Q3 2022 DarioHealth Corp Earnings Call

Good day, everyone and welcome to the Daurio Health third quarter 2022 results conference call.

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I would now like to turn the conference over to Glen Gourmand Investor Relations. Please go ahead.

Thank you Joe and good morning, everybody and thank you for joining us today for a discussion of Dario Health's third quarter 2022 financial results.

Leading the call today will be a restaurant the L Chief Executive officer of Dario Health and he'll be joined by Rick Anderson President.

After the prepared remarks, we'll open the call for Q&A.

An audio recording and webcast replay for today's call will also be available online as detailed in the press release invite for this call for the benefit of those who maybe listening to the replay or archived webcast. This call is being held and recorded on November 15th 2022.

Last evening, we issued a press release announcing our financial results for the third quarter 2022, a copy of the release can be found on the Investor Relations page of the Dario health website actual events or results may differ materially from those projected as a result of changing market trends reduced demand or the competitive nature of Dario helps industry. So.

Such forward looking statements and their implications may involve known and unknown risks uncertainties and other factors that may cause actual results or performance to differ materially from those projected.

The forward looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factors section and elsewhere in the company's 2021 annual report on Form 10-K, as well as the third quarter of 2022 Form 10-Q filed last evening additional information concerning factors that.

Could cause results to differ materially from our forward looking statements are described in greater detail in the company's press release issued last evening and in the company's other filings with the SEC.

In addition, certain non-GAAP financial measures may be discussed during this call. These non-GAAP measures are used by management to make strategic decisions forecast future results and evaluate the company's current performance management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company.

Ongoing core operations and prospects for the future a reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in the press release regarding our quarterly and year to date results with that I'd like to turn the call over to a resurrection of L Chief Executive Officer arrays.

Thank you Glenn and thanks, everyone for joining our call. This morning, and joining me today.

The Sun the president of the company.

For the last three years, we have implemented a multiyear strategy and now we are bearing fruits in two.

Ways. One we are not only in line, but the head of the macro digital health market length of consolidation and consumers simplicity.

Number two I'll comment more nearly as better suited to the financial microenvironment, we're facing the.

The consolidation of conditions into one integrated platform enabled.

Mendelson more conditions, especially in a market that look to save money and being more efficient while better managing its patients.

Employers and bio so looking for bush with solution backed by clinical evidence.

Also data suggest that an integrated model is better than separated single point solution.

Number two the transformation from B to C to be the beam pools, the elastic lead the financial profile of the company significant reduction in the coastal acquisition, creating a more efficient economy model with higher gross smell discipline more one way to execute on our strategic plan.

This.

This modem reduced capital market risk for the company as well.

More than 50% of the pipeline that we have today is for the full integrated best of suite solution that we have.

The full suite creates a higher and more stable revenues, while creating an incumbencies that these how to dislodge once dependent.

Has been established I E. It will take multiple vendors to replace one integrated best of suite solution once it's easy to stone.

Let's take a look at the P&L of the company.

In this quarter, we are presenting a real evidence for the improvement in the financial profile of the company that shows that our model is working and creating a long term shareholder value as we discussed in the previous quarter.

Third quarter was 2022 revenues.

$6 6 million daus increased by 17, 3% from $5 $6 million in the third quarter of 2021 driven by growth in <unk> revenues, all the beta be growth outstripped the decline in our direct to consumer business in which we have shifts at both capital.

And human resources the way.

Two focus on debate it'd be everything we're seeing in the market support this decision.

In fact, we are with this thing other digital health companies replicating the BDC fifth model, we created many years ago to prove with real world data.

And only then move into the beta.

The many use we opened eight that is the BDC company and the data collection is a real differentiator that creates a moat against our competitors.

Another important metric is the percentage of the beta be revenue that grew to 63, 5% of the total revenue for the quarter up from 46% in the previous quarter and another important metric that contributes to the improvement in our financial profile is the beta be gross margin that is now above.

70%, we told the market I'll be the beef business could reach 70% level.

Today, We report that we are delivering on that.

Company wide gross margins for the business for the pool business in food the food you.

