Hinge Health, Inc. ($HNGE)

Thank you, everyone, for being on time. I really appreciate that. You make my life a lot easier. So welcome to our inaugural Investor Day here in Chicago at our Customer Conference movement. And thank you to those on the webinar that are joining. We have an exciting A couple of hours for you where you'll hear from various leaders across the company, walking you through some of the exciting momentum we're seeing here at Hinge Health. First, you'll hear from Dan who will ground us in the strategy and vision Next, Jim and Aaron will discuss some commercial momentum and how our distribution delivers scale and runway. Next, Linda and Gabriel, our product leads, will talk about some of our new product initiatives and take you a layer deeper into how we're building things at Hinge Health. And then finally, we'll wrap up with James and Jeff, to connect all of what you heard today back to the numbers and the model, which I know is what you care about most. We ask that you hold your questions until the end. We will have plenty of time for Q&A for all of the speakers at the end. So please hold your thoughts so then. And lastly, as a quick reminder. We will be discussing forward-looking statements today, so please review the disclaimer at the start of the presentation. With that, over to you, Dan.

Welcome to Chicago, everybody. Really appreciate everybody coming here. I still remember the feeling of waiting leading rooms, waiting for an appointment to be booked waiting to figure out what came next and at Hinge Health our vision is to -- or we're trying to remove that feeling from everybody who's getting care. So our vision overall is to use technology to automate and scale the delivery of care. And our goal is simple, a unified end-to-end care platform from prevention to recovery, care that moves with the member, and we're solving this in 3 key ways. First is through digital care. Members can access personalized care anytime, anywhere from our industry-leading app, and it's a single app delivering all of their care programs. Second is with specialist visits. Easy access to specialists who could perform evaluations, create treatment plans, even make in personal referrals when needed. And third way is in-person care itself. When face-to-face care is essential and it often is, we coordinate directly with high-quality prevetted providers. And why this matters. Musculoskeletal conditions impact 1 in 2 American adults every year, but only a fraction of us actually go to physical therapy. And that's because it's very onerous to seek physical therapy. You have to take time off work. You got to pay a co- pay parking fee, maybe get child care. So many of us resort to a quick fix such as opioids or surgery or injections or we delay care altogether until we get to end stage. And that's why musculoskeletal conditions remains a top 3 cost driver most of the employees that you will meet during this conference. And we try to close these care gaps by seamlessly blending automated and in-person care resulting in higher adherence and better outcomes. And when you think about some of these typical care experience, we're using technology to replicate that. So our intake creates a personalized care plan, computer vision powered exercise therapy gives people real time feedback. Enso or electrical nerve stimulation device gives people a technology alternative for rates and when hands-on care is essential, Hinge Select brings in-person care into their care team directly. And all of this available through a member's fingertip through a single app. We offer convenience that you're really not going to find convenience as well as comprehensiveness. We do not think you will find any other digital health company out there, whether in MSK or outside of MSK. And with Hinge Health, members don't have to navigate a system. The system moves around them. And that's the through line you will see today in this presentation as well as in the rest of our presentations across this conference. But ultimately, as investors, you know that long-term success requires profits that are not competed away or arbitraged away, which itself requires enduring competitive advantages. And we've really focused on building and finishing our competitive advantages. Firstly, is our product. Yes, we're very good at software development. You'll hear from Linda, how we've built consumer-grade AI-first member experience, all available through a single app. But software alone will not automate care delivery. That's why we've also invested in breakthrough hardware such as Enso that moves outcomes, and we are not afraid of hardware. We think hardware will have a really big impact on health care long term. We've also invested in-person care through Hinge Select. Secondly is our distribution. It's not enough to build a great product in health care, you must get paid for it. And we have a repeatable go-to-market motion that consistently retains 97% of our customers while adding hundreds of new customers every year. We also, thanks to our preferred partnerships have preferential access to new customers. Lastly, when you put together the market's best product with incredible distribution, you get scale. We're not only about 3x larger than second place, but our proprietary data set of 100 million-plus treatment sessions and having treated over 2 million members, coupled with our peer-reviewed articles plus ROI studies that we've done has created a compounding loop that's extending our lead. We're also being very deliberate in how we build our platform. Firstly, going deep in MSK from digital to in-person care; second, using the infrastructure we've built for musculoskeletal conditions to lateralize into adjacent areas, allowing us to achieve both wider depth and deeper -- wider breadth and deeper depth than any other health tech company. So PT is a $60 billion market, migraine has $25 billion itself of direct medical spend. Combined, they are still just a fraction of total health care spend in the U.S. So we are not done adding new products. While AI has made us -- allowed us to move a lot faster it's also made our distribution that much more important. Next, Jim, our President, will walk you through how our go-to-market engine turns innovation into rapid adoption. Over to you, Jim.

Thank you, Dan. And thank you, everybody, for joining us. This is probably my favorite time of the entire year, our Movement Conference. It is a chance to spend time with our clients, our partners, our members. They're walking around with pink lanyards, I encourage you to stop them and hear about their experience firsthand. But as Dan mentioned, my name is Jim Pursley, I'm our President here, and I run our commercial organization along with Aaryn Pure our Chief Commercial Officer, who you'll hear from shortly. So let's talk about how we translate that vision that Dan just walked us through into durable growth. So we've developed an enterprise style go-to-market motion, what may be familiar for those of you who look at SaaS companies, but we've added a health care advance that. Our partnerships make buying fast and easy. So our employer clients can contract within weeks, leveraging those existing partnerships and also implement very quickly with no long implementation cycles. What's nice also is our partners not only help grease the skids and help with imitation. They also co-sell alongside of us. And what happens is we develop success proof points and success in those clients, the health plans and our partnership to see that, and they start to add us in the other at-risk parts of their business. We've talked about this before, fully insured FEP, Medicare advantage. These are actual rigorous heavily scrutinized parts of their business that they only add to after demonstrate success. And this creates that virtuous cycle. As the market leader, we get more partnerships, we close more business. That business produces more evidence that evidence produces more partnerships and the flywheel continues to accelerate. So that model is also very efficient. It allows us to go to market in a couple of ways. First and foremost, we do have a dedicated sales force that we've talked about, and they go out and they engage the market directly. And it gives our clients the option to contract directly with us. With that said, though, most of our clients decided to go through a partnership for the benefits and the reasons we just discussed, easy to contract. The wheels agrees to implementation is faster. They get to leverage existing contracts, and they can stand up Hinge Health within weeks as opposed to months and sometimes years that are typical with health care. And they act like an expand sales force as well. Our partners go out there and they engage the market, actively surfacing new opportunities and co-selling new prospects with us. And so it's a kind of a multifactorial force that going out with making it very cost effective for us and leading to a lot of scale very quickly. From a partnership perspective, as I stand here on the stage today, we have over 60 health plan PBM and ecosystem partners, including 5 of the 5 largest national health plans and all 3 of the nation's largest PBMs. But the number I think I'm most proud of is our client -- our partner retention number at 100%. These partners are very hard to win but are very sticky by design. We've invested a tremendous amount over the years in these relationships and the technology that is not easy to replicate or to replace. There are multimillion dollar switching costs inherent and standing up a new partner. And so we've built a nice moat that is not a first-mover advantage, but really a trust-based credentialing process that would take years, again to replicate I know that you can't have a presentation. I'll talk about AI today, but this is not a moat that AI can replicate. This is -- our health plan partners only add new distribution partners like us after years of outcomes data and is really built and earned on trust. And so we're really excited about that. And the results on this slide here. Today, as I stand today, we have over 2,800 clients, 53% of the Fortune 100, 45% of the Fortune 500. Our clients enjoy a Net Promoter Score of 88, and we have a client retention of 97%. So this has not happened overnight. It's not happened by accident, but rather a deliberate and intentional effort over many, many years. So now that we've won a client, what comes next. So after we win a client, we focus on both building awareness and driving enrollment. And we only get paid, as you know, when a member enrolls and then engages with Hinge Health. So we built this dual engine, 2 parts of the engine. First is product-led growth, and you'll hear from Linda here shortly, but think about things like our women's pelvic health expansion, okay? The second part of that engine is awareness and we use proprietary data like claims data and prior authorization data, and we'll talk about that. We use both -- we utilize both paid and unpaid channels, and we use that proprietary data and our analytics teams. They're constantly iterating and experimenting to get better and better and more effective. We're also really focused on reengagement programs to make sure that Hinge Health stays relevant for our members throughout their lifetime. And all of this together, combined has allowed us to improve our yield from 2% 5 years ago to over 4% today, and that's showing up in our financials. On the awareness side, we're running a focused measurement-driven playbook that we're constantly innovating and iterating with new channels. I wanted to call just 3 that we want to highlight today. And the first is member referrals, which might be one of my favorite because it's so affirming when somebody feels so passionate that they're going to talk to their peers about it. We've introduced new in-app features that allows members to share their story with other prospective numbers when they had that great experience. Second, as member renewals. We've added new outreach path to reengage those who haven't used the product in a while, again, staying relevant to our members throughout their lifetime. And the last one, simple but profound something like e-mail where we refine our messaging, we've used pro proprietary data to become more personalized, more targeted and more individual, increasing our conversion rates consistently over time. All this together, more of an outreach, tighter targeting, better channel breast all compounding higher yield while reducing our acquisition costs. And the flywheel is paying off. No. Yes. Okay. So we know that when engagement goes up, pain goes down. And we know when pain goes down, avoidable cost decrease, which translates into real hard dollar savings for our clients. And you know that's important, as you heard this morning from my main stage discussion earlier today. I'm excited to tell you that we just released a new control match study where we engage over 1,000 employers across 23 industries and over 200,000 participants and the results that we saw were over $2,900 of MSK savings per year. That translates into over a 3 ROI for our clients. The biggest cost driver of that, as you might imagine, is surgery, but we also saw meaningful reductions in imaging, injections, durable medical equipment and outpatient visits. So again, this flywheel, it's taken years to build, but it provides a durable hard to replicate moat. Now I'm going to hand off to Aaryn Pure, our Chief Commercial Officer, to walk us through the long runway that we still have to grow in the markets that we already serve and own today. I've worked with Aaron for over 12 years, and I can tell you that nobody knows the market and what matters to it more than Aaryn Pure. Aaryn, come on up.

