Syra Health Corp.

Good morning, everyone, and thank you for joining us for Syrah Health's third quarter 2023 financial results conference call. Joining us on the call today is Dr. Deepika Vivalanchi, CEO of Syrah Health, Syrah Health's Executive Chairman and President Sandeep Alam, and Priya Prasad, Syrah's Chief Financial Officer. At the conclusion of today's prepared remarks, management will answer some questions that were sent to us by investors and other questions we think are relevant to investors as well. Today's event is being recorded and will be available for replay through the webcast information provided in the press release. Finally, I'd also like to call your attention to the customary safe harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of Sira Health. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to the factors set forth by the company's filings with the SEC. Saira undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would like to now turn the event over to Dr. Deepika Lokalanchi, Chief Executive Officer of Saira Health. Deepika, please proceed.

Thank you, Ben, and welcome, everyone. I'm pleased to be leading our very first quarterly results conference call. As many of you know, we completed our IPO and began trading on NASDAQ, under ticker symbol CIRA on September 29th. I look forward to holding these quarterly calls going forward. With this being our first call, I thought it is best to provide overview of CIRA Health and the opportunities we believe will drive growth in CIRA going forward, and then provide you with an update on the results of the third quarter specifically. CytoHealth is a healthcare company providing innovative services and technology solutions to help our partners improve healthcare. We address the most significant healthcare challenges by providing forward-thinking, innovative, and technologically advanced solutions to our partners in public and private sector healthcare and life science organizations. Our partners range from healthcare providers, governments, and payers to biopharmaceutical companies and academic institutions. Our solutions are tailor-made to specifically address the unmet need of our partners using the latest technological advances. Our company is divided into five business units, behavior and mental health, digital health, population health, healthcare education, and healthcare workforce. The growth opportunities of our solutions are substantial as we are targeting end markets that are expanding, yet underserved, and are in the need of tremendous technological and analytical advancement, something CIRA brings to its partners. At CIRA Health, our focus is to become a leader in healthcare solutions for our partners and expand our operations by leveraging our established success. which we have achieved in key geographic areas to drive growth nationwide. Our backlog and pipeline of contracts is robust, and we remain optimistic about our ability to win more of them. For instance, in October alone, we announced a five-year, $4.75 million contract from the District of Columbia's Department of Behavioral Health to support DBH's mental health initiatives including its supported employment program and comprehensive psychiatric emergency program. We quickly thereafter announced the signing of a two-year contract extension worth up to $636,000 with the Indiana Division of Mental Health and Addiction and Family and Social Service Administration to chair and manage the State of Indiana's Epidemiological Outcomes Workgroup. And just over a month ago, We announced a strategic agreement with Maricopa County Department of Public Health in Arizona, where we trained over 100 plus public health staff in the county. We have dedicated in-house RFP teams to ensure appropriate opportunities across government agencies are timely tracked and quality proposals are submitted. As we continue our expansion, our talent pool and infrastructure will grow to support the breadth and depth of our services. To provide more details on each of the business units of our company, I would like to turn the call over to Sandeep Alam, our Executive Chairman and President. Sandeep?