He is expected to be in the 50% ranges. This is a very large step up relative to the 39% that we had last year. We believe that next few we can be in gross margins of approximately 60% in theory, all still we believe that we can reach the 70% for the full business.

The metric is the 30% reduction in our operating expenses for the first quarter of 2022 compared to the third quarter was 2021. This is due to the slowing down of the BDC business and also due to becoming more efficient as we improved our processes and build scale in our booth.

Yeah.

The final results of all the improvements that I just mentioned.

Is lola.

And it is 30% reduction in the net loss of the company.

Comparing to the third quarter was 2021, 30% reduction.

We had also a 13.3% reduction comparing to the previous quarter.

We are seeing it through operating leverage of the infrastructure that we have built and the real economy can vintage for the multi product line approach the underlying reason for the economy advantage.

The multi condition and is the improvement of all the following key barometers.

We have more eligible population, but account because we are managing and serving multi condition.

Cause I believe user that we own the platform well generating more revenue per month in malaria and for the year.

And the overall result is that we have a genuine I think between four to eight X more doors, but every account that we are approaching it with the full suite as opposed to companies that are doing a single condition digital health.

Let's take a look on our balance sheet. We ended the third quarter with a strong financial position with cash of $57 million in the bank and we also keep improving our financial profile.

The way that we are reducing the loss than we expected the loss will continue to reduce into next year.

We also have access for another $25 million for mobile.

The strategic relationship that we keep building and will continue to develop and collaborate with.

On the commercial side, we signed 85 accounts.

And we all know pace to reach the hundred accounts by the end of the year, which is the guidance that we provided at the beginning of the year, we are making a substantial progress in building our relationship with Sanofi. We believe we can take this relationship to the next level, we didn't productions into health plans and others.

Significant relationship with the National Health plan, we signed with <unk> and recognize revenue for the first time in this quarter, we will elaborate about this relationship but we expect that this relationship will expand and contribute significantly to our revenues moving forward.

Well, so walking right now on another strategic deal.

And that will help us expand our commercial outreach.

Overall.

We have our own direct sales team.

But the relationships that we're building with our partner such a Sanofi Boudjenah bus so long.

And you are in and the new relationship that we're building now with with another company.

All of them.

Can help us expand our outreach to the market by multiple folds.

As we all keep growing our business in 'twenty 'twenty, three and 'twenty 'twenty four.

With that I want to handle the call two weeks to elaborate on the commercial side dangerous in the third quarter, we continued to make substantial progress towards our strategic goal of building a robust b to B business. We increased the number of <unk> contracts to 85 in the third quarter on our way to our goal of 100 by year end, which will represent 100.

Per cent growth. This year, our current signed contract value is estimated to be approximately $61 million.

We have seen growth in both of our primary markets health plans and employers in both of our primary products, our full suite and our stand alone behavioral health product.

While we have had off cycle customers, they've launched especially in behavioral health. The majority of the metabolic and full suite contracts that we have recently announced are expected to launch in the first quarter of 2023 as a result, while our performance is improving each quarter, we expect to see significant growth into 2023.

Importantly, these additional agreement also allowed us to generate a growing number of reference customers that are important to growing revenue and a step manner in future quarters and landing an increasing proportion of larger customers as we go forward.

The BTB revenue represented an increasing share of total revenue with growth of approximately 32% over the second quarter and is almost 14 times larger than the beat can be revenue in Q3 last year.

As b to B it become the primary growth engine with a better financial profile that Erez mentioned, we've reduced our marketing expenditures for BDC and have seen an expected decrease in DTC revenue, which was more than offset by strong GDP growth. This has enabled us to maintain the strategic benefits of our BDC business and reduce our operating expense and cash.

Burn substantially quarter over quarter.

We entered into a new phase of our relationship with our National Health plan customer Aetna in the first in the third quarter under this agreement we are partnering to embed our behavioral health technology into their behavioral health digital platform. We have already recognized revenue related to this agreement in Q3, but we expected that to increase as they roll the plaque.

For him out to their customers in 2023.

We are just over two quarters into our relationship with canopy, yet we have seen significant progress and traction.

Our co promotion promotion has developed a significant pipeline with some of those moving to late stages, which bodes well, even though we expect finalization to still take some time we.

