SOC Telemed, Inc.
Q2 2021 Earnings Call Transcript

Published: 12 Aug 2021

[Operator:]

Good evening and welcome to SOC Telemed’s Second Quarter 2021 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. Please note also that today's event is being recorded. I would now like to turn the conference over to Steve Rubis, Vice President of Investor Relations. Please go ahead.

[Steve Rubis:]

Good evening and thank you for joining our conference call. Today we will provide an update on SOC Telemed business as well as the review of financial results for the second quarter of 2021. The news release detailing these results is available on the company's website. A replay of this call will also be archived on the company website. During the conference call, the company will be discussing certain non-GAAP financial measures that they believe are important in evaluating performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measure and reconciliation thereof, can be found in the press release that is posted on the Investor Relations' page of a company's website. Also please note that certain statements made during today's call will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results for SOC Telemed to differ materially from those expressed or implied in this call. For additional information, please refer to the cautionary statements in the press release and filings with the SEC, all of which are available on the Investor Relations' page of the company's website. This evening we are joined by John Kalix, Chief Executive Officer; and Chris Knibb, Chief Financial Officer, who will be available to answer questions after the prepared remarks. I will now turn the call over to John.

[John Kalix:]

Thank you, Steve. Good evening and thank you all for joining our call. Today, I will walk through our second quarter performance, provide an overview of the secular growth trends impacting our business, our sales performance during the quarter, an update on Access Physicians, and then close with how Telemed IQ platform is differentiated from our competitors. On a year-over-year basis in the second quarter, our total consult volume increased 98% or 49% on a pro forma basis. Including Access Physicians, revenue increased 84% and bookings increased 136%. Our bookings performance for the first half of 2021 was greater than bookings performance for the entirety of 2020. Notwithstanding our strong performance in the second quarter and year-to-date, we have revised our 2021 financial guidance lower to reflect near-term disruption stemming from the COVID-19 Delta variance, which has led to temporary delayed decision-making and slower implementations at hospitals. The rise of COVID-19 Delta variant is placing significant pressure on hospital emergency departments, especially in states such as Florida and Texas. The increased pressure stemming from COVID-19 creates a significant distraction for both our current and prospective hospitals and health system customers, resulting in longer sales cycles and delayed implementation timelines associated with new business and cross-selling opportunities. Finally, we've modeled a weaker than normal upcoming flu season, representing additional headwind. Looking beyond COVID-19, we remain optimistic in the growth trajectory of our business, as bookings remain on track to more than double full year relative to 2020. The current bookings trajectory illustrates our market leadership position as well as the significance of longer term growth opportunity for the business. Acute care telemedicine growth and adoption remain in the very early innings. Our broad and flexible solutions continue to gain traction as evidenced by growth with our current customers, which I will discuss shortly. We see firsthand how Telemed IQ value proposition increasingly resonates with hospitals decision makers, seeking to standardize telemedicine needs on a single platform. There are several secular growth tailwind that continue to drive momentum for our business. The first revolves around the shoulders of specialty physicians. In June, the Association of American Medical College posted seventh annual study, report suggests that the US will face a projected shortage of 77,000 specialty physicians by 2034 access to specialty care will remain a prominent issue as 40% of physicians are currently 65 or older. Today these shortages are more severe throughout the middle the country, but rapidly approaching the coastal regions as well. Telemedicine tools such as Telemed IQ are uniquely positioned to help both rural and urban hospitals and health systems relative to specialty physician access gap regardless of location. These trends highlight the need for tools like Telemed IQ that can fill this resource gap by fractionalizing and democratizing specialist clinicians for hospitals and health systems. The second is network integrity, network integrity for hospital health system is the ability to keep patients within their defined network of providers. Our network integrity value proposition revolves around a comprehensive platform, consisting of 11 clinical service lines, as well as the expanded provider network availability through Telemed IQ managed services. The Telemed IQ platform offers hospitals and health systems, a tool to increase clinical capacity and maintain network integrity that not only keeps patients in the network and optimizes revenue, but also improves clinical quality. For our clients, network integrity is about keeping patients