Accolade, Inc. (ACCD) on Q4 2021 Results - Earnings Call Transcript
Operator: Good day, and thank you for standing by. Welcome to the Accolade 4Q 2021 Earnings Results Conference Call. As a reminder, this conference is being recorded. I would now like to hand the conference over to your host, Todd Friedman with IR. Thank you. You may begin. Todd Friedman: Thanks, operator. Welcome, everyone, to our fiscal fourth quarter and year-end earnings call. Rajeev Singh: Thank you, Todd, and thank you all for joining us here today. Fiscal 2021 was a year of transformation for Accolade. We were extremely well positioned at the outset of a global pandemic to be a source of help and guidance for our customers and for our members. And that led to opportunities for us to grow and to innovate. We took advantage of those opportunities. Among the highlights for the year were a consistent investment in innovation, which yet again yielded incredible value for our customers and our members. We delivered new offerings like Accolade COVID Response Care, Intelligent Provider Matching. and a suite of integrated care offerings with partners that started with mental health with Ginger. Additionally, it was our first full year deploying Accolade Total Care and Total Benefits. Combined, these offerings dramatically expanded our solution footprint. We can meet customers wherever they are, and we can grow with them as they evolve. That innovation paid off with a strong organic growth rate across all market segments, strategic, enterprise and middle market, which led to strong financial performance. We doubled our customer base again to more than 100 logos covering more than 2.1 million members. And annual contract value increased 31%. Additionally, we launched our pilot program with the Defense Health Agency this past year. Steve Barnes: Thanks, Raj. I'll start with a report on our results for the full year and fourth quarter of fiscal '21 and then provide a first look at our fiscal '22 guidance. We generated $59.2 million in revenue in the fourth fiscal quarter, representing 33% year-over-year growth, and $170.4 million for the full year or 29% growth over fiscal '20, both ahead of our initial and updated guidance ranges provided in January and March. As a reminder, we closed the 2nd.MD acquisition after the quarter and fiscal year ended, so all of the revenue and growth reported is from core Accolade performance. Revenue outperformance and growth in the fourth quarter was largely attributable to better-than-forecasted achievement of performance-related revenue and customer membership headcounts, including the airlines. Fiscal Q4 adjusted gross margin of 53.8% compared favorably to 50.8% in the prior year period. Remember that fiscal Q4 gross margin is positively impacted by the recognition of performance-related revenue. Overall, adjusted gross margin for the year was 45.6% compared to 44.6% last year. Rajeev Singh: Thank you, Steve. Fiscal '21 was an amazing year for Accolade, but we have even bigger aspirations for fiscal '22 and the years beyond it. I'll conclude by stating what is fairly obvious by now. The acquisition of PlushCare and the addition of virtual primary care materially changes the contours of our business. Aside from opening a huge market opportunity, it opens the door for conversations with customers that will extend our relationships and deepen the value that we provide them. It creates a platform for us to lean hard on our track record of delivering value in the form of engagement, satisfaction and cost savings and change the way health care works in this country for our customers. As we've demonstrated with the innovation we've delivered this year with our fundraising activities and with 2 important acquisitions now, our aspiration is to play a material role in improving health care in this country for the people that we serve and to build a great and enduring business. We wake up every day and think about how to fix an industry that's responsible for half of all personal bankruptcies in the country, that represents 20% of the GDP and that grows at a rate that surpasses GDP, wage growth and most corporate profits. If you're an investor in Accolade, I think it's because you believe we have a chance to be that great and enduring company, and we truly appreciate the confidence you've shown in us. The past year has presented challenges that none of us ever thought we'd face, but we remain focused on our mission and on our vision to help every person live their healthiest life, and we're more motivated than ever to reach that goal. So thank you very much for being here. With that, operator, I'd like to open the call up to questions. Operator: Your first question comes from Michael Cherny from Bank of America. Michael Cherny: Congratulations on a strong end to your fiscal year. I want to dive in a little bit on some of that spend dynamic. I guess for a company that continues to expand its TAM, seeing a spend to grow mentality is not surprising at all. But Steve, you had some comments about remaining disciplined. And so as you think about that spend, can you just walk us through again some of the metrics that you hold yourself against and making sure that the spend that you're pursuing, the investments you're pursuing