We are on track to deliver our first set of development projects by year end and have commenced planning for 2023 projects.

And we have had a strong collaboration on evidence generation with their real world evidence team. They have completed early study planning and preparation, including validating our engagement outcome. This is a valuable part of the collaboration as evidence is expected to play an increasingly important role in digital health in the next several years, especially with health plans.

We expect that this evidence generation work, we are doing with canopy will help differentiate daria from others as we go forward.

And of course, we are pleased to have a third party validate our outcome.

Partners are expected to also be an important part of our strategy in 2023 as customers look for the quote easy button, which is created with partners through single integrations for data and billing. We are pleased with the partnerships that we have announced including Virgin pulse and solera, we now have customers through vitality Alliance and <unk>.

<unk> pulse and we expect our first customer inquiry solera in the near future with more in the pipeline for all partners.

And we are working on additional partnerships with some expected to close before year end or.

Our multi condition integrated chronic condition platform is resonating in the market. We believe that this is based on having an integrated multi condition platform. One journey one coach one experience versus the modules that our competitors have as they cover the same number of conditions that we have in any event, having multiple conditions through one vendor which is clearly.

We are benefiting in the marketplace.

Strong clinical outcomes as demonstrated in a growing body of evidence, including more than 30 studies and Excitingly. Our latest studies are showing the benefit of mandated multiple conditions together rather than an individual point solutions are.

<unk> DNA that enabled the delivery of a consumer centric product and our ability and willingness to integrate within an ecosystem with the member at the Middle overall, we believe we are strongly positioned with our product partners and growing momentum to continue to drive accelerating growth as we go into 2023.

With that I'll turn it back over to Rhett. Thank you.

So despite the macro environment that he's expecting recession, we don't see a slowdown in the market did in fact, we may see a tailwind.

Sales and employers seek to better manage patients and reduce health care cost, we believe that especially in this environment with employers who look to save money create efficiencies and leverage multi condition platforms that should.

Create the better the health profile, they will use value as a comprehensive solution. We also believe that we have all the building blocks, we need in place to keep building it to a digital health company that have the potential to reach profitability between $60 million to $80 million.

Even the revenue Delta is very well positioned for success with digital health market consolidation and focus on profitability is desired.

With that I want to open the call for for the Q&A session.

We will now begin the question and answer session.

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At this time, we will pause momentarily to assemble our roster.

And our first question here will come from Alex Nowak with Craig Hallum. Please go ahead.

Good morning, everyone. This is Jason on for Alex So a nice quarter here as you know there have been some starts and stops and onboarding them. This quarter was a nice pace again.

Help me unpack the growth in and be to be in the quarter. You know is it mainly the national health plan that uptick in Arab's. You know was that a the Santa Fe contribution that stepped up how do you. How do you see that on a go forward as well for Santa Fe I guess, if we could just dig in to that would be.

Growth there that'd be helpful.

Yeah sure Chase so when number one the old B to B revenue as I mentioned was going to 63.5% versus 46% from the previous quarter.

This is percentage wise versus a b to C.

When looking into the few portions of revenue inside the B to B, Oh, we have to sign off about a that.

It was relatively lower than what we have seen in the first quarter.

This is something that is happening according to specific milestones and milestones are related to data delivery development services and market DOCSIS and it's not always easy to anticipate exactly when we're going to recognize the specifics that venue. So think about San Jose is something that is contributing almost every call.

But not in a in a linear or equal weight and the other portion that was new this quarter is the revenue that is coming from Aetna and that we started to build a relationship last U and we managed to see the first the revenue getting in this one had a nice contribution to the.

Revenue other than that.

All the other portions of the B to B, we've seen growth there and we are seeing growth quarter over quarter over the last few quarters, including this quarter.

In terms of the accounts that are getting into production.

So so overall think about some kind of stability all even at a lower revenue on the Sanofi side and a new big account that these are that was.

Recognized for the first time, Aetna and number three accounts that they'll keep growing quarter over quarter, including this quarter.

Got it no that's helpful. I guess one for Mike.

$61 million in pipeline now I mean can we dive in there a little bit too.

Maybe give us an idea of what the breakdown is between you know employer provider health plan customers there that make up that pipeline just to look under the hood there would be great.

