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spk01: Good afternoon and welcome to the SOC TeleMed fourth quarter 2020 earnings conference call and webcast. All participants will be in a listen-only mode. Should you require assistance, please press star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one. To remove yourself, please press star then two. Please note that this event is being recorded. Leading today's call are John Kalix, Chief Executive Officer, and Chris Nibb, Chief Financial Officer. Please note that the company will be discussing certain non-GAAP financial measures that they believe are important in evaluating performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliation thereof can be found in the press release that is posted on the Investor Relations page of the company's website. Also, please note that certain statements during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results for SOC Telemed to differ materially from those expressed or amplified in this call. For additional information, please refer to the cautionary statements in the press release filings with the SEC, all of which are available on the investor relations page of the company's website. With that, I would now like to turn the call over to SOC Telemed's CEO, John Kalix. Please go ahead.
spk04: Thank you, Operator, and welcome everyone on the call. Thank you for joining us this afternoon to review our fourth quarter and full year 2020 results. I want to start the call today by thanking the entire SOC team for their hard work throughout the year. It's your persistence and commitment to the organization that empowers us to deliver time-sensitive care to patients at their most vulnerable. 2020 was an important year for SOC telemed. On October 30th, we closed the SPAC merger transition and began trading on NASDAQ as a standalone public company, and we made significant additions to our team across the organization to best position ourselves to capitalize on the opportunities that lie ahead of us in 2021. On the call today, I'm going to share some high-level results, recent additions we've made to the team, and trends we're seeing in the industry. I'll also share some details of the acquisition we announced today of Access Physicians, an experienced multi-specialty acute care telemedicine provider that further solidifies SOC's position as the largest acute dedicated telemedicine provider in the US. I'll close my comments today by reviewing investments we're making to set up for future growth and what we were planning for 2021. So first of 2020, our revenue for the full year of 2020 was 58 million, a 12% decrease from 2019 really resulting from the impact of COVID-19 had on the emergency room utilization for our hospital customers. That's something we've previously discussed on our last earnings call. At the same time, we achieved record bookings of $12.2 million, doubling our results from 2019. Now, on the last call, I told you about our commitment to ensure our future success by enriching and enhancing the SOC team. To that end, we recently brought on Chris Nibb as our Chief Financial Officer, Ron Egan is our Chief Customer Officer, and Stephanie Harris is our Chief Human Resource Officer, all of whom bring public company experience, strong track records of success, and diversity of thought to the business. As we grow our organization, we remain acutely focused on both optimizing the value we deliver to our customers on a daily basis and being aggressively committed to our people. It's critically important in this stage of the company's life to have experienced Visionary leaders focus on these two key elements, and that's exactly what Chris, Ron, and Stephanie have brought with them to SOC. Additionally, High Tran has been promoted to President and Chief Operating Officer to focus his attention on the operations and growth of the organization. Given his deep domain and company expertise, High is well-suited to drive the operational excellence needed. So as this is only our second earnings call as a publicly traded company, I wanted to step back and provide a quick reminder to all of those where we are positioned in the telemedicine space, really before getting into some of the trends we're seeing in the industry. SSC Telemed is the largest provider of acute care telemedicine solutions that are primarily used inside the hospitals by onsite care teams to provide time-sensitive acute care specialty solutions. The service we deliver is initiated directly by members of the care team, and this is a really important distinction from the consumer-initiated access to remote primary care type clinicians. SLC Telmed provides a differentiated solution through the seamless integration and flexible deployment of our proven, secure, purpose-built software platform called Telmed IQ, a panel of consult coordination experts, and then finally an access of networks of providers across multiple specialties. We are proud to have worked with our pioneering partners who are on the cutting edge of Q-Care telemedicine. And as it becomes more widely accepted, we look forward to this future together. Now Q-Care telemedicine has