Rocket Doctor AI Inc. (AIDR) Earnings Call Transcript & Summary

Hello everybody, welcome to Rocket Doctor AI's Town Hall, our second one now. Excited for everybody to join. I don't know if there's going to be some new investors that are new to the story and some that are returning to follow our story and our growth. Welcome to everybody. As a bit of an introduction here, we'll go through an initial very quick high-level introduction to the company for any new investors. Please enter any questions into the chat. We'll try to get to them at the end of the discussion. We will then move into our growth and then some of the numbers we're seeing and how excited we are about our growth here in the U.S. and so on. And then we'll move it open to the questions at the end. We'll also try to provide the link at the end or in the next few days to watch it if you do miss it or anybody who wants to watch it later on or review it, we can provide that over the next little while on our social media. So again, standard disclaimers with regards to this. And a bit of an introduction, if you don't know who we are. I'm Dr. Essam Hamza, a family doctor over 25 years. I've been in business technology even longer. First company I took public was called CloudMD and grew it to a very large company at one point, over $750 million market cap and $200 million in revenues and joined Treatment.com, which became Rocket Doctor, about 3 years ago and was introduced to Bill at Rocket Doctor about a year ago through our partnership with Google. And maybe, Bill, you can introduce yourself as well.

Yes. Hi, everybody. Some folks familiar names and as Essam noted, some new people, I'm sure that are joining us today. So my name is Bill Cherniak. I'm an emergency doctor trained in family practice, global public health. First start-up was actually about 15 years ago in the nonprofit space, working overseas in East Africa and got involved in a high-tech and diagnostics. Through that, some press in The New York Times around cloud-based teleradiology and then working clinically seeing a bunch of patients coming that really didn't need to be in the department thinking how do we combine advanced technology with virtual care to increase access and expand services, and we'll tell you all about that and what's going on these days at Rocket Doctor from there.

Great. Thanks, Bill. So again, as a high-level introduction, I'm not going to go through anybody on the screen here, except to say that we are a company built by doctors for doctors. And that's extremely important as we move on to the next slides here as you kind of understand how health care is set up. And unless you know the stakeholders, you understand how health care system works and how you can bill and who's going to pay for something, it's really -- you have to understand the stakeholders. You need to understand the payers, the providers and the patients. You can't have just a really nice product and then nobody could pay for it. So one of the things that we like to -- for this discussion today, what we're going to do is we're going to do a quick overview, like I said, and then we'll move right into an update on what we're seeing in terms of our growth and how excited we are moving forward. Okay. Maybe the next one here. So one of the things you probably see a lot of buzz around AI in general. There's a lot of scary stuff and some hopeful things and then you're seeing the different politicians talking about whether it can be trusted and so on. In health care, it's actually pretty revolutionary. And actually, if anything, most people are excited about what it can do in health care from everything -- from obviously figuring out new ways to diagnose things to treat things. But also, when you're looking at health care AI, I think as an investor, you have to ask other questions. Can the information be trusted? Is it something that is reproducible every time? Because in health care, unless you can trust the information almost 100%, you're not going to be able to use it. And no provider will ever use something that they can't trust or that's going to hallucinate and so on. And is it portable? Can you put it behind the health systems' firewall? Is it secure? And is it actually proprietary? Or is it like a wrapper around a ChatGPT or some sort of LLM? So again, ask yourself questions like this when you're looking at health care companies. And then finally, and probably most importantly, is it commercially viable? Can you actually make money off of what we're talking about? Or is it just as a nice-to-have type of product? Why is this important and why I think we've been seeing the tremendous growth and the tremendous buy-in from all the different stakeholders is that the costs are soaring. I mean, I think in the U.S., something like $5 trillion is spent on health care a year. But with that increase in cost, it's not like there's better care. If anything, actually care is going down, access to care is going down, doctors are getting burnt out, data overload, trying to keep up with different diseases and treatments and so on. And most of the time, they are doing things that they don't get rewarded for. So they're working harder, seeing more patients, and then they're not getting any benefit of that. 40% plus is just admin stuff for them, and they're not getting reproduced -- reimbursed. And so it's one of the things that they're looking for.