Thanks, Jim. You're always so complementary. Appreciate it. All right. Aaryn Pure, nice to meet everyone. As Jim shared, we have a repeatable motion that scales and that gives us something rare, and that's visibility into a long runway. When you look at our partners, 1 by one, the amount of room to expanding in each one of them is significant. Even our most tenured partner on this slide, we're only 25% penetrated today. all our major partners are not only here in attendance at the conference, but many are tacking on extra days to have growth sessions and strategy reviews. The next turn of the crank isn't really new partners per se, although there are several that we would like to add and are in the process of doing so, it's really taking advantage of the partners that we have 110 million lives in our existing channels and it's just about converting them to clients at this point. Now zooming out across our existing markets that we serve today, we have roughly 25 million lives contracted. That's the figure at the end of 2025. We're seeing about 215 million plus lives in total TAM in these existing markets. So that's nearly 90% white space or 10x growth opportunity in our existing markets today. We've seen some very strong traction over the last 2 years in the non-ASO space or still less than 5% penetrated. Digging into fully insured in particular, which is about 60 million total covered lives, we have 2 dozen health plans today that offer us to their fully insured book of business. when a health plan puts us into their fully insured book of business, they own the medical risk. They are underwriting our outcomes into their P&L. So this is not just a procurement decision or a medical decision. This is an actuarial decision that they're choosing to add Hingel. As the primary partner to the majority of the largest health plans across the country, we're well positioned as the incumbent to win these lines of business like fully insured. In terms of this year's performance more broadly, year-to-date and active opportunities for 2026, this sales season is the most active sales season I've been a part of in my 4.5 years at Hinge Health. Our momentum hasn't ever been stronger. On that note, within self-insured or our self-funded clients, our most penetrated market, the pattern repeats. And while when you look at the Fortune 100 or Fortune 500, we're about 50% penetrated. There are still many large 100,000-plus life groups still left to convert. So enterprise is still far from saturated, large and mid-market segments or earlier still an S&B and public sector around 15%. So across the board, we're less than 30% penetrated in our core self-funded market. We're focused across the board, but we have made some investments this year in the SMB market to accelerate growth. We've added sales capacity. We're creating a more scalable sales motion with a streamlined trial program for these smaller clients and we have invested more in broad demand generation campaigns. And lastly, and probably most excitingly, we have a number of TPA and health plan partners that are working with us on embedded models and opt-out models for their SMB groups. This allows us to penetrate these smaller clients with a much faster velocity than going one by one. So really excited about that. So we're already seeing the early successes of these investments in SMB. Our SMB pipeline is up over 100% year-over-year. And we very much expect our total number of clients added this year to be higher than years past because of these investments. Why do we win? It's consistent. It's the product experience. It's unified care. It's AI personalization, combined with the go-to-market strategy that we've been talking about the last 10 or so minutes, and our scale. Scale is our brand. It's our data. It's our clinical validation that takes years to build. Together, these attributes remove friction for our buyers and these advantages get stronger with every new life and logo we at. Thank you very much. I'm going to ask Jim to come back up and talk more about Unified Care and Hinge Select.

Thank you, sir. All right. You heard Dan today earlier today on the main stage, talk about our promise to bridge in-person and digital care and Hinge Select has made that promise real benefiting every participant in the ecosystem. For our members, they get quoted high-quality care at low or no cost to them. Our clients enjoy rates, 30% to 50% below commercial benchmarks, and our provider partners have clean, high-quality referrals and faster payment. And for Hinge Health, it gives us the ability to improve outcomes and drive a higher ROI, which, again, allows us to increase yields and add the new revenue stream for our business. 1 platform, 1 team, 1 unified experience for our members. To do that, we've built a network of [indiscernible] work today, 4,100 providers and growing nationwide. So matching the right member to the right provider is fast. And our digital program evolves alongside of it when in-person care progresses. And here's the thing, though. They're more than just providers. These are our partners. There are partners and they are an extension of our care team and they're invested in that unified experience. It's what makes it feel like 1 system, 1 unified experience. And the good news is that's working. Thousands of members have now gone through Hinge Select. As you heard Audrey talk about this morning, 9.4 out of 10 client -- or member satisfaction rating, members report that they feel cared for, in some cases, for the very first time. Cost barriers are gone, and they leave knowing exactly what to do next. And outcomes are happening. More members are getting the right care, less unnecessary imaging, fewer avoidable procedures and the result is over 20% lower MSK costs for our clients. That's a 60% reduction in imaging and surgery utilization, really exciting. And today, we're excited to announce that we'll extend that same coronation to surgery, the largest cost bucket in the MSK ecosystem, 1 team, 1 platform, 1 unified experience. Surgery drives 2/3 of all MSK costs and half of those procedures are medically unnecessary. So you've obviously seen the impact of Hinge Select at scale, avoiding unnecessary spend. And the good news is that surgery is going to be when it's the right choice. We're going to get our members to the same core we get them the same coronation and get them guided through the experience, much like we're doing today with nonsurgical. By adding orthopedic surgeons to the Hinge Select network, we continue to go full continuum of care from digital through nonorthopedic all the way through surgery. And this is what buyers are asking for. This is what our clients are asking for. One accountable system, routing and coordinating care, digital, in-person, surgery. They don't want to add new vendors, they don't want to enter into new contracts. They don't want more friction. So high-value care now is easy to access. We're able to lower cost and prenegotiated rates. We create incremental revenue per member for our business, and it's the flywheel again, continues to accelerate. At this point, I'm going to invite Linda to the stage our VP of Product, who's going to walk us through how we make that experience effortless for our members. Linda?

Thanks, Jim. For those of you who I haven't met, my name is Linda Leung, and I lead our digital care product organization. Now Jim and Aaryn have just walked you through how we go out and bring members onto the platform. my job is to make sure that members actually show up and that they then come back every single day. One of the ways that we're doing that is by redesigning the app to be truly consumer-grade and we're bringing something that I'd like to call energetic momentum. They do things like lively transition, the animations and the complete overhaul of our exercise therapy experience. Now these user experience changes encourage members to come back more often. And that's very important because when members come back, they complete sessions, and then we learn a little bit more. We learn a little bit more about what -- how they move, how they respond and what they need. And that signal is what allows our AI to make care continually more personalized to their needs. And we know that people remain loyal and are increasingly loyal to products that feel truly built for them. Engagement also does something else really important. It delivers outcomes. So when members come back to complete treatment sessions, we see that their pain goes down. And when pain goes down, that also means that costs go down for our clients. And so that's why engagement is one of our key metrics that we look out for. And that's why we designed every single surface of our product to be easy to use, personalized and have it for me. So what actually makes that personalization possible at scale? It's the data. And [indiscernible] a decade that we have spent building a data set that no 1 else can replicate. We have treated over 2 million members. We have delivered over 100 note sessions. We have collected over 39 million outcome loss and integrated DHR data across 750,000 providers. That is not data, but you can just scrape off the Internet is completely proprietary to us. But the volume is not the headline here. What actually matters is the quality of that data and how it's going to be used to be to deliver care. So every day, our physical therapists, on making small, high-impact clinical adjustments for real members in real time. We capture that as structured human evaluation data that trains the agent system that we have built. This is exactly the kind of signal that data annotation companies will manufacture and deliver to the big foundation model companies. That difference is that ours comes from live care delivery and has generated on human clinician at a time by a clinician who has been operating at scale for almost a decade. and Gabriel's going to come in a few minutes and talk a little bit -- we'll talk a little bit more about that next. Now we are using that data to up-level Robin, our AIT member. Robin brings help in moments that count. So we started by having Robin reach out when members are experienced moments of high need such as when they're having a pain flare. And we have seen we've been able to greatly compress the time to care with Robin. And now Robin is going to be truly a members' fingertips at the front line for care. Robin can help understand -- Robin can now understand the member's intent Robin has expanded capabilities such as being able to handle tech support, deliver instant answers to members about their program, be able to explain exercises and why they help escalate to a human clinician, if necessary, and suggest alternative exercises if it's appropriate. Now we've seen very strong satisfaction with Robin moving from a reactive triage to a proactive in-session coach, and there's a lot more coming. We'll be adjusting exercises with voice and expanding contact awareness so that members can finish today's plan even if they're having an imperfect day. Another breakout tool that we launched last year was movement analysis. I hope you all have the opportunity to try it out which turns thoughts of -- like "I think I'm getting better" to actually saying, "I can see that I'm getting better". So we measure range of motion with computer vision and pair it with augmented reality captured pain information to create a single Hinge score that members can track over time and see their progress. Now -- and you can see with the video that we just showed, how a member can log their pain feedback with simply the movement of their hand and never having to go touch the screen. Now we launched movement analysis last year with pain and range of motion scores. And this year, we are expanding into new dimensions of strength and insurance. to new dimensions that are very important to our members. Clear objective progress is a powerful engagement tool. And when people see improvement, they stick with it and then outcomes follow. And this year, we have a new area that we are very excited about migraine. So migraine is a massive underserved market that has been hiding in plain sight. One in 6 Americans live with migraine, probably some of you, and it impacts women twice as often as it does mean. So that's on the order of 15 million people in the U.S. alone. A single person with migraine drives about $16,000 of direct per year in combined medical and pharmacy spending. That's more than twice someone who lives migraine-free. And at a macro level, migraine cost U.S. businesses, an estimated $25 billion annually in direct medical spend. This is a very large, frequent and costly opportunity, and it's squarely within our wheelhouse. And the reason that we are so excited about migraine is because it is adjacent to the chronic pain that we already do so well. 75% of people with migraine also have co-occurring MSK pain, often in the neck. And that -- and the core tools that have worked really well in MSK, things such as exercise therapy, neurostimulation, education, guided breathing and human-led lifestyle coaching are also the recommended best practices for migraine management by leading authorities. So we have spent over a decade building deep expertise with each of these tools. And we pair that with the scale distribution through over 2,800 clients and more than 60 health plans and PBM partners. So let's take a moment and walk through what's included in this program. The member experience we're delivering is going to be comprehensive and live inside the same Hinge Health app that our employers already know and trust. First, we're going to deliver relief, relief within minutes with our FDA-cleared Enso for migraine. In clinical testing, we saw 56% of participants see a significant pain drop when using Enso for migraine. And Enso was almost 2.5x more effective than placebo alone. Second, we're providing understanding. So that includes comprehensive trigger tracking across a wide variety of dimensions that includes sleep, caffeine, weather, stress and much more. Now we're going to take that data, combine that with AI-powered insights so that members can see patterns and then act differently and change their behaviors. And third, we're delivering prevention through targeted neck and upper back exercise therapy through lifestyle coaching and PT support that's going to reduce attack frequency and severity over time. It's going to be one integrated system, we're providing relief now and fewer a tax leader. And our solution is going to be delivered through channels that we already operate at scale. Now we launched migraine about a month ago, and the feedback has been overwhelmingly positive. Jeff will talk a little bit more in a few minutes about our client adoption and how to think about the revenue opportunity here. But for now, I'm going to pass along to Gabriel. He's our Co-Founder and CTO, and he will get into the details of our tech stack and how we're using AI throughout the entire company. Here you go Gabriel.

