Q1 2025 Accolade Inc Earnings Call
Hello, and thank you for standing by walking through the accolade first quarter 'twenty 25 earnings results Conference call.
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I would now like to turn the call over to talk Friedman, Sir you may begin.
Thanks, Operator, welcome everyone to our fiscal first quarter earnings call with me on the call.
Today, our Chief Executive Officer, Rajiv <unk>, our Chief Financial Officer, Steve Barnes before turn the call over to Rajeev. Please note they will be discussing certain non-GAAP financial measures that we believe are important way evaluating archimage performance details on the relationship between these non-GAAP measures. The most comparable GAAP measures. The reconciliations thereof can be found in the press release is posted on our website also.
Please note that certain statements made during this call before looking statements as defined by the private Securities Litigation Reform Act of 95.
Such forward looking statements are subject to risks uncertainties and other factors that could cause the actual results differ.
If materially from those expressed or implied in this call for additional information. Please refer to our cautionary statements in our press release and our filings with the SEC all of which are available on our website with that I'd like to turn the call over to Rajiv.
Thank you John we continue to operate in a large market with an opportunity to grow at attractive rates customers continue to buy the tangible value of the services that we deliver.
As the market leader in our category and our objective is to create long term value for our customers partners employees and shareholders by adapting our strategy in the best interests of that objective.
That in mind this quarter, we've adjusted our revenue expectations for the year, while maintaining our adjusted EBITDA.
Look.
Our rationale is simple we recognize current financial market factors and the need for reliable Bottomline earnings bottom line earnings forecasts with today's guidance, we're creating a higher level of certainty on profitability, while maintaining an attractive growth rate and the upside for our market.
More details on the specifics.
And C section later in this call.
Here's what you should take away from today's call.
First we're de risking our business, while maintaining attractive growth rate in our market improving sidelines to our profitability objectives and positioning ourselves well for the long term.
By aligning this way, we'd give ourselves greater certainty on our out year profitability and cash flows as well.
Third the CAGR of personalized health care built off of an advocacy platform is now well established in the marketplace demand continues to be strong. It is true in every new market as you past the point of category creation market leaders are established with advantage accruing to the leaders I can.
With the first and only company our category to reached public markets. We are now demonstrating scale and growth and profitability that reinforces our standing as a leader in the market moving forward and establishing a new market and cementing our leadership position in health care services is a messy business and not every company chooses the same path or the same discipline.
But history Vacates that those companies that choose extraordinary focus on their customers smart growth tactics and scalable profitability always emerged at the winners.
Finally, as I mentioned earlier, we're in the next stage of building an attractive market.
And we're doing so in a period of massive technological innovation.
The company is better positioned than Appalachia turn generative artificial intelligence and virtual services by primary care expert medical opinion, and a trusted partner platform into a mainstay mainstay of how health care is delivered in the years ahead I will now hand, it over to Steve for the financial details and I'll return shortly for closing remarks, Steve already.
Thanks, Raj a recap fiscal Q1 results and then comment on our forward guidance and.
Fiscal Q1, we generated approximately $110 $5 million in revenue, representing 18% growth over Q1 fiscal 'twenty four.
Outperformance in Q1 was largely driven by timing of revenue recognition.
Joining that timing impact Q1 revenue was within the guidance range. We previously provided.
That revenue recognition timing also had a corresponding positive impact on adjusted EBITDA and adjusted gross margin.
With that adjusted EBITDA loss for the quarter was $3 $3 million adjusted gross margin increased to 47, 8% from 43, 5% in the prior year.
Turning to the balance sheet cash cash equivalents and marketable securities totaled $231 million at the end of the first fiscal quarter.
Our cash balance combined with our China profitability continue to provide us confidence in the strength of our balance sheet and plan to manage our convertible notes, which mature in April 2026.
Now turning to guidance, we are revising our fiscal year 2025 revenue guidance to a range of $460 to $475 million.
Representing year over year growth in the range of 11% to 15%.
We're also affirming our guidance for positive adjusted EBITDA in fiscal 2025, and the range of $15 million to $20 million.
Let me take a moment to provide a few key points about the guidance.
First we are derisking, the revenue guide, while preserving our profitability goals.
Use this word derisking a few times today, so let me be clear about what we're saying the.
The feedback from the street with consistent last quarter at the number one thing the market won't tolerate in the current environment has uncertainty where.