And then to give a little bit of a practical sort of on-the-ground thought experiment example for folks, just often have people take a look at the right side of the screen and think about how commonly you yourself have sat in a room that looks a lot like that and how long you waited to see a doctor. And then imagine that you're one of the approximately 100 million people that doesn't have primary care or is on Medicaid, Medicare across the United States or in Canada, the 6.5 million folks that also similarly doesn't have a family doctor and just look at the wait time to see one of those physicians. And now imagine if you're on Medicaid, Medicare in a rural remote community underserved. So massive health care systemic infrastructure problem that's impacting tens of billions of dollars every year.

Right. So I'm just going to remind everybody, if you have any questions along the way, please enter it, and we'll try to get to them at the end of the discussion here. So again, as a quick overview of what we do. It's, I think, pretty intuitive and it's something that I think is very unique and really exciting is that we've been able to provide and empower doctors with the ability to be their own bosses, their own entrepreneurs for the first time. I think I always say this that in medicine, we go through a lot of years in post grad and so on. And I don't think I've had one course on having -- what to do to build a business basically and be your own boss. Those -- they either have to be self-taught or you join a group. And so one of the things we've been able to do with this ecosystem is basically provide the ability for the doctor to turn on the on sign and see patients whenever they want, wherever they want with the tools that they need. So instead of them trying to figure out what EMR to use electronic medical record, or which billing service to use and can they use other services like an AI scribe and AI assistance and so on. We've been able to provide proprietary software for them where they don't have to sign on to a bunch of different things. All the stuff works together. On top of it, we've been able to provide the patient marketplace for the doctors as well so that they can see the patients and bill for those patients. The harder they work, the more hours they do, the more they get compensated. So versus historically, where they'll sign on, and Bill will talk more about it with a group and they're paid an hourly rate and no matter how hard they work, they're flat in terms of what their potential income is. So it's a pretty exciting, I think, model, and it's kind of a testament to how fast we've been able to grow. At the back end of some of the software we have that's, I think, exciting and proprietary, as I mentioned before, in terms of the AI solutions is our Global Library of Medicine. And it's something that, again, it's been developed over a number of years with over 200 doctors in our system that have been able to build something that thinks like a doctor and approaches the patient in the same way, where it has the ability to analyze who the patient is, age, sex, whether they have any risk factors, whether they have any medical issues and then start asking questions in real time shifting to the next most appropriate question to not only get a really good history, but actually a great and accurate differential diagnosis with actually treatment options as well as what test to do next and so on. So it could be used in many different ways, and we'll talk about that in a second, but it's also a tested model that's being used by medical students in the U.S. right now to basically test and train the medical students and see how their clinical skills are. So as I mentioned, when you have a tool like this, you can use it many different ways. And for us, we're excited because we're able to use it internally with our doctors on our platform where it has the ability to support them. And something that I think I'm looking forward to over the next little while is actually can improve income for the doctors as well as better access to care for the patient. And so not only does it have the ability to assist on onboarding and triaging patients ahead of a visit and see, number one, should they have that visit or should they go to emergency room, take that history, do blood tests or anything ahead of the meeting and then see the doctor and then during the visit with the doctor, talk to the doctor and see if they need to ask a certain question or send them for a certain test for the patient or even after the visit and between visits, imagine a situation with a patient with diabetes, nobody right now is actually checking on that patient between visits to see how their diabetes is being managed, if they're taking their medications, what their numbers are. So imagine an AI assistant being able to check between visits, recalling patients back to the doctor if something shows up and so on. So it's pretty exciting kind of what's coming up in the next while here.

