Q3 2024 American Well Corp Earnings Call
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by these gentlemen, good afternoon. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the M-Well Third Quarter 2020 for earnings call.
All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. And if you would like to ask a question during that time, simply press the star key, followed by the number one on your telephone keypad.
If you would like to withdraw your question, press star 1 a second time. We ask that you do please limit yourself to one question.
Thank you, and I would not like to hand the call over to Sue Dooley, head of investor relations with Amwell. You may begin.
Hello everyone, welcome to Amwell's Conference Call to discuss our third fiscal quarter of 2024. This is Sue Dooley, a VAML investor relations, and joining me today our Amwell's chairman in CEO Dr. Ido Schoenberg, and our CERSHORN, our CFO.
Earlier today, we distributed a press release detailing our announcements. Our earnings releases posted on our website at investors.amual.com and is also available to normal news sources.
The conference call is being webcast live on the IR page of our website where a replay will be archived.
Before we begin our prepare remarks, I'd like to take this opportunity to remind you that during the call we will make forward-looking statements regarding projected operating results and anticipated market opportunities.
This forward-looking information is subject to the recent uncertainties described in our families with the SEC. Actual results or events may differ materially. Except to took care of by law, we undertake no obligation to update or advise these forward-looking statements.
On the call, we'll refer to look gap and bond gap by natural measures, a reconciliation of gap to non-gap financial measures is provided in our posted earnings release. With that, I would like to turn the call over to Ido.
Thank you Sue and good evening everyone.
To begin tonight's call, I would like to take a moment to welcome Mark Hirschoen to Amwell, as our chief financial officer.
Many of you may already know Mark.
We have known him respected mark for many years and believe he is the right leader for Amwell at our current stage of transformation.
for his contributions as Amwell CFO into working to ensure a seamless transition.
Q3 was a busy quarter for our company.
We continue to execute on the key strategies that support our path to case flow positives.
Here are the headlines.
First for the Defense Health Agency, we announce the goal that we convert casual visits in late August.
With our latest partners, we are proceeding according to plan towards full enterprise goal-life anticipated in Q4.
Second, we have continued to align our course structure to fit our strategy with great focus on efficiency and effectiveness.
And finally, we have positioned our growth organization to deliver high-quality growth in 2025 with an ion higher margin revenue.
23, we delivered value for our clients as we maintain and grew existing deployments while implementing new logos.
Our solution is resonating in the market and some of the patients and provider ratings across converged deployments remained well over 90%.
Now let me go into a little more detail on this progress.
We reached an important milestone in the initiative of modernizing the military health system for defense health agency, working closely with our latest partners.
In July we previously shared that we went live with our behavioral health programs.
The first major milestone in this initiative.
Today we can add that we have completed the second milestone.
Convert scheduled and group visits are now also live and being used by members of the armed forces and their dependents.
Based on this progress, we are planning for Enterprise Y deployment for the DHA by the end of 2024.
Serving a women and many new uniforms, is a true honor and privilege.
As we strive to offer them the best possible care, we believe that together with A Laedus partners, we are also unlocking exciting growth for opportunities for our well in the government sector.
Next, implementing our course-based transformation is reflected in our improved 2024 EBDA guidance that was reported in tonight's release.
We are focused on this metric that adds visibility to our financial strengths.
especially when you consider our strong bondage sheet with ample cash and no debt.
Mark will provide you with no details shortly.
Finally, we are driving growth changes, resulting in good visibility, into accelerating high margin growth in 2025.
Our pipeline quality is improving and RFP traction is increasing.
For example, notable Q3 expansions included Sanford Health and Wellstar for Future Nursing.
We also had a sizable win with capital Blue Cross for integrating Sword Health, Muscular Skeletal Program.
In parallel, we documented significant renewals, including based aid health, advantails, and children's medical center of Dallas.
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Rating up my remarks, I would like to speak for a moment about the market for digitally enabled healthcare.
At this time, it is evident that more and more people are going online first for their interactions with their healthcare providers.
