Earnings call transcript Q2 2023

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Operator

Good day. And thank you for standing by. Welcome to the Marpai Second Quarter 2023 Earnings Conference Call. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Simon Li, who is Vice President with Marpai. ahead. go Please

Simon Li

everyone, me Welcome, Executive second XXXX Yoram quarter Edmundo Thanks, the to call With Bibring. Officer, Financial on and Chief today call. Gonzalez; Operator. Chief our are Officer, Marpai's

be to over site. non-GAAP GAAP measures evaluating in to these posted certain that found Marpai's call the Details measures thereof and turning Edmundo, note the the be our financial important that are on believe release comparable non-GAAP on press the measures that please reconciliations we performance. most discussing we'll when can the between Before relationship is Web

Also, risks, statements by from will the note on and could that uncertainties, statements of actual during defined be Litigation implied this Securities call. this forward-looking Reform Act other for materially factors please call differ that the Marpai certain to Private XXXX. those cause as to forward-looking results or subject statements expressed Such made are

filings release marpaihealth.com. SEC, please available statements at our cautionary information, refer of are all and our additional For to which our with on press the

with call Marpai's Edmundo? the Gonzalez. Edmundo over I that, CEO, will to And turn

Edmundo Gonzalez

Thanks, to thank XXXX. discuss here joining you financial Simon. quarter the be second of results the to It's a morning, Good of everyone, us. and pleasure for

well me our As for you as minute that who strategy. done the review just are first the I've as past, for in are let we joining one take some of time to

This on to second is important the largest Marpai spending only employers, manage healthcare healthcare. for second payroll. is around costs reinventing how often expense employers because their are the country

by healthcare employees families on health traditional to who health they our ability expenses to self-insured. have versus for predict chosen Our insurance. buying as healthcare help are of That business risk are clients, and our of services consume their their revolves in is, modify they and behalf pay employers that around

to proposition, populations via these to caring to We like nurse-led carriers access employee manage a Cigna, for in of the delivering example, Aetna the with a value been for our to That's further this to and Being approach member healthier from complications claims may condition, control paying employees' support diagnosed lower do activist higher providing outcomes all health who quarters, their costs. top just and their do. employer's prevent a come. for with plans healthcare as our healthcare We to and national management. even clients. chronic costs health of mechanism in This for has means months, This outcomes employer what we years members proactive works.

to the million million $XX.X during our X.X quarter. the compared quarter was Now, revenue first second during

commitments that by to XX% was EBITDA cash further quarter's Our and Maestro to large severance excluding and Health these subleases. be facilities adjusted Maestro million two aggressively million. and multi-year negative EBITDA can this related We of first improved plan it from offices cut the Thus, X.X. our managed ongoing negative of as $X.X million, EBITDA have sublease these excluding negative from would $X.X dramatically subsidized we continue operations and to adjusted outlays I will unused that of $X.X we implement note compare but we adjusted pretty so our to Health, costs. inherited EBITDA, integration facilities, unused severance was our by

effects our forward, and profitability. towards activities into adjusted severance on going continue EBITDA think the leases adjusted I and view We of as shareholders to report consolidation a our an EBITDA, gives excluding payments and it drive

you remind is to want simple. which focus, I our of

of and falling top the EBITDA our and line keep happy our revenue our report we First, if adjust QX XX% budget fast is that I'm to of budget. budget are XX% behind. expense ahead ahead in

we a already have. have we products clients to opportunity customers to great have. There's upsell sell Second, we already to

us. by clients do Marpai management now provided For acquisition Maestro, have legacy an of many of company. care the example, internal yet care management But our with not we have

benefit have also great opportunity to we course, is of in see network. MarpaiRX, Marpai value continue pharmacy manager. our And our care own own based We Connect, which

increased base see this of from to XXXX. hope our in existing from clients revenue We

outcomes clients, health reminder, go initial further the brings which Connect clients together diabetes As end solution Two, of such have the and they area delivering they a year. against have Marpai to out enrollment validated expect they features. open three, their three risk best a common our the agreed rollout have to to providers, been as a And a high digital can usage of rolled have issues. cost musculoskeletal published our historical or best clients. for great Connect and is put clinically that fees into. One, employers, has targeting which for we ROI, clients at at lean our our Marpai as the and

course, quarters save this for to clients a We health. the is better per and see things plans. solutions. product by sign one the that our per to their areas within item for members as revenue This money come per as these of more month will the our high vehicle wonderful is And attacking in increase up members cost directly employee more

