Ladies and gentlemen, thank you for joining us and welcome to the Hinge Health Second Quarter 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star 9 to raise your hand and star 6 to unmute. I will now hand the conference over to Bianca Buck, Head of Investor Relations. Bianca, please go ahead.

Good afternoon, everyone, and thank you for joining Hinge Health's second quarter 2025 earnings conference call. And our first is a public company. I'm Bianca Buck, Head of Investor Relations at Hinge Health. Joining me today are Daniel Perez, our co-founder and chief executive officer, Jim Pursley, our president, and James Budge, our chief financial officer. Since this is our first earnings call, we felt it important to have Jim join Dan and James to give a refresher on our go-to-market motion. Before we begin, I'd like to note that today's call is being recorded, and you can find all relevant materials, including our earnings presentation, on the Investor Relations section of our website. Today's discussion will include forward-looking statements. These statements reflect our current views and expectations regarding future events, including expected performance of our business, our future financial results, our business and growth strategies and future prospects. These statements also include our improved financial outlook for Q3 and full year 2025. All of these forward-looking statements are subject to various risks, uncertainties, and assumptions. While these statements represent our good faith judgment and beliefs, actual results may differ materially from those projected or implied during the discussion. Note that the forward-looking statements on this call are based on information available to us as of today's date. We undertake no obligation to update any forward looking statements except as required by law. For a detailed discussion of the risks and uncertainties that could cause our actual results to differ, please refer to our IPO prospectus filed with the Securities and Exchange Commission, as well as the Form 10-Q that will be filed next week. Additionally, during today's call, we will reference certain non-GAAP financial measures alongside our GAAP results. Revenue will be discussed on a GAAP basis, while all other measures will be measured on a non-GAAP basis. These non-GAAP measures should be considered as supplemental to, and not a substitute for, our GAAP financial measures. For reconciliation of certain of our non-GAAP to GAAP measures, please refer to our earnings release. With that, I'll now turn the call over to Dan for his opening remarks.

Thank you, Bianca. Welcome, everyone, to our inaugural Hinge Health Earnings Call. I'm excited to share our second quarter results and business update. Let me outline what we'll cover in our remarks. First, I'll provide a high-level financial snapshot of our second quarter performance and give a quick overview of our business. Second, I'll discuss our product updates, including some core product enhancements, an update on our AI efficiency initiatives, and the exciting announcement of Hinge Select, our high-performance network of in-person providers. Third, Jim will provide a commercial update, including our recent sales momentum. Fourth, James will go deeper into our financials and provide our formal guidance. Finally, I'll return to wrap up with our strategic outlook and long-term vision, and then we'll open it up to questions. Let's dive in. First thing, I'm pleased to report that Hinge Health delivered an exceptional second quarter, delivering profitable growth and demonstrating strong momentum across all key metrics. Revenue for the second quarter was $139 million, up 55% compared to $90 million in the same quarter last year. Our non-GAAP income from operations was $26 million for a 19% non-GAAP operating margin. Moreover, we generated $33 million of free cash flow for a free cash flow margin of over 23%. Our last 12 months calculated billings reached $568 million, also up 55% year over year, compared to $368 million in the prior year period. As a reminder, our last 12 months calculated billings is a leading indicator for our revenue. This strong performance was driven by higher eligible lives from both new and legacy clients and better than expected enrollment yields, resulting in increased members and billings. James, our CFO, will go into more details about our financials, but we're proud about these results. We believe they underscore the strength and momentum of our business. Now, since this is our first earnings call as a public company, I'd like to take a moment to remind those new to our story what makes Hinge Health special and why we're so excited about the opportunity ahead of us. At our core, HingeHealth is automating healthcare delivery itself, starting with musculoskeletal conditions, or MSK. We've built a comprehensive platform that combines AI-powered technology, a proprietary wearable device, and expert care to deliver personalized, evidence-based treatment that can help members decrease their pain and improve quality of life, all while reducing healthcare costs for clients. What sets us apart is our approach to scaling healthcare delivery. We've reduced human care team hours associated with traditional physical therapy by approximately 95% through automation, which allows us to reduce healthcare costs for clients while improving members' health outcomes and satisfaction. Our platform isn't just about digitizing existing processes. We believe we're fundamentally reshaping how care can be delivered more effectively and efficiently. The market opportunity before us is significant. MSK spend in the U.S. reached $661 billion in 2023, and we believe that over $70 billion of that is spent on physical therapy. Because MSK treatment has historically been procedure-driven, it consistently ranks as one of the top three healthcare spend categories for employers. Our clients partner with us because we deliver on healthcare's triple aim, enhancing the member experience, improving member outcomes, and reducing costs. To put this in everyday terms, think about someone suffering from chronic back pain. Traditional care often means waiting weeks for an appointment, traveling to multiple providers, and following a one-size-fits-all treatment plan. With HingeHealth, that same person can start their personalized care program within minutes, right from home, receive real-time feedback through our AI-powered motion tracking technology, and connect with the care team when needed, all while their employer saves on healthcare costs. We've built an efficient go-to-market motion and realized early on the benefits of key partners, health plans, pharmacy benefit managers, or PBMs, third-party administrators, or TPAs, and others. We now have 50-plus partners, many of whom have selected us as a preferred digital MSK solution, including all five of the largest national health plans by self-insured lives and the three largest PBMs by market share. This means the vast majority of our enterprise as prospects yet to buy Hinge Health can turn us on without having to go through lengthy contracting or IT security review, which is a big pain point in healthcare. We believe these partnerships differentiate Hinge Health as we seek to be one of the easiest solutions to buy and implement. This combination of accessibility, effectiveness, and cost efficiency has resonated strongly with both our members and clients, positioning us to capture a significant share of this growing market. And as we look ahead, we see significant potential to expand our impact and continue automating the delivery of care. Let me now turn to our recent product innovations and enhancements. We're headquartered in San Francisco, so we're very focused on tech-driven innovation. Over the past three years alone, we've launched our women's pelvic health program, fall prevention program, multiple iterations of our Enzo pain management device, breakthrough AI-powered motion tracking technology, and our menopause program, among other products. Three key product investment areas in 2025 worth mentioning include core enhancements, AI efficiencies, and hinge select. Starting with our core product enhancements, we've made significant improvements to our AI-powered motion tracking technology, or true motion. We've introduced more variety to our exercises and enhanced 3D visualizations, including our new smart skeleton feature. This shows members a detailed view of their spine curvature and provides more dynamic movement tracking, making at-home exercise more intuitive and effective. We've also streamlined how new members start with our program, making it easier to begin their care journey. This has led to more people successfully joining our platform and starting their care. Additionally, we found new ways to reconnect with members who haven't used our platform in a while. We implemented various strategic campaigns and product nudges, showing these members our latest features and expanded offerings, which has successfully brought many of these members back to continue their care. Overall, members are more engaged and satisfied with our platform year over year, and we hit our all-time high in member NPS in the first half of the year. These enhancements also have the benefit of driving our high client retention and improving member enrollment yields. Now, beyond our core product investment areas, we've also seen meaningful efficiency gains across the company from our AI initiatives, benefiting both margins and scalability. As just one tangible example, our proprietary generative AI-powered care team assistant, which automates routine tasks like message drafting and reviewing clinical histories, continue to improve this past quarter. We reduce the average time it takes our care team to respond to members by 16% in Q2 compared to Q1, and by 47% compared to a year ago, freeing up time for deeper interactions. Finally, I'm excited to discuss Hinge Select, our new high-performance provider network we announced in June that complements our digital MSK solution, delivering a truly unified musculoskeletal care experience. Think of Hinge Select as a carefully curated marketplace that connects our members with high quality in-person providers for services like imaging, physical therapy, injections and more, all at up to 50% below typical insurance rates. We are moving towards a future where healthcare delivery itself will be automated via software and connected hardware, but many aspects of care still require in-person providers. Any care that cannot yet be delivered by our technology will be directed to vetted in-person providers designed to provide consistent evidence-based supports every step of the way and to ensure that care is coordinated, high quality, and cost effective. We expect that most members will begin with our flagship digital program, but for those who may benefit from an in-person encounter, they'll be routed using technology to a hinge-like provider and in many cases continue the remainder of their care digitally. This solution is intended to create value for everyone involved, members, employers, providers, and payers. Members can get access to high-quality in-person care at low or no direct cost to them. Employers could benefit from reduced healthcare spending and better outcomes. Healthcare providers can get streamlined workflows, faster payments, and more focused patient referrals. And our health plan partners are particularly excited about the ability to combine their existing networks with Hinge Select to create a better experience for members at a lower cost. We are starting with a limited pilot in late 2025, which we expect to be followed by a broader launch in 2026. We've already secured contracts with providers across more than 2,100 locations as of the end of Q2, with many more being signed in Q3 to date. We have several large early client adopters. While we don't expect meaningful revenue impact until 2027, Hinge Select represents an important opportunity to improve member outcomes and client ROI while increasing yields and adding a high margin revenue stream for us, as we'll recognize a percentage of their medical claims as net revenue. We're incredibly excited about this new offering and its potential to allow us to deliver end-to-end care in MSK. With that, I'll hand over to Jim Persia, our president, to discuss our commercial updates.