Based on our recent discussions with our clients and partners, it is clear that they expect this secular trend to accelerate over the next few years.
They also believe participating in the opportunities it creates is critical to their business.
yet realizing that Didou Toley Naval Care is difficult.
Pairs struggle with offering a true digital enabled whole-person solution that spends across the care continuum and includes effective care orchestration.
They are also hard pressed to report and prove ROI for clinical interventions.
to
Provider is also looking for ways to participate in this new digital enabled care transformation, but want to ensure that patients are engaged while the work will be able to build a new system.
Consumer Equivision is expensive.
and Did Houston enabled programs are fragmented and constantly evolving.
Also, the current state of both patient and provider experiences are isolated, come the sun and not always personalized.
We believe that our Converge platform addresses many of these pain points for our customers and helps them realize their digitally-enabled care aspirations.
We empower them to form a single clinical consumer engagement pathway to many, if not all clinical programs.
We aim to enable the provision of exceptional patient experience for providing efficient engagement within the broader care journey.
then through a layer of navigation and orchestration capabilities and facilitated access to a growing number of amyl-insert particle-input programs.
In this way, we offer value to parents during employer accounts, patients and the clinical program innovators who seek to expand their clinical footprints.
Finally, through offering clinical programs for health systems, we aim to complement the HRs in areas that relate to patients engagement and health system efficiency.
and Bedding Providers EHR. We created pathways for pairs and employers to seamlessly offer hybrid care programs featuring trusted provider brains.
In summary, we are pursuing a well-defined and singular differentiated approach to the market.
It empowers participants in the healthcare ecosystem to realize their efficiency gains and improve outcome that this new digital enabled healthcare landscape promises.
With that, I would like to turn to Mark to review our financials, some key metrics and our guidance.
Mark?
Thank you, Ido, and good afternoon to everyone on the call.
It's a real honor to be back in the CFO seat at such an equal to exciting and critical time to support Amoel's mission of enabling the digital care aspirations of healthcare organizations. I'm inspired to move the company forward and to constructively engage with all of you on this exciting journey.
I want to thank Ido and the board for their vote of confidence and most importantly, my new Ann Wild colleagues who have welcomed me with genuine and through theathom. The team here is so very talented and great teams win every time.
I'd like to first focus on Amwell's natural results and visit metrics from our third quarter. Then I'll review our guidance for the remainder of the year.
Most importantly, we have demonstrated continued progress with our most strategic objective. Specifically, the cost alignment initiatives that reinforce our confidence and our path to being cash flow positive in 2026.
Furthermore, I will also address some headwinds in our visits business.
So now let me share some of our Q3 Finanza results.
Total revenue was 61 million for the quarter, which is flat to the year ago quarter. Subscription revenue was 26.2 million in Q3, down 5% from last quarter.
As I was mentioned on the Q2 results call, we had a $1.5 million benefit related to the change in the timing of our revenue associated with certain contracts. So Q3 is in fact in line with our expectations.
We expect the material uplift and key for a subscription software revenue and we expect that total subscription software revenue for the year will come in at approximately flat to 2023.
Turning to visit metrics, we completed approximately 1.4 million visits in the third quarter, which is 4.6% lower than a year ago. We've seen some market-wide and client execution-related softness in visits and expect this to continue through this Q4.
Scheduled visits represent in 70% of our toll visits, continuing to highlight the evolution of our company from providing virtual, on-demand urgent care to a platform provider enabling hybrid care.
Visiting the Aluman Converge helps steady at approximately 70% of total 2,3 visits.
AMG Visit revenue, trended slightly higher than last year at 27.5 million in Q3. However, the number of AMG visits was slightly lower than a year ago.
average revenue per visit was 83 dollars, which is 7% higher this quarter than last year.
This increase was driven by a mixed shift within AMG visits focused on specialty programs. Our AMG business continues to be strategically important to enable inclined expansion and supporting new client wins.
Our Services and Care Points revenue was 7.3 million to the quarter, versus 6.6 million last quarter. The increase was driven primarily by increased professional services associated with our government business.