So that's that's contracts not pipeline.

And so you know the majority.

Of that is or the largest pieces of that are always going to be health plans relative to employers, but if you look at it on an overall split between them it probably somewhere in the area.

60, 40 health plans and other b to B.

Contracts versus our employers, but that percentage is going to fluctuate.

Every quarter essentially as we move through because health plans will be.

More periodic and employers as you've seen from the announcements that we made them you know we have off cycle on cycle employers and so we'll have more in the third and the fourth quarter on cycle.

But during the year, we were constantly signing contracts associated with that so it tends to change over time, but that's more or less to me.

Got it thanks, and then maybe.

Yes.

A nice 13% decline.

Opex sequentially and what does that look like going into Q4, and you know how are you internally expecting that D to C revenue to wind down now that you were cutting that spend.

Yeah. So.

We are continuing continually.

I'm, making the company more efficient it's a it's in multiple places that are it's still just the beta seats also efficiencies that we are running and.

Need to remember that we integrated literally phone companies together, we had the three acquisitions to long 2021 and we had a lot of elements that related to operation architecture, and when we are selling an integrated suite to suite to be integrated. So we are spending a lot of money integrating pieces together.

We believe that moving forward into next year, we're going to see it.

Additionally, a small reduction in the Opex and in a combination of higher revenue and higher gross margins, we're going to see a significant impact on our ability to reduce the loss. So this trend is going to continue.

A slightly on Opex, but mainly in terms of top line and also bottom line in.

Improving the financial profile and we want to see the company, losing unless something significantly less money into next year. That's what we are expecting to happen specifically to Q4, I think that the opex spend these kind of stabilized on what we're seeing in Q3, but the additional reduction will start.

Again early next year, and we're going to see the trend moving along with the full year next year.

Got it thanks, I'll hop back in the queue. Thanks for the questions guys.

Thanks Chase.

Our next question will come from Charles <unk> with Cowen. Please go ahead.

Yeah. Thanks, Thanks for the question guys, Hey, you know.

You've talked about the $51 million in contracted revenue, obviously I mean, it sounds like the the vast majority is going to have a one one start in 'twenty three and then ramp is that is done is that right to think that as we get into.

Is it right to think that as we exit 'twenty three will be at that 60 million run rate.

And then in fact, we probably would be greater than 60 million in 'twenty four.

So.

Based on the timing of some of those contracts in terms of how they will grow over that period of time I would expect right now that we would be close to that as a run rate at the end of twenty-three. We've always sort of looked at is 12 months out from.

You know the date that we have those contracts in some cases, they launching a little bit later than others, but we should be approximately at that sort of a run rate by the end of 'twenty three and yes, we would expect it would be bigger in 'twenty four.

Great and then with that and.

You talked about it being integrated into a larger platform that they're launching any sense on timing of when you expect that to launch.

Or any kind of indications that you're hearing of when this might be launching.

I think you just highlighted the the most important part which is we're not directly in control of some of those pieces, but we expect that we will likely see some growth in the first half of the year with that accelerating in the second half of the year based on on what we currently understand but there are some.

Some pieces that could accelerate that even more and it's partially dependent on what order they come on the platform. It.

So there tends to have an emphasis on larger and larger customers over smaller.

Larger customers of Aetna did you mean.

Alright, yes, there's yes.

Yeah, because the digital platforms for their ISO business.

Right. So there the employers they're selling to it.

Okay.

And is it is that sort of like Theyre going to offer this new platform and if a nashville client picks the platform they get everything, including the Oreo or they can pick and choose within the platform.

The Dart has been integrated as a technology into the platform. So we get paid for everybody. That's on the platform, but there's also opportunities to access additional services through daurio on that platform.

On an overall basis.

Okay. That's that's helpful last one for me.

Are.

The sales and marketing came down materially in the quarter.

Is this obviously as you've kind of pulled back on DTC is this the right run rate or do we expect to see more savings.

In this line, particularly as we go into next year.

Yeah. So this is mainly because of the b to C. And this is something that we guided the market already and in the last quarter that you're going to see decline here I think that that's the run rate that we're going to see moving forward.