Thank you, Dan, and thanks everyone for joining. I'm excited to share our commercial progress and market momentum with you all today. Our value proposition continues to resonate strongly with clients, as evidenced by our consistently high client retention rates. As a reminder, we operate on an enterprise-focused subscription software model, where we only generate revenue when members actively engage with our platform. This alignment of interest has proven particularly compelling for employers seeking to optimize their healthcare spend while enhancing employee benefits. We have developed an efficient go-to-market model by working directly with our partners and clients. Our clients are primarily self-insured employers and include many of the nation's leading enterprises across a broad range of industries and sizes. Within this segment, we also serve many public sector self-insured employers, such as state, local, and city governments and labor unions. In most instances, we partner with the client's health plans, TPAs, PBMs, or other ecosystem partners to reduce the friction of contracting, procurement, security and IT reviews, implementation, and billing. As of the end of Q2, we had over 50 partners, including the five largest national health plans and the top three PBMs. We're also in the early stages of expanding to serve health plans, fully insured and Medicare banished populations, as well as federal insurance plans. We've seen good traction in these segments over the past couple of years. Before diving into our key priorities, I want to remind everyone about our typical sales cycle. The majority of our clients enter contracts with us in the second half of each calendar year, aligning with typical employee benefit enrollment periods. Most of these clients then launch in the first half of the following calendar year. This creates a natural rhythm to our business, where the first half focuses on launching new clients and building pipeline, while the second half represents our peak sales season. Given that, the first half of 2025 has been focused on two key priorities, successfully launching our clients one in 2024 and building a robust pipeline for the second half of the year. I'm pleased to report strong execution on both fronts. Our new client launches have exceeded expectations, with eligible lives coming in higher than anticipated, which contributed to our financial outperformance this past quarter. Our sales momentum is equally encouraging. We've signed more lives in the first half of 2025 than in the first half of 2024. We had 2,359 clients contracted as of the end of Q2, up 32% compared to Q2 2024. On the competitive front, we're feeling as confident as ever. Our win rate remains strong and has increased year over year. While early in the sales season, looking at our 2025 wins, we're seeing particularly robust growth in our large employer enterprise and public sector segments. Our fully insured and federal programs are also showing promising momentum. Recently, we validated our value proposition in the fully insured space through a new ROI study. This study analyzed medical claims data from nearly 4,800 health plan members and was validated by Gallagher, a leading global insurance brokerage, risk management, and consulting firm. It showed an average savings of $2,343 per member per year and a 2.4 times return on investment. The study found meaningful cost savings from reduced utilization across a spectrum of healthcare services, including injections, physical or occupational therapy, with the majority of claims reduction, 44%, coming from avoided surgeries. This becomes our fifth large-scale claims-based study, further reinforcing the significant value our platform delivers. This past quarter, we also significantly expanded our program's reach across Europe and launched in five new countries, the United Kingdom, France, the Netherlands, Ireland, and Germany, building upon our existing presence in Canada. In each of these markets, we've met Europe's strict privacy and regulatory requirements, launching as a class one medical device. As a reminder, we're currently focusing on U.S.-based multinational corporations with employees abroad, rather than building separate sales and care teams in these countries. This approach helps us better serve large corporations with global workforces. In the future, we expect to work with payers directly in those countries. As we look ahead to the second half of 2025, we believe we are well positioned to capitalize on our strong sales pipeline and continue our growth trajectory. The combination of our proven ROI, enhanced product offerings, and expanding market reach gives us confidence in our ability to maintain our leadership position in the MSK care space. We're now entering the height of our sales season, and the next two quarters will be important in shaping our 2026 performance. While the momentum is encouraging, it's still early, and we remain focused on discipline execution and converting our pipeline into contracted lives. Now, I'll turn over to James, our CFO.

