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spk01: Good evening and welcome to SOC Telemed's second quarter 2021 earnings conference call and webcast. All participants will be in a listen-only mode. Please note also that today's event is being recorded. I would now like to turn the conference over to Steve Rubis, Vice President of Investor Relations. Please go ahead.
spk03: Good evening and thank you for joining our conference call. Today we will provide an update on SSE Telemed's business as well as a review of financial results for the second quarter of 2021. The news release detailing these results is available on the company's website. A replay of this call will also be archived on the company website. During the conference call, 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 gap measure 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 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. This evening, we are joined by John Kalix, Chief Executive Officer, and Chris Nibb, Chief Financial Officer, who will be available to answer questions after the prepared remarks. I will now turn the call over to John. Thank you, Steve. Good evening, and thank you all for joining our call.
spk06: Today, I will walk through our second quarter performance, provide an overview of the secular growth trends impacting our business, our sales performance during the quarter, an update on access positions, and then close with how Telmed IQ platform is differentiated from our competitors. On a year-over-year basis in the second quarter, our total consult volume increased 98%, or 49% on a pro forma basis. Including access positions, revenue increased 84%, and bookings increased 136%. Our bookings performance for the first half of 2021 was greater than bookings performance for the entirety of 2020. Notwithstanding our strong performance in the second quarter and year-to-date, we have revised our 2021 financial guidance lower to reflect near-term disruption stemming from the COVID-19 Delta variant, which has led to temporary delayed decision-making and slower implementations at hospitals. The rise of COVID-19 Delta variant is placing significant pressure on hospital emergency departments, especially in states such as Florida and Texas. The increased pressure stemming from COVID-19 creates a significant distraction for both our current and prospective hospitals and health system customers, resulting in longer sales cycles and delayed implementation timelines associated with new business and cross-selling opportunities. Finally, we've modeled a weaker-than-normal upcoming flu season, representing additional headwinds. Looking beyond COVID-19, we remain optimistic in the growth trajectory of our business, as bookings remain on track to more than double full year relative to 2020. The current bookings trajectory illustrates our market leadership position, as well as the significance of longer-term growth opportunity for the business. Acute care telemedicine growth and adoption remain in the very early innings. Our broad and flexible solutions continue to gain traction as evidenced by growth with our current customers, which I will discuss shortly. We see firsthand how telemedicine value proposition increasingly resonates with hospital decision makers seeking to standardize their telemedicine needs on a single platform. There are several secular growth tailwinds that continue to drive momentum for our business. The first revolves around the shortage of specialty physicians. In June, the Association of American Medical College published its seventh annual study, The report suggests that the U.S. will face a projected shortage of up to 77,000 specialty physicians by 2034. Access to specialty care will remain a prominent issue, as 40% of physicians are currently 65 or older. Today, these shortages are more severe throughout the middle of the country, but rapidly approaching the coastal regions as well. Telemedicine tools such as TelemedicQ are uniquely positioned to help both rural and urban hospitals and health systems bridge the specialty physician access gap regardless of location. These trends highlight the need for tools like TelmedIQ that can fill this resource gap by fractionalizing and democratizing specialist clinicians for hospitals and health systems. The second is network integrity. Network integrity for a hospital health system is the ability to keep patients within their defined network of providers. Our network integrity value proposition revolves around a comprehensive platform consisting of 11 clinical service lines, as well as the expanded provider network availability through Telemed IQ managed services. The Telemed IQ platform offers hospitals and health systems a tool to increase clinical capacity and maintain network integrity that not only keeps patients in the network and optimizes revenue, but also improves clinical quality. For our clients, network integrity is about keeping patients within the local community, and at the same time, improving ROI through reduction of patient transfers to other hospitals or health systems. Third, our platform provides hospitals a tool to optimize their scarce specialist resources through fractionalization and load balancing of these resources to deliver the most cost-efficient clinical coverage solution. Medical claim share