© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
[Foreign Language] Good morning, everyone. Thank you for standing by, and welcome to Dialogue Health Technologies' web conference to discuss results for the first quarter of 2022. [Operator Instructions] Listeners are reminded that portions of today's call may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on Dialogue's risks and uncertainties related to these forward-looking statements, please refer to the company's MD&A dated May 9, 2022, and the annual information form dated March 22, 2022, both of which are posted on SEDAR. [Foreign Language] Our operating and financial results will be presented this morning by Cherif Habib, Co-Founder and Chief Executive Officer; and by Navaid Mansuri, Chief Financial Officer. Cherif, you may begin your presentation.
[Foreign Language] Good morning, everyone. Thank you for joining us today. Looking at our key [indiscernible] highlights, we grew our AR by 38% compared to the same period last year. This translates into $5.3 million in new signings. Our revenue increased 36% year over year and it was almost all organic in nature. Our key [indiscernible] in the direction that we want to see. I'm especially proud of having reached the 2 million member milestone. For some perspective, it took [indiscernible] a little more than 4 years to add the first million members and a little more than 4 quarters to add the second million. We expect to see our high growth rates retained as we drive, scale in our mental health service in EMP and as we onboard in the second quarter, some large customer wiz that we've previously announced. Following our record Q4 in terms of new signatures, the first quarter this year was especially busy with new launches. In the first week of January alone, we onboarded more than 100,000 new members and we did so while improving our service levels. This speaks to the scale we achieved in our ability to onboard ever larger clients. In February, we announced that [indiscernible] EAP was selected by Scotia Bank to help support its [indiscernible] police and their families. As you know, this represents a major win for us and it gives us a great case study to talk about. When a large customer is thinking of leaving their legacy provider in favor of our modern EAP approach. We continue to build our thought leadership in the industry publishing a second annual report in [indiscernible] Research that revealed Canadians [indiscernible] healthcare and virtual care. We also co-sponsored with Sunlight to report on the economic impact of telemedicine on Canada's healthcare system. Key findings from the studies show that Dialogue is building a very relevant service for Canadians who are supportive of virtual care services and overwhelmingly want to employers offer the services as benefits. Our ambition to improve health care for every person in every organization is as relevant today as it has ever been. As more people return to in-person activities, we are seeing that a virtual approach to health and wellness is here to stay. Our integrated health platform is helping customers and partners seize new opportunities to bolster the employee benefits and to empower members to take charge of their physical and mental health. We continue to manage our business with a long-term perspective, investing in our technology, in our team, and in our capabilities. We are setting ourselves up to support continued growth opportunities ahead, while also ensuring that these will be both sustainable and profitable. It's been a big year for IHP in 2022 as we further scale our rebranded Mental Health+ service, continue to gain market share with our digital EAP, and of course, introduced [indiscernible] wellness service to our offering in Canada. 61% of wins in the first quarter were for 2 or more services, which points to the success of our land and expand strategy. This performance marks a fifth consecutive quarter of a 50% and demonstrates how our IHP strategy is resonating with customers and seeing strong adoption. This is true also for prospective customers, as many look not only at their immediate needs but also at their long-term road map for physical and mental health support. The benefits of our fully integrated solution become immediately clear, at which point our conversations often shift to the deployment of multiple service system or IHP over time. In another normal trend, employers are increasingly unlocking budgets for mental health support and prevention services. Dialogue is well-positioned to respond to these demands. Our recently rebranded Mental Health+ service which bundles our iCBT with our former stress management while being offered provides Dialogue with an additional entry point for the employers' health and wellness spending. We continue to secure more some solid local wins in the first quarter. Importantly, consistent with previous quarters, we also continue to fare very well in head-to-head situations winning the vast majority of the competitive bids in which we participated. Let me give you a few examples of our wins. A leading manufacturer of paper products with 700 employees approached us to discuss our primary care service. The company was so impressed with the holistic nature of IHP that they decided to also add our mental health solution and EAP this placing and competitor on the radar. On the expansion front, a longtime customer and provider of e-commerce software with more than a thousand employees in Canada expanded their benefits planned by having our mental health service to complement their existing primary care offer.
