Q4 2025 Hinge Health Inc Earnings Call

February 10, 2026

Bianca Buck: Q4 Earnings Call. I'm Bianca Buck, Head of Investor Relations. With me on the call are Daniel Perez, our Co-Founder and CEO, Jim Pursley, our President, and James Budge, our CFO. I want to thank everyone for joining us today. We'll be walking you through our Q4 and 2025 annual performance, sharing updates on our product innovations and commercial momentum, and providing expectations for our Q1 and full-year 2026 revenue and operating profit. As a reminder, this conference call is being recorded. All relevant materials are available on the Investor Relations section of our website. Today's discussion will include forward-looking statements, which are subject to various risks, uncertainties, and assumptions. These statements reflect our current views and expectations regarding future events, including expected performance of our business, future financial results, and growth strategies.

Speaker #1: Earnings call. I'm Bianca Buck, head of investor relations. With me on the call are Daniel Perez, our co-founder and CEO; Jim Pursley, our president; and James Budge, our CFO.

Speaker #1: I want to thank everyone for joining us today. We'll be walking you through our Q4 and 2025 annual performance, sharing updates on our product innovations and commercial momentum, and providing expectations for our Q1 and full year 2026 revenue and operating profit.

Speaker #1: As a reminder, this conference call is being recorded. All relevant materials are available on the Investor Relations section of our website. Today's discussion will include various risks, uncertainties, and forward-looking statements, which are subject to assumptions.

Speaker #1: These statements reflect our current views and expectations regarding future events, including expected performance of our business, future financial results, and growth strategies. While these statements represent our good faith judgment and beliefs, actual results may differ materially from those projected or implied.

Q4 2025 Hinge Health Inc Earnings Call

Request a DemoDemo

HNGE

Hinge Health

Earnings

Q4 2025 Hinge Health Inc Earnings Call

HNGE

Tuesday, February 10th, 2026 at 9:30 PM

Transcript

No Transcript Available

No transcript data is available for this event yet. Transcripts typically become available shortly after an earnings call ends.

Want AI-powered analysis? Try AllMind AI →

Bianca Buck: While these statements represent our good faith judgment and beliefs, actual results may differ materially from those projected or implied. We undertake no obligation to update any forward-looking statements except as required by law. For a detailed discussion of the risks, please refer to our SEC filings, including our most recent quarterly report on Form 10-Q filed on November 7, 2025, and our annual report on Form 10-K, which will be filed in the coming weeks. All financial measures discussed today are non-GAAP, except for revenue, which is GAAP or as otherwise indicated. These measures should be viewed in addition to and not as a substitute for our GAAP results. Reconciliations to the most comparable GAAP measures are included in our Earnings Release Appendix available on the Investor Relations section of our website. With that, I'll turn it over to Dan.

Daniel Perez: Thanks, Bianca, and good afternoon, everyone. I'm excited to share our Q4 and full-year 2025 results and provide an update on our overall progress. 2025 was an exceptional year that demonstrated the power of our vision to automate healthcare delivery through technology. We delivered outstanding financial performance while making meaningful advancements in our AI-related investments and expanding our market reach to nearly 25 million contracted lives in the best year we've ever had. Today, we will walk you through the following areas. First, I'll give you a high-level recap of our financial performance for the Q4 and full year, highlighting the continued momentum in our core metrics and strong finish to 2025. Second, I'll share some exciting product updates, particularly around our AI initiatives that are transforming how we deliver care to our members, as well as an update on Hinge Select, our high-performance provider network.

Daniel Perez: Third, Jim will discuss our commercial progress, including the tremendous success of our sales season and some encouraging market developments. Next, James will walk you through the detailed financials and our outlook for 2026. And lastly, I'll wrap up with thoughts on why we're so bullish about our business and our future before we open up to your questions. Let me start with our financial results. We delivered $171 million in revenue for Q4, representing 46% year-over-year growth. For the full year 2025, revenue reached $588 million, up 51% compared to 2024. Our last 12 months' calculated billings reached $671 million, up 44% compared to the same period in 2024. These results demonstrate the growing demand for Hinge Health from our clients. Our operational efficiency remains strong as well. Gross margin was 85% in Q4 and 83% for the full year 2025, reflecting the scalability of our technology-driven care model.