Okay. And so to get a little bit more into the weeds for folks on the operational logistics. Essam got into it a little bit in his introduction. But as a quick refresher, the way that we think about ourselves at Rocket Doctor is really as a Shopify for physicians. Now rightfully, people have pointed out, it's a little bit different from that and that you don't see each individual doctor's business necessarily. But each physician on the back end is running our own independent practice. And then we aggregate all of the doctors on our own proprietary AI-enabled electronic medical record, put them out onto a marketplace under our single brand identity of Rocket Doctor to patients primarily in remote communities and focus on Medicaid, Medicare. And then we match the right doctor to the right patient enabled with all the various tools that you heard about, and we'll talk about in a little bit also. And what's really exciting is that number, 24 million was close to 0 at the start of the year and at the end of last year. And we've rapidly been able to grow our network expansion across the United States in addition to seeing huge volumes of patients across Canada. And all those logos at the bottom are real plans that we've signed contracts with over the course of the last year that have built out that 24 million covered lives. So this sort of says a little bit of what we had already talked about, but just at a high level to understand why do doctors come to us, why are patients using our platform? And how are we kind of able at a very high level to start building that market share as quickly as we have been doing, and we'll again show you those numbers. So this slide is what it says on the title, which is it's hard to do digital health and health care in general in America. It takes a long time as some of the folks will know on this platform and others to do all of these things, which simply engage dealing with government regulatory agencies, both at state level as well as federally. So I often say to folks is you can have as much money in the world as you want, but it's going to take you the time it takes to get the state Medicaid to respond to your e-mails. So this just says we've got a head start in everything that we're doing. And the other way that I've sort of described this to folks is think about building an apartment building or a condo. You got to dig the hole in the ground. And often, you got the walls up, nobody sees what's going on. You got to pour the concrete, the foundation. And then finally, once the building starts to come up, people actually see what's happening. So that whole 2.5 years to 3 years of work was just digging the hole, pouring the concrete and now we're actually starting to build the thing above ground, which is exciting, and we'll talk about numbers shortly. So again, this emphasizes a little bit more depth about those payer details I showed you on this 24 million covered lives. And as folks here may be aware, Otherwise, we're in New York, Maryland and California as our first 3 states. And then we've announced this previously as well, the intent to expand into other states in the country with a focus on Florida and Texas, which perhaps is no surprise to people, and we'll give you more details on that as we move through into the next couple of quarters. But this gives you some nuts and bolts on the finances. So where do we actually drive the revenue for the business. And primarily, we think about the independent doctor on the platform being direct to consumer. So across Canada, we take on average about 17% of billings. And then in the United States, we do a $25 flat rate per fee. And what's interesting is as we've started to incorporate different fee codes, we've started to think about different ways around this as well that we can talk about more moving ahead. But in the middle, we have a variety of different partnerships. And this primarily relates to independently owned pharmacies for that $300,000 a year. And then every physician pays us a monthly platform fee to be on the platform that is fixed every month that we go through. And so this just represents the actual growth. So 43% year-over-year, and we're going to talk about that sort of distinction between Q1 and Q2 because really, it got lost in the press release, some of the nuances of what's gone on over the last few months and how exciting it is. So we're going to explain what it means and what's actually going on here. And this just gives you a few of the partnerships that we've experienced in that B2B side through hospitals, nonprofits, municipal governments and then those managed care plans of Medicaid. This gives you a window into the actual patient volume. So obviously, growth year-over-year. Doctors often don't like to work in the summer. So we often see seasonality in terms of visits, and that's normal, as you can see, but this just represents the numbers that we've got. And the far right is from 2025. So it's not a projection for this year or anything. It's just showing you where we were last year in those quarters. And that's across Canada. So still, in spite of massive volume, 45,000 patients per quarter, we're experiencing growth year-over-year organically for that. And okay, now getting into the sort of substance of what was really exciting about our Q2 release is our U.S. growth. So -- and we're giving -- we just did a news release this morning talking about some of these Q3 numbers as well. But in Q2, you'll see that we went up to 3,900 completed visits. So for anybody who is keeping tabs, this is actually visits that fully happened on the platform, the number of booked are higher, but these are folks that actually were seen by the doctor themselves. So a huge jump there. And then so far in Q3, just for the first 2 months of Q3, we almost matched the whole patient volume of Q2. So we don't do projections or anything like that. But if you just kind of looked at what we had done in the first 2 months in terms of kind of like 1,800 visits, that kind of thing, you can sort of get a sense of what Q3 may look like just from that perspective. And by the way, Essam Hamza, feel free to jump in at any point if you want to add anything, but...

