Hinge Health, Inc. (HNGE) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A indicate strong operational efficiency through AI, robust cash flow, and strategic enrollment initiatives. Despite some unclear responses, the company shows positive yield improvements and a growing pipeline. The federal shutdown has had no impact, and the company is addressing cost pressures effectively. Overall, these factors suggest a positive market reaction.
Key Financial Performance
Revenue $154 million for Q3, representing 53% year-over-year growth. This growth was attributed to strong billings performance and the continued strength of underlying fundamentals.
Last 12 Months Calculated Billings $624 million, up 50% compared to the same period last year. This reflects the strength of current execution and opportunities in automating healthcare services.
Gross Margin 83% this quarter, up from 79% in Q3 of last year. The improvement reflects the scalability of the technology-driven care model.
Operating Margin 20%, a significant improvement from negative 4% in Q3 last year. This improvement is driven by investments in automation and AI, which are creating operational leverage.
Free Cash Flow $81 million this quarter compared to $28 million in Q3 of 2024. This represents a free cash flow margin of 53%, highlighting operational efficiency and a strong business model.
Eligible Lives Growth in eligible lives contributed to the strong billings performance, reflecting a healthy client base and successful launches of new clients.
Yield Targeted enrollment initiatives doubled enrollees compared to Q3 2024, contributing to strong engagement and excellent yield performance.
Average Selling Price Remained essentially flat for the year, with 48% of eligible lives opting for the new engagement-based pricing model.
Operating Expenses 63% of revenue in Q3, down from 83% in the same quarter last year, demonstrating improved operational efficiency.
Income from Operations $30 million, with a 20% operating margin, a substantial improvement from negative 4% in Q3 2024.
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Operating Highlights
AI care assistant, Robin: Robin is transforming member support by providing 24/7 assistance, recognizing pain flare-ups, and delivering immediate support. It improves member engagement, health outcomes, and cost savings.
Automated movement analysis: Using TrueMotion Computer Vision technology, this feature captures joint angles, symmetry, and endurance to provide objective Hinge scores for joint health.
AI integration in engineering: AI adoption among engineers increased to nearly 100%, boosting code output by 120% and improving developer experience by 32%.
Client growth: Contracted clients increased by 25% year-over-year to 2,560, with strong traction in jumbo clients, federal programs, and fully insured segments.
HingeSelect provider network: Went live with over 3,300 provider locations across all 50 states, covering 86% of lives within the network footprint. Clients representing hundreds of thousands of lives have committed to the program.
Revenue growth: Q3 revenue reached $154 million, a 53% year-over-year increase. Last 12 months calculated billings grew by 50% to $624 million.
Gross margin improvement: Gross margin improved to 83% from 79% in Q3 2024, driven by technology-driven care model scalability.
Free cash flow: Generated $81 million in free cash flow in Q3, up from $28 million in Q3 2024, with a free cash flow margin of 53%.
Expansion of pricing model: 48% of eligible lives have adopted the new engagement-based pricing model, maintaining stable average selling prices.
Capital allocation strategy: Focus on organic growth, targeted M&A opportunities, and returning capital to stockholders while managing stock-based compensation and dilution.
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Risk or Challenges
Regulatory Risks: The company acknowledges forward-looking statements are subject to various risks, uncertainties, and assumptions, and refers to SEC filings for detailed risks. This indicates potential regulatory hurdles or compliance challenges.
Market Competition: The company faces competitive pressures, as highlighted by the need to maintain high client retention and win rates. The mention of 'head-to-head win rate' suggests a competitive market environment.
Operational Efficiency Risks: While operational efficiency has improved, the company relies heavily on AI and automation. Any disruption or inefficiency in these systems could impact operations and financial performance.
Client Contracting and Seasonality: The business model is highly dependent on the seasonality of client contracts, particularly in the second half of the year. Delays or failures in finalizing contracts could impact revenue and growth.
Dependence on AI and Technology: The company’s reliance on AI for care delivery, product development, and operational efficiency poses risks if the technology fails or underperforms.
Economic Uncertainty: Although not explicitly mentioned, the company’s performance could be impacted by broader economic uncertainties, given its reliance on client budgets and healthcare spending.
Supply Chain and Provider Network Risks: The success of HingeSelect depends on the provider network, which is still in early stages. Any issues in expanding or maintaining this network could affect service delivery.
Stock-Based Compensation and Dilution: The company is managing stock-based compensation and dilution, but this remains a potential risk area for shareholder value.
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Guidance & Outlook
Revenue Guidance for Q4 2025: Expected revenue to be in the range of $155 million to $157 million, representing 33% year-over-year growth at the midpoint.
Full Year 2025 Revenue Guidance: Raised revenue guidance to a range of $572 million to $574 million, representing 47% year-over-year growth at the midpoint.
Non-GAAP Income from Operations for Q4 2025: Projected to be $34 million to $36 million, or a 22% margin at the midpoint.
Full Year 2025 Non-GAAP Income from Operations: Expected to be $106 million to $108 million, a 19% margin at the midpoint, up from prior guidance of $77 million to $83 million.
Operational Efficiency Gains: AI initiatives are driving faster-than-expected operational efficiency gains, contributing to improved financial outlook.
