Q1 2024 Sharecare Inc Earnings Call
Operator: Good day, and welcome to the Sharecare first quarter 2024 earnings call and webcast. Today, all participants are in a listen-only mode.
Good day and welcome to the sure parents first quarter 2020 for Ernie earnings call and webcast.
Operator: All participants are in a listen only mode should you need assistance during todays call. Please signal for a conference specialist by pressing the star key followed by Europe.
Operator: Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star, then one on your telephone keypad. To withdraw your question, please press star, then two.
Operator: After todays presentation, there will be an opportunity to ask questions. You ask a question you May Press Star then one on your telephone keypad.
Operator: Draw. Your question. Please press Star then two.
Operator: Please note that today's call is being recorded and will be available on the company's website. On today's call, we have Mr. Brent Layton, Chief Executive Officer, and Mr. Justin Ferrero, President and Chief Financial Officer. Before we begin today, I would like to remind you that certain statements made during this call will be forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the strategic review, expected cost savings, new capabilities, pipelines, certain contractual disputes, and future expectations.
Operator: Please note that today's call is being recorded and will be available on the company's website.
Justin L. Ferrero: On today's call, we have Mr. Brent Layton, Chief Executive Officer, and Mr. Justin for Arrow, President and Chief Financial Officer.
Operator: These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions, and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that will occur after this call. Descriptions of some of the factors that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in our filings with the SEC, including the Risk Factors section of our Form 10-K for the year ended December 31, 2023.
Operator: Before we begin today I would like to remind you that certain statements made during this call will be forward looking statements within the meaning of the safe Harbor provisions of the private Securities Litigation Reform Act of 1095, which includes statements regarding the strategic review.
Operator: Good cost savings new capabilities pipelines, certain contractual disputes and future expectations. These forward looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs assumptions and information currently available to us.
Operator: Although we believe these expectations are reasonable we undertake no obligation to revise any statements to reflect changes that will occur after this call.
Operator: Description of some of the factors that could cause actual results could differ materially from these forward looking statements are discussed in more detail in our filings with the SEC, including the risk factors section of our Form 10-K for the year ended December 31 2023.
Operator: In addition, please note that the company will be discussing certain non-GAAP financial measures, which we believe are important in evaluating performance. Details of the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliation of historical non-GAAP financial measures can be found in the press release that is posted on the company's website.
Operator: In addition, please note that the company will be discussing certain non-GAAP financial measures, which we believe are important in evaluating performance.
Operator: Details of the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliation of historical non-GAAP financial measures can be found in the press release that is posted on the company's website.
Operator: I would now like to hand the conference over to Mr. Brent Layton. Brent, please go ahead, sir.
Operator: I would now like to hand, the conference over to Mr. Brent linked to Brent. Please go ahead Sir.
Brent Davis Layton: Well, thank you, Chris, and good afternoon. And thank you for joining Sharecare's first quarter 2024 earnings call. Before we go into the details, I want to address our strategic review. Under the direction of the Special Committee of the Board, with the support of our Executive Chairman and Senior Management, the company is in active discussions with multiple bidders for a potential sale of the company or other strategic transactions. We are focused on a clear goal of maximizing value for our shareholders.
Brent Davis Layton: Well, thank you, Chris and good afternoon.
Brent Davis Layton: And thank you for joining <unk> first quarter 2024 earnings call.
Brent Davis Layton: Where we go into the details I wanted to address our strategic review.
Brent Davis Layton: And the direction of the special Committee of the Board.
Brent Davis Layton: Part of our executive Chairman and senior management. The company is in active discussions with multiple bidders for a potential sale of the company or other strategic transactions.
Brent Davis Layton: We are focused on a clear goal maximizing value for our shareholders.
Brent Davis Layton: While we expect to bring the process to a conclusion within 30 to 45 days and will communicate the result at that time, there can be no assurance of the timing or if a transaction will result at all.
Brent Davis Layton: While we expect to bring the process to a conclusion within 30 to 45 days and we'll communicate the results at that time, there can be no assurance of the timing or if a transaction will result at all.
Brent Davis Layton: However, I do want to take this opportunity to update you on the progress we've made in each of our three channels and on the new growth opportunities we discussed in our last audience call. These are life sciences channels generating more than $80 million on an annual basis. Despite softness in macro pharma spend across the industry, we have a strong track record of annual renewals from existing clients, and in Q1, the Team Closed deals with 35 new pharma brands, which creates future growth opportunities in subsequent quarters.
Brent Davis Layton: However, I do want to take this opportunity to update you on the progress we've made in each of our three channels and on the new growth opportunities. We discussed in our last earnings call.
Brent Davis Layton: Life Sciences channels generating more than $80 million on an annual basis, despite softness in the macro pharma spend across the industry. We have a strong track record of annual renewals from existing clients and in Q1. The team close deals with 35, new form of brands, which creates future growth opportunities.
Brent Davis Layton: In subsequent quarters, we also leverage the channel's unique digital targeting capabilities and assets to drive engagement benefiting both our provider and enterprise channels.
Brent Davis Layton: We also leverage the channel's unique digital targeting capabilities and assets to drive engagement, benefiting both our provider and enterprise channels. A decade ago, we established our provider channel through an acquisition that initially generated about $20 million in annual revenue for its release of information services.
Brent Davis Layton: A decade ago, we established our provider channel through an acquisition, which initially generated about $20 million in annual revenue for its release of information services.
Brent Davis Layton: Since then, through purely organic growth, our provider channel has grown into a profitable $120 million business that works with 8,000 health systems and physician groups, for whom we retrieve more than 7 million records annually. In Q1 2024, our provider team closed 75 deals with the average deal size double what it was in the prior year. And in our enterprise channel, we believe there's even a bigger opportunity for long-term sustainable growth. Only four months into 2024, we have secured multi-year renewals with several of our enterprise clients across all segments, including government, Fortune 500 companies, commercial health plans, MCOs, and a large health system.