XX,XXX XXxXX, I've our two our revenue, excluding core and per employee items, in meaning that through employee on $XX breaks The even our mentioned core per profitability. level, lives. to to mantra levers business, business, pass of our get At basis business break month a of net even.

of employee pass north net employee through and per $XX. QX, already getting there. per We're XX,XXX revenue, our are We excluding month lives, was items, in

clients have. get per month adopted into already per employee products our and to committed up, revenue we're the more More selling we

employee On Act employees wanted Marpai virtual health to smaller box, a Vitality. provide the the know called plan more health in a to targeting you specifically Affordable that employers. offering XX or new lives This smaller is about businesses Care to let our lever, have self-insured our or box, insurance. Remember manage. I with more other

afford that expensive can employers has not so happened Now, in become often is years traditional smaller what simply that has the last insurance it.

employees businesses, XXX to for approximately influx businesses We makes first coming self-funding self-insured. a get it these those or Marpai for with of the easy to time. less Vitality smaller are seeing massive

to ancillary solution. plans the select and loss included telehealth, and best access services provide health template created have compliance, we've carriers insurance networks, captives all in banking, leading the one to all with and like stop to partnered also We

smaller For that a department, may not have these businesses full implement HR days. in can we

of We expect quarters the new this come. thousands employee channel in from lives to

financials Yoram Now, CFO, let Yoram? it detailed to a for our turn over our QX. of view me more in Bibring,

Yoram Bibring

you, good closed XXXX, on Thank is impact quarter XXX% the results. X, consecutive the acquisition, everyone. first is acquired we quarters, truly the and Maestro in since November included the which first can as we This compare and quarter which Maestro in both morning, Edmundo, second of

the than the end for which of million year. the quarter first revenues the guidance, and $XX revenues $XXX,XXX higher over our second Our was quarter 'XX million, $XXX,XXX were $X.X approximately for than of of high higher our

number the XX, As decrease due Approximately employee to XX,XXX, June down our XXX within was decline net end XX,XXX total customer our the to first of lives churn, of half was quarter. compared a in to base. lives and the was due employee of lives of at half

basic processing average the and services able extent charge monthly monthly number may per revenues a the serve sell administration revenue are commodity, we're on to of the customers fees life. competitive, a we one that Since products our large extremely and for, to and revenue ancillary Monthly a function per almost employee lives are the employee our base. life increase customer that our the say, of average ability depends to to

including offer we other also stop value-based care ancillary and the main seen services future loss management containment, results. Currently, and uses benefit the A services are our Care meaningful Affordable can be but importance cost ancillary will pharmacy and which two network in second contributors good others, Act to care quarter reporting, manager, these insurance revenues. of believe become example the of placement, we more our like

and a despite in by X% related decline increased revenues the lives Our almost the employee in fees. administration decline X%

cyclical reason The continuing ACA month. increase our we average is services revenue administration revenues that for in from more ACA and made as per quarter, Affordable Act that reporting, employee quarter, peak the per These had second which continue in to the more for to decline or more revenues reporting, are it, up and Care call the our into the in thereby fees. base, our to sell substantial we goal second is but than the

expenses Moving and vendors and processing, first on 'XX to 'XX customers. services quarter Cost be expenses. their for charged to third of expenses, costs, party revenues of by the comparing our the second resell to that customer I will service the amounts cost quarter included, adjudicating historically we claims,

included as we're well. these a of care With cost also delivered cost revenues. labor all of Maestro, containment are now our as and the now by that costs are also services management And providing services have that nurses component, our acquisition

