Jack Wallace: Got it. Understood.
Operator: Your next question comes from Charles Rhyee with TD Cowen. Please go ahead.
Charles Rhyee: Yeah. Hey, thanks for taking the questions. Hey, wanted to touch on, you’re talking about bookings, and one of your key initiatives, right, is to have the bookings acceleration. You mentioned Integris at the start as an expansion client. Can you talk about sort of the focus of the sales force in this next period? Is it really trying to expand services with existing clients or is there a focus on getting new clients on board? And just curious, going back to an early question, sort of receptivity in health systems who have not yet really thought of an integrated platform for digital capabilities, how high is that on the priority list at this point? And so, is the focus more on clients that are already committed to this strategy going forward?
Ido Schoenberg: Hi, Charles, that’s a great question. The answer is both. Obviously, we have a very, very large installed base that is currently, even after migration, has a lot of room to grow in way of traction and additional solutions that we can offer through us and through third parties that we can resell to those customers. The demand and sophistication is growing almost daily. The appetite really depends on the type of the client. As I mentioned earlier, what’s high on payers’ mind is very, very different from health systems. Health systems are really focusing on savings and staff retention, while health plans have different aspirations as we tend to offering better outcomes for their clients and for their at-risk population through ownership of the member and better storage.
So, we are so pleased that most of our clients are on Converge and it’s going to only get better from here. So, this effort is winning. We know they are really, really happy. Our NPS is at all-time high. It sums up both patients/members and providers. The high 90s, it’s very, very impressive. So, that’s a great starting point to begin, as we discussed in the past, the dialogue of further expansion that are higher margin, and of course, will make our relationship more valuable, both for them and for us, and obviously more sticky. But there is a world — big world out there of additional systems and health plans and even governments that don’t use the Amwell. Typically, this entire market is very risk-averse. They are very, very careful. So, the value of the proof points, the referenceability of this enormous installed base that is now on Converge is our biggest asset.
And we certainly plan to expand to also new logos and begin the journey of starting with what they need today and with our future-ready platforms, telling them more as we go. We see those relationships as really life-long relationships. It’s not transactional. We are even hopeful and expect that some of the people that we lost during the re-platforming years are likely to come back as they discover the value of what we are offering today. But everything we discussed to bring us to profitability doesn’t require anything dramatic or herculean, on the contrary. It’s mostly based on what we already booked. It’s entirely dependent on the quality of our execution going forward and requires very, very realistic work by our market-facing teams. That’s not to say that we are not optimistic.
We are usually optimistic. We just don’t count on it to get to this very important milestone of profitable growth.
Charles Rhyee: That’s helpful. And maybe Bob, we think about the ’25 sort of revenue guide here, it’s kind of a step up of around $80 million. How much of that is really DHA? Because it sounds like with the enterprise expansion coming at the end of the year, most of that contribution falls into ’25. You’ve got to give us a rough sense perhaps of how much from government versus backlog from existing clients.
Bob Shepardson: Yeah. Look, Charles, I think the important thing there is a very high percentage, 90%-plus of that is contracted backlog. And I really don’t want to go into too much detail beyond that in terms of what’s associated with one client versus another. Clearly, this — our work with Leidos for the DHA is a big component of that. But the most important thing that I want to communicate about this 30% increase in revenues and 70% increase in adjusted EBITDA is that a huge amount of that is predicated on contracted backlog, inclusive of what we’re doing with Leidos.
Operator: Your next question comes from Jailendra Singh with Truist Securities. Please go ahead.
Eduardo Ron: Hi, guys. This is Eduardo on for Jailendra. Thanks for taking the question. On the comment of achieving breakeven adjusted EBITDA in ’26, I think you guys previously mentioned that you could get to breakeven on $400 million of revenues. Is that sort of indicating a ballpark of what you’re expecting for ’26?
Bob Shepardson: Yeah. I mean, look, we’ve updated, I think, everything from a few quarters ago. Our mix, I would expect, is more heavily weighted towards software than prior. And so that has a meaningful impact on our gross profit margin and what’s available obviously to cover operating costs. And so, the $400 million number I would view as kind of ancient history. And I think the important thing is that I’m really reluctant to — we’ve kind of gone long guidance here in ’24 and in ’25, and talked about what has to happen in ’26. It’s pretty clear that we’re guiding negative $35 million, negative $45 million on EBITDA, so that goes to $0 million-plus in the following year. I feel like we don’t need to put yet another number out there for top-line in ’26. But I think it’s fair to say that it’s lower than $400 million, given the change in mix that we’re anticipating.
Operator: Your next question comes from Eric Percher with Nephron Research. Please go ahead.
Eric Percher: Thank you. Bob, another question for you. I think you’ve flushed out the revenue side. I’d like to ask you to dig in a little bit more on the R&D commentary. And I think what I heard was a path to 25% to 30% reduction over time. Remind us how that kind of stair steps with Converge in getting to 70% of volume, what the step function reductions are? And then, what’s the last part that with DHA there is mitigation but that’s in the mid-teens? What was that mid-teen reduction?