Thank you, Jim. Before digging into the numbers, let me start by reminding everyone about our billings model, which is driven by three key components. Eligible Lives, Yield, which is our conversion rate of eligible lives to active members, and Average Price per Member. I'm pleased to report strong performance across all three of these components this quarter, resulting in strong billings. Our last 12 months calculated billings reached 568 million, representing a 55% year-over-year growth compared to 368 million in the prior year. This outperformance was driven by higher-than-expected eligible lives across our client base, and stronger-than-expected member yields. Average prices are coming in about as expected. On the live side, we saw higher-than-expected numbers from both new client launches and organic growth within our existing client base. For yield, we saw improvements in both newly launched and legacy clients. Our broad and targeted marketing campaigns performed well, and we're seeing particular strength in our newly diversified channels. As an example, one of several of our product-led growth initiatives doubled conversions year over year in the first half of 2025 for that specific channel. Regarding the average price, we are now two quarters into our new utilization-based pricing model and are seeing strong evidence supporting ASP parity with our previous model, and we remain optimistic on the upside potential of this new model. About 40% of our eligible lives opted for the new pricing model by the end of Q2. Our billings momentum translated into revenue of $139 million for Q2, representing 55% growth compared to $90 million in the same quarter last year. Our non-GAAP gross margin improved to 83% from 77% last year, driven by operational efficiencies across our care team, hardware, infrastructure costs, and the successful mitigation of tariff risks. We saw meaningful leverage across all three operating expense categories as we continue to scale. On a non-gap basis, sales and marketing expenses as a percentage of revenue decreased to 36% from 48% in the prior year period. We benefited from strong marketing efficiency driven by favorable channel dynamics, lower than expected acquisition costs, and strong conversion rates across our funnel. Research and development expenses declined to 16% of revenue from 27% last year, while G&A expenses improved to 12% from 18% in the prior year period, despite increased costs to operate as a public company. This translated to our non-GAAP operating margin reaching 19%, a significant improvement from negative 16% in Q2 2024, reflecting continued discipline across all operating units. We've leaned into utilizing various AI tools as an organization, particularly within R&D, which is helping us become more efficient while maintaining headcount. Our free cash flow was $33 million, which represents a free cash flow margin of over 23%, compared to 16% in Q2 2024. This increase was driven by our strong billings growth, an improvement in our collections operations, and improved operating efficiency. We ended the quarter with $415 million in cash and investments, down from $473 million at the end of Q1, primarily due to IPO-related activities, which were partially offset by the $33 million in free cash flow generation. As a reminder, our IPO offering was a mix of secondary shares and primary shares, where we used the primary share proceeds of the IPO to pay withholding taxes on our rsu settlements we ended q2 with 95 million fully diluted shares inclusive of the outstanding preferred stock the weighted average share count for non-gap purposes this quarter is not a meaningful indicator given the timing and impact of our ipo these q2 results reflect the fundamental strength of our business model and our ability to drive both growth and operational efficiency as we look forward based on our strong first half performance i'm pleased to announce our financial expectations for both the third quarter and full year 2025. For Q3 2025, we expect revenue to be between $141 million and $143 million, representing 41% year-over-year growth at the midpoint. For the full year 2025, we expect revenue to be between $548 million and $552 million, also reflecting 41% year-over-year growth at the midpoint. We expect non-gap income from operations to be between 17 and 21 million for Q3, or a 13% operating margin at the midpoint, and between 77 and 83 million for the full year 2025, or a 15% operating margin at the midpoint. This guidance reflects continued operating efficiencies across the board. That said, we plan to lean into our first half momentum by reinvesting in hinge select and sales and marketing to further drive strong top-line growth, especially with a significant number of lives still left to close. These improved expectations are primarily driven by the strength we saw in the first half, particularly in eligible lives, performance, and yield improvements. While we're seeing strong traction on both metrics, the performance has been driven more by higher-than-expected launched eligible lives, and we're confident in our ability to maintain this momentum. them. As we look to the second half of the year, it's important to remind everyone that we face more challenging year-over-year comparisons due to last year being unusually back-end weighted in terms of billings, with its corresponding revenue distribution across the year. The fourth quarter of 2024 was particularly strong due to effective product and marketing initiatives we launched at that time. Q4 traditionally sees lower member conversion rates versus the first three quarters due to the holiday season slowdown, so we typically deploy fewer member touch points during this period. We've aimed to be thoughtful about our guidance, taking into account market conditions, including recent developments in tariffs and the associated market exposure. What's particularly compelling about our business model is its resilience across economic cycles. During challenging economic times, we typically see increased demand as employers look to control costs through our proven roi model conversely when the economy is strong our platform may serve as a key tool for employee retention and satisfaction in terms of shares outstanding our diluted weighted average shares should normalize with our fully diluted share count in q3 we're anticipating a range of 95 to 96 million shares by the end of q3 which includes the outstanding preferred shares finally as a reminder our ipl lockup has a 90-day post lockup provision that allows for the release of up to approximately 2 million shares if the price has exceeded 120% of the IPO price for a certain period. Given current trading dynamics, we are likely to hit this threshold, with the additional 2 million shares becoming free to trade on August 19, 2025. We intend to announce our early lockup release on a Form 8K, and these shares are held by our employees and service providers and exclude directors and officers. With that, thank you all for joining. Remain confident in our business trajectory. and look forward to sharing more updates in future quarters. I'll now turn it back over to Dan to wrap it up.

