SHCR (2021 - Q2)

Good day, and welcome to the Sharecare Second Quarter 2021 Earnings Conference Call and Webcast. [Operator Instructions] Please note this event is being recorded. Leading today's call are Mr. Jeff Arnold, Chairman and CEO; and Mr. Justin Ferrero, President and Chief Financial Officer. Before we begin, we would like to remind you that certain statements made during this call will be forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of some of these factors that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in our filings with the SEC, including the Risk Factors section of the prospectus of our business combination filed with SEC on June 3, 2021. In addition, please note that the company will be discussing certain non-GAAP financial measures that we believe are important in evaluating performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliation of historical non-GAAP financial measures can be found in the press release that is posted on the company's website. I would now like to hand the conference over to your speaker, Mr. Jeff Arnold. Please go ahead, sir. Jeffrey

Welcome, and thank you for joining us for our first earnings call as a public company. Joining me today is Justin Ferrero, our President and Chief Financial Officer. We've had the pleasure of meeting many of you over the past few months. But for those of you who are new to our story, I'll provide a quick overview on Sharecare before getting into our second quarter performance and the acquisition we announced this morning. Sharecare offers the most comprehensive digital health platform in the market. And we make it easy for our diverse customer base to buy, implement and engage with their populations to improve their overall well-being, which lowers their health care cost. Our solution is focused on data interoperability and delivering a user-friendly experience, enabling our clients to efficiently manage the health and wellness of their employees and members. We've been successful in broadly deploying our platform and services to multiple customer segments: health plans, large employers, government, health systems, life sciences and the consumer, building a high-tech business that is diversified in revenue and scale and is profitable, and we continue to innovate. We operate across 3 channels: enterprise, provider and consumer solutions, and I'll take you through quarterly highlights for each. But before I get there, I want to provide a high-level review of our second quarter financial results, which Justin will discuss in greater detail. We delivered strong financial performance in the second quarter with revenue of $98.5 million, which was on the high end of our guidance range, representing 26% year-over-year growth. We delivered adjusted EBITDA of $6.6 million, which also was ahead of our guidance. We are committed to profitable organic growth, which with the $400 million of cash raised from our recent business combination enables us to invest in innovation and new growth opportunities. To bring this to life, we are already integrating the artificial intelligence technology and products from our February acquisition of doc.ai across our entire solution set. Another example, the acquisition of CareLinx from Generali announced today will bring a tech-enabled network of more than 450,000 caregivers to our digital platform, enabling Sharecare to scale into the last mile of health care, the home. In our enterprise channel, we service nearly 9 million lives, representing several large health plans, dozens of direct large employers and 10 public sector clients, which equates to about 60% of our total revenue. These organizations utilize our comprehensive digital platform and services to help their members and employees efficiently manage their health care benefits and take a holistic approach to their well-being. Our platform is designed to deliver each person a data-driven and individualized journey to assess and lower their health risk and measurably improve their well-being focused on going from episodic to everyday management. In addition to benefits navigation, we also offer integrated access to digital therapeutics for specific conditions, such as anxiety, weight loss, tobacco cessation, diabetes, prediabetes, MSK and pregnancy, along with a number of other member-specific products. In an effort to improve the quality and lower the cost of care in real time, we are integrating AI-distributed architecture technology into our flagship platform to turn dynamic and siloed data into actionable insights. In the second quarter, we expanded our relationship with key enterprise clients in addition to landing new clients. We launched several new government-sponsored health plans, including Centene's Peach State Health Plan Medicaid line of business and Humana's CarePlus and their Medicare Advantage population. Centene partnered with Sharecare to focus on their child-bearing members and improve maternal mortality rates in the State of Georgia, which ranks 50 out of 50 in the U.S. Additionally, we won Health Net's Medicare line of business for both California and Oregon, which we believe represents an opportunity to estimated 800,000 new members. We added new large employer customers, winning several competitive RFPs such as Nordstrom, and successfully renewed current clients such as Lockheed Martin and Georgia's State Health Benefit Plan. We also expanded several contracts with current health plan clients to offer digital therapeutics to their entire eligible populations. We continue to see increased engagement in our deployed digital therapeutics and view this as a significant growth driver over the next few years as we increase penetration and expand our total market opportunity. Also in the second quarter, we closed our $50 million investment from Anthem to co-develop a next-generation multi-payer advocacy solution to bring to market across our combined customer base and beyond. This solution will leverage the AI-driven technology capabilities acquired with doc.ai to further enhance our digital platform, which we expect to be very valuable to our enterprise clients. We will discuss this strategically important offering and its potential impact in more detail over the coming months. As part of our enterprise offering, we have several initiatives focused on health security. With the continued uncertainty of returning to the workplace, we are helping our public and private sector clients creatively