Good morning. My name is Stephanie, and I will be your Conference Operator today. At this time, I'd like to welcome everyone to Teladoc Acquires HealthiestYou conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, please press star then the number one on your telephone keypad. If you'd like to withdraw your question, please press the pound key. Thank you. I would now like to turn the call over to Mr. Adam Vandervoort, Chief Legal Officer for Teladoc. You may begin.
Thank you. Good morning. I'm Adam Vandervoort, Chief Legal Officer for Teladoc. The company intends to avail itself of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain statements made during this call will be forward-looking statements within the meaning of that law. These forward-looking statements are subject to risks, uncertainties, and other factors that could cause Teladoc's actual results to differ materially from those expressed or implied by the forward-looking statements. For additional information on the risks facing Teladoc, please refer to our filings with the SEC. I'll now turn the call over to Jason Gorevic, Chief Executive Officer of Teladoc. Jason?
Thanks, Adam. Thank you to everyone on the call for joining us on such short notice. We appreciate it. Prior to the market's opening today, we announced that we've signed a definitive agreement to purchase HealthiestYou. They're a leader in mobile patient engagement based in Scottsdale, Arizona. We believe this is an excellent strategic fit for Teladoc, providing both complementary solutions as well as strengthening our distribution channel to the small and mid-sized employer market. On this call, I'd like to first remind you of our acquisition strategy, second, tell you a bit about HealthiestYou. I'll discuss some of the synergies we expect from this acquisition. Finally, I'll turn the call over to Mark to discuss the financing of the transaction and the financial impact to Teladoc.
As the largest telehealth company, we have a unique vantage point from which to observe the dynamics in the overall healthcare and telehealth markets and monitor M&A opportunities. Teladoc has a track record of making strategic acquisitions and successfully integrating them into our company. We've consistently said that our M&A strategy is focused on two primary goals. One, acquiring complementary products that further our mission of improving access to high-quality healthcare at a significantly lower cost and that we can sell into our base of over 15 million members. Two, acquiring companies that enable us to improve our position in market segments where we're under-penetrated. HealthiestYou accomplishes both of these aforementioned goals. HealthiestYou is a consumer engagement platform that strives to empower its members to take control of their healthcare and related expenses by providing access to important and useful data via their mobile devices.
HealthiestYou makes real-time connections to hundreds of health plans, enabling personalized, intelligent alerts to its members. These alerts enable consumers to better understand their insurance plans and remind them of potential savings opportunities at the point of sale. For example, the HealthiestYou platform knows when a consumer enters a specific pharmacy, and if there are any savings available, it will alert the consumer of them immediately. HealthiestYou and Teladoc share a common philosophy of driving telemedicine engagement and enabling the consumer to take charge of their own healthcare decisions. I'm very excited about the value we will be able to offer to healthcare consumers. The executives of HealthiestYou have each accepted leadership positions with Teladoc, and we're very happy to welcome them into the Teladoc family. I'll turn to the synergies we anticipate from this transaction.
First, Teladoc will provide the telemedicine technology operations and clinical services to the HealthiestYou customer base. Second, acquiring HealthiestYou helps us to build upon our goal of offering a broad suite of solutions to our employer and health plan partners, all with the common goal of providing consumers with better access to high-quality care at a lower cost. Teladoc has been very successful engaging consumers with a multifaceted communication strategy, which includes direct mail, email, targeted digital, social media, worksite communications, and several other channels. HealthiestYou approached the telehealth engagement challenge from another perspective. By providing consumers with a highly valuable suite of capabilities, they were successful in creating a high frequency of interaction and stickiness with consumers. For example, one-third of their telehealth visits originate with a consumer using their provider finder tool.
The combination of these two engagement approaches has the potential to materially accelerate utilization in the Teladoc book of business. Importantly, this transaction also strengthens our position in the currently underserved small to mid-sized employer market. This segment of the market represents approximately 50% of the employed Americans and is the most under-penetrated market for telemedicine. It has also been Teladoc's fastest-growing and most profitable segment of the market. As we've noted on previous earnings calls, we have been increasing our investment in this attractive segment of the market, and improved access to this market will help Teladoc to diversify our revenue streams and more rapidly penetrate this segment. There are two primary reasons this transaction will accelerate Teladoc's growth in the small to mid-sized employer market.