Historically, our services and Kent Points revenues vary from quarter to quarter.
The nature of our business drives variable revenues from customer buying patterns for marketing programs and for care points, as well as the timing of professional services milestones that precede deployments.
Services and Care Points revenue are projected to represent approximately 10% of our total 2024 revenue.
Turning to Gross Profit, our third quarter gross profit margin remained at 37% flat to Q2. For the full year, we expect our gross margin to approximate the levels we saw in 2023.
My annual colleagues have done excellent work towards normalizing R&D spending. Despite gearing up for our government business and all the related spend, our gap R&D expense and Q3 declined 5% compared to Q2.
This is 6% lower than the previous quarter after adjusting for $4.7 million of capitalized software development costs.
Compared to a year ago, capitalized software development costs as 11.5% lower. We continue to expect total R&D expenses to decline at a mid-teens percent this year versus 2023, with much of the remaining decline to be in Q4 and in the Q1 of 2025, as we proceed to complete the bulk of our software configuration work for our government customers.
Sales and Marketing expenses were $16.8 million.
That's $1.6 million lower than last quarter.
Driven by our enhanced focus on cost initiatives. Overall, we expect Gap Sal's and Marketing Cost of the Klein mid-Single Digits year over year.
Consistent with Amwell's other primary cost components, G&A expense was 25.2 million, which is 3.3 million lower than last quarter. Every call that our Q2 G&A expense was artificially high due to a one-time transformation charge.
Fortunately, we are now experiencing reduced DNA expenses as we realize the benefits from our transformation initiatives and we expect to further reduce our costs as we continue to organize the company around a new lower cost structure.
Lastly.
As far as non-cash charges are concerned, we don't expect any material changes in this category through year end. There's a great energetic team here at AMwell that is fully aligned with creating the novel, healthcare products, services, and efficiencies that we successfully deliver to our clients every single day.
We're delivering on the promise of our planned cost initiatives and we are well on our way through reshaping our foundational cost basis.
As a result, adjusted the EBITDA for the quarter was negative $31 million, versus negative $35 million last quarter, and negative $39 million for Q3 in 2023.
A quick note on our balance sheet. We ended the third quarter with $245 million in cash and marketable securities.
and ZeroDead. Let me wrap up with a few words on our outlook.
While we had made significant progress this year towards ensuring a path to being cashflow positive in 2026, I did note earlier that we have seen softness and visits as certain clients face their own Executional challenges in the market.
With this in mind, this afternoon we are revising our 2024 revenue guide and based on our strong execution on costs, we're also raising our adjusted EBITDA guidance.
We now expect full year 2024 revenue to be in the range of 247 to 252 million.
Importantly, the strategic elements of our revenue-based remain on track and we continue to anticipate subscription revenue to be roughly equivalent to what we generated in 2023.
I will revise range for AMG visits is between 1.4 and 1.5 million visits compared to the previous range of 1.6 and 1.7 million visits. And now for our improved guidance on adjust to the EBITDA.
Now that the third quarter is behind us, we have better clarity on our expectations for Q4. So we are bettering our guide for full year 2024, Adjusted to Ebeda.
To a negative 142 to 137 million dollars from our prior range of negative 150 million to 145 million dollars.
We are currently in the process of planning for next year and will provide 20, 25 guidance when we report our Q4, 20, 24 results next February.
We are encouraged by the strides we have made in our business and in Q3 we made solid progress towards the goals which support our confidence in our path to generating positive cash flow in 2026.
Thank you all for listening. With that, I'd like to turn the call back to Ido for some closing remarks.
Ido?
Thank you Mark. With Q3 behind us, we are well on our way to executing the key strategic deliverables for the year.
These include excellence in our work for the government.
our sales transformation efforts and the meaningful realignment of our co-structure.
All of which propel us a long-distance pass to clear its form in 2022.
We will now open the call for questions.
Operator, please go ahead. Thank you.