expand biometric screenings and flu vaccinations into the home. Also related to the pandemic, we launched our health security solution in 2020 to help organizations safely return to their place of work and enable government agencies to manage and streamline vaccination, distribution and adherence. This extension of our business generated thousands of new customers, providing us with new opportunities including working with additional government agencies and hospital systems. As an example, we added another health plan client as a customer to our platform, partnering with CareSource in the State of Ohio on an immunization drive to track and reward CareSource members for receiving the vaccine. We are also working with the State of Arizona, Michigan and Colorado on recent digital vaccine contract awards. Our provider channel, which services approximately 6,000 physician practices, hospital systems and health plans, includes solutions for medical record retrieval, payment integrity, remote patient monitoring, patient engagement and value-based care. In Q2, we added new logos, including Arizona Oncology, Connecticut Orthopaedics and OrthoCarolina. Given this channel's expansive client base, we also take a land-and-expand approach. For example, existing clients of our medical record retrievable services, Capital Ortho and Florida Orthopaedic Associates, recently bought our value-based care offering. We also see a significant opportunity to sell our enterprise solution to our health system customers for their employees. To truly deliver on our vision of all your health in one place, supporting the doctor-patient relationship is critical, and we currently serve over 1 million physicians. Our ultimate goal is to Sharecare-enable providers so they can prescribe Sharecare to their patients to foster continuous connectivity, meaning a person can share their health data with their provider and in turn, receive automated support and care plans from their doctor all through our platform. To that end, we recently started working with Wellstar, one of the largest health care systems in Georgia, which not only rolled out our enterprise solution to their 20,000 employees, but also is collaborating with us to develop a personalized care delivery, population health and a consumer engagement model to better support their patients and communities. This partnership allows Wellstar and Sharecare to accelerate transformation in a value-based care world and optimize, expand and reimagine the health care experience. Finally, our consumer solutions channel focuses on leveraging our platform to implement targeted, audience-specific messaging campaigns on behalf of pharma and life sciences companies to educate people about treatments that could help address a variety of diseases and conditions. This targeting capability is a strategic differentiator for Sharecare as we use it with health plan and employer clients to efficiently engage their members outside of traditional direct and e-mail channels. The consumer solutions channel had a very solid performance in Q2, and its significant growth is reflective of Sharecare's ability to deliver strong results against brand goals and the power of our $108 million first-party database. Additionally, Sharecare earned 23 awards for our expansive content and engaging social platforms of over 2.5 million followers, another differentiator of the Sharecare platform. Looking ahead, the consumer solutions channel has started selling its suite of '22 -- of 2022 client solutions featuring immersive content experiences and new advanced targeting capabilities which leverage insights from social determinants of health and Sharecare's Community Well-Being Index. The team is also commercializing a new product from the doc.ai acquisition, [ Smart OMX ], expanding the consumer channel's footprint into the clinical research space with life sciences, medical device and CRO customers. Moving forward, across all our channels, we have multiple avenues to drive growth, including signing new clients, cross-selling additional solutions to our current customers, expanding our digital therapeutics and value-based care offerings and launching new products like health security. We are committed to growth organically, and we'll further enhance Sharecare capabilities through strategic acquisitions. And with that, I'm pleased to announce our acquisition of CareLinx from Generali. CareLinx is a nationwide tech-enabled home care platform that delivers on-demand personal care services in the home of patients while facilitating rich data capture, population health analytics and real-time care coordination with remote clinical teams. Regulatory and macro changes are driving the shift to home-based care, and COVID further accelerated the adoption of telehealth and home-based services. Payers and providers need scalable and home care provider solutions to manage the total cost of care. CareLinx has a multichannel strategy to provide care solutions to families and is positioned to serve patients' needs across the entire care continuum from personal care to clinical care at home. Their digital platform includes in-home monitoring, digital care plans and population health portal for enterprise clients. Through its network of over 450,000 tech-enabled caregivers, CareLinx will bring a human touch to Sharecare's digital solution, strengthening our platform by helping customers manage the last mile of care. We will systematically enroll CareLinx users into the Sharecare platform and ultimately offer our integrated app to all CareLinx members, families and caregivers. With an exclusive offering for AARP members and a partnership with the VA and 3 of the largest health plans in the United States, over 1 million Medicare Advantage members have access to CareLinx through their health plan. CareLinx has shown impressive organic growth to date, and we believe Sharecare is very well positioned to continue that trajectory. In fact, CareLinx can be sold into all 3 of our channels, and we've already have a number of customers actively looking for this type of solution. Additionally, this capability will be a unique component in our multi-payer advocacy solution. We believe this acquisition can expand our TAM by more than $7 billion for home care and potentially over $100 billion if we expand further into home health. And now I'll turn it over to Justin for a more detailed review of our second quarter financial performance. Justin?