Thank you, Deepika. I want to reiterate the team's sentiments in welcoming everyone to our first quarterly results conference call. This is an exciting time for Sarah Health as we embark on on fulfilling our promise to continually push the boundaries of mental health solutions, explore new frontiers in digital health, and remain dedicated to our pursuit of a healthier population. Taking a deeper dive into our business units, starting from behavior and mental health solutions, in this area, we focus on preventative mental health and treatment as well as easing the access for individuals to reach mental health care and professionals. We offer a variety of products and services to promote mental and behavioral well-being through telehealth and healthcare workforce needs. The important product here is our recently launched Serenity, an AI-backed mental health product for organizations offering mental health workforce solutions. With its With its evidence-based approach, Serenity is a design to identify and prevent the progression of negative factors that can influence an individual's mental health by offering an AI-backed diary, targeted assignments, symptoms monitoring, education, and timely interventions. Serenity encompasses a range of features aimed at continual monitoring, cognitive therapy interventions, and convenient access to care-specific licensed therapists via telehealth. Its user-centric design ensures an intuitive experience for individuals from all backgrounds. Cernity offers several unique advantages, including its evidence-based approach of scientifically proven methods and techniques to assess and address behavioral and mental health concerns. Through a series of assessments, Serenity will create a personalized profile for each user and provides real-time reporting, which will serve as a starting point for developing targeted activities, education, and interventions. Serenity enables users to connect 24 hours a day, seven days a week, and integrates with telehealth. We expect to market Serenity to organizations offering mental health workforce support, and solutions, as well as universities and schools, grades 7 through 12. We recently announced a strategic agreement with ENI Cooperative Services, the only member-owned nonprofit procurement cooperative exclusively focused on serving education. CIRA's goal is to provide mental health services, including telehealth, via Serenity to ENI 6,000 plus university and college members nationwide. Looking more broadly at the opportunity, Serenity is designed to address the large yet undeserved population confronting mental health issues. According to the National Alliance of Mental Illness or NAMI, One in five adults living in the U.S. experiences mental illness annually, while one in six U.S. youth aged 6 to 17 experience a mental health disorder each year. According to President's research, the U.S. behavioral health market size is expected to reach approximately $132.4 billion by 2027. In today's world, prioritizing mental well-being is more important than ever, and certainty provides a preventative, accessible, and affordable solution. Okay, let's transition to our next key business unit, digital health, where we offer solutions to address some of healthcare's biggest challenges. We blend technology and innovation to develop a range of digital health solutions centered on prevention, improved access, and affordable care. We help facilitate information sharing, continuity of care, and interoperability while ensuring security and privacy. Our cloud-based solutions provide secure and scalable infrastructure for healthcare organizations to leverage the benefits of cloud computing while maintaining the highest level of data security to store, manage, and access patient data. We uphold stringent security measures and regular security audits and adhere to industry standards and regulations such as HIPAA and to ensure that patient data remains confidential and secure. So also importantly, our solutions are backed by AI driven by data and supported by real-world evidence and actionable insights. We also focus on what I will call the modernization of legacy systems. To these points, our recently launched Care Plus is a specialized electronic medical record system tailored to small to mid-sized healthcare organizations to enhance operational efficiency, minimize errors, and elevate patient care. CarePlaces are intuitive, easy to use, secure, and scalable platform that allows for streamlining clinical workflows and integrating telehealth while having the ability to interact with labs, radiology systems, and other EMRs, eliminating interoperability issues. This system was largely developed in collaboration with healthcare providers to understand what they needed in their EMR system, while our competitors are focused on large hospitals and healthcare centers. We believe Care Plus is an affordable, integrable solution that can be customized to fit the individual needs to small to mid-sized healthcare organizations. Within artificial intelligence or AI, we are leveraging the power of AI to drive innovation in healthcare. Our AI-powered solutions offer advanced capabilities such as natural language processing, machine learning, and predictive analytics, enabling healthcare providers to make data-driven decisions, automate manual tasks, and enhance patient care. We're collaborating with healthcare organizations to understand their unique needs and challenges and develop AI-powered solutions that align with their goals and objectives. We prioritize transparency in AI, ensuring that healthcare providers and leaders can understand and trust the results generated by our AI-powered solutions. Our solution, branded as CyraBot, is a human-centric chatbot solution that offers 24-7 AI-powered conversational customer support through chat, providing personalized health information, benefit and treatment information for individuals to stay informed and involved in their care. SairaBot communicates at a fifth grade reading level and in up to 200 different languages, ensuring access for everyone. At Saira Health, our digital health solutions are focused on helping our partners achieve five key objectives. Navigate the digital transformation process, Empower their patients to take more active roles in their healthcare by providing patient portals, healthcare products, and online communities. Improve collaboration in healthcare ecosystems. And number four, address disparities in healthcare access and outcomes. And finally, number five, secure their health data and protect their digital health systems against cyber threats and privacy breaches. Our team has made tremendous progress creating products that fit the landscape of needs in the market, allowing us to capitalize on this rapidly growing digital health market. According to Grandview Research, the U.S. engagement solution market size was valued at $5.2 billion in 2021 and is expected to grow at a CAGR of 15% through 2030. Additionally, According to Health Care Dive, the U.S. care coordination software market was $3.2 billion in 2022 and growing at a 15% tier. And now, turning to population health. In this business unit, our solutions help state governments create healthcare improvements for a population of individuals with a focus on substance abuse and mental health. We conduct data analytics and develop solutions from a health equity lens to help improve health equality and access to care. These predictive analytics help stakeholders create public policies and some of Our analytical capabilities include data collection, traditional to advanced analytics, predictive analytics, risk stratification, intervention analytics, spatial analytics, gap analysis, and evidence-based research. Our team of expert-level epidemiologists also provide epidemiology solutions using data-driven analysis, and some of our epidemiology services include managing and technical assistance to the state epidemiological outcomes workgroups, monitoring and program evaluation for substance use, mental health, epidemics and endemics, chronic and infectious conditions, conducting data-driven discussions, establishing health priorities, and evaluation of regional prevention systems. We further use our strong analytical capabilities to provide health equity solutions, including population risk stratification and strategic interventions involving social determinants of health. In September 2021, we entered a contract with State of Indiana's FSSA division of mental health and addiction worth up to approximately 1.25 million dollars due to the excellent service that we provide provided the contract was recently extended for another two years this project involves epidemiological studies in combination with advanced data analytics and health communications this last week we announced a two-year $215,000 contract with the Minnesota Department of Human Services to assess and implement culturally, linguistically appropriate services for Hispanic and Latino communities. Like our business units, population health is a large and growing area, and we are excited to make our mark on it. According to Grandview Research, the U.S. population health management market size was valued $20.6 billion in 2021 and anticipated to grow at a CAGR of 19.5% through 2030, mainly driven by the growing demand for healthcare IT services and solutions that support value-based healthcare delivery, resulting in transition from fee-for-service to a value-based payment model. Our health education business unit provides targeted and continuous learning opportunities for healthcare professionals. By enhancing medical competency and health equity knowledge, we help them deliver better quality patient care. We offer comprehensive patient education solutions and services to provider groups, payers, healthcare institutions, and government health agencies to improve intrinsic health education, which we believe will lead to increased patient satisfaction, positive experiences with better health outcomes. To decrease health disparities and improve patient outcomes and satisfaction, we have a team of subject matter experts that create training of employees and staff of health organizations, pharmaceutical companies, payers, and large healthcare employers. Moving on to healthcare workforce business unit, where we help to evaluate the workforce needs of our partner organizations and use agile implementation staffing methodologies to make it as seamless and cost-effective as possible to expand our partners' clinical personnel. We recruit experienced physicians, nurses, and allied health professionals for a long-term fixed contract positions at government and private provider networks, payer organizations, and healthcare facilities across the country. In 2022, we generated roughly $5.2 million in revenues in this area and $3.1 million for the first nine months of 2023. In our short history, We have worked with over 10 states, providing workforce services, including our home state of Indiana. As I stated at the beginning of my remarks, this is an exciting time for Saira Health. We are on a mission to improve healthcare by addressing some of its most significant challenges with a platform of solutions to address rapidly growing areas within behavior and mental health, digital health, and population health, And I believe we are well-positioned to fulfill our promise while driving value for our shareholders. With that, let me turn it over to our CFO, Priya Prasad, to add some additional color to the numbers. Priya.