emerged as a solution to increase access to scarce clinical resources, improving clinical quality and really driving operational efficiencies. This creates a clear path to revenue generation and improve profitability across healthcare systems. We're well positioned to step in and assist hospital leaders in both the emergency departments and across the hospital more broadly. Hospitals are struggling with the challenges of acute care capacity management, physician scarcity, and cost optimization. Our unique position, developed over 17 years of acute care telemedicine experience, is a result of our ability to deliver clinically effective coverage at a meaningfully lower cost than traditional onsite alternatives and that's due to this fractionalization of remote providers with outcomes as good as or better than traditional care. The COVID-19 pandemic has had a meaningful impact on the delivery of care and the evolution of telemedicine. Starting from the early stages of the healthcare crisis, there's been a rapid uptick in the acceptance of telemedicine, accelerating a multi-year adoption curve. We believe that virtual care will continue to be critically a critical component of the industry's ability to deliver increased access and improve quality of care. All that said, the pandemic clearly demonstrated that high-quality healthcare can indeed be delivered virtually through partnership between virtual specialists and on-site clinical teams. As we look at the long-term demand for our solutions, it's evident the same underlying challenges in place pre-pandemic still exist and persist in our healthcare systems. We directly address increasing financial pressures, the challenges of balancing high labor costs with the delivery of quality care and the widespread shortage of specialists in the US, compounded by the expected increase in the care of the growing aging population. These challenges are only exacerbated by this mild distribution of clinicians nationally. Given the inequities of care delivered today, we believe that where you live should not dictate the quality of care you have access to. The pandemic may have caused a near-term challenge in terms of the emergency room utilization, but we believe it's very clear that virtual care will continue to be a critical component of the healthcare industry's ability to address the aforementioned challenges, delivering increased access and improved care to patients. What today we refer to as telemedicine, tomorrow we may just call medicine. As tele, becomes woven into the fabric of how we provision care. As you likely saw today, in conjunction with our earnings release, we're incredibly excited to announce our acquisition of Access Physicians, an experienced and high-growth multi-specialty acute telemedicine provider. This is a pivotal moment in the growth of SOC TeleMed, and follows through on a critical pillar of our growth strategy. This combination furthers SOC TeleMed's position as the largest pure play provider of acute care telemedicine in the nation, reaching nearly 1,000 facilities, including over 700 hospitals across 47 states. Combined, we bring over 27 years of telemedicine experience to those in need of acute care solutions. When we think about the number of combined sites we support, this acquisition makes us over three times larger than our next closest dedicated acute care telemedicine solution provider, bringing scale, expertise, and technology as a single solution provider to the market. After doubling our bookings from 2019 to 2020, we believe that this strategic acquisition will enable us to nearly double our revenue on a year-over-year basis in 2021. Supported by a purpose-built acute care telemedicine platform called TelmedIQ, the business combination with Access Physicians will enable us to accelerate adoption of acute care telemedicine to have a larger impact in addressing inequalities. We share a mission with Access Physicians' team in the way we strive to deliver high quality care via telemedicine to all patients. We believe this will be a great cultural fit as we progress through the integration process. Part of the rationale around any access or acquisition is the quality of the talent we bring on board. Chris Gallagher, MD, the CEO of Access Physicians, is one of those individuals. Chris is a board certified cardiologist who's a clear thought leader in the telemedicine space with just an impressive entrepreneurial track record. I'm thrilled he's joining my direct leadership team as president of Access Physicians, a division of SOC Telemed. Chris also brings a very strong leadership team with him, and I'm excited to get to work with such a phenomenal team as we grow the combined business. Strategically, our acquisition of Access Physicians expands our clinical service lines and grows our physician networks in both size and experience. As a complement to our current offerings, this combination provides us access to several new specialties, including things like cardiology, infectious disease, maternal-fetal medicine, nephrology, and many others, expanding our estimated white space opportunity to approximately $2.7 billion. And with our combined customers