Thanks, Jeff, and thanks to everyone on the call for your interest in the Sharecare story. As Jeff indicated, we delivered strong performance in the quarter with revenue coming in at the top end of our guidance range and exceeding our guidance with respect to adjusted EBITDA. We continue to gain momentum in the business, delivering strong sequential revenue growth and positive adjusted EBITDA while continuing to invest heavily to support future growth. In our brief time as a public company, we have already made several key hires to bolster our already talented management team and are poised to significantly add to our sales force. As many of you know, on July 1, we completed our business combination with Falcon Capital Acquisition Corp, and on July 2, began trading on NASDAQ as a public company. With more than $400 million of cash raised from our recent business combination, we're in a strong position to invest in new opportunities to further support and accelerate our growth and profitability. Digging into the quarter, our total revenue grew 26% from $78.2 million a year ago to $98.5 million driven by increased client penetration, new client wins and approximately $5 million from the doc.ai acquisition completed earlier this year. On an organic basis, we grew total revenue by approximately 20% compared to the second quarter of last year. Adjusted EBITDA for the quarter was $6.6 million, which was ahead of our previous guidance and included additional growth investments to support product innovation and the rollout of new products like our health security solutions as well as expanded sales initiatives. These investments establish a solid foundation for long-term growth and improve financial performance as we gain additional operating leverage from the Sharecare digital platform. We believe CareLinx will be an accretive acquisition for our shareholders. CareLinx is growing from $5.1 million in revenue in 2020 to approximately $20 million expected in 2021. The $65 million acquisition value is comprised of roughly $55 million in cash and the remaining $10 million in stock to management. We've also arranged for an incremental performance-based earn-out through 2025 for the CareLinx management team to achieve a minimum of 40% annual organic growth. I'll now turn to our guidance for the third quarter and full year. Looking forward, our Q3 guidance for revenue is $103 million to $105 million, which includes approximately a $2 million contribution from the CareLinx acquisition as of August 11. The Q3 guidance for adjusted EBITDA is expected to be $6 million to $7 million, which includes an approximate $1 million negative impact from CareLinx. For the full year 2021, we are updating our guidance to reflect the impact of the CareLinx acquisition: revenue of approximately $414 million to $415 million, which includes approximately $6 million to $7 million from the newly acquired CareLinx business; adjusted EBITDA of approximately $28 million to $30 million, which includes an expectation that the CareLinx business will have a short-term negative $2 million to $3 million impact to our previously provided adjusted EBITDA outlook. With 97% of our business booked, we remain highly confident in our full year outlook. As you think about the cadence for the remainder of the year, I want to reiterate a few factors that play into why we expect the fourth quarter to be our largest quarter of the year. As we stated in previous communications, based on the momentum with existing clients and new client wins year-to-date in both the provider and enterprise channel, we will see sequential revenue growth in the quarter as various initiatives continue to ramp. Also, our consumer solutions channel, as a result of seasonality, generates more than 30% of its revenue in the fourth quarter as life sciences companies typically increase their spend before the end of the year. Now I'll hand it back to Jeff for some closing remarks.

Thanks, Justin. As you can tell, we had a very exciting second quarter and expect our momentum to continue throughout the back half of the year. We have strong runway ahead of us in terms of new business opportunities and cross-selling existing clients, and we have the cash on hand to continue to innovate and grow. None of the work we do at Sharecare would be possible without our dedicated team. So I want to thank everyone for their hard work to help people, no matter where they are in their health journey, live their best lives. Again, I want to thank everybody on the call today for your continued interest in Sharecare. We have an exciting runway ahead of us. I look forward to continuing to update you on our progress. With that, we'll open up the call for any questions. Operator?