within the local community, and at the same time improving ROI through reduction of patient transfers to other hospitals or health systems. Third, our platform provides hospitals a tool to optimize scarce specialist resources through fractionalization and load balancing of these resources to deliver the most cost efficient clinical coverage solution. Medical claim share provides a unique lens to assess where we currently stand on Telemed as an adoption curve. Just like the early days of e-commerce adoption, Telemed as claim share represents a relatively small portion of total medical claims. We expect to achieve significant medical claim share expansion over the next several years. Current estimates from FAIR Health suggest telemedicine claims represent just 5% of all medical claims, while 5% may seem relatively low. We believe such share illustrates mainstream adoption of telemedicine, really vividly illustrates the significant multi-year growth opportunity for acute care focused telehealth services. In the second quarter, we added several new logos and benefited from several cross-selling opportunities. Our go-to-market strategy focuses on four opportunities, new logos, multi-asset expansions, multi-specialty expansions and enterprise deals, an important partnership expansion in both SCP Health or Telemed IQ managed services platform. In May, we announced in conjunction with SCP Health that Telemed IQ will serve as the engine of SCP’s telemedicine expansion. The multi-year partnership includes annual escalating commitments over a five-year period. The agreement provides SCP, the ability to deliver a hybrid clinical approach, designed to optimize SCP’s clinical workforce, enabling the hospital partners to efficiently provide excellent patient care. As a reminder, SCP operates a portfolio of 7,500 providers across 30 states and 400 healthcare facilities, we've seen over eight million patients. Importantly, our second quarter bookings, the annual recurring revenue represents only a small portion of the overall contract value. We benefited from several multi-state expansion in the quarter as well, including UnityPoint Health among others. These multi-site expansion opportunities are primarily driven by proven success through our telePsychiatry offering, leading to a better appreciation of our overall value proposition. Currently we average roughly two service lines per facility within the existing client base. Four adoption of our 11 clinical service lines across our existing 1000 plus facility client base, represents an approximate $3 billion market opportunity, getting full clinical service line adoption across the entire 5,700 hospital market, increases the market opportunity to nearly $7 billion. UnityPoint expanded their use of telemedicine offering across four hospitals in Des Moines and Cedar Rapids markets, and that's set to go live in the second half of 2021. The multi-site expansion stems from proven success with our r telePsychiatry offering at UnityPoint, both Allen Hospital, which resulted in reduced average length of stay by nearly 12 hours. It avoided more than $1.7 million in annualized boarding costs, and it generated an annual ROI of 281%. In April, two customers implemented Telemed IQ platform to maintain network integrity enroll markets, Bon Secours Mercy, Lourdes Hospital implemented ICU service line. Our platform of four Bon Secours with 24/7 Access to intensive patients, as the only hospital in the region with 24/7 Access intensivists Bon Secours can maintain network integrity by keeping higher acuity patients at their facility. There's one final example, the Davis Regional Medical Center, implemented teleNeurology and teleStroke offerings. Implementation of Telemed IQ platform allows Davis Regional Medical Center to maintain network integrity by keeping more patients within the hospital, as it can better manage complex neurological cases. Additionally, Telemed IQ combined with the physician services we deliver to help improve outcomes and drive higher quality of care throughout its community. Now regarding Access’ physicians, we continue to work through the integration process and remain excited about the opportunity. The team is focused on deepening our relationship across both organizations and building the best team. Early focus has been an identifying adopting best practices associated with sales processes and sales opportunities across the combined platform. Additionally, we've identified a significant number of cross-sell opportunities that are active in our pipeline. The cross sell opportunity revolves around moving single facility clients to multi-facility clients, expanding service line utilization from roughly two service lines currently to full penetration of 11 service lines and lastly driving full penetration across the combined legacy client base. At the same time, we've identified some initial operating synergies. For example, we have successfully completed the transition of the Maternal Fetal Medicine Service line onto the Telemed IQ platform, and have gone live with a very sites, our significant cross-selling opportunity across the combined legacy SOC and Access physicians platform remains intact, will be a key driver to future growth. Our late-stage pipeline is up roughly nearly 30% at the end of the first quarter. There are three drivers of the cross-selling opportunity across the combined companies with the bulk of back office contracting work complete customers can more easily adopt additional