Teladoc Health, Inc. (TDOC) Earnings Call Transcript & Summary

All right. Good morning, everyone, and welcome to the Citi Healthcare Services Conference on what is sure to be a very eventful day in the markets. We appreciate you tuning into the Teladoc presentation today. With us, we have Teladoc's CEO, Jason Gorevic; and Teladoc's CFO, Mala Murthy. Welcome, Jason and Mala. We're very glad you could join us today and right after earnings, too. So we have a lot to chat about today. Just a little housekeeping. For those who want to ask questions, you can either ask it directly in the box on the top right of Citi Velocity or you can send e-mails to me directly at [email protected].

All right. Let's dig in, guys. I think I'd like to start out, really just given your recently reported earnings, on some questions that I fielded from investors around some confusion on the 2022 guide. So the full year guide was in line with consensus. And really what you've been saying since the November Investor Day, but how we get there is a little different than I think most folks had anticipated. You noted on the earnings call that chronic starts are being -- some chronic starts are being pushed out to the second half of this year, which is shifting revenue and adjusted EBITDA to the back half. But can you remind us why we're seeing those chronic starts in the back half of the year? Is this a structural change you're seeing in the client base? Or is this more of a one-off issue for 2022?

Yes. So you're right, Daniel. We're confident in the full year growth trajectory and delivering on the revenue outlook that we set forth at our Investor Day in November, where we said $2.6 billion. Our guidance obviously brackets that at $2.55 billion to $2.65 billion. We noted earlier this year that the fourth quarter was our strongest bookings quarter that we've seen really ever in the history of the company, and many of those launches are set for the second half of the year. So I wouldn't say that it's a structural difference. I would say it's a bit of a timing difference relative to the timing of closing those deals and launching them. We have chronic care membership that we expect to increase in the second half of the year substantially with second half launches. We have a number of chronic care clients who will launch in July, in the July 1 timeframe. We have 1 client who shifted unexpectedly from the front half of the year to the back half of the year, and that was due to some internal data issues that they were having in terms of identifying populations that are recruitable for our for our chronic care conditions. But the rest of them actually were planned to be second half launches. Again, I wouldn't say that this is a long-term structural shift. I think it just happens to be the way that this year's cadence sets up. I think on the positive side for us, number one, these are all already-booked deals. So they're signed contracts. It's not like we have to go out and get the new clients. And the second thing that I think is really positive for investors is their thinking about the outlook for '23 is if you do the first half, second half math, this sets us up incredibly well for very strong growth in '23.

Yes. So it's interesting because for those not familiar with the pricing model on chronic care, it's not a PMPM. It's a PPPM: per participant per month. So you don't actually get paid until you enroll folks. Can you remind us what that enrollment ramp looks like? And so if you start on July 1, when do you think you kind of reach most of the folks and get most folks on the plan? Is that kind of an end of third quarter, beginning of fourth quarter even?

Yes, that's exactly right. So it usually takes a couple of months to onboard and recruit those enrollees. And then we hit a gradual increase over time as we penetrate that population and recruit them. So I would expect that by the end of the third quarter, we're at a very strong run rate. So we'll see a significant step up in the third quarter and an even greater step-up in the fourth quarter as we get 3 full months of that revenue.

Got it. And I think you've previously said that line item, product care management, should be growing kind of in the 25% to 35% range. Do you still expect that to happen in 2022? Or is that kind of the run rate that you'll be at in the third quarter?

Mala, you want to take that one?

Yes. So Daniel, what we said on the earnings call, which I will reinforce here, is we just talked about the second half ramp. We have very strong visibility into the revenue ramp as we progress through the year. And the way I would think about it is the 25% to 35% that we talked about on Investor Day, our outlook for chronic care still stands. And think of it as we exit the year, I expect us to be in that 25% to 35% chronic care revenue as the end of the year.

