Ontrak, Inc.

Good day and thank you for standing by. Welcome to the on-track third quarter 2021 earnings call. At this time, all attendee lines are in a listen-only mode. We will have a question and answer on today's presentation. If you wish to ask a question, please press star 1 on your telephone. Please be advised that today's call is being recorded. I will now hand over the call to our host for today, Ms. Caroline Paul. Ma'am, please go ahead.

Thank you, and thank you all for participating in today's call. Joining me today are Jonathan Mayhew, Chief Executive Officer, and Brandon LaVerne, Chief Financial Officer. Earlier today, OnTrack released financial results for the quarter ended September 30th, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to make the following remarks concerning forward-looking statements. All statements in this conference call other than historical facts are forward-looking statements. The words anticipate, believes, estimates, expects, intends, guidance, confidence, targets, projects, and some other expressions typically are used to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, but may involve and are subject to certain risks and uncertainties, other factors that may affect ONTRAC's business, financial condition, and other operating results, which include but are not limited to the risk factors described in the risk factors section of the Form 10-K and Form 10-Q as filed with the SEC. Therefore, actual outcomes and results may differ materially from those expressed or implied by these forward-looking statements. ONTRAC expressly disclaims any intent or obligation to update these forward-looking statements. With that, I'd like to turn the call over to Jonathan.

