Q1 2024 American Well Corporation Earnings Call

Operator: Afternoon, my name is Brianna, and I will be your conference operator today. At this time, I would like to welcome everyone to the AMWEL Q1 2024 earnings call. All lines have been placed on mute to prevent any background noise.

My name is brianna and I will be your conference operator today.

Speaker Change: At this time I would like to welcome everyone to the M. Well Q1, 'twenty 'twenty four earnings call.

Brianna: All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. We ask that you please limit yourself to one question. Thank you. I would now like to hand the call over to Sue Dooley, Head of Investor Relations at Amwell. You may begin.

Brianna: After the Speakers' remarks, there will be a question and answer session.

Brianna: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Brianna: If you would like to withdraw your question press the pound key.

Brianna: We ask that you please limit yourself to one question.

Brianna: Yeah.

Brianna: I would now like to hand, the call over to Sue Dooley head of Investor Relations with M. While you may begin.

Sue Dooley: Hello, everyone. Welcome to AMWEL's conference call to discuss our first fiscal quarter of 2024. This is Sue Dooley of Amwell Investor Relations, and joining me today are Amwell's Chairman and CEO, Dr. Ido Schoenberg, and Bob Shepardson, our CFO. Earlier today, we distributed a press release detailing our announcement. Our earnings release is posted on our website at investors.amwell.com and is also available through normal news sources. This conference call is being webcast live on the IR page of our website, where a replay will be archived.

Sue Dooley: Hello, everyone welcome to <unk> conference call to discuss our first fiscal quarter of 2024.

Sue Dooley: This is sue Dooley of ammo Investor Relations and joining me today are <unk>, chairman and CEO, Dr. Sean Burke and Bob Shepardson, our CFO.

Sue Dooley: Earlier today, we distributed a press release detailing our announcement our earnings release is posted on our website at investors Dot <unk> Dot Com and is also available through normal news sources. This conference call is being webcast live on the IR page of our website, where a replay will be archived.

Sue Dooley: Before we begin our prepared remarks, I'd like to take this opportunity to remind you that during the course of the call, we will make forward-looking statements regarding projected operating results and anticipated market opportunities. This forward-looking information is subject to the risks and uncertainties described in our filings with the SEC, and actual results or events may differ materially. Unless required by law, we undertake no obligation to update or revise these forward-looking statements.

Speaker Change: Before we begin our prepared remarks I'd like to take this opportunity to remind you that during the course of the call. We will make forward looking statements regarding projected operating results and anticipated market opportunities.

Speaker Change: This forward looking information is subject to the risks and uncertainties described in our filings with the SEC and actual results or events may differ materially.

Speaker Change: Except as required by law, we undertake no obligation to update or revise these forward looking statements.

Sue Dooley: On this call, we'll refer to both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release. With that, I would like to turn the call over to Ido.

Speaker Change: On this call, we'll refer to both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP financial measures is provided in our posted earnings release with that I would like to turn the call over to Ido.

Ido Schoenberg: Thank you, Sue, and hello everyone. I'm pleased to report that Q1 was a busy quarter for our company, one that provided a strong start to an important year for us. As a reminder, on our last call, we shared our guidance for a step function in our growth that will help us achieve our profitability goal in 2026. Before I share some highlights from our first quarter, I would like to open with a few general comments.

Ido: Thank you Sue and Hello, everyone.

Ido: I'm pleased to report that Q1 was a busy quarter for our company one that provided a strong start for an important year for us.

Ido: A reminder, on our last call we shared our guidance for a step function in our growth, which will help us achieve our profitability goal in 2026 before I shift some highlights on our first quarter I would like to open with a few general comments.

Ido Schoenberg: It is now clear that the need for digital care enablement is significant. It is also clear that Converge is performing well and powers sophisticated solutions across diversified clients on a large scale. And finally, it is evident that new large customers are recognizing the value of our platform as reflected by the size and revenue mix of our recent win. Importantly, as we deploy our offering in the government, Modernizing the military Health System, we will also expand into a new sizable market.

Ido: It is now clear that the need for digital care enablement is significant.

Ido: It is also clear that converge is performing well empower sophisticated solutions across diversified clients on a large scale.

Ido: And finally, it is evident the new large customers are recognizing the value of our platform.

Ido: Collected by the size and revenue mix over recent weeks importantly, as we deploy our offering in the government sector modernizing the military health system, we also expand into a new sizable market in.

Ido Schoenberg: In addition, we believe that implementing our platform in the demanding government environment is demonstrating important proof points that are also relevant in our existing commercial market. Those include scale, versatility, and cybersecurity capabilities that will shine a spotlight on our market differentiation across all our sectors.

Ido: In addition, we believe that implementing our platform in the demanding government environment is demonstrating important proof points that are also relevant in our existing commercial markets.

Ido: Those include Tien <unk> security and cyber security capabilities that will shine a spotlight on our market differentiation across all our segments.

Ido Schoenberg: During the past three months, we have taken major steps to adapt and transform our organization that will result in a greatly reduced cost structure, as reflected in our Forward Guide. In addition, we have good visibility into strong top-line growth in 2025, coupled with greatly improved markets. The guidance we gave on our last call describes a 30% jump in our 2025 top line, rich with subscription software that will drive gross margin expansion to over 50%. We believe this is a clear indication of the completion of a re-platforming investment period.

Ido: During the past three months, we have taken major steps to adapt and transform our organization.

Ido: Will it result in a greatly reduced cost structure as reflected in our forward guidance.

Ido: In addition, we have good visibility into strong topline growth in 2025, coupled with greatly improved margins.

Ido: The guidance, we gave on our last call described it's 30% jump in our 2025 top line reached with subscription software that will drive gross margin expansion to over 50%.

Ido: We believe this is a clear indication of the completion of our re platforming investment period.

Ido Schoenberg: We believe our technology offering is unique and will continue to drive favorable, high-margin software revenue, and our strong balance sheet fuels us well beyond our needs to achieve profitability. We are proud of our many clients, big and small, that are now committed to and utilizing Converge as their platform. Converge connects their health care services with millions of health care consumers. It drives efficiencies and fuels new revenue opportunities for them on a foundation of very high user satisfaction scores and NPS ratings. The market for digital health is just starting, and we are well positioned to benefit. But what we do is complicated.

Ido: We believe our technology offering is unique and we will continue to drive favorable higher margin software revenue mix and our strong balance sheet fueled us will be on our needs to achieve profitability.

Ido: We are proud of our many clients begin smaller that are now committed to and utilizing compared to their platform.

Ido: Converged connect their healthcare services with millions of healthcare consumers.

Ido: It drives efficiencies and fuels new revenue opportunities for them on the foundation or very high user satisfaction scores and NPS ratings.

Ido: The market for digital health is just starting and we are well positioned to benefit.

Ido: What we do is complicated.

Ido Schoenberg: The value to patients, providers, and parents is significant, and we believe our deep integrations and vast deployments form long-term bonds with healthcare organizations that make up a big part of the U.S. economy. We are proud of what we have accomplished in the past three years and believe it is beginning to pay off. Now, I would like to review some highlights from Q1.

Ido: The value to patients providers and payers is significant.

Ido: And we believe our deep integrations and vast deployments from long term bonds with health care organizations that make up a big part of the U S ecosystem we.

Ido: We are proud of what we've accomplished in the past three years and believe it is beginning to pay off.

Ido: And now I would like to review some highlights from Q1 first we are delivering for our clients.

Ido Schoenberg: First, we are delivering for our clients. In addition to the successful go-lives and migrations we completed this quarter for several clients, we are steadily completing critical milestones as we deploy our solution for the military Health System, working alongside the latest partnership for defense. Following our successful rollout of our digital behavioral health solution in Q1, we are now targeting the next capability offering to Go Live for Q3. Our efforts are on schedule, and we look forward to supporting the MHS in the full enterprise deployment of our solution scheduled for Q4. Interest in the work we're doing together with the DHA is growing. Earlier in Q1, on its health.mil website, the DHA also announced its launch of our digital behavioral health solutions at the beginning of this journey.

Ido: In addition to the successful go lives and migration to be completed this quarter for federal clients. We are steadily completing critical milestones as we deploy our solution for the military health system working alongside the latest partnership for Defense Health.

Ido: Our successful rollout of our digital health solution. In Q1, we are now targeting the next capability offering go lives for Q3.

Ido: Our efforts are on schedule and we look forward to supporting damages in the full enterprise deployment of our solution scheduled for Q4.

Ido: Interest in the work we're doing together with the DHA is growing.

Ido: Early in Q1 helped the mill website. The DHL also announced its launch of our digital will be over in health solutions is the beginning of this journey.

Ido Schoenberg: Also, recently an article in Modern Healthcare described the DHS commitment to modernization with our offering at its core. Second, we solidified important initiatives in our growth organization aimed at re-accelerating our bookings and increasing our mix of subscription software revenue. Our growth organization is embracing the changes we have put in place, and tonight, we will share an example of our bookings. Third, we continue to drive for efficiency.

Ido: Also our recently an article for more than healthcare described the DHS commitment to modernization with our offering at its core.

Ido: Second we solidified important initiatives in our growth organization aimed to reaccelerate, our bookings and increasing our mix of subscription software revenue.

Ido: Our growth Org is embracing the changes we have put in place and Nigel will show. An example of our booking success.

Ido: Third we continue to drive for efficiency.

Ido Schoenberg: We are optimizing our company by instituting a cost structure that provides a baseline for meaningful profit extensions as a growth scale. In a very active Q1, we successfully migrated a large portion of our visit volume onto our Converge platform via some of the most strategic payer migrations, including previously announced Elevance and Highmark. Visits on Converge were nearly 70% in Q1, meaningfully higher than 54% in Q4.

Ido: We are optimizing our company by instituting a cost structure that provides a baseline for meaningful profit expansion as a growth scales.

Ido: In a very active Q1, we successfully migrated a large portion of our visit volume onto our converged platform via some of the most strategic payer migration, including previously announced elephant and Highmark.

Ido: <unk> become converge were nearly 70% in Q1 meaningfully higher than 54% in Q4.