are paying off in terms of growth and returns? Steve Barnes: Sure. And thanks for the question, Mike. A couple of things. Here's how we think about it. If you think even going back to a year ago, when we laid out the company's plan going forward, we talked about believe -- a strong belief that we could grow the Accolade core business 25% or more each year, and we've done that over the past several years; that we could take gross margins from the low-30s 3 years ago into the 40s through investments in innovation and technology; and consistently improve our adjusted EBITDA loss, which was 3 years ago in the 40s and then progressed into the 41% and then to 25% and then this year at 16%, as we just ended. And now as we look in front of us and see a very large 10x size of TAM, we say to ourselves, all right, we believe we can grow, as we said in here, not only at that 25% core growth rate with Accolade, but even faster with the addition of 2nd.MD and with PlushCare. And we do that with an eye towards, if we can continue to do so at attractive gross margins, which today in the mid-40s are attractive, we can -- we believe we can go higher, but we're going to make some smart investments here as we add these capabilities. And then that adjusted EBITDA loss, we can take it -- it will remain roughly flat in fiscal '22 in that 15% or a bit higher range. And then in the year after chunks down. What we're seeing there, Mike, are the following: Very strong attractive return rates on sales and marketing spend, which you see in terms of the ACV growth rate and extremely high customer retention. And when you weave that together with the results from the Aon study, the performance guarantees and the fact that we know we're saving money for customers and this larger TAM, that tells us that we're doing the right things, and we're getting the right returns. And we believe strongly that doing so with that continued discipline and chunking down towards breakeven over the next couple of years as we grow at that kind of rate is how we think about that overall P&L discipline while we attack in the very early stages an extremely large market with a differentiated approach. Michael Cherny: Got it. And as you think about the expansion of the market, you still also do have a core business that's performing fairly well with strong customer adds. How do you see the competitive dynamics playing out there in a market that a lot of companies coming at some different angles, but appears to becoming increasingly competitive. Rajeev Singh: Mike, this is Raj. Thanks for the question, and thanks for being here. Here's the way we think about the competitive dynamics and always have. We're in a category that we think that we largely invented 10 years ago. And in that category, we've seen a number of companies over the last 4 or 5 years pivot into the space, looking at the value that's being delivered in the space. Ultimately, our view is that in order to really deliver high-quality advocacy and navigation services and then weave in the incremental capabilities like second opinions and primary care that we're talking about today, you need to be able to invest in building long-term relationships on a longitudinal basis with individuals with a wide majority of that population. By and large, we think we're unique in our capacity to do that reliably with high percentage of the population, leveraging a differentiated data set that we've pulled together over the years. And then in turn, reliably prove the cost savings via things like the Aon study that Steve referenced. We put a percentage of our fees at risk with every customer that we serve. It's because we know we can deliver cost savings on an ongoing basis. There will always be -- particularly, anytime the leader in the space is growing at attractive rates, there'll always be new competitors in the market. Our job is to continue to set the pace as it relates to the value that we deliver to our members and our customers. And we think we've been pretty active in doing so over the last year. Operator: Your next question is from the line of Robert Jones of Goldman Sachs. Robert Jones: Great. I guess just looking at the revenue guide and the disclosure about more than doubling the customer base, and appreciate the insight on how to think about 2nd.MD, it does look like revenue per customer in the legacy Accolade businesses is down a bit. I was just hoping maybe you could share a little bit more insight into size of customer mix, average PMPMs, what type of offerings the newer customers might be turning on versus maybe like the legacy customer base? Just anything around kind of bridging that gap between the overall revenue and the number of customers would be helpful. Steve Barnes: Sure, Bob. Thanks for the question. Steve. Yes, as we've grown the business over the past couple of years, and you've seen our customer number accelerate, You've seen that happen across all of the segments, and we've talked a lot about how we segment the market into strategic customers, middle market and then enterprise in the middle. Much of the growth has happened on a pure logo count basis in the mid-market, which we consider to be customers with employees of about 500 up to about 5,000 as we've built out those