Q2 2026 Hinge Health Inc Earnings Call

August 4, 2026

Operator: Ladies and gentlemen, thank you for joining us, and welcome to the Hinge Health Q2 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to Bianca Buck, Head of Investor Relations. Bianca, please go ahead.

Operator: Ladies and gentlemen, thank you for joining us, and welcome to the Hinge Health Q2 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to Bianca Buck, Head of Investor Relations. Bianca, please go ahead.

Speaker #1: Ladies and gentlemen, thank you for joining us, and welcome to the Hinge Health second quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session.

Speaker #1: If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star 9 to raise your hand, and star 6 to unmute.

Speaker #1: I will now hand the conference over to Bianca Buck, Head of Investor Relations. Bianca, please go ahead.

Speaker #2: Good afternoon, and welcome to Hinge Health's second quarter 2026 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.

Bianca Buck: Good afternoon. Welcome to Hinge Health's Q2 2026 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. 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. 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.

Speaker #2: Joining us. As a reminder, I want to thank everyone for joining the conference call. This call is being recorded. All relevant materials are available on the Investor Relations section of our website.

Speaker #2: 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 #2: 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.

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.

Speaker #2: For a detailed discussion of the risks, please refer to our SEC filings including our annual report on Form 10-K for the year ended December 31, 2025, and our 10-Q.

Bianca Buck: For a detailed discussion of the risks, please refer to our SEC filings, including our annual report on Form 10-K for the year ended 31 December 2025, and our quarterly reports on Form 10-Q. We expect to file our quarterly report on Form 10-Q in the coming days. All income statement measures discussed today, other than revenue, are non-GAAP. 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 the appendix to our earnings release. With that, I'll turn it over to Dan.

Speaker #2: We expect to file our quarterly report on Form 10-Q in the coming days. All income statement measures discussed today, other than revenue, are non-GAAP.

Speaker #2: 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 the appendix to our earnings release.

Speaker #2: With that, I'll turn it over to Dan.

Speaker #3: Thanks, Bianca. Q2 was another strong proof point that our vision of automating care delivery is working. We delivered excellent financial results, made meaningful progress on our product roadmap, and are set up well heading into the sales season and beyond.

Daniel Perez: Thanks, Bianca. Q2 was another strong proof point that our vision of automating care delivery is working. We delivered excellent financial results, made meaningful progress on our product roadmap, and are set up well heading into the sales season and beyond. Today, we'll walk you through a few key areas. First, I'll give you a snapshot of our Q2 financial performance and why we feel great about how the business is tracking. Second, I'll share updates on our product expansion, specifically how we're moving from being a clear leader in automating care for MSK conditions to automating care across conditions with real traction in migraine and our entry into gastrointestinal health. After that, I'll hand it over to Jim, who will dive into the commercial side: our pipeline strength, the wins we're seeing in both enterprise and SMB, and how our multi-product strategy is driving deeper relationships with clients.

Speaker #3: Today, we'll walk you through a few key areas. First, I'll give you a snapshot of our Q2 financial performance and why we feel great about how the business is tracking.

Speaker #3: Second, I'll share updates on our product expansion, specifically how we're moving from being a clear leader in automating care for MSK conditions to automating care across conditions with real traction in migraine and our entry into gastrointestinal health.

Speaker #3: After that, I'll hand it over to Jim, who'll dive into the commercial side, our pipeline strength, the wins we're seeing in both enterprise and SMB, and how our multi-product strategy is driving deeper relationships with clients.

Speaker #3: Then James will take you through the financials in detail and share our updated guidance for the year. And, of course, we'll open it up for your questions at the end.

Daniel Perez: James will take you through the financials in detail and share our updated guidance for the year. Of course, we'll open it up for your questions at the end. With that, let me jump into the numbers. Q2 was an outstanding quarter across the board. We delivered revenue of $213 million, which represents 53% year-over-year growth. Our last 12 months calculated billings came in at $862 million, up 52% from last year. These numbers reflect the strength of our business model and the value we're delivering to our members and clients. On profitability, we're seeing substantial operating leverage. Our operating income more than doubled from a year ago to $62 million, and operating margin expanded to 29% from 19%. We also generated 3x more free cash flow in Q2 this year at $100 million, compared to $33 million last year.

Speaker #3: With that, let me jump into the numbers. Q2 was an outstanding quarter across the board. We delivered revenue of $213 million, which represents 53% year-over-year growth.

Speaker #3: Our last 12 months' calculated billings came in at $862 million, up 52% from last year. These numbers reflect the strength of our business model and the value we're delivering to our members and clients.

Speaker #3: On profitability, we're seeing substantial operating leverage. Our operating income, more than doubled from a year ago to $62 million in operating margin expanded to $29% from 19%.

Speaker #3: We also generated 3x more free cash flow in Q2 this year at $100 million compared to $33 million last year. That was a 47% free cash flow margin in Q2 compared to 23% in Q2 last year.

Daniel Perez: That was a 47% free cash flow margin in Q2, compared to 23% in Q2 last year. James will walk you through all the details in a bit, including our updated expectations for the rest of the year. The short version is the fundamentals of the business are strong, execution remains solid, and we're continuing to build a platform that delivers clinical outcomes, growth, and cash flow. Let me shift to what we're building on the product side. Over the past 12 years, we've built Hinge Health into a leader in musculoskeletal care. We serve nearly 3,000 clients, including more than half the Fortune 100, and we've helped millions of people reduce their pain and avoid unnecessary procedures. Our foundation in MSK is incredibly strong. What's even more powerful is that the platform enabling it isn't limited to MSK alone.

Speaker #3: James will walk you through all the details in a bit, including our updated expectations for the rest of the fundamentals of the business are strong, execution remains solid, and we're continuing to build a platform that delivers clinical outcomes, growth, and cash flow.

Speaker #3: Now let me shift to what we're building on the product side. Over the past 12 years, we've built Hinge Health into a leader in musculoskeletal care.

Speaker #3: We served nearly 3,000 clients, including more than half the Fortune 100, and we've helped millions of people reduce their pain and avoid unnecessary procedures.

Speaker #3: Our foundation in MSK is incredibly strong. But what's even more powerful is that the platform enabling it isn't limited to MSK alone. It was designed to scale across multiple conditions.

Daniel Perez: It was designed to scale across multiple conditions. Our vision has always been to use technology to automate the delivery of care within MSK and beyond. This quarter, I'm excited to share that we're making that vision even more real. We're not just talking about TAM expansion. We're proving the vision with real products, real client demand, and real member engagement. Let me walk you through two big areas of progress. First, migraine. Last quarter, we launched our migraine care program. We now have over 450 clients signed up, covering more than five million lives. This is meaningful adoption in a short period of time, and it shows that employers see migraine as a real pain point they need to solve. The early signals on the member side are strong as well.

Speaker #3: Our vision has always been to use technology to automate the delivery of care, with an MSK and beyond. And this quarter, I'm excited to share that we're making that vision even more real.

Speaker #3: We're not just talking about TAM expansion; we're proving the vision with real products, real client demand, and real member engagement. Let me walk you through two big areas of progress.

Speaker #3: First, migraine. Last quarter, we launched our migraine care program. We now have over 450 clients signed up, covering more than 5 million lives. This is meaningful adoption in a short period of time, and it shows that employers see migraine as a real pain point they need to solve.

Speaker #3: The early signals on the member side are strong as well. Both enrollment and early engagement metrics are coming in as expected, and we're excited to continue building on this baseline.

Daniel Perez: Both enrollment and early engagement metrics are coming in as expected. We're excited to continue building on this baseline. Our migraine care program has gained traction quickly because we've built our capabilities as reusable components that can be customized for new indications while sharing the same go-to-market motion we've built over a decade at MSK. We've been very intentional about not just what we build or what we sell, how we build and how we sell. When we roll out new products, we benefit from existing platform capabilities and an established distribution footprint, meaning we can build and sell new products much faster versus starting from zero every time. As with everything else we do, we intend to hold our migraine care program and all future programs to the same standard of clinical rigor that we have brought to MSK.

Speaker #3: Our migraine care program has gained traction quickly because we've built our capabilities as reusable components that can be customized for new indications, while sharing the same go-to-market motion we've built over a decade in MSK.

Speaker #3: Essentially, we've been very intentional about not just what we build or what we sell, but how we build and how we sell. When we roll out new products, we benefit from existing platform capabilities and an established distribution footprint, meaning we can build and sell new products much faster, versus starting from zero every time.

Speaker #3: As with everything else we do, we intend to hold our migraine care program in all future programs to the same standard of clinical rigor that we have brought to MSK.

Speaker #3: Second, gastrointestinal, or GI, our next big adjacency. We're following the same playbook we used with MSK and migraine. Identifying area of unmet clinical need and then applying technology to automate care delivery.

Daniel Perez: Second, gastrointestinal or GI, our next big adjacency. We're following the same playbook we used with MSK and migraine: identify an area of unmet clinical need and then apply technology to automate care delivery. GI checks all those boxes. Digestive health issues affect one in four US adults and drive $135 billion in annual medical spend. Traditional care is fragmented and hard to access. 69% of US counties don't even have a gastroenterologist. People cycle through primary care and urgent care visits without a clear treatment plan. We hear consistently from our clients that GI is a major challenge they're struggling to address. To accelerate our entry into this space, we've signed a definitive agreement to acquire Cylinder Health for $105 million in cash, essentially the free cash flow from Q2 alone. This acquisition gives us a strong foundation to build from in GI.

Speaker #3: GI checks all those boxes. Digestive health issues affect 1 in 4 U.S. adults and drive $135 billion in annual medical spend. Traditional care is fragmented and hard to access.

Speaker #3: 69% of U.S. counties don't even have a gastroenterologist. People cycle through primary care and urgent care visits without a clear treatment plan. We hear consistently from our clients that GI is a major challenge they're struggling to address.

Speaker #3: To accelerate our entry into this space, we've signed a definitive agreement to acquire Cylinder Health for $105 million in cash. Essentially, the free cash flow from Q2 alone.

Speaker #3: This acquisition gives us a strong foundation to build from in GI, Cylinder has nearly 100 clients across 2 million lives, and has already treated 150,000 people with a clinically validated ROI.

Daniel Perez: Cylinder has nearly 100 clients across two million lives and has already treated 150,000 people with a clinically validated ROI. They also have established partnerships with two of the three largest PBMs and three of the top five national health plans. They've done great work reinventing the paradigm of care for GI, and we're excited to integrate their capabilities into our platform. GI conditions are also highly comorbid with the MSK, pelvic floor, and migraine conditions we already treat. They share the same gut, brain, and central sensitization mechanisms, and a large share of the people we're already serving are also managing chronic digestive conditions, which makes this a natural extension of our care model. We anticipate GI will have a modest contribution to this year's sales season, with a broader rollout targeted for 2027.

Speaker #3: They also have established partnerships with two of the three largest PBMs, and three of the top five national health plans. They've done great work reinventing the paradigm of care for GI, and we're excited to integrate their capabilities into our platform.

Speaker #3: GI conditions are also highly comorbid with the MSK, pelvic floor, and migraine conditions we already treat. They share the same gut-brain and central sensitization mechanisms.

Speaker #3: And a large share of the people we're already serving are also managing chronic digestive conditions, which makes this a natural extension of our care model.

Speaker #3: We anticipate GI will have a modest contribution to this year's sales season, with a broader rollout targeted for 2027. There's still much work to do on the product side, and we need to integrate it into our tech stack.

Daniel Perez: There's still much work to do on the product side, and we need to integrate it into our tech stack, but we're moving quickly. This acquisition reflects a commitment I made in my IPO letter, where we said we'd move with urgency to further solidify and extend our current position while also developing several new products to scale and automate other aspects of care. That's one of the many reasons that gives us confidence in the durability of our revenue. Because we can build these products efficiently and sell them through the same commercial motion and the same distribution channels, it becomes a compounding advantage. Multi-product isn't just a yield lever, it is a moat. We're extending our platform to address multiple high-impact conditions, and we're doing it in a way that drives all aspects of the triple aim: better outcomes, better experience, and lower cost.

Speaker #3: But we're moving quickly. This acquisition reflects a commitment I made in my IPO letter, where we said we'd move with urgency to further solidify and extend our current position, while also developing several new products to scale and automate other aspects of care.

Speaker #3: That's one of the many reasons that gives us confidence in the durability of our revenue. And because we can build these products efficiently, and sell them through the same commercial motion and the same distribution channels, it becomes a compounding advantage.

Speaker #3: Multi-product isn't just a yield lever; it is a moat. We're extending our platform to address multiple high-impact conditions, and we're doing it in a way that drives all aspects of the triple aim: better outcomes, better experience, and lower cost.

Speaker #3: With that, let me hand it over to Jim to talk about what we're seeing on the commercial side.

Daniel Perez: With that, let me hand it over to Jim to talk about what we're seeing on the commercial side.

Speaker #2: Thanks, Dan. These exciting new capabilities give me confidence in our continued momentum in the market. Starting with this year's sales season, our active pipeline remains ahead of last year.

Jim Pursley: Thanks, Dan. These exciting new capabilities give me confidence in our continued momentum in the market. Starting with this year's sales season, our active pipeline remains ahead of last year. Converting this pipeline as we move through the back half of the year will be a key driver of our 2027 billings growth. Our win rates continue to be up year over year, which leaves me optimistic as we enter the peak months of our sales season. This quarter, we saw strong momentum in our enterprise business, highlighted by a notable win with a Fortune 15 company, where we displaced a competitor to secure nearly 300,000 lives. Beyond our continued large enterprise success, our strategic investments in SMB distribution late last year are also paying off. Our lives have grown more than 100% in the H1, year over year.