and expanded offerings, we have tremendous opportunity. Moreover, this acquisition positions us as a single acute care telemedicine solution provider that we believe the market demands. One of the most attractive elements of this acquisition for SLC TeleMed is that it further accelerates our expansion into the hospital beyond the emergency department, as Access Physicians has historically focused on inpatient solutions. While many patients come through the ED, when we think about inpatient solutions, It is a term more broadly used to define any patient who has been formally admitted to the hospital. These patients require highly trained specialty physicians and care providers for their inpatient care, which all have significant clinical shortages. This is truly a complementary combination that broadens our solutions across a hospital's continuum of care, which also provides a natural hedge to volatility of utilization across departments and specialties. Importantly, we expect that the combined company creates a meaningful opportunity to accelerate growth through cross-selling as we only have six of 1,000 sites that overlap between the two organizations today. This business combination will create a singular clinical solutions provider and partner rapidly growing demand in the market. Together with Access Physicians, we will be a solutions provider that can offer more to our customers than any other organization could on its own, supported by one platform built with a focus on security and flexibility. Moving forward, as we look at 2021, in addition to the integration of Access Physicians, we have a number of key strategic priorities aimed at driving growth in our business. First, we continued our investment in our go-to-market capabilities during the fourth quarter, further developing our sales and customer success teams. We're taking a phased approach to that expansion of our sales organization And while there's still some work to be done, this development is designed to enable our success in 2021 and beyond. The new team members are building pipeline, closing deals, and expanding our reach. As hospital leadership's primary focus shifts away from vaccine distribution back to really hospital operations and the strategic initiatives that they have, we're poised to gain momentum through this team. These investments were intentional and have been time to help us activate our expanded capabilities outside of the ED with access to physicians acquisition. In summary, we are really confident in our ability to leverage this investment to deliver results. Further, in 2021, our customer success organization will provide continuous support and deliver value for a growing number of customers. As we mature, this is an area where we plan to continue to invest to really ensure optimal support for our customers. scaling accordingly with our growth. With an increased focus on expanding system level partnerships, we really believe that we're well positioned to work as a strategic advisor to those systems based on our telemedicine expertise. This expertise is only bolstered by the access positions acquisition as we now offer more services to address the needs of our current customers. Finally, as we look in 2021, we plan to continue to expand our new markets and into new offerings to address the winding needs of our hospital customers throughout their facilities. My interactions alone with large health systems as well as independent hospitals reinforces our belief that there's a pent up demand for a single multi-specialty solutions provider with a broad portfolio of clinical networks that can be accessed through a proven, secure, and flexible telemedicine platform. Purpose built to support the facilitated care model Additionally, I continue to hear the term vendor fatigue used by both current and potential customers. In a fragmented space, hospital systems and independent hospitals are looking for a single partner with a single secure platform to optimize their service lines in a meaningful way. We're now uniquely positioned to be that partner. We intend to continue to build our presence in adjacent specialties in the acute care market, both organically and inorganically. Our experience with the TeleMed IQ platform, where we support more than 20 clinical service lines today, provides the foundation we believe is really required to enable this growth. Now more than ever, I feel incredibly confident that SOC TeleMed is providing the right solutions to meet the needs of the market. There is clear opportunity to leverage our foundation of 750 plus physicians, 27 years of combined acute care telemedicine experience, and proven, dedicated, and secured technology platform to expand into adjacent markets to accelerate our growth. Before I hand it over to Chris, I want to officially welcome the entire Access Physicians organization to SOC Telemed. Additionally, I want to really thank both the SOC Telemed and the Access Physicians leadership teams for just their tireless efforts to execute this meaningful transition and acquisition. With that said, I'll turn it over now to Chris Nidd to review the financials in greater detail. Chris?
