NASDAQ:ACCD Accolade Q4 2024 Earnings Report $7.02 0.00 (0.00%) As of 04/8/2025 Earnings HistoryForecast Accolade EPS ResultsActual EPS-$0.10Consensus EPS -$0.11Beat/MissBeat by +$0.01One Year Ago EPS-$0.42Accolade Revenue ResultsActual Revenue$124.80 millionExpected Revenue$123.91 millionBeat/MissBeat by +$890.00 thousandYoY Revenue Growth+26.10%Accolade Announcement DetailsQuarterQ4 2024Date4/25/2024TimeAfter Market ClosesConference Call DateThursday, April 25, 2024Conference Call Time4:30PM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Accolade Q4 2024 Earnings Call TranscriptProvided by QuartrApril 25, 2024 ShareLink copied to clipboard.There are 13 speakers on the call. Operator00:00:00Hello, and thank you for standing by. Welcome to Acolyte's 4th Quarter 20 24 Earnings Results Conference Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer I would now like to hand the conference over to Todd Freeman, Senior VP of Investor Relations. You may begin. Speaker 100:00:35Thanks, operator. Welcome everyone to our fiscal Q4 earnings call. With me on the call today are our CEO, Rajiv Singh and our CFO, Steve Barnes. Before I turn the call over to Rajiv, please note that we'll be discussing certain non GAAP financial measures that we believe are important when evaluating Acculey's performance. Details on the relationship between these non GAAP measures to the most comparable GAAP measures and the reconciliations thereof can be found in the press release that's posted on our website. Speaker 100:00:59Also, please note that certain statements made during this call will be forward looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward looking statements are subject to risks and uncertainties among other factors that could cause the actual results to act like this materially from those expressed or implied on the call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website. There are slides that will accompany the CFO presentation on this call that will be available on the webcast. The slides will be available for download following the call. Speaker 100:01:29With that, I'll turn the call over to Rajiv. Speaker 200:01:31Thank you, Todd, and thank you to everyone for joining us today on our fiscal 2025 kickoff earnings call. This is an important moment for Accolade and for our shareholders. Over the last several years, markets, including health care, have fundamentally changed. Success today requires a balanced growth mindset with a focus on execution, discipline and profitability. Speaking specifically to healthcare, it's time for digital healthcare disruptors to prove their business models have product market fit in a large market, operating leverage, a discernible competitive advantage and teams that can execute through a challenging environment. Speaker 200:02:04Some will succeed and others will not. Accolade is amongst that select group that has succeeded by checking each of these boxes. Today, we're a well positioned company, positioned to build a strong and enduring business for our customers, shareholders, employees and partners. With those high level remarks behind us, let's begin to zoom in on our business and where we stand. We just completed a fiscal year where we delivered north of 20 percent top line growth and improved our adjusted EBITDA approximately $30,000,000 year over year. Speaker 200:02:36Both of these achievements are above the expectations that we set at the outset of the fiscal year. As a brief aside on the consistency of our execution, with the exception of a quarter where we lost a large customer 2 years ago, we have consistently met or exceeded expectations since we became a public company in July 2020. Our outlook for fiscal year 2025 is also strong. Consistent with our long term guidance, we expect top line growth in the neighborhood of 20% and profitable adjusted EBITDA on a full year basis. Today, serving more than 14,000,000 lives across more than 1200 customers, we are a scaled healthcare services company with a direct line of sight becoming a rule of 40 company in the years ahead. Speaker 200:03:19Our growth in the year ahead is driven by several things. 1st, in annual recurring revenue growth rate of 20% in the last fiscal year, reflecting the strength of our business to business employer, government and health plan offerings. 2nd, the continued strength of a direct to consumer business that again grew over 20% last year and is highly differentiated in a competitive market. And third, the exceptional growth of what you will hear us refer to today as platform connected revenues. These are revenues from offerings either our own or from our partners that are delivered because they are connected to our healthcare navigation platform. Speaker 200:03:58More to come on platform connected and usage based revenues later in today's call. Let's get into more depth on each element of our business and offerings and why they continue to grow at rates that outpace the market. Our business to business offerings focused on employers, health plans and the government are highly differentiated, valuable to our customers and members and scaled to deliver growth and profitability. Our healthcare navigation platform is seamlessly integrated with our own primary care and expert medical opinion competition. From an employer perspective, we solve the physician gap, helping people get access to the right care when they need it from us, our partners or from brick and mortar health systems, something that is particularly challenging for underserved urban, rural or minority populations. Speaker 200:04:52That seamless integration from navigation is enabled by a technology stack, which is at scale, state of the art and market leading. It is extensible and as new capabilities have emerged like generative AI, we've been able to embrace them at pace and deliver leverage to our business. We were recently the recipient of the Artificial Intelligence Excellence Award from the Business Intelligence Group. AI and our investment in technology writ large are key contributors to the significant improvement in our profitability over the last several years. That seamless integration enables platform connected revenues. Speaker 200:05:30These revenues reflect visits with our primary care physicians, 2nd opinion consults with expert specialists and enrollments in our Trusted Partners program. These revenues grow in 2 ways, through customer adoption of new services and through member utilization of those services. Once we see customer adoption in any given year, we expect member usage of those respective services to grow in each following year up to an appropriate threshold based on the relevance of the respective service to a given population. The flywheel is extremely simple. Customer adoption of the service, deployment of the service, employee engagement of the service, which grows each year as a cohort. Speaker 200:06:13One final point on our business to business offerings. The diversity of our offerings gives us access to a variety of growth engines. In previous quarters, we've discussed the demand for our offerings from both employers and the government. In today's call, I want to give you more depth on our appeal to health plans. As many of you know, for many years now, we've maintained productive relationships with health plans, such as UnitedHealthcare and Aetna that resell our expert medical opinion service. Speaker 200:06:41We're increasingly seeing health plans interested in relationships where certain of our capabilities are embedded into their own employer offerings. Just this past quarter, Blue Shield of California published the results from the 1st full year of offering a virtual first plan design called Virtual Blue powered by Accolade. The results were outstanding. Here are some highlights. Reduction in overall cost for the population of 8% to 10%, emergency room claims down 11%, 85% of members received a mental health screening. Speaker 200:07:14And bringing you back to the physician gap, 2 thirds of their members received an appointment within a single day. In addition, recently, as some of you noted, Blue Cross Blue Shield of Arkansas launched an employer offering powered by our navigation platform where customers have the option to also add accolade care or second opinion capabilities. We expect our relationships with health plans, both reseller arrangements and partnerships focused on offerings where Accolade capabilities are fundamental to the new solution to be a growth engine for the business in the years ahead. And Steve will give you more color on how to model these revenues in his remarks. Moving to our D2C offerings, we offer a compelling and differentiated virtual primary care and mental health offering that continues to grow faster than the rest of the market. Speaker 200:08:02Let me outline for you why this growth has continued to outpace other telehealth offerings in the employer and health plan markets and why such growth is sustainable. First, most telehealth offerings in the market offer urgent care, meaning the physicians do not have access to the longitudinal care record of the patient or any information on their corporate benefits. Patients cannot ask to see the same physician again and most physicians are employed in a gig economy part time role. Our PlusCare direct to consumer offering is the opposite of those solutions. Our positions utilizing built for purpose longitudinal EMR system, patients can select the primary care physician and stay with them and our physicians spend at least 60% of their time serving Accolade patients. Speaker 200:08:502nd, we've built an integrated collaborative care model that embeds mental health care into our primary care model. As Blue Shield California noted in their study, we perform mental health screenings on the majority of our patients and we have behavioral health specialists embedded in every care team, thereby providing a scalable mental health service that patients love. 3rd, our service is powered by a state of the art digital experience and dedicated physicians from the top 50 medical schools in the country, a combination that yields Net Promoter Scores of around 90 consistently. We simply have an easier to use service that delivers exceptional patient value. One final point, we've tightly integrated the team's services and capabilities from PlusCare since our 2021 acquisition in a way that has fostered the continued growth of the consumer business, while allowing us to extend access to the same exceptional care experience from these dedicated physicians to our employer customers. Speaker 200:09:50Notably, approximately 80% of the new Accolade customers that launched on January 1 this year deployed Accolade Care. PlusCare and other acquisitions have flourished since being brought under the Accolade umbrella, both individually and as critical components of our B2B offerings. As I turn the call over to Steve, a closing thought. I have never been more bullish about the strength of the market we compete in, the scale and the leverage of our model and the team we've aligned to execute against our vision. As one of our investors, Andreessen Horowitz, said in a recent blog post, it's time to build in healthcare. Speaker 200:10:26Accolade is leading the way. Steve? Thanks, Raj. Speaker 300:10:31I'll recap the results for the fiscal 4th quarter, comment on our outlook and forward guidance and provide additional color on the key drivers of our model as our business has expanded and materially since our IPO in 2020. The webcast will show a set of slides to support these comments and the slides will be posted to our IR website after the conclusion of the call. We hit on this at length in our Capital Markets Day presentation last May and it's worth reiterating. We have executed on a strategy that has meaningfully diversified our offering mix, our customer base and our partnerships and by extension the sources of our revenue. Our margin leverage both gross margin and operating margin is likewise rooted in this diversification as offerings like primary care and our trusted partner ecosystem carry attractive gross margins and also because the attachment and increasing contribution usage based revenue like EMO case rate, primary care visit fees and partner ecosystem revenues create the opportunity to capture more wallet share during the year without incremental sales and marketing costs. Speaker 300:11:39You'll note that we are using the terms usage based revenue instead of utilization based revenue for clarification starting with this quarter and in our 10 ks. As I walk through the results, our key metrics and then our guidance, please keep this diversification and evolution of our business in mind. In that vein, I'll note that many of you have asked for more detail on the various revenue streams and dynamics driving our business. Today, we will provide some of that additional color to illustrate the breadth and strength of our business as we accelerate into profitability. 