Jim Pursley: Thanks, Dan. These exciting new capabilities give me confidence in our continued momentum in the market. Starting with this year's sales season, our active pipeline remains ahead of last year. Converting this pipeline as we move through the back half of the year will be a key driver of our 2027 billings growth. Our win rates continue to be up year-over-year, which leaves me optimistic as we enter the peak months of our sales season. This quarter, we saw strong momentum in our enterprise business, highlighted by a notable win with a Fortune 15 company, where we displaced a competitor to secure nearly 300,000 lives. Beyond our continued large enterprise success, our strategic investments in SMB distribution late last year are also paying off. Our lives have grown more than 100% in the H1, year-over-year.

Speaker #2: Converting this pipeline as we move through the back half of the year will be a key driver of our 2027 billings growth. Our win rates continue to be up year over year, which leaves me optimistic as we enter the peak months of our sales season.

Speaker #2: This quarter, we saw a strong momentum in our enterprise business, highlighted by a notable win with a Fortune 15 company where we displaced a competitor to secure nearly $300,000 lives.

Speaker #2: Beyond our continued large enterprise success, our strategic investments in SMB distribution late last year are also paying off, where lives have grown more than 100% in the first half year over year.

Speaker #2: We've also recently been selected as the default solution for a large national health plan's SMB segment, specifically their under-3,000 lives book of business. Where again, we replaced a competitor.

Jim Pursley: We've also recently been selected as the default solution for a large national health plan's SMB segment. Specifically, their under 3,000 lives book of business, where again, we replaced a competitor. This will function as an opt-out model whereby clients will automatically get Hinge Health unless they elect not to participate. We'll begin seeing these clients added in early 2027. These investments take us deeper into one of our lowest penetrated categories, SMB, where deals close fast, and it complements our large enterprise wins. We're winning across the board, from smaller employers all the way up to the biggest names out there. The third area I want to highlight is how our multi-product strategy is driving deeper relationships with our clients as we can impact a wider array of outcomes and therefore drive greater cost savings. This is a land and expand motion we've been talking about.

Speaker #2: This will function as an opt-out model whereby clients will automatically get Hinge Health, unless they elect not to participate. And we'll begin seeing these clients added in early 2027.

Speaker #2: These investments take us deeper into one of our lowest penetrated categories, SMB, where deals close fast, and it complements our large enterprise wins. So we're winning across the board, from smaller employers all the way up to the biggest names out there.

Speaker #2: The third area I want to highlight is how our multi-product strategy is driving deeper relationships with our clients, as we can impact a wider array of outcomes and, therefore, drive greater cost savings.

Speaker #2: This is the land and expand motion we've been talking about. Only a couple of months since its introduction, Hinge Select with Surgery has been well received.

Jim Pursley: Only a couple of months since its introduction, HingeSelect with surgery has been well received. We already have clients signed up for an anticipated 2027 launch, which signals that the market wants a unified solution that covers the full MSK journey, from physical therapy all the way through surgery and recovery. We've also expanded our provider network, spanning over 5,000 locations now. On migraine, as Dan mentioned, we have over 450 clients and 5 million lives covered already. What's exciting is that more than 10 health plans have turned on migraine for clients sitting underneath those partnership contracts. That's the power of our distribution model. When we launch something new, we can activate it rapidly across a huge footprint. Moving to GI, this is a need we hear about consistently from employers.

Speaker #2: We already have clients signed up for an anticipated 2027 launch, which signals that the market wants a unified solution that covers the full MSK journey.

Speaker #2: From physical therapy, all the way through surgery and recovery. We've also expanded our provider network, spanning over 5,000 migraine, as Dan mentioned, we have over 450 clients in 5 million lives covered already.

Speaker #2: And what's exciting is that more than 10 health plans have turned on migraine for clients sitting underneath those partnership contracts. That's the power of our distribution model.

Speaker #2: When we launch something new, we can activate it rapidly across a huge footprint. Moving to GI, this is a need we hear about consistently from employers.

Jim Pursley: Moving to GI, this is a need we hear about consistently from employers. It's a real pain point. They're excited that we're bringing another solution that furthers the triple aim: better member experience, better outcomes, and lower costs. We're planning to integrate GI into this year's sales season and roll it out more broadly in 2027. Through all of this, our client satisfaction retention remains incredibly strong. Our clients stick with us because we deliver results. As we add more products, we become even more embedded into their healthcare strategy. We also hold ourselves to a high bar for clinical evidence. We just published our 23rd clinical study, our ROI analysis, this one on our fall prevention program.

Speaker #2: It's a real pain point, and they're excited that we're bringing another solution that furthers the triple aim: better member experience, better outcomes, and lower costs.

Jim Pursley: It's a real pain point. They're excited that we're bringing another solution that furthers the triple aim: better member experience, better outcomes, and lower costs. We're planning to integrate GI into this year's sales season and roll it out more broadly in 2027. Through all of this, our client satisfaction retention remains incredibly strong. Our clients stick with us because we deliver results. As we add more products, we become even more embedded into their healthcare strategy. We also hold ourselves to a high bar for clinical evidence. We just published our 23rd clinical study, our ROI analysis, this one on our fall prevention program.

Speaker #2: We're planning to integrate GI into this year's sales season and roll it out more broadly in 2027. Through all of this, our clients satisfaction retention remains incredibly strong.

Speaker #2: Our clients stick with us because we deliver results, and as we add more products, we become even more embedded into their health care strategy.

Speaker #2: We also hold ourselves to a high bar for clinical evidence. We just published our 23rd clinical study—our ROI analysis—this one on our fall prevention program.

Speaker #2: Published in the Journal of Comparative Effectiveness Research, it found that among adults age 65 and older at risk for falls, those using Hinge Health's fall prevention program reported 37% fewer falls, and 57% lower odds of an emergency room visit at three months versus the control group.

Jim Pursley: Published in the Journal of Comparative Effectiveness Research, it found that among adults aged 65 and older at risk for falls, those using Hinge Health's fall prevention program reported 37% fewer falls and 57% lower odds of an emergency room visit at three months versus the control group. We hold every one of our care programs to the same standard, and you should expect us to keep publishing as we expand the platform. To wrap it up, the pipeline is strong. SMB is scaling fast, enterprise continues to perform, and our multi-product platform is driving outcomes and expansion within our client base. We feel great about where we are and where we're headed and look forward to sharing more about this year's sales season in the coming quarters. With that, I'll turn it over to James to walk you through the financials.

Speaker #2: We hold every one of our care programs to the same standard, and you should expect us to keep publishing as we expand the platform.

Speaker #2: So to wrap it up, the pipeline is strong. SMB is scaling fast, enterprise continues to perform, and our multi-product platform is driving outcomes and expansion within our client base.

Speaker #2: We feel great about where we are and where we're headed, and look forward to sharing more about this year's sales season and the coming quarters.

Speaker #2: With that, I'll turn it over to James to walk you through the financials.

James Budge: Thanks, Jim. Let me walk you through the financial details for the quarter and what's driving our strong performance. First, a quick reminder on our model, starting with how our billings work. Our calculated billings are determined by three key levers, the number of average eligible lives we have, multiplied by our yield, multiplied by our average selling price per member, or ASP. We recognize revenue ratably over the subscription period while billings reflect when members engage. Billings are a leading indicator of future revenue growth. Looking at Q2 performance, our LTM calculated billings reached $862 million, up 52% year over year from $568 million in Q2 last year. This strong billings growth sets us up well for continued revenue momentum. Revenue for Q2 came in at $213 million, representing 53% growth compared to $139 million in Q2 2025.

James Budge: Thanks, Jim. Let me walk you through the financial details for the quarter and what's driving our strong performance. First, a quick reminder on our model, starting with how our billings work. Our calculated billings are determined by three key levers, the number of average eligible lives we have, multiplied by our yield, multiplied by our average selling price per member, or ASP. We recognize revenue ratably over the subscription period while billings reflect when members engage. Billings are a leading indicator of future revenue growth. Looking at Q2 performance, our LTM calculated billings reached $862 million, up 52% year-over-year from $568 million in Q2 last year. This strong billings growth sets us up well for continued revenue momentum. Revenue for Q2 came in at $213 million, representing 53% growth compared to $139 million in Q2 2025.

Speaker #3: you through the financial details for the quarter, and what's driving our strong performance. First, a quick reminder on our model. Starting with how our billings work.

Speaker #3: Our calculated billings are determined by three key levers. The number of average eligible lives we have, multiplied by our yield, multiplied by our average selling price per member, or ASP.

Speaker #3: We recognize revenue ratably over the subscription period, while billings reflect when members engage. So billings are a leading indicator of future revenue growth. Looking at Q2's performance, our LTM calculated billings reached $862 million, up 52% year over year from $568 Thanks, Jim.

Speaker #3: That's 53% growth compared to $139 million in Q2. Let me walk you through 2025. That's well above our guidance range of $200 to $202 million. The revenue beat was driven by better-than-expected billings, which came from stronger yields.

James Budge: That's well above our guidance range of $200 to 202 million. The revenue beat was driven by better-than-expected billings, which came from stronger yields. These yield improvements importantly are durable, coming from the initiatives we discussed at our Movement conference, clinically targeted enrollment campaigns, member-to-member referrals, and member renewals, to name a few. These are programs we've built into our operating rhythm, and they're delivering consistent results quarter after quarter. Lives and ASP came in as expected in our prior guidance, the upside was all yield driven. On gross margin, we delivered 87% in Q2, up over 400 basis points from 83% in Q2 last year. This improvement reflects continued care team efficiency gains as we leverage AI and automation to deliver high-quality care at scale. We also benefited from a one-time tariff refund, which provided about 100 basis point boost this quarter.

Speaker #3: These yield improvements, importantly, are durable, coming from the initiatives we discussed at our movement conference: clinically targeted enrollment campaigns, member-to-member referrals, and member renewals, to name a few.

Speaker #3: These are programs we've built into our operating rhythm, and they're delivering consistent results quarter after quarter. Lives and ASP came in as expected in our prior guidance, so the upside was all yield-driven.

Speaker #3: On gross margin, we delivered 87% in Q2, up over $400 basis points from 83% in Q2 last year. This improvement reflects continued care team efficiency gains as we leverage AI and automation to deliver high-quality care at scale.

Speaker #3: We also benefited from a one-time tariff refund, which provided about a 100 basis point boost this quarter. We're also seeing strong operating leverage across the business.

James Budge: We're also seeing strong operating leverage across the business. Total operating expenses were 58% of revenue in Q2, down from 64% in the same period last year. We're growing more efficient in every part of the organization. That efficiency naturally translated into strong bottom-line profitability. We delivered $62 million of income from operations above our guidance range of $50 to $52 million. Operating margin came in at 29%, up from 19% in Q2 last year. For those keeping score, that's 1,000 basis points of margin expansion year over year. On cash generation, we produced $100 million in free cash flow in Q2, compared to $33 million in Q2 2025. That's a free cash flow margin of 47%, up from 23% last year. The business is not only growing quickly, it's generating substantial cash, which gives us enviable optionality.

James Budge: We're also seeing strong operating leverage across the business. Total operating expenses were 58% of revenue in Q2, down from 64% in the same period last year. We're growing more efficient in every part of the organization. That efficiency naturally translated into strong bottom-line profitability. We delivered $62 million of income from operations above our guidance range of $50 to $52 million. Operating margin came in at 29%, up from 19% in Q2 last year. For those keeping score, that's 1,000 basis points of margin expansion year-over-year. On cash generation, we produced $100 million in free cash flow in Q2, compared to $33 million in Q2 2025. That's a free cash flow margin of 47%, up from 23% last year. The business is not only growing quickly, it's generating substantial cash, which gives us enviable optionality.

Speaker #3: Total operating expenses were 58% of revenue in Q2, down from 64% in the same period last year. We're growing more efficient in every part of the organization.

Speaker #3: That efficiency naturally translated into strong bottom-line profitability. We delivered $62 million of income from operations above our guidance range of $50 to $52 million.

Speaker #3: Operating margin came in at 29%, up from 19% in Q2 last year. For those keeping score, that's 1,000 basis points of margin expansion year over year.

Speaker #3: On cash generation, we produced $100 million in free cash flow in Q2. Compared to $33 million in Q2 2025. That's a free cash flow margin of 47%.

Speaker #3: 23% last year. The business is not only growing quickly, it’s generating substantial cash, which gives us enviable optionality. We ended the quarter with $476 million in cash and equivalents on the balance sheet.

James Budge: We ended the quarter with $476 million in cash and equivalents on the balance sheet. During Q2, we repurchased around 480,000 shares for $26 million as part of our ongoing capital allocation strategy. Our weighted average diluted share count for the quarter was 83.4 million shares, and our diluted net income per share attributable to common shareholders for the quarter was $0.59. One important note on the cash position I just mentioned. That $476 million does not yet include the $105 million cash outlay for the Cylinder Health acquisition, which we expect to close later this quarter. This acquisition was not part of our guidance at our Investor Day, and we're treating it as incremental to our plan. It's still early, but we're excited about what this acquisition brings to our multi-product strategy.

Speaker #3: During Q2, we repurchased around $480,000 shares for $26 million as part of our ongoing capital allocation strategy. Up from diluted share count for the quarter was 83.4 million shares.