service lines. Second, customers already understand the value of telemedicine. And then lastly, the sales process becomes more strategic and consultative in nature. The combination of 11 clinical service lines coupled with Telemed IQ platform enables us to meet multiple needs of the health system and hospital leadership level rather than the individual service line leadership. The addition of several new service lines such as cardiology, infectious disease, maternal-fetal medicine, among others, help strengthen our value proposition among hospitals, providing a vast array of specialties allows our clients to easily expand their service lines on the Telemed IQ platform to meet their acute care telemedicine needs with minimal operational disruption, as their clinical resources change over time. One additional driver of our cross selling opportunity is vendor fatigue across hospitals and health systems. SOC Telemed can provide a full suite of clinical services and backup support, including credentialing and privileging. As hospitals and health systems face constraints, our algorithm simplifies and automates complex management associated with licenses and credentials at both the state and the facility level, which is an extremely attractive to current and potential customers. While increased leads provides a strong validation or strategic rationale and growth opportunity associated with the Access Physicians deal, visibility to conversion timing remains limited, given the renewed COVID environment. Possible decision makers face another wave of new demands, and we are already seeing in-person meetings revert back to remote or being delayed as an example. SOC Telemed remains a multi-level growth story. The first lever revolves around cross selling into our extensive set of current customers through multi-site, multi-service line expansion. The second lever, in both attracting new logos and adding new customers over time. The third lever, involves driving adoption of our Telemed IQ managed service offering, that allows hospitals to build out their service lines, load balance their current clinical workforce and supplement capacity need. And then lastly, as the only scale player in acute care telemedicine, we will continue to be opportunistic about aggregating small competitors over time. Investors often asked us, how Telemed IQ platform is differentiated from other offerings. The competitive advantage lies in the flexibility of our platform’s underlying technology, as the flexible workflows driving the secure platform were designed for optimization of clinical resources in acute care. Many of our competitors are trying to take system design for ambulatory or outpatient settings and bring them to the acute care space. Due to the higher acuity workflow complexities and limited panels associated with acute care, other offerings are simply too inflexible to meet the workflow assurances needed for acute care. We provide life-saving medical care. Furthermore, these competing solutions lacked the industrial strength and security of a platform like Telemed IQ. The Telemed IQ workflow aggregates and ranks and counters by acuity in real-time. Specialists are ranked by availability amongst the pool of doctors available who are licensed in the state and privileged at that very specific facility. The result is finding the right doctor for the right patient at the right time. Our Telemed IQ platform accounts for a greater level of sophistication relative to our public and private competitors. Acute care solutions require additional layers of credentialing and privileging for doctors, relative to the direct-to-consumer space. In acute care, a physician must be licensed in a specific state, and then credentialed and privileged to practice medicine at each specific facility. As of the second quarter, we managed 3,400 licenses and 15,000 privileges at standalone SOC. Furthermore, we continue to implement FHIR based two-way EMR integration with Epic and Cerner. This year alone, we've gone live in 36 hospitals across 12 health systems. Such integration embeds our Telemed system within the Epic and Cerner ecosystem, through a single sign-on, medical practitioners can submit a telemedicine console request within seconds directly from the EMR. Additionally, clinician notes captured during the console become available in the EMR as soon as the console is complete. As you can imagine customers are quite interested in this type of EMR integration that facilitates seamless workflow and frictionless data exchange. Finally, in a summary four key elements differentiate SOC Telemed from other telemedicine providers in the market. First, we serve the acute care market where the clinical needs we address have greater complexity and risks than direct to consumer telemedicine. Second, we manage credentialing and privileging for the doctors and hospitals on our platform. Third, the SOC Telemed acute platform allows hospitals to flash on scarce provider resources and improve network integrity. Lastly, our HITRUST CSF Certification represents a testament for commitment to the highest security standards with our Telemed IQ platform. We've stated before ad continue to believe the acute care telemedicine space is a post COVID opportunity as evidenced from the year-over-year bookings acceleration. We look forward to sharing more and new customer, customer success stories in the near future. And with that, I'll turn it over to Chris to walk you through our financials. Chris?

