are seeing is not a fashion or quarterly trend something far greater than that so we could add to zoom out for a second.
And may be realized that we are seeing a whole transformation of the health care system, one that started more than a decade ago in 2010 with the adoption of the EHR.
We need to start of the healthcare transformation.
And the pandemic Covid added really big.
Contribution to the adoption of virtual care lots of people tried it for the first time and that was incredibly important.
In a way of.
Growing adoption.
What we're seeing right now is the added.
<unk> automation coming.
Coming game and the three components access to physical care more and more virtual services and automation.
With our connected to the main pathway of care are driving what we see it didn't start yesterday and it's not going away tomorrow. If anything we got some acceleration, but this is a trend that we have very high degree of confidence in it is.
Complex, but yet incredibly valuable.
So I don't think there is a reason for us to second guess, what we shared with you.
Not that past that happens overnight, but it's a very clear path.
By the choices we have made.
<unk> converge is a giant according an effort, but in my opinion, it's going to pay off in dividends by creating something that the market really needs to date because of the enormous value.
Integrated care delivery system.
Yeah.
Great. Thank you.
Your next question comes from the line of Stephen Baxter with Wells Fargo. Your line is open.
Yeah, Hi, thanks.
Follow up a little bit on one of the prior questions. We're hearing from the hospitals with their financials were under a lot of pressure even before the acceleration that we've seen in inflation. So obviously do you see yourself is helping address the cost problem over the longer term and I get the year existing customer migration seem like they're well on track, but for new customers. It would be interesting to hear.
We're a little bit more about why you don't think there'll be impacts either from competing budget priorities or just the focus of this hospital management, yes. Thank you.
Okay.
Very good question, although I have to admit I didn't say there was no way instead that the impact that we see could be balanced by other elements. There there's clearly.
Some serious struggling going on because of the economic hedge.
Headwinds, but we definitely see.
It's important to realize that when we talk to our customers. The first thing they say that they have they realize the enormous potential of digital solutions, but they have so many of them.
And there is enormous costs not only in the direct cost for maintenance and the difficulties in integration, but also the impact on the provider experience the training things of that nature and what are they are able to really fix a lot of these pain points.
We are not only adding efficiency, but we're also touching the issues.
Baird.
So when we talk to our clients a nuance and that's you asked us to focus on the <unk>.
You want to narrow the number of platforms that they have and they expect the platform that they choose to do much more for many more.
The people.
There is also growing realization that data is incredibly important in the world that focuses on value you cannot really have one platform that aggregates inflammation in house or in patient and another one that focuses and virtual visits and then the third one which focuses on automated their care and Coco.
You need to bring all these data in a patient centric way together and we offer that and of course that is an important element that could eventually contribute to top line.
And two to efficiency, so I would summarize by saying that.
The World is definitely got more complicated Luckily for us we anticipated that complexity and build an infrastructure that is just for the doctor orders in any way to really fight a lot of those challenges.
Headwind and we believe and we see.
It's well understood by not only existing clients, but also new clients in all of you're going to see some real World example, it beyond what I mentioned previously.
Your next question comes from the line of Jessica <unk> with Piper Sandler Your line is open.
Hi, Thank you so much for taking the question.
So I think.
First.
My question would just be on the payer version of converge.
Are we in the end in the.
Development of that product and then when do you anticipate kind of migrating our payer customers.
Onto the upgraded version of converge and then just in terms of that.
Hospital customers that you guys have announced.
Sorry. This afternoon can you just help us understand which of those were existing <unk> customers, and then which of those were new customers entirely.
On the E Commerce platform for the first time, thanks, so much.
Hi, Jessica well there is no payer version of converge. There is one converge that's the beauty, it's really complex to create one converged, but youre absolutely right that we saved the best for last in the payer elements are coming in are.
Delivery.
Michael.
Happy to share the news as we talked about.
Also on the last quarter that in the second half Youre going to see go lives not only all employers and delivery networks.
This is but also payers. So we are beginning to.
Onboard the payer the very soon.
And that process is going to continue in Q2 or into the next day.
Next year some of those payers are very large.
And require long stope integration points.
Yet they are we are very encouraged by their determination and understanding about the new opportunities that the newer upgrades.
We.
Oh for them.
Far as the.
Customers I mentioned.