Speaker Change: You, at this time I would like to remind everyone in order to ask a question for star and then the number one on your telephone keypad. To be able to take as many questions as possible, we ask that you please limit yourself to one question. Again, it is star one to ask a question.
and your first question comes from the line of Craig Hittenbach with Morgan Stanley. Your line is open.
Yes, thank you. You know, on your comments of focusing on high quality, profitable growth in 2025, can you just expand on that? Is that a comment on just competitive backdrop that you're seeing or anything and well specific in terms of strategy that you're gearing towards that for next year?
by Greg, it's definitely the letter. We did a lot of work focusing on the strategy.
that enhances our ability to grow our core services that are subscription-heavy for our flexible marketing both payers and providers.
And from what we stand today, we are very good with the ability into high quality growth already in 25 that is dominated by subscription revenue and is less vulnerable for a visit of the next year.
That's not only true in a way of, one time, we believe that's going to be a multi-year trend going forward, we're enabling functions of our platform of converge and related services are going to be the whole mark of what we sell.
Speaker Change: a DNF-sizing and other businesses and focuses on less-the-creative and less relevant to our overall strategy.
That's helpful, thank you.
and your next question comes from the line of Eric Persher with Neffron Research. Your line is open.
Hi, this is Alfonfer Air, thank you for taking our questions. Mark, I just want to clarify your comments around the Caspo Puzzle for 26. Seems like you're preparing your...
the company still has that target. And when you look at the past of the chief in that target, let's have a risk do you see?
Speaker Change: Thank you.
Sure, I am confirming the 2026 cash flow positive results for the year.
and the execution risks associated with achieving that target will likely be twofold. One is obviously...
Seeing some of that new revenue come together as Ido alluded to, we've got great visibility into 2025.
Revenue will need to see some additional revenues come together to achieve the type of gross margin levels we'll need at our new stabilized cost base.
So it will continue to be a focus.
on achieving overall revenue growth.
Speaker Change: Thank you.
Speaker Change: You're welcome.
and your next question comes from the line of Ryan McDonald with Needham and Company. Your line is open.
Thanks for taking my questions. Maybe just to get a clarifying point on the as you're looking at the DHA contract rollout I think that obviously the expectation on long has been sort of a fourth quarter enterprise-wide deployment But I think you heard the comment by year-end
Should we be reading into that at all as sort of maybe a slight push back in that the point at time frame and then as we think ahead to 2025, just any update on sort of the contract renewal process with the DHA as well. Thank you.
I don't know if we did not mean anything by the no-microchure we used to describe the end of the year. Overvolved, we did deploy this very large project on time with good results and hopefully we have to be customers and partners.
as we continue. So we have all the reasons to believe that the important milestone of going enterprise wide is going to still be an intense, on time.
Having said that, the final decision of an exact timing in scope is always with the customer and there could be some changes, although we don't have any reason to believe that there will be changes at this time.
As you remember, the current funding vehicle that we are using continues until roughly next summer. And in order to continue, it needs to be renewed by the DHA.
We are a partners with the light of partnership and they are the primary on this relationship. Recently the DHA announced it in 10th.
to offer sole source to Lidus and even name they are products.
Speaker Change: in that intent.
To be clear intent is not yet final. This is a process that needs to go through, but is likely to get finalized.
in the not so distant future.
Speaker Change: I want to finalize and assume that everything goes well, light os will win the source source opportunity. And we don't see any reason to believe that we will not continue to be part of the project along the long term.
Speaker Change: [inaudible]
our check record of deployment.
And your next question comes from the line of Jessica Tasson with Piper Sandler, your line is open.
Jessica Tasson: Hi guys, thank you for taking the question and Mark and Graduation from the VA Miss Deep.
I was hoping you guys could just help us understand how to build a cloud, kind of interact or get integrated with other virtual behavioral health providers in a given network.
Speaker Change: Basically, can you help us understand why the code distance of Robert Cloud and an alternative virtual care provider in the behavioral health space would not be cannibalistic and instead might be complementary.