We're reducing that uncertainty by moderating the topline, while reinforcing our commitment and confidence in achieving our profitability goals.
Both aggregates business and the broader navigation market continue to have the potential to go faster, but we're taking the approach to focus first on growing EBITDA and then driving incremental revenue upside as the business matures.
Secondly, we are taking into account a few factors in our revised guidance.
One is this focus on profitable growth.
Looking at all marketing spend to focus on the most profitable quarters excuse me I'll focus on the most profitable opportunities.
In that vein, we expect to grow our consumer care business approximately 20% this year, which represents industry leading growth rates for virtual care and it's also a bit lower than what our guidance contemplated in April and will result in reduced associated marketing spend in fiscal 2025.
The same is true when it comes to driving increased usage base revenue for ammo and enterprise primary care.
This is largely what we refer to as platform connected revenue and it will continue to grow faster than the overall business, but with the judicious view on balancing marketing spend against our profit objectives.
A third factor is customer mix and unit economics as Raj said the market is large and while it is early in the traditional selling season, our pipeline remains strong we recently signed a multimillion dollar advocacy.
To give you a sense of the selling season is off to a good start.
That said, we are not compelled to chase business at margin profiles that do not align with our goals for profitable growth. We are building for the long term and believe strongly that discipline around pricing and margins as that is the right way to build a healthy business.
Along with those revenue factors, we continue to be laser focused on cost management continuing the conversation. We started with you a year ago. We are constantly looking at ways to improve operating efficiency, including means of our office strategy, our use of technology and the location of our recruiting efforts.
The combination of these factors and a view towards balancing growth and profitability are the underlying reasons why we are maintaining our profitability targets, while moderating the revenue guide.
Next we are providing fiscal Q2 guidance today of revenue in the range of $104 million to $106 million and adjusted EBITDA loss in the range of $8 million to $10 million.
Note that the previously mentioned revenue recognized recognition timing in Q1 is a key factor for the sequential revenue decline in Q2, along with our approach around balancing growth and profitability.
Consistent with the outlook, we provided in April we expect adjusted EBITDA to be approximately breakeven in the fiscal third quarter with significant positive adjusted EBITDA in Q4, reflecting our ramp in revenue from savings PG recognition shakers predominantly in Q4, along with revenue contributions from new customers, we expect to launch <unk>.
In January 2025.
Finally for your longer term models, we recommend a mid teens revenue growth rate, while projecting the same adjusted EBITDA margin expansion of 300 to 400 basis points per year that we have guided to previously.
With that I'll turn the call back to Raj before taking questions.
Steve we exist to the health care market are clearly requires innovative new companies and categories to deliver better health care outcomes for individuals and their families. As we approach a half a billion dollars in revenues and profitability of credit one of those companies and one of those categories.
Creation stages of markets, especially in health care in the United States are not straight lines are necessarily smooth those.
Every entrepreneur business person knows if everything is a priority that nothing it's a priority in markets like these the best companies choose their priority to execute in the face headwinds steadfast in their commitment to these principles.
Today, we are choosing smart profitable growth and certainty on the bottom line.
Our approach to create the most value to our customers employees partners and shareholders over the long term.
We continue to lean forward in every way as it relates to evolving and growing our business and most importantly, with serving our members and our customers.
Our investments in artificial intelligence tightly integrated offerings and market, leading clinical quality and capabilities will continue.
Today, we have more than 200 customers at 14 million members, who rely on us to improve their health care every day and.
And we have an incredibly dedicated group of more than 2000 employees focused on creating a fundamentally improves health care experience for those companies and members.
Focus has served us well as we built our business over the last 15 years and it will continue to serve us well moving forward with that operator, we'll now open the call to questions.
Thank you.
Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and then wait to hear your name announced.
Your question. Please press Star one again, please limit yourself to one question only please.
Please standby, while we compile the Q&A roster.
Yes.
Okay.
Our first question comes from the line of Richard close with Canaccord. Your line is open.
Yes, thanks for the questions.
Steve I was wondering if you can maybe go over the three reasons you called out for the lower revenue guidance maybe.
A little bit more details there.
Ranked in.
In terms of the impact on the guidance and then with respect.
Not chasing.
The.
Advocacy side not chasing business are you seeing pricing pressures, there or maybe a little bit more detail around that comment.
So let's start with that answer and then I'll turn it over to Steve to give you more depth to the P&L.
