Q3 2022 American Well Corp Earnings Call

<unk> customers.

And we believe the market is moving to us.

In our day to day lives. It is incredibly apparent the digital is no longer just a side road to surrogate urgent care.

It is rapidly becoming the main highway for all types of care offered by all types of providers and services.

Providers are prioritizing digital care that allows them to offer an experienced improved staff retention streamlines workflows improves outcomes and offers a business model to grow revenue and be more competitive.

And payers and employers are scrambling to leverage digital capabilities to enable effective utilization, while meeting consumer health care experience expectations.

As we deliver on converge and the market response, we are solidifying our role as a digital transformation partner supporting our clients in defining and accelerating the strategies and aspirations.

For example, with converge payors employers providers and innovators can for the first time run on the same platform.

In doing so payers can enable members to see providers, they know and trust.

Can share gaps in care with providers and enable value based care much more easily.

Now I would like to speak to the broader environment for a moment.

As we see economic uncertainty creates both headwinds and <unk> for us.

We know hospital budgets are constrained.

And yet the challenges facing providers and payers to drive an urgent need to leverage technology to achieve their operational goals and Tom will we strive in every conversation to compel prospects and customers that our solutions are the must have engine.

To resolve their pain points today and well into the future.

Workflows priorities and timelines will vary.

So customers that require a platform that seamlessly enables a digital first approach now.

Scalable and he's also future ready.

This is the heart of our value proposition.

To conclude these opening remarks, and before I turn the call over to Bob to discuss our financials I want to thank our teams for their great work in Q3 and they are.

<unk> and contributions to delivering on converge and ensuring our unique role in the digital care delivery ecosystem.

With that I want to turn the call over to Bob.

Bob.

Hello, everyone and thank you for joining us I'm looking forward to sharing our financial results with you.

I'll begin with some key operating metrics. We are pleased to see continued growth in our active providers as the number of active providers on our platform is one measure we use to demonstrate the value we deliver to our provider and payer customers. We ended the third quarter with over 98500 total active provider.

Representing 23% growth compared to a year ago.

The subset providers employed by customers active on our network grew 25% versus last year.

Anticipate this number will continue to rise as we deploy converge for our largest customers.

Beginning this quarter, we changed our methodology of calculating asset providers due to complexities in identifying unique providers, who conduct visits on multiple platforms. We believe this change gives us a better way to accurately reflect our unique active providers as we unify our platform.

We describe the specifics of this in our press release summarize using this new methodology resulted in a slightly lower number of active providers in Q1, and Q2 of this year and based on this new method, we still saw healthy growth in the number of active providers of 19% in Q1 and 35% in Q2.

Moving on to visits total visits were $1 4 million in the third quarter approximately the same as last year scheduled visits represented 70% of visit volume consistent with the 70% to 75% range. We have seen since the beginning of 2021 and up from approximately 30% pre COVID-19.

We are making steady progress on converged development and the migration of our customers to our new platform is proceeding. According to our plan in Q3 total visits on converge grew nicely and comprised approximately 16% of total visits and increase which reflects what we said previously that visit.

Even by migrations are not linear and will expand as we migrate our highest volume customers.

And now onto our financial results.

<unk> revenue was $69 $2 million, reflecting growth of 11% versus the third quarter of 'twenty. One the components of revenue are as follows subscription revenue grew 19% over a year ago and was $31 $9 million, which is up 8% compared to the second quarter.

This is in line with our expectations and is reflective of this year as a transition year, our long term path to profitability is grounded in our plan to drive high margin subscription revenue growth at a rate that is faster than that of our overall business over the long run.

AMG visit revenue declined 4% year over year to $28 8 million.

Per visit was $78 similar to both last quarter and the year ago period, 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 $8 5 million versus $5 4 million, a year ago, and $5 $2 million last quarter, driven largely by our services business. The outperformance. This quarter was attributable to the acceleration of an international marketing services contract, which we <unk>.

