Sharecare, Inc.

Good day, and welcome to the ShareCare fourth quarter and fiscal 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star then one on your touchtone telephone. If anyone should require assistance during the conference, please press star then zero to reach an operator. As a reminder, this call may be recorded. I'd like to turn the call over to Evan Smith, SVP Finance and Investor Relations. You may begin.

Evan Smith Thank you. Good morning and welcome to Sharecare's fourth quarter and fiscal 2021 earnings conference call and webcast. This is Evan Smith, as the operator indicated. I'm SVP of Finance and Investor Relations. After today's presentation, there will be an opportunity to ask questions. Leading today's call are Mr. Jeff Arnold, Chairman and CEO, and Mr. Justin Ferraro, President and Chief Financial Officer. Note, today's call is being recorded in an archive of the recording will be available later today on the investor relations section of our website. 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, which includes our first quarter and full year 2022 guidance. 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 will occur after this call. Descriptions of some of the factors that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in our filings with the SEC, including the risk factors section of our filings. 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 gap measures and reconciliation of historical non-gap 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 call over to Mr. Jeff Arnold. Please go ahead, Jeff.

Thank you, Evan, and thank all of you for joining us this morning. 2021 was an incredible year for ShareCare. We accelerated our growth and enhanced the capabilities of our digital engagement platform. both organically and through M&A activities. We strengthened our operational leadership, sales, and technology teams and grew revenue year over year by 26% to $413 million and delivered $27 million in positive adjusted EBITDA. ShareCare ended the year with a strong balance sheet with no debt and over $300 million in liquidity to support future growth and profitability. In 2021, we expanded on our digital first wellness benefits and health navigation solution to a fully integrated digital front door with a connected suite of virtual care and higher touch offerings. Specifically, we integrated additional digital therapeutic programs, creating new revenue opportunities for current and new customers. Introduced ShareCare Plus, our digital first payer agnostic advocacy solution to seamlessly enable high touch navigation and clinical resources, and integrated the acquisition of CareLynx, our tech-enabled home health solution, providing care, collecting valuable data in the home, and providing a key differentiation of our advocacy solution. With these expanded capabilities, we're even more excited today about our future as we are in a very strong position to support our long-term growth. Our core digital platform drives engagement, consolidates point solutions, informs caregivers and advocates with real-time and comprehensive data, and extends to the home. This helps enhance the member journey, lower costs, and improve outcomes. The increased breadth of the platform positions ShareCare to drive larger, higher PMPMs and more strategic multi-year deals with our current and future customers. While strengthening the platform, we also took a hard look across our portfolio of solutions. And we determined that our vaccine and health passport solutions and our patient-centered medical home solution did not meet our long-term growth hurdles and are taking actions that we believe sets us up for even greater success. I will get into these details in a minute. First, a brief update on our core business. ShareCare's platform helps nearly 10 million employees, plan members, and patients better understand their health, optimize their benefits, discover and address critical care gaps, and improves health outcomes while helping to lower the cost of care. We have an extensive roster of clients, including leading employers, payers, health systems, and government. Our benefits and health navigation capabilities built on deep data analytics provide dynamic visibility into the cost of care and identify cost avoidance opportunities. This enables us to efficiently develop personalized care plans that determine the next best action to address gaps in care and health and social risk that impacted individuals' well-being. We are building on this engagement platform and reach with our new payer-agnostic advocacy platform, ShareCare Plus, which was built and commercially available in under a year and includes health benefits and care navigation all in one place, a library of clinically validated NCQA-accredited digital therapeutics, a team of personal health and clinical advocates, providing high-touch concierge-level service, which can be extended into the home, and a holistic customer 360-degree care console with clinical and customer engagement insights for health advocates and employers. We are already in contract with two large employers covering nearly 70,000 lives for ShareCare+. Both are anticipated to launch in 2023. We have a strong pipeline and are in active discussions with many other employer-impaired clients. Additionally, we strengthened our partnership with Anthem, establishing a collaboration agreement and developing a multi-career advocacy solution to be offered to national employer groups and health plans. Home care has proven to lower costs of care, create savings for health plans, and significantly improve patient and member satisfaction. This has made home health care a must-have, in any