Hinge Health, Inc. Q3 FY2025 earnings call

Product Updates

• AI Initiatives: Introduced AI care assistant Robin, which provides 24/7 support to members, and a new movement analysis capability using TrueMotion Computer Vision for objective joint health tracking. AI is also being used to drive efficiency across the organization, with increased code output and improved developer experience.
• Sales Season and HingeSelect: Sales season is progressing well with 2,560 contracted clients, up 25% Y/Y. HingeSelect, a high-performance provider network, went live with initial clients, has over 3,300 contracted provider locations, and 86% of lives live within its footprint.
• Financial Efficiency: Operational efficiency improved with gross margin up and operating expenses down as a percentage of revenue, leading to strong profitability and free cash flow.

In Q3, Hinge Health achieved $154 million in revenue, representing 53% year-over-year growth. LTM calculated billings reached $624 million, up 50% from the same period last year. Gross margin was 83% in Q3, up from 79% in Q3 of the prior year. Operating margin was 20%, a significant improvement from -4% in Q3 last year. Free cash flow for the quarter was $81 million, with a free cash flow margin of 53%.

Guidance

• Q4 2025: Revenue expected to be in the range of $155 million to $157 million, representing 33% Y/Y growth at the midpoint. Non-GAAP income from operations projected at $34 million to $36 million.
• Full Year 2025: Raised revenue guidance to $572 million to $574 million (up from prior range), with non-GAAP income from operations expected at $106 million to $108 million. Driven by strong core business fundamentals, billings performance, and operational efficiency gains from AI initiatives.

Risks

• Concerns from health plan partners, employers, etc., regarding AI in health care due to high stakes in health care. However, Hinge Health is focused on bread-and-butter AI applications to address these concerns.
• Government shutdown impact on federal business, but currently, no material impact has been seen as federal business is performing strongly.

Q: How is Hinge balancing AI innovation with concerns from health plan partners about data?

A: Hinge Health has published AI care principles guiding development, focusing on responsible AI use, privacy, security, transparency, and continuous improvement, and involves partners in roadmaps and outcomes.

Q: How is the federal government shutdown affecting Hinge's business?

A: There has been no impact so far, and federal business is performing as strong as ever.

Q: Can you elaborate on the targeted enrollment initiatives driving yield outperformance?

A: Targeted enrollment has seen a 2x Y/Y increase, driven by data collaboration with health plans, real-time data ingestion, and standardized data use to identify and enroll high-risk members.

Q: How are AI initiatives impacting operating expenses?

A: AI has contributed to improvements, with about half of the 2,600 basis points of margin improvement coming from AI advances, including more efficient processes and deployment.