Thank you, James. Before we open the call for questions, I want to emphasize why we're optimistic about Hinge Health's future. Our business fundamentals, reputation with our clients, and member experience have never been stronger, with exceptional progress across the board for the first half of this year. Our product innovation continues to accelerate, including True Motion, where we launched a ton of new exercises, our AI-driven efficiencies, and the announcement of our high-performance in-person network, Hinge Select. These advancements, combined with our strong commercial execution and free cash flow, give us confidence to continue playing offense. What truly excites me is that we are just beginning to scratch the surface of our potential. The MSK market represents our initial focus, but our vision extends far beyond. We're building a new healthcare system that leverages technology to automate care delivery itself, transforming the member experience, improving member outcomes, and reducing costs for clients. The success we've demonstrated in PT itself, a $70 billion market, we believe, provides a lot of runway and a blueprint for potentially automating other areas of healthcare delivery in the future. As I mentioned in my IPO letter, healthcare remains one of our economy's last redoubts of manual labor. We have a century of work ahead of us in applying technology to automate care delivery itself, and we're moving with urgency to capture this opportunity. We believe that our double-walled moat combining technology, innovation with preferred access to clients provide us with a strong foundation for sustained long-term growth. Now, while we're proud of our quarterly results, we have a lot of work ahead. Healthcare is hard, but we have the team, the technology, and the stamina to realize our vision of automated delivery of care. With that, I'll turn it over to Bianca for Q&A.

Thank you, Dan. Operator, we're now ready to open the line for questions.

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, please press star 9 to raise your hand and star 6 to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Sakit Kalia with Barclays. Your line is open. Please go ahead. Okay, great. Hey, guys, can you

hear me okay? Yep. Yeah. Okay, awesome. Well, hey, thanks for taking my questions here, and congrats on your first quarter as a public company. Thank you, Sakit. Absolutely. Dan, maybe for you just to start off, you know, I think one of the important channels that you have here is the health plans and PBMs, as you referred to in your prepared remarks. Maybe the question is, what are you hearing from them about sort of casting a wide net to their end customers in MSK, and also what they're thinking about as they think about other sort of other products outside of MSK and physical therapy from Hinge, that is? Great question. So look, when a health plan

approves one of our products, they go through like an 18 to 24 month evaluation process, and they look at all the other digital MSK solutions out there on the market. And so the fact that 50 plus partners have selected us as their preferred partner, most of them as their preferred partner, shows that we are consistently performing above anybody else within digital MSK because they are so methodical and so thoughtful and so thorough in their evaluation process. And so when they do select us, it's frankly because they believe in the outcomes we're driving, the experience, and especially in our ROI. And so when they bring us to their self-insured book, it is because of that belief. And they believe their book of business will benefit from our product. Now, we at Hinch Health, we take that trust very seriously. And as we develop new products, we're able to leverage these relationships that we have, but we still have to demonstrate we are improving outcomes, the experience, and reducing costs with any single one of these products that we bring to market. But the fact is, we have a track record of doing just that. And that's earned us a lot of trust with our health plan partners and a lot of credibility with employer customers. When one of our health plan partners brings us to an employer, they know, oh, actually, I've been speaking to my peer at this other company. They've deployed Hinge. We'd love to bring this on as well. And it makes our health plan partners look good. And again, we had a 98% lower retention in 2024. So we have a track record of building products that truly deliver the triple aim. It's earned us that trust. And because we have an intellectually honest approach to our product development, we will only sell products that we believe work. And our health plan partners appreciate that. Our employer customers appreciate that. We're going to keep it up. We're very excited to surprise you with some of the new

products that will be landing in 2026. Well, that's great to hear and definitely look forward to it. James, maybe for my follow-up for you, can you just talk a little bit about that new pricing model? Just remind us, how different is it compared to sort of our traditional pricing model, and what impact or opportunity does it maybe have as we think about that becoming

more prevalent? Yeah, thanks, Zach. Let me just give you a couple details, and then I think Dan might want to just add in a few bits and pieces here as well. So just as a reminder, we're at about, by the end of Q2, about 40% of our clients have moved to the new pricing model rather than an upfront fee that gets amortized over time. It's more of a pay as you go with a platform fee upfront. So a lot of our clients have opted to go that direction. We think it'll even get a little bit higher than 40% over the coming two to three quarters. And on the pricing side of the ASP, it's about at parity right now through the first half of the year. And we expect that to continue as we move through the balance of the year. Yeah. And I'd say, Zagat, there's

really historically been two sides to our growth coin. It is adding lives that is increasing the amount of people who have access to our product. And the second bit is increasing the enrollment from those lives that have access to the product. To date, ASP has not been a meaningful contributor to our growth. It's just been flat. With this new pricing model, it can be. First things first, Although the new pricing model means we're much more accountable for delivering a product that engages our members, is delightful, and of course, improves outcomes and reduces cost. This year, we are focused on a flat ASP. But as we continue to deliver, and last year, we had record engagement in the first half Again, we had record engagement on a per-member basis. We will allow us to earn the right to have a higher ASP, and we like betting on ourselves.