Ido Schoenberg: Our platform is scaling and performing well, and client feedback remains strong, with SAMS operating consistently well over 90%. And now, I would like to provide some color around the successful Q1 Client Expansion, demonstrating the growth potential within our existing client base, with a sizable expansion with an existing East Coast Blue Pair client that will deploy several of our automated programs to drive engagement, reduce costs, and compete for members in a crowded regional market for health insurance.

Ido: Our platform scaling and performing well and client feedback remains strong with funds operating consistently well over 90%.

Ido: And now I would like to provide some color around the successful Q1 client expansion demonstrating the growth potential within our existing client base.

Ido: With a sizable expansion with an existing east coast Blue payer client that will deploy several of our automated programs to drive engagement reduced cost and compete for members in a crowd in the regional market for health insurance.

Ido Schoenberg: Leveraging our programs, this pair intends to identify high-risk members and proactively encourage them to engage with high-value care programs like diabetes management. We also had a good quarter for client renewals, including Highmark, Intermountain, El Camino Health, Penn State, and Cleveland Clinic. Concluding my discussions on our growth initiatives, we think we have the right team structure in place, and engagement with existing and prospective clients is high. We've completed detailed client reviews and created rigorous account plans with metrics and compensation plans that emphasize a high-value ROI selling approach and a focus on selling subscriptions.

Ido: Leveraging our programs deferred intends to identify high risk members and proactively encourage them to engage with high value care programs like diabetes management.

Ido: We also had a good quarter for client renewals, including high Mark into mountain and Camino Health Penn State and Cleveland Clinic.

Ido: Including my discussions on our growth initiatives, we think we have the right team structure in place and engagement with existing and prospective clients is high.

Ido: We've completed detailed client reviews, and creating rigorous account plans with metrics and compensation plans that emphasize a high value ROI selling approach and a focus on selling subscription software.

Ido Schoenberg: Our new work has the team embracing a robust enterprise selling motion that we believe will accelerate our growth, fueled by demand for our hybrid care expertise and a differentiated approach enabling hybrid care delivery across the health. Based on these achievements, we continue into 2024 with high conviction regarding our guidance for meaningful growth next year and our plan to achieve profitability in 2026. With that, I would like to turn the call over to Bob to review our financials, some key metrics, and our guidance. Bob?

Ido: Our new work his team embracing a robust enterprise selling motion, which we believe will accelerate our growth fueled by demand for our hybrid care expertise and differentiated approach, enabling hybrid care delivery across the health care landscape.

Ido: Based on these achievements, we continue into 2024 with high conviction regarding our guidance for meaningful growth next year.

Ido: Our plan to achieve profitability in 2026.

Ido: With that I would like to turn the call over to Bob to review, our financials and key metrics in our guidance.

Robert Shepardson: Thanks, Ido, and good evening to everybody on the call. We ended the first quarter with continued strong visibility into our future growth and our path to adjust it, even without breakeven. Tonight, I will walk you through a few operating metrics and financial results from the first quarter. Then I will review our guidance for 2024 as well as our expectations for 2025 and 2026.

Robert Shepardson: Thanks, Deno and good evening to everybody on the call.

Robert Shepardson: We ended the first quarter in a position of continued strong visibility into our future growth and our path to adjusted EBITDA breakeven.

Robert Shepardson: Tonight I will walk you through a few operating metrics and financial results from the first quarter.

Robert Shepardson: We review our guidance for 2024 as well as our expectations for 2025 and 2026.

Robert Shepardson: To begin, total visits were approximately 1.67 million in the first quarter, a small decline versus 1.7 million last year. Visit volume this quarter was negatively impacted by two one-time events. First, the change health care security breach, and second, a temporary disruption associated with our largest client migrations to date.

Robert Shepardson: To begin total visits were approximately one $6 7 million in the first quarter, a small decline versus $1 7 million last year visit.

Robert Shepardson: Visit volume this quarter was negatively impacted by two one time events.

Robert Shepardson: First the change healthcare security breach.

Robert Shepardson: Second a temporary disruption associated with our largest client migrations to converge to date we've.

Robert Shepardson: We resolved those issues before quarter end. Scheduled visits represented 63% of total, continuing to highlight the evolution of our company from providing virtual urgent care to a platform provider enabling hybrid care. We continue to make good progress migrating our clients to Converge.

Robert Shepardson: We've resolved those issues before quarter end sketch.

Robert Shepardson: Scheduled visits represented 63% of total continuing to highlight the evolution of our company from providing virtual urgent care to a platform provider, enabling hybrid care.

Robert Shepardson: We continue to make good progress migrating our clients to converge.

Robert Shepardson: As we announced in February, we successfully migrated some of our largest payer clients, and we saw volume from them ramp this quarter. With their volume now migrated, the percentage of visits on Converge is materially higher than the 52% from last quarter, and for 1Q, it was over 68%. Turning to our Q1 financiers.

Robert Shepardson: As we announced in February we successfully migrated some of our largest payer clients and we saw volume from them ramp this quarter.

Robert Shepardson: With their volume now migrated the percentage of visits on converge is materially higher than the 52% from last quarter.

Robert Shepardson: And for <unk> was over 68%.

Robert Shepardson: Turning to our Q1 financials total revenue was $59 5 million for the quarter down $4 5 million or 7% from a year ago Approx.

Robert Shepardson: Total revenue was $59.5 million for the quarter, down $4.5 million, or 7% from a year ago. Approximately $4 million of the decline in revenue versus last year was subscription-related, driven primarily by legacy platform declines, with the balance driven by lower visit revenue, offset by higher services and care points. Subscription revenue declined 9% from Q4 and was $24.9 million in Q1. We believe the first quarter was our low point for the year for subscription revenue.

Robert Shepardson: Approximately $4 million of the decline in revenue versus last year was subscription related driven primarily by legacy platform declines with the balance driven by lower visit revenue offset by higher services and care points revenue.

Robert Shepardson: Subscription revenue declined 9% from Q4 and was $24 $9 million in Q1, we believe the first quarter was our low point for the year for subscription we believe that subscription revenue will increase each quarter. This year with contracted customer go lives.

Robert Shepardson: We believe that subscription revenue will increase each quarter this year with contracted customer go-lives, the full benefit of which we will see in the fourth quarter from a run rate perspective. We continue to expect our subscription revenue for 2024 to be approximately flat. AMG visit revenue trended 4% lower than last year and was $31 million in Q1. AMG visits were 6% lower this quarter versus a year ago, due in part to the one-time dynamics I just mentioned.

Robert Shepardson: We'll benefit of which we will see in the fourth quarter from a run rate perspective.

Robert Shepardson: We continue to expect our subscription revenue for 2024 to be approximately flat to 2023.

Robert Shepardson: AMG visit revenue trend is 4% lower than last year and was $31 million in Q1.

Robert Shepardson: He visits were 6% lower this quarter versus a year ago due in part to the onetime dynamics I just mentioned.

Robert Shepardson: Average revenue per visit was slightly higher this quarter than last year at $77, driven by a mixed shift within AMG away from on-demand urgent care visits. Our AMG business continues to be strategically important to client expansions and new client wins.

Robert Shepardson: Average revenue per visit was slightly higher this quarter than last year at $77 driven by a mix shift within AMG away from on demand urgent care visits or AMG business continues to be strategically important to client expansions and new client wins.

Robert Shepardson: Our services and care points revenue was $3.6 million for the quarter, a decline of $7.7 million from last quarter, driven primarily by the timing of professional services and marketing. These revenues are uneven from quarter to quarter, as well as the professional services milestones that precede deployment. We anticipate that our services and care points revenue will represent approximately 10% of our total revenue for 2024, two-thirds of which will be recognized in the second half of the year, driven primarily by the go-live lives of contracted deployments.

Robert Shepardson: Our services and care points revenue was $3 6 million for the quarter a decline of $7 7 million from last quarter, driven primarily by the timing of professional services and marketing.

Robert Shepardson: These revenues are uneven from quarter to quarter due to customer buying patterns for marketing services programs and for care points as well as the professional services milestones that precede deployments.

Robert Shepardson: We anticipate that our services and care points revenue will represent approximately 10% of our total revenue for 2020 for two thirds of which will be recognized in the second half of the year driven primarily by go lives of contracted deployments.

Robert Shepardson: Turning to profitability, our fourth-quarter gross profit margin was 31%, a decline of approximately 300 basis points from last quarter. We view this decline as temporary, and it was largely due to lower subscription software and services revenue combined with one-time costs related to the very large payer migrations we completed this quarter. For the year, we expect our gross margin to approximate the levels we saw in 2023 and expand meaningfully in future years as our mix of subscription software increases. We are tracking well on our past normalizing R&D spend.

Robert Shepardson: Turning to profitability, our fourth quarter gross profit margin was 31% a decline of approximately 300 basis points from last quarter.

Robert Shepardson: We view this decline is temporary and it was largely due to lower subscription software and services revenue combined with onetime costs related to the very large payer migrations, we completed this quarter for.

Robert Shepardson: For the year, we expect our gross margin to approximate the levels. We saw in 2023 and expand meaningfully in future years as our mix of subscription software increases.

Robert Shepardson: We are tracking well on our path to normalizing RMB spending.

Robert Shepardson: Gap R&D expense was flat compared to last quarter and was 7% higher after adjusting for $3 million of software development capitalization associated with our government work. Inclusive of this spend, software cap adjusted R&D spend is 10% lower than a year ago. We continue to expect our total R&D spend to decline at least mid-teens percent this year versus 2023. Sales and marketing expense was $4 million higher than 4Q23, driven by severance and other costs associated with our growth transformation.

Robert Shepardson: GAAP R&D expense was flat to last quarter and was 7% higher after adjusting for $3 million of software development capitalization associated with our government work.

Robert Shepardson: Inclusive of the spend.

Robert Shepardson: Software cap adjusted R&D spend is 10% lower than a year ago. We continue to expect our total R&D spend to decline at least mid teens percent this year versus 2023.

Robert Shepardson: Sales and marketing expense was $4 million higher than <unk> 23, driven by severance and other costs associated with our growth transformation.

