Q1 2024 DarioHealth Corp Earnings Call
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Operator: Benjamin Haynor, Erez Raphael, Richard Anderson, Felix Lee, Lucas Rahmont, Charles Padala, Arnaud Robert, Ofer Leidner, Tomer Ben, DarioHealth, Guillermo Padano, DarioHealth, Benjamin Haynor, Erez Raphael, Richard Anderson, Felix Lee, Lucas Rahmont, Tomer Ben, DarioHealth, Arnaud Robert, Ofer Leidner, DarioHealth, Guillermo Padano, DarioHealth, Guillermo Padano, Arnaud Robert, Ofer Leidner, DarioHealth, Guillermo Padano, DarioHealth, Guillermo [inaudible]
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Dara Your health first quarter 2024 results conference call. At this time all lines are in a listen only mode.
Operator: Good morning, ladies and gentlemen, and welcome to the DarioHealth First Quarter 2024 Results Conference Call. At this time, all lines are in a listen-only mode.
Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, May 15, 2024. I would now like to turn the conference over to Kat Parilla, Investor Relations Manager at DarioHealth. Please go ahead.
Speaker Change: Following the presentation, we will conduct a question and answer session. If at any time during the call you require immediate assistance. Please press star zero for operator. This call is being recorded on Wednesday May 15, 2024, I would now like to turn the conference over to Gorilla Investor Relations manager at <unk>.
Speaker Change: Go ahead.
Chuck Parada: Thank you, Operator, and good morning, everybody. Thank you for joining us today for a discussion of DarioHealth's first quarter 2024 financial results. Leading the call today will be Erez Raphael, CEO of DarioHealth. He'll be joined by Rick Anderson, President of DarioHealth.
Thank you operator, and good morning, everybody. Thank you for joining us today for a discussion of Dario health first quarter 2024 financial results.
Speaker Change: Leading the call today will be Erez Raphael CEO of cardio health they'll be joined by Rick Anderson President Addario House. After the prepared remarks, we will open the call for Q&A.
Chuck Parada: After the prepared remarks, we will open the call for Q&A. An audio recording and webcast replay for today's call will also be available online, as detailed in the press release invitation for this call. For the benefit of those who may be listening to the replay or archived webcast, this call is being held on Wednesday, May 15, 2024. This morning, we issued a press release announcing our financial results for the first quarter of 2024. A copy of the release can be found on the investor relations page of DarioHealth's website.
Speaker Change: An audio recording and webcast replay for today's call will also be available online as detailed in the press release invite for this call for the benefit of those who may be listening to the replay or archived webcast. This call is being held on Wednesday may 15th 2024.
Speaker Change: This morning, we issued a press release announcing our financial results for the first quarter of 2020 for a copy of the release can be found on the Investor Relations page of Dario helps website.
Chuck Parada: Actual events or results may differ materially from those projected as a result of changing market trends, reduced demand, or the competitive nature of DarioHealth's industry. Such forward-looking statements and their implications may involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factors section and elsewhere in the company's first quarter 2024 quarterly report on Form 10-K. Additional information concerning factors that could cause results to differ materially from our forward-looking statements is described in greater detail in the company's press release issued this morning and in the company's other filings with the SEC.
Speaker Change: Events or results may differ materially from those projected as a result of changing market trends reduced demand or the competitive nature of Dario helps industry.
Speaker Change: Such forward looking statements and their implications may involve known and unknown risks uncertainties and other factors that may cause actual results or performance to differ materially from those projected.
Speaker Change: The forward looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factors section in.
Speaker Change: Elsewhere in the company's first quarter 2024, our quarterly reports on Form 10-K.
Speaker Change: Additional information concerning factors that could cause results to differ materially from our forward looking statements are described in greater detail in the Companys press release issued this morning and in the Companys other filings with the SEC.
Chuck Parada: In addition, certain non-GAAP financial measures may be discussed during this call. These non-GAAP measures are used by management to make strategic decisions, forecast future results, and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company's ongoing core operations and prospects for the future. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in this morning's press release. With that said, I'd like to introduce Erez Raphael, Chief Executive Officer at DarioHealth.