Daniel Perez: Operating margin reached 28% in Q4, with a full-year 2025 operating margin of 20%, demonstrating the impact of our investments in automation and how far along we are in achieving our target of 25%+ operating margin. Perhaps most notably, we generated $62 million in free cash flow in Q4, representing a free cash flow margin of 36%. For the full year, we generated $180 million in free cash flow for an annual free cash flow margin of 31%, reaching the target free cash flow margin we shared at IPO much sooner than anticipated. In 2025, our performance on the Rule of 40 metric, which combines revenue growth and free cash flow margin, was 81 for the full year and 82 in Q4, more than double the 40 standard. We anticipate significantly exceeding the Rule of 40 again in 2026.

Daniel Perez: To put our numbers into context, in the last 10 years, I think there's only been less than 10 other public tech companies with over $500 million of revenue, over 50% growth, and 30% free cash flow margin. We're a very unique company and still on the first page of our story, poised to significantly expand our platform and market presence in 2026. Before I dive into our product updates, I want to emphasize what drives everything we do at Hinge Health. We're using technology to automate healthcare delivery, starting with musculoskeletal clinicians. This quarter, we surpassed 100 million lifetime member activity sessions, with 41 million of those sessions completed in 2025 alone. Every session generates data that helps us improve our programs, making our care more effective for the next member.

Daniel Perez: We build around the Triple Aim: delivering better health outcomes, creating a superior experience, and reducing overall healthcare costs. The more members we serve, the smarter our platform becomes, and the better we can deliver on all three of those goals. This quarter, I want to highlight two key areas where we've made significant progress. First, our AI-powered tools are transforming the efficiency of our care delivery while also improving our member experience. We've rolled out improvements that help our clinicians work more effectively and handle more members without compromising care quality. The results have been remarkable. In 2025, we served 47% more members while keeping care team costs flat. One major driver of this improvement was our successful rollout of automated AI-powered communications for routine messaging, freeing up our care team to focus on higher-value human interactions where they can make the biggest difference.

Daniel Perez: This led to the average time our care team spends in asynchronous sessions supporting members falling by 28% in just one quarter from Q3 to Q4 2025. A key contributor to both our care team efficiency and member satisfaction has been Robin, our AI care assistant. While still early in the rollout, members engaging with Robin are giving it a 92% positive rating, and we're seeing higher response rates compared to interactions with our human care team, an early indication of the trust and comfort members are building with these AI-driven experiences. While we're driving these efficiency gains, our member NPS scores are at an all-time high. This shows we can deliver better care at a lower cost. Moreover, given our tech investments, we're currently planning to keep the size of the care team flat once again in 2026.

Daniel Perez: This will allow us to invest more in the member experience, such as increasing the percentage of members who receive an Enso. Notably, when a member receives an Enso, their NPS score goes up meaningfully, and they complete about 70% more exercise therapy sessions because it's hard to do your exercises when in pain. Second, Hinge Select, our high-performance provider network, was available to several hundred thousand eligible lives in Q4. Multiple ecosystem partners have recognized Hinge Select's potential and included the offering in our co-selling agreements. We have major momentum with our health plan and PBM partners, with one of the largest five national plans by Self-Insured Lives already approving Hinge Select to be sold into their Self-Insured client base. While it's still early in our launch, the data is promising. We're seeing a mix of member experiences. Some do in-person physical therapy only.

Daniel Perez: Some do one or two in-person sessions, then transition to our digital platform. And most excitingly, we've had members who thought they were heading for surgery but were able to avoid elective surgeries altogether after consultations with our orthopedic specialists. Notably, about 85% of Hinge Select members were able to move forward with a conservative care plan, most often digital physical therapy. This demonstrates Hinge Select can bend the cost curve. When you compare our data to commercial benchmarks, members that have used Hinge Select, on average, have more good spend, such as nonsurgical orthopedic evaluations and physical therapy, and less low-value spend, such as imaging, procedures, and surgery. As a reminder, we're building what's essentially a two-sided marketplace, connecting members with high-quality providers. These take time to build, but once built, they create a lasting moat through network effects.

James Pursley: Thanks, Dan. As a quick reminder, our sales cycle aligns with corporate benefits planning, with most new contracts signed during the second half of the year as companies finalize their employee benefits packages. These newly contracted clients typically go live in the first half of the following year, creating the predictable cadence that underpins our billings and revenue growth model. I'm thrilled to report that our 2025 sales season was exceptional. We added 4.8 million net new contracted lives to end the year at approximately 24.6 million contracted lives across over 2,800 clients. This represents 25% year-over-year growth at the client level and 24% year-over-year growth on a contracted live basis. That breaks down to 22 million self-insured lives and 2.6 million lives across fully insured, Medicare Advantage, and federal employee programs known as FEP.