Robert Shepardson: We also had higher compensation accruals compared to last quarter, which was offset by lower salary expense due to our headcount reduction. Overall, we expect GAP sales and marketing costs to be level year-over-year, inclusive of one-time costs. G&A expense was $8 million higher versus last quarter, driven primarily by higher compensation accruals plus higher stock-based compensation expense due to the partial vesting of 2024 grants.

Robert Shepardson: We also had higher compensation accrual compared to last quarter, which was offset by lower salary expense due to our head count reduction.

Robert Shepardson: Overall, we expect GAAP sales and marketing costs to be level year over year inclusive of one time costs.

Robert Shepardson: G&A expense was $8 million higher versus last quarter, driven primarily by higher compensation accruals plus higher stock based compensation expense due to the partial vesting of 2024 grams.

Robert Shepardson: We expect our quarterly run rate for stock-based comp for the remainder of 2024 to be below the level we achieved in the fourth quarter of last year. Adding it all together, adjusted EBITDA for the quarter was negative $45.7 million, versus negative $44.6 million last year. Our gross profit contribution was lower by $7 million, driven by lower subscription software and one-time migration expenses, offset by lower R&D. Transitioning to the balance sheet, we ended the fourth quarter with $309 million of cash in marketable security.

Robert Shepardson: We expect our quarterly run rate for stock based comp for the remainder of 2024 to be below the level, we achieved in the fourth quarter of last year.

Robert Shepardson: Adding it all together adjusted EBITDA for the quarter was negative $45 $7 million.

Robert Shepardson: Versus negative $44 $6 million last year.

Robert Shepardson: Our gross profit contribution is lower by $7 million, driven by lower subscription software and onetime migration expenses offset by lower R&D and.

Robert Shepardson: Transitioning to the balance sheet, we ended the fourth quarter with $309 million of cash and marketable securities.

Robert Shepardson: Turning to our outlook, Q1 represents a good start to our year, and tonight, we are reiterating our 2024 guide. We continue to expect revenue for 2024 to be in the range of 259 to $269 million for the year. We expect subscription revenue to be roughly similar to that of 2023 and to grow incrementally each quarter this year with contracted go-lives, the full impact of which will be evident in the fourth quarter. As to adjusted EBITDA, we continue to expect our 2024 adjusted EBITDA to be in the range of negative $160 to negative $155 million. Additional context around our assumptions remains unchanged.

Robert Shepardson: Turning to our outlook Q1 represents a good start to our year and Tonight, we are reiterating our 2020 for guidance.

Robert Shepardson: We continue to expect revenue for 2024 to be in the range of $259 million to $269 million for the year.

Robert Shepardson: We expect subscription revenue to be roughly similar to that of 2023 and to grow incrementally each quarter. This year with contracted go lives the full impact of which will be evident in the fourth quarter.

Robert Shepardson: As to adjusted EBITDA, We continue to expect our 2024 adjusted EBITDA to be in the range of negative 160 to negative $155 million.

Robert Shepardson: Additional context around our assumptions remains unchanged we are on track to reduce our converged related R&D spend annually by 25% to 30%.

Robert Shepardson: We are on track to reduce our CONVERGE-related R&D spend annually by 25 to 30 percent. However, government-related customization of our platform will moderate the overall decline in R&D to a circa mid-teens percent reduction for the year. Our headcount actions will result in over $15 million in compensation-related savings, though our guidance assumes we return to normal levels of incentive compensation versus 2023. The progress we have made in recent quarters significantly adds to our financial visibility and meaningfully de-risks our path to adjusted EBITDA breakeven. The impact of our plan supporting the DHA, including the enterprise expansion, is not fully visible with a single year of guidance for 2024.

Robert Shepardson: However, government related customization of our platform will moderate the overall decline in R&D to a circa mid teens percent reduction for the year.

Robert Shepardson: Our head count actions will result in over $15 million in compensation related savings. So our guidance assumes we returned to normal level of incentive compensation versus 2023.

Robert Shepardson: The progress we have made in recent quarters significantly adds to our financial visibility and meaningfully de risks our path to adjusted EBITDA breakeven.

Robert Shepardson: The impact of our planned supporting the DHA, including the enterprise expansion is not fully visible with a single year of guidance for 2024.

Robert Shepardson: And so in February, we took the extra step of providing a range of longer-term financial expectations, the highlights of which are as follows. We expect revenue in 2025 to be in the range of $335 to $350 million dollars, representing growth of circa 30% compared to 2024, primarily driven by the go-lives of contracted software backlog, including our planned enterprise-wide DHA deployment. We further expect an approximate 70% improvement in our adjusted EBITDA to a range of negative $45 to negative $35 million.

Robert Shepardson: And so in February we took the extra step of providing a range of longer term financial expectations. The highlights of which are as follows.

Robert Shepardson: We expect revenue in 2025 to be in the range of $335 to $350 million representing growth of circa 30% compared to 2024, primarily driven by go lives have contracted software backlog, including our plan to enterprise wide DHA deployments.

Robert Shepardson: We further expect an approximate 70% improvement in our adjusted EBITDA to a range of negative <unk> 45 to negative $35 million we.

Robert Shepardson: We expect the change in our revenue mix towards subscription software to lift gross margins from the high 30% area in 2024 to over 50% in 2025. After configuring our platform for operation in the government ecosystem, it will be fully scalable and ready to deliver complete hybrid care across the entire MHS enterprise with minimal future development required. And finally, rounding out our forward-looking expectations, we currently expect to achieve adjusted EBITDA break even in 2026 with a cash investments balance of approximately $150 million.

Robert Shepardson: We expect the change in our revenue mix towards subscription and software to lift gross margins from the high 30% area in 2024 to over 50% in 2025.

Robert Shepardson: After configuring our platform for operation in the government ecosystem, it will be fully scalable and ready to deliver complete hybrid care across the entire MHS enterprise with minimal future development required.

Robert Shepardson: And finally rounding out our forward looking expectations. We currently expect to achieve adjusted EBITDA breakeven in 2026 with a cash investments balance of approximately $150 million in conclusion. We are encouraged by the strides we have made in our business and in Q1, we made good progress toward our goals.

Robert Shepardson: In conclusion, we are encouraged by the strides we have made in our business, and in Q1, we made good progress toward our goal. We believe we are just beginning to capitalize on the opportunity in front of us, and this guidance marks the early days for the long-term profitable growth trajectory we anticipate. Thank you for listening. With that, I'll turn the call back to Ido for some closing remarks.

Robert Shepardson: We believe we are just beginning to capitalize on the opportunity in front of US and this guidance March the early days for the long term profitable growth trajectory we envision.

Speaker Change: Thank you for listening with that I'll turn the call back to <unk> for some closing remarks.

Ido Schoenberg: Thank you, Bob. In closing, I would like to thank our teams for the work they completed in Q1. We are on track for our goals, and we made progress towards our strategic initiatives. And as we deploy and migrate customers, and the market takes note of the benefits of the hybrid care we enable, we are solidifying our role as a digital transformation partner.

Speaker Change: Thank you Paul in closing I would like to thank our team for the work. We completed in Q1, we are on track for our growth and we made progress towards our strategic initiatives.

Speaker Change: And as we deploy and migrate our customers and the market takes note of the benefits of the hybrid care. We enable we are solidifying our role as a digital transformation partner.

Operator: We believe we're just getting started. With that, we are ready to conclude our formal remarks. Thank you for listening to me. Operator, we are ready to open the line for questions. Thank you.

Speaker Change: We believe we're just getting started.

Speaker Change: With that we're ready to conclude our formal remarks.

Speaker Change: Thank you for listening today.

Speaker Change: Operator, we are ready to open the line for questions. Thank you.

Operator: At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Charles Rhyee with TD Cowan. Your line is open. Yeah, thanks for taking the questions.

Speaker Change: At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.

Speaker Change: For just a moment to compile the Q&A roster.

Speaker Change: Your first question comes from Charles <unk> with Cowen Your line is open.

Charles Rhyee: Yeah, thanks for taking the questions. I wanted to first ask about the number of the renewals that you kind of highlighted, Intermountain, Cleveland Clinic, et cetera, and maybe get a little bit more details on maybe the length of these renewals, if they were adding any new capabilities, any kind of additional commentary you could provide on sort of the value they're currently benefiting from Converge and sort of what their roadmap looks like in terms of advancing with you guys. Thanks.

Charles: Yes, thanks for taking the questions.

Charles: Yes.

Charles: Wanted to first ask about the number of the renewals that you kind of highlighted in your mountain Cleveland clinic et cetera.

Charles: And maybe get a little bit more details on maybe sort of length of these renewals.

Charles: If they were adding any new capabilities.

Charles: Any kind of additional commentary you can provide on sort of the value. They are currently benefiting from conversion and sort of what their road map looks like in terms of.

Speaker Change: Advancing further with you guys. Thanks.

Charles: Okay.

Speaker Change: Your mute.

Charles: Yes.

Ido Schoenberg: Sorry about that. Hi Charles, and thank you for your question. The duration of our agreement did not change much. It's roughly around three years, give or take.

Speaker Change: Sorry about that hi, Charles and thank you for your question.

Speaker Change: The duration of our agreements did not change much.

Charles: Roughly around the three years give or take.

Ido Schoenberg: The renewals are first and foremost a vote of confidence in Converge. Virtually all the clients that renew are looking at the new platform. And each new client does look to add new elements to it. Of course, those elements and those solutions, in addition to traditional virtual visits on demand or scheduled, vary from one client to another. I'll give you a few examples.

Speaker Change: Renewals are first and foremost.

Speaker Change: A vote of confidence in a converged virtually all clients to renew or looking at the new it platform and each new client does look to add new elements to it.

Speaker Change: Of course, those elements and those solutions in addition to traditional.

Speaker Change: Actual visits.

Charles: On demand or scheduled a vary from one client.

Charles: Neither.

Charles: I'll give you a few examples payers typically add an element, which is a good example of that.

Ido Schoenberg: Payers typically add, and Elevance is a good example of that, virtual primary care. We believe VPC is enormously valuable and has a lot of potential for growth, adding a lot of value to members and creating a lot of savings and impact, clinical and financial, to the sponsor. In addition to that, we see same store growth and, certainly relevant for renewal, in all areas of automated interaction. Automated interactions are very broad in their impact.