[Operator Instructions] And our first question coming from the line of Richard Close with Canaccord.

Congratulations on completing the transaction and the first report as a public company. I had a couple of questions. I was wondering if you could just go into the pipeline of opportunities essentially with payers like Centene, like Anthem. Obviously, you made some progress that you noted with Centene. If you could just give us a little bit of feel of the competitive dynamics there and the pipeline.

Sure. Richard, this is Jeff. Thanks for the question. We're very focused on continuing to grow the clients that we have. So as you know, we have many large clients, several Blues plans, in particular, Anthem. As you know, Anthem has 44 million members, and we have just about 1 million members today that are -- have been penetrated through that account. And with the large investment that they made in Sharecare in April, I think we probably have about 80 people stacked against building out this multi-payer advocacy solution, which we expect to be in market in 2022 with clients and then fully scale it by 2023. We think that has about a 12 million member opportunity for us. So that's Anthem. On the Centene front, as you know, Pam Shipley, who's our COO, joined us from Centene and has been really helping us tailor our product to meet Centene's needs. We started off with them as our first account in Georgia. And in this last quarter, we were lucky enough to win their RFP in California and Oregon for 800,000 of their members, which is, I believe, their largest population. And so we're off to a great start with them. We did a nice launch in Georgia, and we just won that big 800,000-person account. We just won CareSource, which is a new payer for us in Ohio, and the managed care side of the house similar to Centene. As well as we won Blue Cross Blue Shield of Idaho, which now joins Blue Cross Blue Shield of Minnesota, Blue Cross Blue Shield of Arizona, Blue Cross Blue Shield of Maryland, Blue Cross Blue Shield of Pennsylvania with Highmark and Anthem and some others. And so we're really focused on those large accounts, and we're doing really great with the ones that have already been onboarded with us. And we're continuing to land and expand with the Anthems and Centenes of the world.

And maybe, Richard, just one other item I'd add is that we really have a two-pronged model there with those plans of not only expanding, as Jeff took you through, but also upselling our digital therapeutics into those customers as well. So there's significant upside to not only expand with the user base, the member base, but also with additional services.

Okay. That's helpful. And as we -- I appreciate the comments on Anthem and Centene. Curious just in covering other advocacy type companies, navigation type companies. And in some cases, like if you win new business, let's say, with a new payer converting that essentially "booking" to revenue in terms of launching, what are your time lines with respect to launching? So if you won business with an Anthem or a Centene, when does that ultimately launch, just so we have a better feel for that?

Yes. So typically, most of our launches are on the first of the year, April, July or October, with the majority being in Q1. What's great about our Sharecare business is think about our core digital platform is like our Trojan horse. And so all those accounts are buying our Sharecare core platform for all their members. And then just like we turn on digital therapeutics, which we can do at any time throughout the year, it's a little like turning on WiFi, is we can turn on advocacy. And so that's why we're always super focused of selling in our core digital platform because we can get that deployed to the entire membership base. Usually, we need about 60 to 90 days implementation. So it's not that long to actually stand it up and have the payers start rolling this out to their members. And then the way we've architected the platform, we can turn on or off services in the background based on what they bought from us and who's eligible for the product.

Okay. That's helpful. And then my final question would be on the acquisition. Congratulations on that. How is that sold? Maybe I didn't understand in the prepared remarks. But is that -- do you sell that into your existing base? Or is that a different customer channel? Or how are you thinking about CareLinx and driving that?

Yes. Well, we're seeing it as some complementary new client, which we're excited about. So they do a lot of work with 3 big payers that would be complementary to our payer set. And so we're hoping that, because of how happy they are with CareLinx, it will be a great introduction to Sharecare. So that's one. And as Justin noted and I think I said as well, I mean, they're just exploding from an organic growth standpoint right now. But we've known this company for 4 years and have worked with Sherwin, who's the Founder, who's on the call with us. And we've started introducing Sherwin to our clients, and the reception has been really great. So we're already in market with Sherwin talking to clients and believe that we're going to be able to successfully penetrate those clients with these new services.

Okay. That's helpful. And then Justin, maybe on the financial profile. Obviously, it's a drag here initially on adjusted EBITDA. But if this business is mature, what is the like margin profile of CareLinx?