Sure, I just think that's an interesting question. I would generalize it a little bit and then I'll answer you specifically.
Our main purpose is to also our customers, the single of pathways for consumers.
who basically engaged in the routing to a growing number of clinical labor programs.
Some of those programs are offered by Amwell, like Sylvester Klaude, or Urgent Care, or VirtuaPenure Care, or Serapio, or Milleinanders. Others are offered by Serd parties, in some cases, some are even offered by only clients.
Speaker Change: A.R.O.L. is really to make sure that we match the patient.
with the right-air program. A bringing this patient to the program with as much information to see the ground running and start the program well.
Speaker Change: and be able to move from one problem to another in a way that takes the whole person in account and is able to report on the ROI back to the sponsors.
Speaker Change: Siegge Cloud, which was selected by the DHA in which we sent example, but many others, like the NHS and so on, as the proven clinical program, it would very good return over many years.
So we feel good about that to explain the program. However, it's very possible that some of our customers would have alternatives to the program that they prefer for various reasons.
and that does not cannibalize into the main very co-position of ambel, which is the orchestration of the singular experience and the singular care orchestration to a large number of clinical programs.
having a lot of native programs fully embedded in what we offer really helps many of our customers to sign a one-stop-stop agreement with us so we think it's an advantage, but we fully expect some not-to-use all our programs and silver cloud big, good example.
Thank you.
And your next question comes from the line of stand there and stay in with Wells Fargo. Your line is open.
Hi, thanks for taking my questions. Mark, welcome. Ido question for you on the platformer's of potential DHA. So when you're talking about orchestration and routing capabilities, you're routing to these third parties.
Presumably you're also providing revenue opportunities for these third parties. Do you have an opportunity to monetize that routing capacity in the sense of getting a finder fee in those instances? Thanks.
Absolutely, I don't know, yes, as you know, the cost of acquisition of a patient is very high and very often those programs really need to engage with those consumers directly and that's expensive and simply hard because access to some of those individuals is not always available.
Also trying to engage into a single topic like that panel, single literature, is much more difficult than engaging to a pathway that can take your entire set of needs. The very proposition is not just stronger.
So we together with our customers create one pass.
and then through this one part we route a division to the program. We also allow for passing information when applicable and getting information back to us so we can turn back and offer a report.
Speaker Change: to the fair sponsors that is unified, which is harder than it may sound.
The Natal V is that a position of the consumerist life.
who any clinical program vendor is much cheaper and the stickiness is much higher. And eventually we already have agreements in place.
with Longlist of the partners.
like a sword that we announced tonight, or Dario or many others, and we do revshare some of the revenues to finance the acquisition of the patients and the integration of reporting in other elements that we provide to them.
Speaker Change: and many a while ago I give the analogy of an App Store and there is a lot similar in that way that the revshare opportunity is there and we fully expect that to grow over the years to come.
So let's put a final point on it. You're going to start a...
kind of a steady run rate from DHA specifically, but this would be incremental right these finder seas that you would get by pushing volumes or sort of barrier would have you. That would be incremental to the subscription revenue you're generating. So correct?
Speaker Change: Good.
No, so I give you a general answer, is it relates to our relationship with clinical program.
Speaker Change: The DHA agreement is really enabling the connectivity between DHA military providers and men and women and uniform in their family around the globe.
We are not selling any specific therapy with exception to make the programs like Silver Cloud.
when we currently are agreement is comprehensive.
Speaker Change: Long list of automated programs and automated behavioral health programs of field-aclared, plus many other features and functions are all baked in.
Speaker Change: into one agreement.
that will go live globally, hopefully, by the end of this year. So the nature of relationship is much more comprehensive here, and much more binary, which is different from how we work with other pairs and providers.
Speaker Change: but thank you so much.
and your next question comes from the line of Jolendra Singh with truest securities. Your line is open.