We'll do it.

And then as you think about our payer approach, again, I mentioned at the very beginning, our focus is on Medicaid and Medicare. We have a very diversified payer mix. And as you saw from those logos at the beginning and just a couple of them that are shown on this screen, we do have contracts with just about every major commercial insurance payer across the country for HR employer benefits and commercial insurance. But part of our secret sauce really is opening access for really one of the first time for Medicaid and Medicaid managed care, which many of our competitors simply do not go into. And then we also take out-of-network. And we'll talk about out-of-network a little bit and how that influences some of the things you're seeing, but some sort of exciting things around that also. And often, when people think about marketplaces and this direct-to-consumer approach, we're matching the patients and the providers. Of course, the question is where do the patients come from? And we have an ad funnel where folks come in, but we're trying unique creative ways to do it as well. And this was a very exciting partnership that came together over the course of the spring, where we formed this relationship with Rick Ware Racing and NASCAR. And the populations that we're trying to serve are often folks that are attending these races and watching them on television. And as you can see, the car looks great. The logo does well, I think, on the NASCAR with the blue. And we're reaching really millions of people through this through organic brand plays and sort of creative opportunities to expand our brand across the country for folks who had never heard of us before.

Bill, maybe speak to that a bit. I mean one thing is increasing the brand awareness, reducing the customer acquisition cost with that. But what's your feeling when you talk to these national payers and these groups and so on when we have something like this where we are a national brand as well?