So yes, so we're starting from the model that we've taken on that Sherwin has built is in the kind of low 30s margin. But we're now expanding this into our enterprise clients and see long-term gross margins north of 50% as they sell a very similar model on a PMPM basis. And we expect in the -- by 2023 that this could be a 10% to 15% EBITDA contributor [ on their business ].

And our next question coming from the line of David Larsen with BTIG.

Congratulations on a good quarter here. Can you please talk a bit about your Anthem relationship? So Jeff, you had mentioned that you will be in market in 2022 with clients and then fully scaled in 2023, 12 million life opportunity, up from 1 million now. Can you maybe just sort of give a little more detail on what exactly that means? It sounds like there's a very, very clear road map for growth here with Anthem.

Yes. No, my pleasure. Yes, so Anthem saw a need in their product capabilities to be able to offer multi-payer advocacy. And what that means is when they have an account, let's say, a large national employer in which they don't have 100% of the members, so maybe they're -- 80% are on Anthem and 20% around somebody else or some other mix. And so they needed a neutral third party that could act as that advocate for both Anthem members and that other health plan's members. And so that was the strategic reason why they invested in Sharecare. And since that investment, we've been hard at work on 2 things: one is actually building the product, leaning on doc.ai because they have a history of working with Anthem's product and tech teams and Anthem's AI team; and building a go-to-market, really trying to identify where are those 12 million lives, where are they in the buying cycle and how do we get this fully scaled by 2023. And where we're coming out is picking a handful of high-profile clients for 2022 that could become our best references going forward. And so we're in the middle of many of those conversations and expect that to happen next year and while we're building out the full kind of go-to market. And we've made some exciting hires recently as well with sales reps and account management folks to manage the rollout of this.

Okay. So it sounds like Sharecare is a core part of Anthem's longer-term digital health strategy that they've been talking about on their earnings calls.

Yes. And so as you know, Rajeev, who runs -- Ronanki, who runs their digital and transformation, is on Sharecare's Board of Directors, and I talk to him multiple times a week of continuing to understand what's the role that Sharecare can play in helping Anthem roll out their digital capabilities. And we've got a great working relationship, and I think we're off to a great start.

Okay. All right. And then can you just remind us, just at a high level, like where the PMPM rates are now for your existing plans? And over time, what could that get up to?

Okay. Well, this is Justin. I'll start. It really depends, as we've talked about, Dave, on the size of the customer. So when we're dealing with large health plans, it could be in the $1 PMPM range, maybe even a little bit less depending on the size of the plan; to when we work with self-insured employers, it's often in the $2 to $3 PMPM. But I think you know our model is that's for a number of the front end: adjusting the claims data, risk stratifying the population and then providing incentives management, et cetera. We then identify those members and drive them into our digital therapeutics, which is often a much more significant PMPM. So we've talked about our DPP solution being an $800 product per year. So -- but that's been [ holding ] steady the PMPMs. But we're really excited now about introducing our advocacy program, and I'll let Jeff touch on that.

Well, yes, I think Justin did a great job. We sell our core digital platform. We have our digital therapeutics. And we see a range on our advocacy products of adding an additional $5 to up to $25 PEPM into the model. And that's what we're working on right now in our go-to-market of what's our [ concierge ] care management services and what's our custom advocacy solutions that offer even some more robust services that we think we're going to be able to uniquely offer because of the relationship that we have with Anthem.

Okay. Great. So not only is there, yes, the incremental life potential, obviously, the number of services that you can provide to your members could also increase that PMPM rate substantially from like $2 or $1 up to $5 or $10 or even higher. Okay. Very helpful. And then can you talk a little bit more about CareLinx? Like obviously, the whole market is moving towards these lower-cost channels of care, including home health. What exactly does CareLinx do, if you don't mind? If you could expand there, that would be great.

Sure. Sherwin, why don't you introduce yourself quickly to the group? Because I don't want [indiscernible] you anyway and answer that question, if you don't mind.