One, HealthiestYou has a strong broker distribution network that is highly complementary to Teladoc's broker network, as less than 10% of HealthiestYou's revenue comes from brokers where Teladoc has existing relationships. Two, the HealthiestYou engagement suite provides these companies with a set of tools that was previously available only to larger employers. UnitedHealth Group was an early investor in HealthiestYou, and on the foundation of this investment, HealthiestYou built a strong commercial relationship with United, providing its product to several of United's market segments. I look forward to continuing to grow this important relationship and to having UnitedHealth as a shareholder in Teladoc to further cement this partnership. I also believe that many of our other nearly 30 health plan clients will find the HealthiestYou product to be a highly valuable mobile engagement platform that we will be able to bring to them a broader set of capabilities.
I want to comment on the similarity of HealthiestYou's business model to Teladoc's and the attractive economics of the company. Similar to Teladoc, HealthiestYou has been successfully selling its product on a per-employee or per-member per month basis. Due to the broader suite of services, they have been able to command a higher price in the marketplace. This combination of Teladoc and HealthiestYou will create a fully integrated combined offering that can command a PMPM of between $5 and $10 in the small to mid-sized employer market, while also greatly enhancing the value that we provide to our customers. Once again, I want to emphasize that with this acquisition, we are further positioning Teladoc to take advantage of the fastest-growing segment of the employer market, the sub 1,000-employee segment.
Ultimately, this is a great strategic fit as we continue to build out our platform and expand our distribution channels. We're very excited about this acquisition, and going forward, we will continue to be thoughtful and strategic about other opportunities. With that, I'll turn the call over to Mark to review the financials. Mark?
Thanks, Jason. Under the terms of the merger agreement, the purchase price consists of two components: 7 million Teladoc common shares and $45 million in cash. The $45 million cash component is being funded through our recently expanded credit facility with Silicon Valley Bank. The company will be adding a couple of notable investors who had been HealthiestYou preferred investors, including Frontier Capital and, as Jason mentioned, UnitedHealth Group. Each will become Teladoc shareholders when we close this transaction tomorrow. HealthiestYou generated 2015 revenues of approximately $10 million, representing over 100% growth over 2014, and they generated nearly break even 2015 adjusted EBITDA results. HealthiestYou generated revenues of approximately $8 million for the first six months of 2016 and has maintained EBITDA break even through the first half of this year.
Growth for the full year is expected to exceed 65%-70%. Teladoc will become the sole provider of telehealth services to all HealthiestYou members effective tomorrow. As a result of this transition, Teladoc will leverage our extremely scalable infrastructure, and with no incremental infrastructure costs, we will be in a position to immediately service all of the telemedicine demands to efficiently and cost-effectively handle the HealthiestYou membership and their respective visits. To wrap up the call this morning, I want to comment on our outlook for 2016. For full year 2016, we had previously communicated revenue expectation ranges from $118 million to $122 million. We're now increasing that range to $126 million to $130 million. Our guidance for our adjusted EBITDA loss range from $35 million to $37 million remains unchanged.
Our membership, which we had expected to total approximately 16.5 million-17.5 million members, is now increased to a membership range of 17 million-18 million members at year-end. Our previously communicated outlook for total 2016 visits was 880,000-900,000, we have now increased that to 915,000-945,000 total visits. For the full year 2016, we had expected to record a net loss per share between $1.33 and $1.38. Our updated guidance is an expected net loss per share between $1.22 and $1.27, based on a weighted average 42.5 million shares outstanding. Most importantly, the acquisition of HealthiestYou does not change our timeline to profitability, and we are still targeting adjusted EBITDA break even by the fourth quarter of 2017. I'll turn the call back to Jason for some closing comments.
Thanks, Mark. I just wanted to take a moment to reiterate the primary strategic assets that we're acquiring in this transaction. There are four of them. One, a consumer engagement platform that when added to the Teladoc communications capabilities, will improve our utilization and extend our lead on the competition. Two, acceleration of our penetration of the fastest-growing segment of the U.S. employer base, the small and mid-sized employer market. Three, a strong relationship with UnitedHealth Group. Four- A broader suite of products to sell into our existing customer base at a higher price point. Again, I want to thank you for joining on such short notice, and we'll now open the call up to questions. Operator?
At this time, if you would like to ask a question, please press star, followed by the number one on your telephone keypad. We will pause for just a moment to compile our Q&A roster. Your first question comes from the line of Nina Deka with Piper Jaffray. Your line is open.
Hey, guys. Thanks for taking the question. Congratulations on this transaction.
Thank you.
Thanks, Nina.
What portion of the revenue is generated from the UnitedHealthcare members? What's the ratio of the employer revenue versus the health plan revenue among the HealthiestYou?