Thank you, Caroline. Good afternoon, everyone, and thanks for joining us. During the third quarter, we made important progress on building out our sales pipeline. We are now in active discussions with three of the larger national health plans in the country, and we're exchanging data and creating financial models for multiple provider and employer organizations. I'll break down these opportunities for you in a moment, but our confidence in our ability to fast-track growth and convert meaningful portions of our pipeline is increasing given the overall market dynamics in our new management team. During our last earnings call, I shared our plan to recruit experienced leaders for three new executive roles at OnTrack. Number one, renowned industry thought leader Dr. Robert Accardino joined OnTrack from Quartet. in September as our chief medical officer. He's already engaging with clinical decision makers at customer and prospect organizations, presenting the OnTrack program at national healthcare conferences, and giving keynote speeches at Fortune 100 company events, while restructuring OnTrack clinical operations to accelerate our ability to achieve meaningful and measurable engagement across a wider spectrum of individuals with behavioral health conditions and comorbidities. Mary Lou Osborne joined us from Aetna as Chief Customer Officer. She's meeting with our customers and leading our conversion of an increasingly robust sales pipeline, which I'll speak more to momentarily. Arik Hill became OnTrack's first CIO. Arik joined us from the New York foundling and is taking a pragmatic view of our technology investments prioritizing high-value AI-enabled solutions that drive market differentiation for OnTrack. These new appointments round out our executive team and advance our ability to deliver a flexible portfolio of behavioral health solutions to a broader set of customers across more channels. Demand for behavioral health care continues to soar, and access to quality behavioral health care is worsening. The CDC and the U.S. Census Bureau have reported that one in four adults experiencing symptoms of anxiety or depression had not received the counseling or the therapy that they felt that they needed. On-track care coaches continue to play a critical role in preparing members to receive behavioral health care from providers, ensuring that members are guided along appropriate care pathways and engaging with members between provider visits to help them succeed at completing treatments. At a time when there's tremendous pressure on therapists, OnTrack can lessen the burden on providers by increasing members' adherence and engagement. Now I'd like to give you a breakdown of our sales pipeline. I'm very pleased with the recent levels of customer and prospect interest that we're generating as we broaden our reach with refined value propositions for clinically meaningful enhanced human and digital interactions, customized for Medicare, Medicaid, commercial, ASO, at-risk provider groups, and the direct-to-employer market. Health plans remain our core business. We now have market-validated value propositions that recognize the distinct needs of each line of business, commercial, Medicare, and Medicaid, and the metrics that matter most to each customer constituency. We expect our health plan government business to remain the largest share of OnTrack's business. However, we are in discussions with a number of organizations seeking solutions for every line of business. Our current pipeline of health plan prospects includes three of the larger health plans in the nation, and we're actively engaged in discussions with a total of 16 plans in large population states in the Southwest, Midwest, and East. Provider networks are a new source of revenue. We're seeing continued interest in our services among provider networks and hospital systems. We can help these organizations improve access to behavioral health care and completion of treatment through our ability to remove barriers to care, create customized care pathways, and engage and support even those individuals who have the least trust in the health care system. These provider networks are also interested in our ability to help them on value-based care incentives. We're advancing discussions with two regional provider networks and anticipate conversations with a number of large integrated provider organizations representing a significant potential revenue stream for OnTrack. The employer market is another source of increased revenue. We are targeting employer organizations with over 5,000 employees and are in advanced discussions with three employers of that size and have participated in a large employer RFP. We've also begun a dialogue with a national pharmacy retailer, and last month Dr. Robert Accardino, our chief medical officer, was honored to be the keynote speaker at Ford Motor Company's Global Health Awareness Day. I'd now like to provide an update on the product strategy. We continue to see the strongest interest for our highest acuity product for individuals with severe behavioral health conditions. Addressing high acuity populations and delivering health and financial outcomes through a blend of on-track care coaching, digital interventions, and provider visits is as valuable now as it's ever been in improving members' access to behavioral health support while driving down medical costs and improving health outcomes. In fact, in the past several weeks, multiple health plans have reported that the cost of care is well above normal levels due to higher COVID-related costs. Emergency room visits have continued to rise, indicating that high-acuity individuals are increasingly in use of expensive, avoidable ER services instead of accessing the appropriate community primary care and behavioral health services. High acuity members need to be coached to and through care, which requires a well-coordinated effort and continuous communication on the part of their on-track care team, behavioral health providers, and primary care physicians. We are enhancing our highest acuity offering with a new on-track mobile care product that will give our care coaches and providers an easier and more efficient way to communicate with each other and allows members swifter referrals to high-quality behavioral health providers. We envision further investments in content and feature upgrades in an effort to make high-acuity product the clear market leader for evidence-based engagement and treatment of the most difficult to engage individuals. To give you a sense of the value of our high-acuity product, our monthly pricing has historically averaged between $500 and $700 per enrolled member per month. Recently, we've been able to reduce this to the lower end of the range as we have built efficiencies into our cost structure to enable and ensure an appropriate ROI for our customers. As we continue to refine our OnTrack product, including the addition of the OnTrack mobile care module, we anticipate further efficiencies that provide more flexibility to incorporate different price points depending on our customers' needs, including the ability to lower or raise the threshold target spend for inclusion in our program. We believe that lowering the base targeted spend threshold could increase our typical 2% to 4% of the population by an additional 10% to 12%, but at a lower price point while flexing our cost and delivery model to maintain strong margins. and increasing our total addressable market for the core on-track program to approximately $43 billion. Two of our largest employer customers who utilize our Life Dojo well-being digital solution have increased and expressed an interest in adding a lower threshold targeted spend on-track program to their existing well-being program, but at a lower price point than our historic higher targeted spend threshold for the OnTrack program. Further, one of our longest standing health plan customers has already signed a contract to add the OnTrack mobile care product to the high acuity OnTrack program. We estimate that 2022 revenues will still come primarily from high acuity members sold through health plan customers. For low acuity individuals seeking well-being, we are delivering our new OnTrack mobile care product, which takes the original LifeDojo digital product and enhances it with additional human coaching, video-based and interactive content, and asynchronous one-on-one chat for those who are ready to manage their own well-being needs. We expect that employers may want to combine this low-acuity product with flexible features of the OnTrack program in the same way that the two current employer plans are doing so today. Pricing for the low-acuity product will be a few dollars PMPM, focused on employer groups with 5,000 or more employees in the U.S. We estimate that the total addressable market associated with well-being for employers could be nearly $6 billion. Foundational to our product strategy our advanced digital and data infrastructure, tracking of meaningful engagement, and real-time reporting to our customers and the members' care team. In light of the large number of digital apps now available in the behavioral health marketplace, we have been intently focused on meaningful engagement, by which I mean clinical measures of member care teams, interactions that have proven behavioral science-backed verifiable outcomes. All of our products combine human and digital interventions, and the level of human engagement aligns with the severity of the member's condition and their readiness and the needs of the individual. There is no one-size-fits-all approach for those with behavioral health conditions, and we will continue to invest in clinical insights and measures that expand beyond social determinants of health assessments. With respect to our existing customers, we continue to see meaningful levels of interest as we discuss our product development roadmap, develop strategies to maintain or increase the ROI, and enhance our reporting and insights and analytics. As I mentioned earlier, one of our health plan customers is contracted to deliver the OnTrack mobile care product to their members effective early next year, and two of our employer customers will augment their well-being program with some of the flexible features of the OnTrack program for the next year. As I mentioned on our last earnings call, we expect our continued execution and intense focus on growth initiatives will drive us towards greater predictability while also expanding our ability to meet soaring demand across the nation. OnTrack has a world-class management team, a market-validated flexible product, and an increasingly robust sales line that we believe positions us to scale in a rapidly expanding market. I'll now turn the call over to Brandon LaVerne, our Chief Financial Officer. Brandon.