Jim Pursley: Thanks, Dan. As a quick reminder, our sales cycle aligns with corporate benefits planning, with most new contracts signed during the second half of the year as companies finalize their employee benefits packages. These newly contracted clients typically go live in the first half of the following year, creating the predictable cadence that underpins our billings and revenue growth model. I'm thrilled to report that our 2025 sales season was exceptional. We added 4.8 million net new contracted lives to end the year at approximately 24.6 million contracted lives across over 2,800 clients. This represents 25% year-over-year growth at the client level and 24% year-over-year growth on a contracted live basis. That breaks down to 22 million self-insured lives and 2.6 million lives across fully insured, Medicare Advantage, and federal employee programs known as FEP.

James Pursley: Within the non-Self-Insured segment, we saw a 135% increase from the 1 million lives we had at the end of 2024, with the largest growth coming from fully insured, and FEP. For many of our fully insured, Medicare Advantage, and FEP clients, we take a staged approach to roll out, targeting partial populations similar to a land-and-expand model. In 2025, due to our success and the strong ROI outcomes we delivered, we were able to unlock several existing fully insured and Medicare Advantage clients, bringing with them hundreds of thousands of lives and expansions. On the enterprise side, our clients now represent 53% of the Fortune 100 and 45% of the Fortune 500. This demonstrates the scale of trust we've earned from leading organizations nationally, representing an enviable asset from which to bring our future products to market. Moreover, it shows the scale of white space remaining.

Jim Pursley: Within the non-Self-Insured segment, we saw a 135% increase from the 1 million lives we had at the end of 2024, with the largest growth coming from fully insured, and FEP. For many of our fully insured, Medicare Advantage, and FEP clients, we take a staged approach to roll out, targeting partial populations similar to a land-and-expand model. In 2025, due to our success and the strong ROI outcomes we delivered, we were able to unlock several existing fully insured and Medicare Advantage clients, bringing with them hundreds of thousands of lives and expansions. On the enterprise side, our clients now represent 53% of the Fortune 100 and 45% of the Fortune 500. This demonstrates the scale of trust we've earned from leading organizations nationally, representing an enviable asset from which to bring our future products to market. Moreover, it shows the scale of white space remaining.

James Pursley: Given our roughly 25 million lives under contract, is but a fraction of the approximately 215 million people in our current markets. We end the year with an overall head-to-head competitive win rate at an all-time high, which speaks to both the strength of our value proposition and our team's execution. While the majority of our wins continue to come from organizations that are adopting a digital MSK solution for the first time, in 2025, we also saw a meaningful number of competitive conversions where clients chose to move to Hinge Health from an existing provider. One notable example was a large enterprise with over 200,000 lives that made the decision to leave a competitor and partner with us in the final month of the year, reflecting the strength of our product breadth and demonstrated ROI.

Jim Pursley: Given our roughly 25 million lives under contract, is but a fraction of the approximately 215 million people in our current markets. We end the year with an overall head-to-head competitive win rate at an all-time high, which speaks to both the strength of our value proposition and our team's execution. While the majority of our wins continue to come from organizations that are adopting a digital MSK solution for the first time, in 2025, we also saw a meaningful number of competitive conversions where clients chose to move to Hinge Health from an existing provider. One notable example was a large enterprise with over 200,000 lives that made the decision to leave a competitor and partner with us in the final month of the year, reflecting the strength of our product breadth and demonstrated ROI.

James Pursley: Combined with our annual client retention rate of 97% in 2025, we believe this underscores the long-term value we deliver to our clients. This success is a testament not only to our product but also to our partners. We added additional partners in 2025 and now have more than 60 health plans, pharmacy benefit managers, third-party administrators, and ecosystem partners. These partnerships provide validated distribution channels, reduce the complexity for prospects to purchase Hinge Health, and position us as the incumbent to win their other lines of business. Notably, 3/5 of the largest national health plans by Self-Insured Lives now also offer Hinge Health to their own employee populations, two of which were won in 2025. This is a powerful validation of our platform's effectiveness and demonstrates our partners' confidence in our ability to deliver meaningful outcomes for their most important stakeholders, their own employees.

Jim Pursley: Combined with our annual client retention rate of 97% in 2025, we believe this underscores the long-term value we deliver to our clients. This success is a testament not only to our product but also to our partners. We added additional partners in 2025 and now have more than 60 health plans, pharmacy benefit managers, third-party administrators, and ecosystem partners. These partnerships provide validated distribution channels, reduce the complexity for prospects to purchase Hinge Health, and position us as the incumbent to win their other lines of business. Notably, 3/5 of the largest national health plans by Self-Insured Lives now also offer Hinge Health to their own employee populations, two of which were won in 2025. This is a powerful validation of our platform's effectiveness and demonstrates our partners' confidence in our ability to deliver meaningful outcomes for their most important stakeholders, their own employees.