Thank you, Sandeep. And let me add my warm welcome to everyone joining us on this call. The financial results for the quarter are provided in detail within our 10Q, which will be filed later today, as well as within our press release, which was issued earlier this morning. I will aim to provide some color on key areas of the financial results, as well as an outlook on certain areas where I can. Total revenues in the third quarter of 2023 are were 1.58 million versus 1.51 million in quarter three of last year, representing a 4% year-over-year growth. Growth in the quarter was driven by our digital health, population health, and health education business units. Within our digital health business unit, revenues were 131,356 during the quarter, driven by sales of our CyraBot product. The digital health business unit is new and had zero revenues in prior periods, including the third quarter of last year. Within our population health and health education business units, revenues were $328,750 in the third quarter of 2023 versus $66,000 in quarter three of last year. Growth of 400% driven by our epidemiology and reporting services. Revenues from our population health and health education business units are classified as medical communication services on our 10Q financial statements. We are working on updating our financial statements to better reflect our current business units. Within our healthcare workforce business unit, revenues were $1.1 million in the third quarter of 2023 versus $1.4 million in quarter three of last year. This is consistent with fluctuations seen in previous quarters. While our healthcare workforce business unit will continue to generate healthy and sustainable revenues, I want to emphasize that our future revenue base is expected to become more diversified and more geared towards higher growth and higher margins businesses. For reference, In the third quarter of last year, our healthcare workforce services were 96% of our revenue base versus 71% in the most recent quarter. We are focused on growing our differentiated and scalable businesses within digital health and behavioral and mental health. Gross margins for the third quarter of 2023 were 35.1% compared to 27.3% in the third quarter of 2022. The increase in gross margins were due to a slight shift from healthcare staffing services to medical communications and digital health services that carry better margins. Total operating expenses for the third quarter of 2023 increased 18%. to 897,557 compared to 760,600 in the third quarter of 2022. Salaries and benefit expenses increased 31% compared to the third quarter of 2022 due to increased operations and added office personals to support the company's IPO process. Professional fees declined 62% compared to the third quarter of 2022 due to decreased reliance on outsourced professional fees in connection with a prior period audit in preparation for the company's IPO. Selling, general and administrative expenses increased 56% compared to the third quarter of 2022 due to increased operations. Depreciation expense was 14,180 in the third quarter of 2022 2023 compared to 3,880 for the same period last year, reflecting expanded office space. Net loss for the three months ended September 30th, 2023 was 354,376 compared to a net loss of 354,535 for the three months ended September 30th, 2022, a decrease of 159 dollars. Adjusted EBITDA for the quarter ended September 30th, 2023 was a negative 329,580 compared to 341,760 in the third quarter of 2022. Again, full reconciliations are provided in the tables included in today's press release. Our cash balance as of September 30th was $18,000 and Upon the closing of our IPO, the company realized net proceeds of 4.7 million. As we look to the fourth quarter, we believe we will see a continued increase in digital health and population health contract run and a steady state of contract wins in behavioral and mental health as well as our healthcare workforce businesses. With that, let me turn the call over to Deepika.