provides a unique lens to assess where we currently stand on the telemedicine adoption curve. Just like the early days of e-commerce adoption, telemedicine claim share represents a relatively small portion of total medical claims. We expected to see significant medical claim share expansion over the next several years. Current estimates from Fair Health suggest telemedicine claims represent just 5% of all medical claims. While 5% may seem relatively low, we believe such share illustrates mainstream adoption of telemedicine. and really vividly illustrates the significant multi-year growth opportunity for acute care-focused telehealth services. In the second quarter, we added several new logos and benefited from several cross-selling opportunities. Our go-to-market strategy focuses on four opportunities, new logos, multi-set expansions, multi-specialty expansions, and enterprise deals. An important partnership expansion involved SEP Health for our Telmed IQ program, managed services platform. In May, we announced in conjunction with SEP Health that TeleMed IQ will serve as the engine of SEP's telemedicine expansion. The multi-year partnership includes annual escalating commitments over a five-year period. The agreement provides SEP the ability to deliver a hybrid clinical approach designed to optimize SEP's clinical workforce, enabling their hospital partners to efficiently provide excellent patient care. As a reminder, SEP operates a portfolio of 7,500 providers across 30 states and 400 healthcare facilities, reaching over 8 million patients. Importantly, our second quarter bookings, being annual recurring revenue, represents only a small portion of the overall contract value. We benefited from several multi-state expansions in the quarter as well, including UnityPoint Health, among others. These multi-site expansion opportunities are primarily driven by proven success through our telepsychiatry offer, leading to a better appreciation of our overall value proposition. Currently, we average roughly two service lines per facility within the existing client base. Full adoption of our 11 clinical service lines across our existing 1,000-plus facility client base represents an approximate $3 billion market opportunity. Achieving full clinical service line adoption across the entire 5,700 hospital market increases the market opportunity to nearly $7 billion. UnityPoint expanded their use of telemedicine offering across four hospitals in the Des Moines and Cedar Rapids markets. That's set to go live in the second half of 2021. The multi-site expansion stems from proven success with our telepsychiatry offering at UnityPoint Health Allen Hospital, which resulted in reduced average length of stay by nearly 12 hours It avoided more than $1.7 million in annualized boarding costs, and it generated an annual ROI of 281%. In April, two customers implemented our Tomat IQ platform to maintain network integrity in rural markets. Bon Secours Mercy, Lord's Hospital, implemented our ICU service line. Our platform affords Bon Secours with 24-7 access to intensivists. As the only hospital in the region with 24-7 access to intensivists, Bonsai Cores can maintain network integrity by keeping higher-acuity patients at their facility. As one final example, the Davis Regional Medical Center implemented our tele-neurology and tele-stroke offerings. Implementation of Telmed IQ platform allows Davis Regional Medical Center to maintain network integrity by keeping more patients within the hospital, as it can better manage complex neurological cases. Additionally, TelmedIQ combined with the physician services we deliver to help improve outcomes and drive higher quality of care throughout its community. Now, regarding Access Physicians, we continue to work through the integration process and remain excited about the opportunity. The team is focused on deepening our relationship across both organizations and building the best team. Early focus has been in identifying and adopting best practices associated with sales processes and sales opportunities across the combined platform. Additionally, we've identified a significant number of cross-selling opportunities that are active in our pipeline. The cross-sell opportunity revolves around moving single facility clients to multi-facility clients, expanding service line utilization from roughly two service lines currently to full penetration of 11 service lines, and lastly, driving full penetration across the combined legacy client base. At the same time, we've identified some initial operating synergies For example, we have successfully completed the transition of the maternal-fetal medicine service line onto the TelmedIQ platform and have gone live with our very first site. Our significant cross-selling opportunity across the combined legacy SOC and access physician platform remains intact and will be a key driver to future growth. Our late-stage pipeline is up roughly nearly 30% since the end of the first quarter. There are three drivers of the cross-selling opportunity across the combined companies. With the bulk of back office contracting work complete, customers can more easily adopt additional service lines. Second, customers already understand the value of telemedicine. And then lastly, the sales process becomes more strategic and consultative in nature. The