Having a large portion of the overall workforce in the United States they initially sought an international provider. After comparing options they concluded that dialogue in our IHP was their best option for Indian employees. In general, we are seeing services other than primary care create nice optionality in our business. For instance, in our direct channel and specifically for new customers 6 of the top 10 agreements that we've signed this quarter included 2 remote services. Even more, 7 of the top 10 included EAP. Within our existing customer base, the opportunity is equally meaningful. Our top 3 expansions this quarter were from well-established primary care customers that landed to add a mental health service that we wanted to add a mental health service to existing primary care offer. This incremental benefit had been on their road map and the reviewer IHP is the most convenient way to proceed. I also want to highlight that we continue to drive new business from postsecondary schools and several trades and labor unions. Assign them modernization of services is on everyone's radar, not just employers. As our pipeline opportunities, we end the quarter at a record high up 60% year-over-year and 3% from last quarter. Even as we secured a very large agreement with Scotia Bank during the quarter we could continue to see good traction within our midmarket enterprise segment and are having very exciting discussions with customers that are growing in size. Wow, this is reflected in our pipeline I do want to reiterate, however that larger customers typically take longer to divert and are a bit less predictable from a timing standpoint. Our tax rate continue to improve rising to 1.51 at the end of the first quarter compared to 1.50 last quarter and 1.08 in the first quarter of last year. This deep year-over-year inflection is primarily due to the addition of iCBT took handle the life's concept plus platform. We are benefiting from many direct customer expansions as well which is evidenced by the rising percentage of direct members that have multiple services. We now count 22% of our members subscribed to 2 or more services compared to 21% last quarter and 60% of the first quarter of last year.
For 3 services, the penetration stands at 9% compared to 5% of the same period last year. Customers continue to increase their spend with us inside our integrated offering as a major factor for their decision to [indiscernible]. As we add new services or platform and enhance our flywheel, we intend to entrench ourselves even more in our customers' road maps as they seek to improve the health and well-being of their employees. I would now like to provide a quick update on our oppositional picture. We were very pleased to close the transaction on April 10, and have officially welcomed the [indiscernible] direction into dialogue. Adding such an experienced and motivated group to ours is definitely a great way to start a second quarter. I look forward to the growth and we were driving this combination as we develop platforms. We look ahead to the next 2 and a half years, we have set up a very detailed and measured integration plan that will ensure success. In the short term, we plan to provide early access to our new one's program to a select group of customers who are keen to be early adopters of the service. This intermediate step will also allow our go-to-market team to show all the [indiscernible] platform within our HP and provide other employees and partners with a preview of what's to come and the benefits that our members can expect. Also the short term, we plan to launch a commercial version of our wellness program fully integrated in our HP. Essentially, this is when the service will be ready for prime time in Canada. In the medium term, we intend to launch a version of our IHP that will be targeting international markets. This will not be a separate product, but rather a bundle of our highly scalable and high-margin wellness service in [indiscernible]. Beyond 2023, we plan to launch our integrated international IHP with white label customers, which would provide a great deal of growth in new markets where these partners have far-reaching capabilities. We're really pleased with the excitement of this transaction has generated as [indiscernible] interest has been strong in a few weeks since announcing the deal. Our team is engaging your existing customers and partners and introducing them to the idea of a wellness service to drive prevention and complement our current diagnosis and treatment options. Though we're still very early stages, we have started to build up the pipeline for wellness quite nicely. As I mentioned on the [indiscernible] our corporate development team is busier than ever, not only in the tech track integration but also in our pipeline of potential deals. There continues to scour the globe for high-quality products run by high-quality teams that will complement our IHP for the benefits of our members and customers. While we are eager to enhance your offering even more, we will remain disciplined and measured in our approach like we always have been. I will now let Navaid discuss our financial results in more details. [Foreign Language]
[Foreign Language] Thank you for joining us today. We kicked off the year with another solid quarter and continue to convert our pipeline into signed agreements at a healthy rate. We ended the first quarter of 2022 with more than $90 million in annual recurring and reoccurring revenue, representing growth of 38% year over year and 6% sequentially. 