Charles: The primary care, we believe EPC is enormously.

Charles: <unk> and has a lot of potential for growth, adding a lot of value to members and creating a lot of savings and impact clinical and financial.

Charles: The spa.

Charles: <unk>. In addition to that we see same store growth and certainly relevant for renewal in all the area of automated interactions automated interactions are very broad and their impact to there could be as simple as facilitating a bureaucratic activities like showing up for appointments for colossal.

Ido Schoenberg: They could be as simple as facilitating bureaucratic activities, like showing up for appointments for colonoscopies, all the way to managing complex illnesses like diabetes and others. And that's certainly something that we've seen. And I gave at least one example of a blue plan. That's actually a new client, actually. I'm sorry, that's an expansion.

Charles: Copy all the way to managing complex illnesses like diabetes.

Charles: Others, and Thats, certainly something that we've seen and I gave at least one example of a blue plan.

Charles: That's a new client actually.

Speaker Change: I'm sorry, that's an expansion so thats.

Speaker Change: They're relevant to your question.

Ido Schoenberg: So that's really very relevant to your question. Another example that we see now in renewals and expansions is virtual nursing. There is a very big shortage of staff in hospitals, and the ability to add to the roster nurses that can extend their careers and could be very helpful in saving hours and hours of time in facilitating things like admissions and discharges is very significant to many. Lastly, the last example, and there are others, but we are short of time, is the whole notion of collaborative care as it relates to behavioral health.

Charles: And another.

Charles: Example, that we see now.

Charles: In renewals and expansions.

Charles: Is virtual nursing.

Charles: There is a very big shortage of.

Charles: Staff in hospitals, and the ability to add to the roster nurses that extend their career, including very helpful going saving hours and hours of time in facilitating things like admissions and discharges is very significant to many of our customers.

Speaker Change: Lastly, last example, and others, but we are short of time.

Speaker Change: Is the whole notion of.

Speaker Change: Collaborative care as it relates to be every health.

Ido Schoenberg: Our ability to use single cloud technologies to help primary care providers drastically improve access to behavioral health services is something that many of our customers are very interested in. So, in short, I believe that all of our renewals are really focusing on the broad capabilities of the AMOLED platform today, which is very different from our legacy.

Charles: Our ability to use central cloud technologies to help primary care providers.

Charles: Drastically improve access to be able health services is something that many of our customers are very interested in so in short I believe that all of our renewals.

Charles: Focusing on the.

Charles: Broad capabilities of the AMOLED platform today, which is very different form our legacy offering.

Ido Schoenberg: I appreciate all that detail, and you mentioned Elevans adding sort of virtual care. Just curious, you know, your thoughts here on the recent announcement by United with the Optum virtual care platform being kind of wound down here. Just curious about your thoughts on, you know, what that says about the market here for virtual care and the role that payers play in that. Thanks.

Speaker Change: I appreciate all that details and you mentioned NELA bands, adding sort of virtual care just curious.

Charles: Your thoughts here the recent announcement of the United.

Charles: With the Optum virtual care platform being kind of wound down here.

Charles: Just your thoughts on what that says about the market here for virtual care and and the role that payers play on that thanks.

Ido Schoenberg: Sure. So, as you know, United is a very, very old partner of AMREL. We have a very strong relationship that dates back a really long time.

Speaker Change: Sure. So as you know United is a very.

Speaker Change: Very good.

Speaker Change: A partner.

Speaker Change: We have very strong relationship that date back a really long long time.

Ido Schoenberg: Those relationships are strong, and internal events within the United Group do not expect to have a material impact on our relationship or impact on our guidance as to the specific case that you've mentioned. But certainly, and you're absolutely right, we've seen quite a few examples where tech-oriented companies offered care, and it was very challenging for them, and quite a few exited this business. In many ways, we believe this is a testament to how difficult doing what we do is, in the sense that it's really important to work with existing providers that are trusted.

Speaker Change: Those relationships are strong.

Speaker Change: And internal events within the United Group did not expect to have material impact.

Speaker Change: On our relationship or impact on our guidance as to the specific case that you've had.

Speaker Change: You mentioned.

Speaker Change: But certainly we've seen and you're absolutely right, we've seen quite a few examples where.

Speaker Change: <unk> oriented companies offered the care and into a very challenging for them in quite a few exited.

Speaker Change: This business.

Speaker Change: In many ways, we believe this a testimonial of.

Speaker Change: How difficult.

Speaker Change: Offering doing what we do is in defense that it's really important to work with existing providers that are trusted managing this network for digital services is far from obvious and the technology that is required in order to do that is nothing but a commodity like some people are suggesting.

Ido Schoenberg: Managing this network for digital services is far from obvious, and the technology that is required in order to do that is nothing but a commodity, like some people suggest. United, and many others, have reaffirmed their deep commitment to Hybrid Care and Digital Care. So it's important to understand that those people that exit, including Walmart and others, do not say that easier access to health services is not important. They just realize that some of their initial models really were struggling a little bit to find their way.

Speaker Change: And many others reaffirm their deep commitment to hybrid care in digital care. So it's important to understand that those people that exit, including Walmart and others do not say that.

Speaker Change: <unk> access to health services is not something important they just realize that some of their initial madera.

Speaker Change: Really.

Speaker Change: We're struggling a little bit to find their way.

Ido Schoenberg: We see that as affirming our view, where we offer technology to connect existing trusted providers with consumers but open the gate to a tidal wave of technological innovation that we believe could be very, very impactful. And if you want one example, it's the use of automation and AI. We believe that those technologies could have a far-reaching effect on improving outcomes in healthcare. It's almost impossible to use them as standalones, and in the context of interacting between trusted providers and patients, they could find a very good way to realize this potential. Your next question comes from Craig Hettenbach with Morgan Stanley. Please go ahead.

Speaker Change: C that is affirming affirming our view, where we offer technology to connect existing trusted providers.

Speaker Change: With consumers, but opening the gate to tidal wave of technology innovation that we believe could be very very impactful and if you want. One example is the use of automation and AI, we believe that those technologies could hey, this far reaching effect on improving the outcomes in health care.

Speaker Change: It's almost impossible to use them as a standalone and in the context of interacting between trusted providers and patients they could find a very good way to realize this potential.

Speaker Change: Your next question comes from Craig hitting back with Morgan Stanley. Please go ahead.

Craig: Yes. Thank you just a question on the DHA program and really looking for just any key milestones to watch as we progress through this year and what that means to the visibility of the programs.

Speaker Change: And the setup into 2025.

Ido Schoenberg: Absolutely. And Bo can follow with some financial observations.

Speaker Change: Absolutely.

Speaker Change: Both can follow with some.

Speaker Change: I mentioned.

Speaker Change: Observations, but essentially our relationship with the DHA and with the latest partnership.

Ido Schoenberg: But essentially, our relationship with the DHA and with the Leidos Partnership on Health is really terrific. They're very experienced, this is a very large project, and it's going very well. We're going to really do everything we can to make sure that it continues to go well. As I shared in my prepared remark, the first milestone for the year is behind us. We went live with behavioral health, which, according to client preference, was the most urgent thing for them to deploy.

Speaker Change: On healthy it's really terrific theyre very experienced this is a very large project.

Speaker Change: It's going very well.

Speaker Change: We're going to really do everything we can to make sure that it continues to go away when as I shared in the prepared remark. The first milestone for the year is behind US We went live with the behavioral health, which according to the client preference where the most urgent thing for them.

Speaker Change: To deploy as I mentioned earlier there are two more.

Ido Schoenberg: As I mentioned earlier, there are two more milestones, the deployment of CONVERGE, which we are focused on right now, and lastly, the deployment of automated care towards the end of the year, with an expected enterprise rollout at the end of the year. We believe this timeline is still very realistic and very viable going forward. Any other comments? Yeah, Craig, thanks for the question. I guess I would say, from a revenue perspective, you can expect to see some.

Speaker Change: Millstones the deployment of converged we're focused on right now.

Speaker Change: And lastly, the deployment of automated care.

Speaker Change: Towards the end of the year with expected enterprise rollout.

Speaker Change: And at the end of the year.

Speaker Change: We believe this timeline, we still are very realistic and very viable.

Speaker Change: Going going forward.

Speaker Change: Any other comments.

Robert Shepardson: But then there's another leg of that that we will see, and it will drive significant growth in our services and care points revenue in Q2 and Q3. So, you know, from a financial perspective, you'll see a few things going on. Revenues, a highly fourth quarter focus there. Services revenue, you'll see come on in Q2 and Q3 in a meaningful way. Those will be our largest quarters from a revenue perspective in services and care points.

Robert Shepardson: Yeah, Craig, thanks for the question. I guess I would say, from a revenue perspective, you can expect to see the lion's share of the impact in the fourth quarter, with a lot of that revenue coming from Go Lives in the fourth quarter. And for the first couple of quarters, Q2 and Q3, you're going to see a lot of services revenue come online. There are two components to the services revenue that we'll be recognizing as we go forward here on the customization of the platform. You know, one is tied to recognizing revenue tied to Go Lives. So there's that aspect that we won't see in the next two quarters.

Speaker Change: Yeah, Craig Thanks for the question.

Speaker Change: I guess I would say.

Speaker Change: From a revenue perspective.

Speaker Change: You can expect to see some.

Speaker Change: The lion's share of.

Speaker Change: The impact in the fourth quarter.

Speaker Change: With a lot of that revenue coming on with go lives.

Speaker Change: In the fourth quarter.

Speaker Change: And for the first couple of quarters Q2 and Q3.

Speaker Change: Youre going to see a lot of services.

Speaker Change: Revenue come online there is two components to the services revenue that we'll be recognizing as we go forward here.

Speaker Change: On the customization.

Speaker Change: The platform one is.

Speaker Change: Ty is that recognizing the revenue is tied to go lives. So.

Speaker Change: There is that aspect that we won't see in the next two quarters, but then there is another leg of that that we will see and it will drive a significant growth in our.

Speaker Change: Our.

Speaker Change: In our services and care points revenue in Q2 and Q3.

Speaker Change: So from a from a financial perspective, Youll see a few things going on.