James Budge: Thanks, Jim. Let's dive into our fourth quarter and full year 2025 financial performance. As a reminder, our billings model is built on three key drivers. Lives represents the number of people eligible for our program, yield is the percentage of those eligible people who actually enroll and engage with us, and price is what we charge per engaged member. When you multiply these three factors together, the result is our calculated billings, which is the foundation of our revenue model. For the fourth quarter, our LTM calculated billings reached $671 million, representing strong 44% year-over-year growth compared to $468 million at the end of Q4 2024. Q4 revenue came in at $171 million, up 46% year-over-year from $117 million in the prior year fourth quarter and well ahead of our guidance range of $155 to $157 million.

James Budge: For the full year 2025, revenue reached $588 million, representing 51% year-over-year growth over the $390 million in 2024, also coming in well above our guidance range of $572 to 574 million, and representing a cumulative 15% beat above analyst expectations at IPO. This revenue outperformance demonstrates the continued strength in our underlying business fundamentals. The revenue beat was driven by better-than-expected billings, stemming from stellar yield improvements of over 50 basis points year-over-year from 3.4% as of the end of 2024 to 3.9% as of the end of 2025. We ended the year with 20.1 million LTM average eligible lives. This resulted in over 783,000 members as of the end of the year, a 47% increase from 2024. On the pricing side, our average selling price stayed essentially flat as expected.

James Budge: As of the end of Q4, about 50% of our eligible lives had moved to the new engagement-based pricing model. Our high client retention that Jim spoke to, combined with our strong yield improvements, were the main contributors to our Net Dollar Retention being well above 110% for 2025. As a reminder, on Net Dollar Retention, we believe anything above 110% is the measure of success for our industry. Moving to our operating efficiency, our gross margin reached 85% in the fourth quarter, up from 82% in Q4 2024 and 83% for the full year 2025 compared to 78% in 2024. This improvement was driven by continued care team efficiency gains enabled by our AI-powered tools, offset partially by the increase in the percentage of members that received Enso. We saw strong leverage across all operating expense categories.

James Budge: As a reminder, in November, our board authorized a share repurchase program of up to $250 million that we expect to execute as market conditions warrant. In Q4, we repurchased 1.4 million shares for $65 million. And speaking of shares, as we move beyond our IPO year and diluted share counts normalize in 2026, we will now also begin reporting earnings per share. Our diluted net income per share in Q4, with now normalized share counts, was 0.49, which we believe highlights the earnings power of the business as we head into 2026. The overall trend in our financial results reflects the scalability and efficiency of our business model. As we continue to grow our member base and deliver outstanding member outcomes, and cost savings to our clients, we are delivering top and bottom-line performance.

James Budge: For the full year 2026, we expect revenue to be in the range of $732 million to 742 million, which represents 25% year-over-year growth at the midpoint and is $39 million higher than the current sell-side estimate consensus. For full-year non-GAAP income from operations, we expect $151 to 156 million, or 21% margin at the midpoint, which is $18 million higher than the current sell-side estimate consensus and represents 100 basis points improvement over 2025 despite all the meaningful investments we expect to make in 2026. Several key factors are driving our 2026 outlook. We currently expect average LTM eligible lives for full year 2026 to be 24.4 million lives. This forms the baseline for our financial guidance, with the growth coming from the new lives we already won. While our guidance today assumes a flat yield, we have a clear roadmap to continue driving incremental improvements over time.

James Budge: We remain well below the roughly 9% of US adults who see a physical therapist, which we view as a realistic long-term benchmark with an opportunity to close and potentially surpass over time with our easier-to-access and lower-cost-to-members solution. On the pricing side, we expect our average selling price to stay essentially flat. We're viewing 2026 as a year to incrementally invest, given the strong margins we achieved in 2025. These include headcount investments in research and development to accelerate our new product initiatives, as well as targeted investments in sales and marketing to support Hinge Select expansion and accelerate our growth in the small and medium business markets. These investments position us to capture the significant long-term opportunities we see ahead. At the gross margin level, any further improvement we see from our AI efficiency tools for the care team will likely be mostly offset by broader Enso deployments.

James Budge: Given this, we anticipate around 100 basis points improvement in 2026 over 2025. As we move beyond our IPO year, we will transition to discussing GAAP-based weighted average diluted shares rather than the total diluted shares granted and outstanding. For 2026, we expect our GAAP-based diluted weighted average share count to be in the range of 85 to 87 million shares, excluding the impact of any additional buybacks. A further word on GAAP. We believe GAAP profits are important and expect to be GAAP profitable in 2026 as we were in Q4 2025. Our annual dilution from stock grants has declined each of the last three years, and we expect to manage to a further decline again in 2026. Before I turn it back to Dan, I want to highlight an exciting opportunity for our analyst and investor community.