combination of 11 clinical service lines coupled with Telemed IQ platform enables us to meet multiple needs of the health system and hospital leadership level rather than the individual service line leadership. The addition of several new service lines, such as cardiology, infectious disease, internal fetal medicine, among others, helps strengthen our value proposition among hospitals. Providing a vast array of specialties allows our clients to easily expand their service lines on the Telmed IQ platform to meet their acute care telemedicine needs with minimal operational disruption as their clinical resources change over time. One additional driver of our cross-selling opportunity is vendor fatigue across hospitals and health systems. SLC TeleMed can provide a full suite of clinical services and back-office support, including credentialing and privileging. As hospitals and health systems face constraints, our algorithm simplifies and automates complex management associated with licenses and credentials at both the state and the facility level, which has been extremely attractive to current and potential customers. While increased leads provides a strong validation of strategic rationale and growth opportunity associated with the access to the physician's field. Visibility to conversion timing remains limited given the renewed COVID environment. Hospital decision makers face another wave of new demands, and we are already seeing in-person meetings revert back to remote or being delayed, as an example. SOC telemed remains a multilevel growth story. The first lever revolves around cross-selling into our extensive set of current customers through multi-site, multi-service line expansion. The second lever involves attracting new logos and adding new customers over time. The third lever involves driving adoption of our TelmedIQ managed service offering that allow hospitals to build out their service lines, load balance their current clinical workforce, and supplement capacity needs. And then lastly, as the only scaled player in acute care telemedicine, we will continue to be opportunistic about aggregating small competitors over time. Investors often ask us how Telemed IQ platform is differentiated from other offerings. The competitive advantage lies in the flexibility of our platform's underlying technology, as the flexible workflows driving the secure platform were designed for optimization of clinical resources in acute care. Many of our competitors are trying to take system design for ambulatory, or outpatient settings and bring them to the acute care space. Due to the higher acuity workflow complexities and limited panels associated with acute care, other offerings are simply too inflexible to meet the workflow assurances needed for acute care. We provide life-saving medical care. Furthermore, these competing solutions lack the industrial strength and security of a platform like Telmed IQ. The Telmed IQ workflow aggregates and ranks encounters by acuity. in real time. Specialists are ranked by availability amongst the pool of doctors available who are licensed in the state and privileged at that very specific facility. The result is finding the right doctor for the right patient at the right time. Our TelnetIQ platform accounts for a greater level of sophistication relative to our public and private competitors. Acute care solutions require additional layers of credentialing and privileging for doctors relative to the direct-to-consumer space. In acute care, a physician must be licensed in a specific state and then credentialed and privileged to practice medicine at each specific facility. As of the second quarter, we managed 3,400 licenses and 15,000 privileges at standalone SOC. Furthermore, we continue to implement FHIR-based two-way EMAR integration with Epic and Cerner. This year alone, we've gone live in 36 hospitals across 12 health systems. Such integration embeds our Telmed IQ system within the Epic Consumer ecosystem. Through a single sign-on, medical practitioners can submit a telemedicine consult request within seconds, directly from the EMAR. Additionally, clinician notes captured during the consult become available in the EMAR as soon as the consult is complete. As you can imagine, customers are quite interested in this type of EMAR integration that facilitates seamless workflow and frictionless data exchange. Finally, and in summary, Four key elements differentiate SOC TeleMed from other telemedicine providers in the market. First, we serve the acute care market where the clinical needs we address have greater complexity and risk than direct-to-consumer telemedicine. Second, we manage credentialing and privileging for the doctors and hospitals on our platform. Third, the SOC TeleMed IQ platform allows hospitals to fractionalize scarce provider resources and improve network integrity. Lastly, our high-trust CSF certification represents a testament for commitment to the highest security standards with our Telmed IQ platform. We have stated before and continue to believe the acute care telemedicine space is a post-COVID opportunity, as evidenced in the year-over-year bookings acceleration. We look forward to sharing more and new customer and customer success stories in the near future. And with that, I'll turn it over to Chris to walk you through our financials.