Thank you, Priya. Let me just conclude with where I started. Our innovative services and technology solutions have been developed to meet the unmet needs of the healthcare industry, especially in our focus areas of behavior and mental health, digital health, and population health. Our pipeline of current and future contracts is expanding, and we expect to announce contract wins as they are solidified. Utilizing our strong balance sheet, we are expanding our RFP and business development teams as we intend to replicate our current projects with similar customers across the country. I appreciate everyone's participation on the call today and will now be happy to answer any questions. Ben?

Thank you to the entire management team. We have some questions for you. First off, can you speak a bit more on how Serenity works and what do you hope to get out of your agreement with ENI?

CERNITI is a healthcare product that can be downloaded to an individual's phone through Sarah Health Secure Network and delivers AI-backed tools for the prevention and treatment of mental behavioral health issues. As for our agreement with ENI, they are a procurement organization specific to education and have vetted our company and our Serenity product. So together, our combined sales and marketing team are approaching interested universities and colleges nationwide about providing Serenity, which will be provided at a monthly charge per user.

Okay, thank you. You've spoken about expanding your in-house RFP team. Can you speak about this in more detail and what that expansion would mean for Sarah Health?

Sure, Ben. Working with state, local, city, and county governments has been crucial to the success of the company. We have achieved such success in implementation of several government projects which serves to help us serve the greater population. We continue to invest in our proposal teams by bringing in experienced writers and subject matter experts to propose the most value for the government and bring in continued contract awards to Syrahub. We also intend to participate in federal bids. Investing in our proposal teams allows us to further grow and scale our business.

Okay, thank you. Can you speak more about your Care Plus system? You recently launched EMR system. What difference is this product from others on the market?

The healthcare providers told us that their biggest frustration was that electronic medical record systems cannot seamlessly integrate with labs, radiology, and other EMRs. So the inability to talk with other systems results in additional expenses that small to mid-sized providers can't often afford. So K-Plus remedies the situation by providing an easy-to-integrate and affordable system.

Okay, thank you for that. It looks like we are out of time. Many thanks to everyone for participating in today's call, and we look forward to speaking with you again. Thank you, everyone.