Daniel Perez: Thanks, James. Looking at our results this quarter and the trajectory of our business, I couldn't be more excited about what lies ahead for Hinge Health. 2025 was an exceptional year that demonstrates the power of our vision. We launched Hinge Select, our high-performance in-person provider product, and added thousands of providers to our network. We introduced new AI-powered care tools that are driving deeper personalization and quality for our members and efficiencies for the business. We grew our reach to 25 million people across over 2,800 clients, spanning every industry you can imagine: manufacturing, retail, hospitality, tech, public sector, and more. And of course, we began trading on the New York Stock Exchange, embracing the high standard of public accountability that comes with it. The momentum we're seeing across every aspect of our business reinforces my conviction that we're executing on a generational opportunity.

Daniel Perez: Our platform is becoming more intelligent with every interaction, powered by the proprietary data we've built across more than 1.5 million members and over 100 million sessions, insights that allow us to deliver a complete, clinically proven offering that now extends from software and connected hardware into high-quality in-person networks. At the same time, we've spent more than a decade building deep, trusted partnerships across the healthcare ecosystem, embedding ourselves with health plans and employers who value working with a proven market leader in a highly regulated, outcomes-driven space. The compounding impact of these investments is clear: higher member satisfaction, stronger clinical outcomes, and durable client retention, all working together to drive long-term growth. As we look ahead, I'm energized by the breadth of opportunities in front of us.

Daniel Perez: Great question. Thanks, Ryan. Since the start of our existence, we've always had potential new entrant threats, either large tech companies, incumbent healthcare companies, or new startups. But we've thwarted those off and throughout because our competitive advantages go well beyond just a code base. Those advantages include our proprietary data, our distribution channels, a product experience that extends beyond software, and our clinical validation. So start with our proprietary data. Even if OpenAI and Gemini scraped the entire internet, they have not conducted 100 million treatment sessions like we have. Simply put, we may have the largest and most granular dataset for MSK conditions in the entire world. Two is our distribution channels. We've spent a decade building deep relationships with health plans, PBMs, employers. This requires not just work on our end, but substantial work on their end.

James Budge: Yeah. Yeah. Thanks, Ryan, for the questions. And we're delighted it's gotten to 50%. We think it aligns interests between us and our clients really well. And we see that 50% ticking up a little bit as we move throughout 2026 as well. So to your question, the upfront model, obviously, on the billing side, you would get paid mostly upfront. Maybe there's some delayed billings occasionally, but you would have gotten bills out the door on day one. Now, the bills are going out as the usage happens, which, as you can imagine, someone who has something ailing them, they want to solve it as quickly as possible. So it usually extends over a 2- to 3-month period instead of billed upfront. So a minor difference in when the cash or when the bill goes out, the cash comes in.

Daniel Perez: Great question. Thanks, Jailendra. And you're right. In our go-forward forecast, you could see that lives have been inputted into that, but we're assuming it's lacking over your yield. But we had a great Q4, particularly with regards to our member enrollment or our enrollment yields. And two key drivers worth talking about. One was our continued investment in product-led growth, which has helped us very efficiently enroll, engage, and retain members. We have evergreen investments in product-led growth that are constantly landing singles, doubles, and the occasional home run, which we hope to talk about maybe in our next training call. But second was a targeted enrollment effort. These are enrolling members based on their prior claims history. And that ended 2025 up over 160% year-over-year.

Daniel Perez: Your question as well about RMA opportunities. So we get several inbound opportunities a week, maybe 2 to 3 on an average week or so. And we try to look at actually all of them. And our robust cash flows just give us a lot of optionality for tuck-ins. Our main focus is organic growth, where we're always interested in entrepreneurs who've built innovative products that could help us achieve our vision of automating healthcare delivery. We've historically focused on smaller acquisitions where we've acquired a kernel of technology and a potent team, particularly an R&D team, and built it out from there. So I'd say unlikely many entrepreneurs listen to earnings calls, but if you're an entrepreneur that's building something that's relevant to us, we'd love to chat. And we do look at every opportunity that comes by our desk.