Brent Davis Layton: Since then.
Brent Davis Layton: Purely organic growth.
Brent Davis Layton: <unk> channel has grown into a profitable $120 million business that works with 8000 health systems and physician groups, who were treated more than 7 million records annually.
Brent Davis Layton: In Q1 2020 for a provider team closed 75 deals with the average deal size doubled what it was in the prior year.
Brent Davis Layton: And in our enterprise channel. We believe there is even a bigger opportunity for long term sustainable growth.
Brent Davis Layton: Only four months into 2024, we have secured multi year renewals with several of our enterprise clients across all segments, including government Fortune 500 companies commercial health plans M. C O any large health system, we have grown our revenue pipeline threefold.
Brent Davis Layton: We have grown our revenue pipeline three-fold and have signed contracts and verbal confirmations received to date, which we currently expect to exceed $40 million in net new revenue, some of which will be recognized this year. Based on the RFP cycle, we expect to close additional new revenue opportunities throughout the remainder of this year. Last earnings, we discussed the substantial growth opportunities with NCOs that specialize in Medicaid, Medicare, and the exchange. Sharecare's navigation platform provides Medicaid members with easy access to their benefits, providers, government programs, and resources.
Brent Davis Layton: <unk> contracts and verbal confirmation is received today, which we currently expect to exceed $40 million and net new revenue some of which will be recognized this year.
Brent Davis Layton: Based on the RFP cycle, we expect to close additional new revenue opportunities throughout the remainder of this year.
Brent Davis Layton: Last earnings we discusses the substantial growth opportunities with Ncos and specialize in Medicaid Medicare and the exchange.
Brent Davis Layton: Sure cares navigation platform provides Medicaid members with easy access to their benefits providers government programs and resources and.
Brent Davis Layton: In addition to enabling members to navigate their benefits using smart chat functionality, our Medicaid platform also nudges people to engage in preventive actions and close gaps in care. And with CMS issuing new rules last month to ensure that patients don't have to wait too long for a doctor's appointment, our platform also includes a dynamic, searchable provider directory that uses geolocation technology to help members find in-network providers and resources near them, such as pharmacies or shelters. Members can easily access the hours of operation, supported languages, and whether they accept financial assistance programs like SNAP benefits.
Brent Davis Layton: In addition to enabling members to navigate their benefits through using smart chat functionality. Our Medicaid platform also know just people to engage in preventive actions and close gaps in care.
Brent Davis Layton: And with CMS issuing new rules last month to ensure that patients don't have to wait too long for a doctor's appointment or.
Brent Davis Layton: Off platform also includes a dynamic searchable provider directory that uses geolocation technology to help members and network providers and resources near them, such as pharmacies or shelters.
Brent Davis Layton: Members can easily access the hours of operation supported languages, and whether they accept financial assistant programs like snap benefits. It also includes a digital wallet for secure access for the financial assistance and rewards program.
Brent Davis Layton: It also includes a digital wallet for secure access to the financial assistance and rewards program. We're excited to share that this Medicaid navigation platform will go live on July 1, 2024 with our first client, Georgia's largest Medicaid managed care company, Peach State Health Plan, starting with approximately 750,000 members, which is expected to grow as redeterminations come to a conclusion and as other growth opportunities arise for Medicaid managed care in Georgia. Additionally, we partnered with the largest independent specialized general reinsurance agency in the U.S., which will utilize Sharecare as an exclusive well-being offering in order to bend the risk curve for self-funded employers.
Brent Davis Layton: We're excited to share that this Medicaid navigation platform will go live on July one 2024, with our first client, Georgia as the largest Medicaid managed care company Peach State Health plan, starting with approximately 750000 members, which is expected to grow with Redetermination come to a conclusion and it's other growth opportunities.
Brent Davis Layton: Arise for Medicaid managed care in Georgia.
Brent Davis Layton: Additionally, we partnered with the largest independent specialized general reinsurance agency in the U S, which will utilize share cares and exclusive wellbeing offering in order to bend the risk curve for self funded employers.
Brent Davis Layton: We are in the contracting phase for a significant deal with the country's largest directly contracted network of value-based oncologists with 4,500 physicians across 16 states to provide in-home support for patients undergoing chemotherapy. We are partnering with three risk-bearing entities to use our respite care capabilities to support their applications for the CMS Guide Program focused on dementia. These applications have been accepted for both the established and new program tracks, and we will participate in supporting the quality metrics that will determine performance-based adjustments.
Brent Davis Layton: We are in contracted base for a significant deal with the country's largest directly contracted network of value based oncologist with 4500 positions across 16 states to provide in home support for patients undergoing chemotherapy.
Brent Davis Layton: We are partnering with three risk bearing entities to use a respite care capabilities to support their application for the CMS Guide program focused on dementia.
Brent Davis Layton: These applications have been accepted for both established and new program tracks and we will participate in supporting the quality metrics that will determine performance based adjustments.
Brent Davis Layton: These agreements underscore our ability to innovate by leveraging the assets we have already assembled, as well as our intent to share both the financial risks and rewards with our partners and demonstrate how we continue to unlock the value for our 2021 acquisition of the tech-enabled home care solution, CareLink. In summary, we remain focused on growing the enterprise business and have implemented operational improvements to create the best practices for Procurement and Implementation. As you saw in this afternoon's press release, we reported Q1 2024 revenues of approximately $91 million and adjusted EBITDA of negative $2.7 million.
Brent Davis Layton: These agreements underscore our ability to innovate on leveraging the assets, we have already assembled as well as our intent to share both the financial risk and rewards with our partners and demonstrates how we continue to unlock the value from our 2021 acquisition of Tech enabled health care solution Calix.
Brent Davis Layton: In summary, we remain focused on growing the enterprise business and have implemented operational improvements to create best in class processes for procurement and implementation.