1st, let's start with the quarter. Speaker 300:12:14On the slide on the webcast, you'll see we generated $125,000,000 in revenue in the Q4 of fiscal 2024, representing 30% pro form a growth over Q4 of fiscal 2023. This growth was driven by a healthy mix of PG performance, new customer launch revenues, usage based visit and case rate revenues and B2C virtual primary care. Adjusted EBITDA was also strong coming in at $18,500,000 the largest quarter for adjusted EBITDA in Accolade's history. Fiscal Q4 adjusted gross margin was 54.2% versus 50.5% in the prior year period. And for the full year, revenue was $414,300,000 and adjusted EBITDA loss was $7,500,000 Note, in fiscal 2024, we generated almost $100,000,000 in revenue from Plus Care, our D2C offering, which reflects the value and differentiation of that offering and the platform as Raj described earlier. Speaker 300:13:18I'll provide further depth on our various revenue streams shortly. Adjusted gross margin for the year increased to 47.6% from 46.8 percent in the prior year. Now turning to the balance sheet. Cash, cash equivalents and marketable securities totaled $237,000,000 at the end of the 4th fiscal quarter, reflecting an increase of $7,000,000 during the quarter. Our cash balance combined with our turn to profitability continue to provide us confidence in the strength of our balance sheet and our plans to manage our convertible notes which mature in April 2026. Speaker 300:13:58Before turning to guidance, allow me to reiterate that we had a strong selling season in fiscal 2024 with $86,000,000 of ARR bookings representing approximately 20% growth over fiscal 2023. Keep in mind, the nature of our ARR bookings is evolving to reflect the strength, breadth and appeal of our capabilities to a wide range of participants in the industry. In addition to contributions from the employer and government markets, health plan partnerships are meaningful ARR contributors and represent significant growth opportunities for Accolade. Relevant to that point, let me touch on 2 annual metrics that we have shared historically. 1st, ACV or annual contract value was $351,000,000 at the end of fiscal 2024, which compares to $309,000,000 at the end of fiscal 2023. Speaker 300:14:48As we discussed in detail at Capital Markets Day last year, ACV is a metric whose relevance has evolved since the time of our IPO. 4 years ago when we were advocacy only and all of our revenue was PMPM based, ACV represented more than 90% of the following year's revenue forecast. With the dramatic expansion of our business since that time, the increasing contribution of usage fees and our direct to consumer virtual primary care offering, ACV is still a relevant metric, but less so than historically. This is why we are providing additional color about usage fee growth and the drivers therein, as well as a breakout of fee fee revenues. Gross dollar retention or GDR was 89% at the end of fiscal year end 2024 and we expect it to be in the 90% range going forward. Speaker 300:15:38A couple of comments about GDR. First, a portion of the difference from our historical GDR range at fiscal year end 2024 is associated with the ending of our TRICARE product in April 2023 and the delayed launch of T5. We are bullish on the continued growth and value we provide the government via our autism care demonstration offering and the opportunity to drive revenue in future via the T5 program. Another aspect of GDR relates to the maturing profile of our business. Our company now has more than 1200 customers versus 54 at the time of our IPO. Speaker 300:16:14We are making decisions across the business that are highly aligned with our commitment to delivering profitable growth. As we make that turn, our current focus and offering portfolio is not always aligned with some customer relationships and their contracts with us. We acknowledge that this is part of building a growing company that is disrupting the established healthcare system and we are making choices that are in the long term interest of Accolade and our shareholders. Now turning to guidance. We are reiterating our fiscal 2025 revenue guidance and providing an initial range of $480,000,000 to $500,000,000 representing year over year growth in the range of 16% to 21%. Speaker 300:16:56I'll provide some detail on the revenue build from a couple of viewpoints and in a moment walk through some slides to illustrate. As Raj noted earlier, we view our business through 2 broad categories. B2B, which comprises employer, health plan, government and partner end markets and B2C representing FlushCare, our direct to consumer VPC and mental health offering. On the B2B side, our healthcare navigation platform serves as the chassis upon which we deliver our core advocacy offering along with integrated add on elements of VPC, EMO and our broad set of PPE partners, which cover a range of critical clinical categories. We call these add on elements platform connected revenues. Speaker 300:17:41Typically, we drive PEPM or PMPM access fee revenues from our navigation platform and usage based revenues from our platform connected offerings. In addition, our EMO offering is sold on a standalone basis, primarily through channel partnerships with health plans. In D2C, we derive revenues from visit fees and subscription fees. Our D2C margin profile is attractive and we carefully manage customer acquisition costs, retention rates and LTVs. Remember that the same virtual primary care offering about sending doctors, care providers and technology serves our B2B customers, including employers and health plans. Speaker 300:18:24The range of our revenue guidance reflects that there is variability in some elements of our model that we manage carefully to balance growth, profitability and shareholder value creation. With respect to adjusted EBITDA, we are improving our guidance for fiscal 2025 to a range of 3% to 4 percent of revenue or approximately $15,000,000 to $20,000,000 And we are providing fiscal Q1 guidance today of revenue in the range of $103,000,000 to $106,000,000 and adjusted EBITDA loss in the range of $9,000,000 to 12,000,000 dollars You'll see on Slide 6 that we will let we lay out a view of our expected approximately approximate quarterly revenues and adjusted EBITDA ramp in fiscal 2025, which sums to the midpoint of the respective annual ranges. As a reminder, for advocacy deals, we place on average about 10% to 15% of our fees at risk on a performance basis to demonstrate measurable healthcare cost savings for our customers. As in previous years, at the start of the year, we forecast that the majority of those claims based savings PGS will be recognized in fiscal Q4, which along with the impact of forecasted new customer launches on January 1, are the primary drivers of the higher portion of annual revenue in fiscal Q4. Speaker 300:19:43This quarterly ramp is very similar to the ramp we outlined this time last year at our Capital Markets Day, which we ultimately exceeded. On the next slide, you'll see a view of adjusted EBITDA, which we expect the loss to narrow in fiscal Q2 then to be approximately breakeven in fiscal Q3 with the second half of the year generating significant positive adjusted EBITDA. On the next slide, we will walk through revenue composition. We've talked about the growing contribution of usage based revenues over the past few years. This represents the biggest shift in our business model since the IPO. Speaker 300:20:22With a few years of operating history behind us following the FlushCare and 2nd MD acquisitions, we'd like to lay out in some detail the impact of usage based revenue. For definition, usage based revenue largely represents primary care visit fees, expert medical opinion case rate consultations and TPB revenue that is tied to usage. Importantly, usage based revenue has grown from 15% of revenue in fiscal 2022 to 27% in fiscal 2024 and we expect it will represent approximately 30% to 35% of revenue in fiscal 2025. This represents growth from the existing navigation customers who are adding platform connected offerings, plus growth from new customers launched within our bundled solution, which includes the platform connected offering, EMO and Care and increasingly choosing to also attach a trusted partner, as well as the increasing utilization of these platform connected offerings by the population to have access to them. As noted by the dark blue line in the graph, platform connected revenues approximately doubled in each of fiscal years 2023 2024 and we expect those revenues to continue to grow materially in fiscal 2025 as we drive incremental usage based revenues from each of our cohorts of customers. Speaker 300:21:44What's most exciting about this dynamic as we don't expect or need to see dramatic changes in usage rates to drive revenue opportunity. We have more than 12,000,000 lives covered under ExpertMD and more than 1,500,000 lives under Accolade Care. Relatively small increases in EMO utilization, VTC attach rates or TBE referrals can add meaningful revenue growth in any year. Health plan partners leveraging Accolade Care to deliver virtual primary care will also be a driver of usage revenues as evidenced by the Blue Show of California example that Josh described earlier. Speaker 400:22:22And on Slide 9, you'll see a view Speaker 300:22:24of fiscal 2025 revenue. When you apply the context that I just laid out, you'll see in the current year forecast a walk from fiscal 2024 results to our fiscal 2025 guidance. Starting with the fiscal 2024 revenue of $414,000,000 these first few bars should look familiar from our Capital Markets Day last year. You have the impact of churn offsetting growth in new ARR and in year launches. You'll also note that we don't carry 100% of ARR for the following year's revenue forecast based on start dates and some conservatism around PGS attainment in year 1 of the new contracts. Speaker 300:23:01I'll point out 2 columns that provide additional detail in our model. First is the increase in usage based revenue and the second is the growth in B2C primary care. To better understand the dynamic of increasing revenue from new offerings and increased usage, let's look at an example customer on the next slide. This slide shows one of our larger customers who started with Accolade's navigation platform in 2018. We show a 5 year progression on the slide starting with fiscal 2020 when the PMPM revenue was approximately $8 all on an access fee only basis. Speaker 300:23:37Over the next few years, customer grew modestly through headcount and TPE adoption. And then in fiscal 2022, the customer added EMO and in fiscal 2023, the customer added Accolade Care and several more TPE solutions. You can see that as we have delivered more offerings, more services and more care to the customer and its members, we have also seen our revenue from this customer grow with the PMPM increasing approximately 50% from a start as a navigation only customer. We consider this a model customer, one which has invested with us to deploy fully integrated stack of healthcare capabilities rendered as a single place for all its employees and members of their families to turn for their healthcare and benefits needs. The impact of the customer is better outcomes across their population and lower medical spend. Speaker 300:24:28And as we look ahead, we expect our wallet share with this customer to continue to grow. When you apply that model to our broader book of healthcare navigation customers, As we drive additional attachment and usage of these platform connected offerings, we can see a significant revenue expansion opportunity in the range of 50%. This incremental revenue lift with existing customers layers on top of our enterprise and consumer growth engines, providing the foundation for sustainable revenue and margin expansion. To recap, today we outlined several elements at the heart of the business we are building, including delivery of platform connected revenues on top of our healthcare navigation platform, which drives scale and differentiation. The diverse the strength of our diversified revenue streams, the integration of our platform, operations, offerings and capabilities and the predictability of our model combined with the close of another year of sound execution give us confidence that fiscal year 2025 will be our 1st full year of profitability on adjusted EBITDA basis on the path to creating significant value for members, customers, partners and our employees and shareholders. Speaker 300:25:41And with that, we'll open the call to questions. Operator00:25:44Thank Our first question comes from the line of Jalendra Singh with Truist Securities. Your line is open. Speaker 500:26:17Thank you and thanks for taking my questions. I want to ask about the PGEs and the relationship with platform connected revenues. Clearly, Performance Guaranty is a meaningful contributor for the company in Q4. I'm just curious how did those trends compare to expectations in the quarter? Were there any particular benchmarks or areas you outperformed? Speaker 500:26:36Were there any areas you see improvement in future? And just curious if there's any change in the way these PGs are getting design for next year, essentially in context of this focus on platform connected revenues, is level of engagement or enrollment with trusted partners becoming a bigger portion of your PG benchmarks? Speaker 200:26:56Let me take a first cut at that, Steve, and I'll turn it over to you. Jalinder, thanks for Speaker 300:27:00the question. This is Raj. Speaker 200:27:03One of the core value propositions we've always had with our customers is the need to connect their ecosystem and to drive downstream utilization of their chosen partners. And driving the utilization of those capabilities Speaker 400:27:18has often been, Speaker 200:27:18a trusted partner ecosystem and driving the utilization of those capabilities has often been one of the PGs or performance metric that customers have measured and compensated us by. And so in that context, I think it's very consistent with the long term strategic direction of the company. I wouldn't say that it materially changed the achievement of performance guarantees moving forward. That said, one last point. We get paid and Steve referred to it