Nina, about one-third of the revenue today is generated from entities affiliated with UnitedHealthcare. All of the revenues today are being generated, about well 95% of the revenues are generated from employers with 250 or fewer employees. That's really the sweet spot of the client base.
Nina, the vast majority of the UnitedHealthcare membership with HealthiestYou is in that small and mid-sized employer market as well.
Okay, thanks. Just one more. What's the strategy to roll this platform out to the current client base and potentially offer to the new prospective large employers?
Yeah. As you can imagine, we've been having significant discussions around integration of the two platforms, and rolling their product suite out to the Teladoc customer base. We think that we'll be able to do that over the course of the next several quarters. We do think that this will be particularly interesting to sort of the mid-size health plan market and to some degree, to the larger health plan market, as it provides a single mobile solution for something that they've been purchasing multiple disparate products for. The engagement strategy from putting that in a best of breed user interface is very significant and drives meaningfully greater engagement than any of the point solutions that we've seen.
Great. Thanks, guys, congrats again.
Thanks, Nina.
Your next question comes from the line of Ryan Daniels with William Blair. Your line is open.
Yeah. Good morning, guys. Thanks for taking the questions, and I'll add my congrats on the deal. Mark, let me start with one for you in regards to the revenue model. Is it primarily the per member per month fees on a similar ratio to what you're seeing at Teladoc, or is there a little bit more transaction or less transaction-oriented nature to this business model?
Sure. Thanks, Ryan. Actually, 100% of the revenues are PEPM based, and those revenues are generally at a multiple of anywhere from seven to 10 times, and sometimes even greater, our average PEPM, because they are at our highest priced channel pricing, which they've been able to generate, again, a PEPM of an average in the area of $5. No additional transaction fees, so 100% as opposed to our historical 80/20 split.
Right. Ryan, they sell the bundle of services, which includes telehealth on a visits included basis, similar to what we do in the smaller end of the market. As Mark said, their larger bundle of services enabled them to command a higher price in the market.
Okay. That makes sense. Jason, you mentioned one of the four factors behind the transaction was expanding your relationship with UnitedHealth, which is obviously a strategic partner, it sounds like you've had conversations with them. I'm curious if it was beyond, really, if they will continue to support the HealthiestYou platform and any potential relationships between Teladoc and its solution set more broadly into the broader United base, or is it still a little early to tell there?
I would say, although it's early for us to give any indication of whether we will have other areas of the business come to fruition, we've had very productive discussions with United over the course of this transaction. They see tremendous value from the HealthiestYou product. Of course, we've talked about larger relationships with both the HealthiestYou product as well as the broader suite that includes the Teladoc products.
Okay. That's helpful. Maybe one last one, just a big picture on how this acquisition effectively changes your internal either R&D plans or maybe your marketing budget now that you have this as a small employer and small and mid-sized broker distribution channel. Does that reduce your investments there and push the focus somewhere else, or the kind of status quo on the core business? Thanks.
No, I think we continue to march down the path that we have been. As I mentioned, we have been increasing our investment in that segment because of the attractive economics and opportunity in that segment. I think you'll see us shift some of those resources instead of new product development that we were embarking on. We'll shift those resources to integrating the HealthiestYou product into the Teladoc portfolio. I think the other thing to highlight is that HealthiestYou has really focused on the front-end user tools, while Teladoc has focused a little bit more on an industrial strength technology infrastructure and technology-enabled operation to be highly scalable. We're excited about the opportunity to use the HealthiestYou team as almost an innovation lab that can help us to continue to push the envelope in terms of new product development.
Okay, great. Congrats again. Thanks, guys.
Thanks, Ryan.
Your next question comes from the line of Lisa Gill with JPMorgan. Your line is open.
Great. Thanks very much, and congratulations. My first question, Jason, is just around rolling this out to other clients. Can you talk about the timeline around that, and do you anticipate any incremental cost on your side as you roll this out to larger employers? You talked about that this is really a smaller employer base, but will you have to make any changes to it if you're rolling it out to a larger employer or to another health plan?
It's really about integrating their portfolio or their product into our larger portfolio. We don't see significant additional incremental investment. For us, it's a little bit of a shift of resources from where we were on the front of new product development. Let me give you an example, Lisa. They have been very aggressive and forward-thinking in terms of building a broker portal that really streamlines the enrollment of new groups, the commission reporting for brokers, the billing process, and doing that in an automated fashion. To be honest, during our push into the small and mid-sized employer market, we were embarking on a project to build a similar tool. We can now reallocate those resources to integrating the HealthiestYou product into the Teladoc portfolio rather than dedicating those resources to building a new broker portal.
