Talkspace eyes continued growth with payers
Online therapy provider Talkspace brought in revenue of $46 million, up 29% year-over-year, and driven by a 62% jump in payer revenue.
Payer revenue reached $30 million during the quarter and direct-to-enterprise revenue grew 20% to nearly $10 million. The direct-to-consumer business, however, continues to decline, with revenue dropping 29% to $6.5 million.
In a push toward profitability, Talkspace shrunk its losses to a loss of $500,000 in the quarter from a loss $4.7 million net loss in the second quarter of 2023, primarily driven by an increase in revenues.
The company reported adjusted EBITDA was $1.2 million, an improvement from a loss of $4 million a year ago.
The company, which went public in 2021 via a special purpose acquisition company deal, is making a big push into the Medicare market.
Jon Cohen, M.D., Talkspace Chief Executive Officer, credited the strong revenue growth in Q2 to the continued expansion of covered lives, which grew from 131 million to 145 million by quarter-end.
"This was the result of adding the first batch of nearly 14 million people with standard Medicare coverage in 12 states," he told investors this week. "We are on track towards our goal of having all 50 states live with Medicare coverage by the year-end in addition to adding several large Medicare Advantage plans, the first of which will launch in Q4.
Talkspace connects people via an app with therapists who provide counseling remotely, either over the phone, by video chat or by text. The company has 5,600 licensed providers on its network, as of the first quarter of 2024. More than 140 million Americans have access to Talkspace through their health insurance plans, employee assistance programs, the company's partnerships with leading healthcare companies, or as a free benefit through their employer, school, or government agency.
Also this week, Talkspace inked a new in-network agreement with Humana Military (Tricare East) to make it virtual mental health services available to 6 million active active-duty & retired military personnel, along with partners and dependents.
"Looking forward, we anticipate adding several new Blues plans and regional plans by the year-end. We expect that within the next 12 months, nearly 200 million people, almost two-thirds of the American public, will have access to Talkspace through their health insurance," Cohen said during the earnings call.
Doximity shares jump 30% after beating top, bottom line expectations
Doximity, an online platform for medical professionals, had a better than expected first quarter with revenues, EBITDA and total number of users on its platform up.
The company's shares jumped 30% on Friday following its earnings call.
Doximity executives attributed the strong quarter to its telehealth messaging, generative AI, scheduling workflow tools and the launch of its new portal for customers to create content.
In the quarter ending June 30, 2024, Doximity brought in revenue of $126 million, an increase of 17% year over year. Doximity’s net income was $41.4 million and its non-GAAP income was $55.9 million.
Doximity has upped its guidance for the full year and for Q1 of next year, though executives said on the Thursday earnings call that they are staying conservative in their predictions because of macro industry uncertainties.
Doximity’s growth in the quarter was led by its top 20 clients, executives said on the earnings call, who are up 21% on a 12 month basis.
Doximity CEO Jeff Tangney said the platform’s unique active users on a daily, weekly and monthly basis all increased by double digit percentages.
“In q1, a record 590,000 unique active subscribers use our generative AI, telehealth messaging and scheduling workflow tools to provide better care for their patients,” Tangney said.
Doximity made its new client portal available to about 30% of its users. The client portal allows customers to generate their own unique content for the platform.
Its adjusted EBITDA was $65.9 million which is a 42% increase year over year. Doximity’s diluted net income per share was $0.21 compared to $0.13 last year; its non GAAP diluted net income per share was $0.28 while it was $0.19 last year.
Doximity’s operating cash flow was $41.2 million compared to $57.2 million in Q1 last year (28% decrease year over year); free cash flow was $39.5 million, down 29% from $55.6 million.
For its fiscal second quarter ending September 30, 2024 it predicts Revenue between $126.5 million and $127.5 million. For its fiscal year ending March 31, 2025 Doximity expects revenue between $514 million and $523 million and an adjusted EBITDA between $248.5 million and $257.5 million.
Health Catalyst sees M&A opportunities
Data analytics technology and services company Health Catalyst brought in $75.9 million in revenue, up 4% from a year ago and above the midpoint of its guidance.