Speaker Change: Revenues highly fourth fourth quarter focus their services revenue Youll see come on in Q2, and Q3 in a meaningful way those will be our largest quarters from a revenue perspective in services and care points and then you'll also see cash.

Robert Shepardson: And then you'll also see capitalization of software spend, R&D spend, much higher in the second and third quarters as well. So I think financially, that's what you can expect as we, you know, as it relates to that DHA. It's Helpful Co. I appreciate it.

Speaker Change: Capitalization of our AV Av software spend R&D spend.

Speaker Change: Much higher.

Speaker Change: And the second and third quarters.

Speaker Change: As well so I think financially that's what that's what you can expect as we.

Speaker Change: As it relates to that the DHA.

Robert Shepardson: Just a quick follow-up, Bob, you touched on just some of the cost initiatives and kind of path to break even. You know, what are some key variables that you're mindful of in terms of marching towards that break even, like any potential tailwinds or headwinds on the cost side of things? I feel like we've got it pretty programmed at this point, Craig, in terms of, you know, as I think about the components, you know, I think.

Speaker Change: That's helpful color I appreciate it just a quick follow up and Bob you touched on just some of the cost initiatives and kind of path to breakeven.

Robert Shepardson: What are some key variables that you are mindful of in terms of marching towards that breakeven likes on any potential tailwind or headwinds on the cost side of things.

Robert Shepardson: Okay.

Robert Shepardson: I feel like we've got it pretty programmatic.

Robert Shepardson: At this point Craig in terms of as I think about the components.

Robert Shepardson: I think.

Robert Shepardson: Gross profit is going to rise very meaningfully over the next few quarters, getting us back to about what we did last year on the cost of goods sold side and the resulting gross margin and then increasing to north of 50% the next year. So I don't see much concern around that.

Robert Shepardson: Gross profit.

Robert Shepardson: As is is going to rise very meaningfully over the next few quarters.

Robert Shepardson: So getting us back to about what we did last year on the cost of goods sold side and the resulting gross margin and then increasing to north of 50%. The next year. So I don't I don't see much.

Robert Shepardson: Concern around that and then as we.

Robert Shepardson: And then as we, you know, as I think about the operating expense line items, we have a very good bet on what the converge-related spend and the declines there. Continue to expect that it's going to be in the, you know, area of 30% year over year and have a very good idea and a lot of comfort, I think, built into what we're spending for customization in the government sector.

Robert Shepardson: As I think about the operating expense line items.

Robert Shepardson: We have a very good bead on what.

Robert Shepardson: The converge related spend in the declines there continue to expect that's going to be in the area of 30% year over year.

Robert Shepardson: And have a very good idea and a lot of comfort I think built into the.

Robert Shepardson: What we're spending for customization.

Robert Shepardson: The government sector.

Robert Shepardson: So I don't, I feel like we've been conservative in how we've estimated that, and the mid-teens decline reflects that level of conservatism and the contingencies built in for that work. And in SG&A, I think we've done, we've taken some actions in January. I expect that we'll find incremental efficiencies going forward on the SG&A side. I think historically, we've been talking about a lot of operating leverage there. I think there's, you know, we've got scope to actually take those costs down year over year. So I don't, I think those are really the points I'd make. I don't know, Ido, if you had anything you wanted to add.

Robert Shepardson: I feel like we've been conservative in how we've estimated that in the mid teens decline reflects that level of conservatism in the contingencies built in for that work and in SG&A.

Robert Shepardson: I think we.

Robert Shepardson: We've done we've taken some actions in January I expect that we will find incremental efficiencies going forward.

Robert Shepardson: On the SG&A side, I think historically, we've been talking about a lot of operating leverage there I think there is we've got we've got scope to actually take those costs down.

Robert Shepardson: Year over year so.

Robert Shepardson: I don't.

Speaker Change: I think those are really the points I would make I don't know if you had anything you wanted to add.

Ido Schoenberg: Yeah, maybe giving you some color and from another angle. As Bob mentioned, the big event, of course, is the completion of CONVERGE. The platform is built and proven, and that allows us to really greatly reduce the R&D investment. In addition to that, we spent the last few months really focusing on efficiency and effectiveness across the entire company, with special focus on the efficiency and effectiveness of our growth organization.

Speaker Change: Yes, maybe giving you some color and from another angle as Bob mentioned the Big event of course is the completion of converged platform, we've built and proven and that allows us to really greatly reduce the R&D.

Speaker Change: In addition to that we spent the last few months really focusing on efficiency and effectiveness in the company across the entire company with special focus around the efficiency and effectiveness of our growth organization.

Ido Schoenberg: So we, together with third-party consultants and our own team, took a fresh look at the market. A lot has changed in the market, and that drove some very interesting opportunities as it relates to our strategy and our focus. We redefined our TAM and SAM and chose to basically redefine also our business line with special emphasis on profitability. We took the new market segments, and we decided to focus on segments where we have the highest right to win and the best opportunity to generate a better gross margin, especially driven by several mix towards a subscription, software subscription.

Speaker Change: So we together with third party consultants and our own team, we took a fresh look on one.

Speaker Change: On the market a lot has changed in the market and that drove some very interesting opportunity.

Speaker Change: As it relates to our strategy and the focus redefine our Tam Sam.

Speaker Change: And chose to basically redefine also our business lines.

Speaker Change: Special emphasis around the profitability.

Speaker Change: We used to we took the new market segments, and we decided to focus on segments, where we have the highest right to win and the best opportunity to generate better gross margin, especially driven by favorable mix towards a subscription software <unk> subscription.

Ido Schoenberg: We did change our entire growth organization. We built a whole new structure around the sales operation to support the strategy that is fit for the current market condition, the competitors, and convergence. Our marketing, which is really responding right now with the market, was revisited. We upscaled our talent.

Speaker Change: We did change our entire growth organization, we built a whole new structure around sales operation to support the strategy.

That is fit for the current market condition to competitors in converged.

Speaker Change: Our marketing.

Speaker Change: That is really resonating right now with the market.

Speaker Change: We revisited.

Speaker Change: Fueled our talent.

Ido Schoenberg: We brought in some people from outside the area that we needed to, and trimmed people that were less relevant to what we're doing. We trained the entire staff on the new plan, and we created new comp plans that really are encouraging our team to focus on high-margin software subscriptions. And clearly, one of the outputs is that we have fewer quota carriers, and the bags they are carrying are much wider.

Speaker Change: We brought some people from the outside in an area that we needed to and trained on people that are less relevant to what we're doing we trained the entire staff.

On the new plan and we created new comp plan.

Speaker Change: There really are encouraging our team to focus on higher margin software subscriptions and clearly one of the outflows that we have less quota carriers and the bagged theyre carrying as much a broader.

Ido Schoenberg: That's not only interesting financially and in terms of effectiveness, but it means that these people are able to tell the story of a much broader end-to-end solution that we believe the clients appreciate. We no longer have separation around business lines, but other consultants are able to talk about our entire portfolio. We no longer have hunters and farmers. We really have one team that is nurturing the relationship with both new customers and existing customers.

Speaker Change: Thats not only interesting financially and aware of effectiveness and that means that these people are able to tell a story of a much more broad end to end solution that we believe the clients.

Speaker Change: I appreciate we no longer have the separation around business lines.

Speaker Change: Other consultants are able to talk about our entire portfolio, we no longer have hunters and farmers.

Speaker Change: We have one team that.

Ido Schoenberg: Is nurturing the relationship with both new customers.

Ido Schoenberg: So, these are some examples of what has happened in the past few months at Amwell, and the bottom line is that we believe that we have already achieved much more focused and efficiency in our organization, and we fully expect to continue those efforts over the next couple of quarters, which will be demonstrated also by our customers.

Ido Schoenberg: And existing customers. So these are some examples on what happened in the past few months.

Speaker Change: Yes.

Ido Schoenberg: Well end the net of it.

Ido Schoenberg: We believe that we have already achieved with a much more focused and efficiency in our organization and we fully expect to continue those efforts over the next couple of.

Ido Schoenberg: Quarter, which will be demonstrated also in our cost structure.

Operator: Your next question comes from Jessica Tassan with Piper Sandler. Please go ahead.

Ido Schoenberg: Your next question comes from Jessica <unk> with Piper Sandler. Please go ahead.

Jessica Elizabeth Tassan: Hi guys, thanks for the question. So I wanted to confirm first off, the sequential growth you're guiding to from a subscription perspective, that contemplates some kind of known and understood attrition and is net of that attrition? Yes, that's correct. Okay, awesome. And so then my follow-up question is just, I think you guys mentioned that DHA has expanded in some respects into behavioral capabilities that were not part of the initial deployment. Can you just help us understand what the scope of the initial deployment was from a product perspective?

Jessica Elizabeth Tassan: Hi, guys and thanks for the question. So I wanted to confirm first up the sequential growth Youre guiding to you from a subscription perspective that contemplates and kind of known and understood attrition.

Jessica Elizabeth Tassan: And then what is this incremental behavioral business? And my last one is just, can you confirm that the DHA enterprise-wide deployment is locked and loaded, funded, and poised to occur in the fourth quarter of the year? Thank you. I just want to go to you.

Jessica Elizabeth Tassan: Net of that assertion.

Speaker Change: Yes, that's correct.

Jessica: Okay Awesome and so then my follow up is just and I think you guys mentioned that the Doj has expanded.

Jessica Elizabeth Tassan: Im respecting behavioral capabilities that were not part of the initial deployment.

Jessica: Can you just help us understand what's the scope of the initial deployment from a product perspective, and then what is the incremental behavioral business.

Speaker Change: And my last one is just can you confirm that the DHA enterprise wide deployment.

Jessica Elizabeth Tassan: Like locked and loaded funded.

Jessica Elizabeth Tassan: Hi.

Speaker Change: Points to occur in the fourth quarter of the year. Thank you.

Ido Schoenberg: I just could hear a voice. So behavioral health was always part of what the DHA wanted to deploy. In fact, their takeoff, the taking care of people initiatives, is really focusing on behavioral health for our men and women in uniform. So that's why it was always the plan, and indeed the plan was executed, to start with the automated behavioral health system, which we deployed. The product basically allows providers to prescribe different treatment plans that are highly automated but with a hybrid approach together with coaches around things like depression, anxiety, and a long list of other ailments that are behavioral health specific. So we've done that.

