Augmedix, Inc.

Greetings and welcome to Augmedic's fourth quarter 2023 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 a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Matt Chesler, Investor Relations. Thank you. You may begin.

Thank you, Operator. Joining me today are Manny Karkaris, Chief Executive Officer of Augmetics, and Paul Gianocchio, Chief Financial Officer. This afternoon, we released financial results for the quarter ended December 31st, 2023. We've posted a copy of the press release and an investor presentation on our website at Augmetics.com. We'll begin our call with prepared remarks to be followed by a Q&A session. This call is also being simulcast and will be archived on our 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 that relate to expectations or predictions of future events, results, or performance are forward-looking statements. They 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. 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 Risk Factors and Management Discussion Analysis 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'll discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. You'll find additional information regarding these financial measures and a reconciliation to GAAP measures in today's press release. This call contains time-sensitive information and is accurate only as of the live broadcast today, March 18, 2024. We disclaim any intention or obligation, except as required by law, to update or revise 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, Matt. This is a solid ending to a strong and strategically important year for Augmetics. We met or exceeded all of our financial targets while assembling the broadest portfolio of ambient class solutions in the industry, including a fully automated AI documentation solution where we serve more care settings than any other player in our business. We are leveraging the structured data we produce and our bidirectional communication channel to the point of care to become even more valuable to our healthcare enterprise customers. And of course, we've onboarded an enviable set of customers and partners that are supporting us along the way and which provide high visibility to incremental growth. We are well positioned to win. The key to success, we believe, is to be able to meet customers where they are today, in other words, solve their current problems today, and where they want to be in two to three years. It is for this reason that we are offering varying levels of service embedded within our product suite, Customers can choose products ranging from a fully autonomous software product, which we call Augmedix Go, with no human assistance on our part, to a full-service solution, which we call Augmedix Live, where we assign a highly trained medical documentation specialist to observe patient encounters remotely and deliver a very high-quality note and ancillary services to the clinician. Importantly, we also deliver clinical decision support to the point of care and structured data that positively impacts customers' downstream activities. Finally, we are one of only two documentation vendors to be certified by the High Trust Alliance for Information Security. This prestigious certification validates our commitment to safeguard sensitive patient information, which we know is currently at the top of many customers' minds. This broad product approach drove our growth in 2023 and it is resonating with the market today. As evidence of this, last week we were selected to participate in a large pilot with a Fortune 100 healthcare company that is looking to adopt AI and digital health tools across its oncology network. In December, we made the ambulatory version of Augmedix Go generally available to customers, and I am very pleased with how it is performing. Augmetics Go is our new ambient AI product that addresses a very large price segment of the market, sub $600 per month, and represents the vehicle by which we expect to realize significant penetration within health systems. Recent data from survey responses of Augmetics Go customers reveal that 94% of clinicians surveyed reported that Augmetics Go helps them better focus on their patients, and clinicians save up to one hour or more per day using that product. This aligns with our philosophy of enabling clinicians to see the patient and trust the technology to do its work in the background. So very early in its deployment, initial orders have met our expectations and we expect adoption will continue to build throughout the year and beyond. We've also been developing a version of Augmedics Go specifically designed for the challenging conditions of the emergency department. There are very few competing products commercially deployed in this important sector of the market. We are pleased with initial results thus far and expect to make Augmedix Go for the ED generally available by the end of this month. At the same time, our strategic partner, HCA Healthcare, has been testing the emergency department version of Augmedix Go in its own hospitals. HCA is preparing to evaluate this version of Augmetics Go in advance of a broad rollout across its network of hospitals. We are confident we will realize the full potential of this significant opportunity and will update you as soon as we reach the next meaningful milestone. At the HIMSS conference last week, I was on a panel with HCA and Google during which HCA delivered encouraging commentary on both the Go ER pilot and our portfolio of products. HCA also stated its intention to deploy our solutions into other departments within their system. Augmedics Go is being offered at two service levels. The base level is a self-service version wherein Augmedics provides no human assistance in creating the medical note. The note is automatically generated and available for review and sign-off with the clinician within a minute or two following the patient encounter. The base version of Augmedix Go is the least expensive for the customer and most scalable product among our portfolio. The premium version is called Go Assist. At the discretion of the clinician, the draft note is simultaneously delivered to an Augmedix medical documentation specialist who reviews for quality assurance and makes any necessary edits before clinicians sign off. Go Assist comes at a slightly higher price than the base version of Go. Augmedics Go sits alongside our live product, the highest level of service, where a remote medical documentation specialist is matched with a clinician throughout the clinician's shift. And this leads to what is truly unique about Augmedics' approach, our recognition that doctors' needs are diverse and ever-changing, and we have developed the broadest portfolio of solutions to address those needs. Moreover, we offer customers fungibility across our products, whereby clinicians can switch between different products and service levels to address their varying needs. This flexibility provides doctors with a higher touch level of service when they are short-handed or dealing with more complex cases, while also allowing them to save on documentation costs for more routine patient encounters. As Augmetics offers solutions from self-service ambient AI to remote human support in one suite, health systems can cover all of their documentation needs under one agreement and seamless integration process. The AI solutions in the market do not have this breadth of offerings. We see a lot of AI hype and claims made by several AI-only newcomers trying to break into the market. Generative AI tools are clearly capable of doing much of the heavy lifting when it comes to medical note documentation. However, it takes a great deal more than off-the-shelf generative AI tools to produce accurate and comprehensive medical notes consistently across a wide variety of specialties and patient encounters. When harnessed properly, generative AI has the potential to substantially ease and lower the cost of medical documentation. As the pioneer in ambient virtual medical documentation, over the past 11 years, we have built a vast repository of domain knowledge pertaining to clinician workflows and medical data sets. This knowledge has enabled us to address multiple care settings, serve more than 50 specialties, provide clinical decision support to the point of care at the right moment, and deliver structured data that positively impacts customers' downstream activities, such as billing. These key points of differentiation, in conjunction with our two-way communication channel to the point of care, provide a significant moat around our business. Now, I'd like to discuss some of the financial highlights of our strong fourth quarter. We delivered a 45% increase in revenue to $12.7 million, ahead of our most recent guidance, driven by a 44% increase in clinicians in service and net revenue retention of 152%. Our largest customers are increasingly adopting our high ROI products. Additionally, we demonstrated the scalability of our business model by increasing gross profit by 54% to $6.2 million, a 300 basis point improvement in gross margin year over year to 49.3%, and driving meaningful improvement in our adjusted EBITDA and GAAP operating losses. We also bolstered our capital resources through our November equity offering, which generated over $26 million in net proceeds to further solidify our leadership position in our industry by expanding our commercial and engineering teams to enable us to accelerate our growth relative to our previous plan. We have already begun to grow our team with some very strong hires, and as we complete the expansion over the coming months, We expect to realize the payback on this spending later this year and more meaningfully in 2025, which is what we communicated during the capital raise. Our most recent capital raise has enabled us to take a more aggressive approach towards a large, under-penetrated market where customers are adopting generative AI technology at an increasing rate. Our established market presence compared to AI-only newcomers will continue to serve us well. We've expanded our sales organization to bolster our efforts to land new enterprises and to further expand within our existing enterprise accounts. We believe now is the optimal time to lean into our advantages and accelerate our growth initiatives to capture market share and exploit our leadership position. This market is still in its infancy. I am confident that our portfolio approach that addresses the major price points within the market will resonate with healthcare systems and clinicians. With that, I'll now turn the call over to Paul Ginocchio, our Chief Financial Officer, then we'll return with closing comments. Paul?