Speaker #3: And our diluted net income per share attributable to common shareholders for the quarter was $0.59. One important note on the cash position I just mentioned.

Speaker #3: That $476 million does not yet include the $105 million cash outlay for the Cylinder Health acquisition, which we expect to close later this quarter.

Speaker #3: This acquisition was not part of our guidance at our investor day, and we're treating it as incremental to our plan. It's still early, but we're excited about what this acquisition brings to our multi-product strategy.

Speaker #3: We expect cylinder to contribute approximately $7 to $8 million in revenue for the remaining approximate four months of 2026, and meaningfully more in 2027 onwards as we integrate and scale the offering.

James Budge: We expect Cylinder to contribute approximately $7 to $8 million in revenue for the remaining approximate four months of 2026, and meaningfully more in 2027 onwards as we integrate and scale the offering. We want to be clear, we're playing the long game in GI, and we'll be investing to ensure we can drive incredible outcomes while delivering a great experience and reducing costs for our clients. To summarize Q2, strong billings growth, revenue well ahead of guidance driven by continued durable yield improvements, expanding margins, significant free cash flow generation, TAM expansion with GI care, and a solid balance sheet that gives us flexibility to invest in growth both organically and inorganically. Let me turn to our outlook for the rest of the year. Given the strong performance we just walked through, we're confident in raising our guidance.

Speaker #3: We want to be clear. We're playing the long game in GI, and we'll be investing to ensure we can drive incredible outcomes. While delivering a great experience and reducing costs for our clients.

Speaker #3: So to summarize Q2: strong billings growth; revenue well ahead of guidance, driven by continued, durable yield improvements; expanding margins; significant free cash flow generation; TAM expansion with GI care; and a solid balance sheet that gives us flexibility to invest in growth, both organically and inorganically.

Speaker #3: Now, let me turn to our outlook for the rest of the year. Given the strong performance we just walked through, we're confident in raising our guidance.

Speaker #3: For Q3 2026, we're guiding to revenue of $223 to $225 million. At the midpoint of $224 million, that represents 45% growth year over year.

James Budge: For Q3 2026, we're guiding to revenue of $223 to $225 million. At the midpoint of $224 million, that represents 45% growth year over year. We're also guiding to income from operations of $61 to $63 million, which is a 28% operating margin at the midpoint. For the full year 2026, we're raising our revenue guidance to $856 to $860 million. At the midpoint of $858 million, that's 46% growth compared to 2025. We're also raising our income from operations guidance to $236 to $244 million, representing a 28% operating margin at the midpoint, up from our prior guidance of $217 to $227 million, or a 27% margin. Let me walk you through what's driving these numbers. On the top line, eligible lives are tracking in line with what we've shared before.

James Budge: For Q3 2026, we're guiding to revenue of $223 to $225 million. At the midpoint of $224 million, that represents 45% growth year-over-year. We're also guiding to income from operations of $61 to $63 million, which is a 28% operating margin at the midpoint. For the full-year 2026, we're raising our revenue guidance to $856 to $860 million. At the midpoint of $858 million, that's 46% growth compared to 2025. We're also raising our income from operations guidance to $236 to $244 million, representing a 28% operating margin at the midpoint, up from our prior guidance of $217 to $227 million, or a 27% margin. Let me walk you through what's driving these numbers. On the top line, eligible lives are tracking in line with what we've shared before.

Speaker #3: We're also guiding to income from operations of $61 to $63 million. Which is a 28% operating margin at the year 2026, we're raising our revenue guidance to $856 to $860 million.

Speaker #3: At the midpoint of $858 million, that's 46% growth compared to 2025. We're also raising our income from operations guidance to $236 to $244 million.

Speaker #3: Representing a 28% operating margin at the midpoint. Up from our prior guidance of $217 to $227 million, or a 27% margin. Let me walk you through what's driving these numbers.

Speaker #3: On the top line, eligible lives are tracking in line with what we've shared before. ASP is also expected to track in line with what we've shared, which is essentially flat to last year.

James Budge: ASP is also expected to track in line with what we've shared, which is essentially flat to last year. What continues to trend higher is yield. The initiatives we've been running are delivering consistent results, and we're seeing that flow through in our billings and revenue. We're now expecting yield to come in around 4.45% for the year, and that's the primary driver of our revenue raise. On profitability, the increase in income from operations and margin comes from two places. First, from the benefit of that top-line outperformance I just described. Second, we've been able to temper some costs without compromising our growth trajectory. That discipline is showing up in our margins. On share count, we're expecting to end 2026 with 85 to 87 million diluted shares outstanding, higher than where we ended in Q2, primarily due to the conversion of the remaining preferred shares into common.

Speaker #3: What continues to trend higher is yield. The initiatives we've been running are delivering consistent results, and we're seeing that flow through in our billings and revenue.

Speaker #3: We're now expecting yield to come in around 4.45% for the year, and that's the primary driver of our revenue rates. On profitability, the increase in income from operations and margin comes from two places.

Speaker #3: First, from the benefit of that top-line outperformance I just described. And second, we've been able to temper some costs without compromising our growth trajectory.

Speaker #3: That discipline is showing up in our margins. On share count, we're expecting to end 2026 with 85 to 87 million diluted shares outstanding. Higher than where we ended in Q2, primarily due to the conversion of the remaining preferred shares into common.

Speaker #3: The expected share count also reflects the buyback activity we've done year to date, though it does not include any potential repurchases in the second half.

James Budge: The expected share count also reflects the buyback activity we've done year to date, though it does not include any potential repurchases in the H2. On that note, our board of directors has approved a new $300 million share repurchase authorization. This reflects our confidence in the business and commitment to returning capital to shareholders when market conditions warrant. The amount is roughly in line with the free cash flow we've generated over the past Q4. We've said for several quarters now that our capital allocation strategy would be, first, organic investments into our product portfolio to improve outcomes for our members, clients, and partners. Second, inorganic investments, particularly tuck-in acquisitions of technologies or businesses that accelerate our impact on members, clients, and partners. Third, to return capital to investors principally through a share repurchase program.

James Budge: The expected share count also reflects the buyback activity we've done year-to-date, though it does not include any potential repurchases in the H2. On that note, our board of directors has approved a new $300 million share repurchase authorization. This reflects our confidence in the business and commitment to returning capital to shareholders when market conditions warrant. The amount is roughly in line with the free cash flow we've generated over the past Q4. We've said for several quarters now that our capital allocation strategy would be, first, organic investments into our product portfolio to improve outcomes for our members, clients, and partners. Second, inorganic investments, particularly tuck-in acquisitions of technologies or businesses that accelerate our impact on members, clients, and partners. Third, to return capital to investors principally through a share repurchase program.

Speaker #3: On that note, our Board of Directors has approved a new $300 million share repurchase authorization. This reflects our confidence in the business and our commitment to returning capital to shareholders when market conditions warrant it.

Speaker #3: And the amount is roughly in line with the free cash flow we've generated over the past four quarters. We've set for several quarters now that our capital allocation strategy would be first organic investments into our product portfolio to improve outcomes for our members, clients, and partners, second, inorganic investments, particularly tuck-in acquisitions of technologies or businesses that accelerate our impact on members, clients, and partners, and third, to return capital to investors principally through a share repurchase program.

Speaker #3: Thanks to our robust free cash flows, we are pleased to have executed all three of these objectives already in 2026. And this will remain our strategy going forward.

James Budge: Thanks to our robust free cash flows, we are pleased to have executed all three of these objectives already in 2026, this will remain our strategy going forward. With that, let me turn it back to Dan to wrap up.

Speaker #3: With that, let me turn it back to Dan to wrap up.

Speaker #2: Thanks, James. Let's bring this all together. We feel very good about where Hinge Health is headed—not just for the rest of 2026, but for many years ahead.

Daniel Perez: Thanks, James. Let's bring this all together. We feel very good about where Hinge Health is headed, not just for the rest of 2026, but for many years ahead. First, the fundamentals of our business have never been stronger. We're growing revenue 45% this year while expanding margins and generating significant free cash flow. That is a rare combination at our scale, it speaks to the quality of the model we have built and the discipline of our team. Second, we are showing that our platform strategy works. Our MSK program remains by far the market leading product for a decade now, whose cash flows are allowing us to invest in new product lines. Migraine is gaining traction. GI gives us another meaningful adjacency, with every new program, we believe we are making the platform more relevant to members, more valuable to clients, and more durable over time.

Speaker #2: First, the fundamentals of our business have never been stronger. We're growing revenue 45% this year, while expanding margins and generating significant free cash flow.

Speaker #2: That is a rare combination at our scale, and it speaks to the quality of the model we have built and the discipline of our team.

Speaker #2: Second, we are showing that our platform strategy works. Our MSK program remains by far the market-leading product for a decade now, whose cash flows are allowing us to invest in new product lines.

Speaker #2: Migraine is gaining traction. GI gives us another meaningful adjacency, and with every new program, we believe we are making the platform more relevant to members, more valuable to clients, and more durable over time.

Speaker #2: Third, the broader environment continues to play to our strengths. Employers are under pressure to drive more value from healthcare spend. Buyers are asking tougher questions and looking for proof, not promises.

Daniel Perez: Third, the broader environment continues to play to our strengths. Employers are under pressure to drive more value from healthcare spend. Buyers are asking tougher questions and looking for proof, not promises. We think that favors companies that can deliver measurable outcomes, real ROI, durable engagement, and a care experience that works in the real world. While we are pleased with the quarter, we are focused on something bigger than any single quarter. We are building a company that can grow for years to come, we're making investments today that will pay off tomorrow for our members, clients, and investors. Our story is just getting started. Thank you to our team for another outstanding quarter, to our clients and members for trusting us with their care, and to all of you on the call for your continued support. With that, I'll turn it back to Bianca for Q&A.

Speaker #2: We think that favors companies that can deliver measurable outcomes, real ROI, durable engagement, and a care experience that works in the real world. So, while we are pleased with the quarter, we are focused on something bigger than any single quarter.

Speaker #2: We are building a company that can grow for years to come, and we're making investments today that will pay off tomorrow for our members, clients, and investors.

Speaker #2: Our story is just getting started. Thank you to our team for another outstanding quarter, for our clients and members for trusting us with their care, and to all of you on the call for your continued support.

Speaker #2: With that, I'll turn it back to Bianca for Q&A.

Speaker #1: Thanks, Dan. Operator, we're now ready to take questions.

Bianca Buck: Thanks, Dan. Operator, we're now ready to take questions.

Speaker #4: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ryan MacDonald with Needham & Company. Your line is open. Please go ahead.

Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ryan MacDonald with Needham & Company. Your line is open. Please go ahead.

Speaker #4: If you have dialed into today's call, please press star 9 to raise your hand. And star 6 to unmute. Please stand by while we compile the Q&A roster.

Speaker #4: Your first question comes from the line of Ryan McDonald, would need him and company. Your line is open. Please go ahead.

Speaker #5: Hi, thanks for taking my questions and congrats on an excellent quarter. Maybe just to start on the big news with GI and the entrance into the market.

Ryan MacDonald: Hi, thank you for taking my questions and congrats on an excellent quarter. Maybe just to start on the big news with GI and the entrance into the market. Obviously, a massive opportunity here. Can you talk about sort of the replicability of the core Hinge Health care model as you move into GI? I think initially thinking, it seems like GI space would be something that maybe requires a little bit more of live sort of virtual sessions or maybe an in-person component. Can you just kind of talk about some of the moving parts there and maybe what you can take from the core Hinge model, and how you can apply it to GI, and Cylinder moving forward?

Speaker #5: Obviously, there’s a massive opportunity here, but can you talk about the replicability of the core Hinge Health care model as you move into GI?

Speaker #5: I think initially thinking, it seems like GI space would be something that maybe requires a little bit more of live sort of virtual sessions or maybe an in-person component.

Speaker #5: But can you just kind of talk about some of the moving parts there and maybe what you can take from the core Hinge model and how you can apply it to GI and cylinder moving forward?

Speaker #3: Sure. Great. Great question. So there's quite a bit of reasons why we were very interested in GI broadly and cylinder specifically. Again, with GI, just it's a huge area of unmet clinical need.

Daniel Perez: Sure. Great question. There's quite a bit of reasons why we were very interested in GI broadly and Cylinder specifically. Again, with GI, it's a huge area of unmet clinical need, and we felt confident that we could have a big impact. Not only that, our clients kept talking to us about it. In our annual business reviews with so many of our clients, they kept telling us how it's a top cost driver and that it's growing, particularly with the prevalence of GLP-1s, which essentially cause gastroparesis. The GI symptoms are rising in prevalence, but the access to care is only becoming more and more acute. What's also interesting about Cylinder in particular is that their company and their product is very analogous to what we're doing.

Speaker #3: And we felt confident that we could have a big impact. But not only that, our clients kept talking to us about it in our annual business reviews with so many of our clients.

Speaker #3: They kept telling us how it's a top cost driver and that it's growing, particularly with the prevalence of GLP-1s, which essentially cost gastroparesis. GI symptoms are rising in prevalence, but the access to care is only becoming more and more acute.

Speaker #3: What's also interesting about Cylinder in particular is that their company and their product are very analogous to what we're doing. We could map just about every single one of Cylinder's functions to a pre-existing function here at Hinge Health, which means that the integration will be a lot smoother than with any other company out there.