Thank you, Jonathan. During the third quarter, we recorded revenue of $18.6 million, a 23% year-over-year decrease due primarily to the loss of two large customers. Deferred revenue decreased to $5.3 million in the third quarter, down from $14.5 million in the second quarter, with the remainder expected to be mostly recognized into the fourth quarter. At the beginning of the quarter, we had 10,904 enrolled members and ended with 9,395, or a simple average of 10,150. That equates to revenue of about $611 per enrolled member per month for the quarter compared to $608 per enrolled member per month in the third quarter last year and $685 per enrolled member per month in the second quarter of this year. To go a bit deeper into Q3 enrollment, we enrolled a total of 2,854 members during the quarter compared to 7,192 in the third quarter last year. Dividing Q3 gross enrollment by our outreach pool, which averaged approximately 21,613 for the quarter, it annualizes to a 53% enrollment rate compared to the 52% annualized enrollment rate we saw in Q2 and 56% in the first quarter. Our disenrollment rate averaged approximately 7% per month during the quarter, resulting in us disenrolling a total of 2,241 members during the quarter. This compares favorably to the 10% average monthly disenrollment rate we saw in Q3 of last year. Further, we graduated 2,122 enrolled members during the quarter, which equates to about 19% of the enrolled members in the program at the beginning of the quarter. an increase to the 9% average monthly graduation rate we saw in the second quarter of this year. The net impact of all that was a net enrollment decrease of 3,964 in the third quarter. Our gross margin for the third quarter of 68.5% increased sequentially from 67.8% and compared to 45.6% in the third quarter of last year. The expansion of our gross margin from last year was driven by the optimization of our internal costs and numerous efficiencies implemented in our program. We ended the quarter with 181 team members included in cost of revenue, down 7% sequentially from 195 at the end of Q2 due to our reduction in response to the customer loss. I'd like to spend a little time helping you understand how we think about our revenue model for the areas that Jonathan mentioned earlier. Our higher acuity on-track model assumes we receive approximately 2 to 4 percent of the health plan population into our outreach pool, with commercial customers on the lower end and government customers on the higher end. Our annualized enrollment rate assumptions are in the 24 to 45 percent range measured off the outreach pool, again with commercial on the lower end and government on the higher end. Upon launch of any program or receipt of significant new members into the outreach pool, our enrollment rate tends to be much higher and then normalizes over the next several months as the outreach pool matures with only normal monthly changes. As I said earlier, our average per enrolled member per month during Q3 was $611 and is trending lower for the reasons mentioned. But at $611 per enrolled member per month, a one million life health plan in the commercial space at a 2% outreach pool with a 24% annualized enrollment rate given the seven to eight average months in our program, could generate nearly $22 million per year in revenues at maturity. Similar, a one million life Medicare plan at a 4% outreach pool with a 45% annualized enrollment rate at the 611 per enrolled member per month and seven to eight average months in the program could generate over $80 million per year in revenues at maturity, all while showing significant savings to the customers. You can see why we continue to focus on this area of the market and also expect it to be the driver of future revenue growth. In the employer space, the OnTrack mobile care product is priced at a few dollars per month for all lives. So for a 10,000-sized employer, revenues would simply be 10,000 times a few dollars per month. However, we believe we can onboard employers at a much faster pace than health plans, helping to contribute to the revenue growth and also providing opportunities to upsell employers into the OnTrack higher acuity program for enrolled members. Turning to the balance sheet and cash flow, cash flow from operations in the third quarter was negative $14.3 million compared to negative $2.5 million in the third quarter last year. On the balance sheet, we ended the quarter with cash and cash equivalents of $75.3 million down from $86.9 million a year end, including restricted cash, Total cash on the balance sheet was $84.8 million, down from $103.2 million at year end. We expect that we have sufficient capital and access to future capital to manage our operations and execute on the strategic initiatives we've outlined. Regarding our outlook for the remainder of the year, we're raising our 2021 revenue target to the $82 to $86 million range, implying Q4 revenues in the $8 to $12 million range. Our revenues have been impacted by the loss of two large customers, as well as budgetary constraints limiting our outreach pool, enrollment, and pricing with certain other customers to the fullest extent. These headwinds are likely to continue into the new year, limiting our outreach pool, enrollments, and revenue as we disenroll the remaining members from our lost customers by the end of Q4 until we sign and launch any of our pipeline opportunities. While we were able to achieve year-to-date positive adjusted EBITDA up through Q3 of this year, we expect adjusted EBITDA in the near term to be negatively impacted due to the headwinds mentioned above. As we expect to onboard certain of our large pipeline opportunities during 22, we would expect a return to historical rates of growth off the smaller base. I'd now like to turn the call back to Jonathan. Jonathan?