integrated solution providing ShareCare with a unique competitive advantage. As a quick refresher, we acquired CareLinks last August, and it's delivering above our expectations. CareLinks leverages a network of 450,000 caregivers as a single source nationwide home care platform that provides intermittent on-demand personal care services in the home of patients while leveraging mobile technology that facilitates rich data capture population health analytics, and the enabling of real-time care coordination with remote clinical teams via ShareCare. CareLinks expanded rapidly in 2021 and into 2022, now serving more than 400 Medicare Advantage plans, including several of the nation's largest payers as a free in-home personal care benefit to more than 1.5 million Medicare Advantage members. We expect this growth to continue along with the high demand for traditional home care services from our payer clients. CareLynx delivers a complimentary personal care service, which is a critical link in their home-based strategy. And these services are a significant benefit to employers to reduce absenteeism and improve productivity. All of these activities underscore our commitment to manage our solutions with a focus on digital-first and tech-enabled capabilities, that will deliver the best long-term value for our customers, their populations, and shareholders. So let me reiterate. Our focus is on expanding our core platform to drive higher PMPMs and broader patient engagement, platform engagement, to drive better value to our customers, which led us to the decision to suspend support of our vaccine assistant and health passport solution, which is part of our health security portfolio and traditionally to transition our legacy patient-centered medical home or PCMH business to a more tech-enabled model. During COVID, as a digital healthcare leader, we felt it was important for ShareKit to leverage its development and platform capabilities to support its customers and communities we serve. Therefore, we quickly mobilized to develop our vaccine assistant and health passport solution. Having successfully responded, enabling over 5 million vaccine registrations and supporting over 80 vaccination sites, we achieved our objective. But today, the outlook has changed, and thankfully, people are moving back to a normal lifestyle. Therefore, the solution does not meet our performance hurdles going forward, and we've made the decision to suspend our internal support. In addition, in conjunction with the renewal with one of our largest payer clients, we'll be working collaboratively to transition and streamline our legacy patient-centered medical home, or PCMH business, to a more tech-enabled model that, when redeployed, will drive improved productivity, increased coordination with clinical teams and community, and enhanced member engagement. We'll continuously review our portfolio with the objective of optimizing our capital allocation and resources to deliver the highest long-term revenue growth profitability, and shareholder value, and ensure that we continue to simplify our story to make it easier to track our progress. Before I close, let me give a few more highlights on our 2021 performance. We are focused on two objectives for our enterprise business. One, to increase the number of covered lives on our digital engagement platform, and two, to integrate new digital and tech-enabled capabilities into our platform to drive larger engagements and help our customers activate and engage their populations, improving health outcomes by focusing on the cost, quality, and access to care. During the year, we grew Eligible Life on the platform to approximately 9.7 million, expanding our relationship with existing customers while activating new customers like Aflac, Delta, Centene, Humana, and several others leading employers and payers. And more recently, we signed an agreement with Centene to expand into Louisiana. As a result of our success, we increased our potential serviceable lives to 91 million across the existing contracted client populations, presenting a material upside opportunity to grow within our current client base. In our record retrieval business for payers and providers, we retrieved approximately 5 million records in fiscal 2021. a 19% increase over the prior year. In payment integrity, we processed over $6 billion in claims and identified over $100 million in overpayments and continue to expand our pipeline and add new clients, including two new Medicare supplemental insurance companies. And in life sciences, we delivered strong growth, leveraging the strength of our award-winning content library and first-party database of over 100 million users providing digital patient engagement solutions for life sciences brands to improve consumer activation and potential health outcomes. During the year, we increased our penetration with top 20 pharma companies, as well as expanded our revenue with the top 50 pharma brands. I am proud of our team and their significant accomplishments in 2021 to expand the platform, placing us in a very strong position to sell larger integrated digital platform engagements to which will solidify ShareCare's role as a strategic long-term partner to our customers. We will continue to drive growth by upselling complementary tech-enabled solutions, growing eligible lives with those existing and new clients, and cross-selling services. We are confident we can deliver sustainable long-term growth and improve profitability going forward. Now let me turn the call over to Justin, who will review our financial results for the quarter and the fiscal year and share our financial outlook and assumptions for fiscal 2021. Justin?

