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spk08: Telemed's first quarter 2021 earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance during today's call, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star then one on a touch-tone phone. To withdraw your question, press star then two. Please note 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 measure and reconciliation thereof can be found on the press release that is posted on the Investor Relations page of the company's website. Also, please note that certain statements made during today's 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 implied in this call. For additional information, please refer to the cautionary statements in the press release and filings with the SEC. all of which are available on the investor relations page of the company's website. With that, I'd like to turn the call over to SOC Telemed's CEO, John Kalix. Please go ahead.
spk06: Thank you, operator, and welcome everyone on the call. Before we get into the results, I'd like to provide a reminder as to the space in which we play and why the differentiation is so important. As the leading and largest dedicated acute care telemedicine provider, We operate in a very different space than those who primarily focus on lower acuity, patient-initiated consumer telemedicine. With that comes the challenges and the opportunities, actually, tied to managing complex workflows. It requires a level of expertise and experience to provide the highest quality care possible. A recent example where the acute care and direct to consumer spaces differentiate came from Q1 telehealth patient usage. As reported by Fair Health, telehealth usage among individuals with private insurers fell 16% month over month, the first decline since September. Conversely, as we operate in a higher acuity space where the need for patient care delivered in hospitals is stable, we actually saw a significant increase in patient consults volume in Q1 across multiple service lines, led by psychiatry, which is what we will cover in more detail here as we move forward. It's just one example of how the acute care telemedicine space differs from telemedicine at large, and we'll continue to focus on this space moving forward. So we had a great start to the year, and I'm pleased to be here today to provide an update to the first quarter. Revenue came in at $14.8 million, inclusive of five days of Access Physicians contribution. This is consistent with prior year Q1 2020 results. And as a reminder, given the timing of the COVID pandemic, there was simply less impact around Q1 2020 patient volume utilization as compared to Q1 2021. Therefore, we're pleased with the results given that environment. Our bookings, which I'll elaborate a little bit more later here, were 8.5 million for the combined company ahead of plan for the quarter. On the call today, I'm going to share more detail on a recent acquisition of Access Physicians, high-level results, and additional industry trends that we observed in Q1. I'll also share more information on investments we're making to accelerate growth and set us up for long-term success, exciting additions to our board, and then I'll close my comments providing an update on recognition we received around quality and innovation. It's only been a few weeks since our acquisition of Access Physicians, so I want to start by spending some time today recapping exactly why this business combination was so important to our ability to meet the needs of the acute care marketplace and what it means for progress through 2021 and beyond. As we've communicated previously, a key pillar of growth for SOC telemedicine is a creative M&A activity. I've heard through many of my conversations with hospital executives across the country the strong desire to work with a single, established acute care telemedicine partner. As such, when considering potential M&A targets, we strategically sought out a company that would broaden our offerings from a number of clinical specialty standpoint that would complement our current capabilities and further enable us to leverage our Telmed IQ platform. Access Physicians brought seven new incremental service lines and 10 years of acute care telemedicine experience. And as we shared this genetic thread for a commitment to addressing inequalities in access to quality care, it was simply a great fit. The combination with Access Physicians provides us three things, all of which I will expand on during this call. First is scale, as they bring an established physician network of over 600 and programs in over 175 hospitals. Second, meaningful growth opportunity, as there is almost no site overlap, both in terms of existing customers and prospects. Finally, it brings diversification. As access physicians started in smaller hospitals, focused on the inpatient space, whereas our start was focused on emergency-based acute care in larger hospitals. That diversification extends to service lines that complement SOC's legacy offerings providing access to several new specialties, including cardiology, infectious disease, maternal fetal medicine, nephrology, and others. This combination has expanded our estimated total addressable market from $2.8 billion to nearly $7 billion. As previously shared, when you look at the number of combined facilities we support, this acquisition has made us over three times larger than the next closest dedicated acute care telemedicine provider, bringing scale, expertise, and highly secure technology as a single solutions provider to the market. This scale ultimately enables us to partner in delivering network integrity, which is a health system or hospital's ability to keep patients within their defined network of providers. Now offering clinicians across 11 service lines our ability to serve as an extension of the hospital provider network through our clinical services or as an enabler to their provider network through Telemed IQ platform ensures patients can stay within the network to receive care. An additional benefit of that scale comes through working with our large customer base under Telemed IQ platform, which enables SOC to deliver significant value back to our customers through benchmarking and advanced analytics to