in his prepared remarks at 10% to 15% of total revenues, oftentimes on savings associated with a particular customer. Speaker 200:27:54When we drive downstream utilization of trusted partners or our own primary care expert medical opinion service, it accrues value to driving savings for the customer and therefore gives us more confidence in our capacity to achieve those PGs downstream. Steve, anything you'd add? Speaker 300:28:09I'd just add with respect to Q4, because I think that's part of Joe Hunter's question as well. We saw quite consistent performance by Accolade as compared to prior years even with the elevation of healthcare costs that we saw certainly in calendar year 2020 3 heading here into 2024. And that is a reminder about the fact that when we structure our contracts, we're essentially meaning to beat the index and so do better than those higher costs. I will say you asked about contracting heading into the next year. Raj knows this as well. Speaker 300:28:42Customers are extremely sensitive to the elevated cost environment that we are in. So we continue to align with them with this PG dynamic in our contract and certainly make the case that the integration of all of our capabilities is a great way to manage that cost for their company spend as well as for the health of their employees and the members. Operator00:29:07Thank you. Please standby for our next question. Our next question comes from the line of Stephanie Davis with Barclays. Your line is open. Speaker 400:29:18Hey guys, thank you for taking my question. I was hoping you could help us think about the attach rate and cross opportunities in your customer base as you move more towards focusing on them versus kind of the new wins. In terms of benchmarks, is there a high end within your customer base of revenue per life or adjacencies attach rate that you could highlight? And how does that factor into your growth as you think about the coming year? Speaker 200:29:46Thanks for the question, Stephanie. I think the first thing I would say is we're focusing on both on growth in terms of new customer acquisition in the enterprise space where we're focusing on employers, health plans and the government. We're also focusing on growth from a direct to consumer perspective. And yes, we're also focusing on growth as it relates to platform connected revenues inside the customer base. I think Steve really captured it well in his prepared remarks as he pulled as he walked through platform connected. Speaker 200:30:1680% of our customers last year on January 1, this past year on January 1, deployed both our navigation platform and Accolade Care. 96% of our customers deployed our navigation platform and expert medical opinion. So a part of the story is the pull through, the actual adoption of those services or our trusted partner solutions by those customers. The next part of that story is the actual adoption and usage by employees. And we expect the usage of each of those services to grow based on what the respective services needs are within that customer base or within that member base. Speaker 200:30:52And so when we think about the targeted opportunities, Steve's last slide probably said it's the best. A target customer that has actually grown PEPM or in the case of this slide PMPM by almost 50% simply through embracing solutions, not all of our trusted partner solutions, but a subset of them along with virtual primary care and expert medical opinions and growing the PEPM or PMPM of that account by about 50%. There's still room to sell them more trusted partner ecosystem solution. There's still room to grow primary care and expert medical opinion utilization, but we'd expect that, that example applies to any of our customers, which means we could grow PEPM on the navigation business by about 50% or more and we'll watch this customer grow and we think over time the ceiling on that growth will continue to improve. Operator00:31:48Thank you. Please standby for our next question. Our next question comes from the line of Ryan Daniels with William Blair. Your line is open. Speaker 600:31:58Yes. Thanks for taking the question and thanks for all the detailed information in the PowerPoint deck. I guess maybe Steve one for you. As platform connected revenues are more usage based. Can you talk a little bit about what you can do as an organization to continue to drive that? Speaker 600:32:14And what I mean there is, I assume every year that a client has those solutions, it grows naturally. As members use it, they continue to use it. But what can you do maybe 1 to market and drive awareness of what you're offering to covered lives? And then number 2, are there things you could do with analytics internally to kind of promote those services during points of contact when you're engaging with members to also drive that use? Thanks. Speaker 300:32:43Thanks very much for the question, Ryan. The platform connected revenues are incredibly important part of what we do at Accolade. The entire business candidly is focused around this. If you think back to our Investor Day and we laid out how we think about starting with stratifying populations and then applying what we call true health actions to them, which is a data informed and applying the intelligent platform that we have inside of Accolade to get the right members to the right place efficiently, get them to a primary care appointment or an expert medical opinion or to the right clinical program to one of our partners. That is absolutely the part of the way we think about the business. Speaker 300:33:25And we think about it like a funnel. If you think about it, essentially a marketing company sorting through the members to get to the right place at the right time very efficiently, all of that is a critical part of our business. With respect to using analytics, it's exactly how we think about the populations that we serve. In the end, we think of ourselves as a population health oriented company that we can look at the members who are not only in need of help right now, but maybe headed towards the need and leverage that True Health engine in order to get them to that help at the right time. The really compelling part of that from a financial standpoint, if you go back to that slide with the blue line on Slide 9 and so Slide 10, we see the acceleration of those platform connected revenues. Speaker 300:34:16We feel that we're just getting started and have a whole lot of proof points that tell us when we integrate our offerings, we can get people to the right place and also drive revenue for Affiliates. Speaker 200:34:25And Ryan, I think one addition that I would add or put on the pot here for you to think about as well. All of these are in the vein of improving clinical outcomes from our customers. Most of our customers believe that they're underspending on primary care that the lack of access to primary care for their populations is harming their health and increasing their costs. And so they will charter us with improving utilization of primary care. In part, we do that by segmenting populations, but we actually run campaigns to people who have not seen a primary care physician in the last 12 months. Speaker 200:35:00People who have been to the emergency room, but haven't seen a primary care physician post that emergency room visit. Those types of things are outbound capabilities that we can using our digital, mobile or portal capabilities reach members in their time of need and expose them to capabilities that meet clinical needs for our customers, improve outcomes and lower cost. Operator00:35:30Our next question comes from the line of Michael Cherny with Leerink Partners. Your line is open. Speaker 700:35:37Good afternoon and thank you for all the color so far. Steve, you talked about the success during the selling season. As you think about the changing landscape of your business, how are you positioning that with consultants, with industry participants, so that when you go to market into RFPs that you know that you can pitch more than what you've done previously? What does that education process look like? And what's some of the feedback in making sure that the new messaging is landing? Speaker 200:36:08Mike, I appreciate that you tried to farm that one to Steve. Everyone's trying to get me to stop talking and kick it over to Steve, but I'm going to take that one. And Steve, if you want to chime in, you can. Speaker 300:36:17Sorry. Speaker 200:36:19No, don't be sorry at all. Don't be sorry at all. I'm teasing you. Listen, our relationship with the consulting firms, whether that be Willis Towers Watson, Aon, Mercer, Lachlan, Gallagher, you name it, It's really important part of our business in part because they're critical and strategic consultants to our customers and the work that they do enables us to reach customers and drive our value to those customers. We have an entire team built at Accolade entirely around partnering with consultants, actually partnering with them on the future of our business, the focus of our business and also of course on educating the field in those consulting organizations around those new capabilities. Speaker 200:37:015, 7 years ago, we were an advocacy only company. Today, our capacity to reach those consultants to partner in different regions with them to actually educate customers and then drive value is a huge part of our business. Steve, anything you would add? Speaker 300:37:17No. The only thing I would, Raj, is Speaker 400:37:20the continuing education of the breadth of our platform compared to Speaker 300:37:20what might be an advocacy only customer, because sometimes those RFPs show up as advocacy and we view it as our job to educate. Yes, that's the starting point. That's the starting point, but there's so much more to be done with the customer and help educate them on that as not just clinical value, but also financial value in terms of savings and other opportunities for customers is a big part of what we do day to day. Operator00:37:50Thank you. Please stand by for our next question. Our next question comes from the line of Richard Close with Canaccord. Your line is open. Speaker 800:38:02Yes. Thank you and congratulations on a strong fiscal year. I'm just curious on the revenue guidance, the 16% to 21%, obviously it straddles the preliminary of 20%. But I'm just curious what your thoughts are on the low end, which is in the mid teens. Just what's going into that? Speaker 800:38:27I'm sure it has something to do with the usage base expectations through the year. But just curious what's going in to that? And is any of the TPE, is any of that recurring in nature? Or is that just like one time? Speaker 300:38:51Thanks for the question, Richard. And let me start with, when you think about our commitment and visibility over a longer term period towards that 20% growth rate for the business, we see yet another year of performance in which we grew booking in terms of new ARR at a 20% rate. You see the growth rate on the direct to consumer side of the business growing in excess of 20% And you see the growth rate for these platform connected revenues growing quite a bit in excess of 20%. All of these contribute to the growth profile and the diversification of the growth engine, which is really what is super inspiring to us. When you hear us provide a range at that level, look, we look at it at the beginning of the year at $20,000,000 on a $490,000,000 to $500,000,000 midpoint as being 4% as a very good place to be, while we consider the fact that there is some variability in the revenue associated with these platform connected elements for sure and the direct to consumer revenues. Speaker 300:39:55Let me make sure I tie in the bottom line and our path to profitability to this part of the conversation, because you also saw us raise the bottom line target from what was previously $10,000,000 to $20,000,000 to now being $15,000,000 to $20,000,000 What we're saying hopefully very clearly is that we're excited about the top line growth rate opportunity for the business and also we're incredibly committed to being a profitable business within a range of revenues that we think is incredibly attractive. So we keep that all tied together. We're now coming up on a $500,000,000 of revenue and breaking through to profitability. We're going to make smart choices every day about the at the margin trade between that growth and that profitability commitment. Operator00:40:44Thank you. Please stand by for our next question. Our next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is open. Speaker 900:40:56Yes, thanks. It's been a noisy start to the year, including the changed security breach. And so Raj, just curious just from a macro perspective versus 90 days ago, anything you would highlight in terms of sales cycles, any engagement with customers like anything there to note? Speaker 200:41:19Sorry about that, Craig. We had some cell phones. We had some sort of an amber alert in our area and our cell phones were all going crazy. Thanks for the question. This is Raj speaking. Speaker 100:41:32First of all, Speaker 200:41:32I agree there's been some tumult in the overall marketplace as it relates to things like the change breach. That said, I think the biggest thing on customers' minds today is healthcare trend line. Steve mentioned it. It's true not only around GLP-1s, it's true not only around cancer, but it's also true around inflationary pressures and customers obsession with return on investment. Customers are really pushing hard to see the return on their existing investment. Speaker 200:42:02And in many respects, that's why we're so excited about