Yes. I appreciate that. Really excited to be here and the entire team is excited to be part of the Sharecare family. So the best way to be thinking about CareLinx is we've aggregated a network of 450,000 tech-enabled providers. And what we're really doing is serving as an extension of remote clinical teams primarily working with several largest health plans in the country. So they're having supplemental benefits, care management programs where they're paying on a PMPM basis, us going into the home to help the members with their activities of daily living, bathing, grooming, meals, transportation, med reminders, the real life needs of a member, which is getting the members to open up the door. Then while we're in their home, we're identifying true gaps of care and now that we have the physical labor in the home, we can identify those gaps of care and then close those gaps of care. While we're there, we're capturing over 170 data points on behalf of the remote clinical teams with real-time coordination with those care managers to just continue to keep patients at home which is the lowest-cost care setting avoiding unnecessary utilization of acute care and then eventually also post-acute care. So think about us as world continues and digital health continues to evolve and members really embracing telehealth. With health care moving to the home, you still need that physical support because as you go into the hospital, it's not the clinician that's providing the health care. It's the nurse. That's really bedside with that patient. That's what CareLinx is doing now as an extension of our enterprise clients being the eyes, ears and arms in the home.

Okay. So it sounds like you're like that last mile of care, you're in their home, you prevent those high-cost hospital admissions. It's exactly, I think, where the market is moving. Do you work with like telehealth vendors? So if somebody has a telehealth visit and they need some sort of service at home, you can basically fill that need?

We do have a partnership with like doctor-on-demand in -- like that's out there. But majority of the time, we're working with the enterprise care management teams at large health plans who have been trying to engage with their members through telehealth, RPM struggling to really engage with those highest-cost members, which have multiple comorbidities, functional limitations. And so how using us is a Trojan horse, going in and helping those members what their real life needs and then while we're there truly acting as an extension of the clinical teams that struggled through telehealth to engage them.

Okay. Great. And then, Jeff or Justin, can you maybe talk a little bit about the provider side of the business? Obviously, good momentum with Centene and Humana and Health Net and Anthem. How about on the hospital side, any progress there? I think there were 4,000 additional sites of care that you had -- the potential to sell into.

Okay. I'll start and Jeff can fill. We had a fantastic Q2, added dozens of new customers. So kind of that core business is -- has continues to organically grow at an impressive level. We are now making significant traction on the value-based care and payment integrity side of the business of land and customers here in the past 90 days that will be onboarded in Q3, and we expect a big uptick in those lines of business as we go into Q4. So real happy with the performance of the provider team.

Yes. I'd tell you we're also starting to see some great cross-selling, which I know we've talked about in the past, but we have 2 of our biggest health plans who have now bought our medical record retrieval services. that have both happened. So we're seeing great cross-sells. And as we've mentioned in the past, we see -- we have actually 6,000 -- over 6,000 clients is a great opportunity to turn those employers into members on our enterprise side. And so Emory, for example, is a recent win for us where their 25,000 employees are coming on as enterprise clients.

Okay. Great. And then just 1 or 2 more quick ones for me. I know that COVID was a bit of a drag in 2020. I think there was actually about an 8% revenue drag in '20. Any thoughts on what impact COVID had in the quarter or visits at hospitals and dock offices picking back up? And in my mind, that 8% drag should turn into an easier comp and become a tailwind going forward? Do you have any thoughts there, the impact of COVID in the quarter?

Yes. We don't look at it -- there was definitely a drag and as we've talked about, Dave, in 2020, some of the customers brought -- especially on the provider side of it, they brought those services in-house and other customers that we lost due to COVID haven't come back yet. So I don't see -- as we sit here today Q2, I feel like it's somewhat of a wash. Like we truly did 20% organic growth and 26% when you include the acquisition. Going forward, I think that some of those customers will come back, and you're correct that it will ultimately be a tailwind. But I think it's true 20% -- 26% growth quarter-over-quarter, and we expect to see a tailwind as we move forward.

Okay. And then just the last one for me. On the consumer side and on the Life Sciences side, just any color there on your expectations for digital ad spend for the fourth quarter and progress that you might be making on the life sciences side?

Yes. Our consumer division is doing great. As I mentioned, they -- not only are they driving revenue, but producing amazing content, winning awards, growing our social and Q4 is always our biggest quarter, and we feel great. We feel like people are going back to the doctors and digital marketing spends are up and where the quality play. And as cookies and other stuff start to go away, it's going to be a big deal that we have 108 million people and a first-party database to market to. So I think that's where you're going to see a big tailwind for Sharecare is like we have all this first-party data over 100 million people. And as advertising changes with cookies going away, that's going to be a big deal for us.

Okay. Great. And then just the last one for me. Can you talk a little bit, Justin, about the investments you're making in the sales force, and there's a little bit of pressure on EBITDA? Just any color there and your expectations as we head into next year?