Speaker Change: In addition, certain non-GAAP financial measures may be discussed during this call. These non-GAAP measures are used by management to make strategic decisions forecast future results and evaluate the companys current performance.
Speaker Change: Management believes the presentation of these non-GAAP financial measures is useful for investors understanding and assessment of the Companys ongoing core operations and prospects for the future of <unk>.
Speaker Change: Reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in this morning's press release with that I'd like to introduce Erez Raphael Chief Executive Officer at <unk> Health.
Erez Raphael: Thank you, Cass, and thanks to all of you for joining our call this morning. Q1 2024 represents a major turning point in the scaling of our business and the acceleration of our path to profitability. We are happy to announce that our core B2B2C business channel, which represents recurring revenues mainly from health plans and employers, is continuing to scale up and is now the largest of our three revenue channels, accounting for about 71% of our performance revenues for the quarter. This is a milestone that we have been working toward for some time.
Chad: Thank you Chad and thanks to all of you for joining our call. This morning, Q1, 2020 forward with banks, a major turning point and discounting of our business and the acceleration of our basketball suitability.
Erez Raphael: We are happy to announce that our core <unk> business challenge, which represents recurring revenues mainly from health plans and employers is continuing to scale up and is now the largest to power three revenue China accounting for about 71%.
Erez Raphael: Follow up pro forma rent.
Erez Raphael: Revenues for the quarter.
Erez Raphael: This is a milestone that we have been working toward for some time due to destocking and due to the high SaaS like gross margins on this revenue stream that is above 75% it should exceed 80%.
Erez Raphael: Due to this scale, and due to the high SAS-like gross margins of this revenue stream, which is above 75%, it should exceed 80%, and the faster-than-expected achievement in operational efficiencies post-requisition, we have never been better positioned to reach profitability. I would like to share more information on the clear trends that we see in the business and are adding to our confidence in our ability to scale and reach profitability. First, on the BTC recurring revenue scale, the organic Dario revenues this quarter continue to grow alongside the additional revenues from the twill acquisition, which were added since February 15. Performer for Q1, we're at an annual run rate of $31 million for all three channels together.
Erez Raphael: And the faster than expected achievement.
Speaker Change: Additional efficiencies postpaid acquisition, we have never been better positioned to reach profitability.
Speaker Change: I would like to share more information on the key trends that we see in the business and are adding to our confidence in our ability to scale and reach profitability.
Speaker Change: First be the BTC recounting revenue scale, the organic value of revenues. This quarter continue to grow alongside the additional revenues from the <unk> acquisition, which were added since February 15.
Speaker Change: <unk> for Q1 were at an annual run rate of $31 million for all three challenge together.
Erez Raphael: We're approximately $22 million into this being our core B2B to C business. The legacy Dario portion of the B2B to C channel that the new grew sequentially over the fourth quarter of 2023 organically by more than 30%. These goals can be attributed to the Aetna platform, expansions for existing contracts, and a new customer launch. We'll see this growth progress throughout the year with the continuation of our revenue growth from recently launched accounts and multiple new contracts in Q2, and further execution of our pipeline, which currently holds more opportunities than it ever has.
Speaker Change: Will it books immediately $22 million to this being our core <unk> business.
Speaker Change: The legacy value a portion of the <unk> to St. John.
Speaker Change: <unk> grew sequentially over the fourth quarter of 2023 organically by more than 30%.
Speaker Change: This growth can be attributed to the ethanol platform extensions to existing complex a new customer launches.
We'll see the growth progress.
Speaker Change: The yield with the continuation of our revenue growth from recently launched accounts and multiple new contracts in Q2, and further execution of our pipeline, which currently holds more opportunities that we've ever had.
Erez Raphael: This revenue stream is going to go for both Dario Children's and... We have confidence that this stream of revenue will accelerate in 2024 and 2025, as both Dario and Twill have a strong client base, including three out of the top eight national health plans, such as Cigna, Elements, and Aetna, as well as big name national employers such as Amazon, Google, and Microsoft.
Speaker Change: Revenue stream is going for both value challenge.
Speaker Change: Yeah.