the platform connected revenues when existing our existing customer base, which is now 1200 strong, is coming back to us and saying, how can you help us maximize the value of everything we've already purchased? In fact, one of our customers called it sweating his existing assets and that's you can imagine that it might be a manufacturing company that use that expression. Our platform gives us the capacity to do exactly that. And so we believe that individual cohorts who are deploying on any given solution will grow on a year over year basis. And that focus of growing individual cohorts on existing assets is really where we think our customers are most focused. Speaker 200:42:47The second point on that would be, we fundamentally believe as well that customers in this environment are looking at the navigation platforms more so than they were in quarters past and that's reflecting a stronger Operator00:43:05pipeline. Thank you. Please stand by for our next question. Our next question comes from the line of Jeff Garro with Stephens. Your line is open. Speaker 600:43:17Yes, good afternoon. Thanks for taking the questions. And really appreciate the helpful information about seasonality of Performance Guarantee revenue, but want to ask about seasonality for usage based fees and where our expectations should be there. And part of the question is trying to get a better understanding of the revenue growth implied for the Q1 versus the full year and kind Speaker 200:43:42of recalling that surge in GLP-one related activity early last year? Thanks. Speaker 300:43:52Hey Jeff, this is Steve. Great question. You think about it, there are a few different angles on usage based fees for sure. Once a customer is up and launched, so we think of this as cohorts of customers who launch. So think of a brand new set of customers launching on year 1, like Raj described, virtually all of our customers have Accolade care and or expert mental opinion attached, in some cases a trusted partner. Speaker 300:44:18And but they're starting from 0 because those are all going to be usage based fees. That customer is going to get ramped up and hit might take 2 to 3 years to get to what we view as that kind of rational targeted utilization max type of place that Raj was describing. So in year 1, you should see it grow a bit throughout the year after into the second half of the year for that first set of customers. Then once they're up and running, we see pretty consistent through the course of the year. Certainly in the case of, for example, our primary care offering in the case of PlusCare on the direct to consumer or enterprise side, you see some impact from flu season and elements like that, but it's fairly consistent throughout the year. Speaker 200:45:03Jeff, I think if you were to if we were fully penetrated to all of our customers and deployed for several years across all those customers with all of our services, that's when you'd start to see seasonality have an impact on platform connected revenues. But today, I think the way Steve described it, means it's going to be fairly up into the right like you see on the chart that we displayed in slide 7. Speaker 300:45:30Jeff, there's one other I think about just to add on to that. Health plans have been becoming a more important part of our revenue growth algorithm. If you think about the arrangement with either Arkansas or California Blue Shield where we're just launching, You're also seeing there that same type of cohort effect where we're having opportunity to do outreach work with that health plan to do engagement as a kind of co branded basis. Those are going to ramp up over time. So those will have I wouldn't necessarily point to seasonality as much as a ramping part that will take to also hit those cause rational peaks of utilization opportunity. Operator00:46:17Thank you. Please stand by for our next question. Our next question comes from the line of Ryan MacDonald with Needham and Company. Your line is open. Speaker 200:46:28Hi, thanks for taking my questions. I wanted to ask about TRICARE and the T5 contract. Earlier this year, obviously, we, I think, finally completed the appeals process and we have full awards. And at least from the sort of government website, it looks like that they're still tracking to launch and start providing care in January of 2025. So what if any at all sort of revenues are you building into the fiscal 2025 guide from that at this point? Speaker 300:46:59Thanks for Speaker 200:46:59the question, Ryan. We continue to build in the growth of the autism care demonstration. That's a population we serve exceptionally well. Satisfaction levels are really high and we expect that business to continue to grow. We're modeling that at modest growth and we're really not factoring in any material new growth in the T5 agreement until we can see until we get a little closer to the actual innovations that the government is going to mandate for the vendors that were selected. Speaker 200:47:29We expect that we'll see a lot more color on that over the course of the next 2 to 3 quarters. Operator00:47:44Our next question comes from the line of Jess Tassen with Piper Sandler. Your line is open. Speaker 1000:47:50Hi. Thanks so much for taking the questions and appreciate all the detail. I just I wanted to confirm for the FY 'twenty four ACV number, can you just remind us again what that comprises? What percent of ACV is PMPM versus contingency based revenue? And kind of what's the assumed attainment of quality and cost based contingencies in that ACV number? Speaker 1000:48:10And finally, sorry for the multipart question, but just finally, can you confirm utilization based revenue from both an enterprise and PlushCare perspective would be excluded from that ACV, year end number? Thank you. Speaker 300:48:25Hi, Jeff. This is Steve. I'll grab that one. So what goes into ACV is just B2B contract revenue. So to your last part of your question, it does not include direct to consumer revenues, but it would include an estimate of 4 or 12 months utilization based revenues. Speaker 300:48:43To your earlier the first part of your question, you think about the ARR number we spoke about $86,000,000 We see conversion of 80% to 85 percent of that number into the ACV number. There's a we essentially haircut for PG realization and timing of launches. So for you to think about the walk from last year's ending number, less terminations to GVR, the gross dollar retention and then add in 80% to 85% of that ARR number you get to the $351,000,000 Importantly, one of the key points we're hoping to drive home here today is the business has expanded and diversified so much since we went public that ACV is one important predictor. I think it's in the range of 70% or so of this year's revenue. When you add on to that, the growth vectors on the platform connected revenues that will also add into that ACV number and the direct to consumer growth rate and the in year revenues from new ARR bookings and launches is how we build up the guide to the 6.25 revenue. Operator00:49:56Thank you. Please standby for our next question. Our next question comes from the line of David Larsen with BTIG. Your line is open. Speaker 1100:50:08Hi, congratulations on your success with Blue Shield of California. I think 2 of your competitors maybe serving that region and both of them seem to be under significant pressure, partly because of the things it sounds like you're able to do that maybe they're not. When you talk about utilization and activation aside from like PlushCare and the Expert Medical Opinion Service, which are both sort of obviously utilization based. When we talk about like a Virta, for example, or a vendor that you're connecting, are you measuring activation of those services? And then what is it typically across your entire network? Speaker 1100:50:50Is it like 20% to 25% or is it like 80%? And then how much revenue is coming from like those sort of partner vendors if we exclude Plush and also Expert Medical Opinion, please? Thank you. Speaker 200:51:07We're going to tag team this answer, David. First of all, Speaker 300:51:10thank you for the question. Speaker 200:51:13Our success with Blue Shield of California has been a partnership effort. It's been Blue Shield of California and the team here at Akkreli get a ton of credit. We've partnered really well and the virtual blue plan is something that I think both companies are really proud of. Secondly, as it relates to platform connected revenues, you're correct. They do include both our expert medical opinion and primary care service and those services or the utilization of the services in our trusted partner ecosystem. Speaker 200:51:42Let me give you an example of how we think about a trusted partner ecosystem utilization. We'll take Virta as an example. 9% of most populations 9% of the American population wrestles with diabetes. And I'm just going to use this simple math. So you might presume that 9% of a population using Accolade's navigation platform in Virta is a candidate for using Virta. Speaker 200:52:07Let's say a third of that population is reachable in the 1st year. That might be a cohort that we convert at, I'd say 50% in that 1st year. So we're talking about 1.5% of the 9% that we reached in that 1st year. Each year, we have an opportunity to grow that utilization rate as we build a relationship with that membership because we've got a long term relationship with that customer and extraordinary engagement rates. And so it will depend on the service, Dave. Speaker 200:52:37With a vendor like Virta, it might be focused on people who are pre diabetic and diabetic with an offering like musculoskeletal like hinge or sword. It might be those who are wrestling with musculoskeletal issues that might be a smaller percentage of the population, but each have an opportunity to grow each year. Steve or Jeff? Speaker 300:52:59I would just add, Dave, to that. If you think back to Capital Markets Day last year, I think Sam Anakin from Virta remarked that when Accolade is present, we're seeing sometimes 2x utilization there. And so there's a very symbiotic relationship here between certainly the partner in Accolade in which we're sharing in the to the extent we're able to drive incremental revenue and also to the customer who's procured that solution believes that they have a real need within their population, they want to see that engagement and ultimate completion. So we've chosen that select set of TPEs and design relationships with them, those partners, so that we can share in the revenue when we drive that high quality engagement with the partners. So today it's a very important part of our revenue, still fairly small in terms of the total revenue that Accolade is driving, but TPEs are up, really important part of that growth rate. Speaker 300:54:00TPEs are up really important part of that growth rate. Operator00:54:06Thank you. Please stand by for our next question. Our next question comes from the line of Stan with Wells Speaker 1200:54:24Fargo. Raj, maybe just going back to the prepared remarks. I think you touched on the fact that you're continuing to execute against a bit of a backdrop of a challenging sales environment. Can you just clarify what are you seeing in terms of end market demand, maybe competitive dynamics? And maybe if you can frame that on how that compares versus the trailing 12 months? Speaker 1200:54:44Thanks. Speaker 200:54:46Yes. Dan, I appreciate you asking the question because I need to clarify maybe any perception that might have been in the prepared remarks. Our new business growth as it relates to ARR growth over the last couple of years has continued to be very strong. And so we are executing well in the market. We don't think the demand environment has changed dramatically. Speaker 200:55:09We think it continues to grow. We think it continues to grow both for new business ARR as well as for platform connected revenues. Speaker 300:55:18I think perhaps what you may Speaker 200:55:19have been referring to is me speaking to the changing economic conditions and the need to drive profitable growth for companies like ours and the significance of the turn where we're entering fiscal year 2025 with our first full year of adjusted EBITDA profitability. And that profitable growth, along with the strong demand that we're seeing is the buzzword of our business, not just growth. We're going to grow profitably and we're going to grow responsibly and we expect to continue to grow aggressively moving forward. Operator00:56:00Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to management for closing remarks. Speaker 200:56:09We appreciate all of you being here and we look forward to our follow-up conversations in the days ahead. Operator00:56:16Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAccolade Q4 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) Accolade Earnings HeadlinesPernod completes sale of wine portfolio to Accolade Wines ownerApril 30, 2025 | reuters.comAccolade, Inc. (NASDAQ:ACCD) Given Average Recommendation of "Hold" by AnalystsApril 30, 2025 | americanbankingnews.comNew “Trump” currency proposed in DCAccording to one of the most connected men in Washington… A surprising new bill was just introduced in Washington. Its purpose: to put Donald Trump’s face on the $100 note. All to celebrate a new “golden age” for America. May 6, 2025 | Paradigm Press (Ad)Accolade completes merger with Transcarent, shifts controlApril 9, 2025 | investing.comDigital health startup Transcarent takes Accolade private in $621 million dealApril 8, 2025 | cnbc.comTranscarent Completes Merger With AccoladeApril 8, 2025 | businesswire.comSee More Accolade Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Accolade? