Augmedix, Inc.

Greetings. Welcome to the Augmetics Inc. 2021 Fourth Quarter Earnings Conference Call. At this time, all participants are in 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. And please note that this conference is being recorded. I'll now turn the conference over to 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 Kurkaris, Chief Executive Officer, and Paul Ginocchio, Chief Financial Officer. Earlier today, Augmedics released financial results for the quarter ended December 31st, 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 that involve material risks and uncertainties that could cause actual results or events 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, March 21, 2022. Augmedics disclaims any intention or obligation, except as required by law, to 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. For those new to AugMedics, we offer technology and services that reduce the medical note documentation burden for doctors and save them two to three hours a day. Feedback from our clinician customers is that our product is life-changing and brings back the joy of being a doctor again, lost after years of grinding out notes behind a keyboard. We have a real-time synchronous offering, which we call live, and an asynchronous offering, which we call notes. Both solutions allow doctors to have natural conversations with their patients with no change to their normal workflows. For the health enterprise, Augmedix doctors have higher job satisfaction and can see more patients. which usually generates additional revenue. We deliver our service using the Augmedics Ambient Automation Platform, which leverages our proprietary NoteBuilder technology stack, along with a team of medical data specialists who oversee the process and deliver ancillary services. Our NoteBuilder technology is the centerpiece of our technology stack and creates structured data from a completely natural conversation between a physician and a patient. These are complex, nonlinear, and usually multi-conditioned discussions. During the process of classifying and decompiling relevant elements of the unstructured doctor-patient conversation into granular, structured, medically relevant data, NoteBuilder generates vitally important metadata. The metadata generated from over 40,000 patient visits per week that flow through our system helps to continuously train and improve the more than 500 templates that we have thus far created for the most frequent patient conditions. Each time we use a template during a patient visit, our artificial intelligence software makes the template smarter, which in turn improves our efficiency and enables us to deliver a more tailored medical note. We are continuing to add to our inventory of medical condition templates with a goal of being able to cover approximately 80% of patient visits within the next 12 months. Using our AI platform to generate medical notes will lead to higher levels of automation, which should materially improve our productivity and financial performance metrics in the future. Our live and notes offerings cater to two distinct price segments of the overall $6 billion addressable market. Live ARPU is about $2,500, while that of notes is about $1,000. Our product roadmap includes development of additional offerings at price points in the sub-$400 level. Importantly, these new offerings will not require any human intervention on our part. As such, they will be highly accretive to our gross margins. When we look at the biggest themes across healthcare, we see an increasing need for our products. Doctor retention and burnout continue to be a major problem in the U.S., costing an estimated $4.6 billion every year. These challenges have even led to some systems offering documentation services as a key benefit in their recruiting of new doctors. Relatedly, we believe that there is also a large and growing need for healthcare organizations to invest in digital solutions to improve physician workflows, enable increased capacity, and reduce costs of scale. The COVID pandemic has heightened and highlighted these gaps across our industry and served as a catalyst in driving remote solutions such as Augmetics. Importantly, we believe that these market drivers provide a tailwind to our growth trajectory. Our healthcare enterprise clients are actively seeking documentation solutions and look to us because of our variety of services and applicability in multiple healthcare settings. We continue to see strong demand for both new and existing customers. Our existing customers are buying at an accelerating rate, demonstrated by our high net revenue retention rate, and we have seen a pickup in new logo wins as well. We recently signed an emergency room program with a major health enterprise and landed a major regional health system in one of the largest cities in the country. We are only scratching the surface of the $6 billion market opportunity. where healthcare organizations already under contract with Augmedics represent an aggregate annual revenue opportunity of over $1 billion. Recall we also count four of the top 10 and six of the top 20 US healthcare enterprises as customers, and we realized meaningful growth within these accounts in 2021. Now let's review 2021. We are pleased with how the year concluded. We capped the year by delivering our strongest quarter, highlighted, by the continued execution of our growth strategy, further progress along our path to maximize automation of the node creation process, accelerated revenue growth, and gross margin expansion. For the full year, we reported total revenue of $22.2 million, growing 34% year over year. User growth was up by 35% year over year. Fourth quarter's total revenue was $6.6 million, representing a 45% year-over-year increase. This is slightly better than our pre-announced range of 43% to 44% year-over-year revenue growth for Q4 and a significant acceleration from the 33% year-over-year revenue increase we delivered in the third quarter of 2021. In 2021, our team made meaningful progress across a number of key strategic growth initiatives while continuing to drive operational efficiencies. Here are some of the highlights. We had numerous releases to our Note Builder technology that materially reduced the time to complete a medical note and allowed us to capture more structured data. Our Notes product, which was released in 2020, became a more meaningful part of our quarterly bookings and has demonstrated strong ROI for our new and existing enterprise customers. Our Notes product is a relatively high gross margin offering, so as the percentage of our total revenue accounted for by our Notes product increased, our overall gross margin improved. Finally, we delivered a number of partnership agreements in 2021 to extend our market reach and accelerate our growth trajectory. Partner-generated leads became an increasing part of our sales pipeline as 2021 progressed. Looking ahead into 2022 and beyond, we are confident that we can build upon our strong momentum to drive additional growth and gross margin expansions. Aside from continuing to develop our technology platform, as I just outlined, our team is focused on landing and expanding with large healthcare enterprises and physician practice groups. To that end, we have segregated our sales team into distinct groups to align with the areas from where we generate growth. Approximately one-third of our sales team is focused on landing new logos, while the remaining two-thirds are focused on expansion opportunities within existing enterprise accounts. As it relates to the expand part of our strategy, our dedicated client success managers have two primary levers. First, we continue to use data sharing to find those clinicians at large systems that will benefit the most from our service. Within these large systems, we are able to identify each individual clinician who can achieve productivity improvements that correspond to a payback period of 12 months or less if they adopt our service. At most large healthcare enterprises, this sweet spot covers about 25 to 40% of their entire clinician population. This targeted sales approach with health system driven ROI data has proven to be a successful expansion tool. Second, the addition of the notes product with its substantially lower price point has increased the addressable market within health systems, which we believe will accelerate penetration. The target productivity improvement for notes is lower than that for live, thereby expanding number of potential candidates for the service to a much larger pool. Overall, we are very pleased with the progress we made in 2021. Our strong finish at the end of the year is a testament to our team's efforts to deliver superior service to our providers and extend our track record of achievements. Our superior positioning, where we offer the broadest suite of services that accommodate the widest range of clinician workflows and care settings in our industry, will enable us to capture more than our fair share of this rapidly growing market. Adding new products to our existing suite will serve to further strengthen our positioning. We are enthusiastic about 2022 and the years ahead. With that, I'll now turn the call over to Paul Ginocchio, our Chief Financial Officer, then we'll return with closing comments. Paul?