I'd expect it to be spread across the back half of the year and was concentrated in the third quarter.

Looking towards Q4 services and care points typically have their strongest revenues in the fourth quarter as customers seek to drive engagement and use dedicated funds going into year end.

Additionally, we anticipate a healthy mix of professional services contribution to revenue in Q4 as strategic customers continued to deploy customized versions of our platform.

Turning to profitability gross profit margin was 40% approximately 350 basis points lower than last quarter, and a year ago, largely due to the temporary mix shift towards lower margin services and care points revenue I just discussed.

Our gross margin can vary quarter to quarter based on mixed dynamics, we believe as we ramp up converged deployments the efficiencies associated with our multi tenant SaaS based platform will lift our gross margins.

Next regarding our operating expenses R&D spending was similar to last quarter at $36 $3 million converts development is on track and we continue to plan for our R&D spend to increase into Q4, peaking this year and tapering off significantly next year as described in our profitability framework.

Our adjusted EBITDA improved to negative $41 $9 million from negative $42 8 million last quarter. Thanks to careful expense management around head count and ongoing synergies from our recent acquisitions.

Speak to this further when I cover our guidance.

Transitioning to the balance sheet, we're fortunate to have a substantial cash position ending the quarter with $582 million of cash and short term investments.

And now I would like to review our outlook for 2022.

As <unk> mentioned, our teams are executing well we are on track for the year and customer feedback on converge is very positive. We are encouraged by this we are confident our strategy is the right one and our market position continues to be strong.

We are taking the opportunity today to refine our guidance, we believe our revenues will be within our original guidance range set at the first of the year.

With only one quarter left in the year, we have clear visibility to achieving revenue and the lower end of our previously provided range of $275 million to $285 million.

Next I'd like to discuss our EBITDA guidance, we are pleased to be raising our adjusted EBITDA guidance for the year R&D spending related to converge is in line with our original plan and thanks to expense discipline around head count and synergies from silver cloud and converse.

We believe we will deliver adjusted EBITDA of approximately $10 million better than our prior guidance, our new adjusted EBITDA guidance range for 2022 is negative 180 to negative $190 million, we entered the fourth quarter laser focused on our strategic priorities, we will complete the build.

Out of converge deliver on our strategic migrations in deployments and work to ensure the success of our customers to further demonstrate the benefits of our solution.

As usual, we will provide full year guidance for 2023 on our Q4 call in February .

To summarize our third quarter was an important and encouraging quarter for us and we believe we are on a path to achieving the broader strategic and financial goals, we have outlined by.

By putting our technology at the heart of our future. We believe we are on solid ground to execute through this transition year and proceed on our path toward long term high margin subscription revenue growth and expanding profitability.

With that I'll turn it back to eat out for some closing comments before taking your questions Peter.

Thank you Bob.

With Q3 behind US, we aim to execute well and closed out a strong year.

It's early days in the evolution to digital care delivery.

Our differentiated solutions.

Our unique role in large opportunity inspire us every day to be the partner to enable and empower our customers is the seek to evolve their organizations to a digital first future.

With that we're ready to conclude our prepared remarks.

Thank you for listening today.

Operator, we are ready to open the line for questions.

At this time I would like to remind everyone. If you'd like to ask a question. Please press Star then the number one on your telephone keypad.

In the interest of time, we ask that you. Please limit your question to one.

We'll pause for just a moment to compile the Q&A roster.

Our first question comes from the line of Charles <unk> with Cowen.

Yes, thanks, thanks for taking the questions.

You talk about providers.

Payers and employers all embracing virtual.

And obviously, what we're seeing today in utilization compared to several years ago is much greater but they were down from the peaks during the Covid period.

How do we think about.

Where does.

Utilization go I'm not just speaking just let's say a visit itself sort of just the broader adoption of virtual as a core part of care delivering what do you think chipset.