James Pursley: If you think about all the investments Dan mentioned, dozens of little innovations every year that just delivers a better experience, whether it's bring your own device, whether it's unification of multiple programs into a single app experience, whether it's our Enso and the delightful transformative impact Enso has, you kind of add all those up in totality, and you have a really compelling offering. And then lastly, I would say it's our clinical outcomes and our ROI. When you start to build results at scale, year after year, client after client, industry after industry, I think it starts to, again, paint a very compelling picture that's very attractive to a lot of our competitors' clients. And so if you put those three things together in aggregate, that would give you some good sense of what our prospective clients are thinking about when they make the decision to switch.

Jim Pursley: If you think about all the investments Dan mentioned, dozens of little innovations every year that just delivers a better experience, whether it's bring your own device, whether it's unification of multiple programs into a single app experience, whether it's our Enso and the delightful transformative impact Enso has, you kind of add all those up in totality, and you have a really compelling offering. And then lastly, I would say it's our clinical outcomes and our ROI. When you start to build results at scale, year after year, client after client, industry after industry, I think it starts to, again, paint a very compelling picture that's very attractive to a lot of our competitors' clients. And so if you put those three things together in aggregate, that would give you some good sense of what our prospective clients are thinking about when they make the decision to switch.

Daniel Perez: And just to add to that as well, just one quick thing is when clients test our products and actually take it for a spin and actually trial our program and trial our competitors' program, our win rate actually goes up. And so we actually encourage that because we're so confident in our product experience. And when a client has made the unfortunate past decision to not select Hinge, and then years later, they do trial our program and compare it to their existing solution, we're in a very, very good position to win that client over to our end. And that's what you're seeing here. Our engagement is typically our enrollment is typically much higher. Our engagement on a per-member basis is much higher. And then, of course, our ROI that we're able to deliver flows from that.

James Pursley: Yeah. Yeah. Thanks for the question. As you heard us say, non-ASO grew over 100% this past year. And I think that's driven on a couple of things. One is the strength of those relationships, fully insured, and Medicare Advantage, specifically. Really, all three, and Federal, have a health plan component to it. And so as we continue to do a really great job for our health plan partners, as we service their clients well, as we deliver fantastic results, we build trust, those relationships become a key lever. And then secondly and related is exactly that, those outcomes. Those organizations are oftentimes influenced heavily by actuaries and underwriters, and they're really looking at cost savings with a very critical eye. And as we continue to deliver great outcomes for those clients, we're seeing growth in fully insured, in Medicare Advantage, in our Federal Employee Program.

Jim Pursley: Yeah. Yeah. Thanks for the question. As you heard us say, non-ASO grew over 100% this past year. And I think that's driven on a couple of things. One is the strength of those relationships, fully insured, and Medicare Advantage, specifically. Really, all three, and Federal, have a health plan component to it. And so as we continue to do a really great job for our health plan partners, as we service their clients well, as we deliver fantastic results, we build trust, those relationships become a key lever. And then secondly and related is exactly that, those outcomes. Those organizations are oftentimes influenced heavily by actuaries and underwriters, and they're really looking at cost savings with a very critical eye. And as we continue to deliver great outcomes for those clients, we're seeing growth in fully insured, in Medicare Advantage, in our Federal Employee Program.

Daniel Perez: Sure. There's a couple of ways to slice the TAM. And so one key thing is just so you could start as this global healthcare spend. About 50%, 45% or so percent of global healthcare spend is spent in the United States. If you lose the United States, you're in a pretty bad spot when it comes to winning your category. Another way of slicing it is what is the indication you address and how big is that? So for us, even focusing on physical therapy out there, physical therapy is about a $60 billion market or more just in the United States. At about $600 million of revenue, we have got just a sliver of the overall physical therapy market. So just focusing on this, we have a massive amount of runway ahead of us to capture physical therapy here in the United States.

Daniel Perez: And we want to make sure we capture that opportunity. And at the same time, we are starting to already develop, and we've been developing for quite some time, our next product that will come after that that will allow us to ship off another portion of healthcare spend because, while physical therapy is $60 billion overall spend, that's about 1.2% of total healthcare spend. And so if we chip off another half a point of healthcare spend, that'll be another $30 billion TAM. And then we're able to upsell our existing customers because we develop so much trust in them to these new products that we launch that we're continually to peel away aspects of care and using software and connected hardware to automate portions of that care where we can transform outcomes, experience, and costs.

James Pursley: Yeah. And Elizabeth, just to add to that too, as you heard Dan mention the size of the physical therapy market, that's within the context of a broader MSK market as well. So you think about all the challenges that the market faces in a complex landscape that includes imaging and surgery, other nonsurgical orthopedic care; it's a huge TAM. And we've only started to scratch the surface within digital physical therapy. So we think the best way to deliver value to our clients and to the market is to really focus on big problems that have a lot of room and a lot of complexity for us to have an impact. And we think MSK is really a market that fits that definition while we, I think, judiciously look at things that are adjacent and leverage our strengths beyond MSK.