The first thing to point out is the change in our guidance for the for the quarter for the year is our choice based on our view, we look at what we're constantly assessing our strategy and evolving our strategy, we'd look at all the constituencies of the business.
Customers members partners employees and specifically in this sense as we're talking about shareholders last quarter as we outlined our guidance for the year and we outlined our profitability targets for the year one of the things we heard from shareholders directly.
Conversations with some of our some of our shareholders as well as obviously watching the performance of the equity over the last three months since our last earnings call.
Was that there was concern about the top line of the business, having putting pressure on the capacity to achieve our bottom line profitability and cash flow targets.
So we made a choice in between this call at the last call.
To relieve some of that pressure acknowledging we're still growing and attractive rates number one number two we're still growing in a market that we think.
Can support even higher growth rate and number three we can give ourselves access or availability to outside of that plan, but ensuring that we built a plan that derisked our capacity achieved a bottom line with that I'll, let Steve answer some questions about what specifically we did to ensure our capacity to achieve that bottom line, yes. Thanks Raj So Richard as we.
That decision Raj just spoke about we then assess where are the opportunities to you.
Take provide more certainty that our profitability and remember this is our first year breaking through into adjusted EBITDA positive territory and growing profitably our profitable growth from here. So we look at it as well.
There is the call at least efficient marketing spend in particular to acquire revenue and where can we take some of that de risked some of that top line and also ensure the bottomline and so when we looked at that we looked at a few places number one we looked at the <unk> business, which we guided last quarter that we expect to grow call it mid <unk> or even higher.
Our <unk> growth rate, we're dialing that back closer to its funny with our guidance today that allows us to pull back on some associated marketing spend and put that towards the bottom line. While we also.
The top line of the business Secondly, we talked last quarter a lot about platform connected revenues remember those are expert medical opinion virtual primary care and partner revenues on top of our advocacy platform. Those revenues are growing rapidly over the past three years and we will continue to grow.
Rapidly this year, but they do have associated spend in order to do outreach to members and driving both to those certain programs. We can similarly look at where we can dial back.
Some spend at the margin in order to drive those revenues, while still growing them attractively because there are two areas and then to your third point around.
Is there pricing pressure in the market in large part we see prices holding up where they have been we have seen a couple of larger deals.
Probably seen about the calpers deal that had a particularly aggressive pricing profile that we have discipline around where we are willing to go on deals in order to.
Our commitment to the business in terms of delivering value to customers and members and also to shareholders. So we are maintaining all of that profile. While we go after but in large part the commercial market deals we're seeing pricing.
Relatively steady to where it's been over the past couple of years.
Thank you.
Please standby for our next question.
Our next question comes from the line of Craig Hudson back with morning, Morgan Stanley. Your line is open.
Thanks, So a question on the platform connected revenue usage based.
Yes.
Can you just talk about on this new guidance just what your visibility is into those drivers number one and then on the advocacy front what are your expectations for this year and kind of on a multi year like like what's the growth rate trending to that core business.
Thanks for the question Craig So first of all on the usage based revenues, we have good visibility to those particularly again when we we dialed back the growth rate a bit that gives us even more confidence in being able to see those so we have.
Those have been growing we've mentioned in the last call. They doubled two years in a row, we expect that to continue to grow more rapidly than the rest of the business. Even this year again, when we look at that on a cohort basis. We had good visibility we know that when a new customer launches with expert medical opinion on top of an advocacy platform.
For example, we can predict with relative certainty around where we will get to in terms of that threshold in year, one and year, two and year three and when we push on that for members who need it we can drive that growth rate higher and that's very much where I'm talking about where we can pull back a bit on the associated.
Average spend.
With respect to the advocacy market again, we think of it the business overall in terms of the <unk> distribution.
And then D C on the <unk> side, it's often advocacy sold in connection with other capabilities emo, BTC and and partners and that business has been growing.
On the business, which is all the <unk> revenues has grown 20.
20% to 30% over the last couple of years and we're optimistic on the growth profile for this year again.
Again, all of that in the context of the growth rate that we're laying out today we.
See that.
Consistent with the growth rate of the overall business in terms of the opportunity of this year.
Thank you.
Please standby for our next question.
Our next question comes from the line of Michael Cherny with Leerink Partners. Your line is open.
Afternoon, Thanks for taking the question.