approximately first quarter depreciation Our was the XX% also the million $X.X second of or Cost cost revenues. and quarter, of of for revenues. in a revenues of but excluding revenues amortization, higher million, XX% $X.X was

million quarter. of gross million second was quarter Our first XX% revenues, XX% compared the to or or in profit $X.X $X.X

in nature. some the as streams a and in gross the are lumpy have our quarter volatility have some to not expect more them all in from We quarter margin of to same revenue margin gross

expenses the and when million, compared second approximately quarter $XX stock-based of Our amounted of a including expenses, million. mortization, of assets not of decrease loss to revenues, depreciation $X.X compensation operating cost to quarter were disposal and these XXX,XXX first

the of expecting the expenses integration are approximately half $X.X efficiencies these facility in ongoing expenses. relating about we $X.X and do see continued on first Marpai, in costs. costs, that our include $X.X costs million, quarter you to year, not quarter Included unused compared the down to result of which our is million Maestro In derived in This the second second This were which operating the call. operating ongoing reduction ongoing told our reduction severance into means a we're our million to quarter. first costs, from of

quarter approximately in million care $X.X million operating loss the value-based quarter, in million to quarter. compared our platform $X.X second $X.X loss $X.X in to we second first million During for the Operating the quarter. first compared was the invested

severance of the discretionary platform, unused our in value-based operating improvement quarter million, our costs first Excluding $X.X the of compared an loss. was $X.X which investment the loss cost care million, $X.X in was to facilities approximately million and

$X.XX million, per that which we million, recorded quarter, A figures the reverse $X.X quarter price. was X:X per owe This approximately first net second non-cash acquisition interest for the booked to the we a stock split of share, based loss of on net June present XX. to XX completed the These a compared and second quarter. reflect $X relates we for Maestro, a of the amount purchase $X.X share of the the the on we loss In value for expense. XXX,XXX

expenses write-off quarter. interest approximately net of quarter adjusted Excluding asset expense second stock-based depreciation negative to the a of expenses $X.X $XXX,XXX, amortization, compensation and $XXX,XXX, a million the for negative compared for was of of $X.X and first approximately million, million and $X.X EBITDA

As the the to included $X.X $X.X million and related severance value-based million annual $X.X in facilities care platform. invested approximately cost million discussed, approximately

guidance guidance, third previous Moving between guidance annual the to revenue we're in on $XX for 'XX $X and new increasing million million, range to its between our expect revenues guidance to million million previous million-$X.X to $XX a we guidance quarter from 'XX our million. be $XX $XX of of and of

will open we questions. for Operator? that, with the And call

Operator

much. Thank you very

question-and-answer Allen Maxim go comes We question from Please [Operator session. first will begin Today's Group. the now with ahead. Klee Instructions]

Allen Klee

key feel integrating do and in other lifting it beating more My to Maestro, terms was guidance integration, question heavy the to Good on I like top impressed. in you so in bottom just raising by healthcare how you the where feel are issues and morning. line than tackling about sounds of any like most products, you where know, how company today. seems comment I'm just first my of done related the your are just you and related to Congratulations, company

Edmundo Gonzalez

Allen. Yes. Thank Good you, morning.

So This behind and M&A maybe the lifting cost really look, nasty heavy is on is business cutting. of a us. the obviously lot

as which year. these you natural know, new especially part great open customers is is all their fun around cycle, go selling and the of into which, enrollment products, buying the as Now, begins, really more

up are obviously, up, setting have and we these. So, to very aggressively set cross-sell

well. way, We and is operating the one line managers, team by as It's mixed one Marpai as company. management executives with legacy and The are team. Maestro a senior legacy management team,

by So, And it that, go. Maestro we're We're of and and the to than is More in. is disappear to everything as the will brand even melded ready. ready everything company. continue end one fade the year

Allen Klee

Thank you.