Very clear. Thanks, guys.

Your next question. comes from the line of Brad Stills with Brank of America. Your line is open. Please go ahead.

Hey, guys. Can you hear me okay? Yes. Okay, wonderful. Thanks, guys. And I'll give the congratulations on a nice quarter out of the gate here post the IPO. I guess, you know, Daniel, when you kind of step back here and you take a look at, you know, what drove the upside in eligible lives, what would you attribute that to? And I guess the same question on yield. And, you know, just taking a step back, it sounds like new customer signings was good, expansions were good within the existing customer base. But I guess what are the underlying drivers here that you would say on the demand side or the product side?

Sure. I'll let Jim take the first part of the question around what's driving our increased lives above expectations. And I'll take the second part around our increased enrollment deals.

Yeah, I think first and foremost, the strength of our product, the investments that we've made in product. Again, as you heard Dan mention earlier, a delightful experience that's driving both clinical outcomes and a measurable ROI, I think, is really the backbone of that lives growth. Things like offering choice in the engagement pricing model, as well as new product offerings that we've rolled out, has also been very attractive and well received by the market. And so I think that really is the underpinning of the new lives growth.

And by the way, with the question of new lives, our win rate remains exceptionally high. And so we're in an overwhelming majority of head-to-head deals that we have with others. And our health plan partners, TPA and pharmacy benefit managers still make us the easiest, we believe to be the easiest solution to buy for enterprise customers. And that's really been reinforced. Now, with regards to our enrollment yields, our member enrollment agent is one of our secret sauces, one of the most important capabilities a digital health company needs to build. And we leverage various amounts of proprietary data we have access to and couple this with quite a bit of predictive analytics and just a best-in-class consumer-grade growth techniques. And we're constantly experimenting and refining our targeted enrollment as well as our conversion methods. And we had a ton of wins this quarter. And so it's not just one initiative, which we like. It's a combination of a bunch of singles and doubles that we're able to land, none of which are – or many of which are not yet done in their – or fully optimized. And that's what we like. We like to have a portfolio approach of many different ways to build awareness within our member base so that more and more people start enrolling in Hinge and remain engaged with us over a longer period of time.

Super exciting. Thank you so much. Maybe one more follow up if I could, James, for you, please. You alluded to some efficiency gains here on the AI side with developer productivity. Would love it if you could elaborate a little bit there. Where are you applying AI and what does that mean for the future cadence of release here as you guys look forward to the roadmap?

Yeah, maybe just to reinforce some of the numbers we shared down to 16% of revenue, which is almost at our target model for where we want our R&D spend to go. And yeah, AI has certainly been a big story behind that. As far as some of the initiatives, I'll let Dan kick in on that one.

Yeah. And so we are making an incumbent on every team at Hinge Health to apply AI to improve their efficiency, not just in R&D, but in finance, in our HR team, in our operations team, in our customer support across the board. And some teams simply have more mature AI tools with which to avail themselves with. And certainly our R&D team, I mean, it is a new dawn right now when it comes to building product, particularly tech-enabled products, and things are moving faster than even we anticipated 12, 18 months ago. And so me and my co-founder, Gabe, we are hands-on, particularly Gabriel. He has taken the wheel as my co-founder, and he is driving personally from the founder level AI adoption across our R&D organization. And we are measuring, you know, how many of our engineers are using AI tools to build their products. We are having trainings with our PMs and our designers to ensure they are adopting AI products. And it's meant that just across the board in R&D, we are shipping faster at a higher quality and landing on the target more and more frequently. And it's really exciting because when you could ship more, you could take more risks and you could take more shots on goal. And that should be benefiting the entire funnel, both, you know, top of the funnel from enrollment through engagement and re-engagement. But it's not just that where AI is driving efficiency. The other big area or domain where there's a lot of low-hanging fruit outside of just developer efficiency is in our care team efficiency. And so we are applying a lot of brain cells towards putting our AI tooling in place for our care team, because what's exciting about that is that we could make our care team interactions more personalized, quicker, more convenient, as well as lowering costs. So to put it in perspective, while we improved our efficiency in several of our care team metrics by about 15 percent quarter over quarter in terms of their speed or their efficiency and throughput for messaging members and about over 45 percent year over year, our NPS hit an all time high in the first half of the year. So what we're seeing is that not only are we becoming more efficient in how we engage our members, they are loving the product more than ever. And that's really exciting. And their engagement as well, their usage of the product was higher this year than it was last year, too. So we're able to balance the efficiency while improving the experience for our members, which is the true win-win that we're aiming for.

Super exciting, Daniel. Thanks so much. Thank you.

Your next question comes from the line of Craig Hattenbach with Morgan Stanley. Your line is open. Please go ahead.

Yes, thank you. A question on partnerships. Understanding Hinge Select is in kind of pilot stage. Just curious, kind of the partnership feedback in terms of what you're bringing to the table for these partners and how excited they are for it. And then you also had a partnership with Progeny. I know you already have a lot of momentum in women's health, but just kind of what that means to kind of building on that momentum on the women's health side. Great question. And so

So with regards to health plan partners and their perspective on Hinge Select, you know, our high performance network is designed to be complementary to a member's existing health plan and provider network. Members continue to have full access to the current network and coverage. We'll also have been benefiting from our Hinge Select high performance network. And this integration makes it easier for members to access high value MSK care, typically with much lower out-of-pocket costs and minimal barriers to care. And by combining the strengths of a member's existing network with the integrated care of Hinge Select's high-performance network, we could deliver a lot greater convenience, additional choice, and lower costs. And so our health plan partners, we've had really positive discussions with them about bringing this blended network to their employer customers, and even potentially to several are discussing as for their fully insured lives. And so we're really excited about the momentum we have with our health plan partners. And I'll let Jim talk about the partnership with Progeny.

