Augmedix, Inc.

Greetings and welcome to Augmetics Inc. Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jian He, Investor Relations. Thank you. You may begin.

Thank you, and thank you all for participating in today's call. Joining me are Manny Krukaris, Chief Executive Officer, and Paul Ginocchio, Chief Financial Officer. Earlier today, Augmedics released financial results for the quarter ended September 30, 2022. 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's 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. Also during our call today, we may discuss non-GAAP financial measures which adjust our GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in today's financial results press release. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 14, 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.

Thank you, Jian. Good afternoon, everyone, and thank you for joining us. I'm very pleased to announce a record third quarter. Our results reflect our team's continued focus on executing across our strategic priorities to drive enterprise customer expansion, differentiating our AI-driven core platform and flexible product solutions, and intelligently scaling our business model. Importantly, these initiatives are driving operating leverage, which has resulted in a reduction in our operating losses and cash burn quarter-on-quarter. As we stated in Q2, we expect that trend to continue and for operating losses and cash burn to decline in 2023 versus 2022. Our third quarter results serve as validation. They were gaining traction and at the front end of realizing meaningful operating leverage. Improving operating leverage will be a key theme for our medics in 2023 as we continue to aggressively grow the top line. Total revenue for the third quarter of 2022 was $7.9 million, representing a 40% year-over-year growth rate. This is our fourth consecutive quarter near the top of our 30% to 45% multi-year revenue growth target range. Retention and staffing shortages remain at the forefront of concern for health care organizations across the U.S. A recent published report by Bain and Class cited labor shortages and wage inflation as major catalysts to driving demand for solutions that improve productivity and alleviate labor needs. Moreover, COVID-19-era staffing shortfalls, combined with burnout among physicians, nurses, and other clinicians, continue to plague providers, which in turn has been exacerbated by substantial wage inflation over the past 18 months. We see these industry tailwinds boosting demand for our differentiated documentation solutions, which directly address these labor challenges by reducing administrative burden, improving productivity, and increasing retention. The strong demand environment, our effective go-to market strategy, and differentiated market positioning have resulted in a very healthy pipeline for what is typically a seasonally slower fourth quarter. Notably, we also had record bookings in the third quarter, with September representing the largest bookings month in our company's history. We have a number of additional large orders in the pipeline, which underscores how our solutions are addressing the human toll of physician burnout and are resonating with both existing and new clients. This highlights our continued commercial momentum as the health of our pipeline reinforces our optimism for 2023. We continue to drive meaningful organic revenue growth through our land and expand strategy with enterprise accounts. As an example, one of our larger East Coast-based health systems wanted to specifically address its retention issues and increase efficiencies to enable their physicians to see more patients. We implemented our solution among an initial cohort of physicians who we believed would be prime beneficiaries of our services based on their individual productivity metrics. The health system realized an ROI from our service that was in line with the target we had established for that system at the outset of the program. Based on those results, the health system placed our largest ever single order. Our footprint at this enterprise will cover a significant portion of their total physician population. Our partnership with Google continues to generate strategic introductions to large health systems. In the third quarter, we successfully converted another introduction into a new customer. As a reminder, our Google partnership expands beyond engineering collaboration and now includes a systematized go-to market effort, which harnesses the power of over 1,000 enterprise-focused Google Cloud reps. During the third quarter, we formalized our integration into the Google Cloud Platform marketplace, allowing GCP Health System customers allocate their GCP financial commitments towards the purchase of Osmedix services. Turning to our product development efforts, we are excited by the positive response we are starting to see with the commercial release of Osmedix Prep, our pre-charting solution. Osmedix Prep addresses another distinct administrative workflow challenge for clinicians, the time and resources spent before a patient encounter begins with respect to a patient chart. Our pre-charting solution enables the extraction of relevant historical information from a patient's health record into a current chart or medical note. We believe that AugMedix Prep can save clinicians about one and a half hours of administrative burden each day, providing relief with respect to staffing shortages, a major challenge for our health systems today. We are additionally pleased with the commercial rollout of our iOS client device to complement our existing Android client device operating system. With this rollout, we are now able to offer clinicians the option to personally select their preferred operating system for our client's application, thereby broadening our reach to include all clinicians and healthcare enterprises, regardless of which operating system they use. We believe that offering such choice will further enhance clinician satisfaction and retention. Our customer-facing software product also remains on track to be commercially released in 2023. This ambient class solution addresses a large segment of the medical documentation market. This is a software product that clinicians themselves use to generate medical notes with no human intervention on our part. We anticipate it will enjoy even higher gross margins than our current product portfolio. Finally, we continue to make impactful advancements with our proprietary ambient automation platform and note builder technology in our pursuit of enabling fully automated medical notes. As we begin to realize the benefits from our machine learning, the percentage of notes that is automated has been increasing at a steady pace and now represents a meaningful proportion of the 50,000 plus medical notes we generate every week. We anticipate realizing gross margin benefits from increasing levels of automation. In closing, we are very pleased with our third quarter results we remain confident that we are firmly positioned with large opportunities ahead. We continue to execute on our strategic initiatives and focus on delivering strong growth, improving gross margins, and increasing operating leverage. With that, I will now turn the call over to Paul Ginocchio, our Chief Financial Officer, then we'll return with closing comments. Paul?