I want to go back to Richard's question and in particular the difference in the in year revenue changes were so used to your model being one with highly predictable revenue, where the big variation tends to be outperformance, which we saw this quarter executing ahead of pace for your customers. So as we see the difference in <unk>.
<unk> and the <unk>.
Derisking dynamic for the year, how much of that is tied specifically to advocacy. The reason I'm asking that is I am not used to seeing a meaningful deviation.
For our full year revenue on advocacy based on the <unk> dynamics either in my view, either lost customers, which you could have walked away from or something tied to the risk weighting on the performance guarantees. So I just want to make sure we can appropriately bridge.
The whole Thats fine tune of $5 million revenue change not a huge number at the midpoint, which I understand the why behind it specifically type of efficacy if we can.
Thanks for the question Mike I'll start this is Steve Yes, you should think of the change in the revenue outlook is primarily usage based revenue. So again those would be visit fees of our case rate is and in this case, we're talking about and the direct to consumer business dialing that growth rate back to Phil.
Speaker Change: Attractive growth rate of about 20%, but dialing that back there's associated marketing spend that that big.
Speaker Change: A big chunk along with that.
That's a big part of that revenue reduction as well that's one secondly platform connected revenues, which would sit on top of the advocacy.
Or platform revenues are the other big part of the biggest part of the revenue reduction here. So think of it as the usage based revenues not necessarily the <unk> that youre talking about associated with traditional advocacy customer base.
Those are the two core drivers.
Thank you.
Ladies standby for our next question.
Our next question comes from the line of Jeff Garrow with Stephens. Your line. Your line is open.
Yes, good afternoon, and thanks for taking the question says as you've talked about Derisking. The growth outlook. One thing we haven't heard about is any change in assumptions around retention for bookings growth.
Retention I think previously you talked about next year or I guess this current year and going forward returning to 90% plus gross dollar retention and bookings growth.
Roughly you alluded to growth and in line with your long term target so with the change in this year's revenue growth outlook and the moderation of longer term revenue growth expectations will want.
To see if we could dig deeper on those key assumptions around retention and bookings growth.
Yes, thanks for the question Jeff.
Nothing really changes as it relates to our view on gross dollar retention from what we talked about last quarter and the ongoing view there.
We deliver a lot of value for our customers and.
We do a great job retaining them on a long term basis in terms of our bookings growth.
As Steve mentioned in his prepared remarks.
Overall demand environment for the services remains strong we continue to grow we've closed more than our fair share of business in the early stages of the year and we expect <unk> to be successful and we would expect bookings on an ongoing basis to be pretty close to the growth rate of the business on an ongoing basis and so.
You saw bookings growth from 54% to $86 million over the last three years.
Reflective of that demand environment, So really where were you looking for any changes in the way we're thinking about guidance. This year as Steve mentioned this year and next year, what we're really saying is we're de risking the usage base component of the revenue stream by de risking we're saying, we're only going to spend X amount of dollars are the appropriate amount of <unk>.
In order to drive those usage based revenues and to the degree there is upside there.
There we are.
We think those will be assets prices for our investors and shareholders.
Yeah.
Thank you.
Ladies standby for our next question.
Our next question comes from the line of Ryan Daniels with William Blair. Your line is open.
Hey, guys. Thanks for taking the question I'll continue down this path of questions on the revenue outlook I think last quarter, you actually mentioned, 30% to 35% usage based and 65% to 70% access fees and we could probably back into this but I'll just ask directly on the call how should we think about those percentages.
This year and then maybe going forward given an increased focus on marketing yields and kind of getting the appropriate counts in the door.
Thanks for the question Ryan.
For this year you can still think of those percentages as rough ranges, although I'd say for the usage based revenues towards the lower end of that range for this year and then given that those usage based revenues which include.
Platform connecting revenues and <unk>, which is growing faster than the business that those will climb up over the coming years, but.
Call it the lower end of that range this year about 30% 35%.
Our current expectation.
Thank you.
Please standby for our next question.
Our next question comes from the line of Helen Zhang with <unk> Securities. Your line is open.
Yes. This is <unk> Singh from <unk> Securities I, just wanted to double click on the lowered expectations plus care, maybe if you can provide some color how much of that is related to lack of DLP rundlet revenue, which actually did help you guys last fiscal year, because benadryl clients charter supply I'm glad to be out on that.
Topic on the Raj I'm curious on your thoughts around your conversation with employers Great management management GMP, but in general given your loan partnership recently announced.