Thanks, Jeff, and thanks to everyone on the call for your interest in ShareCare. As Jeff indicated, we delivered strong results for the quarter and full year fiscal 2021 with both revenue and adjusted EBITDA. Our fourth quarter revenue grew 34 percent to 118.5 million from 88.4 million a year ago. For the full year, our total revenue grew 26 percent to 412.8 million from $329 million a year ago. The fourth quarter and full year 2021 financial results were impacted by approximately $2 to $3 million in expected revenue related to the timing of contingency payments in our payment integrity business, which is now expected in our fiscal 2022 financial results. Revenue growth for fourth quarter and full year was primarily driven by life sciences, care links, health security, and new client wins across the entire platform. Adjusted EBITDA for the quarter was $5.4 million and $27 million for the full year. Adjusted EBITDA reflects positive performance across the business, as well as increased investments in product and technology and Salesforce expansion, as well as the impact of a one-time increase in COVID-19-related employee healthcare expenses of approximately $1.5 million. We expect these investments to support our long-term growth and drive additional operating leverage as we gain greater traction for the ShareCare digital platform with existing and new customers. I'll now turn to our guidance for the first quarter and full year 2022. Guidance reflects the actions Jeff mentioned with our health security portfolio and our patient-centered medical home business. Combined, these two actions represented approximately $65 million in in revenue and $20 million in contribution margin, which was included in the 2022 guidance we provided in connection with the initial SPAC transaction. Our Q1 guidance for revenue is $95 million to $98 million, an increase of approximately 7% over fiscal 21, using the midpoint of the range. An adjusted EBITDA is expected to be approximately breakeven. Again, this includes the two items I mentioned, as well as the seasonality and our life sciences business whereby the first quarter is our lowest quarter and ramps as we move through the year. For the full year, revenue guidance is $470 million to $500 million, an increase of approximately 15% to 20% over fiscal 2021, and adjusted EBITDA is expected to be $30 million to $36 million. While we continue to invest in the platform, expand our sales force, and support the rollout of ShareCare+, we anticipate adjusted EBITDA margins in line or better than 2021 as a result of the inherent operating leverage. Similar to the prior year, we expect revenue to be split approximately 40% in the first half of the year and 60% in the second half of the year. In addition, because of the step up in revenue in the second half, we anticipate a majority of our adjusted EBITDA guidance will occur in the third and fourth quarter. While the product line suspension and streamlining of our PCMH business impacted our guidance for 2022, we believe the redeployment of resources and the addition of large new client relationships combined with expansion of our platform places the company in an even stronger position to accelerate growth in fiscal 23 and forward. ShareCare remains uniquely positioned in 2022 to generate strong revenue growth positive adjusted EBITDA, and B, cash flow breakeven by year end. Our full year guidance assumptions reflect the following. Increase in eligible lives from 9.7 million at year end 2021 to approximately 12 million lives by year end fiscal 2022, a 24% increase over fiscal 2021. Enterprise revenue growth of approximately 15% compared to fiscal 2021, which includes the impact of suspending support for the majority of our health security solutions and transition of our PCMH business. Provider revenue growth of approximately 30 percent compared to 2021. This reflects an expected increase in records retrieved to 6 million records, an 18 percent increase over fiscal 2021, and additional growth in payment integrity. Life Sciences revenue growth of approximately 11 percent compared to fiscal 2021, which reflects continued market penetration. The channel is expected to have similar seasonality patterns, including approximately 35 percent of annual revenue expected to be reported in the fourth quarter. Capital expenditures of approximately 35 to 40 million, free cash flow between negative 50 million to 60 million, which reflects increased working capital needs and investments to support growth, but excludes any non-recurring items which may occur during the year. Depreciation and amortization are between 40 and 50 million. We remain confident in 2022, delivering strong year-over-year revenue growth and solid adjusted EBITDA performance while building a strong runway for fiscal 23. With that, we will move to the Q&A.