84% of our net new ARR during the quarter, came from non-primary care services. While this result was skewed by the Scotia Bank EAP agreement, it certainly starts things on the right foot towards our goal of generating more than 50% of our new ARR from services other than primary care. Primary care remains a big part of our business, features in almost all of our wins, and continues to be the main point of entry for most customers. We surpassed the 2 million-member mark during the quarter growing by 61% year over year. Compared to the fourth quarter we saw an increase of 11% or nearly 200,000 new members. Member service units or OMS grows 126% year over year to just under 3.1 million approximately 2 million in the first quarter last year. This meaningful increase demonstrates the success of dialogues and expand strategy. As we continue to drive multi-service sales among new customers while upselling existing customers. Our net retention rate was 101% in the first quarter as customers increased their spend on our platform. We began increasing prices for many of our customers whose contracts came up for renewal during the quarter and will continue to do so in future quarters. While these conversations have been very constructive so far, we recognize that some employers can be more sensitive to price increases. As such, we had expected and planned for an increase in our turn levels. We are very pleased to see that our business model is proving to be steady and resilient through this exercise. In the first quarter, we are recording our turn of 4400 members in our direct midmarket and enterprise customer segments. This result was better than our expectations. Many customers recognize the value that dialogue brings to their organization and they continue to see a high rate of return on their investment. With regards to churn, we obviously would love to have none. In some cases, however, churn is healthy. It allows us to focus our resources on more profitable growth and to make sure that all our agreements are priced right. Our revenue grew 36% year over year to $20.7 million driven by our land and expand strategy. Virtually, all of this growth is organic except for a non-material amount related to the acquisition of Ehab health in the second quarter of last year. The primary care and mental health segment continued to perform very well in the period. As revenue increased 50% year over year to $13.8 million and 9% compared to the fourth quarter. The EAP segment generated revenue of $5.8 million for the period of 9% year over year. Importantly, our virtual AP will 43% on a sequential basis. A very strong trend that is set to accelerate in the second quarter. Lastly, our OHS business in Germany progressed nicely in the first quarter as revenue increased 60%, your over year to $1.1 million and 8% sequentially. A growth margin in the first quarter, improved by 80 basis points to 42.3% compared to the same period last year. We continue to scale our EAP and mental health service and migrated more of our smaller optimal customers to the dialogue EAP. Compared to the fourth quarter, our gross margin decreased by 120 basis points. This was in part due to cost inflation, which remains meaningfully higher in CPI. Additionally, we wrapped up our capabilities during the last month of the quarter to prepare for the onboarding of a significant number of EAP members on April 1. This increase in cost was necessary to hire and train our practitioners and to ensure that we can provide a great experience to [indiscernible] employees from day one. These costs were incurred without the revenue to match. As we progress into the coming quarters, we expect our gross margin to move back higher. More specifically for the second quarter, we are looking at a minimum to return to Q4 levels, which was 43.5%. We have several upcoming catalysts that support our expectations. First, our EAP and mental health services continue to scale and drive efficiencies in our model. Second, as I mentioned, we began price increases upon renewals of our eligible customer agreements. And these will roll out through the year as contracts renew at various days, skew towards Q4 obviously if that's the strongest quarter. We are not immune to inflationary pressure and are seeing it impact many of our customers. While our pricing actions are not a perfect offset, they will help partially mitigate the cost increases but will take a full 12 months to cycle through all eligible customers. And third, we continue to migrate our optimal customers to the dialogue EAP. And in addition, we will be consolidating tick track into our numbers beginning the second quarter, effectively accounting for 7 months out of the year in 2022. Gross margin in our primary care segment remains well above 50% and expanded more than 350 basis points on a sequential basis. This further demonstrates the fact the ramp-up in our EAP capabilities was the main factor behind the margin pressure compared to the fourth quarter. Before concluding on gross margin I'd like to highlight that our optimal business improved for a second consecutive quarter, and we saw a stable growth margin across the period, as well as [indiscernible] increase compared to the fourth quarter. We are also implementing price increases as optima. That started in Q1 and will continue to the rest of this year. Operating Expenses increased 20% year over year to $14.5 million in the first quarter, as a percentage of revenue, the operating expense rate was 440 basis points lower year over year, as we continue to drive operating leverage in our business. As we did on the practitioner level, we also ramped up our capabilities in a number of managerial and support roles which contributed to the increase in operating expenses this quarter. We expect that labor cost replacement will continue for a few more quarters as we cycled through the initial market adjustments that we'd make. Lastly, we went public at the end of Q1 last year. For this past quarter also reflected a year over year increase in operating expenses, we like to be a public company. From a sequential perspective, our operating expenses decreased by 340 basis points. As we onboard some of the larger EAP customers with the second quarter, we expect that this rate will decline more meaningful. Moving on to adjusted EBITDA, we recorded a loss of $5.7 million in the first quarter where negative 28% of revenue, compared to a loss of $5 million in the same period last year, or negative 33% of revenue. As of next quarter, we will begin to cycle our first period as a public company which could provide more favorable comparisons as both periods will reflect on the company costs. We continue to pursue a disciplined growth strategy and are very focused on scaling profitably, aiming for our first EBITDA positive even to even a positive by the end of 2023. Before closing, I want to add a quick note on cash balance, which stood at $96 million at the end of the first quarter. When factoring our acquisition of tic track, which at its maximum has an approximate cash portion of $40 million we remain well-positioned to sustain our operations and our path to profitability and to take advantage of additional M&A opportunities. Thank you again.