Yes.
The decision to Raj. Thanks for the question, we de Levered the decision around how we're thinking about consumer revenues largely around customer acquisition costs and capping at what level. We think the right long term lifetime value of that customer versus customer acquisition cost ratio is.
And being very very disciplined about that we have in the past.
But ultimately looking at that as one of the opportunities to drive profitability alongside revenue growth. So that's the fundamental driver of that change.
Reiterate.
I spoke about early.
The first question.
We made a choice in terms of the way, we're thinking about our strategy all about ensuring we're going to deliver attractive growth rates with certainty our bottom line performance.
Based on the way we believe.
The way, we believe we have to take care of all of it.
Relevant stakeholders of our business.
As it relates to GLC was it continues to be a driver.
Interest in the enterprise space customers are buying our solution because they want to control that among other costs of the business.
It's also a driver of interest from a consumer perspective as well.
We've talked in the past that.
It is a driver of volume in both areas in the enterprise space, though remember we are abiding by the policies associated with that our customers derive for their for their members, including things like Preauthorization etcetera.
To tie out to the customers trend line performance requirements et cetera.
Nothing tangibly differ in terms of the demand environment associated with <unk>, one and I wouldn't attribute any of what we're talking about here today to GOP was.
Thank you.
Speaker Change: Please standby for our next question.
Our next question comes from the line of Jessica <unk> with Piper Sandler Your line is open.
Hi, Thanks for taking the question.
I was hoping to dig in a little bit about the calpers gilbertson details out there publicly.
Another navigation vendor is able to offer a five 5% cost trend target in 'twenty five.
Lowering about 60 bps each year from 26 to 29.
Hi, guys.
Luckily those cost trend targets are those guarantees as aggressive how close can you guys get to that.
Approximately 60 basis point cost trend improvement every year and just are you enhancing the platform are making are or kind of endeavoring to match those types of targets.
And just curious on your views on what is achievable and anything you're doing to kind of.
If that's what the competitors offering and that's what the market kind of looks like at this point how quickly can you all get there. Thanks.
I appreciate the question Jeff.
A few thoughts first.
Warming trend line as it relates to cost trend is one of the factors that are associated with customers, making a buying decision.
In the case of <unk>.
Or is that deal you specifically referenced.
A few things to note.
Large opportunities like that one oftentimes at the customer and the consultant of the prospect of a consultant dictating staffing ratios. They say the number of interactions per person et cetera, putting extraordinary depth into what.
What they require from a service delivery perspective, including staffing ratios.
We built that business, we bid it at a level that was associated with our standard performance guarantees and in the neighborhood, where we traditionally are as it relates to the percentage of fees at risk. If you review what the ultimate winning proposal was.
We think it's safe to say it was tangibly lower and by Tangibly, I mean materially lower from an all in fees perspective number one number two it put a significantly higher amount of their total fees at risk and number three it made an assurance around trend line or we came.
Driving trend line guarantees like the one that were described there of course, we are on our capacity to do so depends upon how the customer can figures our solution. The way we deliver the solution engagement rates, we delivered for the solution.
Doing so when we're delivering at.
So let's call it.
Materially materially lower topline.
Fees and.
With an extraordinary amount of fees at risk we didn't feel in our view was it was appropriately balance all of our constituencies shareholders employees customers members partners.
So we chose to bid at a higher much higher number with less fees at risk.
Speaker Change: And.
Performance guarantees that we put at risk we think are very competitive to the way the customer ultimately purchased so I wouldn't say that was the driving force of why the customer made the selection that they made up why our other companies potentially being more aggressive from a topline fees perspective and from a fees at risk perspective.
Can't answer for you, but what I can tell you is in these types of opportunity for going to be disciplined about the way we approach things while we have seen in the past is when companies have been on disciplined two years from now three years from now those deals come back our way we've seen it happen multiple times over the last five years.
And we expect good weather this deal or other deals, we'll see it happen again overtime disciplined.
Behavior from a delivery perspective yields long term businesses and and so answering your question is yes, yes, we're already capable of delivering those kinds of trend line.
Speaker Change: To do so.
We're going to do it by delivering a service we know will make our customers happy and that we know we can deliver profitable.
Okay.
Thank you.
Please standby for our next question.
Our next question comes from the line of Ryan Macdonald with Needham <unk> Company. Your line is open.
Alright, Thanks for taking my questions Raj <unk>.