[Chris Knibb:]

Thank you, John. I will discuss our second quarter results in more detail. Overall, we are pleased with our quarterly operating results led by solid system wide consults volumes. For the second quarter we generated $6.7 million in bookings, up 136% year over year. Our bookings performance for the first half of 2021 is already greater than our full year performance for all of last year. We remain on track to more than double our prior year bookings in 2021 and our late stage pipeline growth of 30% further illustrates our bookings outlook. Total system wide consults to approximately 130,200, up 98% year over year, driven primarily by the Access Physicians acquisition. On a pro forma basis, total system wide consults grew 49% year over year, primarily driven by growth in Psychiatry and Neurology. As a reminder, total system wide consults include core consults at both Legacy SOC and Access Physicians as well as consults from the Telemed IQ managed services platform. System wide core consults totaled approximately 69,500, up 130% year over year or an increase of 34% on a pro forma basis. As a reminder, we defined core consults as those consults performed by our panel of physicians. Strong core consults volume growth can be primarily attributed to the acquisition and strength across Psychiatry and Neurology. Our SOC Telemed standalone core consults totaled approximately 37,800, while Access Physicians contributed 31,700 core consults in the quarter. Strength in core consults volume resulted from moving for growth in both Psychiatry and Neurology service lines. Consults volumes associated with these service lines exhibited a faster than expected recovery to pre-COVID levels for psychiatry and nearly back to pre-COVID levels for neurology. Access Physicians core consults volumes were impacted by weakness in pulmonary and ICU service lines resulting from very limited flu cases, and a significant reduction in COVID cases during the quarter. Revenues were $25 million, up 84% year-over-year, driven by new client implementations, the addition of Access Physicians and growth in core consult volumes in psychiatry and neurology, as well as in cardiology and maternal-fetal medicine within our emerging service lines. Access Physicians contributed $8.4 million of revenue for the quarter. Our adjusted gross margin was 37% versus 40% in the second quarter of 2020, gross margin was negatively impacted primarily by an increase in physician incentive payments related to the rapid increase and volatility we experienced in consult volumes, resulting from the recovery in psychiatry and neurology, as well as increased physician fees attributable to the Access Physicians' acquisition. Operating expenses were $19.5 million compared to $9.8 million a year ago, the increase in operating expenses results from investments in our go-to-market functions, stock-based compensation, added costs associated with being a public company, and the acquisition of Access Physicians. Adjusted EBITDA loss in the second quarter was $5.4 million versus a loss of $1.6 million a year ago. Finally, despite solid utilization trends during the second quarter, we are starting to experience headwinds from the COVID-19 Delta variant, which continues to drive limited visibility into core consult demand. It also serves as a distraction to our prospective clients as they work through vaccine mandates and staffing issues affecting their support services. While the number of COVID -- while the number of daily COVID cases reported to the CDC bottomed out in June to approximately 8,000, since then, there's been a significant acceleration in the number of daily cases to now roughly 110,000 a day. That's nearly 15-fold increase since June. Given these current trends, we're experiencing a level of off of daily volumes in both the psychiatry and neurology service lines. As individuals yet again become hesitant to visit the emergency department, unless absolutely necessary. On the Access Physicians side, consult volumes in pulmonary and ICU service lines experienced lower than expected utilization in the second quarter, resulting from the reduction of COVID cases in the near non-existent flu -- non-existence of flu cases. Additionally, a change in the go-to-market strategy for Access Physicians, hardware sales represents a short-term headwind to revenues, but results in a longer term better outcome. Access Physicians previously offered hardware only as a capital purchase which we are adjusting to better reflect the needs in the market through our operational hardware-as-a-service model whereby customers pay a monthly fee to utilize our hardware. We will continue to evolve our hardware go-to-market strategy as we work through the Access Physicians' integration and the needs in the marketplace. Lastly, as John mentioned, SCP Health deal we announced in May is overall neutral to 2021 revenue, but it will positively impact 2022 and beyond as the patient-physician onboarding increase at SCP. As we look forward to the balance of the year, we are taking a conservative approach and lowering our full year 2021 guidance. Currently, we expect full year 2021 GAAP revenue to be between $90 million and $92 million with Access Physicians contributing roughly 30% of full year 2021 revenue. We expect adjusted gross margin to be between 37% and 40%, and we expect to generate an adjusted EBITDA loss of between $22 million and $25 million. While we do not provide specific guidance on bookings, we remain positive on the Access Physicians acquisition, and the longer term growth in the business, as bookings are on track to more than double in 2021 as compared to last year. With the Access Physicians integration well-underway the only focus has been on identifying and aligning the combined business on best practices from each organization. We are in the initial phases of identifying synergies across the combined organization. We have executed on evolving and training the salesforce on the combined 11 service line, we are accelerating our cross-sell strategy and deepening our penetration across the wider client base. Furthermore, we are continuing to work on aligning the back office functions and teams, and are in the process of identifying associated cost synergies, which we expect to have some impact in the second half of 2021, but a greater impact in 2022 and beyond. We remain optimistic about our ability to execute on the significant growth opportunity in acute care telemedicine, which remains in a very early innings of acceptance and adoption as the scale player in the acute care telemedicine space, we are well-positioned to help our hospital customers solve friction points around access to specialty care, network integrity and load balancing of scarce physicians resources. Thank you, and operator please open the line for questions.