Yes, it certainly increases the credibility of the organization also because many of them may not have heard of us before, and they get approached by tons of independent small, midsized practices that want a credential and contract with them. But to be able to show them a photo like this and say, yes, we're on a NASCAR that's on nationalized television. It definitely adds credibility. And what's also neat is we can bring some folks out to the races and they get the VIP sort of pit pass experience. So it's a neat thing that we're trying to take as much advantage of as possible as well. And the next thing on the patient acquisition side is the majority of our contracts to date have primarily been fee-for-service, which is very much eat what you catch kind of relationship where the payers said, it's great. It's hard to get a contract with these insurance companies to begin with to get to be paid by them. But then now we're moving into some value-based care opportunities where the payers themselves are assigning us members from the plan to take on with ongoing primary care. So no CAC for those patients, they're assigned to us. Of course, our model is comprehensive care. So even when we get a fee-for-service patient from the other contracts, we know that they often stay with us on an ongoing basis for all of their needs. It's not a one-and-done kind of thing, but these are specifically assigned for ongoing care with monthly recurring revenue and value-based care payments. So this is just an example of the first one that we've announced publicly and what we're thinking about for the future also in a repeatable structure. And then obviously, the physician hours are the supply side for what sort of powers. And I see some stuff that is coming in through the chat. So we'll go through the questions afterwards as well as they come in. But Q2 physician hours went up dramatically alongside the patient volume, and you'll see that Q3, we're looking at what we've already done for the first couple of months and similar sort of thing to what we showed you for the patient volume. And we're going to get a little more into the weeds on this in a second, but I wanted to sort of give people the context of this idea that the launch in the United States is very new. It really just started in the end of December of 2025. And we announced in Q1, we had only 12 physicians who are on the platform. We now have 81 who have signed contracts with us. And I'm going to walk you through some details on the time that it takes to actually credential a physician. So by the time somebody signs a contract, and what's interesting here is doctors pay us. So we collect $500 from physicians in order to join the platform and go through credentialing because it's a complex process. And that, as you can see in the middle bullet, can take anywhere from 3 to 6 months to get a doctor fully credentialed. So we went -- we had 12 in Q1. We have 81 now, a quarter later, now 1.5 quarters. It takes 6 months, let's say, to get them fully credentialed with all the different managed care plans of Medicaid. So many of those physicians who have signed contracts and are on the platform technically actually can't see all the patients necessarily or they may be out of network for patients even with insurance plans that we hold a contract with. So this is part of why the revenue you'll notice didn't change in the same way necessarily that the patient volume did in Q2 because in addition to all the credentialing side of things, it takes often anywhere -- our average that we looked at is 51 days to be paid for an in-network claim. And we are getting paid for out-of-network claims, but it can take up to 72 days. So much of the revenue that's driven by those Q2 visits was not reflected in Q2. And so it's important to note that, yes, the U.S. revenue is recognized on receipt of the money. We don't sort of show something that we've billed for, but not actually been paid for. So the volume is not lost. The patients are still there. The billings are out in the world, and we'll be able to sort of talk about them more in Q3. And this just is a little bit more depth about why we take those out-of-network patients. Obviously, we're building the funnel rather than just saying, no, we're not taking you. We'd rather bring them in, get the volume going win the contract with the plan, get the doctor credential, be able to, in some cases, hold billing for future and have the patient continue to come back to us as we get them in network and then also file out-of-network claims with the plans to sort of build traction with them and get them to see that we're seeing their members, which has been a winning strategy for us as you've seen through the 24 million covered lives. And then it just reemphasizes part of what we said earlier about the difficulty in folks really trying to do what we're doing, particularly in the Medicaid and Medicare space where you've got to put in the work to figure it out in the first place and then you've got to wait the time that it just takes to go through it all. So I'll hand it back to Essam.

Yes. Maybe we can go back to the slide with the number of U.S. patients as we talk through it here a bit more. There we go. So maybe for clarity's sake, can you, Bill, kind of explain when we announced the numbers, let's say, for Q1 and the numbers for Q2, number of patients being seen in roughly, how many doctors were involved in getting these numbers just so that as we start talking about now 30 and close and then soon 81 and so on, people get an idea. I know it's not going to be exact because the different hours are now being filled a lot more and so on, but just generally?

Yes. So basically, in Q1, as noted, we had 12 doctors or so that were -- and we use the term clinically active, so the physicians that actually opened a clinic on the platform. And then in Q2, it was more like 30 or so that actually opened the clinic. So -- but we -- as noted, we have 81 that are signed. So there's a lot of -- that's why we say there's this kind of reserve capacity of physicians who have signed but have not yet opened a clinic on the platform. So we have the ability to accommodate more volume essentially.

Right. And each one is at different stages of credentialing, some of them early, some of them later on and so on in terms of activity level. And some of them have multistate licenses, I believe, as well, Bill, right?

Correct. Most doctors are licensed in multiple states, yes. So we cover, I think, now over 20 different states where doctors hold licenses that are currently signed to the platform.

Great. And so the implication of that as we expand will be that, that one doctor in that one state could literally see patients from other states that come on to our marketplace, we can divert those patients to them as well.

Yes. And we're already doing things like that on the back end to sort of have physicians in different areas. And obviously, it's handy because they can cover different time zones, and there's all sorts of other things that we can do with that with having folks ready -- already in different states that we're moving into.

And one of the other questions I got recently was that USD 25 on that slide. Is that -- when they talk about it, is that the only amount? Or is it possibly more if the patient is being seen for, let's call it, mental health and being seen longer, more complicated visits. Obviously, we talked about value-based care as well. But it's a minimum of USD 25, right? I mean it goes up from there.