Augmedix, Inc.

Greetings. Welcome to Augmetics Incorporated's 2022 Fourth Quarter Earnings Conference Call. At this time, all participants will be in 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 from your telephone keypad. Please note that this conference is being recorded. At this time, we'll now turn the conference over to Matt Chesler from Investor Relations. Matt, you may now begin.

Thank you, and thank you all for participating in today's call. Joining me are Manny Carcaras, Chief Executive Officer, and Paul Ginocchio, Chief Financial Officer. Earlier this morning, Augmedics released financial results for the quarter ended December 31st, 2022. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you the management will make statements during this call that include forward-looking statements within the meeting of the 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 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 opening 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 press release. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 27, 2023. Augmetics. 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, Matt. Good morning, everyone, and thank you for joining us. I'd also like to welcome Matt Chesler of FNKR to the Augmedics team. Great to have you with us. Q4 2022 was another strong quarter for Argonautics as the momentum we saw building in the second and third quarters continued and accelerated in the fourth quarter. We finished a great year of bookings and revenue growth with our best ever fourth quarter bookings performance. We materially expanded our footprint with two existing enterprises and experienced continued traction with our other enterprise accounts. One enterprise substantially increased the number of physicians who use our products, and we now service more than a third of all of its physicians due to the strong ROI we deliver. In recognition of the positive impact Augmedix products have had on clinician recruitment, retention, and productivity, another major account has leaned in and adopted a policy to provide Augmedix to all its partner physicians. As a result, Augmedix will grow to serve approximately 20% of its total affiliated physician network. We won a new region of an existing enterprise and added a large cohort of doctors as part of that customer's initiative to reduce physician burnout. And importantly, top 10 health system we won in early 2022 expanded with us in the emergency department, deepening our relationship with that customer and furthering our penetration of the emergency department market segments. Total revenue for the fourth quarter was $8.8 million, representing a 33% year-over-year growth rate, and we exited 2022 with $35 million in annual recurring revenue. The pace of our progress hasn't slowed down in 2023. We signed our largest ever cohort in March and have realized the best ever first quarter bookings. There is a tremendous market opportunity in front of us, and to maintain our momentum, The Augmedics team is 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. We are developing the broadest product portfolio in the medical documentation space so we can meet the needs of most clinicians regardless of care setting or workflow. Our SaaS product, Augmedics Go, will directly target the largest segment of the U.S. clinician market, the approximately 50% of U.S. doctors that historically have used dictation to produce medical notes. Augmetics Go is intended to be easier to use and generate greater time savings for clinicians than legacy dictation tools. This is a significant opportunity for us, and as a pure software product, will be the beneficiary of higher gross margins than our other documentation products, Augmetics Notes and Augmetics Lives. In addition to being easier to use and saving physicians more time than dictation tools, Augmedics Go has the added benefit of capturing and structuring patient visit data according to the specific requirements of health systems. And importantly, Go provides physicians transparency into how the medical note is created and control as to its content and look and feel. We believe transparency and control are attributes that physicians value highly. providing a sense of physician empowerment, and will serve as critical differentiators relative to black box approaches of competing offerings. Augmedics Go is currently being tested with a handful of clinicians at a major health system, and we plan to expand this testing in the second quarter and commercially launch Go late this year. Augmedics Go represents the latest in our continuing effort to effectuate behavioral change at the point of care at scale so that we can help increase patient access, improve patient outcomes, and bend the cost curve across the healthcare industry. Large language models, or LLMs, such as ChatGPT, are dominating the popular press today. LLMs are indeed impressive models that can have a significant impact on automating parts of the medical notes. In fact, LLMs are already incorporated in our tech stacks and are used in conjunction with our other NLP models and structured data sets to generate medical notes. LLMs are particularly useful in providing rapid summaries and context from transcripts. However, use of LLMs alone today cannot produce medical notes that meet the accuracy standards or data structure requirements of our industry. A summary of the physician-patient encounter in the same sequence that the conversation unfolds and which contains some of the inconsistencies that invariably crop up in such conversations, is not what the industry wants or needs. That is why we use other technologies together with LLMs to deliver highly accurate and structured medical notes and is a major reason why our note quality is considered so high by our customers. We're also making solid progress in moving into the acute care setting with additional emergency room and acute care WINS. We continue to add features to all our products to make them support and create value both in ambulatory and acute care settings. Another milestone in the fourth quarter was an EHR integration between one of our large health system clients and Epic. We now have multiple EHR integrations with more planned in the coming quarters. Integrating with an EHR enables us to deliver medical notes to our customers even faster and improves our operating efficiency. Finally, we continue to make impactful advancements with our proprietary NoteBuilder platform in our pursuit of enabling fully automated medical notes. Our machine learning continues to benefit from the large volume of data, about 60,000 notes a week, that passes through our platform, and we expect increasing levels of automation will have a positive impact on our gross margin. We are executing on these priorities, investing in product development, engineering, sales and marketing, and remain laser focused on achieving profitability and self-sustainability as rapidly as possible. The operating leverage inherent in our business model is starting to bear fruit as we realize the reduction in our operating losses again quarter on quarter as our volume increased. We expect that trend to continue throughout 2023 and beyond. Improving operating leverage is a key theme for Augmetics in 2023 as we continue to aggressively grow our top line. In closing, The fourth quarter showed a continuation of accelerated top line growth and improving operating leverage as we made great progress on our path to profitability. Financially and with respect to our product offerings, we are well positioned in a very large and rapidly expanding market. We continue to execute on our strategic initiative and focus on delivering strong growth, improving both margins and increasing operating leverage. With that, I'll now turn the call over to Paul Ginocchio, our Chief Financial Officer, then we'll return with closing comments. Paul?