optimize clinical and operational workflows. In a time when hospitals are managing multiple success metrics, They're looking for embedded partners who provide valuable reporting, analytics, and insights, which we do. Now, to provide some additional color on why this is such a good fit for our organization, we should start with the $2.7 billion cross-selling opportunity, our newly expanded service lines to our current combined customer base. Access Physicians' focus has been on establishing new hospital relationships to drive growth. With limited resources for cross-selling and account management, for existing customers, and that's really consistent with a lot of high-growth companies. This is an area where SOC has proactively invested in, and we will continue to do so. In one world, we've seen real momentum expanding from 1.7 service lines in 2019 to 1.9 service lines per site in 2020. That experience and investment will play a significant role in our success. Finally, we're confident in our ability to consolidate on our proven, secure, and flexible Telmed IQ platform that will help better fractionize clinician time to drive longer-term margin expansion. Together, we're in nearly 1,000 sites of care across the nation, yet only overlap in six existing facilities. That ensures that our ability to deliver additional value to better address inequities in access of care is only strengthened together. Our combination with access physicians not only increased our national footprint, expanded our clinical service lines, and significantly grew our provider depth and breadth, but it also accelerated our expansion in the hospitals beyond the emergency department. As an organization that started in the inpatient space, Access Physicians Business saw less impact from COVID-19 as compared to SOC experience in terms of utilization. As SOC historically was an organization with strength in service lines tied more closely to patients coming through the emergency department, This diversification and expansion across the hospital's continuum of needs will be a key factor in our ability to drive growth irrespective of the macro environments and any related volatility of utilization across departments and specialties. In summary, given the feedback we've received from the market and opportunities created by access positions acquisition, we believe our combined organization is well positioned to accelerate growth in the coming years. I'd like to pivot and discuss some industry trends we observed in the first quarter. As we had anticipated, we've seen increased utilization of our psychiatric service line. It's really fitting that here in May, Mental Health Awareness Month, we're talking about what is becoming a concerning but expected rise in behavioral health related volume tied to the pandemic. Volume dropped dramatically in this particular area in hospitals during the height of the pandemic. So we knew it was only a matter of time until those patients would be coming back into the hospitals. As supported by research conducted by the CDC and other agencies, the impact of COVID-19 pandemic on behavioral health was significant. And we saw that in patient volume in the emergency department in late Q1. And that has continued into Q2. Utilization of our neurology offering is also ticking up. Those volume increases generally in line with our expectations. As vaccinations increase, continued patient volume increases will act as a tailwind for our business. While we are seeing these upticks as a sign of normalization of hospital volumes, we are still in the early stages of COVID recovery. And like many others in the space, we're taking a conservative approach to how we see this playing out over the remainder of 2021. However, longer term, the underlying model is built on the idea that there will continue to be a mismatch between supply and demand. As volumes are unpredictable, even more unpredictable now, hospitals look to partners like us to be able to scale and meet those unpredictable acute care volume shifts via telemedicine. This need will only be exacerbated by future volume changes, really in either direction. As previously mentioned, patients are coming back to the hospital for care that can only be delivered in the hospital. The acute care telemedicine space is primarily focused on delivering care to patients who can't receive it at home, or in an inpatient setting, at least not for the initial consult. While the lockdowns tied to the pandemic kept people in their homes, ultimately, as we're seeing in psychiatry, the acute care nature of their issue will continue to drive and return patients back into the hospitals, which is where we provide our services. And for that reason, we're optimistic about the long-term growth of the space and our position within it. All of this speaks to our mission and the value proposition we deliver to our customers and the market at large. In an environment with a significant shortage of specialists and the complexity tied to staffing for acute care volume volatility and surges, hospitals are often challenged to staff to actual volumes. Due to that volatility, they're required to either staff with onsite physicians to meet peak volumes, which is very expensive, and only exacerbated by the maldistribution of specialists, or staff to average volume, which can lead to both quality and operational challenges in the delivery of care during surges. Now, as I've mentioned previously, we saw a 30% increase in our pipeline during the first quarter, nearly all of which came prior, actually, to the Access Physicians acquisition. This included a spike in interest across the four service lines we offered prior to our expansion, including our more recently launched pulmonology services line. When we then layer in the new seven service lines we added, our ability to better address the challenges and complexity that come from working with multiple vendors that we have been consistently hearing across the acute care space further differentiates SOC. In a fragmented space with significant resource constraints, healthcare systems and hospitals are looking for a single partner with a secure platform to optimize their service lines in a meaningful way. Post-acquisition, the conversations, the