As a reminder, to ask a question, please press star then 1. If your question has been answered and you'd like to move yourself in the queue, press the pound key. Our first question comes from David Larson with VTIG. Your line is open.

Hi. Can you talk a little bit more about the vaccine assistant and health passport, you know, decision to basically migrate away from those businesses? It seems like they were generating revenue and earnings and we're not really through the pandemic yet. Just any color or thoughts there would be really helpful.

Yeah, sure. Hey, David, this is Jeff. So, you know, what was driving a lot of the revenue for the health security portfolio was the vaccine assistance. So, you know, when the pandemic hit, we said let's build a platform for our clients, our government clients, that would help them do mass vaccinations. So, you know, like the Miami Dolphin Stadium, for example, we were registering people there and 79 other sites. And so with the pandemic winding down and being able to get vaccinated through your doctor and other places, we saw that trend, you know, ending. Although we have a great platform, so we repurposed the platform for the health passport program. And we saw a lot of opportunity there as well. As you might remember, there was the Biden mandate for employers over 100 that, you know, that they were going to have to show their vaccine card or a recent test. And we sold some six-figure deals in the fourth quarter. But we saw that not being core to our business going forward. Although it was good revenue, although it was good EBITDA, you know, we're at listening to feedback that we're getting from investors that, hey, your story is a little complicated and you've got a lot of things going down. Could you get more core to your enterprise platform and your other assets so that it's easier for us to model your business and understand your business? And we looked at kind of our growth hurdles and said long-term, is this a business that we're going to be in? Is it going to meet our growth rates? Is it going to meet margins? Is it going to drive profitability? And so we made the decision that now was the right time to say, let's stop pursuing that. Let's redeploy our resources. Not that we couldn't pull it off the shelf if it was needed again.

Okay. As we look at the number of COVID cases on a daily basis decline very significantly, it seems to me like that's the right decision as we get past Omicron. And it does seem like all these mandates are lifting. So quite frankly, it seems to me like, you know, that strategic decision makes a lot of sense. And then with regards to the patient-centered medical home transition, if you're moving from a more service-heavy sort of concentration to a tech-enabled solution, I would think that that would benefit EBITDA. So why wouldn't, I mean, why is there such a material impact to earnings contribution in 22 if you're moving to a tech platform? Just any thoughts there would be helpful.

How about Justin? I'll give the color on that. So, you know, we have been in the patient-centered medical home business for a decade. We inherited that through our Healthways acquisition, and it's part of a contract to our biggest client, which is one of the big blues in the Mid-Atlantic. And we just went through a big renewal process on the digital piece of our contract and won that. And that was a big deal for us. It was to, you know, win the digital component. And once we got through that, we said, you know, let's focus back on this patient-centered medical home model that was a high-revenue driver for us in 19 and 20. But when COVID hit and we could no longer get into the doctor's offices, that model started losing money for us. We just got into the negotiations with a client in a very friendly partnership way. you know, we can't lose money on this business going forward. So how do we retool this? And so that where there's still revenue opportunity, but we, but we don't lose money. And, and that's, that's a very recent conversation, you know, early, you know, 2021 that you'll start to see the impact in the second half of 22. Anything like that, Justin?

Yeah, I just said that, that is, I think Jeff hits it on the head there is that historically it has had pressure from, as an EBITDA contributor and streamlining it over the year, we do believe it will come back as an EBITDA contributor. But it's been impressive so far.

So within the patient-centered medical home business, it sounds like there was very significant EBITDA margin pressure. You may have been making some money from it, but it was very lean, or were you losing money on the PCMH business?