That's an example of where we're going to shift resources that we were otherwise going to focus on something that HealthiestYou already brings to the table.
Okay, that makes sense. Secondly, Mark, with the updated guidance for this year, it looks like you've raised your revenue by about $8 million. Can you just give us an indication, is that you're seeing more visits or membership coming in better than anticipated? I know you brought up the membership number as well for this year, but I'm just wondering how to think about this as it flows through the model.
Yeah, sure. Lisa, what we ended up doing is bringing up all of our guidance, principally for the impact of the HealthiestYou acquisition. The only number that was brought up for our organic reasons, such as higher visits, was the visit number. While HealthiestYou is going to contribute approximately 400,000 members, their other revenues are being brought in based on their first six months of results. We also. Okay.
No, I'm sorry. You also, go ahead.
I was going to say, we've been exceeding our visits number throughout the year, so we continue to see strong visit results. That's why that was brought up.
Okay. Makes sense. Thank you very much.
Sure. You're welcome. Your next question comes from the line of Mahan Naidoo with Oppenheimer. Your line is open.
Thanks for taking my questions, guys. Jason, I just want to get some more clarification on the PMPM fees that you talked about. Did I understand correctly that you guys charge $5-$10 PMPM right now on the HealthiestYou product, or is that the potential to get there?
Yes. Their PMPM in that small employer market is in that range. Again, you have to understand that when they're selling into that employer market, they're selling a mobile engagement platform that offers multiple technologies built into a single user interface and includes not only access to telehealth, but also includes the visits. That range is what they're currently commanding in that market segment. Obviously, with the Teladoc telehealth platform behind that, we think that just enhances the product offering and the value of it to that customer segment.
Got it. Jason, in this model, do you guys have a cap on number of visits the client can have, given that it's an all-inclusive pricing?
Yeah, that's a great question, Mahan. We do put in utilization caps, and when somebody triggers those caps, their price is increased prospectively.
Okay. Mark, one quick question for you. Now that you're going to have UnitedHealth and Frontier as shareholders, is there any lockup related with this new shares?
Yeah, there's the typical 6-month lockup. Clearly, Frontier is joining us. They're going to be in our top five shareholders. I think one of the
One of the principal reasons that we were successful in acquiring HealthiestYou, which ended up, for us, the scarcity value of finding an asset as valuable as HealthiestYou, came into play as a result of the fact that we looked at nearly 100 opportunities this past year. When our board gives us the opportunity to look into a potential M&A target, there are a number of qualifications. Based on really substantial risk-adjusted returns, we found HealthiestYou in a competitive environment to be our best opportunity. Clearly, the sellers found that we didn't offer the highest price, but we offered truly the best opportunity. UnitedHealthcare will also be a significant shareholder with total holdings just under 5%.
Okay, great. Thanks.
Well, I'd just quickly add to Mark's comments. The board and our management team does hold ourselves to a very high standard with respect to acquisition targets. They really have to meet the requirements of three things. One, it has to be a strategic fit. I mentioned the strategy in my prepared remarks about a strong product fit and/or bringing us into an under-penetrated and attractive market segment. It has to be a strategic fit. Second, it has to be revenue growth accretive for us. We've held ourselves to a high standard. Given our revenue growth, it's hard to find companies, quite frankly, who are growing at or above the level of growth that we're putting up.
Third, it had to be a target that would not delay our path to profitability and delay that break-even date that we've put out there for our investors. HealthiestYou met all of those criteria, and quite frankly, there just aren't that many companies out there that do.
Yep, I understand. Thank you so much, Jason.
Your next question comes from the line of George Hill from Deutsche Bank. Your line is open.
Hey, good morning, guys, and thanks for taking the question. I guess, Jason or Mark, first, with respect to the history of HealthiestYou, can you tell us anything about the stickiness of that customer base and what's the average duration per customer? My other question would just be, is there any significant overlap between the HealthiestYou and the Teladoc customer base? I dialed in a minute late, I'm sorry if you guys covered that second part already.
I'll take the overlap of the customer base, Mark can talk about the stickiness and retention rates. I think I mentioned, George, on the call that only 10% of the HealthiestYou revenue comes from brokers that Teladoc already has a relationship with. It's almost entirely, it's 90% additive in terms of new broker distribution relationships for us, which was very, very important as we looked at the value of the asset.
George, on your earlier question.
Customer churn.