early conversations, are tied to addressing needs based on both specialist shortages and the challenges around clinical load balancing issues with health systems. These range from strategic sole source conversations with large IDNs to the ability to offer support in multiple specialties in smaller regional hospitals. As a desire for network integrity and the expressed need to work with a single partner in the acute care space for telemedicine, and that continues to grow, we're starting to see clear strategies forming from health systems and hospitals. Additionally, we're only a month into the merger with Axis Physicians, but we have quickly collaborated to ensure we are collectively meeting the needs of the market. A great example of this is our ability to respond to multiple RFPs within days post-closure as one organization across 11 service lines, coupled with our differentiated Telemed IQ platform. This demonstrates how the combined organization is uniquely positioned to meet the needs of the market. This was the type of ask that we anticipated and we expect to only accelerate. I want to close by spending some time discussing how we are ensuring we are set up for success going forward and some recent recognition around our commitment to quality and innovation. We recognize that the investments we began making in 2020 to build out our commercial organization have helped position us for accelerated growth. Those investments were timely, as they've enabled us to actively and quickly move around new opportunities coming in from the Access Physicians acquisition. Connected to our growth, we have plans to continue to expand our customer success organization to enable us to meet the needs of our customers and really ensure we're embedded partners with alignment around delivery of value. Investment in customer success, really an investment in our customers, enables us to spend more time on average per account, which as service lines expand, will be critical to providing the highest quality of support, build deeper relationships, and grow together. As previously discussed, with an increased focus on expanding system level partnerships, we believe we are well positioned to work as a strategic advisor to those systems based on our acute care telemedicine expertise. Now, as you may have seen earlier this week, We're excited to announce the addition of two new board members, which brings our board to nine. Josie Chelsea, former President and Chief Executive Officer, Hospital and Clinics at Cancer Treatment Centers of America Global, and Dr. Chris Gallagher, President of SOC's recently acquired Access Physicians, are now on the team. It was important that we found directors who would bring diversity of thought, background, and experience to our board. And we've done that with Josie and Chris. Both have dedicated their careers to improving healthcare and addressing health inequities. Jossie's a proven leader in the healthcare space with experience leading large healthcare companies, executive roles in managed care space, and multiple hospital administrative roles. Chris is a thought leader in the space of acute care at Telemedicine and brings an additional clinical voice to the board as a physician board certified in internal medicine and cardiology, as well as a strong entrepreneurial perspective. In addition, we're delighted that Chris has joined the management team to play a critical role in day-to-day operations that drive our success. These are two well-qualified leaders, fully prepared to help SOC guide our course forward. Finally, I'd like to share an important update that speaks to our continued commitment to quality, security, and innovation. In March, SOC achieved reaccreditation by the Joint Commission through their Gold Seal of Approval. The Gold Seal is a symbol of quality that reflects a healthcare organization's commitment to providing safe and quality patient care. As the first telemedicine company to achieve the Joint Commission Gold Seal of approval way back in 2006, we are proud to continuously maintain that accreditation today. This is further proof of our commitment to quality, and it really maintains our position as the only dedicated acute care telemedicine company maintaining Joint Commission accreditation URAC accreditation, which recognizes a commitment to quality and clinical excellence in telehealth space, and HITRUST CSF certification, a testament to our commitment to the highest security standards with our TeleMed IQ platform. To add to this news, we're really excited to share that our highly secure TeleMed IQ platform was awarded the 2021 MedTech Breakthrough Award for Best Overall Telemedicine Platform. based on the robust, flexible, and secure nature of this purpose-built offering. This comes a year after winning the 2020 MedTech Breakthrough Awards for Telehealth Innovation. When we developed telemedIQ as our proprietary acute care telemedicine platform, it was built to enable flexibility, robust clinical workflows, and optimization of scarce resources in a highly secure environment. To provide context to why this focus benefits our customers, You need to really consider that we operate in a space with many new entrants, with clinicians using their own personal devices on platforms not built for acute care telemedicine delivery. This creates massive risk for health systems and hospitals operating in an environment where implications of ransomware and other cyber attacks can be crippling the organizations. To address this potential risk, in addition to utilizing Telmed IQ, SOC provides all of our clinicians with company devices that meet the highest security standards to ensure our customers' patient data is secure. We will continue to lead and invest in these areas going forward to provide a secure, differentiated solution to our customers and the market. To close my comments today, I simply want to thank all of the members of our team, of our combined SOC Telmed family. We've taken a number of vital steps over the last few months to set ourselves up for success in 2021. We're encouraged by the market reception and are excited to share our progress with you on future calls. With that, I'll turn it over now to Chris to review the financials in greater detail. Chris?