Yes, definitely. And first, I would say that relative to the pressure -- number one, just as we laid out through our pipe process and the Analyst Day, et cetera, we are executing on growing our sales force. They have product and tech. And so we've made a number of new hires in Q2 to bolster that sales force. As you know, our target is 120 new sales -- in sales over the next 3 years, and we're tracking to that 40 this year alone. We also gave guidance that we'd hire an additional 120 on the product and tech side. We've been investing heavily. You'll see that in our product and tech growth from Q2 over Q2 of last year. So all of our investments that we said that we're going to drive to continue to drive our growth and profitability are well underway. And we don't see really pressure on our EBITDA because comparing it to last year is really an anomaly. Our guidance for this year was $6.5 million -- for this quarter was $6.5 million, and we exceeded that with all of those investments. When you compare it to last year for $7.9 million, we decided not to take the PPP loan. And instead, we furloughed employees, we cut back staff. We, as a management team, all took pay cuts. And so the EBITDA target year-over-year of 7.9% compared to this one is significantly higher than it would have been because we were taking steps to -- when we didn't take the PPP loan. I believe that, that 7.9% would have been closer to 4% to 5% last year, had we not taken all those cuts. So it's actually an EBITDA growth for us.

Okay. That's one of the things I like about your story, you're focused on growth and also earnings momentum. And longer term, you would still expect a 25% EBITDA margin. Is that still sort of the goal longer term?

Absolutely. Yes.

And we have a follow-up question from Richard Close with Canaccord.

Yes, Jeff, I was wondering if you could talk a little bit more about doc.ai. I know you mentioned -- highlighted it a little bit. But can you talk about how you're thinking about integration of that into the overall platform, where do we stand and what should we be looking for over the next couple of quarters in terms of how that gets blended into the overall platform?

Sure. Yes. So there's basically kind of 4 areas that we focus on, right, currently with doc.ai. And the first area is over delivering on Anthem because we have a large contract with Anthem. And so we're developing all this intellectual property around AI modules, platform we call Tonic, which looks at cost of care, smart Omix, which is our research platform. We've developed with them a back-to-work passport that I believe 900 employers have now adopted. I think I saw Bloomberg was the most recent. And so we have a host of intellectual property that we're developing at doc.ai that Anthem is buying this products as well as we're developing services, as well as we're using that team as kind of the backbone for the advocacy build. And so they're deployed on data engineering, engineering design, product and UX. So if you think about it in kind of 4 boxes, the first box is over-deliver for Anthem. It's a huge contract, and we work really well together. And we can then take those products and sell it to others. And then there's the Sharecare integration piece. And so again, a lot of things that we talk about when we make acquisitions is that we're not a collection of assets. We're a platform. And so there's a lot of work going on right now, like how do we take all their AI modules and build it into the core Sharecare platform. That will happen this year. So our clients will start to see the smart selfies and the medication selfies and the predictive models inside the Sharecare platform for our customers that will happen by the end of Q4 this year. And then the third area is really exciting for our consumer group, which is, how do we take Omix and accelerate and automate decentralized clinical research. And so they've built this really great product of what we're calling internally our operation work speed. So how do we accelerate research to care? And where that goes hand in glove is with our consumer division because we have all these life science clients. We do $65 million a year with pharma and biotech. And now we have this great new tech, and we've all been inspired by the speed of the vaccine being developed. And so we're starting to introduce that capability to our pharma clients. So this is going to be a huge new product offering for Laura, who runs our consumer division. And then lastly, it's just AI, everywhere all the time. And so how do we keep infusing AI into our core customer base. So the way -- what that looks like is we already have lots of data, right? We've got self-reported data, device data, claims data, SDOH data and medical record data. How do we put this on to Tonic, and so we can give our customers a view of what's the total cost of their population and what's the best next action. And so we can show them the data and then say, not only are we just identifying where the problem is. But now we're also giving you the Sharecare platform that we can customize to an individual level to make sure they go on the right road. And so if they go on the wrong road, it's going to have this kind of cost impact. If we can get them on the right road, this is the type of savings that could happen plus the outcomes. And so that's now becoming very regular in our sales presentations, and we expect to have similar success that we've had with Anthem selling those services to all our health plan clients.

That's really helpful. I was wondering if you guys could just talk a little bit -- I appreciate all the health security highlights and updates in the quarter. How are you guys thinking about the duration or sustainability of that type of revenue longer term?