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Accolade and other key companies, straight to your email. Email Address About AccoladeAccolade (NASDAQ:ACCD), together with its subsidiaries, engages in the development and provision of personalized and technology-enabled solutions that help people to understand, navigate, and utilize the healthcare system and their workplace benefits in the United States. The company offers a platform with cloud-based intelligent technology and multimodal support from a team of advocates and clinicians, including registered nurses, physician medical directors, pharmacists, behavioral health specialists, women's health specialists, case management specialists, expert medical opinion providers, and primary care physicians. It also provides medical opinion services to commercial customers; and navigation, care, and advocacy solutions. In addition, the company offers medical consultations that connect patients to qualified condition-specific specialists for adult and pediatric care; and primary care and mental health support solutions. It serves employers who provide employees and their families a single place to turn for their health, healthcare, and benefits needs. 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There are 13 speakers on the call. Operator00:00:00Hello, and thank you for standing by. Welcome to Acolyte's 4th Quarter 20 24 Earnings Results Conference Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer I would now like to hand the conference over to Todd Freeman, Senior VP of Investor Relations. You may begin. Speaker 100:00:35Thanks, operator. Welcome everyone to our fiscal Q4 earnings call. With me on the call today are our CEO, Rajiv Singh and our CFO, Steve Barnes. Before I turn the call over to Rajiv, please note that we'll be discussing certain non GAAP financial measures that we believe are important when evaluating Acculey's performance. Details on the relationship between these non GAAP measures to the most comparable GAAP measures and the reconciliations thereof can be found in the press release that's posted on our website. Speaker 100:00:59Also, please note that certain statements made during this call will be forward looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward looking statements are subject to risks and uncertainties among other factors that could cause the actual results to act like this materially from those expressed or implied on the call. For additional information, please refer to our cautionary statement in our press release and our filings with the SEC, all of which are available on our website. There are slides that will accompany the CFO presentation on this call that will be available on the webcast. The slides will be available for download following the call. Speaker 100:01:29With that, I'll turn the call over to Rajiv. Speaker 200:01:31Thank you, Todd, and thank you to everyone for joining us today on our fiscal 2025 kickoff earnings call. This is an important moment for Accolade and for our shareholders. Over the last several years, markets, including health care, have fundamentally changed. Success today requires a balanced growth mindset with a focus on execution, discipline and profitability. Speaking specifically to healthcare, it's time for digital healthcare disruptors to prove their business models have product market fit in a large market, operating leverage, a discernible competitive advantage and teams that can execute through a challenging environment. Speaker 200:02:04Some will succeed and others will not. Accolade is amongst that select group that has succeeded by checking each of these boxes. Today, we're a well positioned company, positioned to build a strong and enduring business for our customers, shareholders, employees and partners. With those high level remarks behind us, let's begin to zoom in on our business and where we stand. We just completed a fiscal year where we delivered north of 20 percent top line growth and improved our adjusted EBITDA approximately $30,000,000 year over year. Speaker 200:02:36Both of these achievements are above the expectations that we set at the outset of the fiscal year. As a brief aside on the consistency of our execution, with the exception of a quarter where we lost a large customer 2 years ago, we have consistently met or exceeded expectations since we became a public company in July 2020. Our outlook for fiscal year 2025 is also strong. Consistent with our long term guidance, we expect top line growth in the neighborhood of 20% and profitable adjusted EBITDA on a full year basis. Today, serving more than 14,000,000 lives across more than 1200 customers, we are a scaled healthcare services company with a direct line of sight becoming a rule of 40 company in the years ahead. Speaker 200:03:19Our growth in the year ahead is driven by several things. 1st, in annual recurring revenue growth rate of 20% in the last fiscal year, reflecting the strength of our business to business employer, government and health plan offerings. 2nd, the continued strength of a direct to consumer business that again grew over 20% last year and is highly differentiated in a competitive market. And third, the exceptional growth of what you will hear us refer to today as platform connected revenues. These are revenues from offerings either our own or from our partners that are delivered because they are connected to our healthcare navigation platform. Speaker 200:03:58More to come on platform connected and usage based revenues later in today's call. Let's get into more depth on each element of our business and offerings and why they continue to grow at rates that outpace the market. Our business to business offerings focused on employers, health plans and the government are highly differentiated, valuable to our customers and members and scaled to deliver growth and profitability. Our healthcare navigation platform is seamlessly integrated with our own primary care and expert medical opinion competition. From an employer perspective, we solve the physician gap, helping people get access to the right care when they need it from us, our partners or from brick and mortar health systems, something that is particularly challenging for underserved urban, rural or minority populations. Speaker 200:04:52That seamless integration from navigation is enabled by a technology stack, which is at scale, state of the art and market leading. It is extensible and as new capabilities have emerged like generative AI, we've been able to embrace them at pace and deliver leverage to our business. We were recently the recipient of the Artificial Intelligence Excellence Award from the Business Intelligence Group. AI and our investment in technology writ large are key contributors to the significant improvement in our profitability over the last several years. That seamless integration enables platform connected revenues. Speaker 200:05:30These revenues reflect visits with our primary care physicians, 2nd opinion consults with expert specialists and enrollments in our Trusted Partners program. These revenues grow in 2 ways, through customer adoption of new services and through member utilization of those services. Once we see customer adoption in any given year, we expect member usage of those respective services to grow in each following year up to an appropriate threshold based on the relevance of the respective service to a given population. The flywheel is extremely simple. Customer adoption of the service, deployment of the service, employee engagement of the service, which grows each year as a cohort. Speaker 200:06:13One final point on our business to business offerings. The diversity of our offerings gives us access to a variety of growth engines. In previous quarters, we've discussed the demand for our offerings from both employers and the government. In today's call, I want to give you more depth on our appeal to health plans. As many of you know, for many years now, we've maintained productive relationships with health plans, such as UnitedHealthcare and Aetna that resell our expert medical opinion service. Speaker 200:06:41We're increasingly seeing health plans interested in relationships where certain of our capabilities are embedded into their own employer offerings. Just this past quarter, Blue Shield of California published the results from the 1st full year of offering a virtual first plan design called Virtual Blue powered by Accolade. The results were outstanding. Here are some highlights. Reduction in overall cost for the population of 8% to 10%, emergency room claims down 11%, 85% of members received a mental health screening. Speaker 200:07:14And bringing you back to the physician gap, 2 thirds of their members received an appointment within a single day. In addition, recently, as some of you noted, Blue Cross Blue Shield of Arkansas launched an employer offering powered by our navigation platform where customers have the option to also add accolade care or second opinion capabilities. We expect our relationships with health plans, both reseller arrangements and partnerships focused on offerings where Accolade capabilities are fundamental to the new solution to be a growth engine for the business in the years ahead. And Steve will give you more color on how to model these revenues in his remarks. Moving to our D2C offerings, we offer a compelling and differentiated virtual primary care and mental health offering that continues to grow faster than the rest of the market. Speaker 200:08:02Let me outline for you why this growth has continued to outpace other telehealth offerings in the employer and health plan markets and why such growth is sustainable. First, most telehealth offerings in the market offer urgent care, meaning the physicians do not have access to the longitudinal care record of the patient or any information on their corporate benefits. Patients cannot ask to see the same physician again and most physicians are employed in a gig economy part time role. Our PlusCare direct to consumer offering is the opposite of those solutions. Our positions utilizing built for purpose longitudinal EMR system, patients can select the primary care physician and stay with them and our physicians spend at least 60% of their time serving Accolade patients. Speaker 200:08:502nd, we've built an integrated collaborative care model that embeds mental health care into our primary care model. As Blue Shield California noted in their study, we perform mental health screenings on the majority of our patients and we have behavioral health specialists embedded in every care team, thereby providing a scalable mental health service that patients love. 3rd, our service is powered by a state of the art digital experience and dedicated physicians from the top 50 medical schools in the country, a combination that yields Net Promoter Scores of around 90 consistently. We simply have an easier to use service that delivers exceptional patient value. One final point, we've tightly integrated the team's services and capabilities from PlusCare since our 2021 acquisition in a way that has fostered the continued growth of the consumer business, while allowing us to extend access to the same exceptional care experience from these dedicated physicians to our employer customers. Speaker 200:09:50Notably, approximately 80% of the new Accolade customers that launched on January 1 this year deployed Accolade Care. PlusCare and other acquisitions have flourished since being brought under the Accolade umbrella, both individually and as critical components of our B2B offerings. As I turn the call over to Steve, a closing thought. I have never been more bullish about the strength of the market we compete in, the scale and the leverage of our model and the team we've aligned to execute against our vision. As one of our investors, Andreessen Horowitz, said in a recent blog post, it's time to build in healthcare. Speaker 200:10:26Accolade is leading the way. Steve? Thanks, Raj. Speaker 300:10:31I'll recap the results for the fiscal 4th quarter, comment on our outlook and forward guidance and provide additional color on the key drivers of our model as our business has expanded and materially since our IPO in 2020. The webcast will show a set of slides to support these comments and the slides will be posted to our IR website after the conclusion of the call. We hit on this at length in our Capital Markets Day presentation last May and it's worth reiterating. We have executed on a strategy that has meaningfully diversified our offering mix, our customer base and our partnerships and by extension the sources of our revenue. Our margin leverage both gross margin and operating margin is likewise rooted in this diversification as offerings like primary care and our trusted partner ecosystem carry attractive gross margins and also because the attachment and increasing contribution usage based revenue like EMO case rate, primary care visit fees and partner ecosystem revenues create the opportunity to capture more wallet share during the year without incremental sales and marketing costs. Speaker 300:11:39You'll note that we are using the terms usage based revenue instead of utilization based revenue for clarification starting with this quarter and in our 10 ks. As I walk through the results, our key metrics and then our guidance, please keep this diversification and evolution of our business in mind. In that vein, I'll note that many of you have asked for more detail on the various revenue streams and dynamics driving our business. Today, we will provide some of that additional color to illustrate the breadth and strength of our business as we accelerate into profitability. 