spk02: Thank you, John, and thank you all for joining us today to review our financial results. I'll start my comments today with an overview of the Access Physicians transaction details. I'll then review the fourth quarter results and finally share our initial thoughts on guidance for 2021. To expand upon what John already shared, We announced today, after market close, our acquisition of Access Physicians via a cash and stock purchase valued at approximately $194 million with an additional potential consideration based on performance. The transaction, which closed on March 26, is comprised of $100 million in equity and approximately $94 million in cash, funded from a new five-year term loan and a subordinated note. For the full year of 2020, Access Physicians generated approximately $27 million in revenue and grew approximately 50 percent from 2019. while approaching break-even with an adjusted EBITDA loss of $1.8 million. As you heard, the acquisition will broaden our service offerings and is expected to create meaningful cross-sell opportunities. At the same time, it continues our expansion outside of the emergency room to several departments throughout hospitals, making our solutions more robust as a single provider of multiple service offerings. Over the long term, we see potential for increased operating efficiencies as we consolidate onto a single platform, resulting in improved margins. Now, turning to the results from the quarter. We generated $3.9 million of new bookings in the fourth quarter, a 95 percent year-over-year increase. These strong growth rates reflect the increased interest in acute care telemedicine solutions and the momentum we are seeing in our suite of services. As John mentioned, in the latter part of Q4, we started to make investments to build out our go-to-market teams. Accordingly, their ramp-up will take some time. As a result, we expect to start seeing the increased benefits from those investments in the second half of 2021. Revenue was $14.5 million in the fourth quarter, a decline of 13% year-over-year. As we've discussed previously regarding utilization volatility, revenue in the quarter was impacted by lower utilization of our core services, resulting from a decrease in hospital and particularly emergency room visits due to the third wave of the COVID-19 pandemic. After seeing an initial recovery in volume in October, that third wave led to a volume reduction in November and December, which we understand is consistent with hospitals' experience in emergency department utilization across the country. In terms of total consults on our platform, we conducted 88,000 consults during the quarter, a 26 percent increase compared to a year ago, as our platform-only customers continued to increase their utilization. 31,000 of the new consults were what we define as core consults, those that utilized our network of specialist physicians. Now turning to our non-GAAP financials. In the fourth quarter, adjusted gross margin was 44%. relatively flat compared to 45% in the fourth quarter of 2019. Although revenue was down 13% year over year, we were able to largely offset margin pressure by managing our expenses through closer alignment of our physicians' schedules. Our operating expenses, excluding depreciation and amortization, integration costs, and stock-based compensation, was $10.3 million, an increase of 42% compared to a year ago, reflecting our increasing investments in our go-to-market functions and the cost of being a public company. Looking forward, our public company costs are expected to be higher than previously guided, as directors and officers' insurance expense is about $3 million higher than what we had anticipated. as the market for SPAC-related insurance increased dramatically throughout 2020. Reflecting those investments, our fourth quarter adjusted EBITDA was a loss of $3.9 million compared to a positive $200,000 last year. We ended the fourth quarter with approximately $39 million in cash and no debt. However, subsequent to quarter end, in conjunction with the access positions transaction, we established a new $125 million five-year term loan of which we utilized about $85 million and we established a $13.5 million subordinated note. Finally, we are initiating our outlook for the full year of 2021 as a combined company on a pro forma basis as follows. Revenue will be in the range of $107 to $113 million, of which approximately 30% to 35% is expected to be contributed by access physicians. Our adjusted gross margin will be in the range of 42% to 45%, and our adjusted EBITDA loss will be in the range of $15 to $19 million. Going a little deeper into our guidance, the pandemic has and will continue to impact us in multiple ways, which have been considered as part of the guidance provided. One short-term headwind is the variable utilization of core services as I discussed earlier, which impacts, but we are starting to see early signs of stabilization, particularly around psychiatry. The pandemic has also created significant tailwinds, which we believe to be an enduring long-term benefit, given the growing recognition for the solutions that we provide, which has led to meaningful interest and a growing pipeline. Additionally, we will now be able to cross-sell a broader portfolio of solutions and continue to diversify our revenue base. For bookings, we see them as weighted to the second half of the year as our existing potential hospital customer decision makers are focusing their attention on the vaccine distribution in the near term. Additionally, we expect the increased contribution from our new from our newer sales members to have a ramping effect as they mature into their roles. As we look at consolidating the practices of both organizations, we will be reporting on our 2021 bookings to be defined as an estimate of first year revenue. In terms of quarterly revenue, given the higher levels of COVID cases early in the quarter, We expect Q1 to be down sequentially and then grow throughout the rest of the year. We believe adjusted gross margins will be in the low to mid-40s, reflecting access positions' lower margin profile. SoC's standalone higher margins are the result of our more robust platform, Telemed IQ, which will drive long-term margin improvements as the business is integrated. Our adjusted EBITDA outlook reflects continued investment in the incremental cost of being a public company and our go-to-market teams. In conclusion, I want to thank the leadership teams of both Access Physicians and SOC Telemed for their continued hard work throughout a very dynamic year. We look forward to continuing to update you on our progress throughout the year, and with that, we'd be pleased to take questions. Operator?
spk03: Like any quarter in our 138-year history.