Well, I think personally, I think health security is like cybersecurity, it's going to be here forever forward. And what we've done is we've stepped in and said, how do you step and repeat best practices and health security so that your employees and guests feel safe to return. And you need to tech enable it because it's not -- literally can't step and repeated in binders. And we've had -- of all the things we've developed in our career, this has probably been the most viral application. It's been deployed in 80 countries. I checked in a hotel in New York, and there was a Sharecare verified plaque at the front desk this week. And so it's been adopted in 80 countries. We were -- we did the first cruise ship that left America on the celebrity crews where Sharecare verify and live arenas. It generated over $3 billion in media impressions for us already this year. it's great brand building. It's tech-enabled. It's safety. It's affordable, if you're a hotel or an arena or hopefully soon schools. And I think it's going to be here forever. And I think it fits perfectly into our 3 pillars of community well-being, health security and resilience, which is our core platform. And the credibility that we get every time we put out a press release or somebody puts it out on our behalf that they've become Sharecare verified gives us a lot of credibility as we're trying to win these state accounts. And we mentioned that we got Michigan, Colorado and Arizona since the last time we spoke. I mean we're still -- we're signing contracts now, 2-year contracts for vaccine work that hasn't even started yet. And so we see this -- and then it's going to get into, can we be -- can we do this for flus and can we integrate with registry databases and you have the whole CARES Act coming. And so we think that this is going to be a core pillar of ours alongside our community well-being index and alongside our core platform.

That's really helpful. And just like on the hotel example that you just gave about you checking in, remind us how -- what the revenue model is on that in terms of, is that a onetime shot? It's my understanding that maybe that recurs on an annual basis or just help us there.

Yes. So for stadiums, it's an annual fee. I think it's like $25,000 to $50,000 per arena. And then for hotels, it's $2,000 per year. We've been pretty aggressive in rolling it out first year. One is the hotels were crushed, as you know, and don't have any money because they hurt so bad during COVID. But we partnered with Internova which pre-COVID was doing $40 billion in travel bookings. I think they're the largest or one of the largest companies in the world. And they sent out to 50,000 hotels mandating that they won't book at a hotel unless the hotel is Sharecare verified because all their -- they have 65,000 travel agents, and they were having to call all these hotels every time somebody wanted to book and say, hey, what's your COVID practice? And so now they could have a standard and say it's Sharecare verified. And so our goal is to get as many of those 50,000 hotels as possible onboarded, and then charge $2,000 per hotel per year. And that's not in any of our numbers, by the way, but it's not reflected in any numbers. But we think that's potentially very viable. And the hotels love it. As I said, they generated $3 billion media impressions with them putting out press releases about their Sharecare verification.

Yes. So it is a recurring model, just to address the last part of that question, Richard.

Okay. Congratulations again.

The next question coming from David Larsen.

One more quick follow-up here. With these wins that you've highlighted like with Centene and these 800,000 new members, the Health Net's Medicare line of business in California and Oregon, are those lives on the platform right now generating a PMPM fee? Or is it more of like a hunting license?

No, it will be a PMPM starting in January.

Congrats on a great quarter.

And I'm showing no further questions at this time. I would now like to turn the conference call back over to Mr. Jeff Arnold for any closing remarks.

Great. Thank you. I would like to reiterate to everybody, our appreciation for following joining Sharecare and joining the call today. I'd like to leave you just with a few key points. We have large enterprise clients that we've talked about today and we've put in our announcements that we're hyper-focused on penetrating. This is our, I believe, 18th acquisition. And what's great about Sharecare is we're profitable, and so we can take all this capital that we just raised and make smart acquisitions that help service our clients and our members. And so we intend to continue to be active in M&A as an example of what we did today. We have high revenue visibility. We 97% booked for the year. We're going to be going into 2022 in a very strong position. And we're going to be in that strong position because we think we have that scale tech platform. As I said, we're not a collection of assets. We're one platform that we've deployed in scale. And we have some really exciting initiatives that are coming to market. I think you can tell our enthusiasm about our multi-payer advocacy solution, our enthusiasm about our health security solutions and our enthusiasm about our community well-being asset. And we think that's going to create the perfect storm for Sharecare, our clients, our users and our investors, and we appreciate your time today and look forward to talking to you next quarter. Take care.

Ladies and gentlemen, that concludes our conference for today. Thank you for your participation. You may now disconnect.