distribution capabilities, formed partnerships with companies like Humana and others to reach customers of all sizes. So you will see a bit of revenue per customer compression there by design. It's our job and our intention to be able to reach a broader set of the market. We also, from -- over the past couple of years, have introduced this multiproduct suite that has different price points. So oftentimes, but not always, when we're reaching some of those smaller customers, we might start with a Total Benefits or a Total Care that's at that lower price point. The part that gives us great confidence, Bob, about what we're doing there and the take rates is, we see consistent renewals, the very high retention rates that we talked about and the wins that we're having in the market that's showing up in terms of the growth in this year's revenue, this past year revenue and the ACV number headed into fiscal '22. Operator: Your next question is from the line of Ricky Goldwasser from Morgan Stanley. Ricky Goldwasser: So a couple of questions here. First of all, on 2nd.MD, I think you're talking about growth of 35% to 40%. It's a little bit higher than what we were modeling. So does this 35% to 40% includes cross-selling benefit? Or is it the stand-alone growth profile of 2nd.MD? And then my second question related to behavioral health. I mean, our channel checks and what we're hearing from payers and employers, there is real strong, especially post COVID, demand for behavioral health. So one, what kind of demand are you seeing for your offering with the employer base? Is it helping you win new clients? And then do you have any data points maybe to share with us around how behavioral health helps lower medical expense because I think you're always focused on, we really have to kind of like quantify it and do the study. So if you can share any of those, that would be great. Rajeev Singh: Sure. Let me jump in on this one first, Ricky. First of all, thank you for being here, and thanks for the question. This is Raj. And Steve, maybe you can jump in if you've got anything to throw on top. The -- first of all, as it relates to your question regarding 2nd.MD, I think, positively, 2nd.MD is a -- demonstrated an attractive growth rate in its core business, in large part because of its differentiated service it's delivered. And those capabilities are what attracted us to the company, the capacity to deliver a consult within 3 to 5 days, make it a live consult with an expert as opposed to a written consultation like the rest of the market. It has given the 2nd.MD team a capacity to deliver great differentiation and competitive win loss. Incrementally to that 35% to 40% growth rate, certainly, there's a little bit of cross-selling or there is a modest amount of cross-selling or upselling factored into that number. But -- and no doubt, we expect that over the years to continue to grow. As it relates to the BH question, first, let me jump in and give you a little color commentary on why we think it's so powerful within the context of what we do. And then I'll turn it over to Shantanu to speak a little bit to the value that it delivers from a clinical perspective. In our view, BH has long been wrapped into everything that we do. We've -- Accolade's core advocacy and navigation services have always included behavioral health specialists as a part of our process. One of the reasons PlushCare was so attractive to us was that it embedded a behavioral health element or a mental health element into the way primary care physicians were practicing, all of which is geared around the idea that higher-risk populations have a higher propensity to deal with behavioral health issues. And if you can deal with both the physical health issue and the mental health issue in tandem, you have an opportunity to materially improve outcomes. Shantanu, let me turn it over to you to talk a little bit about our clinical philosophy there. Shantanu Nundy: Yes, absolutely, and I love the question. A core part of the strategy, clinically speaking, was, we wanted to get to the right members, right? We know that with mental health, one of the big challenges is that oftentimes those conditions go unrecognized and underdiagnosed. And that there's significant signal with them. So getting to the right member was a core part of it. The second was, was that right decision, right? That -- our perspective is that we just want to get people to the best possible provider for them. And so with mental health, that might be a virtual provider, that might be a brick-and-mortar provider, that might require medication therapy, that might not. And so really getting to that best decision was critical. And then finally, the right path, that we know that often these folks don't necessarily follow up on the next steps, that sometimes that longitudinal support that they need to really be able to get through the entire recovery process is lacking. And so we wanted to make sure that we're with the member every step of the way, ensuring that things don't fall through the cracks. And so what we're seeing in the very early data is, this is a new solution that's been out for us less than a year, is that we're starting to see real traction amongst -- along those dimensions that we're pretty