Sharecare, Inc.

Good day and welcome to the ShareCare second quarter 2022 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Evan Smith, Senior Vice President of Finance and Investor Relations. Please go ahead.

Thank you. Good morning and welcome to ShareCare's second quarter fiscal 2022 earnings conference call and webcast. All participants will be in a listen-only mode. 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. Today's call is being recorded and an archive of the recording will be available for 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 Securities Litigation Reform Act of 1995, which includes statements regarding potential strategic reviews and our guidance. These forward-looking statements are subject to various risks and uncertainties that 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 statements or 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 Form 10-K for the year ended December 31, 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 call over to Mr. Jeff Arnold. Jeff, please go ahead.

Thank you, Evan, and thank you all for joining us this morning. Our second quarter results reflect the continued execution of our strategy with growth across three channels. We delivered revenue and adjusted EBITDA above our guidance ranges, which reflects strong recurring revenue, as well as benefiting from upselling and cross-selling within and across channels. We are continuing to see both RFP and pipeline build sequentially, as well as year over year, supporting our continued growth in 2023 and into 2024. Our expanded sales team is delivering higher productivity, driving new direct opportunities while also seeing growth from both our channel partners and brokers. I will also reiterate from our last call, we continue to have strong client retention and have limited client concentration and have a highly diversified business across all three channels. Additionally, we announced today that we've signed a memorandum of understanding for a multi-year strategic partnership with Carillon, the healthcare service subsidiary of Elevance Health. to integrate ShareCare Plus's capabilities into Carillon's health guide services that currently support hundreds of thousands of members, which will help drive additional and significant scale of our solution. While our 2023 is shaping up to be a strong year, the second half of 2022 is experiencing softness due to the timing of the start date of the Carillon partnership, which was originally planned to start in the third quarter. Justin will provide more detail about this in a moment. While we strongly believe in a long-term strategy for our business and the underlying value of the combined solutions across our three channels for our customers and consumers, we have initiated a strategic review of alternatives that have been presented to us from our non-enterprise segments. The board and management believe that this review, coupled with an ongoing focus on accelerating our strategy and cost initiatives, will create enhanced value for all stakeholders, including our customers, consumers, employees, and investors. Now let me move on to the second quarter performance. In the second quarter, we delivered revenue of $103.8 million, 5% ahead of the prior year, and positive adjusted EBITDA of $2.1 million, while continuing to invest in sales and marketing to support accelerated growth into 2023. With $211 million in cash on our balance sheet to support growth, no debt, and positive trends across all three channels, we remain in a strong position to execute on both our organic and inorganic growth objectives. In enterprise, we are seeing continued momentum, both in the size and number of new pipeline opportunities from 2023 and continued strength in RFP activity. Our digital first approach offering seamless and data-driven experiences resonating with existing and potential new customers. Customers are increasingly looking for a platform solution that can drive consumer activation, engagement, and satisfaction by simplifying the patient journey to not only identify gaps in care, but also to deliver the comprehensive solutions to address gap closures, including improved wellness and preventative screening, disease management with access to digital therapeutics, as well as integrated access to virtual primary care and tech-enabled home care. In addition, as our customers continue to look for ways to address the rising cost of healthcare, while increasing their commitment to their members or employees, our Digital First platform can help them lower their cost of administration while enhancing the experience and outcomes for their respective populations. We have over 11 million eligible lives on the platform with additional growth expected as we launch ShareCare Plus later this year. In addition, with our multi-year strategic partnership with Carillon, we will be able to add to the scale and revenue already in place for ShareCare Plus for 2023 to our current contracts and robust pipeline. We continue to see positive trends from our home health business CareLinks, which is delivering strong performance ahead of our initial expectations by expanding within its customer base, as well as further diversifying its business with new payer wins and the expansion into the employer market. Let me give you a quick example of the benefit CareLinks delivers. Working with an ACO of a leading hospital system, CareLinks rolled out a transitional care program focused on patients discharged from a hospital or SNF within seven days. The program provided in-home support, including managing the first visit and an average of four in-home visits for assistance with daily activities and ADLs, as well as transportation to and from medical visits. It delivered a 19% reduction in readmissions for this transitional care program after two years. The data is very impressive. and highlights the success of our program to reduce avoidable and costly readmissions. In summary, because of our new wins, strategic partnerships, and continued innovation, we remain confident for increased momentum and enterprise in fiscal 2023. In provider, we continue to see strong growth in our record retrieval business, with June being a record month driven by increased penetration of existing clients, the addition of new client sites, as well as continued strength in audit volumes for risk adjustment and HEDIS as we expand our presence of payers. Adding hundreds of new sites in the quarter, we remain on track to achieve our 6 million medical records retrieved target for the year. We also continue to build momentum in our record retrieval pipeline with positive underlining growth trends, including a solid increase in the average deal size and a more than 20% sequential increase in the number of opportunities. As we expand our direct and partner-driven marketing activities and across an increased number of use cases we discussed last quarter, underlying demand for the business remains strong. To further strengthen the business, and as I mentioned earlier in my remarks, we continue to implement cost initiatives to improve margins. In Life Sciences, we continue to grow with our top 20 pharma clients and brands, as well as find new opportunities for our digital patient engagement solutions for leading pharmaceutical brands. We continue to build new pipeline opportunities and maintain solid client retention. We now anticipate lower growth in the second half of the year. A significant slowdown in pharma DTC marketing spend has created a headwind for our growth rate, which is being driven by individual brand dynamics, including patent expiration and launch timing, as well as macro economic factors. That said, we remain confident that the strength of our content, first person data, and our personalized omni-channel approach continues to drive program execution and competitive advantage. We have had several strategic decisions in fiscal 2022 to streamline and advance new solutions like ShareCare Plus and believe these decisions have strengthened our platform and deepened our relationship with strategic partners, which will enable us to drive more sustainable, profitable growth as we move into 2023 and forward. In 2022, we have already seen the benefits of our efforts with increased momentum in our pipeline at four to five times where it was in the prior year, with new commitments in place for 2023. Our focus remains on selling larger engagements, creating more opportunities for cross-selling, and continuing to invest to deliver more value and product innovation to support our clients. 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 the remainder of fiscal 2022.