Got it. Okay. Very helpful. And as we think about the components of that growth, there's obviously PPPM uplifts and just enrollment growth. And with the uplift in PPPM, I think a lot of that is going to come from the bundling of multiple products, right? Jason, you talked about that a lot on the earnings call and now with the Chronic Care Complete, I think that's even more likely. How should we think about those components of growth within chronic care PPPM uplift versus enrollment increases?

So that will be predominantly PPPM or PEPM or PMPM revenue growth. So as we talk about the components of our growth, we talk about membership growth, we talk about increase in revenue per member, that drives more revenue per member than it does membership growth. And importantly, as we said on the call, 80% of our sales last year were multiproduct sales. We're seeing more and more -- we've doubled the incidence of people using more than 1 chronic condition program to where we're now at 30% of our members are using more than 1 program. That's a substantial step up. And we see that we are driving more and more revenue per member. If you think about our ultimate opportunity for revenue per member, we see it at $68 when we look at sort of propensity for various chronic conditions and opportunity for our Primary360 product. We're only at about $2.5 at this point. So when you look at the opportunity there, it's massive for expansion. We still have opportunity to grow our membership, of course, and we will do that. But if you just look at the sheer magnitude of the opportunity to increase revenue per member versus increase the revenue by increasing population, it's significantly greater on the revenue per member.

Yes. And Daniel, I would add also to what Jason just said. You talked about Chronic Care Complete. As we said on Investor Day, proof points such as Chronic Care Complete, such as myStrength Complete that we announced in the middle of last year, these are the proof points for the way we are building our leadership position as the category-defining provider of whole-person health, right, that we talked about, and we are doing it through the investments in data science and the stepped care model that we talked about. So to me, when we talk about our path to growth and we talked about membership growth and then we talked about a preponderance of our growth coming from revenue per member. It is through greater product penetration and through the higher-value products such as Chronic Care Complete, myStrength Complete, et cetera. And so these are important proof points that we are sort of essentially putting along the way.

Yes. And it certainly speaks to the evolution of telehealth over the past decade. Before we dig into that, 1 last question on earnings, and it's really on the cadence of EBITDA improvement throughout the year. As I mentioned, the full year EBITDA was in line with what you had previously said, 100 and 150 basis points of improvement, taking out some of the purchase accounting adjustments last year. But it does imply quite a steep ramp in the back half of the year, particularly in 4Q, and I get to around 18-ish percent or 400 basis points of year-over-year expansion. Are there certain investments that you're making specifically in the first quarter that are going to allow you to get that leverage to hit that pretty steep ramp on EBITDA?

Yes. So you are in the ballpark. You're right that our profit progression is back half weighted. And as we said on the earnings call, the way I would we think about the drivers of that, Daniel, is versus the revenue ramp that we talked about and the fact that we will see, especially on the chronic care side, the revenue being back half weighted, think about the margins on that. And so that is one of the drivers of the back half adjusted EBITDA. The second thing we talked about in terms of investments is our A&M spend, our advertising and marketing spend. And we are taking advantage, if you will, of the much more favorable sort of advertising pricing in the beginning of this year. And so we are investing in it across -- especially on our direct-to-consumer business. And again, think of the -- what the revenue that drives as we go through the year, as we get members, et cetera. That is the other reason how I would think about the first half, second half spend versus profit progression.

Daniel, if you look historically, Mala is indicating something that has been a historical truth that was an anomaly last year, right? So historically, we always pull back on advertising and marketing in the fourth quarter due to the expense of seasonality around the holiday season. That didn't really exist in 2020 when advertisers were sort of folding up shop and not leaning into the ad market due to the pandemic, obviously. So we spent through that because it was a favorable environment for us. So you didn't see the pullback in the fourth quarter of 2020 and then the step up in '21. But if you look historically back in our past, that's always been the case.

