Sharecare, Inc.

Good day and welcome to the ShareCare first quarter 2023 earnings call and webcast. All participants are in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Today's call is being recorded and will be available on the company's website. On today's call, we have Mr. Jeff Arnold, Chairman and CEO, and Mr. Justin Ferrero, President and Chief Financial Officer, as well as Mr. Jeffrey Mohamed, Chief Operating Officer, who will join for the question and answer session. 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 provisions of the Private Securities Litigation Reform Act of 1995. which includes statements regarding strategic reviews and our 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 Form 10-K for the year ended December 31, 2022. 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.

Good morning. Thank you for joining us today as we present ShareCare's Q1 2023 results. As our overall strategy and focus remain consistent with our previous quarterly update, we'll keep today's remarks brief before opening the line for Q&A. We began the year on solid footing with first quarter revenue of $116.3 million and adjusted EBITDA of $2.1 million and are pleased to report robust performance across our enterprise, provider, and life sciences channels. During the quarter, we demonstrated our commitment to sustainable growth and profitability while making forward progress toward achieving our year-end goals, including our core KPIs of 12.9 million eligible enterprise lives and 6.5 million records processed. Our enterprise business experienced 17.4% year-over-year growth for the quarter, generating $70.2 million in revenue, supported by the successful launch of our advocacy product, ShareCare Plus, which is receiving positive customer feedback and engagement, as well as our home care offering, CareLinks. This accomplishment underscores the value of our exceptional clinical and non-clinical operations as well as our comprehensive technology platform in which we continue to integrate AI to better predict customer needs and optimize service delivery. The combination of our advanced analytics, AI-driven insights, and proactive engagement through our advocates have significantly improved the quality of care we provide while maintaining cost efficiency. Further, our investment in sales is showing positive progress as we sign contracts towing more than 275,000 new eligible lives in Q1. marking a significant increase from the same period last year. As a recent example, our expanded public sector team has helped broaden our market reach, winning the RFP for a large state employee's wellness program set to begin in January of 2024. In our provider channel, we processed 1.7 million medical records, delivering 17.2% year-over-year revenue growth and a 19% increase compared to Q4 2022. This growth can be attributed to new client contracts with large national payers and increased demand for record retrieval and release of information, particularly for Medicare and commercial risk adjustment. Through globalization efforts and increased digital medical record delivery, we began to realize operating expense savings and are tracking towards our anticipated annualized cost savings goal of $14 million in the channel by the end of the year. Turning to our life sciences channel, we experienced a modest but promising 5.6% revenue growth year-over-year in Q1. This channel continues to add significant value to our enterprise channel, bringing advanced member targeting capabilities, including a zero-party database of over 100 million individuals for precision targeting and an extensive catalog of award-winning content. Looking forward, life sciences pipeline for the year is showing a healthy increase, currently up 20% compared to the same period last year. We continue to thoroughly pursue our strategic review process, exploring all options to maximize shareholder value. At the same time, we remain focused on driving organic growth across our platform and executing on strategic cost-saving initiatives to drive near and long-term value to shareholders. In summary, Q1 2023 has been a solid quarter for Sharecare, with consistent growth across all our key business channels. Our dedication to leveraging technology against our extensive datasets for continuous improvement and innovation gives us confidence in sustaining this momentum throughout the year and into 2024. Now I'll hand it over to Justin to provide more details on our financials. Justin. Thank you, Jeff.

We had a strong start to the year with first quarter revenue of $116.3 million, representing 15.5% growth from $100.7 million a year ago, and adjusted EBITDA of $2.1 million versus $0.2 million a year ago. with both exceeding the high point of our guidance. Positive performance is due to growth across enterprise provider and life sciences channels, yielding momentum toward achieving our core KPIs as we secure more eligible enterprise lives and increase the number of medical records retrieved. ShareCare also continues to maintain a strong balance sheet, ending the quarter with $155 million in cash on hand over $205 million in available liquidity and no debt. Looking forward to Q2, our guidance for revenue is set between $109.5 million and $110.5 million, an increase from $103.8 million in the second quarter of 2022. Our Q2 adjusted EBITDA guidance is $2.5 million to $3.5 million, an increase of approximately 40% over Q2 fiscal 22, using the midpoint of the range. We are hard at work to realize our $30 million annualized savings opportunity, with $22 million in savings projected to be realized this fiscal year. We expect these savings to accelerate as we move into the latter half of the year. We believe the combination of our strategic automation, reengineering of business processes, and workforce globalization will contribute to the expansion of our adjusted EBITDA margins, nearly double our year-over-year adjusted EBITDA targets, and enable us to turn cash flow positive within 2023. Based upon our Q1 top line outperformance and current business visibility, we are raising the low end of our full year 2023 revenue guidance to 452.5 million. We are also reaffirming the top end 2023 revenue guidance of 460 million and adjusted EBITDA range of 25 to 30 million. We appreciate your continued support We're now ready to take your questions. Thank you.