Yeah, so as we bring new products to market, like Women's Pelvic Health, we look for partners that are complementary and accretive to our efforts. We look for market leaders who, again, are not just accretive from a product standpoint, but also to our brand. And so Prodigy would be a good example of that. And so it's another organization from a lead gen perspective, also as a way to engage our members, maybe as they're coming into their healthcare journey from a different angle or through a different door. It gives us one more touch point to reach and engage members when and where they need us most. And so a project would be a great example of that. One of the market leaders in women's health and has been a great early partner to us since launching that.

Great. Just a follow-up question beyond kind of the core self-insured market. Any anecdotes you can share in terms of inroads you're making in fully insured in the MA markets as well?

Yeah, we're seeing great progress outside of ASO. We're seeing a lot of strength in our government business, our federal employee business. We're seeing strength in our labor markets, as well as fully insured and Medicare Advantage. As we've discussed previously, we think this is a really exciting growth area for us. And while we're in the early innings, we're seeing some really strong signals and some nice ROI being generated in these new markets for us. So stay tuned more to come there, but, you know, a really strong start. Great. Thank you.

Your next question comes from the line of Jaylindra Singh with Truist Securities. Your line

is open. Please go ahead. Thank you. Can you guys hear me okay? Yes, we can. Great. Congratulations on your first earnings call as a public company and a very strong quarter. So my first question is with respect to the 2026 selling season, some nice momentum there. I was wondering if you could spend some more time there in terms of any trends emerging this year in terms of what clients are looking for, either in terms of their preference for bundled offering versus pricing model versus how the benefit is being structured. And related to that, can you give us a number on how has been your win rate so far this

Yeah, thank you for the question, Jalindra. And so we're just entering the heart of our sales season now. So we have to acknowledge that we're early in the heart of our sales season. And but what we're seeing is strong demand fueled by a couple of things. One, MSK costs still are, you know, a top one or two cost driver for the bulk of our clients. So they have to solve the cost issue, you know, from a bundle perspective, you know, you hear a lot of commentary about that in the market. But in reality, most of our buyers looking for best in class solutions, as you've heard Dan mentioned before, we have the benefit of being both. We have the benefit of both being the strongest product in the market to address MSK outcomes and costs, but we also are the easiest to buy through those relationships with the health plans and the PBMs and the TPAs. So we are able to, if you will use the word bundle, but the reality is most clients are still looking for that best of class solution that's really going to solve their problem to the greatest extent possible. And those are some of the kind of macro forces that we're, some of the tailwinds that we're experiencing right now as we enter the heart of our sales season yeah and just to add on to that

we do sometimes hear from like surveys and this and that that employer clients are looking to buy several solutions across disease categories from a single provider but they're a single vendor partner but their actual behavior shows that they still want a best-in-class cardiometabolic solution still want a best-in-class mental health solution still want a best-in-class MSK particularly for their top cost drivers. And the fact is that musculoskeletal, the TAM, is just so large. And in order to capture it, it does require a lot of focus. And we have remained very focused. And even this, a relatively small portion of MSK, which is physical therapy, is still $70 billion market. And so we are really focused on capturing this, what we believe to be a $70 billion market. And we have a, you know, $500 million run rate behind this growing really fast, but a lot of

runway left. And then my follow-up is on the yield improvement you guys called out in both newly launched and legacy clients. Maybe talk about some of the key drivers there. You kind of touched in pieces, but just give us a little bit more kind of concise there, like why, what has been driving that? And can you frame the magnitude of difference between the improvement between the two set of clients? And related to that, maybe touch on if Hinge Connect is having meaningful impact on yields or is that still ahead of us um great yeah so i just want to make

sure i catch a catchy component so with regards to our our yield improvements between existing and new customers we're not breaking that out here um but uh we've had very consistent yield improvements across the board for for both new and existing customers and we haven't seen a material difference though by the way so i i'm not um not sharing that with it because i don't i don't want of there being much of a difference. And with regards to, you know, what we're doing to improve yield. So it starts with both an enrollment yield starts with, you know, how can we better target members who need our services? Sometimes when people have a musculoskeletal care episode, it could be episode limited, you know, they sprained their ankle, they had a flare up in their back pain after they're horsing around with their kids, or they twisted their knee playing basketball. And how can we get better at identifying people when they're early in their in their care episode, but also building our brand within any given employer base or member base so that they think about us when they're in pain. And that's one of the key reasons why we expanded with our Hinge Select in-person provider network, Jalander, because with our in-person provider network, we're able to offer in-person physical therapy, we're able to offer joint injections, we're able to offer imaging, we're able to offer doctor visits. And now for a member, no matter what may be ailing them with regards to their back, joint, or muscle pain, they could see as their one-stop shop for their orthopedic care needs. And I don't have to think, well, you know, Hinge does a digital PT, but I kind of need someone to see me in person. Or I really think I need an MRI first before I go see Hinge out. Now they could, you know, that kind of dissonance could go away. And Hinge is my one-stop shop for anything related to MSK, both in-person and digital And we think that's going to really improve our yield both for digital care, but of course we're going to capture additional yield for in-person. Now, with regards to HingeConnect, this allows us to both integrate with EMRs as well as get quite a bit of claims data as well. And that is ramping up. Focusing on the claims data, we're ramping that up quite substantially. And it really helps when you have so many dozens of health plan partners because that's where you're getting a lot of the data from. And we know when we enroll somebody who's had a prior musculoskeletal claim, our ROI goes up. And so we know these are what we call internally ROI-rich members, and we want to be able to spike our member base with ROI-rich members, knowing that that's going to increase our client retention overall and drive up the points that we get with regards to our ROI. When members sign up, we have north of 90% of them, I think, you know, plus or minus five, I think it's closer to 95% of members, allow us to then integrate with their EMR. And that means that we could monitor their care over time. And in case they become a higher risk member, say they get referred for an MRI or do a surgical re-referral, we're able to follow up with them. And that actually comes post-enrollment, but it allows us to capture members who are trending towards a high cost. And these are some of the reasons why we have such a high logo retention. Thanks, guys. Congrats again. Great question, Jalindra.