Brent Davis Layton: As you saw in this afternoon's press release, we reported Q1 2024 revenues of approximately $91 million and adjusted EBITDA of negative $2 $7 million.
Brent Davis Layton: These results reflect the negative revenue and adjusted EBITDA impact that was expected from the dispute we discussed in our last earnings call and the $10K filing on March 29. As a reminder, the dispute is with a counterparty that has violated its commitments to Sharecare.
Brent Davis Layton: These results reflect the negative revenue and adjusted EBITDA impact that was expected for dispute we discussed in our last earnings call in the 10-K filed on March 29.
Brent Davis Layton: As a reminder, the dispute is with a counterparty has violated their commitments. This year care. We now consider this an active legal matter and our focus on pursuing our legal rights and amounts owed and we will not be commenting further other than to reiterate that this dispute has not involved matters applicable to any of <unk> other customer.
Brent Davis Layton: We now consider this an active legal matter and are focused on pursuing our legal rights and amounts owed, and we will not be commenting further other than to reiterate that this dispute does not involve matters applicable to any of Sharecare's other customers or relationships. Given the current uncertainty created by this legal issue and the ongoing strategic review, we will not be providing 2024 guidance today. Well, I know you're eager to hear about the board's decision on the strategic review.
Brent Davis Layton: Or relationships.
Brent Davis Layton: Given the current uncertainty created by this legal issue and the ongoing strategic review, we will not be providing 2024 guidance to date.
Brent Davis Layton: I know you're eager to hear about the board's decision on the strategic review.
Brent Davis Layton: I want to reinforce that our team remains laser focused on growth, profitability, and delivering our commitments to our clients and the people they serve. Thank you for the ongoing support and interest in our company. I will now hand the call over to Justin before we open for Q&A. Please note that during the Q&A, we will not be able to address additional details about the strategic review process or the legal dispute.
Brent Davis Layton: To reinforce that our team remains laser focused on growth profitability and delivering our commitments to our clients and the people they serve.
Brent Davis Layton: Thank you for the ongoing support and interest in our company I will now hand, the call over to Justin before we open up for Q&A. Please note during the Q&A, we will not be able to address additional details on the strategic review process or the legal dispute.
Justin L. Ferrero: Thank you, Brent, and I appreciate all of you joining us this afternoon. I will be taking you through the financial highlights for the first quarter of 2024. As Brent noted, we reported first quarter revenue of approximately $91 million and adjusted EBITDA of negative $2.7 million. Revenue was down $25.4 million from the prior year, primarily impacted by certain eliminations related to the previously mentioned legal dispute. That said, we continue to realize the benefit of our globalization efforts and tight cost controls, resulting in a decrease in adjusted EBITDA of only $3.3 million over the prior year.
Brent Davis Layton: Yeah.
Justin: Thank you Brent.
Justin: Appreciate all of you joining us this afternoon.
Justin L. Ferrero: It is also worth noting that our adjusted EBITDA was negatively impacted by additional costs required to support the strategic review process, as well as the contract dispute. We ended the quarter with $100.3 million in cash on our balance sheet and over $154 million in available cash.
Justin L. Ferrero: I will be taking you through the financial highlights for the first quarter of 2024.
Justin L. Ferrero: As Brent noted, we reported first quarter revenue of approximately $91 million and adjusted EBITDA of negative $2 7 million.
Justin L. Ferrero: Revenue was down $25 4 million over the prior year, primarily impacted by certain eliminations related to the previously mentioned legal dispute.
Justin L. Ferrero: That said, we continue to realize the benefit of our globalization efforts and tight cost controls, resulting in a decrease in adjusted EBITDA of only $3 3 million over the prior year it.
Justin L. Ferrero: It is also worth noting that our adjusted EBITDA was negatively impacted by additional cost required to support the strategic review process as well as the contract dispute.
Justin L. Ferrero: We ended the quarter with $103 million in cash on our balance sheet and over $154 million available cash we used cash of $27 9 million in the quarter and expected burn which was similar to the first quarter of 2020 Three's cash burn.
Justin L. Ferrero: We use cash of $27.9 million a quarter, an expected burn, which was similar to the first quarter of 2023's cash burn. This is based on the cyclicality of the business, where Q1 revenue is typically lower for the life sciences and provider channels, which generate a higher percentage of their revenue in the second half of the year. Also, from an expense standpoint, Q1 had several one-time payments, including annual prepaid expenses, cash used for income tax-related payments associated with the RSU vesting of locked-up employees, and we had an additional payroll compared to the prior quarter.
Justin L. Ferrero: This is based on the cyclicality of the business, where Q1 revenue is typically lower for the life sciences and provider channels, which generate a higher percentage of build revenue in the second half of the year.
Justin L. Ferrero: Also from expense standpoint, Q1 had several onetime payments, including annual prepaid expenses.
Justin L. Ferrero: Cash used for income tax related payments associated with RSV besting of walked up employees.
Justin L. Ferrero: And we had an additional payroll compared to the prior quarter Sim.
Justin L. Ferrero: Similar to 2023, we expect the business's cash burn to improve significantly over the course of the year. While the provider channel's revenue was flat compared to Q1 2023, it is important to note that Q1 2023 benefited from a several million dollar tailwind due to an extended CMS COVID calendar that provided more time to prepare 2022 Medicare risk adjustment submissions. This anomaly has normalized in Q1 2024.
Justin L. Ferrero: Similar to 2023, we expect the businesses cash burn to improve significantly over the course of the year.
Justin L. Ferrero: While the provider channels revenue was flat compared to Q1 2023. It is important to note that Q1 2023 benefited from a several million dollar tailwind due to an extended CNS COVID-19 calendar that provided more time to prepare 2020 to Medicare.
Justin L. Ferrero: Risk adjustment submissions.