Daniel Perez: We could map just about every single one of Cylinder's function to a preexisting function here at Hinge Health, which means that the integration will be a lot smoother than buying any other company out there. They're selling to the same customers, have the same go-to-market motion, have the same partners, distribution partners that we do. They have three of the top five national health plans as partners, two of the top three pharmacy benefit managers as partners. We share each of those partners, as well as nearly 100 employer customers, so significant overlap with Hinge Health. We saw that there was just a lot of analogous functions between Cylinder and us. Now, when it comes to the product experience, our vision is to use technology to automate and scale delivery of care.

Speaker #3: And they're selling to the same customers, have the same go-to-market motion, have the same partners distribution partners that we do. They have three of the top five national health plans as partners.

Speaker #3: Two of the top three pharmacy benefit managers as partners. We share each of those partners as well as nearly 100 employer customers with significant overlap with Hinge Health.

Speaker #3: So we saw that there were just a lot of analogous functions between Cylinder and us. Now, when it comes to the product experience, our vision is to use technology to automate and scale delivery of care.

Speaker #3: And again, given how constrained access to GI care is in America, this need is particularly acute here. So, similar to our MSK and migraine programs, our GI care program will first be tech and AI-driven at its core. We're going to deliver best-in-class GI care through AI and an AI-led experience—personalized nutrition guidance, easy tracking of what members eat and how their bodies respond, and intelligent identification of triggers behind their digestive issues—so they get clear, personalized plans instead of the fragmented care that's typical today.

Daniel Perez: Again, given how constrained access to GI care in America, this need is particularly acute here. Similar to MSK and migraine programs, our GI care program will first be tech and AI-driven at its core. We're going to deliver best-in-class GI care through an AI-led experience, personalized nutrition guidance, easy tracking of what members eat, how their bodies respond, intelligent identification of triggers behind their digestive issues. They get clear, personalized plan instead of the fragmented care that's typical today. Second, we're going to pair that technology with improved access to GI specialists so members can get human support when they need it. Third, we'll build on the strong product foundations we've already established, the same ones that drive engagement, outcomes, enrollment, and ultimately ROI across our programs.

Speaker #3: Second, we're going to pair that technology with improved access to GI specialists. So members can get human support when they need it. And third, we'll build on the strong product foundations we've already established, the same ones that drive engagement, outcomes, enrollment, and ultimately ROI across our programs.

Speaker #3: And what's great about Cylinder is that it buys us an 18- to 24-month head start for entering the digestive health sector.

Daniel Perez: What's great about Cylinder, is that it buys us 18 to 24-month head start for entering the digestive health sector.

Speaker #5: Super helpful there. Appreciate it. And then maybe as a follow-up, one for Jim: great to hear about how strong the selling season's been going across Core, Migraine, Hinge Select.

Ryan MacDonald: Super helpful there. Appreciate it. Maybe just a follow-up one for Jim. Great to hear about how strong the selling season's been going across core migraine, HingeSelect. Would be curious to sort of get your commentary and thoughts about one of your main competitors, the CEO was out last week talking about also elevated win rates. I think they had put up 70.5% this year in the selling season. You obviously noted in the script, as well that your win rates are up, can you just kind of help us sort of flush out what's happening in the market competitively here? Maybe how concerning or not that is from increasing competition from other vendors?

Speaker #5: But we'd be curious to sort of get your commentary and thoughts about one of your main competitors, the CEO was out last week talking about also elevated win rates.

Speaker #5: I think they had put up 70.5% this year in the selling season. But you obviously noted in the script as well that your win rates are up.

Speaker #5: But can you just kind of help us sort of flush out what's happening in the market competitively here and maybe how concerning or not that is from increasing competition from other vendors?

Speaker #6: Yeah. Ryan, thank you for the question. I can't comment on our competitors and how they calculate their win rate. So I'll let them speak for themselves.

Jim Pursley: Yeah. Brian, thank you for the question. I can't comment on our competitors and how they calculate their win rate, I'll let them speak for themselves. I think what I can tell you is we've never felt better about our competitive positioning. Our data, which we think is very accurate, incredibly transparent, would tell you that our win rates are at an all-time high. We could rattle off quite a few accounts which we've taken from our competition here in the last couple of months. I referenced some of that in our prepared remarks, we feel really good about the active pipeline. I think what is leading to that, which is part of your question, is the product is showing incredibly well. We've invested a tremendous amount in the product experience. Our members love Hinge Health more than ever. As a result, they're using it.

Speaker #6: I think what I can tell you is we've never felt better about our competitive positioning. Our data, which we think is very accurate and incredibly transparent, would tell you that our win rates are at an all-time high.

Speaker #6: We could rattle off quite a few accounts that we've taken from our competition here. In the last couple of months—I referenced some of that in our prepared remarks.

Speaker #6: And we feel really good about the active pipeline. I think what is leading to that, which is part of your question, is the product is showing incredibly well.

Speaker #6: We've invested a tremendous amount in the product experience. Our members love Hinge Health more than ever. As a result, they're using it. That level of engagement produces strong clinical outcomes.

Jim Pursley: That level of engagement produces strong clinical outcomes, those clinical outcomes are leading to real measurable cost savings. That flywheel, which we continue to invest in, is being recognized by the market. Additionally, as you look at large buyers, governments, Fortune 100 employers, the operational rigor, the performance at scale, things like data security and privacy, those elements become increasingly important. I think our investments there and our demonstrated market leadership has been recognized and really has contributed to our strong win rates here over the last quarter and the last year. Yeah. Thanks for the question, we feel really good about our improving win rate.

Speaker #6: And those clinical outcomes are leading to real measurable cost savings. And that flywheel, which we continue to invest in, is being recognized by the market.

Speaker #6: Additionally, as you look at large buyers, governments, Fortune 100 employers, the operational rigor, the performance at scale, things like data security and privacy, those elements become increasingly important and I think our investments there and our demonstrated market leadership has been recognized.

Speaker #6: And really has contributed to our strong win rates here over the last quarter and the last year. So yeah, thanks for the question and we feel really good about our improving win rate.

Speaker #3: And just to emphasize that point as well, as a public company, we take the data points we put out there very seriously. As a private company, people could just put whatever they want out there.

Daniel Perez: Just to emphasize as well on that point, as a public company, we take the data points we put out there very seriously, and as a private company, people could just put whatever they want out there. Look, we believe we're about three to four times larger than second place, but the competitor you mentioned has been claiming a 70% win rate for five years, and yet we remain so much larger. I think somebody's math isn't adding up.

Speaker #3: And look, we believe we're about three to four times larger than second place. But the competitor you mentioned has been claiming a 70% win rate for five years.

Speaker #3: And yet we remain so much larger. So I think somebody's math isn't adding up.

Speaker #5: Appreciate the color clearly. You can see the strength in the numbers. Thanks.

Ryan MacDonald: Appreciate the color. Clearly can see the strength in the numbers. Thanks.

Speaker #1: Your next question comes from the line of Sakeet Kalia with Barclays. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Saket Kalia with Barclays. Your line is open. Please go ahead.

Speaker #7: Okay, great.

Saket Kalia: Okay, great. Hey, guys. Thanks for taking my questions here. Great to see these results. Numbers speak for themselves, well done. Dan, maybe to start with you. First of all, congrats on Cylinder. I was wondering if you could just go one level deeper into the difference in yields between Cylinder and Hinge. I think James mentioned from Cylinder's perspective, about 150,000 members. I heard 2 million lives in there as well. Seems like a little bit of a higher yield, and you correct me there if I'm wrong, but why do you think that is, and is there more opportunity there over time?

Speaker #8: Hey guys, thanks for taking my questions here. And great to see these results — numbers speak for themselves, so well done. Dan, maybe to start with you: first of all, congrats on Cylinder.

Speaker #8: I was wondering if you could just go one level deeper into the difference in yields between Cylinder and Hinge. I think James mentioned, from Cylinder's perspective, about 150,000 members.

Speaker #8: I heard 2 million lives in there as well, so it seems like a little bit of a higher yield. And correct me there if I'm wrong.

Speaker #8: But why do you think that is? And is there more opportunity there over time?

Speaker #3: Great question. And to clarify, the 150,000 numbers are lifetime members. So it's not members in a given year that they've treated, but they have experience of having across their lifetime treated 150,000 members.

Daniel Perez: Great question. To clarify, the 150,000 members are lifetime members. It's not members in a given year that they treated, but they have experience of having, across their lifetime, treated 150,000 members. Long term, we see the yields of GI, digestive healthcare, being comparable to our yields with digital physical therapy because the burden is there. About 25% of adults are dealing with chronic digestive health conditions in any given year. We think we can have a very, very large impact. We don't think out the gate their yields will be as large as our digital physical therapy yields. As part of our diligence, we dug really, really deep into their motions, and into how they enroll members, how they engage members. It was actually one of the confidence-building exercises in terms of going through the acquisition.

Speaker #3: And so, long term, we see the yields of GI digestive healthcare being comparable to our yields with digital physical therapy, because the burden is there.

Speaker #3: About 25% of adults are dealing with chronic digestive health conditions any given year. And we think we could have a very, very large impact.

Speaker #3: We don't think, out of the gate, their yields will be as large as our digital physical therapy yields. But as part of our, as part of our diligence, we dug really, really deep into their motions, and into how they enroll members, how they engage members.

Speaker #3: And it was actually one of the confidence-building exercises, in terms of just going through the acquisition. It was because we saw a lot of low-hanging fruit to be picked, in that there's a lot of best practices that we do, a lot of technology that we have built to identify members, to enroll members, to then engage members—and then repeatedly engage members—in their care that Cylinder hasn't yet adopted. Which is fine.

Daniel Perez: It was because we saw a lot of low-hanging fruit to be picked in that there's a lot of best practices that we do, a lot of technology that we have built to identify members, to enroll members, to then engage members, and then repeatedly engage members in their care that Cylinder hasn't yet adopted, which is fine. It's no knock on them. They're a younger company than us, but that we've refined over many, many years. We're excited to bring these best practices over to Cylinder. We're going to learn a lot from them, and we think they've got a lot to learn from us, and we're really excited about this partnership.

Speaker #3: It's no knock on them. They're comfortable enough, but that we've refined over many, many years. And we're excited to bring these best practices over to cylinder.

Speaker #3: And we're going to learn a lot from them. And we think they've got a lot to learn from us. And we're really excited about this partnership.

Speaker #8: Got it, got it. That sounds great. James, maybe for my follow-up for you, just to stay on Cylinder—you gave some really helpful breadcrumbs on the business in your prepared remarks.

Saket Kalia: Got it. That sounds great. James, maybe for my follow-up for you, just to stay on Cylinder. You gave some really helpful breadcrumbs on the business in your prepared remarks. I was wondering if you could just go one level deeper, just into the model. Whatever you can provide, understanding that the deal hasn't closed yet, whether that's go to market, revenue growth, profitability, any sort of broad brushes that could help. Maybe as part of the question, can you just clarify, does the guide include Cylinder for the remainder of this year? Thanks.

Speaker #8: I was wondering if you could just go one level deeper into the model—whatever you can provide, understanding that the deal hasn't closed yet.

Speaker #8: Whether that's go-to-market, revenue growth, profitability—any sort of broad strokes that could help. And maybe, as part of the question, can you just clarify: Does the guide include Cylinder for the remainder of this year?

Speaker #8: Thanks.

Speaker #3: Yeah. Yeah, thanks for the follow-on. So I'll just take the last question first. So the guide does include the 7, 8 million dollars that we expect for cylinder.

James Budge: Yeah. Thanks for the follow-on. I'll just take the last question first. The guide does include the $78 million that we expect for Cylinder. We expect it to close, call it end of August, early September. That gives us about four months. That $78 million is only for the four months. That implies about a $20 to $25 million a year business this year in 2026, of which we'll capture about seven to eight million of that. That goes up somewhat higher next year, but it really starts to expand in 2028 after we get through a full selling season with our expanded sales force. That's the year we're really looking towards to see it take off. You'll see it do a number of things. You'll see revenue contribution, obviously. Where's that going to come from?

Speaker #3: We expect it to close call at end of August, early September. So that gives us about four months. So that 7, 8 million is only for the four months.

Speaker #3: So that implies about a 20 to 25 million dollar a year business this year. In 2026, of which we'll capture about 7 to 8 million of that.

Speaker #3: That goes up somewhat higher next year, but it really starts to expand in 2028 after we get through a full selling season with our expanded Salesforce.

Speaker #3: So that's the year we're really looking towards to see it take off. You'll see it do a number of things. You'll see revenue contribution, obviously, where is that going to come from?

Speaker #3: It's going to come from yield improvements, so it's going to be yet another capability on top of migraine and the other things we have to continue to grow yield up over time.

Jim Pursley: It's going to come from yield improvements, so it's going to be yet another capability on top of migraine and other things we have to continue to grow yield up over time. We see it as a big potential market for us with yields approaching what we already have, as Dan mentioned, in MSK. The go to market is very similar. It's one of the reasons Dan mentioned we really like this acquisition. It's got a

James Budge: It's going to come from yield improvements, so it's going to be yet another capability on top of migraine and other things we have to continue to grow yield up over time. We see it as a big potential market for us with yields approaching what we already have, as Dan mentioned, in MSK. The go to market is very similar. It's one of the reasons Dan mentioned we really like this acquisition. It's got a

Speaker #3: And we see it as a big potential market for us with yields approaching what we already have as Dan mentioned in MSK, the go-to-market is very similar.

Speaker #3: It's one of the reasons Dan mentioned we really like this acquisition. It's got a very similar go-to-market, similar partners, similar PBM, similar customer profiles.