excited about. Steve Barnes: And Ricky, this is Steve. I just want to circle back to close the loop on your question about 2nd.MD and their growth rate. And I think your point was cross-selling. You're right, 2nd.MD is a rapidly growing business as well on its own. We are very deep in the integration of combining the capabilities and Accolade's capabilities into an offering that is receiving early strong feedback from the market. But it is early, and there's a relatively modest amount of assumed cross-selling in the numbers that we provided about guidance for this year. Operator: Your next question comes from Jailendra Singh of Credit Suisse. Jailendra Singh: Thanks for all the color on ACV on stand-alone Accolade and 2nd.MD. I know you have shared in the past how on stand-alone Accolade side, you have captured ACV across various quarters and how that is split across various buckets of fixed and operational performance and savings. Can you provide similar split for 2nd.MD ACV, how should we think about the quarter capture there and the split across various buckets? Steve Barnes: Sure. Jailendra, it's Steve. With -- as we mentioned in the comments, 2nd.MD's model is a bit different. They don't have the same types of PGs as Accolade. It's typically either a PMPM or in some cases, case rate. So the PEPM model or that $37 million that I spoke about in 2nd.MD's ACV number, is similar to Accolade in the sense that it's a number that we would expect to earn. It's roughly members times a PEPM rate on the books at the end of the year. And most of their revenue is generated -- 2nd.MD's revenue is generated from that model. There's certainly an additional part that is case rate and variable, price times quantity. That would be on top of that. And so that's included in the guidance, the revenue guidance, that is P&L guidance for fiscal '22, but that case rate portion would not be in the ACV number. Operator: Your next question comes from Jeff Garro of Piper Sandler. Jeff Garro: Congrats on the results. I want to ask about your go-to-market approach. With the new acquisitions and the cross-selling opportunity that you've spoken about, just curious how you expect to balance the full vision you have for navigation plus expert medical opinion, plus virtual primary care while making sure your salespeople don't get too far ahead of themselves on the time line for the step-by-step operational and technology work to achieve that vision. Rajeev Singh: Thanks for the question, Jeff. This is Raj. And I appreciate you being here. And I appreciate the question very much. At the core of the value we deliver to our customers, and we -- and I talked a little bit about this in my prepared remarks, is the foundational element of building a relationship, a trust-based relationship with a huge preponderance of the population powered by a data set that we think is extraordinarily differentiated. Everything we add from there, whether that's second opinions, primary care, our own clinical programs, are all geared around adding incremental value to those populations by improving their outcomes and lowering cost. And so what you'll see in our integration strategy is, first and foremost, we're investing in integration. We want there to be seamless workflows, and we want the process to mirror the needs of the consumer as opposed to the silos that exist in health care today. Secondly, you'll see us embedding primary care and expert medical opinions in each of the core platforms that are a part of Accolade's -- that are how Accolade lands with customers today because we fundamentally believe both expert medical opinion and primary care add value to any member that we're serving regardless of the platform they're working with us on. And third, We're -- one of the things we really looked at in both of the acquisitions that we've taken part in, in the last couple -- in the last year, are technology stacks that allow integration to occur at pace. Meaning, we talked at length about the idea that we wanted teams that were culturally aligned, services that were built around longitudinal relationships and tech stacks that allowed us to integrate at pace at scale. We expect that, that's true on both of the companies that -- one that we've already closed and the other that we expect to close next month. And so we expect to be able to deliver these integrations at pace. And obviously, our sales teams are anxious for us to do so. Operator: Your next question is from the line of Ryan Daniels of William Blair. Jared Haase: This is Jared Haase in for Ryan. Raj, maybe for you, I was hoping to just, if you could talk a little bit about just generally the key themes that are coming up in discussions with the client base. So curious if that's still largely kind of focused on sort of the return to work, getting people back into the office post COVID? Or if you're starting to really see kind of a shift towards more of the clinical offerings, obviously, that you've added through M&A and things like that. Just any thoughts there around the themes that you're hearing in the pipeline from clients. Rajeev Singh: Yes, of course, happy to. Very clearly, more and more of our clients are returning to work right now to be sure. But I agree with the premise of your question