[Q - Adam Heussner:]

Hi, this is actually Adam on for Jailendra today. Thanks for taking the question. I was hoping you could just provide a bit more color on this change in go-to-market strategy with the integration of Access Physicians around the hardware sales, was this anticipated at the outset of the transaction, or did something happen down the line since then? And then maybe more broadly on integration, I mean, at this point is there anything else that we should be keeping in mind that what prompted change in how you're bringing Access Physicians to market outside of the hardware sales?

[Chris Knibb:]

Hi, this is Chris. I would say that we weren't certain if we would change the go-to-market strategy around the cart sales or not, we knew that they had done it differently on the Access Physicians side than what we had been doing. However, as we look at refining and co-lacing our go-to-market strategy and our messaging to our customers and what the customers are looking for there are still always certain customers that would prefer to have a capital purchase upfront and we'll be flexible in approaching those customers and offering hardware as a one-time transaction, but in our experience such more of the exception than the rule, and customers are really looking for a Hardware as a Service or really a combined, full service agreement that includes the Hardware as a Component of the service. So it is something we were aware of, but we do – we see that, there's going to be better adoption in the future on the Hardware as a Service basis. And frankly, it is a near-term headwind to revenues because you don't take that upfront revenue for selling a $10,000 or $15,000 cart, you actually bake that into your monthly recurring revenues, and it has a much better economic outcome over the long-term. As far as other things to be concerned about that. There are no other real business model differences that I can think of John, anything to add there?

[John Kalix:]

No.

[Adam Heussner:]

Got it. And then maybe just a follow up on – in regards to cutting guidance due to the impact of the Delta variants. Are you only seeing the pressure in Texas and Florida right now in your customer base or maybe, are you also assuming that those headwinds in the ER is expanded into some other regions in 3Q and 4Q now?

[John Kalix:]

So obviously, Florida and Texas have picked up a lot of national news, right but it is definitely more widespread than just those two states. So, I think, as you see even the reports that came out later, or later this evening, 90% of counties United States are considered high COVID areas. So obviously, Florida, Texas, pick up a banner amount of the news but it is more widespread.

[Adam Heussner:]

Okay, thank you.

[John Kalix:]

Thank you, Adam.

[Operator:]

Next question comes from Ryan Daniels with William Blair, please go ahead.

[Ryan Daniels:]

Hey, guys. Thanks for taking the questions and the details, thus far, and I appreciate all the new details in the press release, it's super helpful. One to ask about the late stage pipeline, you mentioned it's up 30% on a sequential basis that seems like a pretty big number for one quarter, so can you talk a little bit about how you define that meaning what that 30% actually is and then what a late-stage opportunity is actually defined that just put that in perspective for us?

[John Kalix:]

Yes, Ryan, appreciate the question. When we consider late-stage and we are – we do like obviously the growth. We look at it as where we are starting to exchange paper with organizations, so they basically have given us a verbal that they are interested. We realize that does not always come to fruition, so we have different stages within that stage itself, as we have a typical sales process that we track all of these but when we think late-stage it's where a customer says yes, we're definitively interested in doing something, let's start exchanging paper, and see if need matches, then we start getting into specifics around what's the absolute volume, what are the hours, what the type of coverage, et cetera that's taking place, but at that point, we'll look at the preferred option for that.