Yes. Interesting. Well, if my podcast advertisements are indicative of anything, you guys are reaching your target market. I get BetterHelp advertisements probably once or twice a day. So that's definitely coming out. Okay. So that's very helpful on the quarter. I appreciate you walking through some of those issues. Now zooming out a bit, Jason, I think there's still a perception out there that virtual health is synonymous with virtual urgent care. And I tend to get this question from folks who really think that telehealth, virtual health is a commodity product. Obviously, there's been a lot of evolution recently. A lot of that's been due to COVID. But just curious to get your views on the evolution of telehealth over the past 5 to 10 years. Obviously, you're kind of the leader here. You were the first public company out there in doing telehealth. And then over the next 5 to 10 years, where are we going to go?

Yes. I mean certainly, we started in virtual urgent care because it was the place where we could get scale. It was the place where we could get a significant footprint, and it was the place where early adopters were willing to go as we were defining the market. But it was always our vision to take care of the whole person in a comprehensive, virtual care suite of services that all work together in a complementary manner. And so if you look at our last 6 years as a public company, you see us having rapidly and methodically expanded the scope of our services, expanded the footprint that we serve, the parts of the market and channels that we serve and delivering it in what is increasingly a truly integrated way of caring for the whole person. So if you look at our addition of chronic care services, if you look at the introduction of our Primary360 product, if you look at that at the heart of Virtual First plan designs that the health plans are rolling out, that's always been the vision, and we've been the leader in doing that. So if you ask me, is pure general medical the leading product today and sold by itself? It's very rare that we sell a stand-alone general medical product, which is sort of virtual urgent care, to any client. What they're coming to us for is the comprehensive nature of our service and how each one of those products and services complement each other, right? Whether that's mental health going along with our chronic care management programs or the entire care team approach that's done in a stepped care model with digital assets, complementing the human capabilities to deliver virtual care for a consumer as they deal with all the different parts of their health care journey. And there really isn't anybody out there in the market who's doing that. And I think it's why maybe there's a misconception that the primary lever for growth should be or has to be membership growth. I mean, if you look at it, just going back to the question you asked before, we've talked about the fact that we have about 90 million people who have access to the platform today and another 63 million or so of membership opportunity growth within that population. So think of that as kind of like a, I don't know, 60%, 65% growth opportunity within the population we serve, not including those who we would go out and try to acquire. Our growth opportunity in revenue per member based on all of the additional products and services and the role that we play in the health care system goes from about $2.5 to $68, right? So think of that as 27x, right? Not 0.65, but 27x. So we've taken an approach that we want to play that role for the consumer and be their front door into the health care system, and that's really been the strategy of pulling together all of these capabilities and integrating them.

Daniel, the traction we're seeing -- Jason talked about the fact, and we have been saying this for several quarters now. The traction we are seeing in multiproduct bookings, right? The fact that we are seeing the growth in multi-condition enrollment, all of these, to me, is essentially the market saying they are increasingly expecting that.

Yes, yes. That makes sense. And I think that hits on a good point in terms of your moat as well because we have seen this space become more competitive everyone is competing for the front door now. You have telehealth vendors converging with health navigators. You have big tech coming in with Amazon Care. And frankly, it seems like any time Amazon Care gets some press coverage, you guys are down 5% to 10% for some reason and it makes no sense to me. But I think maybe perhaps a bigger threat is the -- are the health plans developing their own telehealth solutions. You've got United with Optum. You've got Cigna buying MDLIVE. You've got Anthem launching their own type of primary care product here. So can you just comment on that battle for the front door? Who do you view as the biggest competitive threat? And how do you fend off those threats?