<unk>.
Swear, but as far as I remember.
The few names that we mentioned on the call are all existing relationships. So the overhang.
Well of course, we don't have only.
Existing customers, we have some new ones, but I wanted to focus on are very impressive.
These achievements that we see.
The existing customer I want just to make make it very clear that there are many many more names and use cases and stories.
That we didn't have time to mentioned.
On the call.
One of the greatest benefits of creating a platform that once its there you sort of sit back and become amazed by the value that is generated by the innovation of our customers and partners.
So maybe to end your.
Your question Al.
Just give you. One example, one more example.
Yes.
Over delivery network that you ask about maybe spectrum health.
So their VP of care management III <unk> Baird.
Went public recently about their use of automated technology by them well.
That allowed them to.
Interact with patients following their visits to the emergency room.
And that single modality unknown.
<unk> generated 5% reduction in <unk>.
And acute care utilization.
Moving a value of 19 909.
$98000 and care savings for that.
Organization.
So interestingly Dr. Byrd also said that they were able to use our technology to create a new transition team that really stand between patients.
To buffer the demand to manage their care, resulting in not only great.
Patient experience, but also such a powerful provider experience that she called it a great staff recruitment tool.
So as you can tell I can sit here for a really long time until in many more stories, but unfortunately, we don't have time to wait.
Got it. Thank you that's helpful.
Your next question comes from the line of David Larsen with BTG. Your line is open.
Hi.
Total provider visits came in a little bit ahead of what we were modeling.
Any sense for what drove that and do you have an AMG provider visit count.
For the quarter. Thanks.
Thanks very much.
Yeah.
I'll take that so.
AMG visits on the quarter or.
I think I said they were flat with what we had in the fourth quarter 390000 paid visits.
Okay.
And.
What drove.
Total visits higher.
I think was just continued.
<unk>.
Exceptional performance in.
In terms of the growth of visits.
From from our software customers right. So.
I think I said, we had our third consecutive quarter of double digit growth there.
And.
And so we're very pleased.
Report that that.
<unk>.
Continues I shouldnt say to surprise to the upside, but I think continues to.
Indicate really strong user benefits the customer benefits from from the platform.
Great and then can you talk a little bit about hospital buying patterns I think last quarter. There was some commentary around hospitals being focused on COVID-19 and the spike in adult to Varian and there may have actually been some elongated buying decisions what are you seeing there.
This quarter are we now through that our hospitals rapidly more rapidly purchasing knees and do you have any color around bookings trend on a year over year basis, our backlog trend on a year over year basis.
Thanks.
So David.
And as you know, we don't really report on those metrics, but I would say this.
What we see as growing interest.
On the more sophisticated part of our offering, namely mainly to converge, but pretty much everyone and especially larger delivery networks. The mechanics. The dynamics of the sale per design longer you need to assess many more parts you need to think about your strategy and your future and once a decision is being made.
Mid to larger decision with larger.
<unk> contract value.
<unk>.
A little longer.
So that should the intro and the micro dynamics, if you will.
<unk> revenue, which we talked about that nausea.
Going.
Forward.
As a general trend, we expect to see growing competition at the lower end of the market people, who just want to use the video dialogue is HIPAA compliant there are many players in this area.
The competition is fierce and while we feel great about our platform. Our added value. There is much much smaller versus the agile adding value in the large integrated delivery.
Capabilities that I mentioned earlier.
Earlier, so the net of it that we are really seeing a transformation of <unk> from.
The service company with technology into a large enterprise delivery also as it relates to the buying dynamics overall climate.
Okay.
Your next question comes from the line of Ryan Macdonald with Needham Your line is open.
Hi, Thank you for the question. This is Matt Shea on for Ryan I wanted to touch on the dermatology and M. S. K program curious if health plans will be able to roll out these programs when they adopt converge or if it will be an upsell after the converge implementation.
As a follow on was this at all motivated to better position yourself to cater to the 12 telehealth specialties that allow Medicare advantage plans to gain a 10% network adequacy credit or was there. Some other motivation that drove a launch of these programs.
So Matt the answer is yes, and yes, although we don't try to sheets, yes.
The agenda of the program always.
But in the same way that Apple doesn't necessarily select apps for one reason or another what we want to do is to create comprehensive diversity to allow as many options as possible to make sure that our clients are successful.