Jim Pursley: Yeah. And Elizabeth, just to add to that too, as you heard Dan mention the size of the physical therapy market, that's within the context of a broader MSK market as well. So you think about all the challenges that the market faces in a complex landscape that includes imaging and surgery, other nonsurgical orthopedic care; it's a huge TAM. And we've only started to scratch the surface within digital physical therapy. So we think the best way to deliver value to our clients and to the market is to really focus on big problems that have a lot of room and a lot of complexity for us to have an impact. And we think MSK is really a market that fits that definition while we, I think, judiciously look at things that are adjacent and leverage our strengths beyond MSK.

Daniel Perez: Great question. So when it comes to R&D and the overall product, we see it as maybe I could break it down in three key ways. One is the consumer experience and the product we're able to deliver to our end user. The second is with our care team efficiency. And the third is just how we build product. Let me walk you through each one of those. So first is the actual product experience. The core of our product experience is driven by AI. When you first sign up, we use we personalize the program to each one of our members. Our Computer Vision is actually a subfield of AI, and Human Pose Estimation is a subfield of Computer Vision. And I'll remind you all listening, we moved into Computer Vision AI well before the ChatGPT craze. So we were not just following some bandwagon here.

Ryan MacDonald: Hi. Thanks for taking my questions and congrats on a great quarter and great close to a fiscal year. Dan, James, much has been made about the current model shift towards the usage-based pricing model and the potential impact that may have on member usage and ASPs over time. Now, your guidance assumes flat ASPs in 2026. But I think based on some of the commentary from the call, the 41 million sessions in 2025 over 783,000 active members, you're averaging 52 sessions per member per year at this point. So can you speak to your confidence in the flat ASP assumptions for 2026, any potential for upside, and whether you're seeing any material differences in the average number of sessions for a member across the usage model versus the upfront model? Thanks.

James Pursley: Yeah. Thanks for the question, Ryan. As the market leader in digital MSK care, we're absolutely excited to be considered for the program. Applications are currently being received. And no news has come out yet. But the potential scale of traditional Medicare, with roughly 30 million addressable lives, is clearly an attractive long-term opportunity for us. That said, the process is still evolving. Applications are coming in. Medicare CMS has not issued the price and structure yet of the offering. And so while rates have yet to be finalized, we would assume that if the pricing makes sense, we're going to participate. I wouldn't expect a meaningful contribution in the back half of 2026. I think this would be more of a 2027 and beyond contribution.

Jim Pursley: Yeah. Thanks for the question, Ryan. As the market leader in digital MSK care, we're absolutely excited to be considered for the program. Applications are currently being received. And no news has come out yet. But the potential scale of traditional Medicare, with roughly 30 million addressable lives, is clearly an attractive long-term opportunity for us. That said, the process is still evolving. Applications are coming in. Medicare CMS has not issued the price and structure yet of the offering. And so while rates have yet to be finalized, we would assume that if the pricing makes sense, we're going to participate. I wouldn't expect a meaningful contribution in the back half of 2026. I think this would be more of a 2027 and beyond contribution.

Daniel Perez: But yeah, I mean, if we close a customer and they have a high density in a particular metro, we then focus on that metro to make sure that we could build the provider density that we need. What's helpful is that we do not need nor are we trying to approximate the provider density of our health plan partners. This is very much complementary to a national plan or our health plan partners in that this is a precision network. And if you want to go to the PT around the corner, you could use your main health plan. If you're willing to drive, say, 5 to 10 minutes, you could go to the Hinge Select physical therapist. And we're able to waive your copay and give you a priority selection in terms of your appointment time. And same thing for imaging.

Daniel Perez: Great. Great question. So we're being conservative overall in our revenue forecast and not assuming really any revenue from Hinge Select in 2026. And so this is. We anticipate to start seeing meaningful impact in 2027, still torqued by the impact of our digital physical therapy solution. But given our Free Cash Flow, this is a solution that we knew would take several years to build, but that once built would be one of our most enduring moats for the business. And we're willing to be patient on planting the seed. We know it's going to take a few years for the seed to become a sapling and then to become a big tree. But we're able to be patient. We're also being disciplined in terms of the spend. And we're not going too crazy, but we like; we really like the market momentum.