Thank you. Alright. My name is Gabriel. I'm the farming team here at Hinch Health and our CTO. I am excited to talk to you today but how we have been using AI. Linda walked you through a lot of the amazing innovation that has been happening on the product side. I'm going to take you behind the curtain a bit. A few things I wanted to talk through. With the high level at the surface, members see a clean, single, simple app makes the care easy for them. And underneath there are years of AI investment into hard and often invisible problems. And we've been building in this area longer than most, not just as part of the recent AI boom. Computer vision is something that we started investing in heavily back in 2021, which is a subfield of artificial intelligence, long before the current GenAI wave. And then back in 2023 before most companies even had an LLM strategy, we launched a first Genetic product with our AI [indiscernible] system. That early investment in data and models, in expertise compounds year-over-year. I'm going to cover 4 specific topics over the next few minutes. Talking more about the technology behind computer vision for real-time measurement. Secondly, AI for clinician scalability; third, walking you through the technical approach we are taking to building Robin, our AI [indiscernible] member; and finally, how we're embedding AI for productivity across the company and some of the impact we've seen on OpEx from that. Starting with computer vision. TrueMotion is not a wrapper around and off-the-shelf foundation model. This has been the core of a foundational AI research for the last 5 years, it's a proprietary computer vision system. We've been training on data that only we have available because of the 2 million therapy sessions -- because of the 2 million members that we have delivered care to in their homes with pets, poor lighting, obstructive views and all. Let me walk you through just 1 example of the type of hard problem our AI research lab has solved recently retraining TrueMotion to keep tracking you even when your body is partially out of camera view, seeing what isn't there. What you see here is a 3D model on the left that TrueMotion has built off dam where that is able to predict with a fairly high degree of accuracy, how the rest of his body is moving even when the camera can actually see it. And in these kinds of innovations that have resulted in 40 issued patents, further pending patents just for our TrueMotion but division technology. The results of this specific improvement is a smoother experience, more precise measurement, looking at some of the metrics, specifically for scenarios where part of the body is of the screen the accuracy of key point detection has gone from 45% to 63% in those particularly challenging scenarios. The angle error is reduced by 2.2%. And again, there are tens of these kinds of hard problems that are all stacking on each other to make TrueMotion really the best AI technology for this use case that is out there. And of course, accurately always matters, but it is particularly important as we are shifting from using to motion just for exercise feedback to also using it for our Hinge Score, for functional measurement to actually be able to accurately track and measure how people are getting better over time. And we'll continue to invest in this with our AI research lab. Secondly, let's talk about AI for clinician scalability. Our digital-first care model has always been very efficient by its nature. Traditional PT, you have 1 patient, 1 PT for 1 hour. In our digital-first model, the actual human clinician hours for delivering equivalent care has been reduced by 97% compared to this traditional model. And over the last couple of years, in particular, AI has been a big contributor to that increasing efficiency. So back in 2023, we delved fully into these new capabilities that LLMs were making available for us, focusing on human in the loop, workflows for our conditions as a safe but impactful way to really lean into these technologies. So today, AI summarizes member, context, suggests excess action, pre-draft messages for our care team members, and humans step in when the complexity of the situation demands human judgment. Comparing Q1 this year to the same period last year, the clinical cost per member Liver Care has reduced by 50%, while our engagement and satisfaction numbers continue to look great. AI gets us that win-win, great patient experience, while we are able to lower our costs significantly. And what's more, the hundreds of cat members working for us and engaging with these systems stay in day out. effectively gives us a huge pool of expert human data annotators to make our system our AI system better and better over time. I'll talk you through what that flywheel looks like in practice. Starting off every day, all day, close to 500 conditions interact with their AI systems. Every time they send a message without edits, every time they change the message every time they provide feedback on an AI suggestion, that turns into structured label data provided by some of the best physical therapists and health coaches in the business. trained on modern best practices, really, really clean clinical training data that we can use. Of course, the first thing that we use this data for is improving the AI care team assistant itself, but this also helps demonstrate where is the AI performing well enough that we can graduate from a human in the loop, getting a system workflow to something that Robin can actually own as our AI care team member without a human in the loop. We graduate those tasks to Robin. And of course, what that then does, it frees up our human care team to spend more of their time on more complex, more valuable use cases, which in turn provides richer training data on those more complex use cases, which then allows us to graduate more complex use cases for Robin and so the flywheel goes on and on. Every quarter, that advantage compounds. And Robin is designed very intentionally in a way that makes it easy for us to incrementally absorb these use cases, experiment and improve. It's a multi-agent system with specialized agents coordinating in real time, built in a very modular way where we can test and evolve different pieces of the system. Most member interactions [indiscernible] through an intial triage layer, where for member contact and member intent, we route them to a specialized agent, specialized system for a certain use case. For example, member reports, pain increase, there's a specialized agent that routes the member understanding what might be going on, recommending the right best action. If they report a problem with their Enso, the tech support agent takes care of them. And when needed, an escalation agent loops in the human care team. We've invested heavily into the member contact layer, the data layer, making sure that each of those agents has full access to real-time member data in a way that LLMs can understand reason about and act on. And the architecture is also built for speed. As mentioned here, the modularity of it that we can test and swap different pieces of this very easily is a big part of it but also that most of this experience is driven by our back-end services rather than being coupled to our mobile app. So we can make changes in hours or days rather than waiting weeks for every 1 of our members to be on the latest up version. And this is how we build a safe, effective AI care team member while still operating at tech product speeds. Last but not least, I want to talk about how we're using AI internally. We are fully leaned into operating as an AI-native company, starting with the engineering team where, obviously, this has been the most mature in terms of AI for productivity, but gradually growing outwards from there to the rest of the company as well. Looking here at the left, where we're looking at PRs, units of engineering work, we grew the raw volume of work per engineer that was flowing through the system at 2.5x last year. And just in the first half of this year, we have again doubled that number. Partially as a result of this, in addition to a lot of other improvements, of course, that we've made, the R&D expense as a percent of revenue has dropped from 37% just a few years ago to 14%. Today, for 2026 to date, and we are continuing to improve that. We work with a software engineering intelligence vendor called DX, which provides us benchmarks to a lot of other top tech companies in business. They have benchmarked us in the top 1% of their customers when it comes to AI adoption and impact in our engineering team. It is something we're very heavily leaned into, and we'll continue to do so. Just as one example. We're looking at the migraine launch. This is something that would have taken a large team a long time. We were able to launch this in less than 6 months with a relatively small core team working on migraine itself through a combination of 2 big things. We invested a lot in paying on tech debt, decomposing the programs that we have built into these configurable lego blocks education, exercise therapy. And so each team really invested in making those components of a program, easy to rearrange, easy to configure for different use cases, and migraine was really our proving point for that strategy. put a lot of that platform work in and made it very easy and fast to launch a new member program for a new condition on this as well as obviously really leaning into AI to move faster. This kind of work would have easily taken 3x as many people twice as long if we had attempted it just a year ago. Taking all of this together, our pace of product innovation that is only increasing, the leverage that we get from AI adoption internally and all of the commercial advantage that we have talked about. I could not be more bullish about Hinge Health merging as a clear winner from the current AI race. Thank you very much, and over to James.