[Ryan Daniels:]

And is it defined by kind of a expected annual contract value to get the actual metric of 30% or is that just number of papers in the works?

[John Kalix:]

No, it does include an actual original estimated value, not just the number of pieces of paper and work, You can imagine the contract deltas are quite different, right. If we do a neurology deal and we're doing all neurology for the hospital, the contract even at a small hospital can be quite larger than we are covering partial coverage for a large hospitals and example, so we don't look at that 30% of late-stage pipeline is the number of deals. We look at it as the original estimate. And we have more work to do on fine tweaking. So we typically sit down and at that point, trying to really make sure we have the clinical coverage that each of the customers and hospitals are looking for. And that's what the work is in that late stage process.

[Chris Knibb:]

Yes. We measure the pipeline in terms of ARR for the contracts that are -- or the customer opportunities within the pipeline.

[Ryan Daniels:]

Yes, yes. Understand. I just want to make sure. Okay. And then, given the volatility, we continue to see in ED, not a big surprise here, given what managed care companies and hospitals have said about the ED performance. Does that change at all your near term sales approach or maybe you look at some of the Access Physicians areas that aren't as impacted by volumes in ED or COVID and maybe try to push those more and take the throttle off some of the sales that are really ED specific, like, thinking of teleneurology?

[John Kalix:]

Hey, Ryan. It's a good question. From a volatility standpoint, we did see great strength in the second quarter, as Chris mentioned, we came back to pre-COVID levels in psychiatry and near pre levels in neurology for legacy SOC. And as you know, a big majority of that was in the emergency room volume place. SOC, even before coming together with Access Physicians was starting to get pulled more into inpatient for neurology and psychiatry as well, again into those hospitals. And so we were already having that natural pivot, as customers are getting more familiar with how they use telemedicine deeper into a hospital setting. What's nice about Access Physicians and SOC coming together, to your point, the conversations on cross sell, and that's what's driving that late stage pipeline on that, that you're hearing, a good look at other specialties with our same customers. Those customers, before we could sit down and have a conversation, they know who we are now. They know the value that we deliver and we can start talking about bringing additional specialties into the inpatient floors. So, yes, you will see the mix of inpatient to Ed just naturally evolving, considering the number of other specialties that we're able to offer in general.

[Ryan Daniels:]

Okay. Perfect. And then, last one and I’ll hop off. Just in the new guidance, again not overly surprising, given everything we're seeing, but I'm curious, how you've constructed that. I know, before the prior guidance, kind of, assumed a gradual normalization throughout the year. You’re just assuming volume stayed flat at this point or a decline in volumes from where we sat at the end of June, given the weaker flu season and delta uptick. Just help us really frame how you're developing your guidance. Thanks.

[John Kalix:]

Yes. Ryan, the overall trend is largely flat, but we have assumed some slight declines and a little bit of volatility in the numbers, because we're seeing that. But you can think of it, you're right, we previously had a linear progression throughout the -- over the balance of the year and that is really just flattened out, which is resulting in resetting the numbers.

[Ryan Daniels:]

And that's flat same-store volume, but you’ll also get some new clients coming on, which should kind of help for that. Is that fair?

[John Kalix:]

Yes. We put a little bit of downward trend, just in case this thing goes sideways on us. We don't expect it to do anything like it did last year, if you will, with the decreases. So that'll buoy the numbers overall, but there is some little bit of pickup you'll get from a bookings coming live. Yes.

[Ryan Daniels:]

Got it. Okay. Perfect. Thank you, guys.

[John Kalix:]

Thank you, Ryan.

[Operator:]

The next question comes from Vikram Kesavabhotla with Baird. Please, go ahead.

[Vikram Kesavabhotla:]

Yes. Thank you for taking the question. I guess, first, on the guidance reduction. I mean, can you talk about how much of that was related to delays in new project implementations that were expected this year? And I guess going forward just looking at the new range, what does that assume in terms of new project implementations to the balance of this year?