Over the line where providers more broadly embraced it and clearly you brought up the idea of let's just being constrained in the macro environment. How much of that do you think is more of a headwind versus the tailwind that you're describing.

It's also an answer to help solve for that as well.

Okay.

You're on mute.

Paul.

Oh, sorry, good evening Charleston.

Thank you for your very good question.

We are using the methods of the path to try to measure the future in some way.

Telehealth was unanimously connected to counting the number of visits.

A token of the progress and we do that as well, but it's very important to understand that the adoption of digital delivery enablement.

Much broader.

A lot of utilization, we see does not necessarily.

Results in the period.

Having said that by creating these exceptional member experience or consumer experience, where my interaction with the health care system digital first.

It allows me to really interact and secure physical visits virtual visits and to a great degree automated visits is a trend that is definitely here to stay and the other participants, namely payers employers and certain providers.

We are also participating in this trial.

Insulation.

So I can't imagine a future where this platform is not really necessary or a must have for.

For the future and seven going to use method with more relate to the improvement of clinical and financial outcomes that it delivers rather than two there.

Typically narrow metric visit.

Let me give you just one example, maybe to illustrate that.

On September 29th UCSF, one of our clients issued a very interesting case.

Case study.

Where they use our technology as part of the new pre listing.

To manage.

<unk> kidney transplant.

They are one of the renowned center.

You asked maybe in the world and their lease there is extremely popular.

<unk> grew to more than 4300 patients.

That is something that requires enormous amount of interaction not only with the people on the list, but growingly with the people that could be potentially candidates on the list.

And that was at all.

On the organization.

Our technology is the backlog they have created the previous thing.

The three allowed for navigators and in digital.

Digital envelope really powered by AI.

They're in the platform.

To really engage with these very large population with great emphasis not on the people on the list alone, but really on the people that would be potential candidates to join the middle East.

With less than a year.

You can play they were able to report that 67% of the patients enrolled routinely and engaged on the program, which is fairly high and more importantly, the waste these have been reduced by 30%.

There were able to show some significant savings of more than half a million dollar annually by reducing the ftes and reducing the listing and the testing costs.

Most importantly, they said that they've got some really great feedback from both their own staff.

Staff retention is very important today and most importantly their patients so.

This is just one example to show the decent care delivery will be measured in a much broader way going forward.

You see very healthy appetite in the market for different use cases and broad adoption overall free.

I appreciate that and if I could just sneak another one in.

Bob you talked about visibility into the fourth quarter and for the full year coming in towards the lower end can you talk about what kind of things maybe didn't happen that might have gotten you to the top end of the range.

Maybe just a sense for sort of the puts and takes that kind of occurred in the back half of this year. Thanks.

Sure Charles Thank you.

Sure.

Really happy.

Two.

To be coming in here and the range that we articulated at the beginning of the year on revenue and.

Talking about a beat on the EBITDA side.

For the year.

We gave a range for a reason obviously, we're in the middle of a strategic transition re platforming our business.

And.

And when we gave the guidance we talked about our primary focus items for the year, we're going to be.

And those are building out converge and finishing the development of the platform.

Implementing our strategic customers migrating customers and ensuring that.

Our customers have an excellent experience through that process and we feel like we are.

Have checked or are in the middle of checking all of those boxes. So.

The the.

That we set the range in was a different environment that we're sitting here today.

That being said.

We we are very pleased with with where we're coming out.

And we're confident that our approach to the market here is the right one to drive performance through the long term model. So.

That's I think what I would tell you.

The puts and takes.

Really some are in our control some some are not.

And.

I feel like we did.

Doing a very good job, especially with the ones that are in our control.

Your next question comes from the line of Craig Hallum back with Morgan Stanley .

Okay.

Yeah.

Okay.

Yes.

Greg We can't hear you.

Your line is open Mr head and neck.

Oh, sorry can you hear me now.

Yes.