spk04: Thank you, John, and thanks to those of you who have joined us today to review our financial results. Jumping right in, for the first quarter, the combined business generated $8.5 million of new annual recurring revenue buildings, providing a strong start to the year. Given the complexity of our space and the nature of the sales cycle, we continue to expect bookings results to vary between quarters. We are also taking this opportunity to adjust our definition of bookings to reflect the expected annual recurring revenue from new contracts signed during a period, which creates a single definition for bookings between legacy SOC and legacy access positions. Taking a closer look at our bookings during the quarter, cross-selling remained a key focus in our SOC customer base, and greenfield opportunities represented the bulk of Access Physicians' contributions. Additionally, our sales pipeline grew throughout the first quarter, tied to high interest from hospitals looking to adopt acute care telemedicine and current customers looking to add new service lines, even prior to the acquisition announcement. Post-acquisition, we believe Access Physicians' additional specialties and the previously discussed minimal customer overlap provide significant opportunity to continue cross-sell within the combined customer base and to address the broader market's needs for our expanded breadth of services. Reported revenue was $14.8 million in the first quarter, consistent with Q1 2020. As a reminder, given the timing of the COVID-19 pandemic hitting late in Q1 last year, there was limited impact around Q1 2020 hospital volume utilization. This was different in Q1 2021, where we didn't start to see patient volumes recover until late in the quarter. Therefore, we're pleased with the current quarter's results given the environment. The Access Physicians transaction closed on March 26th, hence their results were consolidated for just five days in the quarter and contributed approximately $364,000 to this quarter's revenue. On a pro forma combined basis, we generated $22.8 million in revenue for the full quarter. Revenue for our legacy SOC business was driven by modest recovery in core consult volumes in the second half of the quarter and continued utilization growth of our Telemed IQ platform. For the quarter, 94,000 consults were conducted on our platform, a 40% year-over-year increase. As our platform-only customers continue to increase their utilization, 31,000 of the total consults were what we define as core consults, those that utilize our SOC telemed physicians. For those core consults, we saw volatile utilization trends during the first half of the quarter, which stabilized and then increased over the second half of the quarter, with particular strength in psychiatry, as John previously mentioned. Access Physicians had 28,000 core consults for the full quarter, which represented strong growth year over year for that business. On a pro forma combined basis for the full quarter, the average revenue per core consult was $356, reflecting the lower per consult average from Access Physicians inpatient consults, which generally take less time resulting in a lower revenue per consult. Now turning to our non-GAAP financials in the first quarter, adjusted gross margin was 42 percent compared to 34 percent in the first quarter of 2020. On a pro forma combined basis, our adjusted gross margin was approximately 40 percent in Q1. The improvement in adjusted gross margin is the result of closer alignment of scheduled physician hours with the volatile consult demand experienced during the pandemic. In March of 2020, we were unable to reduce physicians' work schedules as quickly as demand began to fall off in the beginning of the pandemic, which resulted in the lower margin position. Operating expenses excluding depreciation and amortization, integration costs, and stock-based compensation was $10.9 million, an increase of 42% compared to a year ago, reflecting our increasing investments in our go-to-market functions and the costs associated with being a public company. Reflecting those investments, Our first quarter adjusted EBITDA was a loss of $4.6 million compared to a loss of $2.7 million in the prior year quarter. On a pro forma basis, adjusted EBITDA in the first quarter would have been a loss of approximately $5.2 million. We ended the first quarter with $32.5 million in cash. Additionally, as previously discussed, we established a $125 million five-year credit facility, of which we have used $85 million, as well as a $13.5 million subordinated note, both related to the Access Physicians transaction. Finally, while we've seen an uptick in utilization, we are still in the early stages of the COVID-19 recovery, so we're taking a conservative approach and maintaining our previously stated guidance. This is consistent with our underlying model, which assumes overall utilization will return to pre-COVID-19 levels in mid Q3 2021. For the full year 2021, we continue to expect pro forma combined revenue in the range of $107 to $113 million, with access positions contributing approximately 30 to 35 percent. And on a GAAP or reported revenue basis, we expect revenue to be in the range of $97 to $103 million. We expect adjusted gross margins to be in the range of 42 to 45% and adjusted EBITDA loss to be in the range of 15 to $19 million. While there continues to be some pressure on utilization of our core services related to COVID-19, we are seeing a number of promising trends. First, the vaccination distribution has transitioned outside of the hospital, meaning hospital executives can turn their attention back to more normal operational concerns, including projects tied to acute care telemedicine. Second, it's important to emphasize that the pandemic has become a tailwind for our segment of the industry, as it has driven rapid acceptance of telemedicine as a solution to provide efficient, time-sensitive, and high-quality care. Finally, we are seeing the desire for strategic consolidation of telemedicine vendors in the acute care space within hospitals and health systems, which positions SOC very well given our experience, our scale, and established leadership position. Finally, I know many of you are aware of the recent focus by the FCC around SPAC warrant accounting. We are happy to share that this issue has not impacted us because our original accounting was consistent with the SEC's guidance. To wrap up, I want to thank the combined SOC telemed and access physicians teams for their hard work as we integrate into a single combined business. We have a lot of runway ahead of us, and I look forward to keeping you updated as we progress going forward. With that, we'd be happy to take questions.
spk01: Operator? We will now begin the question and answer session.
spk08: To ask a question, press star then one on a touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, press star then two. At this time, we will pause momentarily to assemble our roster.
spk01: And the first question comes from Ryan Daniels with William Blair. Please go ahead.
spk00: Hey, Ryan. John Cahill from Chris here.
spk10: Can you guys hear me now?
spk05: We can.
spk10: Now we can, yeah. Sorry about that. Thanks for taking the question, and congrats on a strong start to the year. Quick housekeeping issue. Can you go into a little bit more detail on the change in how you're calculating bookings? In particular, I'm curious if that includes just the fixed recurring fees or if that's now also inclusive of an assumption of the utilization-based fees on top of that?
spk04: Yeah, Ryan, so previously we, on a standalone basis, our bookings included some of the upfront fees as well that technically get amortized over the estimated customer life. So that number we're just taking the estimated 12-month period for now. And we are making a better assumption around what we think the variable fees might be. We work really closely with the customers when we set their and we get some intel in looking at their history where we think they might have overages. So to the extent that those overages are anticipated to come into play, those would be in the model now.