[Chris Knibb:]

Vikram hi. Its Chris. Good to take your question here. So, the largest driver of the downturn is the ED volume impact, that's the biggest driver. What we have seen though on implementations is, they're extending right now on average about 30 days beyond where we had been trending, so we previously, on average we're running just over 90 days and now we're up -- back up to about 120 days. So that does extend the timeline for when we start to see revenue on the new deals going live. But the bigger impact is definitely the volume trends come through the ED.

[Vikram Kesavabhotla:]

Okay, great. Thanks. And then I know in the past you've talked about the potential to convert some of the Access Physicians network from independent over to fully employed status as similar to SOC Telemed. I'm curious if you can just give us an update on that front and what your expectations are there going forward? Thanks.

[Chris Knibb:]

Hey Vikram. Our strategy remains the same as volume grows in a number of the smaller specialties that Access Physicians have. We can naturally bring on work, well we know predictably by a number of states, we have a volume to fully bring over and W-2 physicians, clinicians. We see strong interest in that actually, from individual wanting to come on and be signed into SOC as a W-2. We're obviously watching from volumes overall is, we want to have good steady look at volumes before we start moving people into a W-2 you fix your costs obviously and that's the -- that we can play conservative on as these -- as what's happening both in COVID and then the near term and again what we mentioned as we have steady business that clearly points we need a half dozen, a dozen, two dozen and more W-2s, we will move in that direction and makes sense for our employment team, our clinical team as well as our customers.

[Vikram Kesavabhotla:]

Great, thank you.

[Operator:]

The next question comes from Sean Dodge with RBC Capital Markets. Please go ahead.

[Q – Sean Dodge:]

Yes, Thanks. Good afternoon. John you mentioned vendor fatigue hospitals are feeling and having now the brush Access Physicians deal brings make it more of a one stop shop with that deal have been done for a little while now. Are you noticing a shift at all in the conversations you're having with prospective clients? And I guess is it -- is it just the distraction of a Delta variant that’s slowing conversion down or do you think it's just going to take a little bit of time to kind of integrate it and get it all the gel and get the message out before that really starts to drive some kind of meaningful inflection in traction there?

[John Kalix:]

Yeah. Vendor fatigue was really something that came up in common discussions. I think I mentioned that before it almost felt like folks went to a conference together and mentioned it in this particular space, because when you're trying to run an IDN across multiple states and you want the system CMO to have someone that they trust and no one they can talk to about clinical quality and clinical quality measures and the team that came up in spades and it still has, I think the element that what we're seeing is, especially if you just reflect back on the last six weeks, early July, we were still having a number of meetings live and that was with system CEOs and their medical teams, and they were putting us in touch with the regional leaders within their IDN's etcetera. So those introductions were taking place because they did not want to be introduced to dozens of IT challenges, dozens of vendor elements. And again, there's a lot of technical piece, we're very proud of the work we have on high trust from a technical security basis because that keeps our hospital customer safe at scale as well. You look where we are today, meetings are being canceled, the live meetings are being canceled, we’re going back to Zoom, and that discussion as folks get ready for, hey, do we need to be prepared to be offering up additional vaccinations to the public, obviously, we talked about Florida and Texas feeling the stress, but there are other states clearly, Mississippi, Alabama and other states that are feeling this as well, so the meetings are being pushed on to virtual. That piece, obviously, then when you're talking about system that has multiple states, they're in very different elements are either getting ready for elements to help their teams or they're already hunkered down and we mentioned, it's not just a few states, it's much more broadly nationally. So for us, the value proposition is cleared, in fact the one nice element for us having the number of specialties is Telemed IQ became a much more consultative discussion. It was, where do you need specialist help immediately, which we can provide, and where do you have a mal distribution of your own specialists, where you can help yourself, and then we can bring Telemed IQ. So the fact of having two different strategic discussions at the same time, actually enrich those discussions, and we're wanting to bring that obviously forward, far easier to do when you're sitting around a table live and able to whiteboard out elements and think strategically about how to go at a national campaign for an IBM. Does that help Sean?

[Sean Dodge:]

Yeah, that help. And maybe just to clarify that last point where you're talking to clients about the more inclusive end-to-end offering and it sounds like Telemed IQ is a standalone, is that offering both of those to different parts of the organization, or is that them considering one over the others like, is it like a hybridization, or an either/or decision.