spk00: Chris? Thank you, John. I will discuss our second quarter results in more detail. Overall, we are pleased with our quarterly operating results led by solid system-wide consult volumes. For the second quarter, we generated $6.7 million in bookings, up 136% year-over-year. Our bookings performance for the first half of 2021 is already greater than our full-year performance for all of last year. We remain on track. to more than double our prior year bookings in 2021. And our late stage pipeline growth of 30% further illustrates our bookings outlook. Total system-wide consults were approximately 130,200, up 98% year-over-year, driven primarily by the access physician's acquisition. On a pro forma basis, total system-wide consults grew 49% year-over-year, primarily driven by strength in psychiatry and neurology. As a reminder, total system-wide consults include core consults at both Legacy SSC and Access Physicians, as well as consults from the Telemed IQ managed services platform. System-wide core consults totaled approximately 69,500, up 130% year-over-year, or an increase of 34% on a pro forma basis. As a reminder, we define core consults as those consults performed by our panel of physicians. Strong core consult volume growth can be primarily attributed to the acquisition and strength across psychiatry and neurology. Our SOC telemed standalone core consults totaled approximately 37,800, while access physicians contributed 31,700 core consults in the quarter. Strength in core consult volume resulted from meaningful growth in both psychiatry and neurology service lines. Consult volumes associated with these service lines exhibited a faster than expected recovery to pre-COVID levels for psychiatry and nearly back to pre-COVID levels for neurology. Access Physicians Core Console volumes were impacted by weakness in pulmonary and ICU service lines, resulting from very limited flu cases and a significant reduction in COVID cases during the quarter. Revenues were $25 million, up 84% year-over-year, driven by new client implementations, the addition of Access Physicians, and growth in core consult volumes in psychiatry and neurology, as well as in cardiology and maternal-fetal medicine within our emerging service lines. Access Physicians contributed $8.4 million of revenue for the quarter. Our adjusted gross margin was 37% versus 40% in the second quarter of 2020. Gross margin was negatively impacted primarily by an increase in physician incentive payments related to the rapid increase and volatility we experienced in consult volumes, resulting from the recovery in psychiatry and neurology, as well as increased physician fees attributable to the access physician's acquisition. Operating expenses were $19.5 million compared to $9.8 million a year ago, The increase in operating expenses results from investments in our go-to-market functions, stock-based compensation, added costs associated with being a public company, and the acquisition of access positions. Adjusted EBITDA loss in the second quarter was $5.4 million versus a loss of $1.6 million a year ago. Finally, despite solid utilization trends during the second quarter, We are starting to experience headwinds from the COVID-19 Delta variant, which continues to drive limited visibility into core consult demand. It also serves as a distraction to our prospective clients as they work through vaccine mandates and staffing issues affecting their support services. While the number of daily COVID cases reported to The CDC bottomed out in June to approximately 8,000. Since then, there's been a significant acceleration in the number of daily cases to now roughly 110,000 a day. That's nearly 15-fold increase since June. Given these current trends, we're experiencing a leveling off of daily volumes in both the psychiatry and neurology service lines. as individuals yet again become hesitant to visit the emergency department unless absolutely necessary. On the access physician side, consult volumes in pulmonary and ICU service lines experienced lower than expected utilization in the second quarter, resulting from the reduction in COVID cases and the near non-existence of flu cases. Additionally, a change in the go-to-market strategy for our access physicians hardware sales represents a short-term headwind to revenues, but results in a longer-term better outcome. Access physicians previously offered hardware only as a capital purchase, which we are adjusting to better reflect the needs in the market through our operational hardware-as-a-service model, whereby customers pay a monthly fee to utilize our hardware. We will continue to evolve our hardware go-to-market strategy as we work through the access physicians integration and the needs in the marketplace. Lastly, as John mentioned, the SCP Health Deal we announced in May is overall neutral to 2021 revenue, but it will positively impact 2022 and beyond as the pace of physicians onboarding increase at SCP. As we look forward to the balance of the year, we are taking a conservative approach and lowering our full-year 2021 guidance. Currently, we expect full-year 2021 gap revenue to be between $90 million and $92 million, with access physicians contributing roughly 30% of full-year 2021 revenue. We expect adjusted gross margin to be between 37% and 40% and we expect to generate an adjusted EBITDA loss of between $22 million and $25 million. While we do not provide specific guidance on bookings, we remain positive on the Access Physicians Acquisition and the longer-term growth in the business as bookings are on track to more than double in 2021 as compared to last year. With the Access Physicians integration well underway, the early focus has been on identifying and aligning the combined business on best practices from each organization. We are in the initial phases of identifying synergies across the combined organization. We have executed on evolving and training the sales force on the combined 11 service line. We are accelerating our cross-sell strategy and deepening our penetration across the wider client base. Furthermore, we are continuing to work on aligning the back office functions and teams and are in the process of identifying associated cost synergies, which we expect to have some impact in the second half of 2021 but a greater impact in 2022 and beyond. We remain optimistic about our ability to execute on the significant growth opportunity in acute care telemedicine, which remains in the very early innings of acceptance and adoption. As the scale player in the acute care telemedicine space, we are well positioned to help our hospital customers solve friction points around access to specialty care, network integrity, and load balancing of scarce positions resources. Thank you, and operator, please open the line for questions.