We will now open the floor for questions. [Foreign Language]
Thank you, Navaid. [Operator Instructions] The first question comes from the line of Doug Taylor at Canaccord Genuity.
I think you know last quarter you made the comment you'd like to add roughly the same amount of ARR on an organic basis in absolute dollar terms this year as in the prior year. Is that broad target unchanged on our organic basis before we added in tech track to our models here?
Yes, correct. That's still a target.
Okay. I think we probably all saw Teladoc, a couple of weeks back speak to slower growth. And I think mental health and particularly and more broadly, slower purchasing behavior, post-pandemic. You don't seem to be signaling the same with your own pipelines. I wonder, you know if you'll comment on your own observations about customer behavior at this time, and what you might see as you know, the difference in your models?
Yes. I mean, look, in general, we prefer to focus in our business and upcoming than others, but since you asked directly, I'll try to answer it directly as I can. First of all, we are 100% focused on B2B remotely recurring revenues. Most of the softness in Teladoc's numbers came from their B2C segments. As you know, they made an acquisition of a mental health player in B2C and a lot of the softness came from that segment. And it was also exacerbated by rising performance marketing costs. In our case, that is not a factor at all. Again, we're focused on B2B recruiting, and we don't acquire our customers from performance marketing spent. The second point, I'll say that we're very disciplined on M&A. As you know, they've paid 45 times forward revenue [indiscernible]. You know, when you pay such a rich multiple, I think it puts you at risk, and our acquisitions are nowhere an order of magnitude less than that. So, I think it gives us much more leeway. And then finally, Teladoc has significantly lowered their for guidance and while we don't issue guidance, so that's another difference. In terms of lengthening sales cycles, it's not a dynamic we've seen. As we go upmarket and as we target larger customers, these customers, as expected, will have a longer sales cycle than a SMB or a mid-market customer. But apples to apples, if you just look within, let's say the enterprise segment, we have not seen any changes in buying dynamics and the comments they've made about HR departments being too busy is not something that we've seen in our context at all.
Thank you, Doug. The next question is from Jerome Dubreuil at Desjardins Securities.
[Foreign Language] A little question on the macro environment here, a growing concern of potentially a looming recession. I know your business is relatively young, but I wonder if you can comment on your view of the resilience of your operations in a potential recession context.
[Foreign Language] I'll take this one. Obviously, the risk of a recession is something that we're seeing in the media a lot. I think that economists can't agree whether we're going to win or not. But for discussion's sake, let's say we were. You know, I think our business is not recession-proof and I think no business is. The good news is that we strongly believe that employee health is not a luxury. And we strongly believe that it will not be one of the first places an employer will cut in a downturn. I think the labor market will remain tight for some time. Companies will always look to attract and retain talent. They will always look to improve productivity and reduce absenteeism, and we think this is true in any market environment. And look, we've seen a small example at the beginning of the pandemic, if you rewind time and think about March of 2020 and the uncertainty in the market, and how the capital markets reacted in the midst of that upheaval, companies, and we were worried that companies that it might have a negative impact on our operations and it did not. So, again, it's not an apples-to-apples comparison, but I think we got a little taste of that at the beginning of the pandemic when the market conditions were very challenging. But just to repeat time will tell, but I strongly believe that employee health is something that companies, it's not a place that they're going to cut first.
