Sharecare, Inc.

Good day, and welcome to the ShareCare Second Quarter 2021 Earnings Conference Call and Webcast. Our participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question during this session, you will need to press the Start and the 1 key on your touchtone telephone. Please note, this event is being recorded. Leading today's call are Mr. Jeff Arnold, Chairman and CEO, and Mr. Justin Ferrero, President and Chief Financial Officer. Before we begin, we would like to remind you that certain statements made during this call will be forward-looking statements within the meaning of the Safe Harbor Provision of the Private Security Litigation Reform Act of 1995. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions, and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of some of these factors that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in our filing with the SEC, including the risk factors section of the perspective of our business combination filed with the SEC on June 3, 2021. In addition, please note that the company will be discussing certain non-GAAP financial measures that we believe are important in evaluating performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliation of historical non-GAAP financial measures can be found in the press release that is posted on the company's website. I would now like to hand the conference over to your speaker, Mr. Jeff Arnold. Please go ahead, sir.

Welcome, and thank you for joining us for our first earnings call as a public company. Joining me today is Justin Ferrero, our President and Chief Financial Officer. We've had the pleasure of meeting many of you over the past few months, but for those of you who are new to our story, I'll provide a quick overview on ShareCare before getting into our second quarter performance and the acquisition we announced this morning. ShareCare offers the most comprehensive digital health platform in the market, and we make it easy for our diverse customer base to buy, implement, and engage with their populations to improve their overall well-being, which lowers their healthcare cost. Our solution is focused on data interoperability and delivering a user-friendly experience, enabling our clients to efficiently manage the health and wellness of their employees and members. We've been successful in broadly deploying our platform and services to multiple customer segments, health plans, large employers, government, health systems, life sciences, and the consumer. building a high-tech business that is diversified in revenue and scale and is profitable. And we continue to innovate. We operate across three channels, enterprise, provider, and consumer solutions. And I'll take you through quarterly highlights for each. But before I get there, I want to provide a high-level review of our second quarter financial results, which Justin will discuss in greater detail. We delivered strong financial performance in the second quarter, with revenue of $98.5 million, which was on the high end of our guidance range, representing 26% year-over-year growth. We delivered adjusted EBITDA of $6.6 million, which also was ahead of our guidance. We are committed to profitable, organic growth, which with the $400 million of cash raised from our recent business combination enables us to invest in innovation and new growth opportunities. To bring this to life, we are already integrating the artificial intelligence technology and products from our February acquisition of DocAI across our entire solution set. Another example, the acquisition of CareLinks from Generali, announced today, will bring a tech-enabled network of more than 450,000 caregivers to our digital platform, enabling ShareCare to scale into the last mile of healthcare, the home. In our enterprise channel, We service nearly 9 million lives, representing several large health plans, dozens of direct large employers, and 10 public sector clients, which equates to about 60% of our total revenue. These organizations utilize our comprehensive digital platform and services to help their members and employees efficiently manage the health care benefits and take a holistic approach to their well-being. Our platform is designed to deliver each person a data-driven, an individualized journey to assess and lower their health risks and measurably improve their well-being, focused on going from episodic to everyday management. In addition to benefits navigation, we also offer integrated access to digital therapeutics for specific conditions such as anxiety, weight loss, tobacco cessation, diabetes, prediabetes, MSK, and pregnancy, along with a number of other member programs. specific products. In an effort to improve the quality and lower the cost of care in real time, we are integrating AI distributed architecture technology into our flagship platform to turn dynamic and siloed data into actionable insights. In the second quarter, we expanded our relationship with key enterprise clients in addition to landing new clients. We launched several new government-sponsored health plans, including Centene's Peach State Health Plan Medicaid line of business, and Humana's Care Plus and their Medicare Advantage population. Centene partnered with ShareCare to focus on their childbearing members and improve maternal mortality rates in the state of Georgia, which ranks 50 out of 50 in the U.S. Additionally, we won HealthNet's Medicare line of business for both California and Oregon, which we believe represents an opportunity to add an estimated 800,000 new members. We added new large employer customers, winning several competitive RFPs such as Nordstrom, and successfully renewed current clients such as Lockheed Martin and Georgia's state health benefit plan. We also expanded several contracts with current health plan clients to offer digital therapeutics to their entire eligible populations. We continue to see increased engagement in our deployed digital therapeutics and view this as a significant growth driver over the next few years as we increase penetration and expand our total market opportunity. Also in the second quarter, we closed our $50 million investment from Anthem to co-develop a next-generation multi-payer advocacy solution to bring to market across our combined customer base and beyond. This solution will leverage the AI-driven technology capabilities acquired with DocAI to further enhance our digital platforms. which we expect to be very valuable to our enterprise clients. We'll discuss this strategically important offering and its potential impact in more detail over the coming months. As part of our enterprise offering, we have