Speaker Change: Hi, just continuing voice.

Ido Schoenberg: So the behavioral health was always part of what the DHA wanted to deploy in fact, there are key corp were taken care of our people initiatives is really focusing on being able to help.

Ido Schoenberg: For our men and women in uniform.

Ido Schoenberg: That's why it was always the plan and indeed, the Penn was executed to start with the automated be able health, which we deployed the product basically allows providers to prescribe different treatment plans that are highly automated but we.

Ido Schoenberg: The breed approach together with coaches around things like depression.

Ido Schoenberg: <unk>.

Ido Schoenberg: It normally provide their other ailments.

Ido Schoenberg: <unk> would be able to help a specific so we've done that and if you remember Andy initial year is about deploying the services in five demonstrative sites across the DHA.

Ido Schoenberg: And if you remember, the initial year is about deploying the services in five demonstrative sites across the DHA, and once this is done and working well, to go to enterprise expansion. So this first milestone is deploying those services in the sites of the DHA. And we went live with it, and it's operating. The other two milestones are the conversion deployment that we're focused on right now, and the last one is the automated care opportunities that I mentioned earlier.

Ido Schoenberg: And once this is done and working well.

Ido Schoenberg: To go to an enterprise expansion. So this.

Ido Schoenberg: First milestone.

Ido Schoenberg: Drawing those services in the site.

Ido Schoenberg: The DHA and we went live with it.

Ido Schoenberg: Operating the other two milestones are.

Ido Schoenberg: The converts deployment that we're focused on right now and then.

Ido Schoenberg: Last one is the automated care opportunities that I mentioned earlier all of that is done.

Ido Schoenberg: All that is done in compliance with a long list of requirements for cybersecurity, for our staff credentials, for the GovCloud operation, and many other things. So we are really investing here in capabilities that will be very relevant across the government market and are also a very nice showcase that some of our commercial customers are looking at. As far as the contract and the budget are concerned, as a reminder, the $180 million budget for this is part of a $4 billion task order vehicle for the DHA, and all that was granted.

Ido Schoenberg: Implying with long list of requirements for cyber security for our staff credential credentials.

Ido Schoenberg: For the Gov cloud operation and many other things. So we are reinvesting here in capability that will be very relevant across the government market and are also very nice showcase that some of our commercial customers are looking at as far as the contract in the budget as a reminder.

Ido Schoenberg: Under the $180 million Budd.

Ido Schoenberg: Budget tore this is part of the $4 billion task order or vehicle.

Ido Schoenberg: <unk> for the DHA.

Ido Schoenberg: All that was granted this budget is both for the initial deployment that I mentioned, but also for the enterprise expansion that is planned to take place.

Ido Schoenberg: This budget is both for the initial deployment that I mentioned but also for the enterprise expansion that is planned to take place in the fourth quarter. While the client, of course, always has the right to delay or stop anything that we are doing, we believe that so far everything that we are doing is going very well and generates much value, and there is no budgetary or contractual barrier for the enterprise expansion as part of the existing funded vehicle.

Ido Schoenberg: Place on the fourth quarter.

Ido Schoenberg: While declines of course have always the right to delay or stop anything that we're doing.

Ido Schoenberg: We believe that so far everything that we're doing is going very well and generate as much value.

Ido Schoenberg: And there is no budgetary or contractual barrier.

Ido Schoenberg: For the enterprise expansion as part of the existing funded the vehicle.

Operator: Your next question comes from Jailendra Singh with Truth Securities. Please go ahead.

Speaker Change: Your next question comes from James Sandra Zhang with <unk> Securities. Please go ahead.

Jailendra P. Singh: Thank you. And thanks for taking my questions.

Jailendra P. Singh: Thank you and thanks for taking my questions. So I wanted to follow up on your comment earlier about visit volumes being impacted by change healthcare and the temporary disruption from the large client migration first.

Jailendra P. Singh: So I want to follow up on your comment earlier about visit volumes being impacted by changing healthcare and the temporary disruption from the large client migration. First, are you willing to quantify how much the revenue impact was in the quarter? And the second question is, did changing health care impact in any ways the decision-making process of your potential prospective clients in terms of as they were preoccupied with this problem dealing with changing health care issue? And on the client migration disruption, any other color you can provide on what exactly happened?

Jailendra P. Singh: You're willing to quantify how much was the revenue impact in the quarter and the second.

Jailendra P. Singh: Change healthcare impact.

Jailendra P. Singh: Anyways.

Jailendra P. Singh: I am making process at your potential prospective clients in terms of as they were preoccupied with this problem dealing with change.

Jailendra P. Singh: And then on the clock.

Jailendra P. Singh: Migration disruption any other color you can provide what exactly happened.

Ido Schoenberg: Sure, I'll give you Jilan Rahal. I'll give you the.., you know, the details on what took place, and then Bob can add his view on the impact to the extent that we can share. So essentially, I think what happened with change is evident to everybody. As it relates to us, when we went live with the likes of Elegance and Highmark, the experience was that consumers logged in, and they were not able to continue with a visit because they were not able to see their co-pay and really go forward. So we had lots of doctors waiting to see patients that couldn't go in and lots of patients that couldn't see their doctors. Obviously, that's a serious barrier.

Speaker Change: Sure I'll give you just under high I'll give you the.

Ido Schoenberg: The details on what took place and then Bob can add.

Ido Schoenberg: He has his view on the on the on the impact.

Ido Schoenberg: To the extent that we can share.

Ido Schoenberg: Essentially I think what's happening changes evident to everybody.

Ido Schoenberg: As it relates to us when we went live with the likes of Amazon and Highmark.

Ido Schoenberg: The experience was the consumers' login and they were not able to.

Ido Schoenberg: Continue with the visit because they were not able to see their copay.

Ido Schoenberg: And really go away forwards. So we had lots of doctors waiting to see patients.

Ido Schoenberg: Go in and lots of patients that couldnt see their doctors, obviously, that's a serious serious barrier.

Ido Schoenberg: Our initial solution was to find an alternative to change. It took some time, but we pulled it through. And, of course, after a while, change, and go to solution, and we were able to resume the service. Many, many participants in the ecosystem were affected by this. We certainly were not the only one. So I don't think that this has an impact.

Ido Schoenberg: Our initial solution was to finally land turnkey has to change.

Ido Schoenberg: Some time that we reported through <unk>.

Ido Schoenberg: And of course after a while change the go to solution and we were able to resume the resume service.

Ido Schoenberg: Many many participants in the ecosystem we are affected by this we certainly were not the only one.

Ido Schoenberg: I don't think that this.

Ido Schoenberg: It has an impact that I didn't I don't remember any example of an impact on our pipeline or discussion with potential customers all with existing with.

Ido Schoenberg: I don't remember any example of an impact on our pipeline or discussions with potential customers or with existing clients. Maybe a little bit in the reserves, the fact that we were able to recover from such a major challenge is somewhat of a plus in our reliability in the market. Generally, the migration itself was the largest migration we had in our history.

Ido Schoenberg: With existing clients may be a little bit in the reserve. The fact that we're able to recover from such a major.

Ido Schoenberg: <unk>.

Ido Schoenberg: Is somewhat of a plus in our reliability.

Ido Schoenberg: In.

Ido Schoenberg: In the market.

Ido Schoenberg: Generally the migration itself was the largest migration we had in our history.

Ido Schoenberg: It was very interesting because it took place at the beginning of the year, a time when access to providers is the hardest, and demand is the highest. In addition to that, we also launched a new product with Elevance, the virtual primary care that we had to staff. So it was really an interesting stress test for all our operations, both technical in the state of building two-way integration with a lot of client systems that were ramping up over time.

Ido Schoenberg: It was very interesting because it took place at the beginning of the year, a time, where access to provider the harvest and demand is the highest.

Ido Schoenberg: In addition to that we also launched a new product. We then events to virtual primary care that we.

Ido Schoenberg: We had to staff. So there was really an interesting twist it.

Ido Schoenberg: Two all operations both the.

Ido Schoenberg: The technical and you're still building two way integration with a lot of clients. The assistance that we're ramping up over time and in addition to that we had to manage a network.

Ido Schoenberg: And in addition to that, we had to manage a network that was in full capacity with very high demand. I am pleased to report that we were able to execute, and the system did go live and scale, and is now in full production for both Highmark and Elevance.

Ido Schoenberg: It was in full capacity in the very high <unk>.

Ido Schoenberg: One.

Ido Schoenberg: Pleased to report that we were able to execute.

Ido Schoenberg: In the system.

Ido Schoenberg: It did go live in scale.

Ido Schoenberg: He is now in full production for both the high market into.

Ido Schoenberg: And the elements.

Robert Shepardson: Bob, maybe you have some.

Ido Schoenberg: Bob maybe you have some more comments.

Robert Shepardson: Jailendra, you know, we estimate that, sorry. Jailendra, we estimate that, you know, change, had it not happened, we would have been flat from a visit perspective year over year. So that that cost us, You know, the volume decline that we saw in the first quarter here. And, and so I think I think that was the question you asked, but, absent that, we would have been at least flat.

Bob: Julien we estimate that.

Robert Shepardson: Sorry.

Julien: Julien we estimate that.

Robert Shepardson: Changed.

Robert Shepardson: Had changed not happened.

Robert Shepardson: Would have been flat.

Robert Shepardson: From a visit perspective year over year, so that cost us.

Robert Shepardson: The volume decline that we saw in the.

Robert Shepardson: In the end.

Robert Shepardson: The first quarter here.

Robert Shepardson: And.

Robert Shepardson: So I.

Robert Shepardson: I think I think that was the question you asked but Abbott.

Robert Shepardson: And, and then, you know, and then what Ido described about the, you know, the migrations, you know, that was also a one-time event that cost us some volume, but that would have been growth on top of being flat vis-a-vis the change issue.

Robert Shepardson: Absent that we would have.

Robert Shepardson: We would have been at least flat and.

Robert Shepardson: Then.

