Augmedix, Inc.

Greetings and welcome to AugMedics 2021 Third Quarter Earnings Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Caroline Paul, Investor Relations. Thank you. You may begin.

Thank you, and thank you all for participating in today's call. Joining me are Manny Kurkaras, Chief Executive Officer, and Paul Ginocchio, Chief Financial Officer. Earlier today, Augmedics released financial results for the quarter ended September 30th, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. These forward-looking statements are based upon our current estimates and various assumptions and involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors and management discussion and analysis of financial condition and results of operations in our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission and similar disclosures in subsequent reports filed with the SEC. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 9, 2021. Augmetics disclaims any intention or obligation, except as required by law, update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I'll turn the call over to Manny.

Thanks, Caroline. Good afternoon, everyone, and thank you for joining us. We are pleased to report another strong quarter as we executed well across our growth initiatives and built upon our bookings momentum in the first half of 2021. We continue to see strong demand from our existing customers, and we remain focused on the significant opportunity ahead to further penetrate the clinical documentation market where healthcare organizations already under contract with Augmetics represent an aggregate annual revenue opportunity of about $1 billion. As a reminder, our service model is centered around Augmetics ambient automation platform, which leverages our proprietary note builder system and medical data specialists to generate accurate and timely delivered medical documentation. By combining structured data models with natural language processing and machine learning models, Augmedics' note builder system is able to deliver comprehensive notes for more than 35 specialties in a variety of healthcare settings. The metadata generated from the sequence of clinicians' questions and patient answers from nearly 40,000 visits per week helps train our AI-driven note builder and drive increasing efficiency. This metadata will also facilitate automated add-on services such as coding, providing our cosmetics with a powerful advantage over other approaches that do not possess such data. Physicians have a choice of our real-time service, which we call live, or our non-real-time service, which we call notes. Both of our solutions focus on reducing the burden of medical note documentation, which results in higher clinician productivity and helps generate additional revenue for healthcare enterprises. Our service has also been proven to increase clinician and patient satisfaction. Our unique approach to clinical documentation enables not only natural physician-patient conversations, but also creates scheduled capacity for clinicians to spend more time or see more patients which is exactly what health systems need right now as they are experiencing higher levels of retirement and economic pressure post COVID-19. Turning to our recent financial performance, revenue for the third quarter of 2021 was $5.6 million, representing a 33% year-over-year increase. Quarter-over-quarter revenue growth accelerated to 9% versus 8% last quarter. Given the health of our pipeline, and increase in customer adoption, we expect our bookings momentum to continue and for growth in clinicians and service to accelerate into the fourth quarter of 2021. We believe we have a multi-year revenue growth opportunity of 30 to 45% annually through the increased adoption of our live and notes offerings among our existing and future customers. Looking ahead to the remainder of 2021 and beyond, we are excited to share some updates on our revenue and gross margin growth initiatives. First, we continue to build relationships with our major accounts in order to offer our notes and live offerings to a broader base of physicians within these enterprises. Recall that when we land within one of these enterprises, we implement our solution among an initial cohort of physicians who we believe would be prime beneficiaries of our service based on their individual productivity metrics. And we gradually expand our footprint once we demonstrate the targeted ROI. The unlocking of our notes offering at a few of our large enterprises has increased our opportunities to further penetrate these organizations. Second, we are thrilled today to announce a partnership agreement with the National Cooperative of Health Networks Association, MTHN, a national professional membership organization to help rural health networks gain access to Augmedics' ambient automation platform, which we refer to as AAP. As rural health networks struggled with recruitment and clinician burnout, we are focused on helping NCHN's clinicians free up time, ease the administrative burden of the EHR, and practice at the top of their medical license. We look forward to helping NCHN's rural health networks achieve their goals through this partnership. In September, we were pleased to announce our partnership with Google Cloud to integrate and optimize their automatic speech recognition technology into our Note Builder technology platform. Our proprietary technology provides the natural language processing to the text to produce a final clinical note. We believe this integration can improve the accuracy of our NLP models, improve our unit economics, and accelerate our ability to scale to new clinicians. Our partnership with Google Cloud is also beginning to benefit our go-to-market efforts and generate Google-sponsored enterprise sales leads. We remain focused on identifying other potential partnerships that are complementary to our core documentation solutions to help us further accelerate our growth. Fourth, we continue to invest in technology to enable increasing levels of automation and greater operational efficiencies in the node creation process, and other related services as we broaden our solution portfolio. As a result, we expect higher gross margins in the future. Finally, our flexible operational infrastructure and technology platform have enabled us to seamlessly enter new end markets such as wound care, dental, veterinary, outpatient, and post-acute care settings, which we consider to be underserved markets. Our solutions are utilized today by over 35 specialties across 28 EHR systems, and we remain focused on identifying additional opportunities that will further expand our already large total addressable market. Although these are exciting developments that should continue to drive growth and margin expansion in our business for many years to come, I want to make sure that people remember an ambition of ours since the company was founded back in 2013. And that is the creation of a natural language processing slash artificial intelligence platform that can generate complex medical notes in a fully automated process from an ambient natural physician-patient conversation. This is an enormously complicated piece of technology that requires millions of data sets to create. Because we have built our solution to be end-to-end, meaning we have access to the conversation between the patient and the doctor, as well as the final EHR entry, it means that we are in a unique position in the market to be able to develop this platform. The platform is being launched in phases over time, allowing us to automate key steps in the medical note creation process along the way, until in the end, almost all of the note is likely to be generated by a machine. We expect the majority of the medical note content we create to be automated within the next two to three years. Over time, therefore, we should be able to become much more productive, expand our gross margins, as well as offer increasingly complex and other value-added services to our healthcare system clients. In summary, we delivered another strong quarter, and we are very enthusiastic about our achievements to date. We executed well in our strategic priorities, and we remain committed to investing in our platform to further penetrate the clinical documentation market. With that, I'll now turn the call over to Paul Ginocchio, our Chief Financial Officer, then we'll return with closing comments. Paul?