spk01: We will now begin the question and answer session. To ask a question, press star then 1 on a touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. And the first question comes from Gaylendra Singh with Credit Suisse. Please go ahead.
spk08: Hi, this is actually Adam for Joyner today. Thanks for taking the question. I was hoping you could just provide a bit more color on this change in go-to-market strategy with the integration of access physicians around the hardware sales. Was this anticipated at the outset of the transaction or did something happen down the line since then? And then maybe more broadly on integration, I mean, at this point, is there anything else that we should be keeping in mind that would prompt a change in how you're bringing access physicians to market outside of the hardware sales?
spk00: Hi, this is Chris. I would say that we weren't certain if we would change the go-to-market strategy around the cart sales or not. We knew that they had done it differently before. on the access physician side than what we had been doing. However, as we look at refining and coalescing our go-to-market strategy and our messaging to our customers and what the customers are looking for, there are still always certain customers that would prefer to have a capital purchase up front and will be flexible in approaching those customers and offering hardware as a one-time transaction. But in our experience, that's more of the exception than the rule. And customers are really looking for a hardware as a service or really a combined full service agreement that includes the hardware as a component of the service. So it is something we were aware of. But we see that there's going to be better adoption in the future on the hardware as a service basis. And frankly, it is a near-term headwind to revenues because you don't take that upfront revenue for selling a $10,000 or $15,000 cart. You actually bake that into your monthly recurring revenues, and it has a much better economic outcome over the long term. As far as other things to be concerned about, there are no other real business model differences that I can think of. John, anything to add there? No.
spk08: Got it. And then maybe just a follow-up in regards to cutting guidance due to the impact of the Delta variant. Are you only seeing the pressure in Texas and Florida right now in your customer base? Or maybe are you also assuming that those headwinds in the ERs expand into some other regions in 3Q and 4Q now?
spk06: So obviously Florida and Texas have picked up a lot of national news, right, but it is definitely more widespread than just those two states. So I think as you see even in the reports that came out later this evening, 90% of counties in the United States are considered high COVID areas. So obviously Florida and Texas pick up a banner amount of the news, but it is more widespread.
spk08: Okay, thank you.
spk06: Thank you, Adam.
spk01: The next question comes from Ryan Daniels with William Blair. Please go ahead.
spk04: Hey, guys. Thanks for taking the questions and the details thus far, and I appreciate all the new details and the press release. It's super helpful. I wanted to ask about the late-stage pipeline. You mentioned it's up 30%. on a sequential basis, that seems like a pretty big number for one quarter. So can you talk a little bit about how you define that, meaning what that 30% actually is, and then what a late-stage opportunity is actually to find that, just to put that in perspective for us?
spk06: Yeah, Ryan, I appreciate the question. When we consider late-stage, and we do like, obviously, that growth, we look at it as where we are starting to exchange paper with organizations. So they basically have given us a verbal that they are interested in We realize that does not always come to fruition, so we have different stages within that stage itself, as we have a typical sales process that we track all of these. But when we think late stage, it's where a customer says, yes, we're definitively interested in doing something. Let's start exchanging paper and see if the need matches. Then we start getting into specifics around what's the absolute volume, what are the hours, what's the type of coverage, et cetera, that's taking place. But at that point, we looked at the preferred option for them.