several initiatives focused on health security. With the continued uncertainty of returning to the workplace, we are helping our public and private sector clients creatively expand biometric screenings and flu vaccinations into the home. Also related to the pandemic, we launched our health security solution in 2020 to help organizations safely return to their place of work and enable government agencies to manage and streamline vaccination distribution and adherence. This extension of our business generated thousands of new customers, providing us with new opportunities, including working with additional government agencies and hospital systems. As an example, we added another health plan client as a customer to our platform. partnering with CareSource and the state of Ohio on an immunization drive to track and reward CareSource members for receiving the vaccine. We are also working with the state of Arizona, Michigan, and Colorado on recent digital vaccine contract awards. Our provider channel, which services approximately 6,000 physician practices, hospital systems, and health plans, includes solutions for medical record retrieval, payment integrity, remote patient monitoring, patient engagement, and value-based care. In Q2, we added new logos, including Arizona Oncology, Connecticut Orthopedics, and OrthoCarolina. Given this channel's expansive client base, we also took a land and expand approach. For example, existing clients of our medical record retrieval services, Capital Ortho, and Florida Orthopedic Associates, recently bought our value-based care offerings. We also see a significant opportunity to sell our enterprise solution to our health system customers for their employees. To truly deliver on our vision of all your help in one place, supporting the doctor-patient relationship is critical, and we currently serve over 1 million physicians. Our ultimate goal is to share care enable providers so they can prescribe share care to their patients to foster continuous connectivity, meaning a person can share their health data with their provider and in turn receive automated support and care plans from their doctor all through our platform. To that end, we recently started working with WellSTAR, one of the largest healthcare systems in Georgia, which not only rolled out our enterprise solution to their 20,000 employees, but also is collaborating with us to develop a personalized care delivery, population health, and a consumer engagement model to better support their patients and communities. This partnership allows WellSTAR and ShareCare, to accelerate transformation in a value-based care world and optimize, expand, and reimagine the healthcare experience. Finally, our consumer solutions channel focuses on leveraging our platform to implement targeted, audience-specific messaging campaigns on behalf of pharma and life sciences companies to educate people about treatments that could help address a variety of diseases and conditions. This targeting capability is a strategic differentiator for ShareCare, as we use it with health plan and employer clients to efficiently engage their members outside of traditional direct and email channels. The consumer solutions channel had a very solid performance in Q2, and its significant growth is reflective of ShareCare's ability to deliver strong results against brand goals and the power of our 108 million first-party database. Additionally, ShareCare earned 23 awards for our expansive content and engaging social platforms of over 2.5 million followers, another differentiator of the ShareCare platform. Looking ahead, the Consumer Solutions Channel has started selling its suite of 2022 client solutions featuring immersive content experiences and new advanced targeting capabilities, which leverage insights from social determinants of health and ShareCare's Community Well-Being Index. The team is also commercializing a new product from the DocAI acquisition, Smartomics, expanding the consumer channel's footprint into the clinical research space with life sciences, medical device, and CRO customers. Moving forward across all our channels, we have multiple avenues to drive growth, including signing new clients, cross-selling additional solutions to our current customers, expanding our digital therapeutics and value-based care offerings, and launching new products like health security. We are committed to growth organically and will further enhance ShareCare capabilities through strategic acquisitions. And with that, I'm pleased to announce our acquisition of CareLynx from Generali. CareLynx is a nationwide tech-enabled home care platform that delivers on-demand personal care services in the home of patients, while facilitating rich data capture, population health analytics, and real-time care coordination with remote clinical teams. Regulatory and macro changes are driving the shift to home-based care, and COVID further accelerated the adoption of telehealth and home-based services. Payers and providers need scalable in-home care provider solutions to manage the total cost of care. CareLynx has a multichannel strategy to provide care solutions to families and is positioned to serve patients' needs across the entire care continuum from personal care to clinical care at home. Their digital platform includes in-home monitoring, digital care plans, and a population health portal for enterprise clients. Through its network of over 450,000 tech-enabled caregivers, CareLynx will bring a human touch to ShareCare's digital solution, strengthening our platform by helping customers manage the last mile of care. We will systematically enroll CareLynx users into the ShareCare platform and ultimately offer our integrated app to all CareLinks members, families, and caregivers. With an exclusive offering for AARP members and a partnership with the VA and three of the largest health plans in the United States, over 1 million Medicare Advantage members have access to CareLinks through their health plan. CareLinks has shown impressive organic growth to date, and we believe ShareCare is very well positioned to continue that trajectory. In fact, CareLinks can be sold into all three of our channels, and we already have a number of customers actively looking for this type of solution. Additionally, this capability will be a unique component in our multi-payer advocacy solution. We believe this acquisition can expand our TAM by more than $7 billion for home care and potentially over $100 billion if we expand further into home health. And now I'll turn it over to Justin for a more detailed review of our second quarter financial performance. Justin?