Alright. Thank you, sir. Okay. Can you still hear me? I'll just go here. Okay. I want to just make a quick comment on, I think, the coolest thing you saw here today besides we had a lot of stuff about our commercial operations great strategic piece from Dan and some cool products stuff from Linda and Gabe. But the coolest thing you saw was Dan moving on the screen, if you remember that one. Now the squats are no big deal. We can probably all crank out a few air squats and moving side to side, no big deal. But if you saw at the very end, there was a ball coming into them from the side, he's staring forward and he caught it in his right hand. For any of you that played baseball, it's a pretty impressive feat. So give it up to Dan for that for some incredible hand-eye coordination, I know he was a basketball player growing up, but -- yes. Yes, it was. That was impressive. So well done. Anyway, let's dive into a few numbers that I'll share the stage with here with Jeff our VP of Finance, extraordinary human being, and he'll come up and join in a few seconds. But first, a quick reminder on our model, right? So how do we build to revenue? Well, first, we build the billings. And billings is a function of our yield multiplied by our lives, multiplied by our ASP, pretty simple model. If you look at last year as an example, just over 25 million lives, a 3.9% yield multiplied by 858 in ASP, and you come out to the numbers that you see here of $671 million of billings. This is 2025. Then that gets recognized ratably depending on when the member comes in over a 12-month period that they have access to the platform. And that last year as a comparison, that translated into $588 million of revenue. So nothing's changed with our model. It gives us tremendous visibility into our revenue streams. That's one of the reasons we like it. and it's pretty predictable. So we enjoy it, not going away from it anytime soon. It gives us really good visibility into where our business is going, which helps us make better informed investment decisions on what our model can handle. So let's look at lives really quick. You heard some of the -- from Jim and Aaryn about where we're heading here. and where we've been. We've had tremendous success. We add roughly 400 to 500 new clients every year. We had roughly 4 million to 4.5 million lives every year. Last year was our best lives ever at 4.8 million new lives added I think one of the takeaways, hopefully took from Aaryn as he's feeling as good or better as any year that they've been selling. So maybe that will translate into more than 4.8%. We're expecting probably somewhere typically in the 4% to 5% range. Again, I think we're feeling pretty good about where that's trending to this year. We'll know a lot more. As you know, our business, for those that do know our business well, it's more of a second half story when those lives start to actually come in. Now it's more pipeline building. And getting enthusiasm, excitement moving like at conferences here at movement and hopefully, you've been able to feel some of that energy from our clients out there. But really great work so far this year and really a testament to the success of our go-to-market team and commercial teams for building this flywheel that Jim and Aaryn talked about for why we get to enjoy continuing to add 4 million to 5 million lives every year as we have the last few years. Maybe one small note here we've typically added anywhere from 300 to 400 to 500 new clients each year. We do have this investment that we made in our SMB business. where the flywheel moves a little bit faster. So we'll probably actually end the year with a few more clients than we added in 2025, I would imagine in 2026. So maybe the average price per client or the average amount of employees per client will come down a little bit. But overall, we'll have more clients and it all averages out to the end to adding another 4 million to 5 million lives again. So second one, yield. This is kind of the backbone a little bit of our guidance throughout the year. We generally know the lives that we have as we come into the year. Our ASP has been pretty consistent over the last 4 to 5 years. What really changes for us as we move throughout the year, is the evolution of our yield. And it's been a very good evolution for the last really 5, 6, 7 years, only throwing -- showing a few years here, but we've added roughly 40 to 50 basis points to our yield every year that we've been out there for the last 3 years. Officially, we said on our last earnings call that we were trending to over 4%. And if you sifted through the guidance raise that we had yesterday and sort of back mashed your way into where the billings are going, you'd see that we're not just a little bit over 4%, but we're comfortably moving ahead above 4% to where that 40 to 50 basis point expectation becomes a reality. Maybe even more, we'll see. But for now, that's where we're trending, and it feels pretty strong, another strong year on yield. Now how do we get there? We get there, in my opinion, from 4 major reasons. We get there because we have an incredible product. You've seen from a month ago, when we announced migraine and all the enthusiasm around it again today on our main stage presentations we pack a lot of capability into our products. Secondly, we have an incredible product experience that we deliver to our clients. We have things like Robin and movement analysis that really make the experience much better for the individual that's using that information goes back and enthusiasm goes back to the buyer, and they're even more enthusiastic to stay with us as our 97% client retention continues to demonstrate. Third, we've done a great job at building up our Hinge connects for targeted enrollments, finding those people in their moment of need, whether it's through claims data or immediate action that they're looking for. We can reach them, find them and give them alternatives and their pathway to curing whatever is feeling bad for them at the moment. And then lastly, we have these alternative pathways, one of which Jim talked about, which also happens to be my favorite 1 member-to-member referrals is tremendous. It's up over 100% for us. As far as adding new members this year, we have other pathways with partnerships that we have in addition to the traditional ones of e-mail and other ways to find members. So different ways to find members in their moment of needs and more effective ways to find them, I think, has been super effective for us over the last few years, and it keeps getting stronger as we're rolling through 2026. So when you package all that up with our tremendous work in clients, the lives that come with them, the yield evolution that we've had and enjoyed over the last few years, a consistent ASP with opportunities to potentially even increase over time. That comes to some pretty tremendous growth at scale. So whether you like to look at billings or revenue, they're both generally good indicators of where the health of the business is as far as the growth movement. They're both -- if you look at the end of Q1, our last quarter reported, we're right around 50% on both of those measures. And -- there's nothing in the guidance that we just gave yesterday that suggests it's going backwards anytime soon. So really strong growth across the board. We've been able to do this pretty efficiently. We have increased our margins, our gross margins, all of our margins, any efficiency measure really that you look at. including like the R&D efficiency that Gabe talked about, whether sales and marketing, whether it's our G&A, whether it's the total operating expense, our gross margin, our cost of goods sold, everything has gotten meaningfully more efficient over the last 2, 3, even 4 years. Just on a year-over-year basis, we're looking at a 400 basis point improvement in our gross margin, tremendous improvement in our operating margin and cash has gone from 3% margin in Q1 of 25% to 23% margin in Q1 of '26. So everything is humming pretty well. We are -- I think in Q1, we were -- if you like to anchor to a rule of concept, we are a rule of 72, that's pretty healthily above Rule of 40, if that's where you're -- where you like to see that. We feel very confident of being meaningfully ahead of that from where we have been. And if I look forward over the next year or 2, I don't see any reason why we want to be comfortably well ahead of the rule of 40. If you like to look at quarterly metrics across the board, just gives you a quarterly snapshot here of the annual information on the past one. The one I like the best here is a negative 36% operating margin 2 years ago to positive 25% in the first quarter. So that's pretty massive acceleration of efficiency. And even on the gross margin level, not a lot of companies can say over a 2-year period, they went from 70-ish percent gross margins up to mid-80s. So really good strength and efficiency across the company. If you generally in a business like ours, if you produce pretty good operating margin. You're going to see that show up in cash flow, and that's what this chart is showing you. It does show up in cash flow. Similarly, negative 41% in cash margin 2 years ago to positive 23%. So tremendous improvement over the last couple of years really on the back of just good efficient spend. Maybe just a quick reminder on how we think about cash deployment, organic investment first. We like to invest in our teams that build great product. And hopefully, the demonstrations today, and if you were here yesterday and from our earnings call around migraine and some of the human beings that are being impacted and positively affected from the products we put out there will have hopefully demonstrated that for you. So investment into our products and into our ecosystem is our #1 priority for where we put our cash. We are generally open for business when it comes to M&A. The last 3 or 4 that we've done have been pretty small typically, if we can add a bolt-on here and there that could be interesting to us as a secondary measure for cash. And then lastly, we also want to invest back into ourselves as well by buying back some of those shares out there if there's a dislocation in price. There may still be a dislocation in price right now, but it's come up nicely over the last few weeks and months, and we're happy about that. But we're still -- we still have an active buyback program and we'll be out there when time warrants, right? So that's how our priorities are in cash. So with everything going great, we just thought this would be a really good opportunity to kick our guidance up just a nudge and that's what we did yesterday. We've seen that we've taken our guidance up across the board both at the revenue level for Q2, the operating margin for Q2 operating profit also for the year of 2026, some what we think are some pretty meaningful improvements for a mid-quarter adjustment. So we'll still have an earnings call on April or on August 5 and 4 -- 4? 5? One of those days, some day in August, we'll jump on a call and talk to you all again. But for now, we just feel really strong about the business and felt like we could let some of that out with the announcement that we had yesterday. So hopefully, that was met with met positively. Now this is my last thing I wanted to just pause on. Not to take a victory lap, but sort to talk about how the company is just meaningfully overperformed and we just produced a lot more than we expected when we went public a year ago. I think it's a tremendous high to everybody in the organization that's helped produce this. When we went public a year ago, we said we would do about -- just over $600 million in revenue in 2026. With the announcement yesterday, at the midpoint, we're at 821. So over $200 million more in revenue produced. When we went public a year ago, we said we'd produce about a 9% operating profit in 2026. We now said yesterday, we're going to produce 20% better than that at 27% operating margin. So a pretty significant overperformance, I think. And again, it's all because of the great product that we have. The great ecosystem that we have with our partners and customers, the incredible capability we're delivering to our members to improve their human condition and make them feel better so they can get on with life. And all that typically, when you produce all that, that often results in some pretty great numbers. So that's the past. I'm going to hand it over to Jeff to talk to some of our future. Jeff has been with us for, gosh, 5 years now. Is it maybe more than 5 -- yes. Okay. 5-ish. Tremendous asset, like I said, he's our VP of Finance. Hopefully, you've had a chance to meet with him yesterday or today. And we're delighted to bring them up on stage. Come Jeff.

All right. I'll try to bring the energy like James here on the financial part. So thanks for the warm [indiscernible], James. Good afternoon, everyone. Good to see you in Chicago. Well, as James detailed, we've really come a long way over the past few years, and we've delivered exceptional financial performance. And the great news is that we are just getting started. There's a lot more to be excited about in the future as we continue to innovate. As a lot of you've heard today and over the last month, what's migraine, let's start there. And I'm going to apply a financial lens to the product view that Linda shared. So the opportunity is large, and it's adjacent to MSK. And one of the important things is that we are keeping the same usage-based pricing model. So what that allows us to do is to upsell our clients seamlessly without the need for new contracts. In fact, we already have 300 clients, which encompass greater than 3 million lives that have already approved the migraine expansion. So for migraine, we expect that it will improve both yield and ASP. On the yield front, there's upside as migraine adoption scales across the client base. And for members who require treatment for both migraine and for MSK, there's upside for more usage on the platform. So you'll see us periodically share adoption metrics as clients turn migraine on. And just a reminder, that as far as the financial impact, migraine should really start supporting billings and revenue starting in 2027. Hinge Select. We're very excited about this as well. Dan and Jim covered some of this previously. We're still at an early stage, but we're seeing really great progress. So financially, HIM Select, it creates incremental revenue. It also improves our ability to strengthen the ROI we deliver because it reduces expensive and invasive procedures. We're making excellent progress, expanding our provider network and signing up health plans and PBMs and groundwork for the future. And we're seeing the intended results thus far. Hinge Select is driving members more towards preventative actions like physical therapy, nonsurgical ortho evaluation and less towards imaging and surgery. So as Hinge Select financially begins to contribute in 2027 and starts to scale more in 2028, we wanted to provide a framework for how to think about its long-term potential, including some operational benchmarks as we evolve the offering. So the first area to start with is coverage, namely what percent of our book has Hinge Select available today. Today, we're at 400,000 lives, and we're hard at work to expand that. Over time, we see Hinge Select being adopted by at least 60% of our book. Next, there's penetration and utilization. This represents how many of our members actually use Hinge Select. We see a lot of potential here and a path to 5% as members recognize the value of the solution. From a revenue per user standpoint, we're targeting an average of $300. In particular, we're excited about announcing adding surgery. That's the largest bucket of spend opportunity, and it goes a long way to help us realize this opportunity. And finally, remember, there's a synergy back to digital. Hinge Select, it also lifts digital yield because unified care engages more members. So I wanted to share these building blocks to underwrite over time. towards an initiative that we believe will eventually yield hundreds of millions of dollars annually. So like migraine, as Hinge Select continues to scale, we will keep you updated on our progress. All right. So having covered migraine and Hinge Select. It's a really good segue to come back to a slide you've already seen. Aaryn already presented it. but it reminds us of the substantial opportunity in white space that we still have ahead of us. 25 million lives to date is great. It's a great accomplishment. We have substantial opportunities ahead. As James said, our expectation is that we will add between 4 million to 5 million lives per year for the foreseeable future. And yield should expand as well. We've noted we're now trending to well north of 4% in 2026. And also, as James said, we have a track record of adding around 50 basis points to our yield annually. If you think about it, 9% of people do physical therapy, we think we can expand the TAM into the mid-teens for a more convenient, lower-cost solution than traditional ones. And over time, as we add new product lines and are more relevant to more people, we think we can expand our reach even beyond that. All right. So let's bring it all together here. We have a core business that is performing very well. We have significant opportunities ahead from our new growth drivers kicking in through the end of the decade. I'm excited to share our new target operating model. One thing to recall at IPO, we provided an operating margin target of 25% and a free cash flow margin target of 30%. We hit the free cash flow target within 7 months. And now with our updated guide are guiding ahead of the operating margin target for 2026. It's truly a testament to how quickly the economics of this business are scaling. So as such, we're going to raise the bar. We're raising our long-term plan to annual revenue growth of 20% to 25% non-GAAP operating margin to 35%. This is on gross margins in the mid-80s. Think of this as a steady state rule of 60, the growth and margin balance that we're aiming to sustain as we compound. We have a track record of operational execution and scalability delivered by AI that we intend to sustain. And while our top priority will, for sure, continue to be durable growth, we're confident in our ability to expand profitability as we grow for the next several years. And that's exciting to us, and we hope it's also exciting to investors. All right. With that, I'll invite Dan to come back up to the stage for some closing comments.

Thank you, Jeff, and thank you, everybody. Everybody hear me okay? Yes. Hope you saw today, we are building one system of care, digital care that meets people where they are specialist care when it's needed and an in-person care network that is weaved together with our digital and our specialist care, an intellectually honest approach to delivering an end-to-end care journey firstly in musculoskeletal care and in future indications we may enter. Plus our distribution channels give us preferential access to customers. Our client retention remains sky high because we consistently deliver outcomes, both clinical and financial for our customers. we've weaved AI throughout each aspect of our product as well as through our company operations. And lastly, we have a long runway ahead with multiple growth vectors, lives, yield, ASP, and you're starting to see it with new products as well. So we are building for the long term. And thank you very much for joining us, and let's start the Q&A.