Yes. I guess I would say a few things. One, and we've said this before, we think Cigna buying MDLIVE was a good thing for us. We see a lot of takeaway opportunities because other health plans don't really want to use Cigna as their outsourced telehealth vendor. And so we've seen and experienced takeaway from MDLIVE as a result of that. The -- with respect to United, we have a great relationship with United, and we continue to work on expansion opportunities across our product portfolio. I think it's one of the benefits of the diversification strategy that we've embarked on and the multiple products that we bring to market, many of which are higher revenue per member. And so we continue to expand our relationship into new segments within United as well as with new and additional products. So I feel good about that. Obviously, they're unique. They're the largest owner of physician practices in the country. So yes, they're unique as you look across the payer landscape. The thing that we win on is the breadth of our products, the integration of those products. And I think you see that from our relationships with Aetna and Centene for Primary360. In the second half of last quarter, we signed 2 additional payers to our Primary360 product. I think the plans who do it themselves are going to be the exception rather than the rule.

I would also add the track record we have in building engagement and trust, right? To actually get members in the health plans to engage with the product. That is something that allows us to build that trusted relationship. That is something that we have developed strength in it over time. And I would say, Daniel, people ask us, the barriers to entry into the space seem low. And what we have consistently said and proven is the barriers to operate and execute are not low. They are high. And so when we talk about the breadth of offerings, it is actually about putting together an integrated set of offerings, broad and integrated. And those are the kinds of things that require execution.

Daniel, maybe just last point. You asked about big tech, so I want to make sure we address that. For the past 20 years, big tech has been getting into health care. I would use air quotes if it weren't so cheesy. But with due respect, just after we went public, there was a New York Times article about Google getting into virtual care and well, that never really materialized. And then we saw multiple iterations of them trying to do it. It's not to say that Amazon or somebody else won't get some traction in the health care market. I just think that the health care market and the health care system doesn't really lend itself to monopolies. So there's plenty of space. I think we have a ton of opportunity to continue to hit really market-leading growth at a scale that nobody else is seeing in this space. And there can be a couple of other players. I don't really -- we don't experience running in to any of those players on a frequent basis.

Yes. Okay. Good. Now you've mentioned a couple of times the opportunity for PMPM uplift is much greater than just overall membership growth opportunity. And one of the key components of that PMPM uplift is going to be the Primary360 products. So I'd like to just spend a little time there. During your Investor Day, you noted that general medical segment in, which includes primary care, is going to be the slowest growing segment. Still growing nicely, 10% to 20% CAGR, but behind mental health and chronic care. But it does seem like you're making good traction with virtual primary care, P360. You -- as you mentioned, you've got Aetna's self-insured, you've got Ambetter, and you've signed up multiple contracts that you've highlighted recently. So I'm just curious. Why shouldn't we expect that line item to grow faster given the traction that you've had in P360, which comes with a significantly higher PMPM? Should we expect that to accelerate over the next few years? And when do you think P360 actually becomes a meaningful component of your gen med revenue?

Yes. Maybe I'll start, Mal, then you can add. Daniel, think about -- first of all, we put virtual medical care into 1 bucket. So that includes all of our general medical business, which you alluded to at the beginning, which obviously is a big base of business. Now Primary360 is our new flagship product that we think is going to be our leader as we look into the future, but we're in our first year of commercialization, right? This is our first year of really any meaningful revenue. And so it's a new product that's building on a large base when you talk about virtual medical care as a category. So we gave a 3-year outlook of 10% to 20% CAGR for the 3-year outlook. And you're absolutely right. That will accelerate over the course of those 3 years starting at the lower end of that range and accelerating into the upper end of that range as Primary360 gains traction and becomes the leading component of growth in that category of products and services.

Yes. And I would add, Daniel, you know our track record of when we put out outlooks and then follow it up with guidance. You know we are thoughtful about what we put out there. We have -- in the last 25 or 26 quarters, we have met or exceeded our projections. We are being thoughtful as we think about the scaling of Primary360. Exactly as Jason said, I would expect it to start contributing meaningfully to a large base of revenue as we exit 2023 into 2024. It takes a while for us to just go out there and build that scale over a large base. I'm -- we are seeing good proof points as we sort of go on this journey in terms of the commercial rollout, in terms of the engagement, et cetera. It's just a matter of time.