We started to lose money on it. And so, yeah, so it's 140 caregivers that we manage on behalf of our client. And so. So, yes, but we have a strong vision for it. We think connecting it to the core digital platform, to the primary care doctor and to the specialist, you know, is a great service that will drive down costs and add a lot of value. But in partnership with our client, we said, look, going into 2022, this doesn't meet those growth hurdles that we talked about. It doesn't meet our growth rate. It doesn't meet what we're trying to do. for EBITDA and getting cash flow break-even, et cetera, and we need to take these losses out.

Okay, so it sounds to me like it was your decision to basically transition the patient-centered medical home piece to a tech solution with that client. It's not like they told you that, hey, we want to change the nature of this contract. It sounds to me like it was your decision, and then longer term, we should see an EBITDA margin lift as a result of that proactive decision on your part.

Yes, it was a proactive decision on our part. But, you know, these large payers are partners of ours, and so we wanted to do it in a coordinated way that had value for everybody. And we've been able to achieve that, renew the digital contract, now address this piece that has started to lose money and needs to be tech-enabled, and we're in a good place. But yes, it was our decision, but very much in partnership and support of our client.

Of course, you're there to support the client's members. You want to make sure that they're taken care of, absolutely, totally understood. So in terms of the $65 million in revenue and $20 million in earnings contribution for 2022, it sounds like a lot of that or most of that is coming from the vaccine assistant and health passport business. Is that correct? If you were sort of break even? Okay.

That's correct. That's correct.

Yeah, that's correct. Okay. Very helpful. Really appreciate it. I'll hop back in the queue.

Thank you.

Our next question comes from Richard Close with Canaccord Genuity. Your line is open.

Yeah, thanks for the questions. Justin, maybe with respect to the 2 to 3 million associated with the contingency revenue that's pushing from fourth quarter into 2022, how much of that, if you had it in the fourth quarter, how much of that 2 to 3 million would have dropped down to adjusted EBITDA?

almost all of it, had we gone with an accrual-based accounting methodology for those contingency payments, rather than what we ultimately did, which was closer to cash-based accounting, then all of those, that $2 to $3 million would have dropped to the bottom line. You couple that with the $1.5 million of increased healthcare expense around COVID and we exceed all of our targets.

Okay, great. I was going to ask how those COVID costs. And then as we look forward, I'm curious on the 12 million lives that you're expecting, you know, I guess to help drive the enterprise, 12 million lives, that are live for 2022, how should we think about when those new lives launch during the year? And then, you know, are, are, is the entire, you know, Delta between the 12 9.7 and the 12 million lives, all that sign, that's not business you need to go get or, or is it?

So we'll see those lives come on throughout the year, very similar to last year, how we grew from 8.8 to 9.7. So that target of 12 million is like the 9.7, which we would end the year with 9.7 million lives, which we did. And so we expect lives to come on throughout the year. And some of those, although we are well on our way, To achieving that target, but some of those will come on in the second half of the year Yeah, I'll just add that remember remember there also now as the care links lies in that number Can you repeat that last point It all that was Evan and he was commenting that we had now have care links who? we add those eligible lives into our total lives and just making sure that CareLinks is part of our enterprise business. And so we're including eligible lives that we bring onto the platform through CareLinks in that number as well.

Okay. So how should we think about the number of CareLinks lives that are contributing to that, you know, 2.3 million increase year over year?

I would go around half.

Okay. And then just to be clear on the, the, the remaining lives, not including care links, um, are those contracts already signed? Like, you know, business that you signed in 2021 that you're implementing, um, through, you know, uh, currently, um, And so the contracts are already signed. It's not like you have to win new business.

Yeah, they're either signed. The lion's share of the additional lives are signed. Yeah, we've talked about that. Q1 is a big part of that. You know, we onboard them. They're not always onboarded immediately in Q1. They can come in in Q2 as well. And then there's a – you'll see lift in the back half of the year. We talked about the cadence of our revenue at a 40% front half, 60% back half. So we expect lives to come on as well in the second half of the year. But, yes, a large number of those have come on in the first half. The CareLinks lives will come on throughout the year, and we expect some second half uptick as well.

Okay.

And maybe looking – We're in late – yeah, we're either booked or in contracting with all of them.