spk04: And is it defined by kind of an expected annual contract value to get the actual metric of up 30%? Or is that just number of papers in the works?
spk06: No, it does include an actual original estimated value, not just the number of pieces of paper and works. You can imagine the contract deltas are quite different, right? If we do a neurology deal and we're doing all neurology for the hospital, The contract, even at a small hospital, can be quite larger than we are covering partial coverage for a large hospital as an example. So we don't look at that 30% of late stage pipeline as the number of deals. We look at it as the original estimate. And we have more work to do and find tweaking. So we typically sit down then at that point trying to really make sure we have the clinical coverage that each of the customers and hospitals are looking for. And that's what the work is in that late stage process.
spk00: Yeah, we measure the pipeline in terms of ARR for the, you know, contracts that are or the customer opportunities within the pipeline.
spk04: Yeah, understood. I just wanted to make sure. Okay. And then given the volatility, you know, we continue to see an ED, not a big surprise here given what managed care companies and hospitals have said about the ED performance. Does that change at all your near-term sales approach or maybe you look at some of the access physician areas that, aren't as impacted by volumes in ED or COVID and maybe try to push those more and take the throttle off some of the sales that are really ED-specific, like thinking of teloneurology?
spk06: Yeah, Ryan, it's a good question. From a volatility standpoint, we did see great strength in the second quarter. As Chris mentioned, we came back to pre-COVID levels in psychiatry and near pre-levels in neurology for legacy SOC. And as you know, a big majority of that was in the emergency room volume place. SOC, even before coming together with access physicians, was starting to get pulled more into inpatient for neurology and psychiatry as well, again, into those hospitals. And so we were already having that natural pivot as customers were getting more familiar with how to use telemedicine deeper into the hospital setting. What's nice about access physicians and SOC coming together, to your point, The conversations on cross-sell, so that's what's driving that late-stage pipeline element that you're hearing. A good look at other specialties with our same customers. Those customers before, we could sit down and have a conversation. They know who we are now. They know the value that we deliver. We can start talking about bringing additional specialties into the inpatient floors. So yes, you will see the mix of inpatient to ED just naturally evolving considering the number of other specialties that we're able to offer in general.
spk04: Okay, perfect. And then last one, I'll hop off. Just in the new guidance, again, not overly surprising given everything we're seeing, but I'm curious how you've constructed that. I know before the prior guidance kind of assumed a gradual normalization throughout the year. Are you just assuming volumes stay flat at this point or, you know, a decline in volumes from where we sat? At the end of June, given the weaker flu season and Delta uptick, just help us really frame how you're developing your guidance. Thanks.
spk00: Yeah, Ryan, the overall trend is largely flat, but we have assumed some slight declines and a little bit of volatility in the numbers because we're seeing that. But you can think of it, you're right, we previously had a linear progression throughout over the balance of the year, and that has really just flattened out, which is resulting in resetting the numbers.
spk04: And that's flat same store volume, but you'll also get some new clients coming on, which should kind of help buffer that. Is that fair?
spk00: Yeah, we put a little bit of downward trend just in case this thing goes sideways on us. We don't expect it to do anything like it did, you know, last year, if you will, with the decreases. So that'll buoy the numbers overall, but there is some little bit of pickup you'll get from the bookings coming live. Yep.
spk04: Okay, perfect. Thank you, guys.
spk00: Thank you, Ryan.
spk01: The next question comes from Vikram Kesava-Boltla with Baird. Please go ahead.
spk02: Yeah, thank you for taking the question. I guess first, on the guidance reduction, I mean, can you talk about how much of that was related to delays in new project implementations that were expected this year? I guess going forward, just looking at the new range, what does that assume in terms of new project implementations to the balance of this year?