spk10: Okay, thank you for that. And then, John, more strategically, I know it's still very early and you acknowledge that, but given the expanded service offering, I'm curious, and you did allude to this, what the conversations are more with the larger healthcare systems. Are they seeing your organization as a potential entity that could be someone to work with enterprise-wide, or is it just too early to tell if that could actually come to fruition?
spk06: Yeah, Ryan, it's a great question. And we are seeing much more large and strategic discussions taking place. And actually, think about it in two different elements. Even just commercially with our newer commercial team that we've ramped up at the back part of last year, the discussion of saying, hey, where can you need help for neurology or psychiatry or pulmonology in the ICU? You'd be much more specific, obviously, with just those specialties. In this broader discussion, we start with the strategic question of, walk me through, as you're thinking through a system, what are your three or four largest specialty needs, period? Let's just talk about more in general. What are the areas that you need help with? Maybe not at your largest flagship. Maybe it's your more rural areas. Maybe it's about the fact that, again, it's not just about trying to find the shortage of specialists. but in some areas it's just too consolidated in a particular geography for that same hospital customer. So the combination and the simplification, let's pick one of those specialties, put all of your specialists that you currently have in your network on TalmudIQ, and then we can, where you have peak demands, where you have gaps in clinical coverage, where you're not able to recruit, or where you don't have the specialists very much at all, and we can literally do nearly all of it for you, to create new service lines, create new marketing opportunity within their areas, and most importantly, keep patients, as we talked about that network integrity element, keep patients within their own space. So for us, any solutions resulting in the deployment of Telmed IQ once in with those customers becomes easier to add other specialties. So you start with one, you start with the peak, most critical element that they're trying to consider, And then you talk about a layering effect. And actually, what we're seeing is that layering effect is coming in, what we mentioned, even between 2019 and 2020, growing from 1.7 to 1.9. The conversations now are not just about what's the one specialty. It's, hey, here's the plan. Let's start with one, and then we will quickly move to the second and the third specialty. And it is much more about just the single location. So our conversations have pivoted rapidly from even what I always call singles and doubles, just a single site or one or two sites within a region, to a health system saying, this is the next element we have to tackle. It's complex. I know to do this right, I would need this customer consult center. I need workflow assurance. I need all my clinicians credentialed and privileged I have to have something that activates a physician if one physician forgets to jump on, that we don't have a specialty critical acute care scenario waiting for that specialist. So what is my workflow assurance to ensure there's always someone watching over that as that second safety mechanism? And so the conversations have pivoted pretty dramatically in the first quarter.
spk10: That's great. That's very helpful. And then a final question for me. And you may have highlighted this before discussing the transaction, but can you talk a little bit about the sales investments and customer relationship or service investments you intend to make now given the big opportunity ahead of you? I think a lot of that was, you know, frankly probably made in advance knowing that you were going to do M&A. So maybe it's already established and you don't need to ramp the sales as much as might be the case to kind of expand M&A. into the larger client base. But just any color there would be great as well. Thanks, guys.
spk06: Brian, great question. Your initial statement is correct. We did this very much in a proactive fashion and format. So we knew as we, let me even start back. The moment we went public, we knew one of the strategies of becoming a public company was to become a lightning rod of activity And a number of different groups reached out to us, or we were able to reach out to to have conversations from a merger and acquisition standpoint. Access Physicians to us became a clear symbol of how we wanted to look at merger and acquisition. Again, they had 10 years in telemedicine space. We shared this same vision, mission, kind of culture element within the space. And there was that strategic element about how do we move forward. But we also, as meeting with a lot of other companies, and even meeting with Access Physicians, that element of large commercial team wasn't there. And so we knew any investment we made in the commercial team would help them get up and running to be ready for an expanded portfolio. So there was strategy to the timing on how quickly we moved the commercial organization hiring from spreading it out in 2021 to really doing it much more upfront in preparation. Now I will say the other side, we will continue to have to hire in the account management space. As we grow, we want to have really high touch with our customers, and that has to be done locally as well as at an IDN level nationally. And our customers are expecting that within the systems because there are so many differences. But also, the fact is you can imagine we're not just talking about one or two specialties. Now we're talking nearly a dozen specialties. We need individuals to have the time to really stand back, talk to the different groups and different heads of departments to the CMOs on this broader implementation that can take place, given our broader breadth. So beyond the investments in the sales resources and then the expanded clinical service lines, coupled with Telmed IQ, it really enabled us to say yes with just about any opportunity that hits our table. And that's what we're ready for now. But we're going to continue to expand our account management team, knowing the growth that we had in bookings in the first quarter. and knowing what we are working through on our pipeline currently.
spk10: All right, thanks again, and congrats on the industry recognition of late. Thank you.
spk01: Thank you, Ryan. Appreciate that. The next question comes from Sean Dodge with RBC Capital Markets.