them. Your next question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is

open. Please go ahead. Hi, guys. Thanks so much for the question, and congrats on your first quarter out. It's great to see this. I had a question. I wanted to double-click a little bit more on Hinge Select. Can you talk a little bit more about the business model? I know you said it wasn't really a big contributor until more like 2027, but how do you sort of think about that from like a business model perspective. A few more details on that would be very helpful.

Thank you. Great question. So we are very excited about the Hinch Select's potential. So we're taking a measured approach to the rollout. We'll begin a limited pilot here in late 2025, followed by a broader rollout in 2026. And again, for those tuning in, it might not be as well, Hinch Select is our in-person provider network. For revenue impact, as you mentioned, we expect minimal impact through 26 with more meaningful contribution happening in 27. And we think Hinch select is a great way for us to improve the member experience and just augment that ROI for our clients. For the business, it'll help us capture more individuals. As mentioned earlier, it allows us to stretch the brand beyond physical therapy to a member's one-stop shop for any orthopedic care need. And for the in-person network that we're assembling, the business model is we're going to take a certain percentage rate on the claim as an admin fee, and then ultimately report that as net revenue. And we'll be better positioned to quantify the financial impact if we gather more data from our pilot program but even for you know we're launching into our own employees because we're we're self-insured just from the interest from our own employees to access the network we're really excited about the the member demand for this as we had you know hundreds and hundreds of our employees dialing into our own internal webinar one of the most popular benefits

we've ever launched i might i just oh sorry i'm just gonna add the has been has been tremendously positive. I think the market understands it. I think it's intuitive to them. I think this idea of unified care, the elegant integration of digital care and in-person care into a cohesive member experience just resonates with the market. And the early market reception has been phenomenally

strong. Yeah, that's super great to hear. You also mentioned you have a new ROI study going for your fully insured book of business, which is obviously an exciting part of the longer term opportunity. Can you talk to us about sort of the duration of that study? And, you know, Obviously, I think that would likely be helpful in terms of your sale process for that. So just kind of thinking about that timeline in a little bit more detail would be helpful.

Sure, sure. Yeah, we looked at almost 5,000 members over a 24-month period. We had Gallagher do the actuarial analysis and took a hard look at the impact that we And as I think we mentioned earlier, the results were about 2.4 times ROI. and that's in line with kind of what we typically would see. But again, the key being in fully insured, which is again, very heavily supported by actuarial analysis, by underwriters, the bar is a little bit higher there. And so to be able to deliver that kind of compelling ROI in that member population was really affirming and exciting for us.

Great, thanks so much and congrats.

Your next question comes from the line of Ryan Daniels with William Blair.

Hey, guys. Sorry about that. Can you hear me okay? I can. Perfect. I'll add to the chorus of congratulations on the strong quarter out of the box. James, maybe one for you, just on the Q3 operating margin. I know it's trending down a bit, still well above where our model was. I know some of that's the typical sales and marketing spend into the core selling season, But it sounds like you're leaning heavily, too, into some R&D for product development and maybe further expansion of the Hintz-Shellak network. So can you give us a little more color on what we should anticipate and if there's any difference in the cadence of spending, you know, maybe in the back half of the year?

Yeah, thanks for the question, Ryan. You have caught that observation well. We actually think we have a super exciting selling season coming up. We want to lean more into that than what we were previously expecting, which is the fundamental reason why we're seeing that operating expectation in that margin come down a little bit. And what you're noticing probably in the R&D lines, that's where a fair amount of our hinge select costs will go. And we're putting a bit more into that as well as we lean into that in the second half. So those are the two areas that warrant additional investment, if you will, as we move from the second quarter to the third quarter.

yeah we perfect there's a huge amount of tam left and you know what several pieces of feedback or thoughts we've had internally is like how can we better position us to even capture that and maybe even run a little bit faster and so we're we're hiring additional sales heads to to better capture this opportunity ahead of them great that's helpful and then if we think about the

new relationship with Cigna I think you announced that in April so it was kind of not ready to go at the start of the year, but ahead of the key selling season. Any thoughts on how that's developing? That's obviously a big new channel partner for you. So be curious if you're seeing early momentum there and if that's helping at all with the momentum you're seeing in self-insured employers in the public sector. Thanks. Yeah. While we don't break out specific

results by partner, I will say the signal relationship has officially launched and gone off the ground. We're seeing very strong results from a pipeline development perspective as millions of lives of Cigna's lives have entered into our pipeline. And we're actually starting to see some of that come to the pipeline and come out the other side as clients and preparing to launch those clients here both this year and into 2026. We're really encouraged by the enthusiasm that our partners at Cigna are showing for our solution. And yeah, we're excited to have them play a meaningful role in the growth and success here both in 2025 and beyond.

Great. Thanks for the color. I appreciate it.

Your next question comes from the line of Richard Close with Canaccord Genuity. Mr. Close, your line is open.

Yes, thanks for the question. Can you hear me okay?

Sure can.