Yes. Makes sense. Okay. Let's turn to mental health, which is going to be your fastest-growing segment and also by 2024, assuming the 30% to 40% CAGR that you laid out during your Investor Day will be nearly half of your revenue in '24. I've gotten some questions around the durability and margin profile of that business. So I guess to start with, can you confirm that mental health growth will be margin accretive?

As we said on Investor Day, as we said on earnings call, I will repeat it again. Our mental health margins are strong. They are attractive. We have talked about the fact that we are executing very well in this business, whether it be on the B2B side or whether it be on the direct-to-consumer side folks. We are seeing our -- what I would call our operating metrics in this business get increasingly healthier whether it be the ROIs, whether it be the revenue to customer acquisition cost ratio that we talked about on Investor Day, churn, LTV, they are all progressing in the right direction. And those are the ingredients that fuel the margins that we are seeing.

Got it. Okay. Okay. Sorry to make you repeat, but it's one of the questions I always get. So hopefully, third time's the charm.

And to be clear, as we said on Investor Day, our BetterHelp margins are accretive.

Yes. Yes. Okay. So on BetterHelp, that's around -- that was around $700 million of revenue in '21, and I assume it's going to be growing pretty rapidly going forward as well. We've seen high churn rates, high CACs in this market segment. It seems like you've been relatively immune from that. So maybe you can just help us think through why you're performing a bit better than the overall market in terms of persistency and CACs? And if there's any metrics you can give us around churn, persistency, I think that would be very helpful in framing BetterHelp for us.

Yes. So let me talk about the approach that we take to managing the direct-to-consumer channel. And then Mala can talk about some of the trends with respect to the key metrics. Daniel, you'll recall over the course of many years, we have consistently focused on diversification of our customer acquisition channels for direct-to-consumer. So Mala said, I think we're now at 26 out of 27 quarters that we've met or exceeded our revenue projections. The one, I think it was back in 2016, that we missed was due to the fact that one of the -- that a high concentration channel in direct-to-consumer became too expensive when we pulled back on the marketing because we didn't think it was worth it. And so we pulled back and therefore, we sacrificed the revenue in that quarter. Ever since then, we've been on a consistent journey to diversify our customer acquisition channels and use new methods to acquire members. You mentioned podcasts, right? You said it yourself. You listen to podcasts, and there we are advertising to you. Well, that's not a mistake, but it's also not a channel that existed for us 3 or 4 years ago, right? That was a new addition and proves to be a highly productive channel for us, among many, many others. You saw us have some celebrity endorsements where we work to -- we contribute free service, and a celebrity who has maybe struggled with mental health comes forth and helps to make mental health available for their followers. Again, those are channels we weren't using 3 or 4 years ago. So when you look at our customer acquisition costs, as we said on the quarterly call, they actually came down. So we're actually seeing a decrease in our customer acquisition costs while we're seeing improvements in persistency, improvements in pricing modeling, and therefore improvements in lifetime value of a customer. The improvements in persistency really come from consistent improvements in the product. It's things like matching the consumer to the right therapists the first time so that there's a good fit the first time, and we don't see early churn. It's things like launching new product features like group therapy sessions where not only is there more value add for the consumer, but it's more efficient for us because we get a one-to-many therapist to consumer ratio, and therefore, we reduce our cost of goods sold. So you look at all of those things in its combination, and that's why we drive the business at just quite frankly, a different trajectory and a different profile than anyone else in the market.

And I'd add a couple of other things, Daniel. As we talked about on Investor Day, this is a business where scale matters, right? Scale has many benefits. The fact that we are 10x larger than the next player in the market, there is a scale benefit to that. And one of -- for example, one of the benefits of that scale is the fact that it allows us to test and learn in diversifying our advertising channels, which helps our customer acquisition costs. It allows us to be a destination for therapists, for providers, right? That's one of the scale benefits that allows us to [ win ] margins. So there are all of these benefits that we get from the growing scale we have. The other thing that Jason had talked about on the earnings call that reinforces, when it comes to something like brand awareness. Again, as BetterHelp increasingly grows its brand profile and it is essentially becomes established, it is established as the leading consumer therapy brand, that helps -- again, the unaided brand recall helps from -- in terms of our advertising costs, right, in our acquisition costs rather. So it is about execution that allows us to get to scale and margins, quite frankly, quite differently from our competitors, right? If you look at our public competitors who have -- who posted earnings and results and look at our margin profile, yes, it's different.