Thank you, Brandon. As I mentioned earlier, addressing high-acuity populations, and delivering health and financial outcomes through a blend of on-track care coaching, digital interventions, and provider visits is especially valuable now. Our sales pipeline of health plans, providers, and employers gives us tremendous confidence. Health plans will remain our core customer, and we are in active dialogue with three of the larger health plans in the nation. With our new management team on board, an expanded total addressable market, refined value propositions, a flexible portfolio of market-validated products, and new efficiencies in our cost structure, we're excited to return the company to historical growth rates. I look forward to updating you on the progress and would like to close by recognizing the extraordinary team at OnTrack for their commitment and professionalism. With more than one in four Americans now reporting clinical level anxiety and depression or substance use disorder, the pressure on our employees has never been greater, and their tremendous work is deeply appreciated by the members we serve and by all of us at OnTrack. With that, I'd like to now open it for questions. Operator?

For participants who wish to ask a question, please press star, then the number one on your telephone. Again, please press star, then the number one on your telephone. The first question comes from the line of Richard Close from Canaccord. Your line is open.

Yeah, thanks for the question. Great update here on the business. Jonathan, I was wondering if you could just go into the discussions with the three national plans a little bit more. Obviously, you have lost the two customers in Aetna and Cigna this year. still have some enrollment with them. And I'm curious, the discussions with these three plans that you're talking to, do those losses come up? And, you know, how do you address that with them? Or is it a non-issue? And then is there an opportunity to have discussions with Aetna and Cigna in terms of revisiting their relationship with OnTrack?

Richard, thanks for the question. Really appreciate it. You know, let me say at least the first part of your question relative to three largest or larger plans in the country. I would say that they're in different stages of development, slightly different lines of business or portions of lines of business with those prospects. And the opportunity to expand into geographic and lines of business expansions, I would say, are what those conversations are currently targeted to. Aetna and Cigna are not part of those three, just to try to be clear about that. We don't consider Aetna or Cigna as part of the pipeline. In terms of sort of the reasons for their departures, and we covered this in some of the prior conversations, but they really were sets of different circumstances. I think one of those relationships is moving in a strategic relationship with a strategic partnership that they have been investing in for quite a while, and that's just not the case with one of the other relationships. And it's specific to Aetna. They have been extremely collaborative and cordial. The primary focus that we continue to maintain with both these relationships is the ongoing dialogue and the great job that both companies are doing to support their members through the transition period. And we have tried to make sure that that cordial, collaborative relationship has continued. you know, furnished us with the additional opportunity to talk about the strategic roadmap, make sure that the features and the functions and some of the meaningful levels of engagement that we highlighted, we've had an opportunity to share and to capture that feedback in a way that, you know, helps us understand what we ought to do with the roadmap. And I would just say one thing further. I mean, specific to Aetna, you know, it was one of the longest standing relationships that the company had and In some respects, there's not an organization that knows us better. And so that valuable feedback is sort of essential to help us develop a roadmap that, you know, we hope will continue to resonate in the market.