or the sort of the direction you were leading me with your question around where the conversations are. Health care spend is returning at some level across the country. Our customers are seeing that spend return. There's an acknowledgment that health care trend line in 2021 is going to be higher than the trend line that we saw in 2020. How customers are budgeting for that and how they're dealing with what we think are a profound set of needs in undertreated chronic conditions or in terms of behavioral health, are opportunities for our clinical programs, for our enhanced clinical programs to drive material value. It's a good opportunity for me, if you don't mind, to kick it over to Shantanu Nundy as well, our Chief Medical Officer. Shantanu actually just published a book yesterday that's written about COVID called Care After COVID, that's really about how we're actually dealing with a new wave of needs in the health care system post the pandemic. Shantanu, do you want to talk about the clinical needs that our customers are facing that might be a little different than they were just a year ago. Shantanu Nundy: Yes. Happy to Raj. And I absolutely love the question because I think you're right. I think for a little while earlier in the year, employers were largely focused on the pandemic, right, and just managing the uncertainty of that. I think we're definitely seeing a turn in the conversations where our customers are increasingly sort of getting ready to get back to normal, which means they're concerned about those postponed elective care. And so that's where they're interested in, in second opinion. I think they're interested in getting -- get a handle of chronic diseases, which many things sort of fell off during the pandemic. But I think the way that they're coming at those conversations is different, right? I think that during the past year, what they've seen is that health isn't just an HR benefits issue, it's also a business continuity one. And that it's sort of magnified for them that the core challenges we have on the supply chain of health care are far more stark than they had imagined even before this. So issues like the access to primary care, the fact that 20% to 40% of Americans don't have it and that the reimbursement model for primary care makes it very fragile, right? The fact that mental health is core to what they need to be able to provide their employees, I think the opportunity that virtual provides. So I think what we're seeing early evidence of in the customers is a real change in mindset and sort of a larger aperture for getting even more involved in care delivery and for really connecting all the different pieces of the health care equation for their members. Operator: Your next question comes from the line of Hannah Baade of D.A. Davidson. Hannah Baade: Just a quick question on your growth in your customer base. I saw on the deck that Accolade increased the target customer base from 21,500 to 30,000 for self and fully insured employers. Can you unpack the delta between these? And maybe what portion is attributable to 2nd.MD? Steve Barnes: Sure. It's just an additional data source on the number of target companies in the U.S., Hannah, as opposed to a reflection on 2nd.MD per se. It's more about the sizing of the mid-market of target customers, which as the level at which you can self-insure given the availability of stop-loss insurance at affordable rates even for small companies, has grown that market. So today, we're sizing it a bit larger than we were back at the time of the IPO in the range of 30,000 available companies. Operator: Your next question comes from Richard Close of Canaccord Genuity. Richard Close: A couple of questions on competition and collaboration. Raj, I just wonder if you could address the view that employers are overwhelmed with all these different offerings, definitely referring to this week's journal article. Are you guys hearing stuff like that from your customers in your discussions? And is that something that could impact the signing of new customers, especially as we think about large enterprises? Rajeev Singh: Richard, I appreciate the question very much. And I think there's certainly been a lot of conversation about the journal article. I'll say this. When we read the headline of that article, which spoke to benefits buyers being overwhelmed by the number of solutions that are being presented to them every day, it was as if they've been pulled off of our website or out of our presentation. Ultimately, the value proposition we deliver for our customers and for their employees and their families is to give them a single place to go. So if they're unsure of what benefit they should use or how to go about leveraging their benefits, all they have to do is ask Accolade. Our Trusted Supplier Program is built around the idea of pulling all of their disparate programs together in a way that actually leverages our engagement engine, drives engagement and adoption up and improves outcomes by getting people to leverage their benefits programs as well. And so do we agree? Yes, we fundamentally agree with the headline of that article. Benefits buyers are overwhelmed. They would like to go to a single place to be able to manage their vendor relationships. And