Yes, yes, certainly. Okay. Turning over to the chronic care management business. We already touched on a little of this, but I just wanted to briefly touch on some of the differences in execution versus expectations when you originally bought Livongo. If I go back to the proxy statement, we were projecting around 57-ish percent growth in chronic care, and obviously, that's been ticking down a little bit. Curious to get your thoughts on what's changed in the market or with the integration with Livongo specifically.

Yes. So a couple of things. One, if I step all the way back, we've been focused on launching the Chronic Care Complete product, which you described earlier as the bundle of all of our chronic care solutions, and wrapped together with that is physician resources that can help someone modify their care plan or type -- care plan or titrate their medications to be able to better manage their blood sugars, their blood pressure, et cetera. So we're actively executing on that. We just announced the launch of that. It's now in the market being commercialized and being sold to clients. We feel really positive about the contribution that that's going to make. As we look, and we said now for a couple of quarters, we expect 25% to 30% overall growth in chronic care over the next 3 years. That's based on what we're seeing in the market. And I would say more and more, it's going to be hard to break that out because it will be bundled in together with other products that we bring to market like Primary360. And it also -- it's important to mention that there's a difference between what we had in the proxy and what we have in our chronic care outlook because we've taken mental health out of the chronic care bucket and we've put it into the mental health bucket. So there's some movement there. When you look at what our outlook was at the time of the merger, we thought we would be able to activate the international markets faster, quite frankly, than we have been able to. I believe that, that will materialize. And I feel actually very bullish on our ability to bring the chronic care solutions to some of the nationalized health care systems, but it's taking more time. That's, number one, it's a long sales cycle in order to do that. Number two, there was work to do in order to internationalize those products, just in terms of making them localized for other markets. But the good part of it is those are very, very large opportunities. And so as we execute on that, and we're leaning into that development right now, I think those will prove beneficial for the out years, sort of, of the time horizon that we set forth at the time of the deal.

Yes. Makes sense. Okay. And Mala, you kind of touched on this with mental health, but there's been a lot of concern over the recruitment of providers, staffing shortages, staffing outages. It doesn't seem like that's impacting the mental health or BetterHelp at all. But you mentioned on the call, it did impact the first quarter. You had to pay around $4 million-or-so of retention bonuses given the COVID surge. Other than these transitory bonuses, which I suppose you'll pay from time to time, have you guys had any difficulties recruiting to your general medical staff given the shortages? Any wage pressure there?

Not at all. In fact, I would say I think it is quite commonly understood that if you think about the burnout factor, Daniel, on providers overall over the last 2 years through COVID, right? The provider community is seeing a tremendous amount of burnout. And in fact, we are a refuge from that. So it's the opposite. We have actually been seeing tremendous traction as we have gone out and sought to add to the provider community we have on our network. So it's actually quite the opposite. And I would say exactly like you said, the incentives we provided in the first quarter were absolutely to do with the Omicron spike. They were limited to January. But we felt, given that it was material enough, we felt it was important that we disclose it.

Yes. We appreciate the transparency there. And as you move into more longitudinal relationships with folks, do you anticipate hiring more providers as W-2 workers over 1099s? And how does that shift the margin profile of the business?