spk01: And we will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. And at this time, we will pause momentarily to assemble the roster. And our first question today comes from Ryan Daniels with William Blair. Please go ahead.
spk03: Yeah, guys. Thanks for taking the questions and congrats on the end of the year performance as well as the deal. If we look at the transaction, can you speak a little bit more to one, the integration plans and how rapidly you plan to move them over to the Telemed IQ platform? And then number two, just your thoughts on how to capitalize on the cross-selling opportunity. I think I heard you say there's only six of 1,000 overlapping clients, which is pretty remarkable. obviously a huge greenfield opportunity there for upsells. So how are you going to capitalize on that once the integration progresses? Thanks.
spk04: Thank you, Ryan. Let me take the second question first, and we'll dive into some of these details, because I think they're both really important questions. So first, on the cross, you are right. We looked at the total breadth between both organizations, and there's a really unique jigsaw puzzle that comes together here, where you only have six 1,000 sites where we have any overlap. And we've talked on the past call where 50% of our bookings come from same store customers. That is where they might have psychiatry with us, but we haven't even talked to them about cardiology, infectious disease, nephrology, maternal communal medicine. The amount of detail and breadth of the discussion that we can now have with customers, we know will make a difference. Customers are coming out of the COVID cloud. They got the vaccine plans in place like we had mentioned in the opening comments. And the conversations have definitely turned to much more strategic, broader, all hospital, all IBM type strategies. They truly do have vendor fatigue. I use those words in my opening statement. But there's this element of, I can't actually maximize my own physicians on any platform. What is it that you have? Telemed IQ? That's something different. And hey, when I have all these other specialties, how can I tap in on a floor-by-floor, area-by-area basis to different specialties as I need them? And this combination brings those two jigsaw puzzle pieces together quite eloquently. So one of the elements we talked about from our commercial strategy is not only that we already double our sales team. So our sales team is well underfoot to the size that we expected it to be for 2021. We're rapidly finishing the second part of our strategy, which is the account management team, which regularly meets with all of our customers. And you can imagine now there's many more sites where there wasn't really deep account management on the access position side, that we can now sit down, understand deep needs, and bring a very broad portfolio together. So the second question is, how do we think through getting customers onto TIQ, et cetera? Well, first of all, we're going to start where the customer begins. We need to understand what the customer's workflow is. What's the workflow that we bring? What's the workflow that Access Physician brings? We know if a customer likes a particular workflow, we're not here to break anything. What we're here to show is if they, for instance, it's an Access Physician site that does not have or utilize a Telmed IQ, they're using more of a phone tree type system, the ability to now to say, do you need specialists or not? If it's your own specialist, by the way, here's this thing called Telmed IQ that you would maybe never consider, because again, we've had no overlap in these sites. And then also you can bring on the 10 to 12 specialists we were talking about where we now have access to more than 750 physicians to help solve that solution. So we talked about a wraparound solution. Start with your clinicians and layer ours on top, whether that's for peaks, weekends, vacations, holidays, nights. It's, hey, it's a service line you may have never offered before because you simply couldn't find that person in one space. Now you can take that hospitalist and they can hit the button when they go to their EMAR And they can activate a cardiologist one time, an infectious disease doctor the next time, a nephrologist the next time. And you can really start to virtualize how healthcare changes. And that's why I think the whole team realizes and believes that you can, we want the goal to get the tell out of telemedicine. And this is how hospitals start to operate, to fractionalize and maximize. So we also know that we're going to also evolve our roadmap as well, as we better understand those needs. And so that's going to take time. We want to sit down and we want to listen. I've had a chance to spend a lot of time talking to hospital C-suite and larger IBMs, and the strategy was clear to me that bringing a multi-specialty solution on Telmed IQ platform where we really diversify our offering, we go deeper and wider, more specialties, we can go to more floors inside of a hospital, and we can talk on a national basis with IBMs. That was really the basis of the strategy. And we do see this sticking point of our same customers in Q4, that phenomenon, half of our bookings coming from same customers, was no different than Q3 that we shared at the last earnings call. And now we can unleash the team. The team that we built, we can literally unleash them to names we already know. Customers that we know have already been on the forefront of thinking about how telemedicine can change their hospitals. When they're thinking about dollars and now they're thinking about dimes post-COVID, but they want to think about new specialty lines, we can uniquely bring that. And we can solve, I think, really some of healthcare's biggest issues. And that's why both teams are, the energy is palpable and we're ready to bring it to the market.