Perfect.

So just a question on the overall spending environment and particularly the dichotomy between health systems and some of the pressures they are under versus health plans and then maybe also you can tie into that the point of future proofing, the technology and what that means in the type of backdrop, we're in today.

Sure. Thank you Craig So there is no question that it grew by the.

The macro trends right now and there is also no question health systems seem to be even more tight and health plans.

As we speak.

Type of environment really requires us to very much focus with our customers on value and ROI.

When we talk about that.

We stand as we expand as we migrate.

We really try to understand the business priorities of our customers and find a way that our platform can serve.

Their short term need.

In the case of health system, obviously, the key leaders are tough retention, improving efficiency and diversifying the revenue and allow them to better compete and increase the top line.

With Payors.

They are seeing there.

And that related to the member experience.

Prudent financial and clinical outcomes, and creating much more sticky meaningful relationship with their customers, whether it's members or ASO in some cases the government.

The second point I think you alluded to relates to the modularity of our platform in this type of environment, even more important than ever.

I remember in the past, we had really one giant offering and you either both equal you didn't.

Today, you can really buy the component that you need today.

But it really benefits from the <unk>.

Andy to expanded use cases and utilization of the platform.

We scale not only way or frequency of use but also in <unk> scope of the services.

Then.

This was not lost first and foremost.

Our strategic customers.

And really we are so proud to have some of the largest organizations across the United States is select <unk> as their partner for the next few years.

Initially in the market so.

Net appreciation for.

For the future readiness in the mid part in the lower end of the market. It was very much.

Rice base.

That is changing.

I cannot overstate.

The importance of that but it's very difficult to measure exactly how this is going to stay now by growing lead the sophistication is going down the market size and even smaller clients realize that there was much more than they can do and the pain of switching platform after a year or two.

Significant.

So we see that as an argument for it.

Bank.

Yeah.

I appreciate the color.

Your next question comes from the line of.

Dan Bernstein with Wells Fargo Securities.

Thanks for taking my questions.

I wanted to go back to maybe a couple of comments that I made in the prepared remarks, I think you referred to an uncertain market environment pressure on health systems.

And then Bob I think you mentioned that migration is on track I'm just trying to understand are you seeing any actual buying.

As health systems, or maybe contemplating certain types of module operates as we think about next year, maybe without giving us actual guidance for next year are you seeing any types of pressures.

Well.

There are many many ways.

That is why people.

We'll stay with download or expand that's a natural way a fairly comprehensive platform, but as I mentioned earlier, there is a clear equivalent rate.

Number one I think or health systems today, it's tough retention.

Proving the provider experience and the key the fact that we are fully integrated in <unk>.

Growing number of EMR. They interface is very fast very modern it's highly personalized and contacts entities.

The ability to work not only with your patients in.

But also with other providers and really expand you'll reach a number of ways seems to be very important.

In helping retain.

The SaaS.

We also see that other features of our platform reading the area of automation more than anything else using AI and natural language processing and other other technologies is very very helpful. Because many of those providers. We are very tired and there was enormous pressure on them.

And if we can help them.

Actions managing the relationship with patients with reminding providing reminders, providing some kind of longitudinal envelope.

So they can manage them better that seems to be.

Currently appreciated by our customers. So overall we are these are these are the comonomer levers of course.

There is very large list of examples as it relates to the management of your emergency room.

The way to avoidance of their readmission the integration of behavioral health.

That creates giant bottlenecks very open very.

Very regularly.

The management of scope are just some examples too.

Two very specific use cases that we see that literally hundreds of those.

Today and clients are rediscovering then as we go.

Thanks, maybe a quick one here.

On the go to market strategy I think this year indicated that it's kind of all hands on deck to drive the converge upgrade cycle is that changing next year would be great to get a sense of how your sales strategy.

In 2023, thank you.

Sure. So this year was really all about the deals more than anything else that was the number one network for the company and is more benign mentioned earlier, we are in good shape.