Justin L. Ferrero: This anomaly has normalized in Q1 2024, otherwise the provider channel would have shown positive growth over prior year.
Justin L. Ferrero: Otherwise, the provider channel would have shown positive growth over the prior year. And, as Brent noted earlier, we have a positive outlook on the channel with expected overall revenue growth during the remainder of the year. For Life Sciences, there were several things that impacted growth, a discontinued product offering that generated revenue in Q1 2023, as well as a core brand customer that is going generic, and as a result, has eliminated their digital marketing spend.
Justin L. Ferrero: And as Brent noted earlier, we have a positive outlook on the channel with expected overall revenue growth during the remainder of the year.
Justin L. Ferrero: For life Sciences, there were several things that impacted growth.
Justin L. Ferrero: Discontinued product operating offering that generated revenue in Q1, 2023, as well as a core brand customer that's going generic and as a result has eliminated their digital marketing spend.
Justin L. Ferrero: We remain bullish on this channel and expect revenue to significantly increase over the course of the year, similar to prior years. As previously discussed, we have generated positive momentum in the Enterprise Channel in the first four months of the year, with signed contracts, finalist opportunities, and verbal confirmations, which we expect to yield more than $40 million in net new revenue, some of which will be recognized in 2024 and should also position us for a great 2025.
Justin L. Ferrero: We remain bullish on this channel and expect revenue to significantly increase over the course of the year similar to prior years.
Justin L. Ferrero: As previously discussed we have generated positive momentum in the enterprise channel in the first four months of the year with signed contracts finalist opportunities and verbal confirmation, which we expect to yield more than $40 million and net new revenue some of which will be recognized in 2024 and should.
Justin L. Ferrero: Also position us for a great 2025.
Justin L. Ferrero: It has been a busy start to the year, and we remain confident in our business. We are expanding into new markets, leveraging our assets, continuing to drive meaningful cost savings while delivering high-quality services, and carefully managing our balance sheet, specifically our cash position, all while supporting the strategic review process to maximize shareholder value. As Brent said, we are grateful for your ongoing support and confidence in Sharecare. Thank you all for joining us today. We'll now open the call to your questions. Thank you.
Justin L. Ferrero: It has been a busy start to the year and we remain confident in our business, we are expanding into new markets, leveraging our assets continuing to drive meaningful cost savings, while delivering high quality services.
Justin L. Ferrero: And carefully managing our balance sheet, specifically our cash position.
Justin L. Ferrero: All while supporting the strategic review process to maximize shareholder value.
Justin L. Ferrero: As Brett said, we are grateful for your ongoing support and confidence in share care.
Justin L. Ferrero: Thank you all for joining US today, we will now open the call to your questions.
Justin L. Ferrero: Okay.
Justin L. Ferrero: Yeah.
Operator: Thank you. We will now begin the question and answer session. As a reminder, to ask a question, you may press star and then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. If you would like to withdraw your question, please press star then two. We will now pause momentarily to assemble our roster. And today's first question is from David Larsen with BTIG. Please proceed.
Speaker Change: Thank you we will now begin the question and answer session. As a reminder to ask a question you May Press Star then one on your telephone keypad.
Operator: If you are using a speakerphone please pick up your handset before pressing the keys.
Operator: If you would like to withdraw your question. Please press Star then two.
Operator: We will now pause momentarily to assemble our roster.
Operator: And today's first question is from David Larsen with BP IAG. Please proceed.
Jenny Shen: Hi, this is Jenny Shen on for Dave Larsen. Thanks for taking my questions.
Operator: Hi, This is Jenny Chen on for Dave Larsen. Thanks for taking my question. Congrats on the new Medicaid platform launch can you just provide some more color around the financials of the platform and the opportunity can you talk about the margins in P. M. P M. There.
Jenny Shen: Congratulations on the new Medicaid platform launch. Can you just provide some more color around the financials of the platform and the opportunity? Can you talk about the margins and PMPM there?
Jenny Shen: And I think you noted that it will be launching in July should we expect to see any revenue lift from that this year. If so how much or is it a longer term opportunity. Thanks.
Jenny Shen: And I think you noted that it will be launching in July. Should we expect to see any revenue lift from that this year? If so, how much, or is it a longer-term opportunity?
Jenny Shen: Thanks.
Brent Davis Layton: Well, thank you for asking about our WeCare navigation tool. And we are very excited about it. And we're very excited to begin this summer in July from that standpoint, in regards to the margin in regards to revenue. I am not going to disclose that right now. As we said, we're not going to do anything in regards to talking about earnings for 2024.
Speaker Change: Well, thank you for asking about our weaker navigation tool and we are very excited about it and we're very excited to begin this summer in July from that standpoint in regards to the.
Brent Davis Layton: The margin in regards to the revenue.
Brent Davis Layton: Not going to convey that right now.
Brent Davis Layton: We said, we're not going to do anything in regards talking about earnings for 2024, but I will talk about what we've created.
Brent Davis Layton: But I will talk about what we created. What we have created is a very unique tool that provides navigation so that a Medicaid member is easily able to find a provider that is near them, that's in network, that they are able to see when they open, when they close, are they taking new patients, where they're able to openly see the Aaron's Grocery Store that takes SNAP benefits. and ultimately be able to really be a chassis, a development tool that Medicaid MCOs can use to really connect doctors and patients together.
Brent Davis Layton: What we have created is a very unique tool that provides a navigation. So that a Medicaid member is easily able to find a provider that is nearest to them. That's been network that they are able to see that they when they open when they close are they taking new patients where they are able.
Brent Davis Layton: To ultimately see the nearest grocery store that takes snap benefits debatable to access social determinants of health programs and ultimately be able to really be a chassis a development tool.
Brent Davis Layton: Medicaid Ncos can use to really connect doctor and patient to get the so we're very excited about it and we believe we can build upon it at the same time, we think that it has a great opportunity.