spk08: Please go ahead.
spk02: Hey, good afternoon. This is Thomas Keller on for Sean. Thanks for taking the questions. I just want to go back to the Volume recovery real quick. You mentioned returning to pre-COVID levels in mid-Q3. Can you give us a sense of where you stand right now relative to that?
spk04: Yeah, we're tracking in line with our plan. So our plans had, as we came through the third wave, you know, that started to stabilize and pick up, In the middle of the first quarter towards the end of the first quarter, we have a reasonably straight line expected to go up back to sort of pre-COVID levels, mid Q3 as we stated. We were really happily surprised to see how our March volumes, frankly, We're up 17% over January, so the volumes started to come back and look really promising, and we're in line with our overall plan that we laid out when we did our model originally, so things are still on track.
spk02: Okay, that's helpful. Thanks. And then I guess you mentioned more before about, you know, I guess on the access position side, shifting some of those docs from 1099 to W2 to employees. Have you guys started any of that process yet or do you have any early goals around that you can share with us?
spk06: No, Tom, it's a great question. We really look at that as a process over time. One of the elements about scale and one of the elements about talking and meeting with our customers is ensuring that we meet the customer demand first and their needs. And we mentioned that was the first part of pulling the organization together both commercially and our clinical teams are already meeting and getting to know each other thinking through how we help each other with future coverage given, again, the pipeline that we've been talking about. The element for us, when we move our clinical teams from 1099 to W2, it's where you really have consistent scale and demand, but you need breadth in order to be able to do that. So as we grow each of these additional service lines, we will absolutely move individuals from 1099 to W2. We see that as a slow march, Thomas, but And it's a slow march for purposeful design. The last thing we want to do, remember, these are very critical patients on the other side. This is not a cough and cold. This is not a pink eye. This is not a dermatology appointment. And we have to ensure that we're there on the minutes notice if needed or within the time period that we commit to our customers for these specialties. So we're going to do a very slow design to process on that. It's already considered in how we think about margin moving forward in the future. But we're going to be cautious on that overall. We're also going to be teaching those clinicians, right, on how to utilize the Telematic Q platform and pull them in to the broader SOC team. So far, the discussions have been great. The leadership teams are getting along wonderfully. And it's a testament to what Chris, Dr. Gallagher, has done at Access Physicians with his leadership team, and Jason Hallig, our CMO with our clinician leadership team, things have been going off better than expected.
spk01: Okay, that's very helpful, Kelly. Thanks, guys. Appreciate it, Thomas. The next question comes from Jalendra Singh with Credit Suisse.
spk08: Please go ahead.
spk09: Hey, this is Adam for Jalendra today. Thanks for taking the question. I wanted to follow up on a question that was already asked, So I guess in the guidance, you indicated an expectation of a return to pre-COVID levels in the middle of 3Q. Just curious whether that assumption takes into account any pent-up demand or how we should think about the run rate utilization after any pent-up demand clears within your customer base.
spk04: Yeah, we don't really view it as pent up demand per se, although we've had a little bit stronger recovery in psych that that curve was a little bit steeper, but we don't view it at all as pent up demand. We see it as confidence building as the vaccination rolls out across the nation. that people are less afraid to go back to the ED and people's needs are not fully being met through having interactions at home or otherwise. So we're seeing people coming back into the hospital um on a more normal course regular basis um so there you know there's always potential for upside i would say maybe in psych but we do see it as a ratable stable um uptick over the balance of the year got it that's helpful and then just to follow up um does the acquisition of of access physicians
spk09: Decelerate the role of the standalone telemedicine platform in any way or how should we be thinking about that aspect of the business moving forward with, you know, obviously a lot of Focus on the integration of access positions and then just the backdrop of the competitive landscape with, you know, other, you know, just the standalone platforms out there, providing telehealth or, you know, video conferencing services. Thanks.
spk04: Yeah, the acquisition in no way distorts our rollout of the platform. I mean, frankly, every customer of Legacy SOC is operating on the platform today. And then over the long term, you know, from a very customer-centric perspective, we will ultimately migrate the access physician customers onto the platform as well. And we are continuing to see strong interest from hospitals and physicians groups to buy platform-only services from us. So I don't see any, you know, any deferral of our, you know, rollout of TMIQ across, you know, any time horizon.
spk06: Yeah, Adam, I agree with Chris. The answer is no there, right? Once, again, once Telmed IQ is in, we can turn on a number of new specialties regardless of who really owns a provider network. So whether it's the hospital's own clinicians and providers, whether it's another physician group that they've outsourced that work to hospitalists or ER, et cetera. And so that element of looking at it as a tool that really allows them a Swiss army knife of options across numerous specialties has actually brought in our individuals that sell telemedicine IQ and our expanded sales team into many more co-deals because the conversation becomes just much more natural. We're not trying to displace specialists within a hospital currently. We're trying to help augment where there's a shortage or where you would have to overhire to ensure that you're hitting the peak capacity.