Speaker Change: We are confident that this plan with revenue will accelerate in 2024 and 2025 as both value and will have a strong client base, including three out of the top eight national health plans, such as Cigna element and Aetna.
Speaker Change: As well as big name National employers, such as Amazon, Google and Microsoft.
Erez Raphael: We believe we will achieve significant revenue growth mainly in our core B2B2C business on a combined basis in 2024 and even greater growth in 2025, including cross-sell opportunities that we are currently securing. This should enable us to achieve our goal of 80% gross margins. This monthly recurring revenue stream already has margins that are above 75% as it stands today. Another factor that contributes to our confidence in reaching cash flow positive next year is the two-year Dario merger and synergies we are leveraging.
Speaker Change: We believe we will achieve significant revenue growth mainly in our core <unk> business on a combined basis for 2024.
Speaker Change: And even greater growth in 2025, including cross sell opportunities that we're currently into the journey home.
Speaker Change: This should enable us to achieve our goal of 80% gross margins.
Speaker Change: Monthly recurring revenue stream already has margins that Alibaba, 75%.
Speaker Change: Today.
Speaker Change: Another factor that contributes to our confidence in reaching cash flow positive next year is the twin valuable Mel Joe and synergies.
Speaker Change: Those are the general.
Erez Raphael: Efficiencies are focusing faster than we initially anticipated. When we announced the acquisition, we communicated an estimated 30% efficiencies over three years. But after a recently executed cost reduction, we are on track to achieve efficiencies that are higher than 30% by the end of this year, a year ahead of schedule.
Speaker Change: <unk> seen are focusing faster than we initially anticipated.
Speaker Change: When we announced the acquisition, we communicated an estimated 30% efficiencies over three years.
Speaker Change: <unk> recently executed cost reduction we are on track to achieve efficient with.
Speaker Change: With the higher than 30% by the end of this year a year ahead of schedule.
Erez Raphael: With the revenue growth I mentioned before and the faster than anticipated cost synergies and high gross margins of 80%, we believe we are on track to break even in the second half of 2025. We believe that the coming quarters will show continued improvement in all elements of our financial profile, from the top line to OPEC's gross margins and reduction in loss. Looking into the other revenue streams, in the first quarter, our B2C business generated approximately $2 million, which is consistent with the channel expected revenue run rate of $8 million. This channel is already off the bank.
Speaker Change: With the revenue growth I mentioned before and the faster than anticipated cost synergies and high gross margins of 80%.
Speaker Change: Believe we are on track to breakeven in the second half of 2025.
Speaker Change: We believe that the coming quarters will show continued improvement in all elements of our financial profile on top clients to Opex gross margin and reduction in losses.
Speaker Change: Looking into the other revenue streams in the first quarter and our BDC business generated approximately $2 million, which is consistent with the China, an expected $8 million of annual revenue run rate.
Speaker Change: This channel is already booked.
Erez Raphael: The third revenue stream we call commercial-strategic, which comes mainly from Parma partners and is milestone-based rather than monthly recurring revenues and therefore should be viewed on an annual basis. This quarter, we recorded approximately $500,000 in revenue. We expect an annual run rate of $6 million from this channel to continue through 2024 under our original $30 million deal with Enope. This excludes any additional revenues we are hopeful to see materialized from increased demand from pharma following the full acquisition.
Speaker Change: The third let me just.
Speaker Change: Recall commercial strategic.
Speaker Change: Mainly from former partners.
Speaker Change: He is milestone based rather than monthly recurring revenues and therefore should be viewed on an annual basis. This quarter, we recorded approximately $500000 to revenues.
Speaker Change: Expect an annual run rate of $6 million from this channel to continue through 2020 full fill all regional $30 million of Bbs and <unk>.
Speaker Change: This excludes any additional revenues we are hopeful to see materialize.
Speaker Change: Demand from pharma following the full acquisition.
Erez Raphael: Above all else, we are most excited by the demand for our quarter-top. We are now three months into the acquisition, and we are seeing the effect that the expanded product offering has on our pipeline, both from B2B to C, to employers, health trends, and pharma, with few competitive opportunities with our existing clients. With the GLP-1 offering that we have, we have already signed six new contracts, and we see growing demand from employers.