[Foreign Language], Jerome. The next question is from Endri Leno, National Bank Financial.
The first one for me, there was a slide in the prepared remarks, you're talking about shrink in terms of the new wins that you had, had in Q1. And it looks like primary health is still leading. So I was wondering whether that is by design, by dialogue, or whether it's a reflection of the demand on the market and whether you'd expect any shifts, for example, with a mental health to be leading or EAP rather than primary health.
Yes, it's a good question. I mean, our EAP and mental health growth rates in the last couple of quarters have been extremely strong and we've been really happy with that. I think the reason that you see that primary care is still leading quite a bit is that there is this perception that primary care is kind of the foundational service on top of which you add other products. And I think it's just because probably the first 4 years of dialogue, that was the main service we offered but that dynamic is changing. You know, Scotia is just one of many examples of a company that will start another service. And we will over time try to convert other services so more and more-- And I think we've cited some of those numbers in the prepared remarks. More and more companies start with a service other than primary care and more and more companies starts with 2 and more services. So that is a dynamic that I think quarter over quarter will continue to improve and get stronger, but I think it's just a fact of we were known for first 4 years as a telemedicine provider. And we're repeating that in the market that we have the IHP, and that the other services are not just add-ons but they could be stand-alone services. So I think as we undergo that transformation of that transition, you'll see it less and less.
Okay. No, that's great. That's great color. And the next question I have, it's a bit of a 2-part but the first one if you can talk a bit, you talked about transitioning Scotia on April 1st. I think you have also Sun Life in Q2. If you can talk a bit about the progress there as well as how do you expect to onboard the Q1 wins? Are they all been done in Q1 or will they be in Q2? And that's it for me.
Thank you. You're right. So Scotiabank started 1st of April. The 1st of April was a Friday, but we gave them access on the Monday of that week. So we gave them kind of 4 days early access to make sure that we hit the ground running on Friday in a very strong way. That contributed to obviously us incurring some expenses ahead of the launch which is something that it's an investment on our part just to make sure everything goes flawlessly with such an important customer. You're right that Sun Life, the EAP, starts a little bit later this year. Look, we don't have control on when a big customer decides to launch. You know, sometimes it's tied to the cancellation of an existing. agreement. Sometimes they want to time it with a renewal of benefits agreement. Sometimes they say it's a milestone. Some companies will say, "We're offering Dialogue as an anniversary present to our employees." So we really have very little control, but you are right that many of the Q1 signatures we're only onboarding Q2 and Q3 and we're seeing this-- You know, the larger the customer, the more of a distance you see between the signature and the launch. Whereas sometimes even with an SMB customer, you know they'll sign on a Friday and launch on Monday or Tuesday, obviously, when an enterprise customer with several thousand or several tens of thousands of employees, that dynamic becomes much more slower.
Thanks, Endri. The next question is from Nick Agostino from Laurentian Bank Securities.
I guess 2 quick questions on my part. First one, just looking through your MD&A, it looks like you guys made a small investment at the end of February, about $1 million in a company that operates medical clinics. Can you just maybe give some color as to the thought process behind that investment, but more importantly, the fact that it wasn't invested in a company that has medical clinics?
Yes. Very good question. Thanks, Nick. So the company is called Lotus Medical. Lotus Medical is a tech-enabled start-up operator of clinics here in Quebec. And the reason we've made this investment is that as you know, in virtual care, you can't treat everything, right? So there's a percentage of cases that will come to our platform that we cannot treat. And as part of our service, we navigate them to other in-person clinics. Pediatrics is one of those cases where just the nature of the patients, you obviously can do as much virtually, and Lotus specializes in pediatrics. And the investments allows us to have a corridor of care whereas when we see a pediatric patient, we're able to book them in person at Lotus in the same day. That is not live yet, but that is where we are going. And we just felt that owning the piece of that business was very strategic for us above and beyond just having a partnership agreement with them. We're very impressed with the team and what they've built, and it allows us to have the corridor of care where you go from a virtual consult to an in-person consult within kind of the same family. So that's why we made that investment.