Okay. Okay. And then let's just talk about the overall pipeline, if we can, in terms of obviously what you're doing now, builds for 2023. Can you, you know, talk about what you're seeing in the pipeline, how it shapes up versus, you know, last year, and just any, you know, qualitative point there would be helpful.

Yeah, Jesse, maybe I'll set you up. this is the strongest pipeline that ShareCare has ever had that is for much bigger deals, higher PMPMs. We were successful in bringing 30 salespeople on last year, like we talked about, and we are getting many, many at-bats, and our close ratio, I think, is really high. And, you know, I think our clients are really buying into this idea that advocacy is great, But when you add engagement, it's even better because an advocate that has engagement can get the best results. And then when we add in that, we can also extend that now into the home and help the people that need help in the home or provide CareLinks as an employee benefit so that, you know, if I had to be on this phone call right now but my mom needed to go to the doctor, you know, I could use CareLinks as a benefit. and that I think we have a leading position in our social determinants of health work where we can really show health risk, and then you throw on the Doc AI, and that one platform strategy is really resonating, and the pipeline is growing like it never has before. The salespeople are trained, and maybe, Justin, you can translate what that means into pipeline numbers.

Yeah, I think, hey, Richard, We've never given exact pipeline dollars as a KPI. We may do that going forward, but maybe I'll just tell you on a percentage basis is that our pipeline is up four to five X year over year. And so it is stronger by a multiple of four to five X than this time last year, which puts us in a really good place as we move into 2023.

Excellent. Thank you for that. And my final question is just on the life sciences. I appreciate the 11% expected growth and having to be back and waited here for 2022. What was the life sciences growth? Maybe I missed that for the fourth quarter in the year 2021. We'll start there, and then I have a follow-up on that.

Yeah, it was significant. So like we talked about for, you know, the fourth quarter is always the biggest quarter for the life sciences business. And so it grew to over $27 million in the fourth quarter, which, you know, in Q3 it was around $11 million. Pardon me, around $18 million. So $9 million in growth. It's roughly a 50% growth from Q3 to Q4. And then just hard numbers, probably easier for me to give, is that we grew from 61 million to 78 million from 2020 to 21. So, you know, when you come off such a significant growth year like that in that business, you know, almost 30% growth, You know, we just wanted to be mindful of that when we gave our pro forma for this year. So currently we're projecting that 11% as around 87 million. But we're coming off such a large growth year last year that we wanted to be a little conservative.

Okay. That's helpful. Thank you very much.

And, Richard, I would say just on that business too, just as I know you know this, but what's so great about that is, you know, we – spend tens of millions of dollars in developing this award-winning content that we use to service those life science customers. But all that content we repurpose in our enterprise platform, and we think that is what drives a lot of the engagement. It would be really hard for someone else to replicate if they couldn't offset the cost like we do in life sciences.

Our next question comes from Eric Percher with Neflon Research. Your line is open.

Hi. This is Dolph on for Eric. First, though, we appreciate the move towards simplification. On the question, do any of today's announcements affect the enterprise sales expansion? And then if you could remind us, the new sources that sales – resources that came online were last year. When do we see the productivity ramp over 2022?

No, it does not impact. We're going to continue to invest heavily in sales expansion. As we talked about before, our target was around 30 per year. We met that target. We expect to do the same this year. So we are continuing to make a significant sales investment across the platform. We expect that growth to start to bear fruit in the second half of this year, and especially as we go into 2023. Okay, thank you. The pipeline – yeah, the pipeline growth is – We're getting more at-bats responding to more RFPs. We have more feet on the street, and that's why you're seeing the significant expansion in our pipeline. That sets us up for H2 in 2023.

Great. Thank you. And then within digital therapeutics, is there any part that you're seeing higher demand for or getting greater traction with versus others at this point?

Yeah, digital therapeutics continues to perform. We've talked about this in previous calls, but really it's the prevalency, obviously, around diabetes and diabetes prevention typically gets a, you know, kind of outweighs some of the others. But we're seeing traction across maternity, MSK, sleep, hypertension, other areas as well. But if you had to pick one, it would be in the diabetes and diabetes prevention.