Speaker Change: Above all else. We're the most excited by the demand for the top billing. We're now three months into the acquisition and we are seeing the effect that the expanded product offering is on our pipeline both from Davita BDC to employers health plans and pharma with few compete opportunities.
Speaker Change: All existing clients.
Speaker Change: On the G&P, one offering that we have we already signed six new contracts and we see growing demand from employers.
Erez Raphael: We believe this is something that will accelerate moving forward as it's clear that adoption of the GLP-1 should be in companion with behavioral change that will make the weight of... Sustainable, and other aspects of our business that have always been attractive to our partners are our data. With the large number of conditions that we cover and billions of data points collected from millions of users by Dario and Twill, our collection of data is not only deeper, but far more comprehensive on a level that is unique to Dario.
Speaker Change: This is something that we accelerate moving forward.
Speaker Change: It is clear that adoption of the GOP, one should be companion with behavioral change between the Waitrose sustainably.
Speaker Change: Sustainably.
Speaker Change: And other aspects of our business that has always been attractive to our partners at our data with the large number of conditions that recovers and billions of data points collected 4 million users by value and twin.
Collection of data.
Speaker Change: Only depot, but far more comprehensive on a level that is unique to <unk>.
Erez Raphael: This is useful for us as we continue to refine our products to deliver the best clinical outcomes possible. Generative AI microservices are being implemented in multiple industries. In healthcare, it is clear it will promote drug discovery and consumer engagement and personalization. However, over time. Proprietary datasets will be monetized either internally through the creation and augmentation of services or externally through IP licensing and or strategic transactions. We believe that the consumer-centric dataset we have and the scale of this dataset is an asset that will be valuable for running such models and will position us well to be part of this big revolution. With that, I want to hand over the call to Rick Anderson.
Speaker Change: This is useful for us as we continue to refine our products to deliver the best clinical outcome possible.
Speaker Change: Janet <unk> and micro services that are being implemented multiple needlessly in health care. It is clear it will promote drug discovery and consumer engagement with organization.
Speaker Change: Overtime.
Speaker Change: Proprietary data sets will be monetized, either internally through the creation and implementation of services.
Speaker Change: Donnelley through IP licensing and all strategic transactions.
Speaker Change: We believe that the consumer centric data set we have and the scale of this dataset is in.
Speaker Change: Asset that will be valuable to wanting such model.
Speaker Change: And will position us well to be part of this big evolution.
Speaker Change: With that I want to hand over the call to week on Lowes com.
Richard A. Anderson: Thanks, Erez. Our B2B2C revenue grew substantially from the fourth quarter of last year to the first quarter of this year as we saw the impact of new customer launches, customer expansions, and the TWIL acquisition. We have more than 15 customers launching in Q1 and Q2 of this year, and we have customers from last year's sales cycle continuing to sign contracts into Q2. Both products on the private-label Aetna platform have launched, and we have seen Aetna continue to add customers to the Mind Companion platform in Q1 and Q2, a trend we expect to continue with related increases in revenue for the next several quarters.
Harriss: Thanks, Harriss, our b to B to C revenue grew substantially from the fourth quarter of last year to the first quarter of this year as we saw the impact of new customer launches customer expansions and the impact of the <unk> acquisition, we have more than 15 customers launching in Q1 and Q2 of this year and we have custom.
Harriss: From last year sales cycle, continuing to sign contracts into Q2.
Speaker Change: Both products on the private labeled Aetna platform have launched and we have seen aetna continue to add customers to the mine companion platform in Q1 and Q2 of <unk>.
Speaker Change: And we expect to continue with related to increases in revenue for the next several quarters. We have signed an agreement to expand with one of our health plan customers through a partner and we expect to launch that expansion. Later. This year. In addition, we expect to add an additional health plan and a handful of off cycle self insured employers throughout the year the.