spk03: That's great, Keller. I appreciate all that. And then I guess this might follow up. Any commentary on their revenue model? I know you have a model that's a mix of fixed-based fees and utilization-based fees with the latter typically being a little bit more expensive but also more volatile in regards to the revenue stream. So can you comment on what their model looks like and if that will also help kind of diversify the volatility in the revenue stream going forward or if it's really just diversification based on specialty lines? Thanks.
spk02: Hi, Ryan. This is Chris. Yeah, they have a similar model to ours with fixed fee and variable fees as well. So the diversification really comes from our diversification outside of the ED. You know, we've been very concentrated there. We've started there. But they came to the business from a different angle. They started with inpatient and have grown into the ED. You know, there's very little overlap in our business, not only in facilities, as John mentioned, only six out of a thousand, but also in our service offerings. We do overlap in neurology, but quite frankly, there's a lot of non-overlap business. The neurology piece is not significant. So the business models are very similar, so it'll be, you know, really easy to adapt as we go to market together. to sell our solutions together.
spk03: Okay, perfect. Thanks. I'll hop back in the queue. Appreciate it. Congrats again.
spk01: Thanks, Ryan. Appreciate that. And our next question will come from Sean Dodge with RBC Capital Markets. Please go ahead.
spk06: Yep, thanks. Good afternoon. On maybe starting on the revenue guidance, I was wondering if you could parse that out a bit. Maybe just give us a sense of how much should be contributed from the acquisition. And then if we think about setting the acquisition aside, How much of the incremental revenue is expected to flow out of backlog from new clients that you've signed recently versus how much is expected to be contributed from maybe kind of a COVID, post-COVID normalization existing clients kind of re-ramping their utilization platform?
spk02: Yeah, so, Shawn, this is Chris. What we're expecting from the contribution from access physicians is, as we stated in the release and on the comments earlier, we expect them to contribute on a full-year pro forma basis between 30 and 35 percent of our overall targeted revenue. But on the backlog question, You know, both companies have had really strong growth. And so there's a significant momentum in our already onboarded core signed, you know, customers that we're delivering services to. But as you've seen, we've both had really strong momentum in bookings. The COVID tailwind for us just continues to pay dividends as we're really starting to see significant ramp up in our pipeline. And so they're, is a relative amount of growth baked into the plan. But as you know, we're a recurring revenue business model. And so as you get throughout the year, those new bookings contribute less and less to your current year earnings. So the business models have not changed. Their model is really similar to ours. And so we would expect, you know, to be able to hit the numbers that we've put forward.
spk06: Okay, thanks. And then, so maybe on the acquisition, the business models, Chrissy said, similar, but margins for access physicians being a little bit lower than SFCs. Is that just a function of scale, or is there something structurally different about the technology or the platform? Maybe if you could give us just a little bit more insight there.
spk02: Yeah, scale, look, this is a business where scale matters, of course. And where we really shine is telemed IQ. We have the sort of best in market operating system out there that allows us to optimize our most expensive line item, the physician fees that we pay. So we're able to highly fractionalize that scarce resources time and therefore the expense and spread that expense over a wider service offering. So our panels are much more effective at delivering the services to the customers than what they were able to achieve at their scale. So it's a combination of scale and the platform.
spk06: Okay, great. Thanks again.
spk01: And our next question will come from Jandra Singh with Credit Suisse. Please go ahead.
spk00: Thank you. And congratulations on the good quarter and the access positions transactions. I want to go back to your 2021 revenue outlook. I think it's getting a little confusing, like what is the contribution from access position? Are you saying that we should use that 107 to 113, 130 million revenue and apply 30 to 35% on that number to get what is the contribution from access position? Or are you saying that if you perform your guidance for the full year, then apply the 30 to 35%? Because it's not clear, like, what is the taxes for addition contribution and what is the core SOC telemed revenue contribution? Can you please, sorry to go back there, but I want to make sure that it's clear because we are getting some questions on that.