And maybe I'd add one thing to that, Justin. The company that we acquired, Mind Sciences, which is all based on mindfulness, and, you know, we have programs for anxiety. We have programs for weight loss, you know, for smoking, very research-heavy, mindfulness-based, has become almost like the table stake in all our sales now. And so we own those assets. It's very high margin. We bundle it in with the core platform. And so almost every deal that we're selling now, you always see those therapeutics included. And then as Justin said, we're getting really good at using the data to be able to inform our clients. What are the right therapeutics for their population? And then together via the platform, how do we target them and get them enrolled? And because 80 million people are pre-diabetic, that's always a big driver. Great. Thank you.

I appreciate it. Sure.

Our next question comes from Cindy Motes with Goldman Sachs. Your line is open.

Okay. Thanks for taking my question. So it sounds like basically what you're doing here is streamlining the business a bit. You gave the revenue sort of cadence for the year. Just on EBITDA as well, I'm guessing if we see break-even first quarter and then to get to your numbers, we're going to see a pretty decent ramp, particularly in the fourth quarter. So that means we exit the year, I'm just putting out there, maybe 11%, 12% EBITDA margins. Does that set you up? So essentially for 2023, I know you're not giving guidance, but it would seem like we get back to maybe where you know, at least we were expecting in 2023, you know, not to put guidance in your mouth, but if you exit the year at that, you know, hopefully that would be something. I'm thinking about it the right way. That's the first question. And just on, if you could just give us a little color on some of the, you know, transition investments that you're making, because I did notice that G&A was pretty high this quarter last Is that something, I mean, is there like a retention bonus, employee wage inflation, something going on there? And I guess over time then we see that also come down. Also product and technology was up a little bit, but just if you could give any color there and I'll stop. Thanks.

Yeah, so on the first question you're right on, we expect to be in double-digit operating margins by Q4. And then, obviously, we think we're not giving guidance for 2023, as you said. But we expect that to kind of continue into 2023 and beyond. So you're right in line with, you know, our expectations. And just want to reiterate is that we're also focused on by the end of the year to get to cash flow and break even, which we think is, you know, we're one of the unique companies in our space to achieve that. So that is your assumptions there are right on. And then on the P&T piece, I think what we've talked about, we added over 70 resources in product and tech. A lot of our calls, we talk about investing in innovation, which is heavy on product and tech, and we're investing heavily in sales and marketing. So you're right. The sales and marketing grew in Q4. P&T grew in Q4. And then, you know, there's a number of things that grew kind of the corporate G&A item. But we're investing in our senior team, which has been built out. There were some, you know, we're investing heavily in our new assets like CareLinks and Advocacy. So all those together kind of drove the growth in our office.

Okay, and so we're going to expect that. So there's not like a one-time like employee retention thing in there, but we're going to over time. And there's not expenses in there like some other companies that we've seen of transitioning the platform and it takes kind of a while. That's not what's going on here. It should be pretty straightforward. I'm just looking for a little clarification there.

Yeah, we had a marketing expense, and I talked about the one-time fee for COVID expenses being high. So I would say that $25 million is high. I wouldn't expect that to continue on into the first half of the year, but – But, yeah, so it's, yeah, there were a couple one-time expenses, but we're investing. I mean, I think the bigger point is we're investing heavily across the board. But you could pull that back in the first half of the year, but, you know, as we move out in the latter part of the year, we're going to continue to invest in our advocacy products and our care links home health products. So, you know, year over year, our corporate G&A is going to grow from 2021 to 2022. Okay.

All right, and maybe some of that is like wage inflation that we're hearing from other companies as well, but it's not – it sounds like it's manageable, correct?

It's definitely manageable.

Okay, and then just, you know, I don't recall you giving it, but do you have any guidance, you know, at all on the PMPM or anything like that? And just with CareLinks, as I recall, I mean, that guidance is still intact, right, with the revenue there? I think you said – focused on about $35 million for the year end. Just those last two. Thanks.