Richard A. Anderson: We have signed an agreement to expand with one of our health plan customers through a partner, and we expect to launch that expansion later this year. In addition, we expect to add an additional health plan and a handful of off-cycle self-insured employers throughout the year. The acquisition of Twill also brought a broader opportunity to enable pharmaceutical customers through Twill's patient acquisition and adherence platform. This platform leverages the core Twill platform used by their employer and health plan customers, making the delivery highly efficient and high-margin. Twill has a proven track record of its ability to activate patients and increase adherence with several of the largest pharmaceutical companies in the world.
Speaker Change: <unk> of Twill also brought a broader opportunity to enable pharmaceutical customers through <unk> patient acquisition and adherence platform. This.
Speaker Change: This platform Leverages the core <unk> platform used by their employer and health plan customers, making the delivery highly efficient and high margin.
Speaker Change: <unk> has a proven track record of its ability to activate patients and increase adherence with several of the largest pharmaceutical companies in the world over.
Richard A. Anderson: Over the last year, they have refined this platform into a licensing model that we expect to bring ARR revenue starting in 2024 from a couple of large pharma companies that are already piloting the solution. And we believe, based on early interest and traction, that we'll be able to expand this to add significant additional revenue to our recurring ARR B2B2C business by the end of 2024 and into 2025. We are very pleased with the first quarter of the 2024 employer sales season, with significantly increased activity and opportunities through benefit consultants compared to the first quarter of 2023.
Speaker Change: Over the last year. They have refined this platform into a licensee model that we expect to bring IRR revenue starting in 2024 from a couple of large pharma companies that are already piloting the solution and we believe based on early interest and traction that we will be able to expand this to added.
Speaker Change: Significant additional revenue and our recurring <unk> business by the end of 2024 and into 2025. We are very pleased with the first quarter of 2020 for employer sales season with significantly increased activity and opportunities through benefit consultants compared to the first quarter of 2012.
Richard A. Anderson: We are seeing more opportunities, and the opportunities we are seeing are at least 200 percent larger in the first quarter of 2024 compared to the first quarter of 2023. We believe this is a result of the efforts that we have put into developing relationships with employee benefit consultants and the increasing number of reference customers that we have built over the last couple of years. As I have mentioned in the past, selling to employers and health plans is a step-function business that, done correctly, allows you to build trust and confidence through execution, resulting in step-function increases in revenue each year.
Speaker Change: Three we are seeing more opportunities and the opportunities. We're seeing are at least 200% larger in the first quarter of 2024 compared to the first quarter of 2023. We believe this is a product of the efforts that we have put into developing relationships with employee benefit consultants and the increasing number of reference.
Speaker Change: <unk> that we have built over the last couple of years as I have mentioned in the past selling to employers and health plans is a step function business that done correctly allows you to build trust and confidence through execution, resulting in step function increases in revenue each year.
Richard A. Anderson: Benefit consultants are a significant source of employer opportunities, and this increased volume speaks also to the scalability of our sales infrastructure. As most self-insured employers are on a 1-1 to 12-31 sales cycle, we believe the vast majority of the accounts that we close between now and the end of 2024 will launch in 2025. We are also expecting significant growth in our health plan business in 2025, based on opportunities currently in our pipeline. We expect to add at least one additional national health plan later this year, which will launch in 2025, and we expect an additional expansion from at least two of our other current health plans in 2025.
Speaker Change: Benefit consultants are a significant source of employer opportunities and this increased volume speaks also to the scalability of our sales infrastructure.
Speaker Change: As most self insured employers are on a one 1% to 12 31 sales cycle. We believe the vast majority of the accounts that we close between now and the end of 2024 will launch in 2025.
Speaker Change: We are also expecting significant growth in our health plan business in 2025 based on opportunities currently in our pipeline, we expect to add at least one additional national Health plan later, this year, which will launch in 2025, and we expect an additional 2025 expansions from at least two of our other occurring.
Speaker Change: Health plans.
Richard A. Anderson: Our acquisition of Twill enables us to offer a broader array of conditions and product functionality to our customers. This builds on our promise of more conditions through one integrated consumer-centric platform, which the market continues to evolve towards. We see this in our pipeline, with over 80 percent of our opportunities being for more than one condition. Our configurability allows customers to buy the full platform, or parts of it, with the ability to consolidate other conditions at a later date.