Excellent. So just want to talk a little bit about the win rates. Good to hear that those have been improving. I'm just curious, you know, your largest competitor seems to be expanding into other areas such as mental health, I think some AI development initiatives. And I'm just curious, you know, any thoughts in terms of do you think that improves the opportunity for win rates to go up for you guys going forward during the selling season?

Yeah, yeah. Thank you for the question, Richard. So as you mentioned, our win rate continues to be very strong and increasing year over We actually think of our largest competitor as being distracted and not moving forward with a digital musculoskeletal solution, whether it's a new health plan RFP, maybe they're putting their PBM out to RFP. We still see our biggest competition being a no decision or a deal pushing to next year. And so we're always looking for ways, again, to increase value, to improve outcomes. We do think that staying focused in MSK is really important. As Dan mentioned earlier, the TAM is enormous. The problems can be complex. And our ability to really build something end-to-end comprehensive that's delightful, whether you're in person or digitally, we think is a really compelling offering. And we're hearing that feedback from the marketplace, both in what they're telling us and also how they're behaving by what they're buying today. So we really like our strategy. We love our competitive position, and we see that only growing stronger in the months and years ahead.

I just underlined Richard by saying, yeah, focus matters. Like, healthcare is hard. Capturing orthopedics is hard, and even capturing physical therapy is exceptionally hard. You know, our vision is to use technology to scale and automate the delivery of care, and you're taking unstructured physical tasks, and you're using software, connected hardware to automate the delivery of that. We've got about 1,500 employees at Hinge Health laser-focused on that problem, and we've had a lot of momentum behind us able to do that. We'd like to see that, you know, in some ways competitors are starting to look elsewhere to find their growth because of our win rates have been really high within our market. And there's a lot more runway to go within this market. And we're going to continue over time to apply our model to other areas of healthcare, but where we can leverage our existing infrastructure that we built, both the existing products that we built, as well as our sales team and our client base, because we see

that as incredible assets. Okay, that's helpful. And quick follow-up, Yield's been talked about a little bit several times here on the call. You do, if I remember correctly, have on the self-insured some yields, high single digits, maybe low double digits. I'm just curious, thought process on you know, progressing the yield higher? And then, you know, maybe specifically the MA and fully insured books, you know, that those are relatively new. Are you seeing any dynamics that those would be meaningfully different from the self-insured over time?

Great question. And so starting with like the potential for our yields, you know, 40% of Americans have a musculoskeletal condition in any given year, ranging again from a twisted knee to hip arthritis to a sprained ankle to chronic low back pain. So 40% of American adults have a musculoskeletal condition in a given year. 9% of them see a physical therapist. There's a big gap between those who are in pain and those actually getting care for physical therapy. And there's a lot of reasons for that. Physical therapy could be inconvenient, could be expensive. You often take time off work, hire a babysitter. And we have developed a product that makes it much more convenient and accessible and lower costs and we believe to be more effective as well. And I actually think that percentage of people seeking physical therapy or getting physical therapy each year should be closer to 12 to 15 percent, not 9 percent. Last year in 2024, we had 3.4 percent of people who have access to Hinge Health adults use Hinge Health. So we're getting, you know, 37, not quite 40 percent of equivalence to in-person PT. And that's gone up from, you know, years ago, it was like 2 percent. And we want to continue to invest in our yields such that, you know, we could approximate the take rate of in-person PT at 9% and eventually we'd like to go beyond that. We don't know how long it's going to take. It's going to take a while, but we like the investments that we're putting in. With regards to our enrollment rates for MA and fully insured, the investments we make across our self-insured book benefit both of those books as well. It's a very consistent product. And certainly, there's no difference even in the age range or the profile of the members for fully insured and self-insured. They're roughly this exact same age, roughly 45, 46 years old. MA is a little older. But we actually see some of our highest engagement on a per-member basis from MA. As people get more concerned about their mobility, their interest in using Hinge on a per-member basis goes up. And I think we have time for one more question.

Yes, your final question for today comes from the line of Brian Peterson with Raymond James. Your line is open. Please go ahead.

Thanks for squeezing me in, guys. Congrats on the strong quarter. Maybe for Dan or Jim, just you have these new partnerships and everything on these market expansion. You're growing revenue in the 50s, which was really rarefied air. I'd really just like to understand And how does the pipeline growth look relative to the billings or revenue growth? And how should we be thinking about that in terms of greenfield versus competitive displacement? Thanks, guys.

So pipeline growth continues to be incredibly strong. We're very pleased. And again, like you said, it's a good leading indicator of what ultimately bookings and revenue will look like in outer years. As you think about the split between competitive displacements and Greenfield, while we're seeing quite a few competitive displacements, which is really encouraging, the reality is the TAM is so big that the bulk of the growth is going to come from Greenfield opportunities, just given the size of the TAM and the unmet need. So, you know, we're absolutely focused on delivering the best experience that attracts, you know, folks from other competitors to the Hinge solution. But I think from a mixed perspective, you're still going to see the bulk of the growth coming from Greenfield, just given how much unmet opportunity there is out there.

Great. Thank you.

And part of the revenue growth, again, will over time come from lives, but also through our increased enrollment yields as well. So the both two sides of our growth coin. And as we continue to improve the product, we'll earn the right to increase their ASP as well, which will give another growth lever beyond just lives. And of course, new products that we're launching. So I think with that, we're a minute over. I'd love to keep going. And so I just want to appreciate everybody's time. Sorry we couldn't get to all the questions. Bianca and James will be following up with each of you, excited about the future and giving more updates. I'm also happy to join a few of these calls if any of you have specific questions for myself as well, and really excited about the future ahead of using technology to automate the delivery of care. We're in the early innings, so stay tuned.

This concludes today's call. Thank you for attending. You may now disconnect.