1st, let's start with the quarter. Speaker 300:12:14On the slide on the webcast, you'll see we generated $125,000,000 in revenue in the Q4 of fiscal 2024, representing 30% pro form a growth over Q4 of fiscal 2023. This growth was driven by a healthy mix of PG performance, new customer launch revenues, usage based visit and case rate revenues and B2C virtual primary care. Adjusted EBITDA was also strong coming in at $18,500,000 the largest quarter for adjusted EBITDA in Accolade's history. Fiscal Q4 adjusted gross margin was 54.2% versus 50.5% in the prior year period. And for the full year, revenue was $414,300,000 and adjusted EBITDA loss was $7,500,000 Note, in fiscal 2024, we generated almost $100,000,000 in revenue from Plus Care, our D2C offering, which reflects the value and differentiation of that offering and the platform as Raj described earlier. Speaker 300:13:18I'll provide further depth on our various revenue streams shortly. Adjusted gross margin for the year increased to 47.6% from 46.8 percent in the prior year. Now turning to the balance sheet. Cash, cash equivalents and marketable securities totaled $237,000,000 at the end of the 4th fiscal quarter, reflecting an increase of $7,000,000 during the quarter. Our cash balance combined with our turn to profitability continue to provide us confidence in the strength of our balance sheet and our plans to manage our convertible notes which mature in April 2026. Speaker 300:13:58Before turning to guidance, allow me to reiterate that we had a strong selling season in fiscal 2024 with $86,000,000 of ARR bookings representing approximately 20% growth over fiscal 2023. Keep in mind, the nature of our ARR bookings is evolving to reflect the strength, breadth and appeal of our capabilities to a wide range of participants in the industry. In addition to contributions from the employer and government markets, health plan partnerships are meaningful ARR contributors and represent significant growth opportunities for Accolade. Relevant to that point, let me touch on 2 annual metrics that we have shared historically. 1st, ACV or annual contract value was $351,000,000 at the end of fiscal 2024, which compares to $309,000,000 at the end of fiscal 2023. Speaker 300:14:48As we discussed in detail at Capital Markets Day last year, ACV is a metric whose relevance has evolved since the time of our IPO. 4 years ago when we were advocacy only and all of our revenue was PMPM based, ACV represented more than 90% of the following year's revenue forecast. With the dramatic expansion of our business since that time, the increasing contribution of usage fees and our direct to consumer virtual primary care offering, ACV is still a relevant metric, but less so than historically. This is why we are providing additional color about usage fee growth and the drivers therein, as well as a breakout of fee fee revenues. Gross dollar retention or GDR was 89% at the end of fiscal year end 2024 and we expect it to be in the 90% range going forward. Speaker 300:15:38A couple of comments about GDR. First, a portion of the difference from our historical GDR range at fiscal year end 2024 is associated with the ending of our TRICARE product in April 2023 and the delayed launch of T5. We are bullish on the continued growth and value we provide the government via our autism care demonstration offering and the opportunity to drive revenue in future via the T5 program. Another aspect of GDR relates to the maturing profile of our business. Our company now has more than 1200 customers versus 54 at the time of our IPO. Speaker 300:16:14We are making decisions across the business that are highly aligned with our commitment to delivering profitable growth. As we make that turn, our current focus and offering portfolio is not always aligned with some customer relationships and their contracts with us. We acknowledge that this is part of building a growing company that is disrupting the established healthcare system and we are making choices that are in the long term interest of Accolade and our shareholders. Now turning to guidance. We are reiterating our fiscal 2025 revenue guidance and providing an initial range of $480,000,000 to $500,000,000 representing year over year growth in the range of 16% to 21%. Speaker 300:16:56I'll provide some detail on the revenue build from a couple of viewpoints and in a moment walk through some slides to illustrate. As Raj noted earlier, we view our business through 2 broad categories. B2B, which comprises employer, health plan, government and partner end markets and B2C representing FlushCare, our direct to consumer VPC and mental health offering. On the B2B side, our healthcare navigation platform serves as the chassis upon which we deliver our core advocacy offering along with integrated add on elements of VPC, EMO and our broad set of PPE partners, which cover a range of critical clinical categories. We call these add on elements platform connected revenues. Speaker 300:17:41Typically, we drive PEPM or PMPM access fee revenues from our navigation platform and usage based revenues from our platform connected offerings. In addition, our EMO offering is sold on a standalone basis, primarily through channel partnerships with health plans. In D2C, we derive revenues from visit fees and subscription fees. Our D2C margin profile is attractive and we carefully manage customer acquisition costs, retention rates and LTVs. Remember that the same virtual primary care offering about sending doctors, care providers and technology serves our B2B customers, including employers and health plans. Speaker 300:18:24The range of our revenue guidance reflects that there is variability in some elements of our model that we manage carefully to balance growth, profitability and shareholder value creation. With respect to adjusted EBITDA, we are improving our guidance for fiscal 2025 to a range of 3% to 4 percent of revenue or approximately $15,000,000 to $20,000,000 And we are providing fiscal Q1 guidance today of revenue in the range of $103,000,000 to $106,000,000 and adjusted EBITDA loss in the range of $9,000,000 to 12,000,000 dollars You'll see on Slide 6 that we will let we lay out a view of our expected approximately approximate quarterly revenues and adjusted EBITDA ramp in fiscal 2025, which sums to the midpoint of the respective annual ranges. As a reminder, for advocacy deals, we place on average about 10% to 15% of our fees at risk on a performance basis to demonstrate measurable healthcare cost savings for our customers. As in previous years, at the start of the year, we forecast that the majority of those claims based savings PGS will be recognized in fiscal Q4, which along with the impact of forecasted new customer launches on January 1, are the primary drivers of the higher portion of annual revenue in fiscal Q4. Speaker 300:19:43This quarterly ramp is very similar to the ramp we outlined this time last year at our Capital Markets Day, which we ultimately exceeded. On the next slide, you'll see a view of adjusted EBITDA, which we expect the loss to narrow in fiscal Q2 then to be approximately breakeven in fiscal Q3 with the second half of the year generating significant positive adjusted EBITDA. On the next slide, we will walk through revenue composition. We've talked about the growing contribution of usage based revenues over the past few years. This represents the biggest shift in our business model since the IPO. Speaker 300:20:22With a few years of operating history behind us following the FlushCare and 2nd MD acquisitions, we'd like to lay out in some detail the impact of usage based revenue. For definition, usage based revenue largely represents primary care visit fees, expert medical opinion case rate consultations and TPB revenue that is tied to usage. Importantly, usage based revenue has grown from 15% of revenue in fiscal 2022 to 27% in fiscal 2024 and we expect it will represent approximately 30% to 35% of revenue in fiscal 2025. This represents growth from the existing navigation customers who are adding platform connected offerings, plus growth from new customers launched within our bundled solution, which includes the platform connected offering, EMO and Care and increasingly choosing to also attach a trusted partner, as well as the increasing utilization of these platform connected offerings by the population to have access to them. As noted by the dark blue line in the graph, platform connected revenues approximately doubled in each of fiscal years 2023 2024 and we expect those revenues to continue to grow materially in fiscal 2025 as we drive incremental usage based revenues from each of our cohorts of customers. Speaker 300:21:44What's most exciting about this dynamic as we don't expect or need to see dramatic changes in usage rates to drive revenue opportunity. We have more than 12,000,000 lives covered under ExpertMD and more than 1,500,000 lives under Accolade Care. Relatively small increases in EMO utilization, VTC attach rates or TBE referrals can add meaningful revenue growth in any year. Health plan partners leveraging Accolade Care to deliver virtual primary care will also be a driver of usage revenues as evidenced by the Blue Show of California example that Josh described earlier. Speaker 400:22:22And on Slide 9, you'll see a view Speaker 300:22:24of fiscal 2025 revenue. When you apply the context that I just laid out, you'll see in the current year forecast a walk from fiscal 2024 results to our fiscal 2025 guidance. Starting with the fiscal 2024 revenue of $414,000,000 these first few bars should look familiar from our Capital Markets Day last year. You have the impact of churn offsetting growth in new ARR and in year launches. You'll also note that we don't carry 100% of ARR for the following year's revenue forecast based on start dates and some conservatism around PGS attainment in year 1 of the new contracts. Speaker 300:23:01I'll point out 2 columns that provide additional detail in our model. First is the increase in usage based revenue and the second is the growth in B2C primary care. To better understand the dynamic of increasing revenue from new offerings and increased usage, let's look at an example customer on the next slide. This slide shows one of our larger customers who started with Accolade's navigation platform in 2018. We show a 5 year progression on the slide starting with fiscal 2020 when the PMPM revenue was approximately $8 all on an access fee only basis. Speaker 300:23:37Over the next few years, customer grew modestly through headcount and TPE adoption. And then in fiscal 2022, the customer added EMO and in fiscal 2023, the customer added Accolade Care and several more TPE solutions. You can see that as we have delivered more offerings, more services and more care to the customer and its members, we have also seen our revenue from this customer grow with the PMPM increasing approximately 50% from a start as a navigation only customer. We consider this a model customer, one which has invested with us to deploy fully integrated stack of healthcare capabilities rendered as a single place for all its employees and members of their families to turn for their healthcare and benefits needs. The impact of the customer is better outcomes across their population and lower medical spend. Speaker 300:24:28And as we look ahead, we expect our wallet share with this customer to continue to grow. When you apply that model to our broader book of healthcare navigation customers, As we drive additional attachment and usage of these platform connected offerings, we can see a significant revenue expansion opportunity in the range of 50%. This incremental revenue lift with existing customers layers on top of our enterprise and consumer growth engines, providing the foundation for sustainable revenue and margin expansion. To recap, today we outlined several elements at the heart of the business we are building, including delivery of platform connected revenues on top of our healthcare navigation platform, which drives scale and differentiation. The diverse the strength of our diversified revenue streams, the integration of our platform, operations, offerings and capabilities and the predictability of our model combined with the close of another year of sound execution give us confidence that fiscal year 2025 will be our 1st full year of profitability on adjusted EBITDA basis on the path to creating significant value for members, customers, partners and our employees and shareholders. Speaker 300:25:41And with that, we'll open the call to questions. Operator00:25:44Thank Our first question comes from the line of Jalendra Singh with Truist Securities. Your line is open. Speaker 500:26:17Thank you and thanks for taking my questions. I want to ask about the PGEs and the relationship with platform connected revenues. Clearly, Performance Guaranty is a meaningful contributor for the company in Q4. I'm just curious how did those trends compare to expectations in the quarter? Were there any particular benchmarks or areas you outperformed? Speaker 500:26:36Were there any areas you see improvement in future? And just curious if there's any change in the way these PGs are getting design for next year, essentially in context of this focus on platform connected revenues, is level of engagement or enrollment with trusted partners becoming a bigger portion of your PG benchmarks? Speaker 200:26:56Let me take a first cut at that, Steve, and I'll