HingeSelect Provider Network Expansion: Plans to significantly increase the provider network footprint over the next 12 months, with 86% of lives already within the network footprint.
Client Adoption of HingeSelect: Clients representing hundreds of thousands of eligible lives have committed to HingeSelect, with launches planned for next year. Active discussions with clients representing millions of lives are ongoing.
Market Expansion: Promising preliminary data on the next product and plans to expand market reach while maintaining operational efficiency.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you explain how Hinge Health is addressing concerns about AI in healthcare and its applications?
A:Hinge Health is focused on bread-and-butter applications of AI to make the member experience more convenient and personalized, and to increase care team efficiency. They have published AI care principles emphasizing responsible AI development, ethical use, privacy, security, transparency, and continuous improvement. Their AI tools, like movement analysis and Robin, enhance care delivery and operational efficiency.
Q:What assumptions are being made for the open enrollment season and its impact on Q4 guidance?
A:New clients typically go live on January 1 or throughout Q1, with open enrollment being an opportunity for existing clients to highlight upcoming benefits. Federal government shutdown has had no impact so far, and health benefits continue to be funded through the end of the year.
Q:What are the seasonal and year-over-year dynamics behind the Q4 yield assumptions?
A:Q4 is typically slower than Q3, with lower billings and cash flows. This year follows normal seasonality, unlike 2024, which had pent-up marketing demand. Yield improvements are driven by targeted enrollment initiatives and evergreen investments.
Q:Can you describe the targeted enrollment initiatives and their impact on yield improvements?
A:Targeted enrollment initiatives involve building partnerships with health plans, creating data pipelines, and using data to identify and enroll high-risk members. These efforts have doubled the number of members enrolled via targeted enrollment year-over-year.
Q:What is the breakdown of greenfield wins versus competitive displacements in the selling season?
A:The majority of wins are still greenfield, though there is an increasing percentage of competitive displacements.
Q:What contributed to the strong operating cash flow in Q3, and how is the new engagement-based model impacting collections?
A:The $81 million operating cash flow in Q3 was driven by better collections, process efficiencies, and AI deployment. The engagement-based model has improved billing and collection processes, contributing to cash profitability.
Q:Are there any shifts in rollout timing for new clients, and what is the status of the 2026 pipeline?
A:The rollout timing for new clients remains traditional, with most launching in Q1. The 2026 pipeline is growing and robust, but specific data on late-stage or contracting clients is not disclosed.
Q:How are recent AI tools impacting care team FTE requirements and operational efficiency?
A:AI tools have doubled code output per engineer and improved operational efficiency. Care team headcount is expected to remain flat or decrease in 2026, despite revenue growth, due to AI-driven efficiencies.
Q:What is the impact of new AI product offerings like Robin and movement analysis on yield and ARPU?
A:These offerings improve member engagement and satisfaction, contributing to yield improvements. However, ASP is expected to remain flat due to contractual commitments.
Q:How is AI contributing to operating expense reductions and margin improvements?
A:AI has contributed to about half of the 2,600 basis points improvement in gross and operating margins by enhancing process efficiencies and reducing reliance on human labor.
Q:What is the status of the HingeSelect provider network, and how is provider quality evaluated?
A:HingeSelect focuses on high-quality providers by assessing claims data and consumer experience. The network is complementary to health plans and aims for targeted density in specific regions.
Q:How is Hinge Health addressing rising employer healthcare costs, and what role does ROI play?
A:Hinge Health's validated ROI and focus on musculoskeletal care, a top cost driver, make it an attractive solution for employers facing rising healthcare costs.
Q:What is the adoption rate of Enso, and how does it impact member engagement?
A:Enso adoption has increased from 5% two years ago to over 25% this year. It improves member engagement and satisfaction, making it a beloved aspect of the program.
Q:What is the timeline for HingeSelect's impact on billings and revenue?
A:HingeSelect is expected to have a meaningful impact on billings and revenue starting in 2027, with current investments focused on building the provider network and technology platform.
Q:How is Hinge Health addressing Medicare Advantage cost pressures?
A:Hinge Health sees Medicare Advantage cost pressures as an opportunity, leveraging its ROI and innovation to attract and retain MA clients.
Q:What is the impact of the federal government shutdown on Hinge Health's federal business?
A:The shutdown has had no impact on Hinge Health's federal business, which is performing strongly. Health benefits continue to be funded during the shutdown.
Q:What are the near-term investments and their impact on margins?
A:Near-term investments include HingeSelect and go-to-market functions. These are expected to be manageable and are already embedded in forecasts, with no significant impact on margins.
Q:How is Hinge Health balancing new product development with maintaining strong margins?
A:Hinge Health is investing in R&D for organic growth while ensuring that new products like HingeSelect are cost-efficient and complementary to existing offerings.
Q:Review of Unclear Management Responses
A:Management avoided providing specific data on the 2026 pipeline's late-stage or contracting clients, and they did not clarify the impact of a prolonged federal government shutdown on health benefits beyond January 1.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI care
Bianca
Hinge Health
adoption
billing
capital
cash flow
client
delivery
discussion
efficiency
end
enrollment
experience
health care
improvement
income
investment
life
margin
market
member
midpoint
model
momentum
movement
network
opportunity
outcome
point
pricing
product
program
provider
question
result
sale
share
statement
strength
technology
today
update
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