And we.

We believe that towards next year middle of next year, we're going to see these line and getting back to growth because.

And then when we penetrate the more we're going to invest into the sales and marketing going to be to be site.

Got it.

Sorry, one last one on therapy.

Obviously, a great partner.

But when you look in the diabetes market. The bigger players are Lilly and Novo Nordisk have you have you is there any is there any exclusivity with the set up of deal are you allowed to speak to other you know manufacturers that are in the diabetes space and just curious if your platform would fit well with some of these new.

Drugs in the market.

So I think a couple of things there I think our Santa Fe relationship is broader than diabetes. I mean, we're in the general medicines area, primarily although there are conversations with other parts of the organization as well.

And they they view it through that lens as well as more of a digital health and diabetes.

<unk> issued the co promotion is for for our full platform. So you know that kind of speaks to the overall relationship. We do have you know there are some.

Elements of exclusivity, but they wouldn't prevent us from having <unk>.

Relationships with other companies that are in the in the generally in the space depending on exactly how we structured that we don't see a lot of value in doing app partnership with a specific drug and the absence of a larger <unk>.

<unk> you know, we really view this in one of the reasons why we did the deal with N. If he was they were interested in digital health as a market.

And not just as a companion app to a medication now that doesn't mean, we would never have it as a companion app to our medication. It just means we see a broader value there from that relationship.

Oh, that's great clarification, I think a lot of people assume there was much more tied to diabetes.

But.

So is it that so when you guys are sharing data what are what are they doing with you know with the data right now and how are they how are they planning to integrate than the broader dario platform into their into their environment I guess.

Like how are they how are they moving that towards their patients.

Question.

Yeah, and so I think that's an evolving strategy on an overall basis with them. This was them stepping in and part of it was them validating our data for themselves. They did a bunch of due diligence upfront, but then you'll have done some additional.

Really deep dive work around it and the real world evidence team that they're working on is about validating the and providing evidence for the benefits of the Dario platform for patients on an overall basis. So full suite. There most I mean, yes, they will do some stuff around diabetes, because obviously the <unk>.

He has the longest history in diabetes. So we have the most amount of data on an overall basis in diabetes, but then rapidly moving into the overall suite because.

We agree with them on this but there their point of view is.

They're looking at health plans, primarily and their point of view is hey, you know the people that have the best evidence theyre going to win which is fully consistent with the way that they look at medications on an overall basis.

So that's kind of their view.

The way that it gets integrated I think it is going to be in a bunch of different places. So we're going to see some of it with their product we're going to see some of it in.

Well, let's just a broader relationships in the ecosystem more to come on that later.

And then I think ultimately they are looking at is how they get closer to the.

The folks that are using their medications and devices and also really theyre looking at digital health is a multibillion dollar potential opportunity for them as a company. So I think it cuts across all of those.

Got it got it and sorry, just one clarification from my earlier question to the $61 million is just in the PDP business right. So we would layer on top of any remaining piece of the revenue.

Correct.

Okay, great. Thanks, Thanks for the color.

Thanks Ross.

And our next question will come from Rahul Rohit with lifestyle capital. Please go ahead.

Hey, guys I really appreciate all the color. So far I was just wondering if you could expand on what percentage of the account growth coming internally versus your strategic partners. How do you expect that partner contribution impact account growth now in.

Q4, and then more I guess beyond to 2023.

Current account growth the vast majority would be internal we've.

We've seen some some nice activity from partners in Q3 and were expecting a bit more in Q4 I expect that.

To be seen to some extent, but we're expecting that partners will play an important part of our growth.

Going forward in 2023, and probably 2024 and I think a lot of that has to do with.

Market dynamics.

That we're seeing it as there is more and more effort on the on the part of customers to really make it easier on themselves manage less vendors and make the vendors that they're managing easier.

So I think that that bodes well for our sales.

Sales through our partnership so we're investing more in the sell through either of those partners and as Rick mentioned in his comments too that gives us a lot greater reach than our own sales force on a standalone basis, but to date the majority of interim.

Got it that makes sense I mean, it's great that you guys are on track to double the number of accounts that you had last year, but is it reasonable to think that you might potentially or are you looking to double accounts again next year.