Yeah. Yeah. So, you know, we talked about it. We don't provide guidance on the PMPM, but you can back into it on our enterprise business, which is, you know, a little over $2. With these larger deals, the advocacy deals and others, you know, as we look out to 23 and beyond, we think that that will expand significantly. Care Links is continuing to perform right in line with plan, if not ahead, and feel like we made an excellent acquisition for the shareholders, and it's performing, and it's performing ahead of plan.

Okay, thanks a lot. That helps. Our next question is a follow-up from David Larson with BTIG. Your line is open.

Hi, what was the revenue either for the quarter or the year in enterprise and then also provider? And I think you said in consumer for the year it was 78.

Yeah, so you want to break out each for the quarter and the year. So enterprise for the year was $243 million, which was up from $188 the year earlier. Our provider business was $91 million. It was up from $79 million the year earlier. And then obviously I gave you $78 million on the consumer piece, which adds up to right at the 413.

Okay, that's very helpful. Thank you. And then can you talk about the in-sell or cross-sell potential for CareLinks in particular? It's my understanding – that they have a presence in some very, very large health plans. Are you talking with those plans about other ways that you can serve them with the ShareCare suite of products? And any thoughts on how those discussions are progressing?

Yeah, that's a great question. So, like, I think we've made so much progress as a company. is in this full one platform. So, you know, when we first met, we talked a lot about, you know, an engagement platform and the importance of that and how hard it is to get people to engage in their health and why we think we do well at that. And then we talked about the ability to upsell digital therapeutics. You know, once you get the data, how do you enroll the person into the right program and put that on the one platform. Now in the last year, I mean, what has taken some folks a decade to build, you know, we've built a full advocacy solution in less than nine months. in partnership with Anthem, and we've brought that to market and we've sold clients, adding sometimes 12x the PMPM that we were getting for just the engagement platform. And in addition to that, we now, in every presentation we make, the same way we added advocacy to the engagement platform, we've added CareLinks. And so when we're in a finalist presentation for a large employer, we're saying you should add CareLinks as an employee benefit if it's a commercial client, and doing the same, coming at it From the other side of the table, which is the question you're asking, from the CareLink side, they've made a lot of traction with one of the big payers. And they've kicked off and are having great results in Q1 with another one of the big payers that complement the payers that we had. And we're actively educating those clients on the ShareCare capabilities. You know, put it all together. Put the engagement with the therapeutics, with the advocate, and with the home care. And so what Evan often says is it doesn't matter how you come into the platform. Are you an adult employee coming in initially for wellness? Are you a Medicare Advantage member initially coming in through CareLinks? You know, let's get them to buy all the services because we think this one platform approach is best for the member and most comprehensive and one-stop shop for the clients.

Okay, that's very helpful. And then in terms of the salespeople, how are they actually paid? Are they all commission-based? And just any color on the percentage of their comp that is commission-based?

Yeah, they are heavily incented on commission. And they all change somewhat, but they're all a little bit different. But the – But ultimately, we bring these colleagues in at relatively low base, and they can make a lot of money based on the number of sales that they make. So it's really aligned. We do better, and they do better.

Okay. Thanks very much. Appreciate it.

There are no further questions. I'd like to turn the call over to Jeff Arnold for any closing remarks.

Well, just in closing out, I'd like to reiterate that we had, I think, a really strong, you know, 2021. You know, we got the company public. We made two really key acquisitions. We showed 26% growth, $27 million in adjusted EBITDA. We have an incredibly strong balance sheet in which we're going to continue to be active in M&A. And the company has never been in a stronger position. We have a huge pipeline. Our value proposition is resonating with our clients. We're getting the outcomes that we want with our users. And we're listening to the feedback that we're getting from investors. And it's important that we simplify our story. And hopefully you can see from the actions that we've taken with health security and PCMH that – that we're aggressively taking those steps. And we think that we can sustain these growth rates and meet our investment hurdles that make ShareCare a great investment for all our shareholders. And we appreciate your time today and look forward to talking to you in May. Thank you.

This concludes the program. You may now disconnect. Everyone, have a great day.