As a 1(b) to that question, is it possible you make similar type investments and partnerships for that core, to use that term, across the rest of Canada to complement where you have other presence?
Yes. Lotus Medical in their road map, they have a penned community road map. Obviously, they're very early in that road map, but we will grow with them. You know, if we find other opportunities where the tech enablement and the care philosophy is as good as the one we found in Lotus, we might but it's not really on our radar, this is more of a one-off.
Okay. And then my second question is, I think back in Q3 of last year, you had 2 new partnerships that you announced. I think one was HR consultancy in Ontario and the other one was a group benefits provider in Quebec. Any update that you can provide just to discuss contributions that they have made either in Q1 or timing of contributions you expect from those partnerships in 2022?
I mean, it's still very early. You know, these are longer sales cycle type of opportunities. So I would say it's still early, but we can update you on that at the next quarter.
The next question is from David Kwan at TD Securities.
So looking at the final presentation on customer wins in Q1, looks like [indiscernible] highlighted was for iCBT and just [indiscernible] increase for medical solutions given what's going on here with the pandemic. And the development of [indiscernible] and I guess is a lot more iCBT win. So I'm wondering what you would attribute that to. Is it just customers using a competing solution or maybe is there more customer education part?
I can't hear you well.
iCBT. I think global iCBT mental health, I think.
There was an echo so strong that we couldn't even make up which words you were saying.
I'm sorry. Can you hear me now? Is this better?
It's the same.
I'll try dialing in.
Okay. Or if you want to type your question in the chat.
Sorry about that, David. The next question is from Adam Buckham at Scotiabank.
I want to focus or maybe touch on operating costs in the context of cost inflation and your profitability goal. Now, you spoke to the fact that some cost per pressure is going to be persistent over the coming quarters. Now, in terms of progress towards your goal, are you able to share context on timing towards improvements in adjusted EBITDA? You know, is it more weighted to year-end and next year, or should we start to see progress over the coming quarters?
Thanks, Adam, for the question. Year-end, I mean, we've communicated that our target to meet is to be EBITDA positive by the end of 2023. The cost pressures obviously and the inflation pressures make that more challenging, but we're taking and accelerating some of our actions to offset that. We've talked about price increases. We've talked about accelerating some of our investments to drive operating efficiencies, improve our processes. As I mentioned, the price increases will take at least 12 months to cycle through as we cycle through all of our eligible customers. As we move forward, we've increased our cost base because of the inflationary pressures, but progressively over the next few quarters, you'll continue to see improvements. I don't think it'll get worse in terms of EBITDA. We do expect to see sort of sequential improvements as early as the next couple of quarters, and then progressing through the end of 2023.
The second point I wanted to touch on, you talked about incremental MN&A opportunities and the balance sheet being prime for those opportunities, right? In the context of your current customer base and then the enhanced platform with tech track, I was just wondering if you're still hearing from your customers that there's areas that they want you guys to be within your health and wellness, or whether it's your current platform spreads the breadth of where it should be right now.
Yes. I think we've communicated broadly the last few times we spoke that we're really trying to catch people earlier in their health and wellbeing journey. Up until now, many of our services were you get sick, you're trying to get better, you're in a crisis. With tech track, with wellness, we're trying to go catch people early and help them being healthy every day. And I think that general theme will continue over time. This is really the pull we're seeing from the market. It's our strong belief that by catching things earlier, you're really reducing the incidence of disease, absenteeism, productivity issues. So that general theme will continue but we're not commenting on specific services. But if, as you think about the universe of possible expansions, just think more wellness and prevention versus the other side of the spectrum.
Thank you, Adam. The next question is from David from TD Securities. All right, David.
Hey, guys. Can you hear me now?
Yes.
Yes.
[indiscernible] my phone. So just looking at the slide in the presentation just on the Q1 customer wins that you guys highlighted, you obviously talked about leading with primary care, some good cross-selling ones with the EAP, but just a handful of ones for mental health and only one for iCBT which I find a bit surprising just given what's going on with the pandemic. And for iCBT, given its pretty low price point, I'm just surprised that there weren't more additional wins from that standpoint. So I was just curious what you'd attribute that to. Is our customer using a competing solution? Is it a budget? Is it customer education? Can you talk more about that, please?