[Operator Instructions]

I'll kick it off, Ryan Daniels from William Blair in the back. I wanted to ask for a little bit more detail about the streamline trial program in SMB. It seems like you've got a lot of momentum there. Love to hear a little bit more about why you changed your go-to-market approach there? Kind of what the streamline program involves? Is it literally a freight trial? And then how does that convert to a pain client? Is it retroactive? Just any more details there would be great.

Yes. So we have a thing called the trial experience program. It's a short-term trial that allows a buyer oftentimes the buyers in real pain to experience the program over 4 to 8 weeks. And in the SMB market, we can get hundreds of those requests. So we built a web-based version of the trial experience program to allow people to come on and demo the product in a way that's easy is and scales very nicely because the traditional trial experience program is higher touch and includes our physical therapist or health coaches. And so it's just more scalable. And we haven't had that to date. So we've kind of turned away a lot of SMB clients. You want to get into trial experience program, and now you have a great way for them to lean in. And our win rate when a member -- I'm sorry, when a buyer trials our program our head-to-head win rate jumps into the low 90s. So as you've heard from multiple speakers today, the product is one of the best salespeople that we have in the entire company.

It's essentially self-serve trial program for SMB.

Great. And then one quick follow-up, if I could, and then I'll hand the mic over. Just on the Hinge Select, as you move into surgery, I can imagine part of that's the point of care. So moving to a surgical center versus a hospital. Part of it's probably quality, part of it's rate. Can you talk about how you get data for that? And then how important are partnerships like the one you announced with Lantern roughly a year ago to kind of tap in that network and their lower rates?

Great question. So we always start with quality. So the question is, [indiscernible]. So when it comes to selecting surgeons we were talking any sort of provider in our network. We're going to look at quality standards. And quality sands are going to differ depending on providers. PT is one of the most important quality standard we look at is actually consumer reviews because most PT is actually really good. But if the consumer reviews are high, that means they're not making patients wait in the waiting room, they're not rescheduling appointments. They have a friendly experience. The patient is more likely to stay adherent. If you were adherent to physical therapy, you've got a great shot of improving your outcomes. For surgeons, there's different outcomes. Yes, we're going to look at consumer reviews and like the overall patient experience as well that's very, very important. But we can actually look at more granular outcomes and actually looking at claims data. For instance, for a given surgeon, we can actually -- claim state is public. We actually look at what has been their practice patterns for the last 100 patients that have had nerothroscopy with the surgeon, how many have had revisions for them, how many had -- looking at that for a given patients claims history before they had the surgery had exhausted conservative management first? Or was the surgeon escalating immediately to surgery before even trialing PT right? How many times is a surgeon redoing an MRI that had already been done because every now and then, there might be a conflict of interest and maybe they own an MRI center, and hell let's redo the imaging because I just want to get a little bit of a better slice and hey, I'm not exposing them to any sort of radiation. And gosh, who would have thought I also got a little couple of economics out of this as well. And so we look at those practice patterns also rate the quality of the surge. And then there are some incredible surgeons out there. And you don't have to get into -- and most surgeons are practicing correctly. I might be hinting some practice patterns that aren't great, that is the minority, but you want to avoid the bottom quartile surgeons in particular. And if you get to the top quartile, your surgery rate is going to be lower. They're going to be more proactive about evaluating whether the person even needs surgery. Their revision rate is also going to be a lot lower and the satisfaction rate is going to be lower. Those all typically trend to or tend to be bundled together. So that's how we're looking at surgery. We're looking at quite a few outcome measures. And in terms of our partnership with Lantern and Karma it doesn't change. There's going to be some overlap in some of the capabilities we're able to deliver if one of our customers has [indiscernible] satisfied Karen, very happy to continue to work with them on that. What we are seeing those -- a lot of our customers like that end-to-end experience, some of them who are rapidly adopting our surgery program doing want to turn off necessarily care [indiscernible] per se. They really have them in place. they'll allow them to stay in place. But if a member is ready with Hinge Health, and they want to stay with Hinge Health through that full care journey, including through surgery, they want to allow that member to do that.

Jailendra Singh from Truist. Staying on the same topic, in Select, if I use your metrics you shared on the slide here, get to like $0.5 billion of annual revenue, maybe even higher. So maybe talk about what are your underlying assumptions there in terms of adoption of surgery benefits, is it more in-person PD side of things versus surgical? Just give us any breakdown how do we get to those metrics?

In terms of the overall revenue. Most of the revenue eventually will be driven by higher-cost procedures. A lot of the absolute volume of utilization, we want to be physical therapy. We want to be nonsurgical orthopedic specialist care, but we've spent 10 years avoiding unnecessary surgery now we want to manage the necessary ones and each surgery will drive substantially more revenue than multiple PT sessions. So longer term surgery, at least for MSK for in-person care drive about half of the revenue for MSK product line or in select.

Okay, yes. And then one quick follow-up. I mean, to Ryan's question about how do we fit a Hinge Health surgery benefit fitting the CEO partnership ecosystem? Do you expect employers to start putting mandates in place to go through a Hinge health program for MSK surgery before going for is directly just to make sure that they're following the process in place because that's what they do for some COEs. And if that happens, I'm still struggling to figure out like how do COEs fit there? I know they're expanding into other type sides, but in MSK in particular, what is the feedback from your partners on [indiscernible]?

We just announced it today, so we haven't had feedback from them just yet. But in terms of mandates, we welcome that. We welcome to be part of the conversation sooner when a member when a patient is considering a course of surgery and the feedback we've gotten from our customers is like that we don't come in at the point of surgery. Right now, we really respect our COE partners, and I think they do really good work. They do intervene when the decision has been made to go to surgery. And there is a process as you escalate towards surgery, your pain -- focused on MSK sort your pain is increasing over time. You might escalate with some several joint injections. You might have imaging. You might have several orthopedic visits. There's bread crumbs that are piling up on your way to surgery and that you could ideally intervene much earlier by giving people nonsurgical alternatives for their pain relief and for their function improvement and for their stiffness improvement. And a lot of our customers are saying, "Hey, the COs just intervene at the surgery they can intervene earlier. And so we're hearing really positive feedback. And we previewed this in some ways to our COE partners, and they they're very intelligent, and I think they saw the pattern of where we're going, and we're going to be professional will continue to work together.

As Dan mentioned, our clients are very excited. One of the limitations or challenges of the traditional COE model is utilization because they're so downstream. I think what excites our clients is exactly what Dan said. Those bread crumbs are building over time. And we in our role of conservative care, have access to those breadcrumbs weeks, months, years ahead of time. And so we really think that we can drive utilization substantially higher than it has been traditionally seen and have even a bigger impact on cost reduction. So yes, it's exciting for us and our clients are really excited about it. So what that means long term for kind of the broader market is yet to be seen, but we really like our approach.

And it will take time to build out the provider network, but we like our experience in building out a digital experience. And the ground game of building out a provider network is keep your head down and just do it, and we're -- it will take a little bit of time, but we're very confident we'll be able to build a great provider number. And our initial results, and you could talk to [ Adrian ], our Head of Operations for Hinge [indiscernible] either now or later, even without surgery, we've been able to substantially reduce the rate of imaging, substantial reduce the rate of interventions like certain injections, nerve ablations and substantially reduce the rate of surgery already. just with the Hinge capabilities we've had. And that's gone a huge way, especially our orthopedic specialist. I cannot emphasize enough how difficult it is. If you are in chronic pain, if you feel you have a slip disk if you twisted your knee or think you need a new arthroscopy or chronic hip pain to be able to speak to a sports medicine doctor to be able to speak to a posiatrist, especially if you're in a rule error, there might not be any or might be a 4 to 6 week or if not a multi-month wait time, we have people speak to a physiatrist for 45 minutes within 1 to 2 days and they're able to refer for in-person care. They were able to completely create a personalized care plan. That is having a massive impact on ROI because so much of our high-risk cases can be directed to our in-house physiatry.

Rishi Jaluria, RBC. I really appreciate the time and all the announcements. Maybe just a 2-parter and I'll ask them both at once. Number one, if we think about the long-term growth trajectory that you've given, maybe can you walk us through in your mind how much of that is attainable by the core that you've built out, how much of that requires in select, surgery, migraines to start to hit certain targets? And how much of that is dependent on future growth drivers that you have contemplated that you're working on today, you've clearly announced a lot of, I think, really impressive innovation even in just the last year. And I'd have to imagine that's only going to accelerate from here. And then the second part of that question, similarly related to the long-term model. If we think about the margins, obviously, you're giving a really healthy margin trajectory long term, no specific time frame. But if we also think about the opportunity you have with AI, especially as these models continue to -- it seems to get a new release every single day. we saw meat to able come out yesterday. Obviously, I can imagine you're blowing through tokens pretty quickly as you kind of figure this out. Just how do you balance the kind of commitment to that long-term profitability while not want to dial back on innovation.

Sure. And just to [indiscernible], I'll take the first question just a bit and James as well in terms of what some of our product strategy is to maintain our growth profile longer term. And then Gabe and Jeff maybe could also take some of the AI spend and how we're thinking through that, and Linda could dive in on some of the product work as well. But when it comes to our long-term model, we are of the school that only the paranoid will survive. And so we want to make sure that we have resilience in the system and multiple paths to goal. We'd rather overshoot our revenue target that understood our revenue target. And so starting with our core product of digital physical therapy. Our last 12 months revenue is around $640 million, 1% of total PT spend in America. So we want to make sure that we do not lose sight of our core runway ahead of us, which is physical therapy. We are still just 1% of the TAM in America, and we want to make sure that continues to grow by adding new lives by improving our yield by improving the engagement and therefore, our ASP overall although even if ASP is flat at a new lives and yield, we'll go a very long way towards ensuring we continue to grow in our core market of digital physical therapy. Now we want to increase the pace given the -- where we are at to add new products. Migraine is the first manifestation of that. You -- hopefully, you start seeing a steady cadence and Hinge Select is another one. Hinge Select is a slower burn as a 2-sided marketplace, but we think it will be 1 of the most enduring moats once mature of anything because just solving a hard problem is itself amot. But we're focusing on digital care programs. Migraine is here. And yes, we are active at work on launching additional ones. And I hope you see with the adoption that we're able to drive for migraine, the benefit that our commercial rails gives us to drive rapid adoption of new digital care programs that we launch. And anything to add in terms of our product strategy to ensure longer-term growth?

Yes. Maybe I'll just add to that 1 and then we'll talk about the tokens piece. Maybe a small nuance, but a year ago when we went public, we said we'd be about a 18% to 20% grower sort of for the long term. Now it's a range of 20% to 25%. Last year, we didn't -- we had just begun to start talking about Hinge Select, and it was only in the world of in-person physical therapy and a little bit of imaging and now you've had surgery we didn't have migraine a year ago. There will be a new migraine-like thing a year from now, just like we punch out every year. So all of those kind of capabilities in select I think it was [indiscernible] or somebody probably most of you did some math that said off of Jeff's slide, that adds up to about $500 million of revenue. Certainly, if that's something we get to in the next 5 to 6 years, that's going to produce a healthy percentage of our revenue. But the core product, as Dan said, is still the key driver to the vast majority of our revenue over time.