Yes. We have talked about the fact that we are going to make our journey into a hybrid model, whether a combination of 1099s and W-2s annual, so you're exactly right. We are going to do it, as we always do, methodically, surgically. We'll do it thoughtfully. We're not going to rush into it. But you're right. From a longitudinal -- the fact that we are increasingly going into longitudinal relationships, that matters. That's important. And by the way, we are seeing tremendous traction as we think about hiring W-2s. From a margin profile perspective, again, think about the higher-value products and the accretive PEPM, PPPM, that we just talked about, right? And the fact that we are going from about $2.5 to $68. That is the potential. We will manage our margins and our gross profit and adjusted EBITDA dollars appropriately. We will think about the relationship between pricing and our COGS as we always do. We have proven a track record for strong gross margins, and we will continue to expand our adjusted EBITDA margins, just like we talked about on Investor Day.

Yes. Okay. And sticking with that margin question. I think previously, you had mentioned that you were expecting, and this was last year, EBITDA expansion of 200 to 300 basis points per annum. And then that was kind of titrated down to 100 to 150 due to planned investments. Can you just put a finer point on what additional investments you're making? And when you anticipate that will start to bear fruit?

Yes, absolutely. So I would think about the investments we are making in a couple of different ways. First of all, we have always invested in A&M. We will continue to invest in A&M, right? Not a surprise given the growth that we are seeing in our mental health business on the direct-to-consumer side. And as we think about the engagement engine, the flywheel, as we've called it, as we roll out these high-value products and we engage with our members. We also have talked about the investments that we are making in data science, in R&D, in our product road map. And what I would say is when we talked on Investor Day, we defined it in 3 broad buckets, right? One is essentially market expansions. Second is the capabilities in taking on of risk and more value-based arrangements. And the third is additional products. So that is exactly what we are investing in. And I would say, Daniel, we absolutely expect to -- those investments to help us drive leverage in the business in the years ahead, both sustain top line growth and also drive leverage in the business.

Yes. And I know we're just about out of time, but 2 questions have just come in, so I'll do a rapid fire for you guys. On the question around expanding dollar per member. You mentioned going from $2.50 to up to $68 per member, but I think that might assume that, that member needs all of these solutions, i.e., they need chronic care, they need some of these issues. Can you reach $68 per member in a healthy person? Or does that assume it's a person who needs some more care?

Yes. So Daniel, when we do that calculation, we take into account the incidence of all of the chronic conditions. So we're not assuming that every one of the 90 million people has diabetes. We're only looking at the populations, the incidence of that condition in the given population. Similarly, for Primary360, about half of the population doesn't have a primary care relationship, so we've actually only considered that part of the population. We haven't included any sort of takeaways, if you will, from existing brick-and-mortar primary care relationships. So we've really done a true sort of addressable and available market, not assume every one of the 90 million takes every one of our products.

Got it. So that $68 is an average across your whole book.

That's right. Based on the incidents and propensity.

Okay. And then last one for you. Capital deployment. You obviously have cash. You're cash flow positive. What are you thinking in terms of inorganic growth over the next few years?

I mean certainly, we're very focused on executing on the acquisitions that we've done. We have been acquisitive in the past. The acquisitions we've done in the past have been primarily to expand the scope of our clinical services and to expand the markets that we serve. And we're still focused on those areas. I think we have a lot of opportunity to continue to expand the scope of our clinical services. The difference now, though, I think, is that we have the ability with 90-plus million people that have access to our platform to make smaller acquisitions that are more capability-oriented but haven't necessarily gotten to late stages of commercialization, and therefore it sort of hit the higher end of the revenue curve. And we're kind of uniquely positioned to be able to capitalize on that given our footprint, right? We can do more with an asset like that than anyone else in the market. And that makes, I think, us both an attractive buyer for those companies and destination as well as uniquely capable of creating accretive value out of those. We also continue to be focused on, as Mala said, surgical geographic and market expansion where we know that we are maybe underpenetrated and have an opportunity to accelerate our growth.

Yes. Makes sense. All right. We are now officially out of time. Jason, Mala, thank you so much for joining us this morning, and thank you for all those who are listening in. We really appreciate it. Take care.

Thank you.

Thanks, Daniel.