Steve I'm curious as we've talked to more of the digital health point solution vendors more recently it seems like that one area of surprise as we've gone through this year has been around.
Employee staffing levels at customers with sort of the layoffs to start the year and some of the turnover there.
Maybe maybe an unexpected impact are you seeing any of those impacts in terms of employee counts in your calculation with the out your guidance or updated guidance and then secondly, as you talked about pulling back on marketing costs.
Within the customer base is there any risk here to your ability to hit some of those performance guarantees targets that are assigned that are associated with engagement as we go through the year based on some of the pullback in spend here. Thanks.
Yes.
Alright, Thanks for the question, Steve So first point around.
Employee staffing levels, we have seen some noise about we've seen some some customers thinking an employee base. We also have seen offsetting.
Modest growth, but growth to offset that in a sense of our same store member growth across our book has remained relatively flat over the last couple of years, including this year to date.
So that's not a large impact we also don't built in an assumption about massive growth there in the current macro environment.
Environment sure.
Your second point about marketing spend and being able to achieve operational PGS are even savings PGS.
We've taken that all into account and are not not reducing to that level, but we're reducing as call. It the marginal incremental marketing spend to drive incremental usage and incremental revenue to hit the higher revenue goal that we have.
Reduced today.
Not not to put our current customer base.
Risk in terms of operating <unk> or or savings PGS.
Thank you.
Please standby for our next question.
Our next question comes from the line of Stephanie Davis with Barclays. Your line is open.
Hey, guys. Thank you for taking my questions.
Given the funding environment and your comments, Ron not pursuing unprofitable business as being a little bit.
I wanted to ask this more directly.
Are you still seeing any rational competitors in the market driving this aggressive pricing or.
Or are you starting to see limiting background customer willingness to pay due to macro.
Since you've talked a lot more about your opportunities within your base versus outside of the days do you have any opportunity to <unk>.
Further in the cross selling with your SG&A dollars, maybe benefit next years growth.
Your existing base.
Thank you for the questions.
With the.
The second question first.
Alright.
Yes.
Let's.
Start with the second question first.
We absolutely have an opportunity to continue to grow as the customer base last quarter, we talked about the growth in platform connected revenue platform connected revenues continue to grow tangibly and outpace the overall growth rate of the business from connected revenues is really where you are looking at growth inside the customer base.
Other companies different companies might cross selling so that's part one.
Answering your question number two first question number one are we seeing.
Speaker Change: Accommodation or standardization of pricing in the market were by and large we're seeing rational pricing in the marketplace. The answer to that question is yes.
That said there will be there will always be opportunities where companies might see might see places where they might be more aggressive or tangibly more aggressive for.
For whatever reasons their business might dictate and in those situations.
Well, we've decided and we've decided this over the last several years.
We're building a long term business. We're building a long term business that we think can grow attractively with disciplined because most customers not all customers, but most customers.
We will look at track record, we will look at reference ability, we will look at historical performance against trend line improvement and Raj and performance guarantees will look at consulting relationships than consultants credibility associated with the services that we deliver and choose the market leader at price point.
That can sustain the business were attempting to build.
Nine times out of 10 eight times out of 10, we see that behavior manifesting in the marketplace. There will be an occasion deals that are one off were at where the opportunity is large and some competitors are coming in.
Materially lower than what other competitors are coming in at.
When those happen, we maintain our discipline run our business and acknowledge that over time all of these things tend to work themselves out of the year.
Thank you.
Please standby for our next question.
Our next question comes from the line of Stan with Wells Fargo Securities. Your line is open.
Hi, Thanks for taking my questions, maybe circling back to turn its consumer plus care Guy that 20% growth can you just walk us through how much of that growth is expected to come from member growth versus pricing.
Hey, Dan this is Steve.
You can think of that primarily as member and visit growth and thats across all the different reasons that consumers come to see a doctor whether whether it's.
Prime for primary care Doctor to be Theyre launched you know provider or it's at an acute need then enroll into becoming.
Plus care patient or weight loss <unk>, one type of opportunity.
But predominantly you are looking at increases in visits and associated subscription fees.
Thank you.
Please standby for our next question.
Our next question comes from the line of David Larsen with BTG. Your line is open.
Hi can you talk about the nature of the timing of the revenue impact in the quarter I'm, assuming that that was a performance guarantee is that correct and if so can you size it.
Speaker Change: And then also I think.