You severance. of the mentioned had that loss quarter of costs law million on $X.X integration assets disposal and

that that did was time, you the million the trying sublease that's did cost $X.X but number You cost Thank that also -- in it you does you them, away? the understand go and going goes said if to the -- quarter or down just subleased, of over also I'm the impact when factor of you. in offices what to

Yoram Bibring

Yoram. signed. Hi, signed one, which It's actually Allen. We we

of other one a the And couple in free is The months. are getting process. people

won't plus early rid yes, You that did probably because $XXX,XXX until next That's see write-off X.X on year. offices. of it that we is we the sitting all you that see P&L that actually number. write-off. asset got It's in loss why $XXX,XXX But

you are a So, the these way year down is won't on cash But total see it coming $X.X, of much it's actually but this contracts just basis $X.X. because written.

Allen Klee

to the guys go you down through your heard expect you -- I say expenses that

Yoram Bibring

ongoing, yes, the yes, ongoing The because --

Allen Klee

Go ahead.

Yoram Bibring

It's most today, us. true, already August. in said Edmundo that yes, of behind we're the and it's cost So, heavy lifting us but cutting behind the that

some of QX the then QX. in going the to and in this So, it impact you you'll full see of see you're impact see,

more, a the But of translates the is way So, again, this there's still into little most but it don't bit numbers. the That's it done. in numbers. see you

Allen Klee

Got it.

value-based then, impressive for you've signing very partners. thank been care, you. Okay, And these

it building out. on working You're

days, customers. You're you talk the early -- do you if Can to employers? steps effective can to share can about And to what sign you know and like how doing actions it's taking approach? ability about customers feel I to -- like How an savings about much feel the have maybe up you up are you're actions up sign questions. how now? the you Sorry, And you the think customers get the XX that's of you sign pretty --

Edmundo Gonzalez

Marpai our value-based into network. which okay. our right? It's Connect, it's No, all one, wrapped do How care is commercialize we

and easy So company, every done clients takes of all put data interpret tech is line out projects single disease to a all of their that basically, their remember, trend, very in XXX dashboard we data their basically to a and a one right? trend easy by cost what their we point of read, have our mapped as we're of starting So, technology put state.

into exactly but with you are or up can the of thousand if experiencing end core. this where XXX and employees they pinpoint what so X will and we today, XXXX costs have at diabetes, type So, end also those living are then year

these present nice, easy Now, to charts read given that, we very as online.

impact up the Virta, of you has diabetes. in population large. the sign who in partner, their to, have X pay have clients the type say, We that potential on the also front. also our but running Remember, if part trial the very diabetes the of is published would Including are ROI based because cost those longest Virta Virta, other claims

So, we've clients. done our for that

with the meeting are clients. We

it of feel in aimed what Some is reversible. is let's their of slice customer controllable our open it. slice, driving Because Others have a will them a "Look, which are have at Why? take already out or our said, this But base, roll conjunction enrollment." I adopted costs, this. good with significant that very exactly

for the At it's So, employer's employees outcomes, without the pain. healthier of day, employer. a very in managing part can good life life, a potential good work, P&L the this by meaning, live of of end also terms the but we're their our is

category we're their which and clinical We've add the of These strength scientific amount they to fees the their of the to systems best is chosen of them. at also program. enough obviously, validation. are signal, in terms solution in a And of their approach, work why course, is betting of risk, really of the confident confident in that's and huge their put a work, we anyone them, in done massive we've best that the

in want which that of some have up Will larger No, But lives take of promising. So, is a I bottom the every so. managing XXX% of very line, stepped think don't our one clients this, clients. first the our this actually of it? that member are clients for I our lot are is thing good

Allen Klee

of cost is acquiring of your terms so, cost -- cost the customer. in a of real And the the

you customer some the the that cost think then success get savings. that? of the acquiring and But a that. pretty your profit you the marketing program, doing margin question in But once of of XXX% much then, a how about customer, of get of You're do you the is

Edmundo Gonzalez

of clear audience, Yes, other just to clear. that members be the for not may be

virtual the So, is a care - rather, network the value-based network.

a of negotiated like Marpai with network. So, are rates. networks. list Cigna much Aetna of and but they as than have Think as that, this, they're our Connect providers Obviously, bigger a

clients. upfront actually we fees charge not to our So, do

family an are medical one the charged related of all say, Our claim fees employee as - then to Once are in member these a the programs, their or provider are self-insured of because opts to groups. these that clients employers. a

on claim We you of like money that. would just a visiting doctor. make for that, And slice make that. pay a So, we based off a