Okay. And then, Brandon, you know, let's say you successfully, you know, close one of these opportunities, these three national plans. Is there any opportunity for it to begin to contribute revenue, you know, beginning in 2022? Obviously, we're coming up on a new plan year, so just curious in terms of any potential timing. Sure.

Yeah, thanks, Richard. Yeah, I would say, you know, the answer is yes. I mean, we are looking to, you know, not have these things close, you know, by the end of 2022. We're looking for much sooner than that. I think, as you may know, you know, depending on the complexity of the plan, you know, it takes, you know, a couple months, could be two to three months to onboard and launch, you know, post-signature. And, you know, we are aggressively, you know, trying to work, you know, all of these you know, to that end. And so could they start contributing into 22? I'd say the answer is yes. And, you know, we've also got, you know, many of those other conversations that Jonathan mentioned too that, you know, we would like to, you know, sign and close and start contributing into 2022 as well. Okay.

And final question is on those employer conversations, I would expect the time to, you know, launch would be shorter with the mobile offering, you know, maybe I'm wrong there, but, uh, is that something like, you know, you can get the employers turned on, you know, in the first part of the year, they're contributing obviously a smaller amount, you know, call it $2 per month, um, per employee or something like that. But, um, that they could sort of fill a hole until you get one of those larger ones signed?

I mean, that's I mean, you're thinking about it the right way. I think that there are, you know, between individual sales and even some of the aggregators, right, that, you know, and the intermediaries that exist in the employer market, you know, there are opportunities to try to activate the sales cycle a little bit more easily. It's a digital tool. The digital tool plugs in. It can be done on or off open enrollment cycle for those employers. And, you know, you know, it aligns a little bit more easily with an employer's budget, right, from a purchasing decision. The health plan sale is, you know, a longer sales cycle. It's more involved. We'll go from proposal stages to data and analytics and financial modeling, and then you ultimately end up at term sheets and statements of work. And so working through, you know, a more complicated and involved and a higher threshold sale is So it takes a little bit longer given the nature of it. And, you know, the health plans are bigger, right? So there are more internal, you know, sort of constituents to navigate with those pieces. But our thinking is if we can drive volume and it is a shorter sales cycle and we know that the capabilities differentiate in the employer market between the digital lower acuity toll, when we supplement or complement that digital platform, with the human aspects of a coach-to-care model, that that's resonating and seems to create a market opportunity for us with some of the larger employers.

Okay, great. Thanks. I'll get back in the queue. I appreciate it.

Thank you. Your next question comes from the line of Charles Rye from Collin. Your line is open.

Hi, guys. This is Gwen Sheehan for Charles. Congrats on the quarter. So I guess First question is, in terms of the on-track A members, I mean, I think it sounded like you guys had around 760 members or so left, and it seems like you guys added around 100 or so. I mean, are those new enrollments, and how should we kind of be thinking about that tail of members as they graduate? Should we kind of expect that to go away by the end of the year? Second question is, you know, Maybe around the wellness products and the newer offerings you're introducing, can you help describe what maybe a typical user might look like? Is it someone who already graduated from the higher acuity on-track program, maybe with substance use disorder, who just needs something in between? Is it someone who might not need therapy at all? Because I guess the question is, I think we hear a lot about how competitive some of these offerings are in the behavioral health space. maybe just some color around what kind of user would be on this type of offering would be really helpful. Thanks.