spk01: Optimize the workforce. Got it. Very helpful. Thank you.
spk08: The next question comes from Bill Sutherland with The Benchmark Company. Please go ahead.
spk11: Thank you. Chris, John, good evening. Hi, Bill. Good quarter. Telemed IQ, do you have a revenue number for them in the quarter and for that product, I mean, and how did that factor into bookings?
spk04: Well, Bill, you know, the bookings, each contract for Telemed IQ is a smaller dollar amount on average than a full services contract. So, and we haven't broken out those bookings between the different service lines. And I can tell you that Telemed IQ is continuing to grow. We had, let's see, it grew, the utilization on the platform grew over 100% year over year and about in the low teams on a sequential basis. But I don't think we're giving out the revenue number per se. It's not significant enough for our, to meet our, we need to break it out for an SLC perspective yet.
spk11: Well, it's an even smaller percentage now that you're combined with access physicians, of course.
spk06: The other part of that, too, to keep in mind is, you know, once we activate with a provider organization, right, outside of SLC zone clinicians, right, the expansion takes place there because they adopted this as their solution. And again, we've really seen now, we've really seen where everyone who has tried a simple Zoom-based platform or tried to do it on a platform that didn't have the technical capability and workflow assurance has learned their hard lessons where they, it worked well enough as a band-aid approach in the initial onslaught because everyone was in sort of the push on the COVID element and just trying to be urgent. But now the thoughtfulness of the platform, and we've mentioned before, we're already working with several large physician groups and we're now working with a few others as well. The ability for us, once they start, it's one and then it's a dozen, then it's two dozen, and then we have the team focus on working with those organizations who have their own sales teams to activate against their own clinical groups. So this element is, once we increase scale, it increases... workflow, you have increased scale, you have increased workflow complexity. So large groups, lots of volume complexity goes up, you need the ability for something to manage that complexity. And we're fitting into a nice mix there.
spk11: Right? Great. Chris, I just hope if you could, on bookings, the way you define it now, which was eight and a half million in the quarter, what would that have been in one q 20? using that approach?
spk04: You know, Bill, last year, I did not go back and redo what that would have been. But for the legacy business, the math is not wildly different because when we did bookings previously, it included all of the upfront fees that in reality get amortized over the life of the contract. So now that has a lower effect in our math because we're just taking 12 months worth of that. And then to the extent that we believe that there would be overages, we're adding that back in. So it has somewhat of a neutralizing effect.
spk11: Yeah, I can see that. So it would compare, I mean, I think it's 3.9 for the fourth quarter. Correct.
spk04: Okay.
spk11: It compares pretty directly to that, or is there some access position?
spk04: Yeah, our $8.5 million is for the combined business because all of the benefit of that booking will come in and turn into revenue as those new customers get onboarded in the future.
spk11: Is it kind of proportional with the size of the two businesses? Just curious.
spk04: Actually, there was a little bit more weighting towards access physicians, ironically, but ours was on trend with our historical trends.
spk11: Okay. And then just one last one for me, just so I understand, kind of if I look at the comparison, the way you talked about your core consults, I think you said 31,000 or was it?
spk04: Is that correct? Yes. Yeah, we had 31,000 in the quarter, which total quarter to quarter sequentially were about the same. It was about a 2% lift sequentially. However, in the first quarter, on our average core councils per day, when you compare March to January, we were up 17% in March over January. The quarter itself is a bit of an anomaly, particularly when you look at full quarter to full quarter. But we did see the recovery really start to set in, as we had modeled, thankfully. Yeah. Yeah. But we do see it coming back. The acute care setting, where we're uniquely positioned, we believe is coming back online.
spk11: And the, I'm sorry, one more. Core revenue per, I mean, the revenue per core consult was what again?
spk04: So we gave that number on a pro forma basis, which includes the access position consults, and it's $356 for the quarter. So trying to sort of help reset that number.
spk11: So just so I can think about it, versus 4Q, do you have your standalone?
spk04: Yeah, last year, at the end of the year, we provided the full year number, which is $430. Right, right. Yeah, and the Access Physicians has, you know, I shouldn't say they. They're part of us now. But the inpatient councils generally take less time. No, I understand. So on average, yeah, that weights it down a bit.
spk11: But you guys were running kind of like, your 2020 number. Is that what you're saying? Yes. Okay. Thanks, Chris.
spk01: Thanks, John. Yep. Welcome. As a reminder, if you have a question, press star then one to be joined into the queue.
spk08: The next question comes from David Larson with BTIG. Please go ahead.
spk07: Hi. Can you please talk about your cross-selling expectations, like into your core base, What areas within access physicians would you expect to see the highest demand coming from? What different specialties, please? And over what time period would you expect to see meaningful cross-sell? Thanks very much.