The lion's share of our planned development behind us very soon by the end of it.

Yes.

Next year, it's obviously about defining that in further improving we will really never stopped doing that going forward as part of our offering to our customers.

It's all about completing this migration. So the immigration plan was public we talked about it very clearly the first line of defense was to protect our low end customers, which would be quite successful early on with our NAV.

Then we move to our providers.

We are hurting.

And we did that and continuing to do that.

Very well.

And now we are turning to the last segment into we're offering which are payers.

Cvs announced Theyre going live and they have a payer component obviously to their offering January 1st either example.

So we definitely plan to see a lot of migration.

Also next year. So the focus of this deal was development in the mission migration in strategic market segments next year. The focus is really on migration.

This will generate opportunities for same store growth.

It will create opportunities for strengthening our relationship with our customers and retention and very importantly, this is a very close market newcomers are really looking at existing customers and their success.

And we believe that when we have a network effect of more and more clients are demonstrating that in various ways that will be a strong tailwind also for other customers I would like to caution people that this growth.

Very heavy train it takes time to move where we recognize revenue not only when we signed the deal and then when we implemented and that will go live in the county.

The length.

Of the agreements, but the trend is very much there and its very encouraging.

Your next question comes from the line of David Larsen with BPI team.

Yeah.

Hi, congratulations on a good quarter.

Not getting too specific.

You did previously provide sort of long term objectives in terms of revenue growth and EBITDA margin.

What are going to be some of the positive drivers for 2023, how is the Cvs deployment progressing relative to expectations is revenue for Cvs being recognized now or does that start to roll on January 1st.

And can you give any color around like the pace of.

Newly signed deals in calendar <unk> of 'twenty two.

<unk> sort of somewhat challenging economic environment that we're in are they trending relative to expectations.

A high level, thanks very much.

So David maybe I'll just take the first part of your question as it relates to two appetite in the market. The appetite is healthy. There's no question about it people are paying attention and I'm fairly confident that if the trend will continue we will see a nice mix of same store growth.

We have a very large market share so that's incredibly important.

But also a newcomers we shared some of them to others, we didn't carry yet.

But overall I think what we see the encouraging <unk> complete the answer.

Okay.

So the.

I would say I think the heart of your question is.

What's where is the good news is going to come from next year.

And so.

We've been we've been.

Thank you.

Fighting with one hand tied behind our back here for the last 18 months.

With.

With the with the re platforming of our business our sales force has been.

I don't want to handicap, but they haven't been able to present to customers.

A platform that is in operation.

With the same or better functionality.

And they've done a fantastic job holding on to customers, while we've been doing this but signing new logos, obviously is difficult and that kind of a setup.

Setup and as is.

Signing customer upgrades.

We have done both.

And.

Full credit.

Those folks for making that happen and selling division in the future.

But obviously, we feel really good about how we're positioned going into next year.

To see bookings ramp relative to the rate that we've seen over the prior several quarters.

Being in a position once people are comfortable with the migration.

And active on the network for a while are existing customers buying.

Buying up more services so.

So those.

And I guess I would add to that.

We're seeing and I referenced it.

In our prepared remarks, our strategic customers are wanting more and more of a converged functionality.

That.

That's a terrific thing.

And.

And that will drive.

Hopefully as we go forward here some incremental professional services revenue as we deploy more customized solutions to the folks that demand those.

So I would look for in <unk>.

Youre going to see.

Some of this.

In the first half of the year, but this is really going to be.

Build over the coming quarters.

Bookings momentum draw.

Driving implementations, which are going to drive go lives, which youre going to drive revenue and similarly as you see.

The percentage of visits on converge, reflecting our migration progress.

As those migrated customers.

The throttle off and.

Realize.

The power of the platform and are very comfortable get comfortable with it buying more whether it's silver cloud or converse.

Or other modules.