Brent Davis Layton: So we're very excited about it, and we believe we can build upon it. At the same time, we think that it has a great opportunity to move into the exchange and, hopefully, into Medicare Advantage. So, and we were able to do this using existing assets and a lot of great brain power around here for being creative and innovative. And maybe I'll just add one thing. Since we commented that this will start in Q3, we do expect revenue this year, and we're excited about the margin profile, and we'll leave it at that.
Brent Davis Layton: To move into the exchange and ultimately into Medicare advantage, So and we were able to do this using existing assets and a lot of great brainpower around here for being creative and innovative.
Brent Davis Layton: And maybe I'll just add one thing since we.
Brent Davis Layton: We commented that this will start in Q3, we do expect revenue this year and and we're excited about the.
Brent Davis Layton: The margin profile and we'll leave it at that.
Jenny Shen: Got it. That's helpful. And then for a follow-up, one thing that we've been kind of looking at is utilization for different platforms across the board. Do you have a utilization number you can share? And do you have like an executive dashboard where you can track data on things like how many people log into your platform, how often, and also data around the total cost savings that you can impact and that you can then show your clients? Thanks.
Speaker Change: Got it that's helpful and then for a follow up one thing that we've been kind of looking at is utilization for different platforms across the board do you have a utilization number you can share and do you have like an executive dashboard, where you can track data on things like how many people log into your.
Jenny Shen: Platform, how often and also data around the total cost savings that you can impact and that you can then show your clients. Thanks.
Brent Davis Layton: We are on par with the best in the market, but as far as metrics that we will be seeing on this Navigate platform, we will be learning this together as we roll this out on July 1st. This is a brand new approach, and engagement and helping people access services, benefits, and ultimately providers are what we are going to initially be judged by. But if people are able to access their benefits, their providers, and their services, then the ROI will begin. And we will be communicating this, and we'll be creating new KPIs that we'll be discussing with you over the coming quarters.
Jenny Shen: We are on par with the best in the market, but as far as metrics that we'll be seeing on this navigate plus platform.
Brent Davis Layton: We will be learning this together as we roll this out on July 1st this is a brand new approach and engagement and helping people access services benefits and ultimate providers is what were going to initially be judged by but as people are able to access their benefits that providers and their services than the ror will begin and we will be.
Brent Davis Layton: Conveying this and we will be creating new kpis that we will be discussing with you over the coming quarters.
Jenny Shen: Okay, great. And if I can sneak a last one in here,
Speaker Change: Okay, great and if I can sneak a last one in here, so Jill Q1s and weight management programs has still been really relevant.
Speaker Change: So I know you've mentioned before at year eat right. Now program can you just talk about the traction there and what progress you can see thank you.
Jenny Shen: Absolutely and traction is probably a very good word to use there from that standpoint.
Jenny Shen: Ultimately.
Jenny Shen: Right now in leveraged into therapeutics is a preauthorization, we've been able to do this with multiple clients.
Jenny Shen: And we believe is having a positive contribution we're also exploring partnerships with pbms to resell our relevant digital therapeutics, and we're really leveraging our advocates for education on the benefits and drugs. So we're really pulling all this together.
Jenny Shen: So, GLP-1s and weight management programs have still been really relevant in our space. So, I know you've mentioned before your Eat Right Now program. Can you just talk about the traction there and what progress you've been seeing? Thank you.
Brent Davis Layton: Absolutely, and fraction is probably a very good word to use there from that standpoint. You know, ultimately, with it right now and leveraging the therapeutics as a preauthorization, we've been able to do this with multiple clients. And we believe that it's making a positive contribution. We're also exploring partnerships with PBMs to resell our relevant digital therapeutics. And we're really leveraging our advocates for education on the benefits and the drugs. So we're really pulling all this together as we're really on the front end of what these weight loss drugs can do. Great
Brent Davis Layton: We're really on the front end of what these weight loss drugs can do.
Jenny Shen: Great! Thank you so much.
Speaker Change: Great. Thank you so much.
Jenny Shen: Jay.
Jenny Shen: Okay.
Craig Matthew Hettenbach: The next question comes from Craig Hettenbach with Morgan Stanley. Please proceed.
Jenny Shen: The next question comes from Craig <unk> with Morgan Stanley. Please proceed.
Craig Matthew Hettenbach: Yes, thanks. You had noted just in terms of the revenue reduction in the quarter there was some impact of lower margin business kind of moving away. I'm just curious if that's Q1 is a good run right here, or there's still some mixed things as you kind of manage the business going forward.
Craig Matthew Hettenbach: Yes. Thanks.
Craig Matthew Hettenbach: You had noted just in terms of the revenue reduction in the quarter. There was some impact of lower.
Craig Matthew Hettenbach: Margin business kind of moving away I'm just curious if that's Q1 is a good run rate here or are there still some mixed things as you kind of manage the business going.
Craig Matthew Hettenbach: Going forward.
Justin L. Ferrero: No, I think Q1, hey, hey, Craig, it's Justin. I think it's how I laid it out in the opening remarks, which we expect to improve over the course of the year. So on the enterprise side, we just talked about the WeCare Medicaid product, and that will be coming online in Q3. So we expect growth over the course of the year in the enterprise channel. When it comes to life sciences, you know, just historically, you saw last year, Q1 was $17 million, and Q4 was $27 million.
Craig Matthew Hettenbach: No I think Q1, Hey, Craig it's Justin.
Justin L. Ferrero: I think it's how I laid it out in the opening remarks, which is we expect.
Justin L. Ferrero: To improve over the course of the year. So on the enterprise side, we just talked about the weaker Medicaid product and that will be coming online in Q3. So we expect growth over the course of the year in the enterprise channel.