Robert Shepardson: And then what <unk> described about the.

Robert Shepardson: The migrations.

Robert Shepardson: <unk>.

Robert Shepardson: That was also a one time event that that cost us some volume, but that would've been the growth on top of being flat.

Robert Shepardson: These are the.

Robert Shepardson: The change issue.

Operator: Your next question comes from Ryan McDonald with Needham and Company. Please go ahead. Hey, this is Matt Shea on for Ryan. Thanks for taking the question. Just wanted to circle back on the Optum shuttering did.

Ryan McDonald: Your next question comes from Ryan McDonald with Needham and Company. Please go ahead.

Robert Shepardson: Your next question comes from Ryan Macdonald with Needham <unk> Company. Please go ahead.

Ryan McDonald: Hey, this is Matt Shea on for Ian Thanks for taking the question I just wanted to circle back on the Optum Shuttering digital health as well as Walmart closing their digital health operations do you see this is creating a potential opportunity for <unk> to move more into the retail space or see kind of some some greenfield opportunity that wasn't there before.

Matthew Dineen Shea: Sure and maybe kind of in conjunction with that these announcements change at all how CBS is thinking about their digital health program, either seeing more opportunity or anything to call out there.

Ryan McDonald: Yes.

Ido Schoenberg: So Matt, these are really great questions. And, of course, I cannot opine or share anything about specific clients of ours, but more on a general So, zooming out for a second, do we believe that people will use digital care as an opportunity to access the healthcare system? And I think that everybody agrees that the answer is a very strong, yes. We don't think that that trend is going anywhere.

Ryan McDonald: So now these are really great questions then of course I cannot.

Ido Schoenberg: Opine or share anything about specific clients of ours, but more a more generally so zooming out for a second.

Ido Schoenberg: Do we believe that.

Ido Schoenberg: People will use digital care as an opportunity to access the health care system, and I think that everybody agrees that the answer is yes.

Ido Schoenberg: Very strong yes, we don't think that that trend is growing anywhere there is so much potential convenience cost savings.

Ido Schoenberg: There is so much potential, convenience, cost savings, improvement of outcomes, and access to higher quality care that is possible when you use hybrid care. However, I think that some of the events that you mentioned demonstrate that this is really complicated. And the solution is not very, very easy, not only for a single organization, but it really requires integration. The answer is not by having one hero do it all, but rather, to have a solution that works across the ecosystem to build bridges and really combine in a hybrid way the solutions that exist.

Ido Schoenberg: Improvement of outcome, the access to higher quality care that is possible. When you use a hybrid do care I think that some of the events that you mentioned and demonstrate that this is really complicated.

Ido Schoenberg: And the solution is not very very easy not only for a single organization, but it really requires integration. The answer is not by having one here or do it all but rather has a solution that I think is working across the ecosystem to build bridges and really combining a hybrid way the solution.

Ido Schoenberg: There is no substitute for the trusted brands of providers. There is no substitute for very sophisticated network management that takes into account countless considerations. There is no substitute for reinvesting in what it actually takes to allow patients and consumers to navigate through this very important, complex set of, So having said all that, we believe that we have built an infrastructure that facilitates that connection and does not overlap with the traditional roles of traditional players that we believe continue to be there.

Ido Schoenberg: That exist there is no substitute to the trusted brands of providers.

Ido Schoenberg: There is no substitute for very sophisticated network management that take into account conscious of considerations. There is no substitute to reinvest in what would it actually take to allow patients and consumers to navigate through this very important complex.

Ido Schoenberg: Set of.

Ido Schoenberg: Options, so having said all that we.

Ido Schoenberg: We believe that we build an infrastructure that facilitates that connection and.

Ido Schoenberg: It does not overlap with traditional roles of traditional players that we believe continue to two meters.

Ido Schoenberg: We're saying it in another way. We believe that what we build is positioned very well to benefit from everything we say. Just to give an example, United Health Group was very vocal saying after what they announced that they are very committed to telehealth, to hybrid care, they definitely plan to continue and sponsor it, and they said it to us; they said it to the world. So, in many ways, my short answer to your long, after the long details, is that we are here.

Ido Schoenberg: Saying it another way we believe the towards we build as Christian has very well to benefit from everything we said.

Ido Schoenberg: Just to give you an example, United Health Group was very vocal saying after <unk>.

Ido Schoenberg: They announced that they are very committed to to telehealth to hybrid care. The definitely plan to continue and sponsor REIT and decided to us with their it to the world.

Ido Schoenberg: So in many ways.

Ido Schoenberg: The short answer to your long.

Ido Schoenberg: After the long detail.

Ido Schoenberg: Is that.

Ido Schoenberg: We're still serving a big part of the US ecosystem. When there are going to be fewer players, the math is that we are likely to net benefit from it. But it's early days, and we're not trying to suggest right now how quickly this trend is going to evolve from our vantage point.

Ido Schoenberg: Here, we're still serving a big part of the newest ecosystem when theyre going to be less players.

Ido Schoenberg: The math is that we are likely to net benefit it but it's early days and we're not trying to.

Ido Schoenberg: Suggests right now how quickly this trend is going to evolve.

Ido Schoenberg: From our vantage point.

Stanislav Berenshteyn: Your next question comes from Stan Berenshteyn with Wells Fargo Securities. Please go ahead.

Operator: Your next question comes from Stan Berenshteyn with Wells Fargo Securities. Please go ahead. Paya. Thanks for taking my questions. Ido, first, maybe just to follow up on your

Ido Schoenberg: Your next question comes from Dan Bernstein with Wells Fargo Securities. Please go ahead.

Stanislav Berenshteyn: Hi, Thanks for taking my questions.

Stanislav Berenshteyn: First maybe just a follow up on your comments regarding the go to market strategy. You mentioned there were some changes there can you maybe just expand specifically what are the changes what are the focal points that are different versus historically and maybe if you can also comment on how is your sales team now splitting their time between Upselling.

Stanislav Berenshteyn: Existing clients versus going to market for new clients.

Operator: Sure.

Ido Schoenberg: So, as I mentioned earlier, the market today is so different from a few years ago. Essentially, buyers want a complete solution. When you think about those solutions, it's helpful to, I think, talk about them in the way that what do patients, what do consumers want? And we all want to go digital, go online, either proactively or reactively, and have the richest set of options from trusted sources with a combination of in-person, automated, and virtual.

Stanislav Berenshteyn: So as I mentioned earlier the market today, so different from a few years ago essentially buyers want complete solutions. When you think about the solutions. It's helpful. Too I think talk about it in the way of what does what do patients want what.

Ido Schoenberg: What the consumers want and we all want to.

Ido Schoenberg: Go digital go online either proactively or Reactively and have the richest set of options on trusted sources with a combination of in person automated and mutual.

Ido Schoenberg: In addition to that, providers are key to that solution. So providers want to have a solution that is very intuitive, very easy, that is fully embedded in their workflow, protects their licenses, and allows them to get paid for their time in a fair way. And all those things are not very easy, and we believe Converge solves for them in a really comprehensive fashion.

Ido Schoenberg: In addition to that.

Ido Schoenberg: Providers are key to that solution. So providers want to have a solution that is very intuitive very easy that is fully embedded in their workflow.

Ido Schoenberg: Protect the licensure allows them to get paid for the time in a fair way and all those things are not not very easy.

Ido Schoenberg: And we believe converge so stories in a really comprehensive fashion. We also believe that the combination of our own network together with long long list of partners that is getting longer but today like Cleveland clinic, and Dario and many others.

Ido Schoenberg: We also believe that the combination of our own network together with a long list of partners that is getting longer by the day, like Cleveland Clinic and Dario and many others, allows us to offer the full gamut, not only urgent care but also diabetes and hypertension and nutrition and GFP1 and telestroke and psychiatry and psychology and therapy and so on and so forth in a really efficient way. So you have trusted services from known brands across the full care continuum to an interface that is so unique that connects you to people that you know. Having said all that, as it relates to market demand, what I just said appeals to sub-segments that we have defined, and we just don't have the time to go through within the payer and provider community where this is the most compelling, where what we created has the best right to win.

Ido Schoenberg: It allows us to offer the full gamut.

Ido Schoenberg: Not only urgent care, but also diabetes and hypertension, and nutrition and <unk>, one and to the stroke in psychiatry, and psychology and therapy and so on and so forth in a really efficient efficient way. So you have trusted services from known brands. It caused the food care continue.

Ido Schoenberg: Through an interface. So do you need the connects you to people that you Trust, having said all that as it relates to the market demand.

Ido Schoenberg: I, just said appeals to sub segments.

Ido Schoenberg: We have defined we just don't have the time to go through within the payer and provider community, where this is the most compelling where what we created is the best right to win so together with our friends at Mckinsey and others, we really mapped those out and makes it package our products.

Ido Schoenberg: So together with our friends at McKinsey and others, we really mapped those out and packaged our products in the right way to address those needs. The teams that we built are no longer separated by product lines or by new logos and existing customers. Basically, the idea is that each pod of consultants is able to basically establish a new relationship but then continue this relationship and manage it to expand it or focus on existing relationships and just expand it. And the metric here is more related to capacity rather than the type of people that do that.

Ido Schoenberg: In the in the in there right.

Ido Schoenberg: A way to address those those those needs.

Ido Schoenberg: The.

Ido Schoenberg: Team that we built.

Ido Schoenberg: No longer separated by product line or by new logos and existing customers basically the idea is that each port of consultants is able to basically.

Ido Schoenberg: Establish new relationship, but then continue this relationship and manage it to expanded or focused on existing relationship and just expanded and the metric here is more relates to capacity rather than be the type of people that do that and that may sound like a small change but.

Operator: And that may sound like a small change, but it's actually a very profound change. Anyone that is facing our clients in Amol today knows from the first interaction that they are going to own this relationship for many years. And that changes the dynamics both on our end but, very importantly, for our customers. Your next question comes from Diana Lee with Bank of America. Please go ahead.

Diana Lee: It's actually a very profound change.

Diana Lee: Anyone that is facing our clients numbers today knows that they are from the first interaction that they are going to own this relationship for many years.

Diana Lee: And that changes the dynamics, both on our end, but very importantly.

