TELUS(US:TU)2022-05-03 18:02Financial Data and Key Metrics Changes - LifeWorks reported an adjusted EBITDA margin of 18.7% for Q1 2022, an increase from 18.5% in Q4 2021 and 18.2% in Q3 2021, indicating a positive trend in profitability [8][45][36] - The company achieved a profit of $14.1 million or $0.20 per share, reflecting a year-over-year increase of 38.1% driven by reduced expenses [45][46] - Normalized free cash flow for Q1 was $26.2 million, consistent with the previous year [46] Business Line Data and Key Metrics Changes - Core mental health and well-being services grew by 5.1%, while absence management business grew over 6% [7][38] - The Retirement and Financial Solutions (RFS) business returned to growth in Q1 after previous declines, with expectations for continued momentum [10][40] - Fee-for-service revenue, impacted by lockdowns, declined by 29% year-over-year, but is expected to improve as economies reopen [38] Market Data and Key Metrics Changes - The LifeWorks platform now supports 7.1 million lives, a 32.7% increase from 5.4 million a year ago, with organizations paying for additional modules up by 56% year-over-year [12] - Microsoft Teams users accessing LifeWorks' platform grew to 140,000, a 40% increase from the previous quarter [13] Company Strategy and Development Direction - The company aims to consolidate and expand its leadership in the mental health and well-being markets, with a focus on accelerating growth through US and global expansion [31][32] - LifeWorks is investing in digital capabilities and plans to evolve its product roadmap to enhance client relationships and improve retention and productivity [25][27] - The strategic plan emphasizes total well-being across mental, physical, financial, and social pillars, with a strong portfolio of recurring revenue businesses [30][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to mid to high single-digit revenue growth for the full year, supported by a strong sales pipeline and retention rates [11][65] - The company anticipates that fee-for-service revenue will recover as lockdowns ease and employees return to workplaces [38][84] - Management highlighted the increasing demand for integrated mental health support, with a focus on in-person services as employees seek comprehensive care [18][20] Other Important Information - The company completed its Workday ERP project, contributing to improved earnings quality and lower capital expenditures [37][46] - LifeWorks has won back several significant contracts from clients who previously opted for digital-only competitors, indicating a trend towards in-person support [16][64] Q&A Session Summary Question: Pricing expectations for mental health and well-being business - Management expects to realize $7 to $8 million in higher pricing this year, with a run rate of $15 million by year-end, achieved through targeted client engagement [50][52] Question: Margin performance and salary costs - The decrease in salary costs is attributed to a favorable mix of in-house counselors and operational efficiencies from combining business units [56] Question: Integration of iCBT and efficiency in therapist utilization - The integration of iCBT is expected to enhance efficiency and drive margins by providing a seamless user experience across various mental health services [58][60] Question: Win-backs from digital competitors - Win-backs refer to contracts previously lost to digital competitors, with retention rates remaining high at 95% to 98% [64] Question: Organic revenue growth target for 2022 - The target for organic revenue growth is mid-single digits for the full year 2022, supported by positive sales metrics [65][73] Question: Impact of Omicron on fee-for-service items - The decline in fee-for-service revenue is primarily due to in-person service restrictions during lockdowns, which are expected to recover as conditions improve [82][84]