spk00: Yeah, Vikram, hi. It's Chris. Good to take your question here. So the largest driver of the downturn is the ED volume impacts. That's the biggest driver. What we have seen, though, on implementations is They're extending right now on average about 30 days beyond where we had been trending. So we'd previously, you know, on average we're running just over 90 days, and now we're back up to about 120 days. So that does extend the timeline for when we start to see revenue on the new deals going live. But the bigger impact is definitely the volume trends coming through the ED.
spk02: Okay, great, thanks. And then I know in the past you've talked about the potential to convert some of the Access Physicians Network from independent over to fully employed status, similar to SOC TeleMed. I'm curious if you can just give us an update on that front and what your expectations are there going forward. Thanks.
spk06: Yeah, Vikram, our strategy remains the same. As Dine grows in a number of the smaller specialties that Access Physicians have, we can naturally bring on work where we know predictably by a number of states. We have a volume to fully bring over W2 physicians, clinicians. We see strong interest in that, actually. from individuals wanting to come on and be signed in to SOC as a W-2. What we're obviously watching from volumes overall is we want to have good, steady look at volumes before we start moving people into a W-2 where you fix your costs, obviously. And that's the element that we can play conservative on as what's happening both in COVID and in the near term. And again, what we mentioned is we have steady business that clearly points we need a half dozen, a dozen, two dozen, and more W-2s, we will move in that direction. It makes sense for our employment team, our clinical team, as well as our customers.
spk02: Great. Thank you.
spk01: The next question comes from Sean Dodge with RBC Capital Markets. Please go ahead.
spk07: Yep, thanks. Good afternoon. John, you mentioned vendor fatigue, hospitals are feeling it, and having now the breadth that Access Physicians, that deal brings, makes you more of a one-stop shop. With that deal, I've been down for a little while now. Are you noticing a shift at all in the conversations you're having with prospective clients? And I guess, is it just the distraction of the Delta variant that's slowing conversions down? Or do you think it It's just going to take a little bit of time to kind of integrate it and get it all to gel and get the message out before that really starts to drive some kind of meaningful inflection and traction there.
spk06: Yeah, vendor fatigue was really something that came out in common discussions at I think I mentioned it before, it almost felt like folks went to a conference together and mentioned it in this particular space because when you're trying to run an IDN across multiple states and you want the system CMO to have someone that they trust and know and they can talk to about clinical quality and clinical quality measures and a team, that came up in spades and it still has. I think the element that what we're seeing is, especially if you just reflect back on the last six weeks, Early July, we were still having a number of meetings live, and that was with system CEOs and their medical teams. And they were putting us in touch with the regional leaders within their IDNs, et cetera. So those introductions were taking place because they did not want to be introduced to dozens of IT challenges, dozens of vendor elements. And again, there's a lot of technical piece. We're very proud of the work we have on high trust from a technical security basis because it keeps our hospital customers safe at scale as well. You look where we are today. Meetings are being canceled. The live meetings are being canceled. We're going back to Zoom. And that discussion, as folks get ready for, hey, do we need to be prepared to be offering up additional vaccinations to the public? Obviously, we talked about Florida and Texas feeling the stress, but there are other states clearly. You've heard Mississippi, Alabama, and other states that are feeling this as well. So the meetings are being pushed onto virtual. That piece, obviously, then when you're talking about a system that has multiple states, they're in very different elements. They're either getting ready for elements to help their teams or they're already hunkered down. We mentioned it's not just a few states. It's much more broadly nationally. So for us, the value proposition has come clear. In fact, the one nice element for us, having the number of specialties, is Telmed IQ became a much more consultative discussion. It was where do you need specialist help immediately, which we can provide, and where do you have a mal-distribution of your own specialists where you can help yourself, and then we can bring Telmed IQ. So the fact of having two different strategic discussions at the same time actually enriched those discussions. And we're wanting to bring that obviously forward. Far easier to do when you're sitting around a table live and able to whiteboard out elements and think strategically about how to go at a national campaign for an IDN. Does that help, Sean?
spk07: Yeah, that helps. And maybe just to kind of clarify that last point where you're talking to clients about the more kind of inclusive end-to-end offering, and it sounds like Telemed IQ is a standalone. Is that Is that kind of offering both of those to different parts of the organization, or is that them kind of considering one over the other? So is it kind of like a hybridization or an either-or decision?
