Hinge Health, Inc. Class A

Ladies and gentlemen, thank you for joining us and welcome to the Hinge Health Second Quarter 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star 9 to raise your hand and star 6 to unmute. I will now hand the conference over to Bianca Buck, Head of Investor Relations. Bianca, please go ahead.

Good afternoon, everyone, and thank you for joining Hinge Health's second quarter 2025 earnings conference call, and our first as a public company. I'm Bianca Buck, head of investor relations at Hinge Health. Joining me today are Daniel Perez, our co-founder and chief executive officer, Jim Persley, our president, and James Budge, our chief financial officer. Since this is our first earnings call, we felt it important to have Jim join Dan and James to give a refresher on our go-to-market motion. Before we begin, I'd like to note that today's call is being recorded and you can find all relevant materials, including our earnings presentation on the investor relations section of our website. Today's discussion will include forward looking statements. These statements reflect our current views and expectations regarding future events, including expected performance of our business, our future financial results, our business and growth strategies and future prospects. These statements also include our improved financial outlook for Q3 and full year 2025. All of these forward-looking statements are subject to various risks, uncertainties, and assumptions. While these statements represent our good faith judgment and beliefs, actual results may differ materially from those projected or implied during the discussion. Note that the forward-looking statements on this call are based on information available to us as of today's date. We undertake no obligation to update any forward-looking statements except as required by law. For a detailed discussion of the risks and uncertainties that could cause our actual results to differ, please refer to our IPO prospectus filed with the Securities and Exchange Commission, as well as the Form 10-Q that will be filed next week. Additionally, during today's call, we will reference certain non-GAAP financial measures alongside our GAAP results. Revenue will be discussed on a GAAP basis, while all other measures will be measured on a non-GAAP basis. These non-GAAP measures should be considered as supplemental to and not a substitute for our GAAP financial measures. For reconciliation of certain of our non-GAAP to GAAP measures, please refer to our earnings release. With that, I'll now turn the call over to Dan for his opening remarks.