Long term, we hope in 5 years, you could see a product portfolio of multiple products eats driving $100 million plus of revenue and each growing robustly along with the core product, digital physical therapy, still remaining 25-plus percent grower every year. And spinning off cash in 1 of the reasons we're now in a position to add new products is because our core product is efficient, and we could use that cash flow to invest in new products.

Okay. I can go first. Two question about how we're using AI to balance are like productivity and our profitability. So we are definitely blowing through tokens. I think Gabriel and I were joking other day on like being able to see the increase in our token growth over time. But we are not at the point yet. We're not even close to the point yet where the increase in use of AI is actually coming at the cost of our margins. every use case that we have had for AI has been very purposeful and has delivered returns. So our first use case of specifically like LLM type of has been with our care team assistant that has drastically shortened the time it takes for our care team to be able to respond back to messages and just very quickly understand what's going on with their members. And that's enabled us to be able to grow while maintaining a relatively lean and very experienced care team. Similarly, I think with the improvements we've been seeing with Robin, this is not a company that is just using AI for AI's sake. We have a very real member needs in a very real like member use case, where AI happens to be a great fit. So every 1 of these like models that comes out, it will just be an enabler for us to be able to do more and more. Gabriel, do you want to add?

Yes. Just very briefly on AI for productivity. I mean, it's something that I'm monitoring very closely. And when I'm managing the engineering budget, the R&D budget, I'm effectively putting head count spend and token spend to the same budget. And if 1 goes up, the other 1 needs to go down. in very much managing that together. We've invested a lot in tooling that makes all of this much more measurable. I mentioned Dx, the software engineering intelligence vendor that we use have added a lot of features recently for much more granular tracking of what individual people are doing with if they're using it correctly, if they're not using it correctly, doing more cost accounting, how much are we spending on tokens per PR that given engineered ships. So we get a lot of more measurement capabilities from that. We switched our project management tool from Jira to linear in large part because it gives us much better visibility into project level execution, where we're not just measuring these individual pieces of work that an engineer ships or where you say, are more projects of a given size moving through the pipeline, how long does given project take end-to-end, how does the different stages of that breakdown? And I always think about the full funnel, right? Like right now, we're measuring is activity, activity has gone up 5x over the last 2 years, the input into the system. Then the next step in the funnel is, does this actually translate into features moving faster. We have a lot of indications that, yes, it is translating around faster future delivery, but we need much cleaner data so we can directly manage through those metrics. And then, of course, making sure that the projects that we do launch translate into metrics impact. That is obviously something that Linda and her team focus on a lot, but really closing the cycle. We want to make sure that we can draw a complete through line from token spend on the inputs business impact at the very end, just getting much more sophisticated about the cost accounting. I think that's something that you'll start seeing in a lot of companies. I think a lot of companies have had a real budget shock in the first 2 quarters of this year. blowing through token budgets in the first few months. And we're not in the -- at a stage where we want to reduce the spend. We still want to increase the spend, but we want to make sure that for every incremental dollar we spend, we can point at the I think there's -- we've just scratched the surface on what we can do with velocity and productivity there.

I just want to point out that this year, we're going to produce at least $821 million of revenue. In 2023, we produced $293 million of revenue. We have the same head count today that we had in 2023. So when Gabe talked about going all in our whole product based on AI dating back many years to really going all in operationally in 2023. It's no coincidence that you're seeing the massive efficiency gains that we've had on the back of not only just great work from the humans that we have working for the company, but a lot of really good technology like AI that we've plugged in as well.

Craig Hettenbach with Morgan Stanley. Two questions. First, on migraine, really strong numbers out of the gate. 3 million lives and 300-plus customers. How are you thinking about go-to-market, whether it's marketing, just driving awareness to build further momentum. And then second question for Gabriel on AI, just to dig deeper there. I know the company likes to remind people that you're doing a lot of this stuff pre-cat GBT to stay ahead of the curve. Technology is moving really fast. What does some things top of mind for you to kind of continue to stay ahead of the curve.

So from a migraine standpoint, it's become a very easy conversation with our existing clients. So we've done a number of expansions over the years. Dan, correct me if I'm wrong, we're the first 2 joints that hip and knee.

Knee and back.

Knee and back, added hip, elbow, shoulder. You may recall women's petichealth. So we've been expanding the different pathways of our solution. And so our clients are kind of in this rhythm of what's the next thing that you're bringing out for us to adopt. No contract changes, just yes, we'd like to add this tee that up on the back end. We begin the communication strategy. And as members enroll, we onboard them into the migraine program. So it's a pretty frictionless process for existing clients. For net new clients, it just gives us something new to talk about as part of our growing platform. And I think we were all excited about migraines, but probably just very surprised at how much more excited the buyers have been in terms of is a huge problem and both financially, but also from a personal standpoint, the amount of anecdotes and stories that we hear in these meetings, like you heard this morning we hear throughout our days and weeks on the migraine front.

And I think just to add to that, we're also hearing like relief from our clients, I think you get migraine through us. they were not looking for a stand-alone migraine vendor, and that's probably 1 of the reasons there hadn't been enough adoption. And the more products we launch, the more likely or future products will be adopted as well because clients like the idea of consolidating with the vendor. It's been a theoretical item in the past because no 1 vendor had market-leading products across multiple indications. We've developed a brand with our customers. We hope to maintain that brand that when we ship something, it's at a very, very high quality and that they could trust that our products work that they improve outcomes. They deliver great experience for their members that their members love it and that they're going to save costs. And we want to maintain that brand, which allows us to get more and more products approved over time. What was your second question, do you...

Just the AI for Gabriel.

Just the AI?

[indiscernible]

The answer is yes. The question is to restate that, kind of like what we're excited about what we're looking forward to with AI next year. So I would say 2 big buckets. I'm focusing on more on AI in the product experience for now. versus democratizing AI internally. Right now, it's still somewhat specialist skill sets, some of the systems require certain expertise to work with -- so while we're doing great work in this, it's still somewhat limited to 2 specific teams that are working on this. So something that I feel very passionate about is making it just a standard part of every team's toolkit. In the same way that we have full stack teams, they can work on our back-end services and on a mobile app, I want every team to be able to add both generative AI as well as traditional ML to this full stack. Every team should be able to work with this. And probably the biggest thing that we're investing in for that is our member data platform. That means ensuring that every piece of member data that's important to us flows through our system is real-time events, they get aggregated in real-time process is something that agents can understand so raw exercise therapy, completion events get translated into a string that says this member has completed 3 exercise therapy sessions this past week, something that an agent can reason about. And at the same time, from a traditional ML, these Roy events get transformed in real time into what's called features, which basically just means it's a piece of information and ML model can use to predict things. And we want to make that really, really easy where this complete, well structured and real-time member context is available to every single team on tap, making it very, very easy to build ML models to build agents themselves. For example, a design partner with Databricks, our data platform vendor on some of the new real-time MLN Friends products that they're working on which I'm very excited about. So again, like democratizing and making this available to every team to build into their products. The other thing that I think is going to become really interesting is this multimodal convergence, right? We have ML that does personalization of the member experience. We have computer vision, AI that sees what the member does. We have conversational AI with Robin. And you can start all of these starting to fit together. Where you have an AI system that can see you, that can talk to you that can customize careful, you get care for you. As those different strands of AI start coming together. I think that will make for really, really rich and compelling member experiences.

Yes. Yes, I'd just like to add, along those 2 lines. I think every member of our product team and our design team has ship code at this point and then the predominant feeling that everybody has had afterwards was, wow, this was a lot easier than I thought it was going to be. And now I feel much more empowered to go build things by myself. So it's -- and we've seen a lot of PM and designers. PM and designers really like embrace that type of attitude and just start being more like full stack builders which is, I think, a good direction to go into for the industry as a whole. And then I think the theme that we're starting to move into and I think a lot of other companies are moving to in terms of AI, it's just like seeing a lot more diversity in the different types of AI that get blended together into 1 like coherent system. So we have CV. We have standard traditional reinforcement learning. We have LLM, agent -- there's a lot of ways in which we can actually string those together into 1 experience. So we can take reinforcement learning to figure out what might be the next best action that we want a member to take. We can use CV as the eyes to help a member understand what is like going on in their context. We can use Robin, LLM and identic AI in order to actually have like conversations with the member in order to help them go take that action. I think this combination like hybrid approach of pulling all these things together on top of this member data platform is the very most exciting thing in terms of like where we want to go with AI and the product.

Overall that whether Careful on the terms you used for -- because they're protected terms, but an AI that can deliver care and the limitation in the future will be licensure. We'll be medical bodies who are essentially you're creeping up on what their capabilities are, but the AIs will be able to automate all connate tasks. That is all nontouch aspects of health care will be automated. Ordering medications, ordering referrals, interpreting imaging, all of that, we're moving to not just hinghealth, but the field overall, which is really exciting.

Ryan MacDonald with Needham and that was a pretty smooth pass from Bianca and some acrobatics back there. Appreciate it. Maybe for James and Jeff, as I think about sort of the drivers of member growth going into 27, I'm trying to understand maybe how you're thinking about HingSelect relative to migraine. I want to in select obviously, smart starting smaller from a cover to live perspective, but I can see an instance where with Hinge Connect, you have access to all of the existing in-person PT employees with your customers and maybe that yield could go to 9% right away. So are there any gating factors there and why a client wouldn't immediately move their existing in-person PT? And then on the migraine side, like -- what kind of magnitude of uptick would you expect from a yield rate? Can you just remind us on sort of new supplemental products if you expect sort of that it goes right to that 4% blended rate right away? Or if it starts is like a traditional ramp of the 1% to 2% to 3% sort of thing.

Do you want me to go? Yes. Okay. I'll start, and Jeff can correct me if I veer off course here, which is what he's really good at. Yes. I mean, so 40 to 50 basis points has been our historical trend for adding. Do I think we potentially get more than that next year on the back of if you just look at yield on the back of in-select customers starting to come on and migraine, yes, there probably is an opportunity in '27 to see that go beyond 40 to 50 basis points. You kind of expect that. If our normal business is cranking out 40, 50 basis points, and then we add something extraordinary like migraine, that adds a little bit of a kicker on top of that. I'd say over time, and I think it was even on 1 of the slides here, we see migraine adding at least 1% to 2% in yield. That's not all going to come in 27, of course, but over time, call it, time being 4 to 6 years, that should be accountable to something in that range. And then the number Jeff gave on the slide was over time, we get about 5.5% of our population coming into use us in some way, shape or form because of Hinge Select. Again, that's over time, not going to happen all in 2027. So I think 2027 -- if I boil that down, 2027, shows progress towards that accelerating yield number. Maybe it's not the typical 40 although 40 to 50 points is pretty awesome. I mean that's a big number already. Yes, that's right. That's right. That's right. Yes. But yes, you'd expect as we're marching towards the 9%, how do you get from 9% to 15%, like these are all elements that help us get there, no question. Anything to add? Steal out thunder. [indiscernible] quoted his slide.