to the degree they can reduce their vendor relationships by finding more value, and value is the critical term here that I'll expand on in just a moment, with a single vendor, they'd like to do so. But that value isn't about per se the right cost price per unit PEPM or PMPM. That value is about clinical value and about driving cost down. It's about improving member satisfaction. And if you can do those 3 things by weaving offerings together in the nature that we are, we think you have a winning proposition for the customer, reducing the number of vendors that they're dealing with, building longitudinal relationships with their people to make them happier, improving clinical outcomes and lowering cost. That is fundamentally aligned with the value proposition Accolade has been talking about for 10 years. Operator: Your next question is from the line of David Grossman of Stifel. David Grossman: I'm wondering if you could just remind us of how the integration of 2nd.MD and PlushCare get factored into the risk element of your revenue model. Should we assume that once the integrations are fully completed that in fact you can guarantee a higher level of savings post integration? Rajeev Singh: First of all, thank you for the question. I think when we think about adding capabilities to our platform, like expert medical opinion, like primary care and specifically with things like primary care, where we think we're adding value to a wide variety of our longitudinal relationships, we absolutely assess every one of those incremental capabilities with an eye towards, will it improve clinical outcomes, will it reduce cost and will it improve member satisfaction. We believe that's true for both of these capabilities. And we believe when embedded with -- in our platform, we can drive engagement for those solutions up in a way that improves our capacity to deliver incremental cost or value. In my prepared remarks, I talked about the idea of driving negative trend line. We do fundamentally believe we can eat into the waste that exists in the system by delivering an integrated experience in a longitudinal form like the one we have today. How will that manifest for our customers? Well, we've been putting our fees at risk since the beginning of the business, meaning we've been putting a percentage of our fees at risk since the company was founded. And today, for preponderance of our customers, a percentage of our fees are at risk associated with the savings we deliver. We'd expect that to continue into the future, and we expect that we can yield more value from those relationships as we drive more cost savings for our customers. Operator: Your next question comes from Stephanie Davis of SVB Leerink. Stephanie Davis: With the addition of the second opinion solutions and the virtual primary care announcement, I'd be curious if you're seeing any change in market perception from your employer clients. So 2 parts. One, are you seeing employers open to contracting directly with you for care? Or is the market perception still leaning towards Accolade as a third-party navigator that has value via its independence? And secondly, are you seeing customers open to shutting off their third-party virtual care in favor of yours? Or is it more of an additive component to their overall care suite? Rajeev Singh: I'm going to let Shantanu jump in here because I know he's got 5 things that he wants to add to whatever answer I give you, so Shantanu get ready. Our strategy fundamentally is, and this has been true in terms of our customers' perception of us since the beginning, has been about improving clinical outcomes, reducing costs and making people -- and driving engaged members who are happy with the service we deliver. And so in answering your question around customer perception, customers expect us to continue to deliver new value to them and are quite, in fact, excited about the new capabilities we've been bringing to their doorstep over the course of the last 6 months. Second point I'd make there is, as it relates to our care delivery vehicles and how we collaborate with the marketplace, and this is where I'll turn it to Shantanu, our strategy is fundamentally about improving outcomes for the people we serve. And that means we will collaborate where that's appropriate. We're always going to get the people -- our members to the right place at the right time, including to our partners or to the brick-and-mortar health care system that exists. And so we're not really talking about replacing things. We're talking about enhancing a system that already exists in order to drive to better outcomes. Shantanu, do you want to jump in and speak a little to that model? Shantanu Nundy: Yes, absolutely. I think, as you said, I mean, I think fundamentally, our sort of philosophy, right, is that we want to get our members to the right doctors and help them empower that patient, empower that doctor to get to the right decisions for them. And I think sometimes that may be providers that we have, that might be providers in brick-and-mortar, that might be through our partners. But ultimately, our North Star is really making -- helping members make the best decisions so that we can get them to the best outcomes. And I think where will you see second