Speaker Change: Our acquisition of Twill enables us to offer a broader array of conditions and product functionality to our customers. This builds on our promise of more conditions through one integrated consumer centric platform, which the market continues to evolve towards we see this in our pipeline with over 80% of our opportunities.
Speaker Change: He has been for more than one condition or configure ability allows customers to buy the full platform or parts of it with the ability to consolidate other conditions at a later date, we find that this message is resonating well in the market.
Richard A. Anderson: We find that this message is responding well in the market. Product integration is well underway, and we expect to have the first product with integrated Dario and Twill capabilities launched in the fourth quarter of this year. Early customer response to the combined company has been strong, with almost a dozen of our customers expressing interest in a cross-sold product. With the combined product, we can compete in more RFP customer opportunities, and we believe the combined capability will enable us to increase our win rate and our revenue per customer.
Speaker Change: <unk> integration is well underway and we expect to have the first product with integrated Dario and twill capabilities launched in the fourth quarter of this year.
Speaker Change: Early customer response to the combined company has been strong with almost a dozen of our customers expressing interest in a cross sell product with the combined product, we can compete and more RFP customer opportunities and we believe the combined capability will enable us to increase our win rate and our revenue per customer in summary.
Richard A. Anderson: In summary, we are confident in our revenue growth in 2024, and we are excited about the customer traction we are already seeing in the 2024 sales cycle for 2025 revenue. We believe we will dramatically accelerate our revenue growth in 2024 and 2025 across our B2B2C and strategic B2B channels. With that, I would like to turn it back over to Erez.
Speaker Change: We are confident in our revenue growth in 2024, and we are excited about the customer traction we have already seen in the 2024 sales cycle for 2025 revenue. We believe we will dramatically accelerate our revenue in 2024, and 2025 across our b to B to C and strategic <unk>.
Speaker Change: With that I would like to turn it back over to Erez.
Erez Raphael: Thank you Mike.
Erez Raphael: All the strategic decisions that we have made over the last few years are reaching a turning point in the scaling of our business and acceleration toward profitability. Today, the Dario platform is the most consumer-centric, the most comprehensive in terms of conditions covered, and has the most proven track record in terms of clinical performance and proven cost savings in the space. Today, Dario has a massive client base and book of business, including three out of the top eight national health plans such as Cigna, Elements, and Aetna, as well as big-name national employers such as Amazon, Google, Microsoft, and key pharma companies such as Sanofi, Merck, and Eli Lilly, all of which are contributing to our B2B2C revenue, which is growing intensively on a Dario twill-integrated basis.
Erez Raphael: The strategic decisions that we have made over the last few years, reaching a turning point and the scaling of our business and acceleration.
Speaker Change: Got it.
Speaker Change: Today, the download platform is the most consumer centric the most comprehensive in terms of conditions cargo.
Speaker Change: And is the most proven track record in terms of clinical performance improvement cost savings can be space.
To date <unk> has massive.
Speaker Change: And book of business, including three out of the top National Health plan, such as Cigna, and Aetna as well as big name mission of employers such as Amazon, Google, Microsoft and key pharma companies.
Speaker Change: Sanofi American eliminating all of which are contributing to our <unk> revenue, which is growing extensively on and Danielle twill integrated basis.
Speaker Change: I have a couple that contribute to our confidence reaching cash flow positive next year in the <unk> value.
Speaker Change: <unk> energy.
Erez Raphael: Another factor that contributes to our confidence-rich and cash-flow positive next year is the twilled value of marriage and synergies we are leveraging. With efficiencies that we mentioned and are progressing about a year ahead of our original schedule on track to hit even about 30% by the end of the year, we believe that the B2B free recurring revenue channel alongside best efficiencies will be the main driver of our acceleration to profitability in the second half of 2025. $54 million in revenue. With that, I want to open the call for Q&A. Thank you.
Speaker Change: With the efficiencies that we mentioned.
<unk> about a year ahead of our regional schedule.
Speaker Change: Contractually given above.
Speaker Change: But at the end of the year, we believe that the beta.
Speaker Change: Accounting revenue, China alongside the sufficiency.