Sure. Gwen, I'll take the first half of that. Yeah, and I'll take the second. Okay.

There we go. Perfect. So, Gwen, thanks for the question. So, Aetna, I'm not sure what data you're referring to, but Aetna definitely we've been disenrolling during the entire frame during the quarter and will continue to do so throughout the fourth quarter. So there's definitely not been an increase in enrollment or membership, you know, with them. We had, you know, disenrolled all of the Medicare members earlier in the year, and then it started to, you know, as people either graduated through their course of a program or disenrolled naturally or they lost health plan coverage, whatever the case might be, those numbers have been coming down each month. You know, so as we sit here today, You know, we still have several hundred members in the plan. And similar to, you know, both customers, we're basically in the exact same boat, where all the members that are in the plan today will continue to either graduate or otherwise disenroll. And anyone who's left at 1231 will ultimately be disenrolled, you know, at that time. So there won't be any enrollment continuing into 2022. Okay.

Jonathan, do you want to take the second half? Yeah, please. Glenn, in terms of sort of the individuals that the employer planned today, and it's probably sort of the basis to sort of talk about those solutions today since we've got a number of large national and international customers up on the digital platform, there's a host of health goal-related content that is available to those individuals. And so, you know, the focus is on personal health engagement, well-being. But one of the things that we learned from the feedback with those customers is many of those individuals that are supporting themselves through, you know, the health content and the goal activation really do want to have the opportunity to be referred into care. And whether that's a live human being who's coaching them towards advanced support at their goals or whether that human interaction is actually seeking therapy, what we found is the level of severity is going to be directly connected to how much human contact we put into that digital app. So if there's very little coaching or there's no therapy, then you're going to end up with a lower level of acuity of people interacting on their goals. When we make available a deeper level of depression, anxiety support, say, the ability to support people around some of the social risk factors that they might be trying to manage through, we'll see interest in a number of therapy sessions, a number of therapy encounters. And then what we want to do is make sure that we balance that right level of therapy and coaching support to fit the price point of the product. And that's what's nice about targeting the larger employers is they're generally or routinely self-funded. They will be paying for these therapy costs and the behavioral health costs inside their populations. So for us to support that as an engagement mechanism off of the digital access that their employees have seems to be a strategy that, one, for us resonates, and two, seems to be a way for us to differentiate ourselves from sort of the content-heavy but coaching and therapy-light digital programs that exist in the market. Does that help a little bit from a context in terms of answering a question of who's likely to engage?

Yeah, that's helpful. Thanks.

Again, if you wish to ask a question, please press star, then the number one on your telephone. You have a question from Sean Dodge from RBC Capital Markets. Your line is open.

Hey, good afternoon. This is Thomas Keller on for Sean. Thanks for taking the questions. So maybe going back to some of the health plans in the pipeline, how would you characterize the appetite for, like, the traditional one-year program versus some of the lower-touch solutions that might potentially extend beyond a year? Are people more interested in just the on-track program, or where's most of the interest?

Can you just clarify what you mean by a one-year program?

Yeah, well, I mean, isn't that the kind of typical graduation timeline? You will graduate within a year.