[John Kalix:]

It's a total solution. We have yet to have a conversation where and this is the difference between last year and this year by having multiple specialties. We're almost always being asked about helping with specialty coverage in some of the 11 that we can help cover within. And then the conversation goes further, and this is what we've been teaching the sales teams and working through the training on the sales teams, it's you clearly probably have an over distribution of specialist of particular geography, how can we help that mal distribution and fractionalized their time, and that's an entirely different discussion, which is why we have folks on the team that are skilled at sash like discussions versus clinical type discussions, and they team together to ensure that we're working with the customers. There are literally right-hand, left-hand in that discussion. It's not a separate strategy or solution and you can imagine it fluctuates. Our ability to be in the hospital and be their solution as their environment changes, whether it's a specialty, they might hire a few of their own and then be able to use Telemed IQ instead. There is always going to be a shortage, right, the stat around the 77,000 additional shortages of specialists, there's just simply not enough to solve. So it's really trying to move individuals around maximize their time and help with the mal distribution of specialists.

[Sean Dodge:]

Okay, interesting. That's very helpful. Thanks again.

[John Kalix:]

Thanks.

[Operator:]

The next question comes from David Larsen with BTIG. Please go ahead.

[David Larsen:]

Hi, I'm sorry if this question has already been asked, I joined the call a little bit late. But the bookings growth actually looked pretty good to me. I think $6.7 million, up 136%, can you maybe just comment on the selling environment and what drove that? Thanks.

[John Kalix:]

Hey David, we are pleased with the bookings, both in the second quarter as well as the first half of the year compared to all of 2020. We see strength in that. We think it shows that in this environment where telemedicine is trying to be adopted, it's being understood that it can truly be used in this acute care space. So, we do see it as bullish. We see it both between the numbers that were put up in the first half as well as the late-stage and the cross-selling opportunities that we've been getting after. So, we are bullish on the booking side. And that's obviously -- we've always said, we are post-COVID play. I think we would have never predicted there was going to be a third and then a fourth wave, I think we can all agree that that's not something we have wanting to put into any models, any in business in the world and so it is that pressure. But what it shows is there's true understanding that the shortage is not going to go away. While the immediate and the urgent, is COVID, the long-term urgent is going to be adding specialists to take care of my population as they are getting older. And that's where we saw the long-term strategy for hospitals which is why we think the bookings is coming in so strong.

[David Larsen:]

Okay. Does that bookings include SOC Telemed and Access Physicians? And is that sort of inorganic growth rate, or -- like, what's the breakout for pure SOC Telemed and what was that trend on a year-over-year basis?

[John Kalix:]

So, that number does include all of SOC legacy and Access Physicians' legacy combined. The elements for that includes Telemed IQ as well as our clinicians offering in our, what we call, our core consults. The one that does not include the Chris' comment and my comment, the SCP contract was -- because it's a multi-year contract, it only represents a one year evaluation within that total bookings number that you heard for the quarter. So, it does not show the entire value of that contract over the five-year period.

[David Larsen:]

Okay. And then it looks like on a total basis, the revenue per consult declined a little bit, but the Access Physician revenue per consult actually increased on a year-over-year basis, just any color on what drove those trends would be very helpful?

[Chris Knibb:]

Yes, the decline on the revenue per consult on the SOC side is driven by, as we discussed before, throughout the heavy COVID period, we had been operating below minimums, primarily on the SOC side. So, customers had been paying for a minimum number of consults, but we had been performing fewer than those. So, there's a period of time, which we fill that minimums bucket and that drives down your revenue per consult because as you fill the minimums bucket, you're effectively doing those additional consults at the same price you were doing before. So that's what drove that down. And then on the Access Physician side, it's sort of the inverse we saw a decrease in consults in pulmonary and ICU, which then kind of increased the revenue per consult.

[David Larsen:]

Okay. Great. Thanks very much.

[Operator:]

This concludes our question-and-answer session. I'll now to the conference back over to John Kalix for any closing remarks.

[John Kalix:]

I'll just quickly thank everyone for joining tonight. We look forward to connecting more ensuring details on additional customers and additional growth moving forward. Thank you, everybody.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.