spk02: Yeah, yeah, Jolinda, happy to do so. So the guidance we provided is, the full year pro forma range, the 107 to 113. So assuming the transaction had closed on January 1st of this year. So that is the range on a full year pro forma basis. And within that range, we expect access positions to contribute between 30 and 35% of the number that we land on within that range.
spk00: So actually when you report, so when you report 2021, your reported number will be lower than 107 to 113 because it does not include around like roughly three months of contribution from access position, right?
spk02: That's correct. Yes.
spk00: Okay. Uh, can you, uh, talk about that roughly?
spk02: I mean, yeah, so we would think about that. Yeah. We would think about that number. Somewhere in the range of right around $100 million.
spk00: Okay.
spk02: On a gap basis, around $100 million, yep.
spk00: Got it. And then when we think about excess fiduciary annual revenue run rate, what you're assuming in 2021, is that a real run rate or even that business is getting impacted from COVID? I'm just trying to understand what is the core revenue run rate for that business right now. if you adjust for any COVID related headwind?
spk02: Yeah, so the additional strategic value to this business as it relates to coming together with us is that they were not as heavily impacted by COVID because of their higher concentration on inpatient specialties. So Where we were more dramatically impacted because of our higher concentration historically in the emergency department, you know, hospitals across the nation have seen significant volume decreases through the ED. But overall, they've had less impact in inpatient. So for them, they haven't had the same volume declines that we've had during this COVID period.
spk00: Okay. Then a couple of other clarification with respect to the impact of this transaction and some incremental expenses you are incurring this year. Are you still comfortable with your prior outlook of getting to EBITDA profitability in 2022?
spk02: Yeah, our current expectation is that we will be achieving adjusted EBITDA breakeven around the second half of 22.
spk00: Okay. And the last thing I want to go back to, I mean, I want to see if you can elaborate a little bit on your how many physicians access position has, how they source their positions. Do they also have a mix of employed and contracted positions and how are they paid? Maybe just compare that side of the model with your business model.
spk04: Yeah, I can take that actually. So some of the opening statements we made, there are more than 750 physicians now in the network. And the way to really look at this comes back to even some of your beginning questions and some earlier questions on even fractionalization. So as you get size and scale and you have many customers using a particular service line, you can start to move people from a 1099 model over to a W2 model, right? And that's where scale does matter. It doesn't change how you use Telmed IQ, how you fractionalize time, how do you really think through maximizing and breaking down the borders. But scale does help you think through 1099 with our specialists versus a 10 versus a W2. So we have within SOC Legacy, for instance, we've mentioned in the past, about a third of our physicians, 40% of our physicians were W2, but they were doing more than 75% of the total volume that we had in the marketplace. Access Physicians has a different approach simply because of the scale and the breadth. They went wider, we went deeper. So they went to cardiology, infectious disease, nephrology, maternal fetal medicine. They also did, which we did, neurology, ICU, and pulmonology. But they have many more physicians covering across those states to cover those specialties. As we grow, we see where we will be looking for individuals to come over and be W2s with us in the physician ranks, which will allow us to more, you know, value matters in the fact that just statistically, your peaks and your troughs become more statistically enabled to really predict, and that's one of the things that the data that comes off Telmed IQ, that that allows us to predict what might be coming from a needs necessity. So whether you need a specialist in five minutes, 15 minutes, or in two hours, And what are those use cases? The data will tell us how we can actually not only lean into help, but actually improve healthcare before, where it is today. And that's the benefit of the model growing. You will see us moving to more W2. Access physicians right now, their specialists are largely 1099.
spk00: Great, thanks a lot.
spk04: You're quite welcome.
spk01: And our next question will come from David Larson with BTIG. Please go ahead.
spk05: Hi, can you talk a little bit about the volumes that you're seeing? I think that the consultations of 88K, I think that's up about 10% sequentially. And the core visits of, I think you said 31, it's down slightly sequentially, maybe like basically flat. I guess, just how are volumes trending and how do you expect them to trend as we go into like one Q of 21 and through 2021? Thanks.