And in that kind of factoring in this contribution from partners to help drive you guys are in that direction.

But generally the mentality.

Yeah.

I mean, we went a doubling from 52, we are doubling from 5200.

Most everything is direct and now he's only spout news that are walking with us who lives in an assumption that we can double again and that's something that we're going to talk about at the beginning of next year, but yes.

I think so.

Got it I appreciate it.

One more yeah, you guys previously mentioned that you're anticipating additional strategic partnerships come in before year end is that still a reasonable expectation.

And if so can you help us understand what type of strategic partnership you might be looking at you might be pursuing at this point.

We are still pursuing things that we anticipate will close before year end.

And we think that they will be.

Substantial in terms of the ability to add to our overall client base over a period of time and you know more to come on that later.

Okay cool thanks for taking the questions.

Thank you.

Our next question will come from David Grossman with Stifel. Please go ahead.

Thank you good morning.

I just wanted to follow up a couple of questions are already asked I think first on you know the.

The air are the $61 million.

Fair to say that given where we are in the calendar year.

You know most of the large employers self insured plans sort of you know.

Kind of made their decision by now and that the incremental growth from here would come from health plans.

That would probably most likely you know kind of have some impact next year, just depending on timing in terms of increments above the 61 million.

Yes health plans also off cycle employers.

It would be incremental between now and.

In terms of revenue contribution to next year, there's a couple of other opportunities, but yes generally speaking yes.

Great and then maybe.

If you could give us a sense of kind of how pricing is really trending for you in the marketplace, particularly on a full bundle.

Maybe you have to give specific numbers on kind of what that pricing looks like on an absolute basis, but.

On a year over year basis, how is that trending and you know when you're out there selling the you know the.

Full suite.

We have purposely taken a pricing strategy that I don't want to discuss an absolute detailed but let's just say generally speaking, we've either maintained or pricing or raised it slightly.

Maybe I can give you some more color there.

I mean, that's something that I mentioned earlier on the call the way to look at it and then do some just speaking up on I'm not going to mention the name but.

That is.

Was buying the full suite at the beginning of the U S.

Hmm.

The average revenue that will generate I think been a single user.

Is it about is it like 50, 50% higher than full assemble condition. Once we are selling the full suite and users are utilizing the full suite.

<unk> when we are launching a next numbers that we've seen so far and we believe we're going to scare you meet.

Overall, 30% to 40% of the population are going to be eligible to one or more conditions and if you were thinking about it.

We know other competitors that were selling into this market diabetes only oil potential on me the numbers, so usually around 6% to 8%. So if we are like selling both of them SK be age weight loss and hypertension and diabetes, you can reach somewhere between 30% to 40% off.

The account that is eligible to one or more conditions.

Usually we have like around 35% of the population.

And they have done in Egypt.

All in all eventually to the platform.

And whenever an age we start to see nice numbers that are the <unk> patients that is saying, yes to the program will probably ask for whenever H 2.2 conditions to be to be in.

And to be managed by this.

This is more or less the numbers that we have seen and this is why on the call I mentioned that the revenue per account is somewhere between four to eight X or phones.

Comparing to accompany the designing a single condition, that's the numbers that we're seeing today.

Right. So so just to make sure I got that right you said that.

Turning to 40% of the ultra bowls are taking the service and the average is 2.2.

Services per eligible but take the service did I did I get that right.

Just to that on average the number of people when somebody enrolls in our full suite program. They are taking they are involved in two point too, but the price that the revenue, we're earning is not relevant to how many they are actually taking because the pricing on the full suite is.

All of the conditions, whether they take one or multiple of those conditions. So its a higher price than the single condition as Erez mentioned, but it also gives us access to four times. The population four tenths of population within your average population would be eligible when you add the full suite versus say diabetes on a standalone basis.

Got it okay, great. Thanks for that and then.

You don't just go back to both Sam opinion that now can you just remind us what the revenue milestones are the conditions that have to be met for you too.

Nick on incremental revenue for each of those I think I've got different bits and pieces I just want to make sure that I understand all the different components that drive revenue for those two relationships.

So within Santa fee there are.

Preferred partnership payments that.