Daniel Perez: Very similar go-to-market, similar partners, similar PBMs, similar customer profiles. It's got a lot to like, and we think we can take what is already a good business and, with the additional resources we have, turn into something outstanding.

James Budge: Very similar go-to-market, similar partners, similar PBMs, similar customer profiles. It's got a lot to like, and we think we can take what is already a good business and, with the additional resources we have, turn into something outstanding.

Speaker #3: So it's got a lot to like. And we think we can take what is already a good business and with the additional resources we have turn it into something outstanding.

Speaker #8: Super helpful. Congrats again, guys. Thank you.

Saket Kalia: Super helpful. Congrats again, guys. Thank you.

Speaker #3: Yep.

Daniel Perez: Yep.

Speaker #1: Your next question comes from the line of Scott Stonehouse with KeyBank. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Scott Shenault with KeyBanc. Your line is open. Please go ahead.

Speaker #7: Hi guys, thanks for taking my question. Following up on Cylinder, it looks like there's a large diagnostics side to this acquisition. Maybe talk about how that is going to be monetized on your platform.

Scott Shenault: Hi, guys. Thanks for taking my question. Following up on Cylinder, it looks like there's a large diagnostics side to this acquisition. Maybe talk about how that is going to be monetized on your platform, and maybe talk about future growth opportunities within diagnostics, if this is the launching point. Thanks.

Scott Schoenhaus: Hi, guys. Thanks for taking my question. Following up on Cylinder, it looks like there's a large diagnostics side to this acquisition. Maybe talk about how that is going to be monetized on your platform, and maybe talk about future growth opportunities within diagnostics, if this is the launching point. Thanks.

Speaker #7: And maybe talk about future growth opportunities within diagnostics if this is the launching point. Thanks.

Speaker #3: Great question. There is currently a gut microbiome component of the product, which we're evaluating whether to continue. It's generally speaking, diagnostics in-person diagnostics is an important part of the workup for somebody with GI symptoms.

Daniel Perez: Great question. There is currently a gut microbiome component of the product, which we're evaluating whether to continue. Generally speaking, in-person diagnostics is an important part of the workup for somebody with GI symptoms. It's not required for every workup, but it is an important component that we actually like the fact that we're licensed in all 50 states, and we have to refer you out or give you an order to grab some labs at Quest or give you an order to grab some labs at Labcorp. We're able to do that, and it really helps us to better understand what might be going on with a given member. I think what you're referring to is their Gut Check component of their product and that's the gut microbiome, which we're evaluating what the future of that component of the product may be in 2027 and beyond.

Speaker #3: It's not required for every workup, but it is an important component. We actually like the fact that we're licensed in all 50 states. If we have to refer you out or give you an order to grab some labs and questions, or give you an order to grab some labs at LabCorp, we're able to do that.

Speaker #3: And it really helps us to better understand what might be going on with the given member. But I think what you're referring to is their gut check component of their product.

Speaker #3: And that's a gut microbiome, which we're evaluating whether what the future of that component of the product may be. In 2027 and beyond.

Speaker #7: And then one just last follow-up on cylinder. Any areas of geographical strength that this acquisition brings to you or is there certain density where this members are located or the employers are based out of?

Scott Shenault: One just last follow-up on Cylinder. Any areas of geographical strength that this acquisition brings to you, or is there a certain density where the members are located, or the employers are based out of?

Scott Schoenhaus: One just last follow-up on Cylinder. Any areas of geographical strength that this acquisition brings to you, or is there a certain density where the members are located, or the employers are based out of?

Speaker #3: One of that's one of the interesting things about digital health is that unlike a health system where you might be a very large employer in a given metropolitan because there's so much physical infrastructure as a digital health solution, you really competing across all 50 states in the United States.

Daniel Perez: That's one of the interesting things about digital health is that, unlike a health system where you might be a very large employer in a given metropolitan because there's so much physical infrastructure, as a digital health solution, you're really competing across all 50 states in the United States. While Cylinder is a younger company, that is, they have more revenue concentration across their logos than we would, I suppose there may be a few geographies that have a higher amount of lives, but nothing that stood out to us. No, we don't see it. We think the bigger sort of concentration or footprint that's an asset that we could build upon is their distribution partnerships with health plans and pharmacy benefit managers. They have really strong partners. We diligenced all of them, spoke to all of them, as well as all of their largest customers.

Speaker #3: And while cylinder is a younger company, that is, they have more revenue concentration across their logos. Then we would. I suppose there may be a few geographies that have a higher amount of lives, but nothing that stood out to us.

Speaker #3: And so no, we don't say we think the bigger sort of concentration or footprint that's an asset that we could build upon is their distribution partnerships with health plans and pharmacy benefit managers.

Speaker #3: And these are they have really strong partners. We diligenced all of them spoke to all of them as well as all of their largest customers.

Speaker #3: And there's the enthusiasm that these partners have with the leadership at Cylinder, the product at Cylinder, and the need for better digestive health, which gave us a lot of confidence.

Daniel Perez: Just the enthusiasm that these partners have with the leadership of Cylinder, the product of Cylinder, and the need for better digestive health gave us a lot of confidence, as well as their confidence in this acquisition, and they felt this was good for them, good for their members, and good for Cylinder and Hinge Health.

Speaker #3: As well as their confidence in this acquisition. And they felt this was good for them, good for their members, and good for cylinder in general.

Speaker #7: Thanks, Dan.

Scott Shenault: Thanks, Dan.

Scott Schoenhaus: Thanks, Dan.

Speaker #1: Your next question comes from the line of Stan Bernstein with Wells Fargo. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Stan Bernstein with Wells Fargo. Your line is open. Please go ahead.

Speaker #5: Yes. Hi. Thanks for taking my questions. Can you maybe just walk us through how the cylinder deal came about? And can you comment on what's your appetite for additional M&A?

Stan Bernstein: Yes, hi. Thanks for taking my questions. Can you maybe just walk us through how the Cylinder deal came about? Can you comment on what's your appetite for additional M&A? Are there any other potential deals on the table here?

Stan Berenshteyn: Yes, hi. Thanks for taking my questions. Can you maybe just walk us through how the Cylinder deal came about? Can you comment on what's your appetite for additional M&A? Are there any other potential deals on the table here?

Speaker #5: Are there any other potential deals on the table here?

Speaker #3: Scott, thank you. So we've actually been looking at cylinder from afar for quite a while. And admiring the business that they've built and admiring their team and their product.

Daniel Perez: Stan, thank you. We've actually been looking at Cylinder from afar for quite a while and admiring the business that they've built, admiring their team and their product, and hearing from our joint clients. We share several dozen clients together, we've been able to get feedback from clients over time. We get inbound, some weeks it's two or three companies inbound looking to potentially get a part of Hinge. We are constantly looking at potential opportunities. With Cylinder, we started conversations together several months ago in earnest about this, we got a chance to get to know their leadership team. Terry, who we're very impressed with, got to know their investors, it's a small community, our leadership team, particularly Jim, already knew their investors. We just dug deeper into the product and the opportunity.

Speaker #3: And hearing from our joint clients, we share several dozen clients together. So we've been able to get feedback from clients over time. Some weeks, we get inbound interest from two or three companies looking to potentially get a partner in.

Speaker #3: So we are constantly looking at potential opportunities. With cylinder, we started a conversation together several months ago in earnest about this. And we got a chance to get to know their leadership team.

Speaker #3: Terry, who we were very impressed with, got to know their investors. And we have it's a small community. So our leadership team, particularly Jim, already knew their investors.

Speaker #3: And we just dug deeper into the product and the opportunities. We spoke to quite a few of our clients as well, who've consistently mentioned how big of an opportunity it is for us to address GI health.

Daniel Perez: Spoke to quite a few of our clients as well, who consistently mentioned how big of an opportunity it is for us to address GI health. That's what gave us a lot of confidence to move on. Jim, anything to add?

Speaker #3: And that's what gave us a lot of comms to move on. Jim, anything to add?

Speaker #8: Just Dan, I think what you already had spoken about in a previous question was really just that strength of the signal from the market.

Jim Pursley: Just, Dan, I think what you already had spoken about in a previous question was really just that strength of the signal from the market, GI being a real pain point for our clients that are looking to actively solve. That demand has really only intensified with the rise of GLP-1s, which frequently cause GI side effects. You look at the unmet clinical need, you look at the cost that it's driving, and you look at what clients have come to expect from Hinge, which is that triple aim, delivering a delightful and highly engaging member experience, proven clinical outcomes, and then measurable cost savings. It just felt like the right time and the right market to approach, and Cylinder, as Dan mentioned, really became the clear choice for how to do that, and we're really excited about it.

Speaker #8: GI being a real pain point for our clients that are looking to actively solve. And that demand has really only intensified with the rise of GLP-1s.

Speaker #8: Which frequently caused GI side effects. So you look at the unmet clinical need, you look at the cost that is driving, and you look at what clients have come to expect from Hinge, which is that triple aim—delivering a delightful and highly engaging member experience, proven clinical outcomes, and then measurable cost savings.

Speaker #8: It just felt like the right time. And the right market to approach. And cylinder, as Dan mentioned, really became the clear choice for how to do that.

Speaker #8: And we're really excited about it.

Speaker #3: And just to put a fine point on that—again, what we're getting with Cylinder is a solid product foundation and clinical expertise built across almost a decade of delivering care in digestive health.

Daniel Perez: Just to put a finer point on that, again, what we're getting with Cylinder is a solid product foundation and clinical expertise built across almost a decade of delivering care in digestive health. Secondly, we're inheriting a meaningful number of client and channel partners. Again, there's going to be a lot of work to unify the two products, but we are easily accelerating our product and go-to-market timeline versus a de novo build by 18 to 24 months. More broadly, our strategy is usually to build organically, and you've seen it with migraine, but we're open to M&A when it accelerates our timeline. We've got a track record of integrating technologies quickly and building them out into something much more robust than what we inherited. We've also been blessed with a strong balance sheet and meaningful free cash flow.

Speaker #3: Secondly, we're inheriting meaningful number of client and channel partners. And again, there's going to be a lot of work to unify the two products.

Speaker #3: But we are easily accelerating our product and go-to-market timeline versus a de novo build by 18 to 24 months. And more broadly, our strategy is usually to build organically.

Speaker #3: And you've seen it with migraine or open M&A when it accelerates our timeline. And we've got a track record of integrating technologies quickly and building them out into something much more robust than what we inherited.

Speaker #3: We've also been blessed with a strong balance sheet. And meaningful free cash flow. So it's the right opportunity comes along that fits our strategy and meets our return thresholds.

Daniel Perez: If the right opportunity comes along that fits our strategy and meets our return thresholds, we will absolutely consider it. As mentioned, we get several inbound opportunities a month. We review each, but we have a very high bar.

Speaker #3: We will absolutely consider it. And as mentioned, we get several inbound opportunities a month. We review each, but we have a very high bar.

Speaker #5: Appreciate the question, caller. Maybe just as a follow-up on the competitive takeaway you called out—could you provide any details or context on why you were able to win?

Stan Bernstein: Appreciate the color. Maybe just as a follow-up on the competitive takeaway you called out, just any details or context on why you were able to win? Was it pricing, product, any combination thereof? Any color would be helpful. Thank you.

Stan Berenshteyn: Appreciate the color. Maybe just as a follow-up on the competitive takeaway you called out, just any details or context on why you were able to win? Was it pricing, product, any combination thereof? Any color would be helpful. Thank you.

Speaker #5: Was it pricing, product, any combination thereof? Any color would be helpful. Thank you.

Speaker #7: Yeah. But I would say I think

Jim Pursley: Yeah, what I would say, I think, our typical buyer goes through the product, actually trials the product themselves, and they typically do that with multiple vendors that they're looking at and evaluating. The quality of that experience, the interaction with the product, things like our Enso product, working with our physical therapists, engaging with the digital forward elements of our program, really I think showcased the breadth and depth of the Hinge offering. I would say it was really probably the product experience that won the day in that one. In fact, there were some other elements that we probably were playing at a disadvantage and playing from behind. I think it was really affirming for us as a team to see how strong the product performed in that regard.

Speaker #8: our typical buyer goes through a the product actually trials the product themselves and they typically do that with multiple vendors that they're looking at and evaluating.

Speaker #8: And the quality of that experience, the interaction with the product, things like our ENSO product, working with our physical therapists, engaging in the with the digital forward elements of our program, really I think showcased the breadth and depth of the Hinge offering.

Speaker #8: And I would say it was really probably the product experience that won the day. And that one and in fact, there were some other elements that we probably were playing at a disadvantage and playing from behind.

Speaker #8: And so, I think it was really affirming for us as a team to see how strong the product performed in that regard.

Speaker #5: Great. Thank you.

Stan Bernstein: Great. Thank you.

Stan Berenshteyn: Great. Thank you.

Speaker #1: Your next question comes from the line of Brian Peterson with Raymond James. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Brian Peterson with Raymond James. Your line is open. Please go ahead.

Speaker #6: Oh, hey guys. Congrats on the really strong quarter. I wanted to clarify something about the selling season. It seems like this is the second year in a row where there's been a really strong pipeline build, but the conversion is going to be about halfway.

Brian Peterson: Hey, guys. Congrats on the really strong quarter. I wanted to clarify on the selling season, it seems like this is the second year in a row where there's been really strong pipeline build, but the conversion is going to be back half weighted. Is that the new normal that we should expect? Do you think there's anything that's driving that?

Speaker #6: Is that the new normal that we should expect? And do you think there's anything that's driving that?