Diana Lee: <unk> for our customers.

Diana Lee: Your next question comes from Diana Li with Bank of America. Please go ahead.

Diana Lee: This is Hannah Lee on for Alan Thanks for taking my question.

Diana Lee: Just over the past few months have there been any changes with what you've been seeing in the spending environment and just overall macro pressures with health system would just love to hear your thoughts on recent customer trend.

Diana Lee: How much do you expect growth in 2025, and 26 come from either new customers versus expansion I think customers.

Ido Schoenberg: Hi Emily. Well, I think that the biggest change we've seen, and others, maybe from two or three years ago to today, and we think that many of those changes are permanent. What we've seen first and foremost is a dramatic rise in the sophistication of health systems. If telehealth was somewhat of an afterthought, & Co. Today, hybrid care is a very effective tool that is known to do important things for health systems, such as retain staff, improve efficiency, save time, engage patients in a very meaningful way, and manage risk in a new way, to name a few.

Operator: Annually.

Operator:

Ido Schoenberg: I think that the biggest change that we've seen is maybe from two or three years ago to today and we think that many of those changes are permanent.

Ido Schoenberg: The what we've seen first and foremost is dramatic rise in sophistication.

Ido Schoenberg: Health systems.

Ido Schoenberg: The telehealth was somewhat exciting and in some cases nave.

Ido Schoenberg: Day hybrid care.

Ido Schoenberg: Very effective tool that is known to do important things for health systems to retain staff to improve efficiency to save time.

Ido Schoenberg: Engage patients in a very meaningful way to manage risk in a new way to name to name a few so the rfps that we see and the dialogue with health system, both existing customers and new ones is a very different dialogue than the one that we held only a couple of a couple of years.

Ido Schoenberg: So the RFPs that we see and the dialogue with health systems, both existing customers and new ones, is a very different dialogue than the one that we held only a couple of years ago. The ROI is really front and center in those conversations. And it's no longer enough to talk about a broad platform. It's very important to dig deeper into specific solutions. And I gave a few examples earlier in the call today.

Ido Schoenberg: Ago.

Ido Schoenberg: The ROI is really front and center to those dialogues.

Ido Schoenberg: And it's no longer enough to talk about broad platform, it's very important to dig deeper into specific solutions and I gave a few examples earlier on the call today.

Ido Schoenberg: The benefit of having Converge today is it's really, it's already coming out of the door with a very broad set of solutions, but it's very open to getting new ones, not only from our world but also from new partners and to also embed solutions that our clients bring to the table. And that's really important, so I would say that. There is readiness to pay for clear ROI. The model that is preferred is a model of risk sharing whenever possible, but there is a growing conviction that we see in making those payments.

Ido Schoenberg: The benefit of having converged today is it's really it's already coming out of the door.

Ido Schoenberg: With a very broad set of solutions, but it's very open to get new ones not only for my world, but also form new partners into also embed solutions that our clients bring.

Ido Schoenberg: To the table and Thats, a really important important attribute so I would say that.

Ido Schoenberg: There is readiness to pay for clear ROI.

Ido Schoenberg: The model is preferred as a model of risk sharing whenever possible.

Ido Schoenberg: But there is growing conviction that we see.

Ido Schoenberg: And in making those payments so in summary.

Ido Schoenberg: So, in summary, we believe that if telehealth two or three years ago was part of the innovation, differentiation, and vision part of the health system, it's really much closer today to the operational, mundane part of the infrastructure that has very clear goals and very clear ROI to be proven by the party.

Ido Schoenberg: We believe that is telehealth.

Ido Schoenberg: Telehealth, two or three years ago was part of the innovation differentiation vision part of the health system, It's really much closer today to the operational mundane part of the infrastructure that has very clear goals and very clear with our ROI to.

Ido Schoenberg: Proven by the park.

Operator: Your next question comes from David Larsen with BTIG. Please go ahead.

Ido Schoenberg: Your next question comes from David Larsen with BPI. Please.

David Michael Larsen: Please go ahead.

Jenny Cao: Hi, this is Jenny Shen on behalf of Dave Larsen. Thanks for taking my question. I just wanted to ask, you've mentioned in the past that 90% plus of the revenue increase that you need from 2024 to 25 is associated with contract go live or backlog. Can you give us some more color there, any updates just to have a better idea of concentration? And how much of that is related to the DHA contract?

Operator: Hi, This is Jenny Chen on for Dave Larsen. Thanks for taking my question I just wanted to ask you've mentioned in the past that 90% plus of the revenue increase that you need from 2024 to 25. This associated with contracting go lives our backlog can you.

Jenny Cao: Give us some more color there any update just to have a better idea on concentration how much of that is.

Jenny Cao: To the geha contract.

Jenny Cao: Any additional comments you can give us in terms of visibility how you are feeling with the.

Jenny Cao: And any additional comments you can give us in terms of visibility, how you're feeling with The Longer Term Outlook for Profitability by 26, and any comments on your good bookings, which you made some positive comments on earlier. Thanks.

Jenny Cao: The longer term outlook for profitability by 2006 and any comments.

Jenny Cao: On your.

Jenny Cao: You're good bookings, which you made some positive comments Australia.

Robert Shepardson: Yeah, Jenny, I think we gave really specific guidance back in February, and nothing's really changed there in terms of, you know, those, the statistics, the percentage of growth that's underpinned by, contracted go lives, still in that same zip code. And if anything, we have higher conviction around all that.

Speaker Change: Yes Jenny.

Jenny Cao: I think we gave really specific guidance back in February nothing's really changed there in terms of.

Robert Shepardson: Those.

Robert Shepardson: The statistics.

Robert Shepardson: The percentage of growth that's underpinned by.

Robert Shepardson: By contracted.

Robert Shepardson: Go lives.

Robert Shepardson: Still in that in that same Zip code.

Robert Shepardson: So, I don't really have anything incremental to share on that. And as far as, you know, the path beyond that and to profitability, again, I would say higher conviction as we've really dug in on our cost structure. And then we'll be down all of, you know, circa 25% from that level in 2025. So costs are coming out of the business very quickly. And again, on the revenue side and the mixed side and the gross profit margin side, we continue to feel really good about the guidance we gave in February. Please go ahead. Hey, thanks and congrats on what looks to be an increasingly positive outlook here.

Robert Shepardson: And if anything we have higher conviction.

Robert Shepardson: Around.

Speaker Change: Around all of that so I don't really have anything incremental to share on that and then as far as the path.

Speaker Change: That and to profitability.

Speaker Change: Again, I would say higher conviction as we've.

Speaker Change: Really dug in on our cost structure.

Speaker Change: We're going to show just independent of all of the all of the goodness that we're going to see topline and gross profit if you just.

Speaker Change: Look at where we were in 2023 from an operating expense perspective.

Speaker Change: We're going to be down high single digits. This year, and then we will be down call it circa 25%.

Speaker Change: From that level.

Robert Shepardson: In.

Speaker Change: In 2025, so costs are coming out of the business very quickly.

Speaker Change: And again on the revenue side and the mix side and the gross profit margin side.

Speaker Change: We continue to feel really good about the guidance we gave in February.

Operator: Our last question comes from Jack Wallace with Guggenheim Securities. Please go ahead.

Robert Shepardson: Our last question comes from Jack Wallace with Guggenheim Securities. Please go ahead.

Jack Dawson Wallace: Hey, guys, thanks, and congrats on what looks to be an increasingly positive outlook here.

Jack Dawson Wallace: Question on the provider business.

Jack Dawson Wallace: For the providers that have migrated.

Jack Dawson Wallace: Have we seen any churn there I say that because my hunch is no and if most of the providers.

Jack Dawson Wallace: Then migrated at this point there shouldnt be much of a churn element in the subscription line going forward do I have that correct.

Jack Dawson Wallace: So we have many clients, but I don't think you're right. But I need to check all of them. Some of them are very small.

Jack Dawson Wallace: So we have many clients, but I think youre right.

Jack Dawson Wallace: I need to check all of them. Some of them are very small so I don't want to mislead anyone who will brief you on the on the call, but as a general rule I don't recall any migrated customer.

Jack Dawson Wallace: Terminated or departed that I'm aware of.

Jack Dawson Wallace: Notwithstanding the people that had some.

Ido Schoenberg: So I don't want to mislead anyone over here on the call, but as a general rule, I don't recall any migrated customer that terminated or departed that I'm aware of. Notwithstanding, the people that had some non-market events that we cannot talk about are not necessarily connected to us at all. But as a whole, in the way of a market, people that migrated are very happy and are not going anywhere anytime soon as far as our vantage point is concerned. Benny, any color on that? No, I think you, I think that's right.

Jack Dawson Wallace: None marketing events that we cannot talk about it are not connected necessarily through to us at all but there is a hole in the wearable market is people just migrated are very happy and I'm not going anywhere anytime soon as far as our vintage point too easily.

Benny: Is concerned.

Benny: Any color on that.

Ido Schoenberg: No, I think you, I think that's right. Great.

Benny: No I think that's right.

Benny: Great. Thank you so much.

Benny: Youre welcome Jackie.

Operator: There are no further questions at this time. I will now turn the call back to Mr. Ido Schoenberg for any closing remarks.

Ido Schoenberg: There are no further questions at this time I will now turn the call back to Mr. Schoenberg for any closing remarks.

Ido Schoenberg: Well, thank you, everyone. We really appreciate your support of AMWEL and going through this enormous period of transformation. It was a long road, but we're excited that we're nearing the hard part, and we're excited about what's to come. So thank you for joining us on this journey. And thank you for joining us this

Ido Schoenberg: Well. Thank you everyone. We really appreciate your support of <unk> and going through this enormous period of transformation.

Ido Schoenberg: It was a long road, but we're excited that it's nearing.

Ido Schoenberg: The hard part and we're excited about what's to come.

Ido Schoenberg: Thank you for joining us on this journey and thank you for joining us this evening.

Speaker Change: This concludes today's conference call you may now disconnect.

Operator: This concludes today's conference call. You may now disconnect. Please wait; the next conference will begin shortly.

Operator: [inaudible]

Ido Schoenberg: Please wait the conference will begin shortly.

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