spk06: It's a total solution. We have yet to have a conversation where – and this is the difference between last year and this year by having multiple specialties. We are almost always being asked about helping with specialty coverage and in some of the 11 that we can help cover within. And then the conversation goes further, and this is what we've been teaching the sales teams and working through the training on the sales teams. You clearly probably have an over-distribution of specialists of particular geography. How can we help that mal-distribution and fractionalize their time And that nets an entirely different discussion, which is why we have folks on the team that are skilled at SAS-like discussions versus clinical-type discussions. And they team together to ensure that we're working with the customers. They're literally right hand, left hand in that discussion. It's not a separate strategy or solution. And you can imagine it fluctuates. Our ability to be in with a hospital and be their solution as their environment changes, whether it's a specialty, they might hire a few of their own and then be able to use Telmed IQ instead, there is always going to be a shortage, right? The stat around the 77,000 additional shortages of specialists, there's just simply not enough to solve. So it's really trying to move individuals around, maximize their time, and help with the maldistribution of specialists.
spk07: Okay, interesting. That's very helpful. Thanks again.
spk01: Again, if you would like to ask a question, press star then 1 to join the queue. The next question comes from David Larson with BTIG. Please go ahead.
spk05: Hi. I'm sorry if this question has already been asked. I joined the call a little bit late, but the bookings growth actually looked pretty good to me. I think 6.7 million up 136%. Can you maybe just comment on the selling environment and what drove that. Thanks.
spk06: David, we are pleased with the bookings, both in the second quarter as well as the first half of the year compared to all of 2020. We see strength in that. We think it shows that in this environment, where telemedicine is trying to be adopted, it's being understood that it can truly be used in this acute care space. So we do see it as bullish. We see it both between the numbers that were put up in the first half as well as the late stage and the cross-selling opportunities that we've been getting after. So we are bullish on the booking side. And that's obviously, we've always said we are post-COVID play. I think we would have never predicted there was going to be a third and then a fourth wave. I think we can all agree that that's not something we have wanting to put into any models, any in business in the world. And so it is that pressure. But what it shows is there's true understanding that the shortage is not going to go away. Why the immediate and the urgent is COVID. The long-term urgent is going to be, I need specialists to take care of my population as they're getting older. And that's where we solve a long-term strategy for hospitals, which is why we think the bookings is coming in so strongly.
spk05: Okay. Does that bookings include SOC telemed and access physicians, and is that sort of an organic growth rate? What's the breakout for pure SOC telemed, and what was that trend on a year-over-year basis?
spk06: So that number does include all of SOC legacy and access physicians legacy combined. The element, so that includes Telmed IQ as well as our clinicians offering and what we call our consults. The one element that it does not include, to Chris's comment and to my comment, the SEP contract was, because it's a multi-year contract, it only represents a one-year evaluation within that total bookings number that you heard for the quarter. So it does not show the entire value of that contract over the five-year period.
spk05: Okay, and then it looks like on a total basis, the revenue per consult declined a little bit, but the access to physician revenue per consult actually increased on a year-over-year basis. Just any color on what drove those trends would be very helpful.
spk00: Yeah, the decline on the revenue per consult on the SOC side is driven by, as we've discussed before... Throughout the heavy COVID period, we had been operating below minimums primarily on the SOC side. So customers had been paying for a minimum number of consults, but we had been performing fewer than those. So there's a period of time which we fill that minimums bucket and that drives down your revenue per consult because As you fill the minimums bucket, you're effectively doing those additional consults at the same price you were doing before. So that's what drove that down. And then on the access physician side, it's sort of the inverse. We saw a decrease in consults in pulmonary and ICU, which then kind of increased the revenue per consult. Okay, great. Thanks very much.
spk01: This concludes our question and answer session. I'll now turn the conference back over to John Kalix for any closing remarks.
spk06: I'll just quickly thank everyone for joining tonight. We look forward to connecting more and sharing details on additional customers and additional growth moving forward. Thank you, everybody.
spk01: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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