Justin L. Ferrero: When it comes to life Sciences, just historically, you've seen last year Q1 was $17 million Q4 was $27 million. So our campaigns performed very well and as a result, we get the second half of the year by ups and our revenue increases.
Justin L. Ferrero: So our campaigns performed very well, and as a result, we got the second half of the year buy-ups, and our revenue increased, typically quarter over quarter. We expect to see that again this year. And then on the provider side, you know, providers have been performing extremely well. This Q1 is an anomaly for the reason I laid out. The highest quarter is typically Q3, but they definitely generate more revenue in the second half of the year than they do in the first half of the year. That's really where those risk adjustment audits kick in. And so we expect to see growth over the course of the year.
Justin L. Ferrero: Typically quarter over quarter, we expect to see that again this year and then on the provider side provider has been performing extremely well. This Q1 is an anomaly for the reason I laid out.
Justin L. Ferrero: The the highest quarter is typically Q3, but they are definitely generate more revenue in the second half of the year than they do in the first half of the year and Thats really where those risk adjustment audits kick in.
Justin L. Ferrero: And so we expect to see growth over the course over the course of the year.
Craig Matthew Hettenbach: And then just a follow-up question for Brent, I know you've been busy kind of on the road and meeting with customers. I'm curious what the feedback's been and just what are some of the things that are maybe responding on the platform that you feel like are actionable, you know, from a growth perspective, looking out the next 12, 18 months. I'm pleased that we really have a solid...
Speaker Change: Got it and then just a follow up question for Brent I know you've been busy kind of on the road and meeting with customers.
Craig Matthew Hettenbach: Various elements.
Craig Matthew Hettenbach: I'm curious what the feedback has been and just what are some of the things that are maybe resume on the platform that you feel like are actionable from a growth perspective looking out next 12 18 months.
Brent Davis Layton: I'm pleased that we really have a solid base of current customers, and what I'm finding from them is that they're looking for innovation. Unknown Attendee, Jeffrey Arnold, Justin Ferrero, Kyle Aikman, Unknown Attendee, Jeffrey Arnold, And just yesterday, we were with a Fortune 500 company, a current client of ours, and we spent several hours with them.
Speaker Change: I believe that we really have a solid base of current customers.
Brent Davis Layton: And what I am bonding from them is that.
Brent Davis Layton: They're looking for innovation.
Brent Davis Layton: Ah Ah moment. It goes off the question about <unk>, one drugs and what else can you do and we are excited of what we've been able to do.
Brent Davis Layton: About how we can really be on the front end, our propositions and leading people to ultimately get here is they need from that standpoint.
Brent Davis Layton: And just yesterday, we were with a fortune 500 company a current client of ours and we spent several hours with them.
Brent Davis Layton: And we did a very long review about what we're providing to them, and we were excited about how we were progressing with them. But more importantly, we liked the discussions about innovation. What more can you do?
Brent Davis Layton: And we did a very long review about what we're providing to them and we were excited how they saw how we were progressing with them, but more importantly, we like the discussions about innovation and what more can you do.
Brent Davis Layton: So in my time on the road, that is really what I'm hearing, is that we find customers that are ultimately partners with us. And those partners are looking for creativity and, at the same time, as I mentioned a moment ago, really return on investment. Maybe I'll add one thing, Craig, is that all this innovation that Brent and his team are driving is using current assets. So, we are, he is tweaking current assets.
Brent Davis Layton: So in my time on the road that is really what I'm hearing is that we find customers that are ultimately partners with us and those partners are looking for creativity and at same time I mentioned, a moment ago really the return on investment.
Brent Davis Layton: In raws and as we continue to evolve as an industry and evolve as a company we're going to continue to show outcomes health outcomes and really ultimately I look forward in coming quarters to talk to you about new kpis, because that's really ultimately what the customers and government is looking for and Ncos maybe.
Brent Davis Layton: And maybe I'll add one thing Craig is that all of this innovation.
Brent Davis Layton: Brent and team are driving it.
Brent Davis Layton: He is using current assets. So we are.
Brent Davis Layton: He is tweaking current assets I think you can see our operating expenses are down significantly year over year.
Brent Davis Layton: I think you can see our operating expenses are down significantly year over year. We expect to keep pushing on with our expenses and refining and optimizing even more. And so all of this innovation is happening with existing infrastructure and existing assets. Not that we have to go buy something new or hire a lot of new people. It's all with our existing base. So, they should be very profitable in the long run.
Brent Davis Layton: We expect to keep pushing on our expenses and refining and optimizing even more and so all of this innovation is happening with existing infrastructure and existing assets not that we have to go buy something new or higher a lot of new people, it's all of our existing.
Brent Davis Layton: Base, so they should be long term very profitable to the bottom line.
Speaker Change: Got it thanks for that.
Speaker Change: Thank you.
Justin L. Ferrero: And our next question comes from Eric Percher with Nefron Research. Please proceed.
Brent Davis Layton: And our next question comes from Eric Percher with Nephron Research. Please proceed.
Eric R. Percher: Thank you.
Eric R. Percher: I'd like to get your perspective on revenue performance, and obviously, we don't have guidance, but maybe, looking in the rear view mirror, can you tell us how you performed relative to budget? I think we're about 10% below where consensus was. And then, again, on the revenue line, if we look at the segments, were you in enterprise, did you see a similar headwind from the dispute as last quarter? I think that's what you had commented on previously.
Eric R. Percher: I'd like to get your perspective on the revenue performance, obviously, we don't have guidance, but maybe looking rearview mirror can you tell us how you performed relative to budget I think we're about 10% below where consensus was and then again revenue line. If we look at the segments.
Eric R. Percher: Where are you in enterprise did you see a similar headwind to us.
Eric R. Percher: From the dispute as last quarter I think that's.
Eric R. Percher: You had commented on previously and then provider assumed you knew the $4 million comparison was that in line life Sciences. You knew the generic conversion was coming was that in line can you walk us through.