As a vacate.
So the dermatology at Emmis care, just important topics in the same way that they ever healthy they're super important or a chronic care should definitely expect to see us covering bigger and bigger part of the care continuum and although then it into.
Integration into in network physical options into.
Neutral growing number of virtual auctions and the growing number of automated the auction.
<unk>.
Central part of what we offer today made by them well.
But in the future as I mentioned before we definitely expect to have lots of other third party contributes the wrong, even if they sometimes overlap or compete with our own how say offering if you will.
Your next question comes from the line of Eric Percher with Nephron Research. Your line is open.
Thank you.
Question relative to model cadence this year and it's one part revenue one part expense.
On the subscription revenue side I heard you loud and clear in terms of the expectation for quarterly.
Stepped down and the issue here being the new platform not not ready to put up what what's natural churn.
Or your thoughts on how that progresses over the course of the year and when you get to the point, where you see sequential.
Growth in subscription and then an expense similar question on R&D and your expectation for continued expansion and at what point, we start to see R&D contract.
I would say I have the same answer to both questions Eric second half.
And where exactly in the second half I don't want to get too specific but.
We.
We expect that.
We will start to recognize revenue.
Some go lives.
Large go lives in the second half so.
I would expect that.
Revenue growth on the subscription side resumes then.
I think some of what we'll see in the second quarter is very similar to kind of what we had in the first quarter.
Just given given the setup, it's a very similar setup although.
Yes, it's a similar setup.
And on the expense side.
<unk> specifically.
I would expect that to continue decline next quarter.
Then.
Latin and certainly declined by the fourth quarter.
No.
No change there in terms of how we characterize that last quarter.
More more kind of growing and plateauing.
And the.
In the first half and then.
Plateauing to shrinking in the second half.
Your last question comes from the line of Alan Alan Black with Bank of America. Your line is open.
Hey, Ido and Bob Thanks for taking the questions.
Active providers were up nicely again this quarter I guess is that coming from legacy customers, adding new providers or is it coming from new customers and if it's coming from legacy customers where exactly.
Is that growth coming from and then on MSA and Darren can you just talk about how that's going to hit the P&L is any of that going to flow through the visits fine. Thanks.
Yes.
Yeah.
I'll, let Bob answer more specifically, the although I'll give it to try to answer both.
Question. So yes. It is the growth is mostly coming from our legacy or existing clients.
As I mentioned earlier, our platform can see things our clients our discover discovery.
<unk> options and as a result.
More and more providers are involved a lot of these visits are specialty visits and lot of these visits are part of a sophisticated program because very clearly our ROI and really across the entire.
Care continuum.
As you know.
This is so important to us we believe that getting providers to trust our platform and our ability to retain them in growing the opportunity for patients to see their own Doctor was always really the number one kpis in anvil and we are so glad to see this growing so well.
In general a program like in the K or reoccurring revenues and not unlike as fast.
Revenue they do have an element typically over over clinical visits so.
So, it's a combo or some kind of with PM P&C and clinical fees.
As a general generally run their rule of course, it could be other programs that are exclusively <unk>.
And I am Heartbreak to think about the program that is exclusively visits.
Less likely.
I don't have anything to add really.
I don't think it's definitely.
The <unk>.
Our customers are the legacy customers that are.
Adding these and.
I would say it kind of goes hand in hand with.
With what's going on from a scheduled visits perspective as well I mentioned that scheduled visits were 75% of our total visit volume, which was a new high for us. So I think it's just when you see the number of providers that give providers growing on the network and the composition of visits shifting to scheduled visits.
Meaningfully over the course of the last year.
It just kind of speaks to how this is.
Very natural growth normal growth and that that this is not driven by.
Any COVID-19 type dynamics or anything like that this is the evolution of.
The offering.
That is all the time, we have for questions I'd like to turn the call back to Dr. Scheinberg for closing remarks.
Well. Thank you so much everyone.
I'm very pleased to see the growing level of understanding.
Well end, the converge and how we differ from some other business activities there in the market what.
What we do.
Lighting and has enormous upside.
I appreciate the time to really understand our mission and where we're going we look forward to seeing you again.
This concludes today's conference call. Thank you for joining you may now disconnect.
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