opinion, you see primary care is if you look at the health care system and you look at where are the places that often sort of fail patients the most, right, those are the places where we see an opportunity for us to connect the dots and ultimately help drive those better decisions, right? When you look at how many people that have cancer or that have surgeries that don't even have the right diagnosis or don't have the right treatment plan and how often when we get a second opinion that, that diagnosis or treatment meaningfully changes, right, that's a place where we see immense leverage for us to be more part of that solution. Same thing for primary care, right? The statistics show, right, that 20% to 40% of the Americans don't have a primary care physician. But if you dig deeper into what percent of patients don't have a strong primary care relationship and then if you go on the other side, I still get a chance to practice medicine and primary care every week, the challenges that I, as a primary care physician, have being able to provide the care that my patients need, right, simple things like I don't know what medications they've actually filled, I don't know if they were in the hospital recently, I -- when I prescribe a medication, I can't tell them how much that medication costs before they leave my clinic, those are the places where we see a tremendous opportunity for us to leverage the navigation service that we have, the data that we've built, the relationship we've built to really empower those physicians and, again, take a part of the health care journey that just is simply not working for enough people. And again, sometimes that might be our own and sometimes that might be brick-and-mortar doctors and really augmenting and supporting them in getting to those better decisions. Operator: Your next question comes from the line of David Larsen of BTIG. David Larsen: Can you talk a little bit about your relationship with TRICARE. It's my understanding that TRICARE has about 9 million lives in total. You've a pilot program going on with about 100,000 lives. And I was hoping to hear about sort of more in-sell potential with that particular client. Just any thoughts there around timing would be very helpful. Rajeev Singh: David, thanks for the question. We are in now entering the second year of our TRICARE pilot. You may recall that last year, we announced we signed a 3-year pilot with TRICARE that needed to renew at the end of each year. That renewal process has taken place, and we are now into our second year serving members and continuing to see great early indicators of the value we can provide, extraordinary satisfaction and an opportunity to guide people to the right outcomes. Our belief is, to your point, that we have an opportunity to extend that value to more of the TRICARE population with the success of the pilot. And obviously, the extension of the pilot for another year is a great indicator of the opportunity to extend the relationship. And we don't have a lot to tell you today around incremental opportunities or the size of the incremental opportunity beyond the fact that we have 100,000 members today. And there's 9 million members in the broader population. But we do like the leading indicators associated with the service we're delivering. Operator: Your next question is from the line of Ryan MacDonald of Needham. Ryan MacDonald: In regards to 2nd.MD, you obviously talked about the mix of revenue being a combination of PEPM, but then there's also sort of price times quantity case rate component as well. As you look at the outlook that you've provided for 2nd.MD, how should we think about the mix of revenue contribution between those 2? And is there any potential tailwind to the case quantity amount as we look at a return of potential elective procedures throughout the year? Steve Barnes: Ryan, thanks for your question. It's Steve. Yes, the case rate component is outside of that ACV, number one, while the majority of the revenue that 2nd.MD generates is on a PEPM basis. You could think of it as a quarter to a 30%, 1/3, something like that of potential around case rate. And as people are coming back into the health care system and more cases, there's potential tailwinds there. So we've included it in the guidance what we think is an achievable number, but there certainly could be that opportunity for upside. As we all know, we're all trying to figure out exactly how quickly people come back into the health care system. So we're taking -- we think it's a very prudent approach there, but certainly could be some upside on volumes as we move through the year. Operator: I am showing no further questions at this time. I would now like to turn the conference back to Mr. Singh. You may proceed. Rajeev Singh: Thank you very much, operator. And to all of our investors and analysts who joined us today, we appreciate you making the time. We're excited about the future. We look forward to catching up with you in July for our Q2 earnings call -- Q1 earnings call, excuse me. Thanks, everyone. Bye now. Operator: This concludes today's conference call. Thank you for your participation, and have a wonderful day. You may now disconnect.ACCD Ratings Summary
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