Speaker Change: We will be the main driver of solid acceleration to profitability second half 2025.
Speaker Change: At $54 million of inhibitors.
Speaker Change: With that I want to open the call for Q&A session.
Operator: Thank you. And, ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the number two. One moment, please for your first question. Your first question comes from the line of Charles Rhyee from TD Cowen. Your line is open.
Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question can you press the star followed by the number one on your telephone keypad. If you would like to withdraw your question. Please press the star followed by the number to one moment. Please for your first question.
Speaker Change: Oh.
Charles Rhyee: Hi, this is Adam on behalf of Charles. Thanks for taking our questions.
Charles Rhyee: Your first question comes from the line of Charles <unk> from TD Cowen Your line is open.
Charles Rhyee: To begin with, has anything changed in the agreement with Sanofi that could affect milestone payments from them over the course of this year? And wondering how we should think about the timing of the payments in 2024, looking at the first quarter's payments here. Understand that there's lumpiness quarter to quarter, and we should be looking at the full year. But I just wanted to come back to that and wonder what Sanofi looks like over the course of this year, if you can share.
Adam: Hi, This is Adam on for Charles Thanks for taking my questions wondering to begin with has anything changed in the agreement with Sanofi that could affect the milestone payments from them over the course of this year I'm wondering how we should think about timing of the payments in 2024 looking at the first quarter's financial statements here understand that theres lumpiness quarter to quarter, and we should be looking at the full year, but just wanted to.
Adam: Come back to that and I'm wondering what sense it looks like over the questions here.
Erez Raphael: Sure, so good morning, Adam, and thanks for the question. [inaudible] There is no fundamental change in the way that we are executing on the agreement with Sanofi. We do see some additional opportunities with the addition of Twill to our product portfolio, and we do expect that the addition of 12 is going to create opportunities with Sanofi. So overall, the deal exists, the $30 million deal exists, and yes, it's going to still stay lumpy.
Speaker Change: Yeah sure. So good morning, guys. Thanks for the question.
Speaker Change: There is no fundamental change in the way that we are executing on the agreement with Sanofi.
Speaker Change: We do see some additional opportunities.
Speaker Change: Was the addition of <unk> into our product offering.
Speaker Change: And we do expect that the additional.
Speaker Change: In addition, tourism is going to create opportunities.
Speaker Change: So overall.
Speaker Change: The $30 million.
Speaker Change: Yes.
Speaker Change: Still a lumpy.
Erez Raphael: But overall, as I stated in the earnings call, we are looking at somewhere between $6 million. So overall, we believe that later this year, we're going to balance the revenue in a way that we're going to be able to save the six to eight million dollars. Ideally, we will be in a position that we will do maybe even more than that by having the Twill platform also adopted. And we are having specific discussions about that, not only with Sanofi, but also with other clients that are looking into the addition of Twill to our product offering.
Speaker Change: But overall as I stated on the a and B.
Speaker Change: We are looking on somewhere between $6 million to $8 million.
Speaker Change: Revenue from the strategic but it's coming from Sanofi of liabilities. So the software revenue.
Speaker Change: So overall, we believe that the level of this year.
Speaker Change: But the rest of enjoying the way that we generate.
Speaker Change: Be able to.
Speaker Change: So say $6 million to $8 million.
Ideally we will be in a position that we will do.
Maybe even more than that by having between platform also adopt it then we are having.
Speaker Change: Specifically discussions about that.
Speaker Change: Not only with Sanofi, but they also.
Speaker Change: Idle time <unk> to be addition of split it into all of that product offering.
Richard A. Anderson: That's helpful. Thank you. And with regard to the Aetna ramp, obviously, good to see the contribution there this quarter. I'm wondering if you can share, are you seeing utilization volumes there as you'd expected to see so far, and how should we be thinking about that over the course of this year and maybe contributing to revenue through the course of this year?
Speaker Change: That's helpful. Thank you and with regards to the Aetna ramp obviously good to see the contribution of this quarter.
I'm wondering if you can share or are you seeing utilization volumes. There as you would expect to see so far and how should we be thinking about that over the course of this year and maybe contributing to revenue through the course of this year.