One of your analyst days, you had guided to $1 billion in revenue for fiscal 2009.
That sort of withdrawn I'm assuming it is.
And then can you just sort of comment on the broader market. It seems like we're in an unusual period Walgreens had a tough quarter. This morning traded down 25% health plans are under pressure with utilization in Ma rates.
Is that going into like potentially a more difficult.
Operating environment, where theyre driving tougher pricing just.
Thanks very much appreciate it.
Thanks, Steve This is Steve I mean, you have a few questions in there in Q1.
As longer term outlook, and then maybe more of it in an environment question. So first of all in Q1.
The timing revenue recognition timing, we're talking about is predominantly a performance guarantee.
Type of item that was timing that we would've had in our models originally to have been earned over the rest of the year. It was about $6 million. So Mike referenced in the call to the fact that X that number we've been.
About the middle of the range of the guidance that we provided and you've seen that people are from a state we've had times in which we when we have a performance guarantee or other revenue recognition items associated with success fixed accounting essentially we're going to call that out so the street understands.
The revenue versus the guidance and so that's why that is most of it would've been in Q4 some of that would've been in Q2, and Q3 as well, but the bulk of it would have been in Q4, secondly, with respect to our longer term plan. If you think that mid teens growth rate and run it out you would see a $1 billion plus coming come.
Going through in about a year later than that but importantly, our view is we will continue to drive EBITDA growth and adjusted EBITDA growth along the same pattern that we laid out before so we would expect by that five years out that we will achieve that.
15% to 20%.
Range and growing thereafter.
The long term model that we're seeing today with this guidance dialed back towards the mid teens.
Speaker Change: With respect to the.
Speaker Change: I haven't had a chance to read up on the Walmart.
Walgreens note, but in terms of the overall environment I think the biggest thing we're seeing is employers recognizing that costs are continuing to rise. This year, we expect high single digit growth in healthcare spend which continues to put at the forefront companies like accolade II.
Can provide a service that when combined can get members to better health care. It do so at lower cost that continues to drive the opportunity for us so.
That's a bit on your three questions there.
<unk>.
Thank you.
Please standby for our next question.
Our next question comes from the line of Jack Wallace with Guggenheim. Your line is open.
Hey, Steve Thanks for taking the questions.
Just to double click again into the.
The guidance and the environment here, how should we think about your win rates.
Your expected win rates this year.
Further than that how much of a potential change on lowering of when rates are going to be.
Accolade related in terms of not wanting to or being on.
On.
Unwilling to drop price.
You put more fees at risk in the deals so let's call it non regrettable losses versus regrettable losses were.
Youre bidding you think competitively youre ultimately, losing to a competitor or.
The company not choosing the knockout with advocacy partners. Thank you.
Yes, thanks for the question Jack.
The vast majority of our pipeline continues to behave.
As it always has and we continue to win.
I'll call. It a majority of the transactions that we play in we would expect that win rate to continue.
We've had this conversation periodically Jack with the market, there's been opportunities, where we've talked about hey, that's a deal. This particular, this particular discount versus where we were higher priced than the competition.
I think.
Sure that we're all aligned were higher principally competition, but offering very competitive.
Performance guarantees and incentives associated with achievement, but acknowledging that in a deal or in a specific deal where the customer is specifically mandating staffing requirements et cetera.
Pricing is.
<unk> should be relatively consistent across the board on occasion, it wont be and customers are going to have to make a decision process is going to have to make a decision about who they still can.
Tangibly reliably deliver that service on an ongoing basis. So those one off situations, yes, we're going to stay disciplined and we might put ourselves more at risk of not taking on that business, but I would call that to your point not regrettable.
In the in the in the vein of regrettable losses.
We would not expect the.
The take rates of change at all our team continues to be very competitive our product continues to be differentiated.
Speaker Change: And we will keep winning our fair share of those deals and then in terms of no decisions. Okay.
The things I tried to call out in the prepared remarks. This is now a category that is defined created and growing every single year has been for the last five years.
So.
No decision has continued to decline as a percentage of the overall pipeline, but nonetheless, we will see some percentage of Prost.
Prospect.
Using carrier solutions at lower prices, but thats always been the case nothing new there John.
Thank you.
Ladies and gentlemen, im showing no further questions in the queue.
I'd now like to turn the call back over to management for closing remarks.
Thank you all for being here, we look forward to the follow up conversations.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now.
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