turn it over to you. Jalinder, thanks for Speaker 300:27:00the question. This is Raj. Speaker 200:27:03One of the core value propositions we've always had with our customers is the need to connect their ecosystem and to drive downstream utilization of their chosen partners. And driving the utilization of those capabilities Speaker 400:27:18has often been, Speaker 200:27:18a trusted partner ecosystem and driving the utilization of those capabilities has often been one of the PGs or performance metric that customers have measured and compensated us by. And so in that context, I think it's very consistent with the long term strategic direction of the company. I wouldn't say that it materially changed the achievement of performance guarantees moving forward. That said, one last point. We get paid and Steve referred to it in his prepared remarks at 10% to 15% of total revenues, oftentimes on savings associated with a particular customer. Speaker 200:27:54When we drive downstream utilization of trusted partners or our own primary care expert medical opinion service, it accrues value to driving savings for the customer and therefore gives us more confidence in our capacity to achieve those PGs downstream. Steve, anything you'd add? Speaker 300:28:09I'd just add with respect to Q4, because I think that's part of Joe Hunter's question as well. We saw quite consistent performance by Accolade as compared to prior years even with the elevation of healthcare costs that we saw certainly in calendar year 2020 3 heading here into 2024. And that is a reminder about the fact that when we structure our contracts, we're essentially meaning to beat the index and so do better than those higher costs. I will say you asked about contracting heading into the next year. Raj knows this as well. Speaker 300:28:42Customers are extremely sensitive to the elevated cost environment that we are in. So we continue to align with them with this PG dynamic in our contract and certainly make the case that the integration of all of our capabilities is a great way to manage that cost for their company spend as well as for the health of their employees and the members. Operator00:29:07Thank you. Please standby for our next question. Our next question comes from the line of Stephanie Davis with Barclays. Your line is open. Speaker 400:29:18Hey guys, thank you for taking my question. I was hoping you could help us think about the attach rate and cross opportunities in your customer base as you move more towards focusing on them versus kind of the new wins. In terms of benchmarks, is there a high end within your customer base of revenue per life or adjacencies attach rate that you could highlight? And how does that factor into your growth as you think about the coming year? Speaker 200:29:46Thanks for the question, Stephanie. I think the first thing I would say is we're focusing on both on growth in terms of new customer acquisition in the enterprise space where we're focusing on employers, health plans and the government. We're also focusing on growth from a direct to consumer perspective. And yes, we're also focusing on growth as it relates to platform connected revenues inside the customer base. I think Steve really captured it well in his prepared remarks as he pulled as he walked through platform connected. Speaker 200:30:1680% of our customers last year on January 1, this past year on January 1, deployed both our navigation platform and Accolade Care. 96% of our customers deployed our navigation platform and expert medical opinion. So a part of the story is the pull through, the actual adoption of those services or our trusted partner solutions by those customers. The next part of that story is the actual adoption and usage by employees. And we expect the usage of each of those services to grow based on what the respective services needs are within that customer base or within that member base. Speaker 200:30:52And so when we think about the targeted opportunities, Steve's last slide probably said it's the best. A target customer that has actually grown PEPM or in the case of this slide PMPM by almost 50% simply through embracing solutions, not all of our trusted partner solutions, but a subset of them along with virtual primary care and expert medical opinions and growing the PEPM or PMPM of that account by about 50%. There's still room to sell them more trusted partner ecosystem solution. There's still room to grow primary care and expert medical opinion utilization, but we'd expect that, that example applies to any of our customers, which means we could grow PEPM on the navigation business by about 50% or more and we'll watch this customer grow and we think over time the ceiling on that growth will continue to improve. Operator00:31:48Thank you. Please standby for our next question. Our next question comes from the line of Ryan Daniels with William Blair. Your line is open. Speaker 600:31:58Yes. Thanks for taking the question and thanks for all the detailed information in the PowerPoint deck. I guess maybe Steve one for you. As platform connected revenues are more usage based. Can you talk a little bit about what you can do as an organization to continue to drive that? Speaker 600:32:14And what I mean there is, I assume every year that a client has those solutions, it grows naturally. As members use it, they continue to use it. But what can you do maybe 1 to market and drive awareness of what you're offering to covered lives? And then number 2, are there things you could do with analytics internally to kind of promote those services during points of contact when you're engaging with members to also drive that use? Thanks. Speaker 300:32:43Thanks very much for the question, Ryan. The platform connected revenues are incredibly important part of what we do at Accolade. The entire business candidly is focused around this. If you think back to our Investor Day and we laid out how we think about starting with stratifying populations and then applying what we call true health actions to them, which is a data informed and applying the intelligent platform that we have inside of Accolade to get the right members to the right place efficiently, get them to a primary care appointment or an expert medical opinion or to the right clinical program to one of our partners. That is absolutely the part of the way we think about the business. Speaker 300:33:25And we think about it like a funnel. If you think about it, essentially a marketing company sorting through the members to get to the right place at the right time very efficiently, all of that is a critical part of our business. With respect to using analytics, it's exactly how we think about the populations that we serve. In the end, we think of ourselves as a population health oriented company that we can look at the members who are not only in need of help right now, but maybe headed towards the need and leverage that True Health engine in order to get them to that help at the right time. The really compelling part of that from a financial standpoint, if you go back to that slide with the blue line on Slide 9 and so Slide 10, we see the acceleration of those platform connected revenues. Speaker 300:34:16We feel that we're just getting started and have a whole lot of proof points that tell us when we integrate our offerings, we can get people to the right place and also drive revenue for Affiliates. Speaker 200:34:25And Ryan, I think one addition that I would add or put on the pot here for you to think about as well. All of these are in the vein of improving clinical outcomes from our customers. Most of our customers believe that they're underspending on primary care that the lack of access to primary care for their populations is harming their health and increasing their costs. And so they will charter us with improving utilization of primary care. In part, we do that by segmenting populations, but we actually run campaigns to people who have not seen a primary care physician in the last 12 months. Speaker 200:35:00People who have been to the emergency room, but haven't seen a primary care physician post that emergency room visit. Those types of things are outbound capabilities that we can using our digital, mobile or portal capabilities reach members in their time of need and expose them to capabilities that meet clinical needs for our customers, improve outcomes and lower cost. Operator00:35:30Our next question comes from the line of Michael Cherny with Leerink Partners. Your line is open. Speaker 700:35:37Good afternoon and thank you for all the color so far. Steve, you talked about the success during the selling season. As you think about the changing landscape of your business, how are you positioning that with consultants, with industry participants, so that when you go to market into RFPs that you know that you can pitch more than what you've done previously? What does that education process look like? And what's some of the feedback in making sure that the new messaging is landing? Speaker 200:36:08Mike, I appreciate that you tried to farm that one to Steve. Everyone's trying to get me to stop talking and kick it over to Steve, but I'm going to take that one. And Steve, if you want to chime in, you can. Speaker 300:36:17Sorry. Speaker 200:36:19No, don't be sorry at all. Don't be sorry at all. I'm teasing you. Listen, our relationship with the consulting firms, whether that be Willis Towers Watson, Aon, Mercer, Lachlan, Gallagher, you name it, It's really important part of our business in part because they're critical and strategic consultants to our customers and the work that they do enables us to reach customers and drive our value to those customers. We have an entire team built at Accolade entirely around partnering with consultants, actually partnering with them on the future of our business, the focus of our business and also of course on educating the field in those consulting organizations around those new capabilities. Speaker 200:37:015, 7 years ago, we were an advocacy only company. Today, our capacity to reach those consultants to partner in different regions with them to actually educate customers and then drive value is a huge part of our business. Steve, anything you would add? Speaker 300:37:17No. The only thing I would, Raj, is Speaker 400:37:20the continuing education of the breadth of our platform compared to Speaker 300:37:20what might be an advocacy only customer, because sometimes those RFPs show up as advocacy and we view it as our job to educate. Yes, that's the starting point. That's the starting point, but there's so much more to be done with the customer and help educate them on that as not just clinical value, but also financial value in terms of savings and other opportunities for customers is a big part of what we do day to day. Operator00:37:50Thank you. Please stand by for our next question. Our next question comes from the line of Richard Close with Canaccord. Your line is open. Speaker 800:38:02Yes. Thank you and congratulations on a strong fiscal year. I'm just curious on the revenue guidance, the 16% to 21%, obviously it straddles the preliminary of 20%. But I'm just curious what your thoughts are on the low end, which is in the mid teens. Just what's going into that? Speaker 800:38:27I'm sure it has something to do with the usage base expectations through the year. But just curious what's going in to that? And is any of the TPE, is any of that recurring in nature? Or is that just like one time? Speaker 300:38:51Thanks for the question, Richard. And let me start with, when you think about our commitment and visibility over a longer term period towards that 20% growth rate for the business, we see yet another year of performance in which we grew booking in terms of new ARR at a 20% rate. You see the growth rate on the direct to consumer side of the business growing in excess of 20% And you see the growth rate for these platform connected revenues growing quite a bit in excess of 20%. All of these contribute to the growth profile and the diversification of the growth engine, which is really what is super inspiring to us. When you hear us provide a range at that level, look, we look at it at the beginning of the year at $20,000,000 on a $490,000,000 to $500,000,000 midpoint as being 4% as a very good place to be, while we consider the fact that there is some variability in the revenue associated with these platform connected elements for sure and the direct to consumer revenues. Speaker 300:39:55Let me make sure I tie in the bottom line and our path to profitability to this part of the conversation, because you also saw us raise the bottom line target from what was previously $10,000,000 to $20,000,000 to now being $15,000,000 to $20,000,000 What we're saying hopefully very clearly is that we're excited about the top line growth rate opportunity for the business and also we're incredibly committed to being a profitable business within a range of revenues that we think is incredibly attractive. So we keep that all tied together. We're now coming up on a $500,000,000 of revenue and breaking through to profitability. We're going to make smart choices every day about the at the margin trade between that growth and that profitability commitment. Operator00:40:44Thank you. Please stand by for our next question. Our next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is open. Speaker 900:40:56Yes, thanks. It's been a noisy start to the year, including the changed security breach. And so Raj, just curious just from a macro perspective versus 90 days ago, anything you would highlight in terms of sales cycles, any engagement with