So, fee, clients there's no also like meaning you're it paying on fixed consumption. because

You're important for not very new up than just clients this any is easy More basically us in And our to have. distinction the it's standard here. it. to contract. a client, already That's wrapped very paying have sign that, to we

So, clients make the our really fruit sure of are this. want we enjoying to

more what the think at getting a acquisition I cost of member. of Now, you're is

part already to That a XXX advantage these. we guess, acquired them. biggest, We is XX really is there XX,XXX have, those cost minimal call lives. yes, member the nurse. a member We've already base. But client potentially is of right? our have I So have The in clients, some the from Now, texting, we costs. is are a the is e-mailing, already

with obviously technology. So, low member getting base within a of acquiring that pretty lower, our and cost is

clinician. of one member a a is will of programs I from a effective tell Although call to most you, nurse join or these a method getting the

Allen Klee

That's interesting.

little or just a -- or you in you've could So, new how you about ways bigger okay, how using using been it? been that the ways some maybe that it use you've talk AI some things

Edmundo Gonzalez

impactful most is, is just as pervasive here described. I latest and the way one, Yes, and the

clients tools based cost advanced trend next So, as have that of just quarter and even the all projection disciplines but dashboard, analytics. AI next this we the to project of on a are or see year

of we back the peek tangible own power data, them given the is of very have that our AI So our this own way future sneak with little and clients a data, a basically cost. harnessed of

how or much really Now, claims them our who to other obviously. in progressing, we'll that's how items and on results more That's But just engage data, the then telling engage those contact may on future we a the can example, other members seeing of on with use into very see more is tangible published to to them from a other get analytics vendors. here that's automating costs, rest, based projecting sign the they and that's really AI, not understanding up AI. these save, lot what getting based we and those But progressing are programs. on claimants use costs one just that journey, how about the

right do effective from is be mentioned, our What we we most text, working? right part We do way everything. a now, obviously, our who's I call a of least. at As to It do now, company, the plan, clinician seems part is phone but of mixed, calls.

Allen Klee

you. Thank

pass-throughs hopefully, that, $XX at hit I to employer then, you then, you're live? that. revenue get I to live, currently heard did on But I I revenue on move happen, And something some guys XX,XXX and have lives. it'll follow-ups that when Okay, after you profitability, per $XX wanted to you per say excluding that say hear to else. per

Edmundo Gonzalez

in as me Yes, also let Yoram, well, here. explain call and

our number. you revenue, the actually if it's did just higher much on So, math

network revenue excluding through So pass for example, internally, our look at items, we fees.

way. pass That's RevX really keep. it basically call the what reported we revenue inside. by So, excluding keep. the It's not $XX. a That's we throughs. That's we What number,

won't employee P&L. the just revenue XXs. per per basis in month I And is the on You find it our think on a

$XX. So, we we look do That's at actually, the what keep?

yes, it's in range. need number, that Now, still We safe already lives. the more

these as two Now, Allen, know, are levers. you

are in XX, to management number of that the aware the less product you levers need releasing so employee take okay, make new that we're understanding of. per month business. simple, a per of very lives. you we're if when ours, are. But it's as that we in pretty talking is all want two that all and the in doing it's economics is sure internally is most because team economics, these everyone And price drive to fundamental the So, volume, language, businesses what our And

here fees, net lives on from from volume what doing everything, admin Our up value-based focused employee other $XX. lives, ancillary based from make view, we well revenue products, prices our we're because yes, how But, from this industry share our care, which the amount from the the we that's on RevX point and then need is on of we're is is what builds and of now. more exactly