Thank you, Bianca. Welcome everyone to our inaugural Hinge Health earnings call. I'm excited to share our second quarter results and business update. Let me outline what we'll cover in our remarks. First, I'll provide a high level financial snapshot of our second quarter performance and give a quick overview of our business. Second, I'll discuss our product updates, including some core product enhancements and update on our AI efficiency initiatives. and the exciting announcement of Hinge Select, our high-performance network of in-person providers. Third, Jim will provide a commercial update, including our recent sales momentum. Fourth, James will go deeper into our financials and provide our formal guidance. Finally, I'll return to wrap up with our strategic outlook and long-term vision, and then we'll open it up to questions. Let's dive in. Firstly, I'm pleased to report that Hinge Health delivered an exceptional second quarter, delivering profitable growth and demonstrating strong momentum across all key metrics. Revenue for the second quarter was $139 million, up 55% compared to $90 million in the same quarter last year. Our non-GAAP income from operations was $26 million for a 19% non-GAAP operating margin. Moreover, we generated $33 million of free cash flow for a free cash flow margin of over 23%. Our last 12 months calculated billings reached $568 million, also up 55% year over year compared to $368 million in the prior year period. As a reminder, our last 12 months calculated billings is a leading indicator for our revenue. This strong performance was driven by higher eligible lives from both new and legacy clients and better than expected enrollment yields, resulting in increased members and billings. James, our CFO, will go into more details about our financials, but we're proud about these results. We believe they underscore the strength and momentum of our business. Now, since this is our first earnings call as a public company, I'd like to take a moment to remind those new to our story what makes Hinge Health special and why we're so excited about the opportunity ahead of us. At our core, Hinge Health is automating healthcare delivery itself, starting with musculoskeletal conditions, or MSK. We've built a comprehensive platform that combines AI-powered technology, a proprietary wearable device, and expert care to deliver personalized, evidence-based treatment that can help members decrease their pain and improve quality of life, all while reducing healthcare costs for clients. What sets us apart is our approach to scaling healthcare delivery, We've reduced human care team hours associated with traditional physical therapy by approximately 95% through automation, which allows us to reduce healthcare costs for clients while improving members' health outcomes and satisfaction. Our platform isn't just about digitizing existing processes. We believe we're fundamentally reshaping how care can be delivered more effectively and efficiently. The market opportunity before us is significant. MSK spend in the US reached $661 billion in 2023, and we believe that over 70 billion of that is spent on physical therapy. Because MSK treatment has historically been procedure-driven, it consistently ranks as one of the top three healthcare spend categories for employers. Our clients partner with us because we deliver on healthcare's triple aim, enhancing the member experience, improving member outcomes, and reducing costs. To put this in everyday terms, think about someone suffering from chronic back pain. Traditional care often means waiting weeks for an appointment, traveling to multiple providers, and following a one-size-fits-all treatment plan. With Hinge Health, that same person can start their personalized care program within minutes, right from home, receive real-time feedback through our AI-powered motion tracking technology, and connect with the care team when needed, all while their employer saves on healthcare costs. We've built an efficient go-to-market motion and realized early on the benefits of key partners, health plans, pharmacy benefit managers or PBMs, third-party administrators or TPAs, and others. We now have 50-plus partners, many of whom have selected us as their preferred digital MSK solution, including all five of the largest national health plans by Self-Insured Lives and the three largest PBMs by MarketShare. This means the vast majority of our enterprise prospects yet to buy Hinge Health can turn us on without having to go through lengthy contracting or IT security review, which is a big pain point in healthcare. We believe these partnerships differentiate Hinge Health as we seek to be one of the easiest solutions to buy and implement. This combination of accessibility, effectiveness, and cost efficiency has resonated strongly with both our members and clients, positioning us to capture a significant share of this growing market. And as we look ahead, we see significant potential to expand our impact and continue automating the delivery of care. Let me now turn to our recent product innovations and enhancements. We're headquartered in San Francisco, so we're very focused on tech-driven innovation. Over the past three years alone, we've launched our women's pelvic health program, fall prevention program, multiple iterations of our ENSO pain management device, breakthrough AI-powered motion tracking technology, and our menopause program, among other products. Three key product investment areas in 2025 worth mentioning include core enhancements, AI efficiencies, and hinge select. Starting with our core product enhancements, we've made significant improvements to our AI-powered motion tracking technology, or TruMotion. We've introduced more variety to our exercises and enhanced 3D visualizations, including our new smart skeleton feature. This shows members a detailed view of their spine curvature and provides more dynamic movement tracking, making at-home exercise more intuitive and effective. We've also streamlined how new members start with our program, making it easier to begin their care journey. This has led to more people successfully joining our platform and starting their care. Additionally, we found new ways to reconnect with members who haven't used our platform in a while. We implemented various strategic campaigns and product nudges showing these members our latest features and expanded offerings, which has successfully brought many of these members back to continue their care. Overall, Members are more engaged and satisfied with our platform year over year, and we hit our all-time high in member NPS in the first half of the year. These enhancements also have the benefit of driving our high client retention and improving member enrollment yields. Now, beyond our core product investment areas, we've also seen meaningful efficiency gains across the company from our AI initiatives, benefiting both margins and scalability. As just one tangible example, our proprietary generative AI-powered care team assistant which automates routine tasks like message drafting and reviewing clinical histories, continue to improve this past quarter. We reduced the average time it takes our care team to respond to members by 16% in Q2 compared to Q1, and by 47% compared to a year ago, freeing up time for deeper interactions. Finally, I'm excited to discuss Hinge Select. Our new high-performance provider network we announced in June that complements our digital MSK solution, delivering a truly unified musculoskeletal care experience. Think of Hinge Select as a carefully curated marketplace that connects our members with high-quality in-person providers for services like imaging, physical therapy, injections, and more, all at up to 50% below typical insurance rates. We are moving towards a future where healthcare delivery itself will be automated via software and connected hardware, but many aspects of care still require in-person providers. Any care that cannot yet be delivered by our technology will be directed to vetted in-person providers, designed to provide consistent, evidence-based support every step of the way, and to ensure that care is coordinated, high quality, and cost effective. We expect that most members will begin with our flagship digital program, but for those who may benefit from an in-person encounter, they'll be routed using technology to a HINTS-like provider, and in many cases, continue the remainder of their care digitally. This solution is intended to create value for everyone involved, members, employers, providers, and payers. Members can get access to high-quality in-person care at low or no direct cost to them. Employers could benefit from reduced healthcare spending and better outcomes. Healthcare providers can get streamlined workflows, faster payments, and more focused patient referrals. And our health plan partners are particularly excited about the ability to combine their existing networks with Hinge Select to create a better experience for members at a lower cost. We are starting with a limited pilot in late 2025, which we expect to be followed by a broader launch in 2026. We've already secured contracts with providers across more than 2,100 locations as of the end of Q2, with many more being signed in Q3 to date. We have several large early client adopters. While we don't expect meaningful revenue impact until 2027, Hinge Select represents an important opportunity to improve member outcomes and client ROI while increasing yields and adding a high margin revenue stream for us, as we'll recognize a percentage of the medical claims as net revenue. We're incredibly excited about this new offering and its potential to allow us to deliver end-to-end care in MSK. With that, I'll hand over to Jim Percy, our president, to discuss our commercial updates.