Sure. I think the big push on iCBT from our perspective has been on the embedded side. We've announced kind of life and I think we've announced or will be announcing others. So we've really focused our GTM efforts on the embedded side. We've had some wins on the direct side, but I think iCBT is going to be particularly interesting on embedded for a number of reasons. I mean, one of them is cost but the other one is our direct customers are very rarely buying iCBT on its own, right? So it's just much more of an embedded type of product, and that's why it shows up at least in this chart but we knew that on the onset.
Okay. And then just as it relates on the EAP side, as you mentioned for Scotiabank in the past, you've built out this contact center infrastructure, helped support that win, and also to help address any other clients that might be interested in offering this option to their employees. So can you talk about how much more of the EAP market you can address with the contact center and I guess trying to figure out what the rest of that balance is where customers will want to have like an in-person solution that you obviously wouldn't be able to address at this point?
Yes. Thanks for the question, David. And I think it's a good opportunity for me to clarify what a call center is for us. We strongly believe in the modern virtual approach. This means that you are not meeting an in-person practitioner in an office somewhere. It means that you are speaking to them, most of the cases by our app, but in some cases, our customer said, for example, in Scotia's example, not every single one, let's say, of our bank tellers has a smartphone and is comfortable using a smartphone, we would like to keep the 1-800 number. For us, the 1-800 number is just another way to have a virtual consultation. And if you imagine our network of healthcare providers that are working remotely from all over the country, they're working on a laptop, and on this laptop is what we call our care platform. And on this care platform is how they communicate virtually with our members. And now the only thing that changes is that instead of typing or having a video consultation, the care platform can now ring and you can have a voice consultation. So the 1-800 number is connected to this platform, but there is no call center or contact center in the old way of thinking, there's no building or room or there's no new team. It is the exact same team. It is just we've built new technology to add a communication medium to the care platform. That has, I think, opened up to us a large portion of the time of folks who said, "Look, we love the modern approach, but we want to add one more medium. We're not going in person. We don't believe that in-person yields the best results and the best outcomes for the clients and the members because now you need to build a network of folks all over the country. As you know, we have a large country with low density, and to do that is not effective. And that is why we promised and commit to a 24-hour turnaround when you're consulting a mental health specialist on our platform versus our competitors, they have wait times going from 10 to 2 weeks. And in the midst of the pandemic, I think that was 3 weeks. The very important point that I want to mention is that the only reason we've ever lost an EAP competitive situation is because we didn't have an in-person option. I think it's really important to understand that. The only reason we've ever lost a competitive EAP situation is because we did not have in-person. The way we think about this is like the transition from on-premise servers to clouds. If you remember maybe 10 years ago, there were some companies that wanted on-premise, some companies that wanted cloud, legacy versus modern, and now nobody even talks about on-premise because it's completely antiquated. We view in person as the exact same way. There will be some RFPs that require in-person. We will not win these. We'll do our best to convince the customer, but we will not win all of them. Quarter over quarter, year by year people understand that in-person is antiquated. That's like having services in your basement and nobody wants that. So that was kind of a long answer to a simple question, but I wanted just to make sure that we hit those messages home on call center and in person.
Oh, that makes sense, Cherif. So I guess just as it relates to the market, with the contact center option for customers, like what percentage of the EAP market do you think you can address now with that versus when you just were only servicing them through the IHP?
We think that the only segment of the market that is resistant to drop in-person is public sector. We think that public sector customers are still some ways, a little bit away from dropping that from their RFPs. But I think that between the fully virtual and the virtual plus call center, we have access to all of the markets except for public sector that is slowly, slowly converting over time.
Do you have a rough estimate as to how much the public sector would account?
I don't have it offhand, but we can check with our team and send you that out to you.
Thank you, David. These are all the questions we have today. Before passing it back to Cherif, I just wanted to let investors know that for anyone who'd like to meet our team, we'll be hosting some meetings at several conferences in May and June. You can also reach us at any time by e-mail at investors@dialogue.co. It'll be our pleasure to answer any of the questions you may have. Cherif, the floor is yours again to conclude today's call.
Thank you, everyone, for your participation on today's call. Great questions as always. And we look forward to speaking with you again during our Q2 results on August 11. Have a nice day, everyone. Talk soon. Thank you.