Benefitfocus, Inc.

Greetings, welcome to the benefit focus Q4 2021 earnings 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. Please note this conference is being recorded. I'll now turn the conference over to your host, Doug Kuckelman.

You may begin. Thank you, Operator, and good afternoon, and welcome to BenefitFocus's fourth quarter 2021 earnings call. Joining me today are Matt Levin, President and Chief Executive Officer, and Alpana Wagner, Chief Financial Officer. Matt and Alpana will offer some prepared remarks, then we'll open for questions. Before we begin, let me remind you that today's discussion will include forward-looking statements that involve risks and uncertainties, market developments and opportunities, and the impact of our growth strategy that could cause actual results to differ materially. For more information, please refer to risk factors discussed in our most recently filed Form 10-K. We also will refer to certain non-GAAP financial measures. Important disclosures about those measures can be found in today's earnings release. Lastly, we will reference a presentation furnished in an 8K, which you can also find in our investor relations website at investor.benefitfocus.com. With that, I'll turn the call over to Matt.

Thank you, Doug, and good afternoon, everyone. Today, we will discuss our fourth quarter and fiscal year 2021 results. As we close the year and look ahead, I would also like to discuss the significant opportunity we have in front of us to create value for our shareholders. I have never been more confident that BenefitFocus is well positioned for growth and to win in this industry. BenefitFocus has carved out a differentiated position in the benefits administration market. I joined the team with a conviction that we can strengthen our offering and in turn put ourselves back on a long-term growth trajectory. Last year, I spent a significant amount of time listening to our customers, brokers, and third-party evaluators. Based on the feedback from those discussions, it became clear to me that we had some challenges, but also a lot of opportunity. We took that feedback seriously, and we have been transparent in our commitment to make the changes necessary to rebuild our reputation as a safe set of hands for our customers. As an organization, we have been unwavering in our focus and decisive in our actions to transform our business. Today, I will discuss the progress made to date and explain how we are executing against our transformation strategy and what's still to come. In a short period, we have delivered meaningfully against our commitments to improve our service levels, begun strengthening our go-to-market channel relationships, and invested in our team with the addition of industry veterans. We are looking forward to providing additional insight into our growth strategy, accomplishments, and our mid- and long-term financial targets at our investor day on May 10, 2022. If you turn to slide five, I'd like to discuss three key takeaways from today. First, I can confidently say that we are on track to return benefit focus to long-term sustainable growth. We have a differentiated platform and an attractive industry with a total addressable market in the $30 billion range. We believe that executing our strategy using our considerable domain expertise and leveraging our leading technology platform will drive sustainable ARR growth and, in turn, deliver significant value to shareholders. Second, we are making great progress towards improving service excellence, our most important initiative over the past eight months. Our last open enrollment, the best in our history, is a testament to the transformational efforts underway. We achieved some of the best customer satisfaction scores ever as a company, which I will share with you in a moment, and is a reflection of the hard work and commitment of our associates. Third, we are delivering on what we promised. We call that our say-do ratio, meaning when we say we are going to do something, we deliver. I'll now walk you through our three pillar strategy as well as the progress we are making against each. Turning to slide seven, the first pillar is to strengthen the core of our company, aimed at serving our customers with excellence and strengthening our solutions platform. We have been investing across benefit-focused to improve our service levels and enhance our solutions platform. We firmly believe that service excellence is key to creating value for our customers and shareholders creating a flywheel effect. By delivering excellent service, we earn higher NPS and customer satisfaction scores, which improves customer retention, increases customer references, and translates into a growing ARR base. Service excellence is also critical to our brokers and third-party evaluators who generate referrals for our business. Additionally, we improved implementations and testing processes to ensure a smooth customer experience. We focused on readiness and data exchange as well, improving our open enrollment on time starts to 99% for the employer business, and we reached 100% for the health plan business. We also reached 99% for on-time data exchange, a meaningful improvement from last year. Finally, our customer satisfaction scores for open enrollment increased to 95% this year, which is our highest in recent years. The feedback from our customers has been overwhelmingly positive. Testimonials reveal that end users have greater clarity around their benefits and increased conviction about their benefits elections. Additionally, they find the guided enrollment experience helpful, the tools intuitive, and most importantly, They have peace of mind for themselves and their families. I'm also encouraged by the momentum we are gaining with brokers. We are seeing referrals from brokers at a meaningfully higher rate than we have seen in recent history. We are also in the final stages of being added to the preferred vendor panels for a couple of the largest brokers in the