customers like anything there to note? Speaker 200:41:19Sorry about that, Craig. We had some cell phones. We had some sort of an amber alert in our area and our cell phones were all going crazy. Thanks for the question. This is Raj speaking. Speaker 100:41:32First of all, Speaker 200:41:32I agree there's been some tumult in the overall marketplace as it relates to things like the change breach. That said, I think the biggest thing on customers' minds today is healthcare trend line. Steve mentioned it. It's true not only around GLP-1s, it's true not only around cancer, but it's also true around inflationary pressures and customers obsession with return on investment. Customers are really pushing hard to see the return on their existing investment. Speaker 200:42:02And in many respects, that's why we're so excited about the platform connected revenues when existing our existing customer base, which is now 1200 strong, is coming back to us and saying, how can you help us maximize the value of everything we've already purchased? In fact, one of our customers called it sweating his existing assets and that's you can imagine that it might be a manufacturing company that use that expression. Our platform gives us the capacity to do exactly that. And so we believe that individual cohorts who are deploying on any given solution will grow on a year over year basis. And that focus of growing individual cohorts on existing assets is really where we think our customers are most focused. Speaker 200:42:47The second point on that would be, we fundamentally believe as well that customers in this environment are looking at the navigation platforms more so than they were in quarters past and that's reflecting a stronger Operator00:43:05pipeline. Thank you. Please stand by for our next question. Our next question comes from the line of Jeff Garro with Stephens. Your line is open. Speaker 600:43:17Yes, good afternoon. Thanks for taking the questions. And really appreciate the helpful information about seasonality of Performance Guarantee revenue, but want to ask about seasonality for usage based fees and where our expectations should be there. And part of the question is trying to get a better understanding of the revenue growth implied for the Q1 versus the full year and kind Speaker 200:43:42of recalling that surge in GLP-one related activity early last year? Thanks. Speaker 300:43:52Hey Jeff, this is Steve. Great question. You think about it, there are a few different angles on usage based fees for sure. Once a customer is up and launched, so we think of this as cohorts of customers who launch. So think of a brand new set of customers launching on year 1, like Raj described, virtually all of our customers have Accolade care and or expert mental opinion attached, in some cases a trusted partner. Speaker 300:44:18And but they're starting from 0 because those are all going to be usage based fees. That customer is going to get ramped up and hit might take 2 to 3 years to get to what we view as that kind of rational targeted utilization max type of place that Raj was describing. So in year 1, you should see it grow a bit throughout the year after into the second half of the year for that first set of customers. Then once they're up and running, we see pretty consistent through the course of the year. Certainly in the case of, for example, our primary care offering in the case of PlusCare on the direct to consumer or enterprise side, you see some impact from flu season and elements like that, but it's fairly consistent throughout the year. Speaker 200:45:03Jeff, I think if you were to if we were fully penetrated to all of our customers and deployed for several years across all those customers with all of our services, that's when you'd start to see seasonality have an impact on platform connected revenues. But today, I think the way Steve described it, means it's going to be fairly up into the right like you see on the chart that we displayed in slide 7. Speaker 300:45:30Jeff, there's one other I think about just to add on to that. Health plans have been becoming a more important part of our revenue growth algorithm. If you think about the arrangement with either Arkansas or California Blue Shield where we're just launching, You're also seeing there that same type of cohort effect where we're having opportunity to do outreach work with that health plan to do engagement as a kind of co branded basis. Those are going to ramp up over time. So those will have I wouldn't necessarily point to seasonality as much as a ramping part that will take to also hit those cause rational peaks of utilization opportunity. Operator00:46:17Thank you. Please stand by for our next question. Our next question comes from the line of Ryan MacDonald with Needham and Company. Your line is open. Speaker 200:46:28Hi, thanks for taking my questions. I wanted to ask about TRICARE and the T5 contract. Earlier this year, obviously, we, I think, finally completed the appeals process and we have full awards. And at least from the sort of government website, it looks like that they're still tracking to launch and start providing care in January of 2025. So what if any at all sort of revenues are you building into the fiscal 2025 guide from that at this point? Speaker 300:46:59Thanks for Speaker 200:46:59the question, Ryan. We continue to build in the growth of the autism care demonstration. That's a population we serve exceptionally well. Satisfaction levels are really high and we expect that business to continue to grow. We're modeling that at modest growth and we're really not factoring in any material new growth in the T5 agreement until we can see until we get a little closer to the actual innovations that the government is going to mandate for the vendors that were selected. Speaker 200:47:29We expect that we'll see a lot more color on that over the course of the next 2 to 3 quarters. Operator00:47:44Our next question comes from the line of Jess Tassen with Piper Sandler. Your line is open. Speaker 1000:47:50Hi. Thanks so much for taking the questions and appreciate all the detail. I just I wanted to confirm for the FY 'twenty four ACV number, can you just remind us again what that comprises? What percent of ACV is PMPM versus contingency based revenue? And kind of what's the assumed attainment of quality and cost based contingencies in that ACV number? Speaker 1000:48:10And finally, sorry for the multipart question, but just finally, can you confirm utilization based revenue from both an enterprise and PlushCare perspective would be excluded from that ACV, year end number? Thank you. Speaker 300:48:25Hi, Jeff. This is Steve. I'll grab that one. So what goes into ACV is just B2B contract revenue. So to your last part of your question, it does not include direct to consumer revenues, but it would include an estimate of 4 or 12 months utilization based revenues. Speaker 300:48:43To your earlier the first part of your question, you think about the ARR number we spoke about $86,000,000 We see conversion of 80% to 85 percent of that number into the ACV number. There's a we essentially haircut for PG realization and timing of launches. So for you to think about the walk from last year's ending number, less terminations to GVR, the gross dollar retention and then add in 80% to 85% of that ARR number you get to the $351,000,000 Importantly, one of the key points we're hoping to drive home here today is the business has expanded and diversified so much since we went public that ACV is one important predictor. I think it's in the range of 70% or so of this year's revenue. When you add on to that, the growth vectors on the platform connected revenues that will also add into that ACV number and the direct to consumer growth rate and the in year revenues from new ARR bookings and launches is how we build up the guide to the 6.25 revenue. Operator00:49:56Thank you. Please standby for our next question. Our next question comes from the line of David Larsen with BTIG. Your line is open. Speaker 1100:50:08Hi, congratulations on your success with Blue Shield of California. I think 2 of your competitors maybe serving that region and both of them seem to be under significant pressure, partly because of the things it sounds like you're able to do that maybe they're not. When you talk about utilization and activation aside from like PlushCare and the Expert Medical Opinion Service, which are both sort of obviously utilization based. When we talk about like a Virta, for example, or a vendor that you're connecting, are you measuring activation of those services? And then what is it typically across your entire network? Speaker 1100:50:50Is it like 20% to 25% or is it like 80%? And then how much revenue is coming from like those sort of partner vendors if we exclude Plush and also Expert Medical Opinion, please? Thank you. Speaker 200:51:07We're going to tag team this answer, David. First of all, Speaker 300:51:10thank you for the question. Speaker 200:51:13Our success with Blue Shield of California has been a partnership effort. It's been Blue Shield of California and the team here at Akkreli get a ton of credit. We've partnered really well and the virtual blue plan is something that I think both companies are really proud of. Secondly, as it relates to platform connected revenues, you're correct. They do include both our expert medical opinion and primary care service and those services or the utilization of the services in our trusted partner ecosystem. Speaker 200:51:42Let me give you an example of how we think about a trusted partner ecosystem utilization. We'll take Virta as an example. 9% of most populations 9% of the American population wrestles with diabetes. And I'm just going to use this simple math. So you might presume that 9% of a population using Accolade's navigation platform in Virta is a candidate for using Virta. Speaker 200:52:07Let's say a third of that population is reachable in the 1st year. That might be a cohort that we convert at, I'd say 50% in that 1st year. So we're talking about 1.5% of the 9% that we reached in that 1st year. Each year, we have an opportunity to grow that utilization rate as we build a relationship with that membership because we've got a long term relationship with that customer and extraordinary engagement rates. And so it will depend on the service, Dave. Speaker 200:52:37With a vendor like Virta, it might be focused on people who are pre diabetic and diabetic with an offering like musculoskeletal like hinge or sword. It might be those who are wrestling with musculoskeletal issues that might be a smaller percentage of the population, but each have an opportunity to grow each year. Steve or Jeff? Speaker 300:52:59I would just add, Dave, to that. If you think back to Capital Markets Day last year, I think Sam Anakin from Virta remarked that when Accolade is present, we're seeing sometimes 2x utilization there. And so there's a very symbiotic relationship here between certainly the partner in Accolade in which we're sharing in the to the extent we're able to drive incremental revenue and also to the customer who's procured that solution believes that they have a real need within their population, they want to see that engagement and ultimate completion. So we've chosen that select set of TPEs and design relationships with them, those partners, so that we can share in the revenue when we drive that high quality engagement with the partners. So today it's a very important part of our revenue, still fairly small in terms of the total revenue that Accolade is driving, but TPEs are up, really important part of that growth rate. Speaker 300:54:00TPEs are up really important part of that growth rate. Operator00:54:06Thank you. Please stand by for our next question. Our next question comes from the line of Stan with Wells Speaker 1200:54:24Fargo. Raj, maybe just going back to the prepared remarks. I think you touched on the fact that you're continuing to execute against a bit of a backdrop of a challenging sales environment. Can you just clarify what are you seeing in terms of end market demand, maybe competitive dynamics? And maybe if you can frame that on how that compares versus the trailing 12 months? Speaker 1200:54:44Thanks. Speaker 200:54:46Yes. Dan, I appreciate you asking the question because I need to clarify maybe any perception that might have been in the prepared remarks. Our new business growth as it relates to ARR growth over the last couple of years has continued to be very strong. And so we are executing well in the market. We don't think the demand environment has changed dramatically. Speaker 200:55:09We think it continues to grow. We think it continues to grow both for new business ARR as well as for platform connected revenues. Speaker 300:55:18I think perhaps what you may Speaker 200:55:19have been referring to is me speaking to the changing economic conditions and the need to drive profitable growth for companies like ours and the significance of the turn where we're entering fiscal year 2025 with our first full year of adjusted EBITDA profitability. And that profitable growth, along with the strong demand that we're seeing is the buzzword of our business, not just growth. We're going to grow profitably and we're going to grow responsibly and we expect to continue to grow aggressively moving forward. Operator00:56:00Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to management for closing remarks. Speaker 200:56:09We appreciate all of you being here and we look forward to our follow-up conversations in the days ahead. Operator00:56:16Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by