Buying up from there we have certainly seen demand.

For that but that will also drive a good bit of the growth that we'll see next year.

Thats helpful don't want to get specific on.

Numbers are quantum we'll certainly do some of that beginning of next year.

Great. Thanks, very much I'll hop back in the queue.

Okay.

Question comes from the line of Alan Chris Inglis with security.

Hi, This is actually Eduardo Ron on for Joel Indra.

We're just curious to hear your thoughts about client feedback, particularly those that obviously you mentioned that the ones that up to converge, but those that either delay, making a decision to uptake the offering or our DAU and.

What drives that decision or are they looking for something else within within the module that you are offering.

So again, a great question and I am sure that we don't have 100% penetration in the market and some clients. Obviously go with the competition, which is which is the fund.

As far as what we see.

We have very good success rate.

Getting people excited about our offering.

That should not be confused with the readiness to make a decision or implement the decision.

Those two factors are really influenced by the macro in some ways.

It influenced by the priorities of the organization.

So people, we understand the value of the offering we feel that.

Obviously, many of them are ready to jump in and commit.

Then when it comes to implementation in.

It's tough availabilities things of that nature, there is always a queue and factors beyond our current quarter.

Don't see material impact of that to be fair.

Some organization, especially the larger ones.

Year sense of urgency and they want to grow much faster than we can even deliver others.

More challenges, especially in Q2.

Health systems, but these challenges eventually may push the original timeline by quarter or by a month or two it's not something that we feel is going to have a dramatic impact on our plan and on our future and that is very much linked to the realization that you actually need the platform.

Got it.

Petroleum uptake.

Next question comes from the line of Jack Wallace with Guggenheim Securities.

Hi, This is John on for Jack.

I wanted to ask to see if.

In terms of guidance or visit volumes are you seeing any are you seeing any.

Impact from the flu season and are those are those negative impacts embedded within the <unk> guidance.

Thank you.

Okay.

<unk>.

Negative.

The negative impacts I guess it is negative for the folks that are getting the flu.

But it is positive for our business.

It's just that's the business we're in.

Certainly.

We are.

Yeah.

We are seeing.

A heightened level of activity.

Associated with that and.

Anecdotally I am saying it.

On the ground in New York City.

The fluid certainly.

Come early.

Two to the northern hemisphere.

And volumes are.

I think.

I don't want to get specific about volumes, but but we are we are clearly seeing an impact from.

From from the flu and other.

Respiratory viruses.

Your next question comes from the line of Eric Percher with Nephron research.

Hi, this is the off on for Eric.

Just wanted to go back to the gross margin and to make sure I understand are.

Are we supposed to understand that as a pull forward of low margin business that reverses.

More so rebounds in <unk>.

Or is this.

Something of a margin dilutive step up that came earlier than expected.

Just wanted to clarify that point thank you.

<unk>, yes.

We expected we.

We typically see an acceleration in the fourth quarter of marketing programs. This one.

Is rather large and it it executed.

In the third quarter so.

Pull forward of some revenues that we would have expected to see in the fourth quarter.

It's not a big.

Number, but it had a dilutive impact and I wouldn't expect as a result, I would expect that.

The margin performance.

Is better in the fourth quarter than we would have otherwise anticipated.

Okay, great and if I can just ask one follow up was there are you seeing anything in late.

Labor cost within the AMG visit that might.

Temporarily or b kind of weighing on margins at this point. Thank you.

No I don't think so.

Sure.

I don't.

I don't know why.

Other.

I wouldn't say that that is.

And a hold.

For next year, we're kind of going through that process now, but as far as what we're seeing right now and what we saw in the third quarter. It was kind of business as usual from a.

299 cost.

Our next question comes from the line of Jessica <unk> with Piper Sandler.

Hi, Thanks for taking my question.

Net debt.

Hi.

I was able to give us a sense of just what percent of your provider customers have either completed or expected to convert upgrade at this point.