Speaker #7: Yeah. Thanks, Brian, for the question.

Jim Pursley: No, thanks, Brian, for the question. Appreciate it. I do think that the seasonality is normal, and we don't anticipate it changing much. What's driving that? It's probably a number of things. I think, the current buyers have a high bar for ROI, for evidence, again, things like data security and privacy. Their procurement teams are involved in going through it. That may add a little bit of time to their evaluation process. Again, the great news is when scrutiny in those areas increases, I think what you're seeing is our win rate increases as well because we are able to demonstrate those types of results at a scale that is unrivaled, and we're able to bring the investments of the organization to bear in a way that gives our buyers a lot of confidence.

Speaker #8: Appreciate it. I do think that seasonality is normal, and we don't anticipate it changing much. What's driving that? It's probably a number of things.

Speaker #8: I think the current buyers have a high bar for ROI, for evidence. Again, things like data security and privacy. Their procurement teams are involved and going through it.

Speaker #8: And so that may add a little bit of time. To their evaluation process. Again, the great news is when those things when scrutiny in those areas increases, I think what you're seeing is our win rate increases as well.

Speaker #8: Because we are able to demonstrate those types of results at a scale that is unrivaled. And we're able to bring the investments of the organization to bear in a way that gives our buyers a lot of confidence.

Speaker #8: And so yeah, we feel great about the current sales season. And the second half of the year is always that's always the big half of the year.

Jim Pursley: Yeah, we feel great about the current sales season, and the H2 of the year, that's always the big half of the year. Stay tuned. We feel great about how things are shaping up and look forward to sharing more details with you guys in a future call.

Speaker #8: So stay tuned. We feel great about how things are shaping up and look forward to sharing more details with you all on a future call.

Speaker #3: Yeah. And just it is very normal that benefits buyers make their decisions in the second half for benefits that go live on 1/1. We'd say 70% plus of decisions are made second half of Q3 into the first half of Q4.

Daniel Perez: Just so you know, it is very normal that benefits buyers make their decisions in the H2 for benefits that go live on 1 January. We'd say 70% plus of decisions are made H2 of Q3 into the H1 of Q4. That is the decision window for employers for benefits going live in the next year.

Speaker #3: But that is the decision window for employers, for benefits going live in the next year.

Brian Peterson: Understood. Maybe just following up on seasonality again, the free cash flow was really strong this quarter. Is there anything that's timing related in the Q2, maybe how we should be thinking about conversion in the H2? Thanks, guys.

Speaker #6: Understood. Maybe just following up on seasonality again. The free cash flow is really strong this quarter. Is there anything that's timing related in the second quarter?

Speaker #6: Maybe you could talk about how we should be thinking about conversion in the second half? Thanks, guys.

Speaker #2: Not really. On cash flow, good question. Probably the only thing unusual from an expense perspective was the tariff refund. Wasn't that big, but it did contribute about 100 basis points to gross margin.

James Budge: Not really on cash flow. Good question. Probably the only thing unusual from an expense perspective was the tariff refund. Wasn't that big, but it did contribute about 100 basis points to gross margin. There's a little bit left in the H2, but not enough to really make any difference one way or the other. Generally speaking, our free cash flow is typically a little bit higher in the Q3 than the Q2, just a little bit. It dips back down a little bit in the Q4, and as you've probably typically seen already, the Q1 for us is still a great quarter from a cash flow perspective, but the least strong of the four quarters. Yeah, H2 looks great.

Speaker #2: There's a little bit left in the second half, but not enough to really make any difference one way or the other. But generally speaking, our free cash flow is typically a little bit higher in the third quarter than the second.

Speaker #2: Just a little bit. And then it dips back down a little bit in the fourth quarter and as you probably typically seen already, the first quarter for us is still a great quarter from a cash flow perspective, but the least strong of the four quarters.

Speaker #2: So yeah, back half looks great.

Speaker #1: Your next question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is open. Please go ahead.

Speaker #4: Hi, guys. Thanks so much for taking the question this afternoon. I had a question about cylinder health—just in terms of the integration. Thank you, Dave, for the comments about the revenue contribution.

Elizabeth Anderson: Hi, guys. Thanks so much for the question this afternoon. I had a question about Cylinder Health. Just in terms of the integration, thank you, Jim, Dave, for the comments about the revenue contribution. If we think about the integration, does it run sort of similar to your core business in terms of margin profile? Are there any integration costs or R&D expenses that you would expect to incur just to bring it into the broader Hinge platform? From a selling season perspective, given that it closes in the Q3, I heard obviously what you guys just said about the contribution in the H2 to the selling season for your core product.

Speaker #4: If we think about the integration, do you think does it run sort of similar to your core business in terms of margin profile? Are there any integration costs or sort of R&D expenses that you would expect to incur just to bring it into the broader Hinge platform?

Speaker #4: And then, from a selling season perspective, given that it closes in the third quarter—I heard, obviously, what you guys just said about the contribution in the back half of the year to the selling season for your core product.

Speaker #4: Does that also do you think it's like the 2027 revenue growth is largely predicated on what cylinder has sold year to date? Or is that something you feel like you can actually add to your customer base and cross-sell through in that sort of fourth quarter and then obviously as we go through into 2028 and beyond?

Elizabeth Anderson: Do you think it's like the 2027 revenue growth is largely predicated on what Cylinder has sold year to date, or is that something you feel like you can actually add to your customer base and cross-sell through in that sort of Q4, obviously as we go through into 2028 and beyond? Thanks so much.

Elizabeth Anderson: Do you think it's like the 2027 revenue growth is largely predicated on what Cylinder has sold year-to-date, or is that something you feel like you can actually add to your customer base and cross-sell through in that sort of Q4, obviously as we go through into 2028 and beyond? Thanks so much.

Speaker #4: Thanks so much.

Speaker #2: Yeah. Thanks, Elizabeth. Let me maybe start with that and we'll see if I capture everything there. Dan may add some perspective as well. I think from I think the first question you had there was on the bottom line or expense side or integration costs or anything special to call out there.

James Budge: Thanks, Liz. Let me maybe start with that and we'll see if I capture everything there, and Dan may add some perspective as well. I think the first question you had there was on the bottom line or expense side or integration cost or anything special to call out there. Yeah, good. I meant to add that to the revenue discussion earlier. Glad you brought that back up again. Yeah, as you can imagine, as a slightly less mature company, they were running at a little bit of a loss. We expect to bring that up to our profile in short order. Short order not being 3 months, but short order being like 1 year to 2 years. As Dan mentioned, we're going through some product integration over the next 9 months or so that we expect to have complete by the summer of next year.

Speaker #2: Yeah, good. I meant to add that to the revenue discussion earlier. Glad you brought that back up again. So, yeah, I mean, as you can imagine, as a slightly less mature company, they were running at a little bit of a loss.

Speaker #2: We expect to bring that up to our profile in short order. Short order not being three months, but short order being like a year to two years.

Speaker #2: As Dan mentioned, we're going through some product integration over the next nine months or so that we expect to have complete by the summer of next year.

James Budge: That will certainly probably have some integration costs. I don't think too meaningful between now and then, but once we get past that, it'll look pretty normalized and just fold right into the business. We're not changing anything with our long-term profit margin profile. We mentioned 35%+ at our Investor Day. We're still sticking to that, even though this is initially going to pose some losses to us, but we can absorb that given the strength of the rest of the business. Yes.

Speaker #2: And that will certainly probably have some integration costs. I don't think they're too meaningful between now and then, but once we get past that, it'll look pretty normalized.

Speaker #2: And just fold right into the business. We're not changing or anything with our long-term profit margin profile. So we mentioned 35% plus that our investor day, we're still sticking to that even though this is initially going to pose some losses to us, but we can absorb that given the strength of the rest of the business.

Speaker #3: Yes. Yeah. To add in is we've spent several years building our core technology platform. In such a way that we could reuse many of the components.

Daniel Perez: To add in is, we've spent several years building our core technology platform, in such a way that we could reuse many of the components. That's one of the reasons we were able to bring Migraine to market in such a capital efficient manner. We believe the integration of this product into our core Hinge Health platform will be similarly capital efficient, which is one of the reasons we were so attracted to this. We could use, again, the same sales team, same client success team, same member enrollment team, same finance team. We aim to harmonize pricing over time to give our customers more value. The product build itself, and product integration itself, will also be very capital efficient. That's going to be a seed we will be reaping that we had sown many years ago.

Speaker #3: And that's one of the reasons we were able to bring migraines to market with in such a capital efficient manner. And we believe the integration of this product into our core Hinge Health platform will be similarly capital efficient.

Speaker #3: And which is one of the reasons we were so attracted to this. We could use it, again, the same sales team, same client success team, same member enrollment team, same finance team.

Speaker #3: We aim to harmonize pricing over time to give our customers more value. But the product build itself will also be and product integration itself will also be very capital efficient.

Speaker #3: And that's going to be a seed we will reaping. We'll be reaping that we had sown many years ago. And you're going to see that.

Daniel Perez: You're going to see that, and you already saw it with Migraine, how quickly we were able to bring that to market and how efficiently we've been able to sell it.

Speaker #3: And you already saw it with migraine of how quickly we're able to bring that to market and how efficiently we've been able to sell it.

Speaker #4: Super helpful. And I assume all those costs are already in your guidance. So from that perspective.

Elizabeth Anderson: Super helpful. I assume all those costs are already in your guidance. I'm not.

James Budge: They are.

Speaker #3: Yeah, modest—it's not a substantial increase in cost yet. It's actually relatively modest, given how efficient our R&D build is.

Daniel Perez: Again, it's modest. It's not substantial increase in cost yet. It's actually relatively modest given how efficient our R&D build is.

Speaker #4: Great. Thank you so much.

Elizabeth Anderson: Great. Thank you so much.

Speaker #1: Your next question comes from the line of Jalindra Singh, which was securities. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Jailendra Singh with Truist Securities. Your line is open. Please go ahead.

Speaker #5: Thank you. And thanks for taking my questions. And congratulations on a very strong quarter here. So first, a quick clarification question on cylinder. So on 100 clients, they have can you share how many of them already have virtual MSK offerings in place and how many of them are Hinge client?

Jailendra Singh: Thank you, and thanks for taking my questions, and congratulations on a very strong quarter here. First, a quick clarification question on Cylinder. On 100 clients they have, can you share how many of them already have virtual MSK offerings in place, and how many of them are Hinge client? Following up on the question Elizabeth asked about integration Cylinder Health, obviously one of the most important part of these benefit companies integrations around integration of accounts and sales management. Curious if you can share any thoughts around ensuring a smooth transition there. Will the leadership team also come over? Have they committed to staying for any particular length of time?

Speaker #5: And following up on the question Elizabeth asked about integration cylinder health, obviously one of the most important parts of these benefit companies' integrations is around integration of accounts and sales management.

Speaker #5: So curious if you can share any thoughts around ensuring a smooth transition there with the leadership team also come over? Have they committed to staying for any particular length of time?

Speaker #3: Great. I mean, just to touch the last bit, yeah, we anticipate nearly all similar employees will be transitioning over. And we've had really strong and robust and collaborative discussions with our leadership.

Daniel Perez: Great. Just to touch the last bit. Yeah, we anticipate nearly all of Cylinder's employees will be transitioning over, and we've had really strong, robust, and collaborative discussions with their leadership and have several long-term roles for their go-to-market leadership in particular, because we know how critical those relationships are. Frankly, we've been extremely impressed with the level of talent on Cylinder's leadership team. The first part of your question was around the overlap of the clients. Our count is 52 of their clients are currently Hinge Health clients as well. We were able to see a really strong signal from our book that quite a few of our clients were already buying Cylinder, as well as quite a few of our partners, our health plan PBM partners were partnering with Cylinder.

Speaker #3: And have several long-term roles for their go-to-market leadership in particular because we know how critical those relationships are. And frankly, we've been extremely impressed with the level of talent on cylinder's leadership team.

Speaker #3: And the first part of your question was around the overlap with the clients. Our account is 52 of their clients are currently Hinge Health clients as well.

Speaker #3: And so we were able to see a really strong signal from our book that quite a few of their clients were quite a few of our clients were already buying cylinder.

Speaker #3: As well as quite a few of our partners are health plan and PBM partners were partnering with cylinder.

Speaker #5: Great. And then my quick follow-up on yield now expected at 4.45 person versus prior 4.3. And the new update is almost like up 60 basis point year over year.

Jailendra Singh: Great. My quick follow-up on yield, now expected at 4.45% versus prior 4.3%, the new update is almost up 60 basis points year-over-year. Curious if you can bifurcate that between your existing client base, yield improvement you're seeing or whether your new member yield is also improving by that much. Just give us a little breakdown between your existing and new membership yields.

Speaker #5: Curious if you can bifurcate that between your existing client base—yield improvement you're seeing there—or whether your new member yield is also improving by that much.

Speaker #5: Just give us a little breakdown between your existing and new membership yields.

Speaker #3: Sure. So our yield improvements are broad-based. It's not just one piston firing cylinder. It's several. And they're I'd say those pistons aren't even at full speed yet.

Daniel Perez: Sure. Our yield improvements are broad-based. It's not just one system firing Cylinder. It's several. I'd say those systems aren't even at full speed yet. Some notable drivers, as you mentioned in prior quarters as well, target enrollment, but also members referring their family and colleagues, as well as members returning for additional care as we improve our care experience and expand our portfolio. Today, almost all enrollment yield is from digital physical therapy. Look, about 9% of people see a PT in a given year. We believe with better access, that number for digital PT could be, that number of people seeking PT overall, digital and in person, should be closer to 12% to 15%. As you note, we're on pace for 4.45%, almost all of which is from digital PT. Migraine just launched.