spk06: So the cross-sell activity actually happened quite quickly. It was coming in three elements. One was simply inbound. We had already built up a pretty significant marketing presence online. And interestingly, on the day of the announcement, made sure we updated all the company webpages, we made sure we went back into, we mentioned before that you lay out crumbs and make sure that you follow those out for people that are looking for telemedicine in the past. So that was the first avenue, incoming. The second avenue was obviously talking with the sales teams and the ability for them, even with customers they were talking to about a neurology need that hadn't yet closed, the ability to go back to those same customers because you have that captured presence to have that discussion. The third element was the larger discussions, which either our client services team activated against obviously quickly, because they meet with our current customers quite regularly as part of their job responsibilities and bringing forward the metrics to our customers to be able to utilize for efficiency and clinical quality measures. So we were able to activate all three of those groups into the teams that look for initial opportunities with our customers. So that part we started nearly immediately out into the marketplace. The interesting thing is you would expect certain specialties, and I'll give two examples. You would expect certain specialties to, quote unquote, fall off after COVID, one of those being like infectious disease. Hey, you would think infectious disease, because it's COVID, would start to taper down as COVID exits, but that's actually not the case. What ended up happening was hospitals who had not thought through the need of infectious disease who now have that specialty available to them see the need the value and the opportunity for their own patients and their own communities by having access to that infectious disease doctor. So that's an example of a specialty that has continued to grow because it's a specialty with dramatic shortage and a specialized need. MFN is the exact same thing. There are less than 1,000 MFN specialists in the country and well more than 1,000 hospitals that need access to MFN clinicians, internal fetal medicine specialists, and we're fortunate to have some great ones on Team SOC. And that's the element that we see just the uptick coming because the interest is there. You can imagine during COVID and pre-COVID, actually, telestroke was known. That was where acute care telemedicine was essentially founded and became a basis of. I don't think everyone clearly understood until the technology was understood and everyone started having the more direct-to-consumer experiences at home and trust in the interaction, knowing that Telmed IQ already had been built in for 20 specialties, the ability to say, can I do this for nephrology? Man, I could do this for cardiology. I didn't think I could even think about for infectious disease. And so that conversation, we're bringing the need When people are having the enlightenment of this can work within their institutions, it doesn't matter about zip code address or location. And as we mentioned on a prior call, half of our business is rural by site and location, but half is urban. So it is across all state, regardless of location and regardless of specialty. So our element now, and I don't think the deal speed will pick up any more than it always has because hospitals have to work through the same processes that they always have. It's the element of finding that opportunity, activating our clinical, our new commercial organization, and then individuals like Dr. Gallagher joining our direct leadership team, being able to leverage as a cardiologist that discussion on what he has done himself with telemedicine in that space. just brings a really unique addition to the team that has been great on the early days here.
spk07: Great. That's very helpful. Thank you. And then with regards to the bookings, I think that we know what the 1H20 bookings were. I think they were 5.7 million. I would guess that the 1Q20 bookings were probably around 2.9 million. Is that right? And then What was the growth rate in bookings on a year-over-year basis? I mean, it seems like it was actually very healthy. Just any color there would be great. Thanks.
spk04: Yeah, I think your number is right on the bookings. 2.9, I believe, is the right number for Q1 last year. I actually have that here, and that is correct. And so the growth was tremendous. The 8.5, just if you look at the 8.5, just sequentially, Q4 to Q1, it's nearly 120% growth sequentially. So on a year-over-year basis, it's almost nearly 200% growth. It's 193% year-over-year. So just the interest in the growth You know, as John said, we intentionally went out to do M&A that was going to expand our breadth of services because we were hearing from the market that there's a need for a wider breadth of services and that hospitals are looking for a single partner to help them throughout their system or their hospital because it's difficult for them to manage multiple various systems and processes and contracts and things of that nature. So we're seeing a huge interest in what we now have to offer. And even prior to the transaction being announced, our pipeline was up 30% during the quarter just on a legacy business alone. So it does take time, as John mentioned, for us to go out and sell and negotiate contracts and implement. But as I look down the road, the long-term future is very bright.
spk07: Great. Of the $8.5 million, how much was access physician, how much was legacy SOC telemedicine?
spk04: Was it half and half? Not quite half and half. It was a little bit more skewed towards access because of their broader set of services that they were offering, which is exactly why we were interested in the business.
spk07: Okay, so it looks like the core legacy business bookings were up at least 30%, probably closer to 40% or so on a year-over-year basis. Yeah, core bookings were up. Core bookings were up. I don't have that person in front of me, but yeah, we were definitely up. Great. Thanks very much. Congrats on a good quarter.
spk08: Thank you. Appreciate it, David. As we have no further questions, this concludes our question and answer session. I would now like to turn the conference back over to management for any closing remarks.
spk06: Look, we're right at the top of the hour, so I'll make this short. Thank you for everyone for listening in. Just a giant thank you to everyone within our access physicians and SOC telemed larger family now. It's been a tremendous coming together. We look forward to just an exciting future. I think we all see what we can do together in acute care telemedicine, and we're excited to bring you those results in the future.
spk05: So with that, have a great night, everyone.
spk01: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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