Daniel Perez: Great. Great question. So I can't go into too much specifics around some of the algorithms we use as we are ingesting so much data. I would say we are investing very meaningful resources, and we're having a really good output from those investments and those resources, as you could see in both the members enrolled as well as the impact on ROI. It's something that a lot of digital health companies and others in our space have been trying to do for a long time. We now have the scale. We're learning a lot from our data. And we're also getting multiple data sources. The most common data source we're getting from our employer and health plan partners is claims data. We're also getting pharmacy data. We're getting prior auth and pre-auth data. And we're trying to increase the overall coverage from those. But it's multiple different data sources.

Rishi Jaluria: I'd have to imagine, given your value proposition where you are making physical therapy more accessible to people who may not otherwise have the time or access, is there an opportunity to go beyond just kind of this reactive physical therapy paradigm that we've been in where someone has an issue, they have a pain, they're trying to avoid surgery, and that's why they do physical therapy versus maybe something that's a little bit more proactive that even the health plans themselves may incentivize to prevent future problems from appearing down the line? And I'd imagine insurers and your own corporate customers would be really well aligned with that. Maybe how should we just be thinking about that on a longer-term basis? And I've got a quick follow-up.

Daniel Perez: That's a great question. And so, kind of stepping back and thinking about lifestyle medicine generally, movement is almost never contraindicated. It is, whether you're in knee pain or not, moving your joints. Move your knee joints; it's good. Cartilage doesn't actually. It's avascular. And so there's not actually blood flow to your cartilage. And so when you move your joints, you're actually exchanging waste and bringing in nutrients. And so we should always be moving about, not just when we need it. And so you're absolutely right there. And we want Hinge Health or movement to become a lifestyle choice for a lot of our members overall. And so we are focused right now on capturing more and more of the outpatient physical therapy market.

Daniel Perez: Again, it's a $60 billion market ahead of us, even without leaving physical therapy, which, again, we're developing new products that are PT-adjacent right now, which we hope to talk about in the coming months. But we don't want to lose, and we could talk about TAM expansion all we want, but we don't want to lose sight of the TAM capture and the capture of our existing TAM. It's a $60 billion market. We're at about a $600 million of revenue in 2025 or $588 million. And we want to make sure we capture the hell out of the $60 billion market ahead of us and then start capturing lateral markets next to it and then start making Hinge Health more of a lifestyle choice. Now, what makes healthcare price points achievable in many ways is that you are treating an actual condition that ends up being very expensive.

Daniel Perez: And once you start moving beyond that, you have to think through what the impact could be on ROI when it becomes more of a prevention solution. And ROI and prevention, I think, is very real, but it could be more difficult to attribute, and it could take a bit longer. And so we remain focused on physical therapy and folks who have a real clinical need. I don't think that's perfect because you're right. We don't want just sick care in many ways where you're only treating folks. But we do feel like we're intervening early enough in their care journey that we're preventing a lot of downstream costs. Now, you could always intervene even earlier, get people to just live a healthier lifestyle. Those are harder to get reimbursed for, but we're trying to intervene as early in the condition as possible while still being reimbursable.

Rishi Jaluria: Yeah, absolutely. No, that's really helpful. And then one for James. Look, I appreciate you talk about maybe targeting stronger GAAP profitability, thinking about things in GAAP terms, putting aside, obviously, the mismatch between revenue and expenses in a SaaS model with the GAAP income statement. I think, especially in this environment, it's increasingly becoming appreciated. Maybe what's kind of your mental model that we should be thinking, not necessarily in terms of the guide for 2026, but in terms of just how we should be thinking about FCF and dilution going forward? Is there kind of a target dilution rate, target SBC as percent of revenue? And this can be over the next several years, again, not holding anyone to it, but just a mental model would be helpful. Thank you.

Daniel Perez: Great call. Thank you, everybody, for dialing in and for taking the time to learn more about our company and how we perform in 2025. I just want to leave you with just saying that just putting, again, our 2025 performance into context, in the last decade, there has been less than 10 companies who have delivered over $500 million of annual revenue, still growing at over 50% with a 30% free cash flow margin. We're number 9 or number 10 of that. Just to see just how unique our print was in 2025. We stand in pretty elite company. We're not done yet. This is a generational opportunity ahead of us to automate healthcare delivery. I think digital health, in many other ways, hasn't delivered. We're going to show you that Hinge is an NM1 company, and we are different.

AllMind AI

AllMind AI

Q4 2025 Hinge Health Inc Earnings Call

Event Details

Hinge Health

Q4 2025 Hinge Health Inc Earnings Call

Open Event Documents

Search Transcript

Hinge Health

Q4 2025 Hinge Health Inc Earnings Call

Transcript

No Transcript Available