Speaker #3: So notable drivers, as mentioned in prior quarters as well, target enrollment, but also members referring their family and colleagues, as well as members returning for additional care as we improve our care experience and expand our portfolio.

Speaker #3: Today, almost all enrollment yield is from digital physical therapy. And look, about 9% of people see a PT in a given year. We believe with better access, that number for digital PT could be that number of people seeking PT overall, digital and in-person, should be closer to 12 to 15%.

Speaker #3: And as you note, we're on pace for 4.45%, almost all of which is from digital PT. Migraine just launched, but look, one in six working age adults are impacted with migraine.

Daniel Perez: Look, one in six working age adults are impacted with migraine, and with GI, it's one in four. We see improved performance across our legacy book and our new clients with regards to yield. We see a path to increasing yields for many, many years to come.

Speaker #3: And with GI, it's one in four. So we see improved performance across our legacy book and our new clients with regards to yield. And we see a path to increasing yield for many, many years to come.

Speaker #2: I think maybe, Jalindra, also what you might have been referring to is, last year we had a particularly strong improvement in our first-year yields.

James Budge: I think maybe, Jailendra, also what you might have been referring to is last year, we had a particularly strong improvement in our first-year yields over prior years. That continues this year. As Daniel mentioned, it's a little more balanced this year. Existing clients and new clients, all are coming on at higher yields.

Speaker #2: Over prior years, that continues this year. But, as Dan mentioned, it's a little more balanced this year. Existing clients and new clients all are coming on at higher yields.

Speaker #5: Perfect. Thanks a lot.

Jailendra Singh: Perfect. Thanks a lot.

Speaker #2: Yep.

James Budge: Yep.

Speaker #1: Your next question comes from the line of Craig Hattenbach with Morgan Stanley. Please go ahead.

Operator: Your next question comes from the line of Craig Hettenbach with Morgan Stanley. Please go ahead.

Speaker #6: Yes. Thank you. As you prepare to launch migraine on a broader basis, are there any parallels to other product rollouts? So for example, you saw a yield expansion from programs in women's health.

Craig Hettenbach: Yes, thank you. As you prepare to launch Migraine on a broader basis, are there any parallels to other product rollouts? For example, you saw yield expansion from programs in women's health, that just provide kind of a look at the opportunity to drive yield expansion in 2027 and beyond.

Speaker #6: That just provide kind of a look at the opportunity to drive yield expansion in 27 and beyond.

Speaker #3: Yeah. Our first and primary goal is expanding the impact and clinical outcomes we can deliver in our populations, so we can improve results for more people.

Daniel Perez: Yeah, look, our first and primary goal is expanding the impact and the clinical impact we have in our populations, so we could improve outcomes for more people. With Migraine, there are net new people coming on board who wouldn't have engaged with Hinge Health otherwise, had we not had Migraine. Some people are engaging with Migraine and our MSK program, and you could argue they would've engaged already with our MSK program. The majority are engaging for the first time with Migraine. We see Migraine as a way of expanding our impact within our client population and a downstream impact as well on our financials, that we have more members that are engaging and therefore it impacts our revenue.

Speaker #3: And with migraine, there are net new people coming on board who wouldn't have engaged with Hinge Health otherwise had we not had migraine. So some people are engaging with migraine and our MSK program.

Speaker #3: And you could argue they would have engaged already with our MSK program. The majority are engaging for the first time with migraine. So we see migraine as a way of expanding our impact within our clients' population.

Speaker #3: And a downstream impact as well as on our financials is that we have more members that are engaging, and therefore it impacts our revenue.

Speaker #2: Maybe I'll just add a reminder, Craig, from investor day. We made a point that we expected migraine to contribute about 10 to 20 basis points of yield improvement in 2027.

James Budge: Maybe I'll just add a reminder, Craig, from Investor Day. We made a point that we expected Migraine to contribute about 10 to 20 basis points of yield improvement in 2027. We don't have any change to that expectation, we see it as a very strong additional capability as we roll into 2027. Expect wherever we believe yields are going to go through the year, we think a good 10 to 20 of that's going to come from Migraine.

Speaker #2: We don't have any change to that expectation. So we see it as a very strong additional capability as we roll into 2027. Expect wherever we believe yields are going to go through the year, we think a good 10 to 20 of that's going to come from migraine.

Speaker #6: That's helpful. And then just as a follow-up on the study that was published last week about Hinge Health, a significantly lower fall risk in adults 65 and older, the Medicare market doesn't get nearly as much attention as the employer market.

Craig Hettenbach: That's helpful. Just as a follow-up on the study that was published last week about Hinge Health, a significantly lower fall risk in adults 65 and older. The Medicare market doesn't get nearly as much attention as the employer market, just wanted to dig deeper into that in terms of the implications to that study and just the longer-term opportunity you see in that age population.

Speaker #6: So just wanted to dig deeper into that in terms of the implications to that study and just the longer-term opportunity you see in that age population.

Speaker #4: Yeah, yeah. Craig, thanks—thanks for the question. So, as you know, we have relationships with dozens and dozens of large health plans. Those health plans—almost all of them operate meaningful Medicare Advantage business.

Jim Pursley: Yeah. Craig, thanks. Good question. As you know, we have relationships with dozens of large health plans. Those health plans, almost all of them operate meaningful Medicare Advantage business. It's definitely an area of strong interest from them. We have an offering, our fall prevention offering, we refer to as Balance, which is a customized offering for seniors, who we've deployed across our MA book, we're seeing great results. We're really pleased and proud to publish the study. We think that MA is going to be a continued growth area for us, in the quarters and the years ahead, we're going to continue to invest in it. What's great about, again, that market is it allows us to ride on the rails that we've already built with the existing relationships with these health plans.

Speaker #4: It's definitely an area of strong interest from them. And we have an offering—our fall prevention offering—we refer to as Balance, which is a, yeah, it's a customized offering for seniors that we've deployed across our MA book.

Speaker #4: And we're seeing great results. We're really pleased and proud to publish the study and we think that MA is going to be a continued growth area for us in the quarters and the years ahead.

Speaker #4: And we're going to continue to invest in. And what's great about, again, that market is allows us to ride on the rails that we've already built with the existing relationships with these health plans.

Speaker #4: And so, yeah, a lot of momentum is building there, and the results just continue to be more and more positive as we continue to pursue that market.

Jim Pursley: Yeah, a lot of momentum building there, the results just continue to be more and more positive as we continue to pursue that market.

Speaker #6: Great. Thank you.

Craig Hettenbach: Great. Thank you.

Speaker #1: Your next question comes from the line of Jessica Tasson. With Piper Sandler. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Jessica Tassan with Piper Sandler. Your line is open. Please go ahead.

Speaker #7: Hi, guys. Thanks very much for taking the question, and thanks again for hosting us at Movement. It was a really excellent event. So, I wanted to follow up on Craig's question about migraine.

Jessica Tassan: Hi, guys. Thanks very much for taking the question and thanks again for hosting us at Movement. It was a really excellent event. I wanted to follow up on Craig's question about migraine. Dan, you mentioned most migraine members are engaging for the first time, and we know obviously 10 to 20 bps incremental yield from migraine in 2027. As we think about kind of the overlap between active members in migraine and in MSK, will we see concurrent migraine and MSK show up as two distinct active members? Or for concurrent active members, will migraine just increase ASP? In terms of member workflow on migraine, are we operating on a single unified app at this point? If not, when should we expect to see that?

Speaker #7: Dan, you mentioned most migraine members are engaging for the first time. And we know obviously 10 to 20 bips incremental yield from migraine in 27.

Speaker #7: But as we think about the overlap between active members with migraine and MSK, will we see concurrent migraine and MSK show up as two distinct active members?

Speaker #7: Or for concurrent active members, will migraine just increase ASP? And then in terms of member workflow on migraine, are we operating on a single unified app at this point?

Speaker #7: And if not, when should we expect to see that?

Daniel Perez: Good. Great questions. First of all, when it comes to migraine and MSK together and a member engaging with both, we charge at the member level, and this is one of the values we want to deliver to our clients, particularly as we continue to expand our impact across multiple indications, is that a given member is not charged for two different subscriptions. They come in with Hinge Health, and they could get essentially all they could, or unlimited care from Hinge Health, when they become a subscribing member. That's a key value to our clients and part of our engagement building model. Migraine is part of our engagement building model.

Speaker #3: Great questions. So first of all, when it comes to migraine and MSK together, and the member engagement goals, we charge at the member level.

Speaker #3: And this is one of the values we want to deliver to our clients, particularly as we continue to expand our impact across multiple indications, is that a given member is not charged for two different subscriptions.

Speaker #3: They come in with Hinge Health as they could get essentially all they could or unlimited care from Hinge Health when they become a subscribing member.

Speaker #3: And so, that's a key value to our clients and part of our engagement-building model. And migraine is part of our engagement-building model.

Speaker #3: And

James Budge: You can put it up.

Speaker #2: You can put it off.

Speaker #3: Both of the apps are now there is migraines is on the same app as our digital physical therapy. So you could actually have concurrent enrollment, treat your back pain, and your migraine.

Daniel Perez: Both of the apps are now. Migraine is on the same app as our digital physical therapy, so you could actually have concurrent enrollment, treat your back pain and your migraine, and that's been rolling out to our clients right now. That's what we want to continue to be doing across all of our products as well, is to ensure anything we launch will be part of our unified platform. I don't think a person with back pain and digestive health issues and migraine wants to download three different apps and deal with three different logins, and we wouldn't either. We want to make sure that you could come to Hinge Health for increasing amounts of your care in one destination.

Speaker #3: And that's been rolling out. And to our clients right now, that's what we want to continue to be doing for across all of our products as well is to ensure anything we launch will be part of our unified platform.

Speaker #3: I don't think a person with back pain and digestive health issues and migraine wants to download three different apps. And deal with three different logins.

Speaker #3: And we wouldn't either. And so we want to make sure that you could come to Hinge Health for increasing amounts of your care in one destination.

Speaker #7: Okay. That's really helpful. Thank you. And congrats. That's great to hear. And then I was wondering if maybe you all could talk a little bit about the migraine trial that you're running when should we expect to see results from that?

Jessica Tassan: Okay. That's really helpful. Thank you, and congrats. That's great to hear. I was wondering if maybe you all could talk a little bit about the migraine trial that you're running. When should we expect to see results from that? What are you all looking for, and is that expected to support migraine sales for calendar 2027, or is it more of a 2028 catalyst in the employer market? Thanks again.

Speaker #7: What are you all looking for? And is that expected to support migraine sales for calendar 27? Or is it more of a 2028 catalyst in the employer market?

Speaker #7: Thanks again.

Speaker #3: Great. Well, when it comes to migraine, our approach to migraine with neuromodulation is actually newer and experimental. There's actually decades of clinical research and multiple randomized trials showing that trigeminal nerve stimulation reduces migraine frequency and severity for both acute relief and prevention.

Daniel Perez: Great. Well, when it comes to migraine, our approach to migraine with neuromodulation actually isn't new or experimental. There's actually decades of clinical research and multiple randomized trials showing that trigeminal nerve stimulation reduces migraine frequency and severity for both acute relief and prevention. FDA granted us a 510(k) clearance and also reviewed that established body of evidence when clearing Enso for migraine. We're actually already building upon years of prior research, so I do want to clarify that. We're expanding beyond that foundation with our own proprietary waveforms, our AI-powered trigger tracking, exercise therapy for prevention, and access to expert clinicians. It's not a point solution delivered in one piece. We're delivering a whole system, and we'll be publishing additional research into our impact for migraine in 2027.

Speaker #3: So FDA granted us a 510(k) clearance and also reviewed that established body of evidence when clearing enzo for migraine. So we're actually already building upon years of prior research.

Speaker #3: So I do want to clarify that. And we're extending beyond that foundation with our own proprietary waveforms, our AI-powered trigger tracking, and exercise therapy for prevention, and access to expert clinicians.

Speaker #3: It's not a point solution delivered to one piece. We're delivering the whole system. And we'll be publishing additional research into our impact for migraine in 2027.

Speaker #7: Thank you.

Jessica Tassan: Thank you.

Speaker #1: Your next question comes from the line of David Grossman with Stifel. Your line is open. Please go ahead.

Operator: Your next question comes from the line of David Grossman with Stifel. Your line is open. Please go ahead.

Speaker #5: Thank you, good afternoon. Yeah, you mentioned in your prepared remarks a push into the SMB market. Just wondering, how does the ramp, the yield progression, the ASPs differ, if at all, from the enterprise market?

David Grossman: Thank you. Good afternoon. You mentioned in your prepared remarks a push into the SMB market, just wondering, how does the ramp, the yield progression, the ASPs differ, if at all, with the enterprise market?

Speaker #4: Yeah. Thank you, David. Appreciate the question. The ramp is very fast. The buying cycle on SMB tends to be shorter and more compressed than in large enterprises.

Jim Pursley: Yeah. Thank you, David. Appreciate the question. The ramp is very fast. The buying cycle in SMB tends to be shorter and more compressed than in large enterprises. The economics of the market are very favorable, and we tend to get a lot of latitude in how we engage membership. I think the SMB market kind of recognizes us as the clear market leader and the expert in how to engage people, so they extend a lot of trust and confidence in us. The economics are very favorable. The sales cycles are compressed, it's a market that's just really under-penetrated because a lot of companies just haven't made the decision to invest there. Given both our direct investments and the relations of our health plans, we're able to serve that market very cost-effectively.