Scott Schoenhaus with KeyBanc. Just wanting to drill in more on to Hinge Select. So you've talked about the $300 per member revenue contribution. I'm assuming that the take rate for surgery would be a little bit lower than maybe the take rate on in-person PT, given the just amount of dollars. So kind of want to drill into that for more color. And then is there a room for negotiation to take rates up with providers over time as you're providing them with more consistent volumes.

Great question. And the take rate were -- is not from providers so much as there's an admin fee that is charged to the employer, and we negotiate rates strictly with providers at a lower rate. And even with our admin fee charged to employers, it still delivers to the employer a substantially reduced rate. And it's -- we try to just -- to be simple, we keep the admin fee as a percentage of total claims, is consistent, whether it's an MRI or a PT visit or a steroid injection or surgery, it's very consistent the admin fee.

[indiscernible]

Yes, possibly. Yes. We're more interested in getting new lives and driving more providers in the network and more overall utilization. And in the future, that could be a toggle for us to drive more revenue for Hinge Select. But it is not top of mind at the moment, but it is a potential toggle in the future. I think our admin fee is competitive right now. And -- but the main goal would be putting it all together, having digital care, in-person care and driving a lot of recurring usage there. Great question though.

Stan Berenshteyn, Wells Fargo. Just maybe going back on adoption yield. Obviously, you're rolling out a lot of new products, new services. I'm just curious, are you finding it easier for are to drive awareness with existing members that already use the platform or with new members that are coming online and now they're aware of all these products and services. Like where is it easier to drive engagement?

We're early days with migraine. And you mean in terms of driving new enrollments for like our new products. Early days for both our existing members know us the best, and we're able to market directly to them. Their [indiscernible] already assigned member -- signed up member and we're making it easier than ever for them and we can make it easier still for them to switch between programs. And -- but for migraine, one of the biggest interest level was from existing members to sign up and us making sure that they could quickly add migraine to their existing program. So they could do migrate an MSK pain concurrently. So we're seeing both of those. And we've structured our subscription model as well for employers, such that it's all the same subscription. So they don't necessarily pay a separate subscription fee to do migraine and back pain and women's pelvic health together. Obviously, the ASP for that individual member or the total fees for that individual member might go up but they don't pay an additional enrollment fee, and it's one of our -- the value adds we give to our customers. It's kind of all you can eat. And every time we add a new program, it just enhances the value of that subscription, and we want that flywheel to keep spinning.

This is Vikram Kesavabhotla with Baird. You talked about engagement being a key metric that you follow and the basis for some of the redesigned app experiences. So can you talk more about what you're observing there, whether it's frequency of log-ins or time spent or any other metrics that you follow? And just how that behavior across your member base has evolved over time.

Yes. Great question. So we look at engagement in many different ways. So how quickly it takes someone to onboard and get started in the app, how often they come back how many activities they do in terms of -- at different intervals. So in the first week, second week, third week, fourth week because we do look at engagement across cohorts so that we see if people are not just engaging in a certain point in time, but throughout a point in time. And we also look at outcomes. So we make sure that when people are engaging, they're also able to like tell us whether or not their pain is reducing or if they're like surgery likelihood is going to go down. So we look at all of those things as our like signposts leading up to what we call like engagement and retention. And then there's other like Gabriel talked a little bit about like features. These are the things that are like little micro events that we track that tell us what's going on with the member. And we have a wide variety of other features that we like log and look at. So whether or not people are skipping their exercises, if they're completing their default exercise therapy session, how long and how often are they using their Enso. These are all like variants of different like features that we might look at that give us a little bit of a ladder up to like overall engagement and retention. You'd also mentioned time spent. So I come from consumer tech where time spent is something that is a very good indicator of whether or not you're doing your core job well because consumer products it is about like getting people's time and attention and using it as much as possible. Time spend is a very poor indicator of performance for us. for several reasons. One is that Enso, which is 1 of the key differentiators for our product, our hardware product does not like time spent calculations do not work very well with Enzo. You usually turn it on and then you go about the rest of your day. So it's a little bit different than when you're like maybe watching TikTok or Instagram or something. And then our goal is not to get people to just use the app to use that's sake. We are trying to get people to come in, do their exercise therapy, make it as painless and delightful as possible because if you've gone through PT, it's usually not incredibly delightful. So we're trying to do our best and make it as delightful as possible. And then we want people to go about the rest of their day. So we're purposely not trying to get people to just dwell on the app. I think that creates like a much more like adverse incentives compared to what we're trying to do, which is ultimately drive outcome, value for our members and like value for our clients.

And engagement on a per member basis is up meaningfully year-over-year, and we've continued to do go up meaningfully year-over-year. And we look at that both not just enrollment, but while we're enrolling a record number of people, Linda's team is also ensuring that the number of exercise therapy sessions is also up meaningfully year-over-year, and we track that on a weekly daily basis.

Jessica Tassan from Piper. I appreciate all of the detail today. It's been really helpful. So maybe for Jim, can you just elaborate on the SMB sales initiatives, which are the most important? When did these sales initiatives like the TPA opt-out model launch? And just how should we think about the economics or sales and marketing expense for every dollar of SMB revenue versus enterprise kind of in light of these new commercialization efforts?

Yes. So I'll start with the last question first. The economics of SMB are very attractive. They tend to be standardized. There tends to be less incentives, less customization, less product feature requests. So the economics of SMB is really attractive. And it's encouraging to us as we see that market grow, the economics are accretive to the business. The question about what is kind of most impactful from an SMB strategy perspective. It would be hard to say which is most impactful. I think you heard about 3 or 4 major initiatives. Some is hiring. And so building out the SMB direct sales force, things like the self-serve model that we talked about for the trial experience program allowing thousands of more people to experience Hinge health for the first time in the buying process has been very important. Our health plan relationships, this opt-out model that is not trivial for a health plan to agree to. And that is built on, again, years of demonstrated outcomes and trust where they go to the point where this is just how we operate and our clients are going to follow us in this way. And if you want to opt out, you can but this is how we operate. So that's a great tool or vehicle for us to get big chunks of lives, hundreds of thousands, millions of lives in 1 fell swoop. And so that's really exciting. And then just some targeted, again, and focused demand in the SMB, which we haven't historically. That's not a market where we spend a lot of energy and effort. So the combination of all those things together is producing results again, pipeline is up over 100%. And I think you'll see it have a very accretive contribution to the overall business here in 2026.

One thing I'll just add to that. We also have a team internally in R&D focused on driving efficiency for the commercial team, building out tools and [indiscernible], in SMB, there's a big opportunity, right? We talked about the self-serve demo, where we're working on similar days for self-serve reporting, self-serve uploads of eligibility files and contact data, making all of the process totally streamlined and self-serve for the smaller clients so that it becomes viable without an enterprise customer success kind of motion after the close as well.

Got it. That's really helpful. One quick follow-up kind of unrelated. Can you help us understand how billing for members who are concurrently enrolled in migraine and MSK kind of works? And then just how migraine stands to potentially increase ASP over time.

I'll take the billing question. So engagement-based billing, which now the majority of our clients are on engagement-based billing, that's a billable session. You're engaging an [indiscernible] therapy session, you're engaging in migraine care and that would be looked at as a bill possession. So as Dan said, it's not a separate program with additional enrollment cost. It's just you're engaging in Hinge Health. And therefore, that triggers a billable exercise therapy session or a billable Enso session. And so it's really easy for the client to understand and say yes, too. And then as it relates to the impact of migrant ASP to be determined.

So I have 3 questions. First off is, do you have a separate way of marketing or handling spouses, independents versus the actual employee member Second question, and is it a greater challenge to effectively reach out or manage the spouses or dependents. And then now that you're offering surgery, does that kind of model the message potentially of here we are, we're trying to minimize your surgical costs, but now we're also perhaps not champion, but helping out with surgery. And then the third one is like what's out of balance for Hinge, like with oncology be a bridge too far to help manage the costs and walking the employee through all the horrible decisions and events that they have to go through.

So I think I got all 3, but focus on the spouses and dependence on the plan. It is harder for us to reach them sometimes, but the product experience is no different. And sometimes we don't always get the contact information for the spouse when we get the e-file years are all the above 18 on the file because we treat adults 18 and plus. And we get everybody's name, data of birth, we get the contact information, but we often some only get the e-mail for the primary sponsor of the plan, which is typically the employee. And so we have a little bit more work to do to reach the spouses, but they spend just as much money as the employee when it comes to health care costs and the employers just equally on the hook for both of their health care costs. And so for them, it's an industry inducible to us and our care team. Are you an employee or you're a dependent. And I think you'll meet many members today. I'd say they're almost half and half between independents and employees. And so -- and their engagement is no different. It's just we have to work a little bit harder to reach them and enroll them. But we do get their home addresses, which does help when it comes to -- I got your third question. Your second question was I don't think there's a comp. Ultimately, our aim is to just to deliver the best care possible. We want to improve outcomes, have a great experience and reduce cost. I don't want to stand up here and say surgery is never required. I think Kaiser has published data and many others have published data that 1 in 2 MRIs, particularly for spine and lower extremities for must health indices are not indicated. But that means 1 and 2 are indicated. 1 and 2 elective surgeries often do not perform better than a coin toss in terms of outcomes and they don't perform as well as sham surgeries. But there are some [indiscernible] that are very effective. And I think most orthopedic surgeons do operate appropriately. Overwhelmingly, most orthopedic surgeons operate appropriately and seek the best outcomes for their patients. And we do think that orthopedic surgeries are still vastly overutilized and overcharged. And you actually kind of saw it during COVID. When hospitals shut down they were losing a lot of money because elective surgeries drives such a huge operating profit. It is something like a 60% to 70% gross margin for the hospital, some of these surgeries. And so there's a high financial incentive to do more surgeries, but there's a recognition that they're overutilized. But that doesn't mean that they should go down to 0. And so we want to make sure that if a surgery is appropriate, that we get you to the right surgeon. And we've helped clear you upfront, and then we feel clinically, it is appropriate that we could support you. And once we're on board, the heysurgery is the best option for you. We want to make sure you get baseline imaging if it hasn't already been done. And that you go to a reputable surgeon and who we've contracted with, and we have clear quality SLAs with to make sure that you have a very successful outcome. And so does that answer your question? Okay. And then -- and the third one is what area may we not enter.

Specifically [indiscernible]

Yes. We -- we're not going to be -- we won't become an AI cloud provider. We're not going to be renting out our GPO.

[indiscernible] you guys can.