Speaker Change: The End
Thank you and thanks for taking my questions and upon you if I missed this but I want to talk about You know GLT one medication and the eight management solutions that this is clearly one a major focus for employers and payers these days I know this is not your core focus, but just curious if you see any opportunities in that area given yours
Speaker Change: and Pierre Partnerships in either in terms of working with PBMs or various third party weight management vendors. Any thoughts that will be available.
Hi, Jen and Rob's salute, so maybe referring back to my answer with this, then really demonstrate the same idea.
We don't necessarily have any expertise or advantage in providing GLP, and we can manage the solution in our cells.
Over that plenty of vendors, some of which we are interacting with, they provide different programs, some of better than the others.
Speaker Change: Wait Management is one element of a whole person care, that we facilitate.
Our mission and value in the ecosystem is to provide this one path of access to one orchestration to the dynamic set of clinical programs.
and I think in another way, if a large pair would want to add one GLP program versus the other, we really strive to make it incredibly simple and easy to embed that program in this singular experiment to allow for bidirectional exchange of information to improve the program outcomes and to report on returns, plus sometimes a cycle between different programs for the same patient to increase efficiency and effectiveness and improve outcomes.
and we saw some specifically GLP weight loss programs that were successful. We actually saw a recently won that was incredibly unsuccessful and we really don't know the time. So, the time for the time to decide what programs to use or change over time.
Speaker Change: The End
Thank you.
Speaker Change: and your next question comes from the line of Charles R. with TD Cowan. Your line is open.
Thanks for your question, I'm proud to be here, but looking at the revised guidance and looking at the midpoint, kind of flies on motor sequential step up in 4Q revenues, relative to story historicals.
Charles R.: Seems like suggestions may be a small potential seasonal benefit. Is this a function that sort of visits often as you kind of refer to earlier the way the drivers are potentially sort of a new normal type of cadence going forward?
at Charles and Mark. You know, that's softness that we saw in Q3.
and of course we're now a third of the way through Q4.
Speaker Change: is continuing and as we feel and believe that
Speaker Change: It's both a contribution from a number of clients, overall in the macro environment, we do see just the lower overall pull-through in visits.
The nice thing about our buildup of our 2025
Speaker Change: Revenue is that there's far less dependence on those variable revenues and we have a very significant contribution of incremental subscription revenue. So it will not have the same type of impact as it had throughout 2024.
Speaker Change: Okay, got it. And you know, one of the competitors is in the list of a rollout, which I can for a virtual behavioral care. Can you follow what kind of impact this could have on maybe the automated programs that you're able to provide the DHA?
Yeah, absolutely, I think it's wonderful that the trichair.
Members have the opportunity among multiple vendors.
Speaker Change: but we are far from a vendor. We're actual an operating partner. We are not one of many that can be selected. We are in fact the De facto Provider through Lido's and through this DHA contract.
Speaker Change: We have a guaranteed...
Speaker Change: and subscribe to the review month over month and hopefully be this multi-year contract.
where we are by default enabling the government to provide the services to the military and their dependence.
the addition of any vendors to try care, again, is wonderful as there's new choices, but it is just an addition of yet another vendor providing choice to their members.
Okay, God, thank you.
Speaker Change: and press star one if you would like to ask a question and your next question comes from the line of David Larson with BTIG. Your line is open.
Hi, congratulations Mark for joining the ML team. I think it's great that they have somebody to see with prior public company CFO experience.
Can you maybe talk a little bit about?
You mentioned the phrase a leaner sort of cost, efficient or cost reduction program that you envision for animal. Just any more details are colored around that would be great.
And then did I hear you reaffirmed that the 25 sort of EBDAGIDE? I think it was minus 35 to minus 45 with break-even EBDAG in 26. Any color there, we helpful. Thank you.
Sure, well, thank you for the kind words. Also extremely excited about being here. You had a couple questions. So one is the...
Let's say the confirmation of us being cash flow positive in 2020-06 is correct.
However, I do not reconfirm any figures for 2025. That will come in February of 2025 when we share our Q4 results as well as our plan for all of 2025 guidance.
The question you have referred to our costs initiatives.