Speaker #4: The economics of the market are very favorable. And we tend to get a lot of latitude in how we engage membership. So I think SMB market kind of recognizes us as the clear market leader and the expert.

Speaker #4: And how to engage people. And so they extend a lot of trust and confidence in us. And so the economics are very favorable. The sales cycles are compressed.

Speaker #4: And it's a market that's just really underpenetrated, because a lot of companies just haven't made the decision to invest there, given both our direct investments and the relationships of our health plans.

Speaker #4: We're able to serve that market very cost-effectively. And so it's been a great strategic investment for us that we're going to keep investing in and continue to pay off.

Jim Pursley: It's been a great strategic investment for us that we're going to keep investing in and continues to pay off.

Speaker #5: Great. And then I know this has come up a couple of times about the yields. Obviously, a surprise even versus where you were two months ago.

David Grossman: Great. I know this has come up a couple of times about the yield, obviously, a surprise even versus where you were two months ago. With that kind of upward volatility, if you will, can you provide any parameters that may inform how we should think about the cadence of improvement in 2027, versus historical gains, particularly given all these new products that you're introducing that are going to have varying impact on 2027?

Speaker #5: So, with that kind of upward volatility, if you will, can you provide any parameters that may inform how we should think about the cadence of improvement in 2027 versus historical gains?

Speaker #5: Particularly given all these new products that you're introducing that are going to have varying impact on 2027.

Speaker #2: Yeah. Thanks, David. I'll just maybe to answer that, I'll just remind kind of what the last two years of cadence have been. We started when we first went public, we were suggesting a 3.4% yield.

James Budge: Yeah. Thanks, David. Maybe to answer that, I'll just remind kind of what the last two years of cadence have been. We started, when we first went public, we were suggesting a 3.4% yield. We ended the year at 3.9%. Again, as a reminder, that's how we generally view our guidance. Our guidance is typically based on what we see in front of us, the yield that we have been experiencing plus the lives we already have from prior sale seasons. In 2025, we went from 3.4 to 3.9. This year, we started at 3.9 and we're up to 4.45, roughly between the two, about 50 basis points. I think we feel really good about where the yield's going.

Speaker #2: We ended the year at 3.9%. And again, as a reminder, that's how we generally view our guidance. Our guidance is typically based on what we see in front of us.

Speaker #2: So the yield that we have been experiencing, plus the lives we already have from prior sales season... So in 2025, we went from 3.4 to 3.9.

Speaker #2: This year, we started at 3.9 and we're up to 4.45. So roughly between the two, about 50 basis points. And we feel I think there's we feel really good about where the yield's going today and talked about sort of the North Star metric, which is used to be 9%, but we think we can tick it up to 12 to 15% in all these extra capabilities like migraine and GI and other capabilities we have certainly help us believe that the TAM expansion is takes it even higher.

James Budge: Dan talked about sort of the North Star metric, which used to be 9%, but we think we can take it up to 12% to 15%, and all these extra capabilities like migraine and GI and other capabilities we have certainly help us believe that the TAM expansion takes it even higher.

Speaker #3: Yeah, it gives us a you could extend the yield with obviously product improvements. We've really invested in how to identify and enroll members and engage them.

Daniel Perez: Yeah, it gives us. You could spend yields with, obviously, product improvements. We've really invested in how to identify and enroll members and engage them. Of course, with every product we launch, it gives us another shot on goal to deliver value to members and to improve their care, and more opportunities to engage people with their care.

Speaker #3: And of course, with every product we launch, it gives us another shot on goal to deliver value to members and to improve their care.

Speaker #3: And more opportunities to engage people with their care.

Speaker #5: Great. All right. Thanks very much.

David Grossman: Great. All right. Thanks very much.

Speaker #1: Well, we have time for one last question. This question comes from the line of Rishi Jalloriya with RBC. Your line is open. Please go ahead.

Operator: We have time for one last question. This question comes from the line of Rishi Jaluria with RBC. Your line is open. Please go ahead.

Speaker #4: Oh, wonderful. Thanks for squeezing me in. Really appreciate it. And great to see continued strong execution. Look, I know we've been talking a lot about cylinder and GI.

Rishi Jaluria: Oh, wonderful. Thanks for squeezing me in. Really appreciate it. Great to see continued strong execution. Look, I know we've been talking a lot about Cylinder and GI. Obviously, I think we're just all excited about the market opportunity there. Maybe one question there, then maybe one a little bit more broadly speaking. Look, if we think about the markets that you've been in, no one's doubting the size of GI. The markets that you've been in and have a right to succeed in are ones where technology is a clear enabler, and more importantly, your own proprietary technology is a clear enabler. With MSK, it's obviously the TrueMotion, the motion capture technology, as well as the Enso device, that very much differentiates it from just a physical therapist getting on Zoom and watching a customer, or a patient.

Speaker #4: But obviously, I think we're just all excited about the market opportunity there. So maybe one question there, and then maybe one a little bit more broadly speaking.

Speaker #4: So look, if we think about the markets that you've been in, no one is doubting the size of GI, but the markets that you've been in and have a right to succeed in are ones where technology is a clear enabler and more importantly, your own proprietary technology is a clear enabler.

Speaker #4: With MSK, it's obviously the true motion, the motion capture technology, as well as the enzo device. That very much differentiates it from just a physical therapist getting on Zoom and watching a customer or a patient.

Speaker #4: With migraines, obviously, Enso becomes a differentiating factor there, and that's your own proprietary IP. What is the equivalent where your own proprietary technology is a differentiator on the GI side versus a patient going to a GI specialist and meeting with them virtually?

Rishi Jaluria: With migraines, obviously Enso becomes a differentiating factor there. That's your own proprietary IP. What is the equivalent where your own proprietary technology is a differentiator on the GI side versus a patient going to a GI specialist and meeting with them virtually? Then just kind of as an expander beyond that, Dan, as we think about this, you clearly have a lot of growth drivers that you're going at. Can you help us understand how you intend to kind of keep the focus and not let your eye off the ball as you're juggling all these different initiatives simultaneously? Thank you so much.

Speaker #4: And then just kind of as an expander beyond that, Dan, as we think about this, you clearly have a lot of growth drivers that you're going at.

Speaker #4: Can you help us understand how you intend to kind of keep the focus and not kind of let your eye off the ball as you're juggling all these different initiatives simultaneously?

Speaker #4: Thank you so much.

Speaker #3: Great question. And we as mentioned earlier, we are our vision is to scale and automate. The delivery of healthcare. And a asking ourselves, can technology meaningfully move deliver care while meaningfully moving outcomes, experience, and cost?

Daniel Perez: Great question. As mentioned earlier, our vision is to scale and automate the delivery of healthcare. The key challenge in any area we enter is asking ourselves, can technology meaningfully deliver care while meaningfully moving outcomes, experience, and cost? It is a challenge in any area we enter. You're right to point out that within physical therapy, it's very clear that you could automate via computer vision and AI, exercise therapy component of treatment for musculoskeletal care. With GI program, we do believe that you could automate. Now, a lot of the care and interventions still have to be patient-led. That is, the patient needs to make particular dietary changes or changes to their lifestyle. What we're able to do with best-in-class GI care is making sure that we're giving them those insights.

Speaker #3: And it is a challenge in any area we enter. And you're right to point out that within physical therapy, it's very clear that you could automate, via computer vision and AI, the exercise therapy component of treatment for musculoskeletal care.

Speaker #3: With GI program, we do believe that you could automate. Now, a lot of the care and interventions still have to be patient-led. That is the patient needs to make particular dietary changes or changes to their lifestyle.

Speaker #3: But what we're able to do with best-in-class GI care is making sure that we're giving them those insights. That is we're able to better understand their symptoms, what's going in as well, both the food as well as the symptom profile.

Daniel Perez: That is, we're able to better understand their symptoms, what's going in as well, both the food as well as the symptom profile. Give them a clear differential, either diagnosis or interventions that we believe they should be doing, particularly around personalized nutrition guidance, certain lifestyle factors, because this has such a downturn impact on your overall GI symptoms, right? It's your gut health, and it's often driven by what you're eating or when you're eating and how you're eating. It also could be autoimmune mediated as well. Then we want to be able to easily track member symptoms thereafter and be able to tie that to treatment as well as adjustments to their care plan. Yes, there will be access to specialists, but what's helpful is that today, even access to a virtual specialist is a substantial step up from a status quo.

Speaker #3: Give them a clear differential, either diagnosis or interventions that we believe they should be doing—particularly around personalized nutrition guidance and certain lifestyle factors—because this has such a downstream impact on your overall GI symptoms, right?

Speaker #3: It's your gut health and it's often driven by what you're eating or when you're eating and how you're eating. But it also could be autoimmune-mediated as well.

Speaker #3: And then we want to be able to easily track member symptoms, thereafter, and be able to tie that to treatment as well as adjustments to their care plan.

Speaker #3: Yes, there will be access to specialists, but what's helpful is that today, even access to a virtual specialist is a substantial step up from the status quo.

Speaker #3: You're almost competing with non-consumption. And these non-touch interactions are very, very amenable to AI-driven automation, which we're really excited about—the ability to do that.

Daniel Perez: You're almost competing with non-consumption. These non-touch interactions are very amenable to AI-driven automation, which we're really excited about the ability to do that. The main benefit there, we could give members a lot more access, a lot quicker access, and we could lower costs. Because when somebody is flailing about and going to different specialists or the ER or their primary care and trying to figure out what's wrong, our aim is to short-circuit that process. Of course, we're going to continue to have access to specialists very efficiently, whether it's a dietician or a gastroenterologist or a nurse practitioner.

Speaker #3: And the main benefit there we could give members a lot more access, a lot quicker access, and we could lower costs because when somebody is toiling about and going to different specialists or the or their primary care, and trying to figure out what's wrong, our aim is to short-circuit that process.

Speaker #3: And of course, we're going to continue to have access to specialists very efficiently, whether it's a dietitian, a gastroenterologist, or a nurse practitioner.

Speaker #3: And the third aspect is that it's kind of a meta-capability you will need, whether it's migraine or digital physical therapy or GI, is how do we engage people in their health such that they want to do something that they may not want to do, which is focus on their gut health today, or focus on their knee pain, or focus on their headache.

Daniel Perez: The third aspect is that it's kind of a meta capability you will need, whether it's migraine or digital physical therapy or GI, is how do we engage people in their health such that they want to do something that they may not want to do, which is focus on their gut health today, or focus on their knee pain, or focus on their headache. We've built a really strong foundation of tactics such that, and a product foundation, where we could get people to actually engage with their health, engage with their providers so that we can move their outcomes. Because if people don't engage, we're not going to have a very good shot at steering their outcomes to become better. Absolutely, the product experience for GI will be different from digital physical therapy, but we're very confident we can make a big impact on outcomes.

Speaker #3: And we've built a really strong foundation of tactics and a product foundation where we could get people to actually engage with their health, engage with their providers, so that we can move their outcomes. So that people don't engage.

Speaker #3: We're not going to have a very good shot at steering their outcomes to become better. But absolutely, the product experience for GI will be different from digital physical therapy, but we're very confident we can make a big impact on outcomes.

Speaker #4: Very helpful. Thank you.

Rishi Jaluria: Very helpful. Thank you.

Speaker #1: That is all the time we have for questions. I will now turn the call back to Daniel Perez for closing remarks.

Operator: That is all the time we have for questions. I will now turn the call back to Daniel Perez for closing remarks.

Speaker #3: Just want to end by saying thank you, everybody, for tuning in. As you can see from our Q2 results, our core business is very, very strong with digital physical therapy.

Daniel Perez: Just want to end by saying thank you everybody for tuning in. As you can see from our Q2 results, our core business is very strong with digital physical therapy. We are very blessed and fortunate to remain by far the market leader in our space. We've built a very sustainable business that is driving very meaningful free cash flow. It allows us to invest both in organic investments, which you see with migraine, inorganic investments, which you see with Cylinder, as well as to return capital to shareholders, as you saw with our $300 million share buyback program, which we announced today. We are planting seeds that we hope we'll be able to sow in the future. Seeds such as migraine, which is a big challenge. We think has hit the ground running with 450 clients across covering five million members.

Speaker #3: We are very blessed and fortunate to remain by far the market leader in our space. We've built a very sustainable business that is driving very meaningful free cash flow.

Speaker #3: And it allows us to invest both in organic investments, which you see with migraine, inorganic investments, which you see with cylinder, as well as to return capital shareholders as you saw with our $300 million share buyback program, which we announced today.

Speaker #3: And we are planting seeds that we hope we'll be able to sow in the future. Seeds such as migraine, which is a big challenge, and we think has hit the ground running with 450 clients, covering 5 million members.

Speaker #3: We still have many millions tens of millions of members to go to upsell our migraine product to. And now with a GI care, as another seed that we're planting.

Daniel Perez: We still have many millions, tens of millions, of members to go to upsell our migraine product to. Now with GI care as another seed that we're planting. We're really excited about many plentiful harvests up ahead. Thank you for tuning in. We look forward to speaking to you again in about 90 days.

Speaker #3: And so we're really excited about many plentiful harvests up ahead. So thank you for tuning in, and we look forward to speaking to you again in about 90 days.

Speaker #1: This concludes today's call. Thank you for attending. You may now disconnect.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Jailendra Singh: We're going to go there.

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