Eric R. Percher: And then in provider, assume you knew the $4 million comparison; was that in line? Life sciences, you knew the generic conversion was coming; was that in line? Can you walk us through how you're doing relative to internal views?
Eric R. Percher: How are you doing relative to internal views.
Justin L. Ferrero: Yes. Hey Eric, we are. We're right in line, and really where the consensus was off was not enterprise. Like, we talked about that a lot. It was really on the provider side, and life sciences is where there was, in consensus, higher growth. Then, and you'll see this when we obviously release the queue. And that's why we commented on the few items that impacted those channels in particular. So, with the provider business, there was a tailwind last Q1. Like, there would have been nice growth in provider business this Q1 if that COVID calendar extended into 2024. It didn't didn't.
Speaker Change: Yes, Hey, Eric we are we're right in line and.
Justin L. Ferrero: And the.
Justin L. Ferrero: Really where the consensus was off wasn't it wasn't enterprise like we've talked about that a lot of it was really on the provider and life Sciences is where where there was an <unk>.
Justin L. Ferrero: Consensus higher growth than and you'll see this when we obviously released the Q and Thats why we commented on that the few items that impacted that.
Justin L. Ferrero: Those channels in particular, so with that provider business. There was a tailwind last Q1, there would have been nice growth and provider. This Q1 is that kind of a calendar extended into 2024.
Justin L. Ferrero: It's a little bit, you know; we expected that, and so that's why it's flat year over year versus growth, which is really in the models. And then the second piece is on life sciences, and we talked about how we're very bullish on that channel. And we're still very bullish on that channel.
Justin L. Ferrero: It's a little bit we expected that and so that's why it's flat year over year versus growth, which is really in the models.
Justin L. Ferrero:
Justin L. Ferrero: And then the second piece is on life Sciences, and we talked about we're very bullish on that channel. We're still very bullish on that channel. There was two two items that impacted Q1, primarily which we've talked about that is a one of our brand customer is a big brand customers going generic and they'd cut all of their spend and then.
Justin L. Ferrero: There were two items that impacted Q1 primarily, which we talked about. One of our brand customers, a big brand customer, is going generic, so they cut all their spend. And then the second was we discontinued a non-core product. It wasn't a pharma product, and it just wasn't worth continuing to invest in.
Justin L. Ferrero: Second was we discontinued our noncore product there wasn't a pharma product and it just wasn't warrants continued investment.
Justin L. Ferrero: But our team performs, and our campaigns perform very well. And, just like I mentioned before, you know, grew from 17 million in life sciences to 27 million in Q4 of last year. We expect that to continue on a similar trajectory this year and expect that to drive both of those divisions to drive growth for us this year. So we were in line. Unfortunately, we weren't able to guide you, unfortunately, when the models came out, or we would have called you.
Justin L. Ferrero: But our team performs and our campaigns performed very well and just like I've mentioned before grew from $17 million in life Sciences to $27 million in Q4 of last year, we expect that a similar trajectory this year.
Justin L. Ferrero: And expect that to drive both of those divisions to drive growth for us this year.
Justin L. Ferrero: So we were and we were in line, we Werent able to guide.
Justin L. Ferrero: Unfortunately, when when the models came out or where we would have we would have called you.
Brent Davis Layton: But I would like to talk a little bit about the enterprise pipeline. I mentioned in my remark that, ultimately, the first thing I want to make sure is that we have a healthy pipeline. And we have worked hard. This team has grown the pipeline threefold since the beginning of this calendar year. And also, the innovation that we've done, and as Justin has reiterated many times, this is using existing assets, really just looking at things a little bit differently, with slight tweaks to new segments with MCOs and reinsurance and value-based care, and really a new approach. Higher Deal Sizes, Higher Acuity Contracts.
Justin L. Ferrero: But I would like to talk a little bit about the enterprise pipeline I mentioned in my remarks.
Brent Davis Layton: That ultimately we first thing I wanted to make sure we have a healthy pipeline.
Brent Davis Layton: And we have worked hard this team has grown the pipeline threefold since the beginning of this calendar year.
Brent Davis Layton: And also the innovation that we've done and as Justin has reiterated many times. This is using existing assets really just looking at things a little bit differently with slight tweaks of new segments, with Ncos and reinsurance and value based care.
Brent Davis Layton: Really.
Brent Davis Layton: New approaches higher deal sizes higher acuity contracts.
Brent Davis Layton: And we put together a new team. We have a new head of sales. We have a new head of operations, and we are using true business development to help us grow. And as I mentioned, in the coming quarters, we'll talk about new KPIs, and one of them is going to be around sales. And a lot of people have asked me about, you know, our RFPs, how many RFPs we get, and there's been plenty. But I would say I'm focused more on the close rate and the success rate. And that is how we're looking at things.
Brent Davis Layton: And we put together a new team we have a new head of sales we have a new head of operations and we are using true true business development to help us grow.
Brent Davis Layton: And as I've mentioned in the coming quarters, we will talk about new Kpis and one of them is going to be around sales and why do people have asked me about.
Brent Davis Layton: Our RFP 70, Rfps are getting in.
Brent Davis Layton: And theres been plenty, but I would say I'm focused more on the close rate and the success rate.
Brent Davis Layton: And that is what we're looking at things.
Eric R. Percher: Okay. And then on the EBITDA line, I think we got some guidance last quarter on the impact, if there's any difference there this quarter versus the prior. And you mentioned that there are costs for the review and dispute. Are you primarily seeing elevated legal expenses? And was that greater than you had expected?
Brent Davis Layton: Okay, and then I think EBITDA line I think we got some guidance last quarter on the impact if there is any difference there this quarter versus the prior and you mentioned that there is cost for the review and dispute.
Eric R. Percher: Primarily seeing elevated legal expense was that greater than you had.
Eric R. Percher: Good.