Speaker Change: Those were set into place earlier this year, but they continue. I have the privilege now through the board, and of course, with Edo's direction to turn over every stone. And look to right-size the company's cost basis, knowing that we're evaluating every aspect of the business, leaning towards...
Repeatable, Higher Value Revenue Streams in 2025 and Beyond. The focus on this...
Quality Revenue Exercise is likely going to enable us to find other opportunities to redirect resources and we are all aligned with the focus on reducing costs further each sequential quarter.
That's very helpful. Thank you. And then just one quick follow-up piece. Talk a bit about.
the relationships that you have with key clients in particular, do you meet with them on, like, let's say, a monthly basis, or do you provide them executive dashboard data on a real-time basis?
When they can see you, okay, these are my members, these are the gaps in care that have been closed.
These are the avoidable hospital admissions or ER visits that were actually avoided and my cost trend is improving by X amount. What we've been hearing from health plans a lot in clear is that...
They're migrating away from the PMPM or PEPM model and they're moving towards what is the sort of clinical outcome benefit this being delivered. Just any more color there will be helpful. Thank you.
David, so our relationship with our client is fairly intimate. We've been operating almost two decades. We know the players well, we understand their business.
and certainly a very close.
You absolutely right that the heart of the service that we provide being able to understand our lie, measure outcomes.
Speaker Change: is the key.
and the could be models of payment with the value based arrangements, the tough inefficient for everybody.
Speaker Change: and that's why our focus is so great on improving and making the consumer experience much better.
Creating a localization layer that is central to all clinical programs. So we know where people go and monitor their outcome. And that information is indeed in very high demand.
are clients very, and they're so many use cases. So I'm heartbreak to say that every client wants all the data all the time and uses it in the same level of effectiveness.
but is a general trend there's no question.
that what you alluded to is where the market is going. In some of our more advanced customers are actually leveraging that way. The reports of activity on this magical moment when a member becomes a patient.
and his manager effectively online through hybrid care.
Speaker Change: and Montenegro and he's very carefully and posing our lie, is really a key feature and key part.
of what our customers expect us to do in a key investment area for the company, and that's really part of our high quality, high margin revenue, and if you focus on in the next quarter of years to come.
Thanks for a much.
and your final question comes from the line of Jack Wallace. Your line is open.
Jack Wallace: Thanks for letting me in the queue here. Mark Welcome to the team. There are two things that I was paying attention to coming into this quarter. One was the expense line, it looks like we had a...
Another good quarter there and a raising of the U.S. The second was the subscription revenue line which looked like it came in the right way. The message coming into the quarter, but then most of the more importantly, the full year guided subscription revenue appears to be reiterated.
Now that implies they've called a mid to high single digit, a million dollar sequential step up and 4K of a 3K. And I might understand a community of the quarter was...
Speaker Change: You've very little of any contributions expected by the Enterprise Roller for the MHS in that step up. Mark can help us better understand the sources of the sequential increase and the expected and subscription revenue before the quarter. And you really want to let that mean for a jumping off point for next year.
Jack Wallace: Thank you.
Speaker Change: Certainly, you're correct in assuming that that subscription revenue contribution.
is new. That is coming from as we expect to begin recognizing revenue from our new contract.
as we continue through this quarter and achieve the milestone that we believe we will. We've got no indication to suggest that we're going to miss.
Speaker Change: The milestone has been executing on target throughout this year. We close this year with anticipation towards...
and the following enterprise. And as we meet that milestone, we are then in a great position to engage and begin building for the full enterprise value commencing in January.
We have both tremendous confidence in our ability to do that and we're equally pleased with our ability to add that material amount of subscription revenue for full year 2025.
Speaker Change: The End
Speaker Change: Thank you, appreciate it.
Speaker Change: Welcome.
and my piece from gentlemen, that concludes our question and answer session. I would now like to turn the conference back over to Mr. Ido Schoenberg for closing remarks.
Thank you, Ocorator, and thank you everyone for joining. We look forward to talking with you soon. Take care.