You know that the milestones associated with those or delivery of.

Training and data and things of that nature as well as just general market access. There is also milestones related to delivery and development plans, which really tend to happen through.

Throughout the year and I mean, those are the primary revenues all of that excludes agreement that we signed three of the co promotion, so that would be above and beyond that that would that would land in our health plan.

Revenue and pipeline associated with that.

For the National Health plan, the the contract is really.

The way to think about it is that we get paint.

Payments for delivering certain elements of the platform and then from there it is.

Essentially you get per employee per month for a per member per month. If you prefer for people that have access to the platform and like I said a minute ago. Those that would have buyup services. It would be for those that buy those services.

It's a monthly fee for those that have access.

And where are we delivering the elements of the platform component of that recovery.

The significant milestones that are still left in terms of dollar so heavily weighted.

Are we kind of beyond that at this point because it sounds like just started recognizing revenue in this quarter. So it would appear that that would still be out there.

There is some of that still out there we definitely do have some of that in this quarter.

I expect that we will have all of that that will be completed within the first half of next year.

Yeah.

And our next question will come from Ben Hayner with Alliance Global Partners. Please go ahead.

Hey, gentlemen, thanks for taking my questions.

First off for me just thinking about R&D expenditures.

It's really going into those at the moment are those mostly kind of the implementation details is it stuff that youre developing in terms of any new features functionality.

Et cetera, what's kind of the right way.

Uh huh.

Let's think about.

Higher allocating R&D dollars.

Yeah. Thanks eventful. The question so the way to look at it is that we have like few main a bulk so spending number one.

Pushing to promote each of the product.

Alone I mean, we want to have the best diabetes solution one of the best <unk> solution. So we are promoting each of the products and taking them to the next maturity level better engagement improvements that's bucket number one the reach of the product lines bucket number two is that we are investing when integrating.

Pieces together into one integrated experience, which is something that is very important when we are selling the suite. We are talking about the best of suite.

This is one of the advantages that we are creating alluded to competitors because we are creating in one integrated journey one clinical.

Jeremy and used cases that don't cost conditions.

Bucket number two bucket number three.

We had the menu use of experience as a BDC company.

Forming everything to be to be making sure that all the operation is a functioning from billing to.

Circuity and all what we're calling operational on our side is significant especially when you are combining few technologies together and here we have a very big investment that we are doing and we're going to keep it.

Keep spend in order to make sure that we are a very stable and can keep the scale. If we really want to continue and double the number of accounts next year. So these are when we are investing the money usually.

When companies are running.

M&A has and technologies all being integrated together only usually you'll see a ramp up in the R&D expenses in the first two use of the of the acquisition.

<unk> and then things on getting consolidator than we are.

And the companies are creating more efficiencies and the thing that.

We're going to see the same kind of trend.

Kind of a trend in the sense.

After you've digested these acquisitions that you made.

Over the past couple.

Couple of years.

We should start to see the R&D line come down a little bit.

Yes.

Yes.

Sure.

Okay great.

I apologize if I missed this but did you guys zero out b to C advertising dollars that you still do it a little bit of that.

We still do some of it so we just we reduced it to a level that.

Made the business very sustainable we still see strategic benefit to the BDC business just like.

From always we use as a testbed as well as for a variety of other things that we're not expecting to zero out of band, but we've got to spend at a level that makes sense relative to the cost of the market and the margins associated with it.

Okay.

Some of that.

Sales and marketing spend is sort of effectively R&D spend as well.

You can think you can think about it that way.

Yes, that's a that's a really.

Good way to look at it.

Okay Fair enough and then last one for me.

I guess more curiosity or housekeeping.

I know last quarter, you talked about.

A customer that was had some revenue that was slipping into Q3.

Was that aetna that slipped from Q yesterday expected some revenue in Q2 that slipped into Q3.

Yes.

Okay, great well, that's all I had gentlemen, thanks for taking the questions.

Thank you so much Greg.

With no remaining questions. We will conclude our question and answer session I would like to turn the conference back over to Erez Raphael for any closing remarks.

Yeah.

Thank you.

Thanks, everyone. Appreciate you joining our call today, we shoe amazing day. Thank you.

Yeah.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.