And then I know <unk> sort of more Nathan, but if you're able to provide the same stats or payer that'd be helpful.

Jeff Good to hear your voice and thank you for being the first two I think our rights.

Pulling that out.

Please.

Really try to focus on number of metrics and not expand them as much as possible I would suggest that with two very nice and healthy migration in the health system segments, and we see some the beginning of very healthy migration and also in the payer segment, but we really don't report beyond what we are reporting.

Okay and do you think maybe you could just give us some examples of some of the supplemental capability either or.

Or add on capabilities that customers are asking you to rollout with bank of America.

Thanks.

Sure when you re lag with digital first experience really touches everything an element of.

Payer and provider organizations cleaning requires enormous amount of integration integration will scheduling payment systems workflow rules and regulations the services dynamic clinical load balancing and many many others.

So, it's really making sure that the core capabilities of the infrastructure that we've created is really embedded in everything these customers are doing when they're big and they're complexed.

It requires enormous amount of work both from our end in the clients hands, but extremely effective as well.

Roy of doing that.

It's very very significant and so they are really no upside or gun shy in making those investments.

Next question comes from the line of thinly mounts with Goldman Sachs.

Hi, Thanks for taking my question I just wanted to go back to some of the numbers make sure I understand them. So.

Just to kick it to sort of the lower end of your guidance on revenues we need to.

This is probably like a ramp of around 657%.

Next quarter, which is off of a good very strong fourth quarter 'twenty one.

And when I, just look it sounds like the care points the.

The other revenues you had some sort of pull through this quarter, because it's definitely higher than we were expecting so you might see some bump next quarter with that and then the visit revenue I just wanted to check Q. Because you said it was $78 Bob I think revenue per visit which is sequentially down like from like 81.

And then maybe even last year a little more so just wondering if there was something going on there that I guess the expectation would be that the subscription revenue is really going to carry.

As in fourth quarter as.

As you see it and then I have a follow up thanks.

Okay.

Thanks, Andy I would say so on the on the revenue per visit.

It's been run.

Your sequential number is right.

It's down about a dollar I think and I think it's down about $1 from the year ago period too if you.

Think about that.

We had changed the methodology that we used to.

On our on our <unk> business.

So if you if you think about that pro forma number.

It's all within a dollar or two so I think my point in the prepared remarks was it's been rather consistent within a dollar or two and it tends to go down during periods, where we have a high percentage of urgent care.

Because that carries with it lower.

Revenue per visit when relative to the specialty so so I hope that's helpful on that.

And then the other the other point I made in that.

In the prepared remarks, Cindy was around professional services.

And strategic implementations driving some incremental revenue there in the fourth quarter. So.

I think we'll see strength across the.

The line items for revenue.

In the fourth quarter to get to the range that we talked about.

Okay, and then just as a follow up you had mentioned that this year the salespeople kind of had their arms tied behind their back because it is it is hard to go.

Clients and things like that when you are still working on the system, but the platform and stuff, but just curious because the sales and marketing costs are.

Pretty good like they definitely were lower than we were expecting.

Is that because.

They are basically not going full steam ahead in the next year.

We think that we would have to see that ramp.

Just waiting for maybe the R&D to work out and then again just following up on one of the other questions I know, you're not giving guidance, but do you still feel comfortable with your sort of articulated path to profitability in the broad sense with EBITDA and.

With EBITDA at like getting down that last summer. Thanks.

So cindy in a high level.

Not only changed our platform, we're really changing our company in many ways, we'll Miss service based company with technology to SaaS enterprise.

Yes.

And that touches every single part of the company, including sales and marketing.

What you need.

And Antonio with sale of the DNA of the sale is changing.

It's much more advisory it's much more a technical and deep.

And we have made and continue to make those changes during this year. So while our engineers were really working very hard on this.

New differentiated solution our growth organization was getting ready to catch as a board and we did that with <unk>.