But, the company's losses deepened during the quarter. Health Catalyst reported a loss of $13.5 million in Q2 compared to $32.6 a year ago.
Health Catalyst ended Q2 2024 with $308.1 million of cash, cash equivalents and short-term investments compared to $317.7 million at year-end 2023.
"I am also pleased with our bookings performance through Q2 2024, especially as it relates to our net new platform subscription clients. In the first half of 2024 we signed more net new platform subscription clients than in all of 2023, and our updated expectations of low-20s net new platform subscription clients would represent the strongest year in the company’s history for this metric,” said Dan Burton, CEO of Health Catalyst.
The company sees opportunities with M&A to deepen its relationships with existing customers and generate more revenue, Burton told investors on the call.
In Q2, Health Catalyst closed its acquisition of Carevive, an oncology-focused health care technology company centered on understanding and improving the experience of patients with cancer. "Oncology is one of the most strategic and important delivery programs within a health system. And access to high-quality data is essential to success in the oncology space. We believe our acquisition of Carevive bolsters our capabilities and will help better position Health Catalyst in the oncology space," Burton said during the earnings call.
The company also announced its acquisition of Lumeon, a company that integrates data from disparate sources to create individualized and highly coordinated patient journeys. Lumeon's services help to "close the gap between clinical intent and clinical delivery, a gap that often causes wasted effort, missed follow-ups and confused patients," Burton said.
"Existing solutions like EMRs are not sufficient to resolve this problem. And Lumeon is uniquely positioned to help," he added.
The two acquisitions are part of Health Catalyst's strategy to maintain a pipeline, technology-focused tuck-in acquisition opportunities" that enable the company act as a "consolidation platform."
"Our recent acquisitions provide us with additional avenues to deepen our client relationships and cross-sell additional solutions. We believe our clients will continue to focus on consolidating relationships that we will among that small group of strategic long-term technology partners. Clients have shared that they appreciate it when we consolidate strong app layer technologies so they don't have to manage the complexity of small relationships with point solutions who are often thinly capitalized. This allows clients to deepen their relationship with us as their long-term strategic partner," Burton said.
For the full year of 2024, the company expects total revenue between $304 million and $312 million, and adjusted EBITDA between $24 million and $26 million.
The company also shared that it entered into a new credit facility for up to $225 million with Silver Point Finance.
Amwell plots path to EBITDA profitability
Telehealth company Amwell reported Q2 revenue of $62.8 million, above its guidance of $61.1 million, but down from $62.4 million a year ago.
The company's quarterly revenue was driven by $27.5 million in subscription revenue of $27.5 million and $28.7 million in revenue from telehealth visits to its Amwell Medical Group.
Amwell, formerly American Well, narrowed its net loss during the quarter. The company reported a net loss of $50 million, down from a loss of $73.4 million in first quarter of 2024 and $93.5 million in the same quarter a year ago.
The company also reported an adjusted EBITDA loss of $35 million compared to an adjusted EBITDA loss of $45.7 million in the previous quarter.
Amwell is betting big on its Converge platform to help support a digital-first approach to healthcare as virtual care evolves post-pandemic. Amwell spent 2023 making significant investments in its new virtual care platform. Converge makes all of Amwell’s products and programs, plus third-party applications, available in one place, like an app store that embeds third-party solutions, according to executives.
Total visits during the quarter reached 1.5 million with 70% visits on the Converge platform.
At the end of 2023, the company cut 10% of its workforce to slash expenses as its losses ballooned to $679 million. Amwell's losses in 2023 included significant goodwill impairment charges totaling $436 million caused by a sustained decline in its share price during the first three quarters.
But, the virtual care giant is plotting accelerated revenue growth and a path to EBITDA profitability in 2026, boosted by a major contract with the Defense Health Agency (DHA).
In November, Amwell announced it inked a major contract with the DHA to expand its reach into the government and public sectors. In partnership with Leidos, Amwell will provide a hybrid care technology platform designed to power the “digital first” transformation of the Military Health System, according to the company.
The contract, worth up to $180 million, will deploy Amwell's Converge platform to replace the Military Health System's video connect solution. The project will start at five initial sites followed by a phased enterprise rollout.