Okay. Yeah. Yeah, for some reason I was thinking that you might be referring to like the contract term or something like that for one year. Well, I think it goes to sort of the need for the higher acuity, right? I mean, I just, you know, everything that we continue to hear in terms of a segment of the market that is difficult to address, proliferation of digital solutions, even if they have a coaching component, don't seem to be well-faced off against people who need to be introduced to behavioral health services. They're going to have stigma. They're going to have access issues. They're going to have community and social determinant barriers that they need to sort of rise above or climb through. And so that segment of the behavioral health market, what we continue to receive feedback on, is one that folks don't feel is particularly well addressed. And so for us to talk about the way we approach that, Taking claims information in, making sure that we model a series of cost and condition eligibility criteria to go after the engagement and outreach is hard to do. It's hard work to do. It takes us, right, you know, many instances, many months to get those individuals activated and ready to enroll into the program. if we can better support that member, coach, and provider experience through digital capabilities, which is totally different than people just, you know, having a per-member, per-month digital well-being tool, and that differentiation around outreach and engagement for people with a level of severity that is just not what's represented typically on a digital tool, is a segment in the marketplace. So even when we talk to a health plan, they have four or five different behavioral health options. What they tend to tell us that they don't feel that they've got covered well is the far end of the continuum with high-acuity intervention. And so I would sit here and tell you that we're not having a lot of conversations around kicking somebody out, right, kicking a competitor out, kicking a vendor out. We're having a lot of conversations about a gap Even gaps when some of these health plans have multiple vendors plugged in, they still think there's a gap around the higher acuity end of the market. And so that resonates, right, because I think we have continued to develop a set of capabilities that are well intended and we can execute against that end of the marketplace. Does that help a little bit? And so like the duration of people in treatment, right, you know, about 40% of our folks are that we get into treatment will make it to that 12-month mark and about half make it halfway through the program. So the duration of people, one of the things that we've learned is the duration of people in treatment is, in many respects, directly connected to the level of engagement. So if we've got digital tools to engage people, we've always got telephonic and, you know, coach-enabled capabilities to keep people engaged, but the more meaningful measure and the meaningful engagement we can drive, I think it will create a more robust program. And that's what we intend to continue to work on. So when you hear us talking about meaningful measures, that's really what we're trying to do is continue to drive deeper engagement.

Okay, that's helpful. Yeah, for sure. Yeah, it sounds like there's still a fair amount of interest in it. What would you say is, kind of one of the biggest sticking points, I guess, why wouldn't people sign up for it? If you guys, you know, you've got the studies out that document the savings, and you said that's, you know, resonating with some of the prospective clients, I guess what's kind of stopping people from going forward with this?

It's a great question. You know, I think the sales cycle, you know, for one, right, you know, it is a lift for the customers to evaluate, implement, and then manage any population health program. And so, you know, it's always, you know, sort of a human capacity, right, to get their time and attention. I would say, you know, where we do run into sort of reasonable constraints on their time and effort to evaluate is if they've just implemented a bunch of digital solutions on us, so to see how they perform for a year or two, right, in order to render opinions about where exist or limitations might exist. So, you know, I think the human time element to evaluate and ultimately implement the plan is part of what we contend with. And the, you know, the data intake process and the analysis process is, you know, I'll say it differs by size of organization, right? In some of the smaller single state, maybe single line of business health plans, those conversations can move a little bit more quickly and some of the large there are a lot of people involved in the proposal data analytics and modeling conversations. So I think those are some of, you know, just sort of the natural sales challenges, if you will, relative to, you know, how our market, how our product needs to go to market and be contemplated for implementation.

Okay. Thanks. And then one last quick one, if I can here, just looking into 2022, um, I know you guys previously talked about maybe a $50 million revenue target. Is that still the right number? Are you still tracking toward that?

Hi, Thomas. It's Brandon. You know, I would say one of the things in the themes that we had talked about was, you know, as we're coming into the third quarter and into the fourth quarter, that budgets have been increasingly constrained with some of our other existing customers. And so, you know, kind of the intent there is to say, look, we're kind of resetting where we're at how we're closing out the year and had indicated that we kind of expect those headwinds to continue into the new year. And so we're not really targeting a number for next year at this point. I'm sure when we come out in our fourth quarter earnings, we will give some guidance on, you know, the amount of the revenues associated with whether it's our existing customers or any launches that we may have to talk about at that time too. But right now we're trying to focus on, you know, making sure our customers are wiser met, that their budgets are met. We're doing, we're doing what's right to manage them and make sure that they're happy with our program. And so, you know, what we're seeing through into the fourth quarter, I'd say is going to continue into the first.

All right. That makes sense. Appreciate it.

You have a follow-up question from Richard Close of Canaccord. Your line is open.

Yeah, thanks for the follow-up. Jonathan, maybe with respect to the existing customer looking to expand to the mobile care solution, is that to cover different geographies or just to cover lower acuity in the same geographies? That was my first question, and then I have another follow-up.