Yoram Bibring

some had because RevX a Yes, lower higher products margins. this right, It's number. that and little lumpy, just we in QX because other margins be high one thing, in lower a QX, we is have going to have have some

say when XX,XXX, month, And the just as by average about profitable we're talking We're So, not TPA year, talking specific specific also, right? talking a about for TPA, a the we the we're entity. in quarter. XX

value-based money, XX,XXX But as break XX,XXX that's doesn't not need then, invest a covered apply even. the of our whole. more care, in So, If we than TPA lot to we to this to lives a XX,XXX. lives, it bring company by

Allen Klee

you to lives that I product most said could potentially heard thousands this have, on in that think that that's one the Marpai things focused of then, quarters employee And come. important this I you was Vitality, employers maybe that of add new small

you or goals. does it's brokers? Does to Just stand? obviously. that for it, important your a you're get. differently So, like about getting product, sounds do It's pretty you. you direction where more it that that through new get this could Thank to you in sold get because the that terms How very hoping sell in than of

Edmundo Gonzalez

done It's important self-funded seen were new that's small a self-funded is - single have. a packaging cost. every everyone what for could traditionally product. who make everything we've for sign And statement new we you businesses for the here is very that. very if easy It of in industry one thank with that Self-funding, It's a us. seen us. to you've up a it Allen, Yes, is there's companies one their different. slightly ease, want here. self-funded that's to they We at the way. appropriate group, the Bigger customize that is for not of many you've believe plan point and small And the end because that group, their businesses control day, want simplicity,

created That's the They that's wrapping that's also PBM plans insurance access go. different Everything to Marpai built And in from may design the own program. choose to very put the pick like a start are just vitality. our line. want bottom They not that the that That's and basically from from and where have networks. and in established they plans off basically select. HR and we insurance everything MarpaiRX, is creating traditional great, program, shelf, can infrastructure full what we've They bespoke. plan looks something feels to the can

than Yes, channels our solutions the shopping also other lot can it insured necessarily and for that's lot The this of are obviously twofold. here. demand big we way is businesses sell fully have these So, are from among because of the it they carriers. selling smaller a through we who asking traditional difference a not broker

are those one. that captives with is Two insurance channels that's us. various we for So, have and partnerships established

They of smaller essentially those everything cases, have plans of coming built have So, a in powering we're we that channels cost sales. to many background. don't for are the but those businesses, the in health

Allen Klee

describe Sorry an interrupt. is? say I'm partnership captive you an what a define have sorry, insurance when could you to to with insurance you captive,

Edmundo Gonzalez

no, this no, totally No, is fine.

sales multiple of entities are there are loss as the focused they in channels, work part but stop do on with self-funding. we So, we that what

you're to though is You'll our member very self-insured, everyone a if that you if business, words, remember, say, loss an may Why? we member it's of never et conversations company to like a X have that you Berkshire small a a point. say, space, it from to insurance cetera. add Well, cost "Look, go your above $XXX,XXX, even bankrupt. this stop risk Re, sick that dollars, that self-insured you're costs other happens. let's In a going away to layer Swiss and insurance we call million in Allen, like Hathaway, plan if dollars," Because trading

part entities of that are the business. are and they that there captives, called manage Now, basically

own Now, it. some like created all and cetera. work, benefit of core What their claims, the management, et is distribute have services, processing it. them They plan like don't ancillary they health care sell providing also they meaning the management, of the pharmacy do all

do of several with partnered we've that. these So, basically and all

basically. We've we client, they a businesses So, there. don't the underneath of see for cost them acquired already we up them, of as dozens and signed the and us, channel. dozens then may acquisition have have but It's just channel partner

Allen Klee

much. it it. my Thank questions. very Thank Got for That's you you.

Edmundo Gonzalez

for much attending. so you Thank Sure.

Operator

like question-and-answer call back Simon for now This concludes Li I remarks. closing to session. hand to would our the

Edmundo Gonzalez

at thank listening find can take reading thank actually. much. Thank Those Okay, of I'd you I'll also, to the it, But Edmundo. everyone or marpaihealth.com. you information interest so more for you like your participating. and you always for This is transcript,

Operator

now participation. for Thank has conference your The concluded. you

You your now disconnect may lines.

Marpai (MRAI) 3 Aug 232023 Q2 Earnings call transcript