U.S. This highlights the progress we've made in improving our service levels. Being part of these broker panels will give us the ability to partner with them to add value to their large customer bases. The progress on this important milestone reflects our ongoing efforts to strengthen our broker relationships and also provides a blueprint for future broker partnerships. The seal of approval from brokers and third-party evaluators is a strong validation of our effort. Positions us as an attractive partner and will help drive more business from current and new customers. Regarding strengthening our solutions platform, we enhanced our administrative services suite with the acquisition of Tango Health. This enables us to further improve our service levels and administrative services for our customers through more advanced data technology and delivery processes. We are bundling Tango's suite of offerings with new customer contracts, and we'll cross-sell it to our current base of customers. Importantly, this more robust and comprehensive solutions platform should enable us to improve attachment rates, move up market, and grow our revenues. And to strengthen the core, we have assembled the best team in the industry. Last year, we brought in top industry leaders in sales, product, engineering, marketing, and customer deliveries. to ensure we have the domain expertise to drive our multi-year strategy forward with energy and confidence. As I have said in the past, I would put our team up against any in the industry. Turning to slide eight, growing with intent. Our second strategic pillar is designed to power our growth by bolstering existing capabilities and moving into attractive adjacencies, as well as strengthening our value proposition to our current customers and end users. Our disciplined approach enables us to strategically deploy our capital to focus on the right opportunities at the right time so that we can expand our product offering, increase our market share, build scale, and drive shareholder value. The Tango Health Acquisition is an example of our disciplined capital allocation process while also enhancing a core capability in expanding our administrative service product offerings. We are also leveraging the data on our platform to deliver superior tech-enabled services and insights. Our data helps us better serve our customers during their enrollment and empowers them to better utilize their benefits with tailored plans, resulting in improved engagement and utilization of benefits. These offerings also help the broker community better support customers as they think about key areas such as plan design and ancillary services. Our most recent data offering, called RxInsights, is gaining traction with early adopters who have subscribed to this product since our launch last fall. We recognize the need for a product like this in the market, and we accelerated our development cycle to bring this solution to customers in less than a year, driving additional customer value and growth opportunities in the process. Lastly, we continue to focus on moving up markets. We are working to fill gaps in our solutions offerings, but believe we are uniquely positioned, given our domain expertise and foundation in technology, to serve a larger customer base. Turning to slide nine. Our third pillar, operating with efficiency, speaks to our focus on creating long-term shareholder value through profitable growth. BenefitFocus was founded as a technology company, and our platform has allowed us to drive operational efficiencies and process automation that our customers appreciate. In addition, our team's sensible rationalization decisions have enabled us to achieve a cost structure that is producing industry-leading margins while increasing our competitiveness. We expect these focused efforts will help us expand margins over time as we continue to grow our revenue and scale the business. And we will continue to reinvest efficiencies to support our growth strategy and improve our return. I will let Alpana further explain how this strategic pillar has been an important driver of our results. As we look to the months ahead, and given the nature of the business cycles in our industry and our subscription recurring revenue model, the lion's share of our recent progress will be reflected in our 2023 financials. But I'm pleased to say that we expect to see a significant improvement in our underlying organic growth rate. And I'm more excited than ever about the prospects of creating a sustainable high growth business model. With more than 20 years of domain expertise, we have a solid base to build on. Our customers are facing increasingly complicated healthcare challenges. Benefits management, in particular, is becoming more complicated, more expensive, and at the same time, more integral part of the value proposition that companies provide to their employees. The products and services that BenefitFocus delivers will increasingly give our customers a competitive edge in this rapidly evolving environment. As we solidify the improvements I've discussed and strengthen our customer relationships, we have the opportunity to both win market share and expand into natural adjacencies. Simply put, as we earn the right to serve, we become an increasingly attractive partner for customers, positioning us to win business and take share in a large and growing market. I'm confident we can grow in the mid single digits in the medium term, and if we continue to deliver on our strategy, we will be well positioned to meaningfully exceed this. I'm encouraged by the progress we've made in the last eight months and confident we are on track to achieve our vision. This team has been here before, in this industry, and we're excited for what the future holds. I want to take a moment to recognize and thank our entire team, especially our associates, who have shown their dedication to and passion for serving our customers with excellence. Now over to Alpana to walk through the financials.