Richard A. Anderson: In terms of what we're seeing with that, as I mentioned on the call, we've launched both products actually, and you know, the utilization rates are about what we would expect. From that, we expect that they will continue to add customers to the platform throughout the year. As a matter of fact, we're seeing them add essentially more people every month onto the platform. And, you know, they are selling through the ASO employer sales cycle.
Speaker Change: The.
Speaker Change: In terms of what we're seeing with that as I mentioned on the call is that we've launched both products actually and the utilization is about what we would expect.
Speaker Change: From that we expect that they will continue to add customers to the platform throughout the year as a matter of fact, we're seeing them add essentially every month.
Speaker Change: More people onto the platform and they are selling through the ASO employer sales cycles. So we will expect to another.
Richard A. Anderson: So, you know, we'll expect another group of customers come on board mid-year and then end of the year, but they're adding every month right now, basically, to the platform. And the revenue from both of those products is on a PPM basis. So, we are getting paid for everybody who has access to the platform. So, it's not a utilization-based contract, but the underlying utilization is more or less what we would have anticipated. And, you know, obviously, we're early in the year for that launch, but from what we're seeing so far.
Speaker Change: Uh huh.
Speaker Change: Group of customers come on mid year, and then ended the year, but theyre, adding every every months right now basically to the platform and the revenue from both of those products is on a P. P. M basis. So we are getting paid for everybody who has access to the platform. So it's not a utilization based contract.
Speaker Change: But the underlying utilization is more or less what we would.
Speaker Change: Have anticipated you know obviously we're.
Speaker Change: Early in the year from that launch, but from what we're seeing so far.
Erez Raphael: Thanks. And last question: with regard to the $60 million in signed contract value that you guys have previously talked about, how should we be thinking about that phasing in over the course of this year, maybe next year as well? Are these things that we can see maybe in the coming quarters? Or are these opportunities that really phase in over time?
Speaker Change: Thanks, and last question would be.
Speaker Change: With regard to the $60 million in foreign contract value that you guys had previously talked about how should we be thinking about that phasing in over the course of this year or maybe next year as well.
Speaker Change: These things that can.
Speaker Change: See maybe in the coming quarters or are these opportunities that really season over time.
Erez Raphael: Yes, thanks for this question. So overall, we believe that it's going to materialize this year and into the kind of first half of next year. We think that we're going to see that we keep building, we keep getting signed contracts, and it's being added to the $60 million. So overall, we look at it as something that will materialize like somewhere like the mid-to-end of next year. That's very helpful.
Speaker Change: Yes. So thanks for the question. So overall, we believe that it's been.
Speaker Change: To materialize.
Speaker Change: This year and into the kind of first half of next year, we think that we've done a superb.
Speaker Change: Keep building.
Speaker Change: We keep getting signed corn cogs and its being added to the $600 million sold.
Speaker Change: So overall, we looked at it as something that will bring in materialize like somewhere in the mid <unk>.
Next year.
Charles Rhyee: That's very helpful. Thank you.
Speaker Change: That's very helpful. Thank you.
Operator: Thank you. And once again, if you would like to ask a question, you press star followed by the number one on your telephone keypad. And there are no further questions at this time. I would like to turn it back to Erez Raphael for closing remarks. I would like to thank everyone, and I'm
Speaker Change: Thank you and once again, if you would like to ask a question you press the star followed by the number one on your telephone keypad.
Speaker Change: And there are no further questions at this time I would like to turn it back to Erez Raphael for closing remarks.
Erez Raphael: I would like to thank everyone, and I'm looking forward to seeing you in the next quarters, where we're going to continue to report on our progress on all the parameters, top line, gross margins, opex, and bottom line toward our best profitability. Thanks, everyone.
Erez Raphael: I would like to thank everyone and I'm looking forward to see you in the next quarter.
Erez Raphael: Well, we're going to continue to report on our progress on all the bundles topline gross margins Opex and bottom line.
Speaker Change: Tesco profitability thanks, everyone.
Operator: Thank you, and Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: Thank you.
Speaker Change: Ladies and.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
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