So that won't happen. But look, whether it's -- I tell people, if you forecast out 200 years from now, all of health care should be automated. If you get to the like Star Trek level of future. And now the real question is, what is the slope of that curve. How quickly could we automate more and more aspects of care. And I think health care in the next 2 decades is going to look a lot different in 2 decades after that, it's going to look a lot different. And how quickly could we continue to chip off areas of care to automate more aspects of it.

I guess I should rephrase it just slightly. Is migraine maybe doable because you're using maybe neck pain is a cause or a bridge to effectively helping reduce migraines. So with some other areas like ophthalmology or oncology, just be like, no, this is beyond our...

I think you're getting to an important point as you expand your products, where might you have the best brand permission today to collateralize. And we think about that a lot. The -- our customers are -- have a lot of needs and high-cost areas. -- and we don't necessarily have brand permission in all areas. And I think our reputation gives us maybe the benefit of the doubt for many areas. But we have more brand permission for certain areas. But as we expand, for instance, you could -- you're identifying something very, very strategic, migraine was a stepping stone away from musculoskeletal conditions because of the comorbidity with neck pain. Now that we have a beachhead within neurology. There's a lot of stepping stones for migraine that were not necessarily obvious from neck pain or from MSK pain. And so every time we do a stepping stone away from MSK, we create additional opportunities for additional stepping stones where we're expanding the brand and the permission. So we would we are very much looking at additional areas within neurology that are maybe 2 to 3 stepping zones from MSK but only 1 or 2 stepping stones away for migraine if that makes sense. And so absolutely. So using your oncology example, not on our road map now, but maybe in 10 years, there might be 1 or 2 stepping zones before we get in there. But we may eventually want to have an opinion on oncology and impact the care outcomes there as well as the cost, given how difficult it is. It wouldn't be a direct shot from MSK. Great question.

Elizabeth Anderson, Evercore. Can we circle back to Hinge to the surgery and imaging parts that you're adding on to Hinge Select? How long one, I guess, how long do you sort of see the process taking to build out the provider network? And if I think about it, in general, I'd love to hear a little bit more about how the economics there work? Is it similar to the to the hint select on the PT side. And if I'm an orthopedic surgeon and I might be reticent partnering with somebody who's trying to reduce my surgical volume by half, but maybe on a higher quality basis, like is that something you've encountered in providers? And how do you sort of bring them into the fold there?

When we contract with high-quality providers, they are already turning away patients who are not surgical candidates. And those are the types of providers we like to work with. And we're able to add a lot of value to these providers in other ways as well and that particularly for surgeons, there's a lot of prior auths and paperwork they have to fill out just to get a surgery approved. And from their perspective, there could be some [indiscernible] about that because, hey, I practice the right way. the reason I had to fill out these prior offs is because the bottom quartile surgeons have not been behaving appropriately. And once you select for quality, you could kind of gold card your network. And therefore, when we do send you somebody, we've already preagreed that or predecided ourselves that they are appropriate, you don't have to ask us permission if you want to precede resurgery, no paperwork needed. We're going to send you high-quality volume, and we're reducing all of that administrative overhead that you might have to worry about. And when it comes to billing when you send us the claim, and we've agreed on a bundled fee. So we've agreed upfront, the surgery costs this much. We're not going to add a bunch of other stuff. We've agreed very clearly and have clarity on the bill is how much surgery will be. And when you send us a bill, we're going to try to pay you within 2 weeks and often, we try to beat that to get to within 5 to 7 days even. And so you -- for you as maybe a small business owner running on ASC or a few -- as we're going to really -- or a PT clinic it's 1 or 2 or 5 PT clinics, we're going to really help your cash flow because we're not going to wait 90 days to pay you and certainly not 180 days, we're going to pay you fast. -- when you send us that claim, we're going to try to turn it around as fast as possible.

And then do you coordinate also with the employer's benefit plan if it's an ASO like they're insured with an ASO to like that PA that our PA is maybe better than their rate or something like that or...

They go to a select, we don't have to go through their main health plans PA. So it kind of opiates that. Great question.

We got Scott or David, and then we've got 1 more over here.

1 David Grossman from Stifel. First for you, James. Just it was a pretty big step up in your operating margin target model from where you were or where you think you're going to be, just -- is pricing an element of that? Or do you think you can just get to that 35% without incremental pricing just on normal growth and mix in the business?

Yes, the assumption there, yes, pretty much keeps ASP flat for the next foreseeable future. We do have some levers. I think as we see engagement start to spike up with things like migraine and Hinge Select, that does give us an opportunity to go back and see the ASP go up a little bit more, but I wouldn't count on much increase in the pricing there. I think it's really just coming from more lives and more yield from our traditional programs just driving higher top line growth and keeping our costs relatively flat over time.

2 Got it. And then as you continue to add new products, you're assuming more of the continuum of care. And I'm just wondering, longer term, at what point do you become a one-stop shop, if you will, for MSK. And if that's really the ultimate goal, what needs to evolve, if anything, in terms of pricing go-to-market or anything else I may not be thinking of?

Yes. So I would venture to say that we're pretty much there as now with the Hinge Select and add additional surgery, we should be able to meet the onwhelming majority of a client's MSK needs. So as Dan talked about, you create that domain expertise, you go very, very deep. You create capabilities then that can lateralize. But I think from an MSK perspective, we've come almost all the way there as far as being the sole MSK partner for a client needs. If you look at all the companies that somebody make contracts with today, and they may have an imaging COE, they may have a surgical COE, they may have a digital physical therapy provider. They may have a direct provider and person relationship. All those now become encompassed by our core product offering plus Hinge Select. So we're pretty excited about that. What was the second part of your question?

To build on that, I think other than nonemergency MSK because you don't have an ER if you have a fall off ladder, you got to go to the ER, I think we're about 85%, 90% would be my estimate of nonemergency MSK spend that we could handle. And so you could stay with us throughout any sort of procedure you may need through like network. Obviously, we need to build network density but we have the capabilities and the and the procedures that we've contracted for to cover about 90% of nonemergency MSK spend.

Yes. And I think the second question was economics maybe pricing. And we've talked internally and maybe I'll let James discuss this. There's probably other metrics other than ASP that will start to make more sense because the revenue will look diverse. And so there's revenue per life or there's other, I think, metrics that will probably begin to make more sense than the traditional EY and ASP because of the scale and diversity of the revenue within a client base, but...

We don't want to change your metrics just yet. But yes, it's as we think about how 3 to 4 years, the revenue per life would probably be a more relevant metric in 3 to 4 years.

Final question over here.

[indiscernible] When you walk around the conference and you're talking to the consultants, employers, it is very clear that MSK is more top of mind than ever just because the costs have exploded. So your actionable TAM is getting easier than ever. Then when you think about converting that actionable TAM, your yield is improving 50 bps a year. You're cross-selling additional solutions like migraine, Hinge Select, so I know you haven't mathematically like disclosed this, but your sales efficiency has to be an order of magnitude better than it was even a couple of years ago, just as a result of the improvements you guys made, how the environment has turned out. How do you think -- but at the same time, James, what you talked about is you've kept head count the same, you've gotten all these efficiency gains. How do you think about balancing sort of that tremendous sales efficiency and reinvesting even further into accelerating growth and investing in the head count of the sales team or maybe the self-serve solutions that you're putting out are so good that you don't need to do that and not all flows through the bottom line.

Did you say a tremendous sales efficiency?

Yes, exactly.

We'll have Jeff and [indiscernible].

It's always good to have my partners here. I have product and R&D talking about cost efficiencies. I've got AP talking about sales efficiencies, that's great. They've been trained well. tremendous. Yes. Great word. I think we can keep trying to do it all. I think we can keep trying to do it all. And I think one of the things we have had tuck-ins where we talk about investing in SMB. We've had -- we're select -- we make select investments under the hood, but we believe that we can keep going with this and based on the momentum that you're calling out the energy that you're feeling here that we can continue to drive that growth pretty far in excess of the growth of the sales and marketing, keeping that sales efficiency tremendous.

Can I just add. It does help with you're selling to the same customers. And it won't -- like account management, for instance, an account manager managing a customer with digital physical therapy. We don't need 2 account managers want to manage the digital physical therapy in the migraine product. So like your client success efficiency goes up. We will eventually, as the revenue per customer goes up, probably we want to reduce the panel sizes of our account managers, we call them client success managers here just because as the revenue per client goes up, as you're adding new products, the need to retain those customers and the attention you want to give them goes up as well. So it won't be like 0 additional investments as we add new products, but it's the same sales team selling migraine and digital physical therapy, same account management team selling [indiscernible] digital fiscal therapy. Same marketing team, marketing the 2, right? And we'll expand them, we definitely will not expand them linearly with revenue, which is what you're getting at. And so the sales and marketing should continue to, I think, get more efficient. I wouldn't call it tremendous actually -- with a small t, maybe. But I think we have more room to grow to become more efficient. And we want to continue to invest in sales and marketing, but it will not grow linearly with revenue. So it's a great point. But same with the rest of the business, which is really nice, like tech support our care team will not have to grow linear will -- hasn't grown much. Well venture start growing again, but not linearly with revenue. because we've extracted so many efficiencies from our care team. But yes, tech support should be the same tech support team for digital physical therapy in migraine and product C that we may launch. And the team that does our enrollment that builds out our enrollment flow did just build out an enrollment flow for digital physical therapy for 10 years. Now they're building an enrollment full for digital fiscal therapy in migraine and so we're able to reuse those components as well. So across the board, the business is being matrixed and being modularized to be able to serve all of these different products. And so it's becoming more efficient across the board.

Yes. I was going to give something similar to what Dan said, but he said it much more eloquently, but some evidences of that is that we've -- those efficiencies and just being able to take multiple products to the same buyer with the same person to make it easier and more cost effective. As the slide you saw from Gabe at the end where our R&D cost as a percent of revenue have gone from 37% to 14%. Probably we'll do better than that. But the same chart for sales looks like 100% of revenue in that same period 3, 4 years ago, and it's trending towards 30% now. In the last 12 months, we've added a fairly decent sized team to go capture the SMB market. and or go deeper in the SMB market and an entire provider sales team. And even with that, we still managed to get much more efficient on the sales front because of all the reasons that Dan mentioned there.

All right. With that, Dan, do you want to say any final words to everyone.

No. Thanks for coming. We'll be around for the rest of the day if you want to come and you could -- the reason we try to be a transparent business. We want you to know what we would want to know if the tables reflect okay? And so we try to be intellectually honest. And so you walk up to any 1 of our team members. You can walk up to any of our clients here and your some members as well and ask them about the business and get to know the business, try not to ask some confidential financial information, you shouldn't know it, but please. But we try to be transparent because we want you to know the business and we want you to be able to invest for the long haul and we're definitely in it for the long haul as well. So thank you very much.

And thank you to the hundreds online watching as well.