Thanks, Jeff, and thanks to everyone on the call for your interest in the ShareCare story. As Jeff indicated, we delivered strong performance in the quarter, with revenue coming in at the top end of our guidance range and exceeding our guidance with respect to adjusted EBITDA. We continue to gain momentum in the business, delivering strong sequential revenue growth and positive adjusted EBITDA, while continuing to invest heavily to support future growth. In our brief time as a public company, we have already made several key hires to bolster our already talented management team and are poised to significantly add to our sales force. As many of you know, on July 1st, we completed our business combination with Falcon Capital Acquisition Corp. And on July 2nd, began trading on NASDAQ as a public company. With more than $400 million of cash raised from our recent business combination, we're in a strong position to invest in new opportunities to further support and accelerate our growth and profitability. Digging into the quarter, our total revenue grew 26% from $78.2 million a year ago to $98.5 million, driven by increased client penetration, new client wins, and approximately $5 million from the DocAI acquisition completed earlier this year. On an organic basis, we grew total revenue by approximately 20% compared to the second quarter of last year. Adjusted EBITDA for the quarter was $6.6 million, which was ahead of our previous guidance and included additional growth investments to support product innovation and the rollout of new products like our health security solutions, as well as expanded sales initiatives. These investments establish a solid foundation for long-term growth and improve financial performance as we gain additional operating leverage from the ShareCare digital platform. We believe CareLinks will be an accretive acquisition for our shareholders. CareLinks is growing from $5.1 million in revenue in 2020 to approximately $20 million expected in 2021. The $65 million acquisition value is comprised of roughly $55 million in cash and the remaining $10 million in stock to management. We've also arranged for an incremental performance-based earn out through 2025 for the CareLinks management team to achieve a minimum of 40% annual organic growth. I'll now turn to our guidance for the third quarter and full year. Looking forward, our Q3 guidance for revenue is $103 to $105 million, which includes approximately a $2 million contribution from the CareLinks acquisition as of August 11th. The Q3 guidance for adjusted EBITDA is expected to be $6 to $7 million, which includes an approximate $1 million negative impact from CareLinks. For the full year 2021, we are updating our guidance to reflect the impact of the CareLinks acquisition. Revenue of approximately $414 to $415 million, which includes approximately $6 to $7 million for the newly acquired CareLinks business. Adjusted EBITDA of approximately $28 to $30 million, which includes an expectation that the CareLinks business will have a short-term negative $2 to $3 million impact to our previously provided adjusted EBITDA outlook. With 97% of our business booked, we remain highly confident in our full-year outlook. As you think about the cadence for the remainder of the year, I want to reiterate a few factors that play into why we expect the fourth quarter to to be our largest quarter of the year. As we stated in previous communications, based on the momentum with existing clients and new client wins year to date, in both the provider and enterprise channel, we will see sequential revenue growth in the quarter as various initiatives continue to ramp. Also, our consumer solutions channel, as a result of seasonality, generates more than 30% of its revenue in the fourth quarter as life sciences companies typically increase their spend before the end of the year. Now I'll hand it back to Jeff for some closing remarks.