For 2024, Amwell is expecting revenue in the range of $259 to $269 million and telehealth AMG visits between 1.6 and 1.7 million.
The company also issued improved guidance by $10 million for 2024 adjusted EBITDA, forecasting a range of between a loss of $150 million to a loss of $145 million from a previous range between a loss of $160 million to negative $155 million.
"Our headcount is down across the enterprise, mid-teens from where it was at the end of the year. And that's really one of the big drivers for our improvement in guidance," CFO Robert Shepardson told investors on the call.
“In Q2, we drove progress on all fronts. We continued the deployment of our solution for the U.S. Military Health System and our ongoing rigorous cost alignment efforts resulted in an improved outlook for 2024 adjusted EBITDA,” said Ido Schoenberg, M.D. chairman and CEO of Amwell. "Our focus is strong as we deliver on key strategies that support our guidance which calls for a step function in our growth in 2025 leading to adjusted EBITDA breakeven in 2026.”
In June, Amwell announced that co-founder Roy Schoenberg stepped down from his position as president and co-CEO to become executive vice chairman of the board.
Ido Schoenberg said Amwell offers an "end-to-end comprehensive solution" for healthcare clients. "It is dependable, safe, secure with a proven track record at scale. It powers the large part of the U.S. ecosystem and can enable the exchange of data and services between entities across our client base to make care even more efficient and accessible," he told investors and analysts.
Tempus AI betting big on AI and precision medicine
Precision medicine company Tempus AI marked its first earnings call since going public in June.
The company, which uses artificial intelligence to process medical data, reported $166 million in Q2 revenue, up 25% year-over-year from $132 million. Genomics revenue came to $112.3 million, an increase of $20.4 million or 22.2% over the second quarter of 2023. Data and services revenue of $53.6 million in the second quarter of 2024, an increase of $13.2 million or 32.5% over the second quarter of 2023.
But, the company's net loss ballooned during the quarter to $552.2 million, largely driven by $493.1 million of stock compensation and related employer payroll taxes tied to initial public offering, the company said in its financial filing.
The company's adjusted EBITDA was a loss of $31.2 million in Q2 2024 versus a loss of $37 million in Q2 2023 and a loss of $43.9 million in Q1 2024, an improvement of $5.8 million year-over-year and $12.7 million quarter-over-quarter.
“We continue to make great progress in deploying technology within healthcare as providers and life science companies are increasingly seeking AI solutions,” said Eric Lefkofsky, Founder and CEO of Tempus. “Given our expansive multimodal dataset, and our broad reach across thousands of connected healthcare providers, we are uniquely positioned to advance AI in diagnostics and accelerate the pace of algorithmic insights.”
The company is projecting $700 million in full year revenue for 2024, representing around 32% annual growth.
SoftBank-backed Tempus AI provides AI and data and analytics tools for precision medicine. It filed for an IPO with the U.S. Securities and Exchange Commission (SEC) on May 21.
Founded in 2015, Tempus, led by Groupon co-founder Eric Lefkofsky, says it’s built the world’s largest library of clinical and molecular data along with an operating system to make those data accessible and useful for providers to inform patient care. Over the past seven years, Tempus built out capabilities in precision medicine and AI to power drug discovery and genomic sequencing.
The company started in genomics by generating large amounts of molecular data, which in turn gave rise to its data and services business, according to its SEC filing to go public. Tempus expanded the reach of its AI-enabled patient data platform into AI-enabled diagnostics and personalized medicine for cancer, cardiology, neuropsychology and radiology. The company is strategically focused on expanding its capabilities and commercial traction beyond oncology to include other disease categories, according to the SEC filing.
Wall Street analysts seem bullish on Tempus' future growth. Seven brokerages, including J.P.Morgan, Morgan Stanley, BofA Global Research and Stifel initiated coverage with a "buy" or "overweight" rating, with the highest price target of $50 by TD Cowen, Reuters reported.
J.P.Morgan forecasts roughly 33% revenue growth for Tempus through 2027. It expects the company to turn a core profit by the second half of 2025. Morgan Stanley expects revenue growth of 27% through 2028, and expects the company to break-even on core profit by 2027.