Justin L. Ferrero: Yeah, I love it. There's I just For the dispute, there's legal. It's like there's always accounting. There's so yes, legal accounting professionals.
Eric R. Percher: Yes.
Eric R. Percher: I just.
Justin L. Ferrero: Further dispute there is legal side Theres always accounting there is.
Justin L. Ferrero: So, yes legal accounting professionals, it's across the board.
Justin L. Ferrero: It's across the board, that we're spending money on across the strategic review as well as the dispute. So they would have been much closer. The point of that is that the gap, even at, you know, we knew this reduction in revenue was coming year over year. But we managed costs. And the gap was only $3 million on a $25 million top line, and we think it would have been much closer without those other one-time expenses that are related to those two items, if that makes sense. That's the point we were trying to make. There's additional expenses that we're incurring to support the strategic review and the disputed contract. That wasn't in last Q1.
Justin L. Ferrero: That we're spending money on across the strategic review as well as.
Justin L. Ferrero: The dispute.
Justin L. Ferrero: So they would have been much closer I guess the point of that is that the the gap even at.
Justin L. Ferrero: We knew this reduction in revenue was coming year over year.
Justin L. Ferrero: But we managed cost and the gap was only $3 million on a $25 million.
Justin L. Ferrero: Top line and we think it would've been much closer without those one other one time expenses that are related to those two those two items does that makes sense. That's the point we were trying to make there was additional expense that we're incurring to support the strategic review and the disputed contract that wasn't in last Q.
Eric R. Percher: And so if we look at last quarter, I think you called out 6.3 million of EBITDA impact. Is that plus 3 million that gets us to the impact that you're facing?
Justin L. Ferrero: One.
Justin L. Ferrero: And so if we look at last quarter I think you called out $6 3 million of EBITDA impact is it that plus $3 million that gets us to the impact that you are facing.
Eric R. Percher: No, that's really apples and oranges. The six points, yeah, we're talking about two different items. That was a balance sheet item that impacted Q4.
Speaker Change: No thats really apples and oranges, but the six point yes.
Eric R. Percher: We're talking about two different items that was a that was a balance sheet.
Eric R. Percher: Item that impacted Q4, yeah.
Eric R. Percher: Is there anything you guys can impair.
Eric R. Percher: On a per.
Unknown Attendee: [inaudible] Okay, there's guidance you can give on the impact at a bit down the line.
Eric R. Percher: Okay. So it was unfair.
Unknown Attendee: The guidance you can give on the impact at the EBITDA line.
Justin L. Ferrero: Well, we're not guiding for the year, but what I will say is that we expect EBITDA to improve for all the reasons that we talked about before. It's just Q1 is a seasonally low quarter from a revenue standpoint, and it's also high from an expense standpoint with prepaids and others, and we expect two things to happen.
Speaker Change: Well, we're not guiding for the year, but what I will say is that we expect EBITDA to improve for all the reasons that we've talked about before.
Justin L. Ferrero: Q1 is a seasonally low quarter from a revenue standpoint.
Justin L. Ferrero: I mean, as you know, our EBITDA is historically back half of the year loaded, and that's how we expect it to play out this year. We expect in Q3 to have our best quarter for the provider channel. We expect Q4 to be our best quarter for life sciences. And we expect our enterprise business to add this momentum that Brent has taken you through starting in Q3 as well. So EBITDA will improve.
Justin L. Ferrero: It's also high from an expense standpoint, with prepaid and others and we expect two things to happen I mean, as you know our Ebitdas is historically back half of the year loaded and that's how we expect it to play out this year, we expect in Q3.
Justin L. Ferrero: And to have our best quarter for that.
Justin L. Ferrero: The provider channel, we expect Q4 to be our best quarter for life Sciences.
Justin L. Ferrero: And we expect our enterprise business just to add.
Justin L. Ferrero: This momentum that Brent has taken you through.
Justin L. Ferrero: Starting in Q3 as well.
Justin L. Ferrero: EBITDA will improve.
Justin L. Ferrero: Yes.
Speaker Change: Thank you.
Speaker Change: You bet.
Justin L. Ferrero: Okay.
Operator: And at this time, we are showing no further questionnaires in the queue. And this does conclude our question and answer session. I would now like to turn the conference back over to Mr. Brent Layton for any closing remarks. I want to reiterate, we will be transparent, and we will communicate when the special
Justin L. Ferrero: And at this time, we're showing no further questioners in the queue and this does conclude our question and answer session I would now like to turn the conference back over to Mr. Brent Layton for any closing remarks.
Brent Davis Layton: Thank you Chris.
Brent Davis Layton: I want to reiterate, we will be transparent, and we will communicate when the special committee and our board of directors conclude the strategic review. Thank you for your time today and support of Sharecare.
Brent Davis Layton: I want to reiterate we will be transparent and we will convey when the special Committee and our board of Directors concludes the strategic review.
Brent Davis Layton: Thank you for your time today and support of share here.
Brent Davis Layton: Okay.
Brent Davis Layton: Okay.
Brent Davis Layton: Yes.
Brent Davis Layton: Yes.
Brent Davis Layton: Yes.
Brent Davis Layton: Okay.
Brent Davis Layton: Okay.
Brent Davis Layton: [music].
Brent Davis Layton: Okay.
Brent Davis Layton: [laughter].
Brent Davis Layton: Yes.
Brent Davis Layton: [music].
Brent Davis Layton: Yes.
Brent Davis Layton: Yeah.
Operator: ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??? ??? ??? ??? ??? ??? ??? ???
Brent Davis Layton: Okay.
Operator: [music].
Operator: Yes.
Operator: [music].
Operator: Yes.
Operator:
Operator: [music].
Operator: Yes.
Operator: Yes.
Operator: Yes.
Operator: Yes.
Operator: Okay.
Operator: Yeah.
Operator: Okay.
Operator: [music].