spk04: Let me start more 60,000 feet, and I can let Chris take some additional detail here. I can tell you today, and we use a phrase, and we saw it coming, we just didn't know when it would be here, is we definitively see this psychiatric tsunami taking place. Now, that was already known in the more direct-to-consumer space, right? People going online, meeting with psychologists and psychiatrists online while they're at home. But given the length of time that's been taking place with COVID, people, that methodology is simply not meeting their clinical needs, and we're starting to already see this pretty large increase in psychiatric demand. We did know there would be a little bit tail from neurology demand in the ED, if you're going back to legacy SOC, and that's when you hear the ED volumes basically taking place out there. The ED volumes that are still down, but they're starting to come back into play. So just like we have that difference between what's happening in the ED between psychiatry and neurology, it's happening across within the hospital. And again, as we talk about diversifying and going deeper, this is now a matter of use and leaning in on other specialties. And that's where we know this is going to be organic growth through the new larger SOC telemed. The ability for us to really think through and see the... think through the telemedic Q platform, which I think is the basis of some of your questions, is that's the new need that's quickly coming up in the strategy. It's how do I first, if I'm a hospital IDN, how do I first maximize the investment I have in my current specialist positions? And that question, that simple question leads to a TMIQ discussion, telemedic Q, that we're not really having in-depth and detailed during the crisis, because everyone was in crisis mode. Now, It's this understanding of, hey, that thing you were talking about, can we revisit it? The amount of revisit meetings we are having right now is significant. And we are fortunate that we brought on our sales team to focus on telemedicue, individuals that have SAS-based software sales experience that can articulate not only the value proposition, but talk through the IT security demands. In this space of remote telemedicine, people are also looking for a secure platform. They know the element of getting hacked into at a hospital has significant repercussions. So they want to see something that is Eurex certified, HITRUST certified, tested, and with a secure platform basis. And that's what telemedicu brings. That is the difference that we're starting to see on a value basis. Now, I'll let Chris go into some of the numbers and any additional detail that you might have.
spk02: Yeah, just to add on to that. As we stated earlier, we did see the third wave volatility come back through November and December and continue into Q1. As John just mentioned, we are starting to see stabilization and an uptick, particularly in psych, as we come out of COVID. And our models reflect getting back to a more normalized volume number in Q3 around the July and August timeframe. As it relates to telemed IQ, we've seen a 90 percent increase in consults on the platform from our platform-only customers on a year-over-year basis. So, there's continuing tremendous usage. And overall, in the long term, that increased utilization leads to more licenses by our physician groups who are using the platform. that ultimately, frankly, we are only just beginning to offer this and dive into this. There's a tremendous white space opportunity within just our two largest physician group customers. There's a lot of runway to go there.
spk05: Okay, that's very helpful. Thank you. And then, I'm sorry, I just got a little bit confused with the 2021 revenue guide here. If I heard you correctly, I think what you said was it's going to be about $100 million in revenue after we account for the fact that you got three-quarters of the new acquisition in the full year for 21. Is that correct? Yes. Yeah, that would be more of a gap basis, full-year gap basis. And that assumes $10 million in revenue is deducted from the full year to account for that one-quarter, so... Is it proper to assume about $30 million of revenue is included in the guide from the acquisition, which means you have about $70 million of core sort of revenue in 21 from the core business?
spk02: Those numbers are within our range, but I don't think you have the mix exactly right. And I think the contribution in Q1 is more in the $8 million to $10 million range that you'd be looking for. Okay. Thanks very much. Remember the ramping effect of the business.
spk05: What's your expected growth rate for access physicians in 21?
spk02: Our growth rate that we have in the model for the year is in the mid-30s. So I haven't bifurcated the growth rates out between the two businesses. Okay, great. Thanks very much.
spk01: This will conclude the question and answer session. I'd like to turn the conference over to John Kalix for any closing remarks.
spk04: First of all, I want to thank everyone on both the SOC team and the Access Positions team and all of our advisors that helped with this deal. Everyone's put a tremendous amount of work into this, and I think the teams are really excited about the elements on talking to our customers shortly after we end these calls and being able to start tomorrow. I want to thank everyone for joining. We look forward to taking additional questions I know we are short on time here, so with that operator, we will conclude the call today.
spk01: And ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines at this time.
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