Great.

I would say a question.

Operating in a responsible way.

In this time, but the northeast scheme, England works, we would need.

Two really emerging growth you don't need an army to sell enterprise solutions, it's very very different DNA. Typically these deals are bigger and longer the cases to the more sophisticated the larger clients.

You can do more with less we don't see that changing very much growing going forward.

Framework the board, we have provided to the pathway.

Profitability and cash flow positive.

It's something we completely stand behind also today, putting this year.

Yes, Sidney I agree.

Just the.

The long term.

The path.

Past the profitability framework that we laid out.

We feel.

Very good about.

<unk>.

<unk>.

The way that was laid out.

Our subscription revenue growing faster than the overall business.

That's going to drive.

Our gross profit margins up.

Meaningfully from the low <unk> to the mid fifties over the next few years.

And seeing operating leverage.

Across the other line items in R&D.

Being down year over year.

Driving incremental profitability.

In the near term and so yes, we see it we still feel we see the same market opportunity. We saw at the beginning of the year, we feel like we've really de risked a lot of.

The.

The the concerns around converge being delivered on time and working well because we are on time, and we're getting very strong feedback from strategic and and existing customers. The quality that it's delivering so our ability to drive market share gains over.

For that period of time, we feel very good about.

And delivering on the operating leverage for <unk>.

To get us to EBITDA breakeven, we will be a lot obviously more specific.

Our guidance.

Our near term guidance.

In February .

Thats going to reflect kind of what we're seeing very near term in the markets today and our estimates for.

For revenue and profitability.

Our final question comes from the line of Allen Lutz with Bank of America.

Thanks for taking the questions Bob I guess, one for you you mentioned youre not seeing wage pressure in the <unk>.

<unk> business, which is good I guess kind of taking that from a different angle obviously.

<unk> is occurring all over the place and if you kind of think about urgent care and behavioral theres been some volatility I think in the average price per visit but it looks like prices that you're charging have been relatively flattish can you talk about the opportunity to maybe raise prices for AMG.

Okay.

Yes.

No.

It's a competitive market Alan.

And we approach this.

AMG.

Kind of.

<unk> by region state by state basis.

And.

And I think we are.

We really do set set our prices to accomplish a couple of things one is to meet sla's for provider availability.

For our strategic customers, that's very important.

So we want to make sure we have the right level of availability for wait times.

But we also obviously youre looking to.

Generate a reasonable return on that as well so.

Hi.

Overall, we would love to be able to take some price here.

On the provider side, but.

But and we will do that to the degree we can.

But we are in a competitive market and.

I do think that.

Once we are further penetrated with some of our strategic customers.

That volume.

May drive some opportunity for us, but we'll just have to see.

I wouldn't I wouldn't be.

Building in I'm not building in a lot of.

Increase in.

Urgent care pricing over then.

The next few years.

The next several quarters or the same on any of the specialty.

Categories as well.

Got it.

I would add just one more thing Alan.

Unlike.

Other traditional and mobile.

Looking at the reality will converge.

Putting that.

Both the payer and provider on the same platform there would be an opportunity to a very large market share of hospitals and specialty providers too.

Participate in providing services if they have the capacity to do so and therefore, the cost of recruiting and managing managing those providers a.

Counter to the current 2099 is much lower it's also offers an opportunity for patients to see doctor. They know and trust from branded they recognize which is really a net positive for everyone.

So we are seeing a long term our role as matchmaking and brokering much more than selling the actual services.

And by a ranging orchestrating these services we can defend.

Variable margin.

We are not actually paying for the supply that we are enabling.

Okay.

Thanks Peter.

At this time there are no further questions I would like to turn the call back over to <unk> for any closing remarks.

Okay.

Thank you operator, and I want to thank everyone for your time and interest and great questions.

We really appreciate your support and look forward to continue our dialogue.

This concludes today's conference call even now disconnect.

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