It is, at the moment, scheduled to be plugged into the existing marketplace adjacent to the current OnTrack product. With that said, we're obviously trying to work those conversations into other geographies, but where we have a signed commitment is around the existing marketplace as an adjacent offering to the current contract offer.

Okay. And then how would you gauge any, you know, potential risk? You roll out this mobile and then, you know, maybe the customer says, hey, you know, I like this. I don't really need the high acuity side of things. Is that a risk at all or no? No.

You know, a lot of older risks I think about. It's not a huge one because, you know, when people move beyond, you know, the digital asynchronous, you know, interactions around their well-being content and the things that they can, you know, take down from the digital tools themselves and you get into, you know, clicking to chat and you want to either chat to a coach or you want to click through to a therapy encounter. I mean, the cost profile of the program changes at that point. And again, what we've started to understand is when you make coaching and you make therapy available through the digital tool, people are likely to use it. And so will we, you know, end up in this middle ground between people who are not going to find their way to a digital tool, right? That's why they do the calling. That's why they do the outreach. If they were managing their health really well, they probably wouldn't have a set of chronic conditions that need a lot of support. So the difference between an outreach-oriented program that's going to pull people into support and treatment versus people who are going to find their way to coaching and therapy tend to look like really different people, both from a health and a well-being and then an overall cost standpoint. And so do those two worlds fuse at some point? Maybe. But, you know, the ability to be up in, you know, something that's higher acuity than what typically is found in a digital tool looks like a really different person from a cost and a comorbidity and a complexity standpoint than the people that we have to go drive a lot of outreach to and, you know, encourage them to enroll in the program. So, again, you know, does a middle tier eventually develop, Richard? Maybe, but, you know, we're really talking about sort of a lower end. with people's ability to be supported with therapy and the upper end where you've got to drive a lot of outreach in order to get engagement.

Okay. And my final question is we haven't really hit on it, but you did talk about the provider segment, and I think you said two regional provider groups or something along that line. Can you just dive into that a little bit deeper, and is that more a near-term revenue opportunity, or is it something like health plans, you have a longer sales cycle?

You know, it's a newer thing. You know, it's a newer sales cycle for us to continue to explore. I think, you know, some of the steps that I described earlier I think are, you know, likely to continue to apply themselves as we expand to other provider conversations. I mean, we move from a proposal. We want to model data, and this is where, you know, it – It might feel a little bit like a health plan sale where if they want us to model data, they want us to do outreach, they want us to do engagement, and they want us to pull people into behavioral health programs, it's going to feel a little like a health plan sale. What's really interesting, Richard, is that's not necessarily what all the providers want. Some of the providers feel like they already, because they've got a close relationship, right, their providers are interacting with these members. So their clinicians already feel like, in many instances, they've got an idea of who the individuals are who might have a need for behavioral health support. And if they're going to make a referral to us, if we're going to work off of a model where they're doing the identification off of their existing treatment base of individuals, it looks a lot different, right? We're not going to be doing financial modeling the same way. We're not going to be doing data analytics the same way. And what's really interesting is some of the provider groups really do want us to do the outreach because even though they're the clinical group, they're losing contact with people and they don't have all the engagement that they'd like. In other conversations, it appears that the providers feel like they've got plenty of engagement and what they really need is help making sure that people get coached to and through behavioral health care in order to support the individual. So I think there'll be a little bit of a difference, but What I would have told you a couple of months ago as we were starting to explore these conversations is we didn't think that some of the provider groups were necessarily looking for us to run our eligibility process and do outreach, and that's just kind of not the case. So long answer short, some of these provider groups are going to look more like a health plan, I think, from a sales and an implementation standpoint, and others may be a little bit different because they won't be looking for all the eligibility and outreach work.

Okay, thank you.

There are no questions at this time. Handing over to Jonathan for closing comments.

Thank you very much. We appreciate everybody's time this evening and the opportunity to share with you the quarter and our optimism for what we're working on and the great urgency with which we're working with it. So thank you for everyone's time.

This now concludes today's conference call. Thank you for participating. You may now all disconnect.