On the churn side, they experienced a similar churn. Over a two-year period, they were at approximately 10, and the highest percent of churn was about 15% churn. What's more important is that their clients coming through them through UnitedHealthcare and other principal distribution partners have not churned. It's their smaller standalone broker clients that have churned in and out. The high-value clients have been with them, and it's been a very sticky product.
Yeah. Jason, maybe just a quick follow-up. As we think about the deal, is it too late to market the offerings together under at least the one ownership group for the 2017 benefit season? Or is this more of a back half of 2017, 2018 benefit season where we think we can see some cross-sell capture?
Yeah. For our customer base, it's probably more of a back half of 2017. There may be a couple of clients who are taking a fresh look, but that's going to be primarily in the mid-sized market, more than the very large employers and health plans. We do think we'll start to see that in the back half of 2017. As you might imagine, HealthiestYou has a very, very strong pipeline. Obviously, we did a lot of diligence on that pipeline for January and the first quarter of 2017. We're excited about the growth prospects there.
Okay. Appreciate the call. Thanks.
Thanks, George.
Your next question comes from the line of Dave Francis with RBC Capital Markets. Your line is open.
Hi, good morning, guys. I'll add my congratulations. On the operational front, Jason, two quickies. One, to what degree have you gauged or had a chance to talk with your existing customer base about their appetite for some of the additional services and solutions that you're going to be bolting on with HealthiestYou? Kind of attached to that, what exactly does your sales organization look like into some of those larger existing customers today to be able to capture some of that additional cross-sell opportunity?
Yeah. Dave, as you can imagine, we've sort of indirectly polled our client base. We couldn't mention the opportunity, obviously. As we look at the appetite among our existing clients for additional products and services, and especially additional strategies for engaging their employees and members to drive higher utilization, there's a very significant appetite there. They are continually looking to us for new solutions that are going to drive greater engagement. I'll give you an example. We had our large account client advisory group in Dallas about a month and a half ago. The discussions there about strategies to engage their consumers, were significantly far afield from the straight down the middle member communications.
That gave us a lot of confidence, in doing this acquisition and the license we have, quite frankly, to bring them a broader array of services because of the value that we've already offered. With respect to our sales organization, we now have, let's say about three dozen actively selling feet on the street. In addition to that, we have just about the same number of account managers who are interacting with our clients every day and bringing them new solutions. We would see both of those organizations ultimately having the HealthiestYou product in their quiver of arrows to bring to clients both on a prospective as well as on an existing basis.
Okay. That's helpful. One last follow-up. I know you're not going to get into the business of providing 2017 guidance and what have you, but from a valuation perspective, is it safe to say that you're expecting a revenue trajectory similar to what the company experienced or is experiencing this year over last year going forward? How should we be thinking about the growth trajectory of this business in particular? Thanks.
Yeah, Dave, it's Mark. They obviously experienced tremendous growth over the past two years, and quite frankly, they're in a channel where we experience our strongest growth. We generate our strongest growth through this broker channel, as well as generating our strongest returns, highest priced PMPM, and highest margin. We'd expect them to grow anywhere from 65% to sort of 80% this year. We'd expect something in a similar range between 60% and 75% next year. When we look at our expected 2017 results from the HealthiestYou channel, we looked at a five-time multiple. We're expecting them to produce at least $30 million of revenue next year, and that's the premise for the construction of our acquisition price.
Great. Very helpful. Thanks, guys.
Your last question comes from the line of Sandy Draper with SunTrust. Your line is open.
Thanks very much. Since I'm last, I'll add my congrats here on the call as well. A couple of quick ones. I know most of them have been asked. The focus of the call obviously is on the top line, and that's obviously the exciting opportunity. I think, Jason, you mentioned that there's an opportunity to redeploy some costs so you don't have to build out the broker platform. Just thinking more broadly, are there opportunities for other cost synergies, or how are you thinking about cost synergies versus having to invest over sort of a couple of year timeframe?
Thanks, Sandy. It's Mark. I'll take the question. One of the principal cost synergies in this transaction is that HealthiestYou had previously paid a very high premium to have their visits delivered. This really results from a lack of critical mass. When we take over the delivery of visits tomorrow morning, the cost to HealthiestYou will decline by nearly 66%. We'll deliver those visits to the members of HealthiestYou at one-third the cost of their previous provider. Clearly, that's something that was a big trigger for us. Secondly, we've got some duplicative costs as a result of us having a very significant infrastructure utilizing really only about 15%, 20% of our capacity.
We're going to be in a fantastic position to integrate HealthiestYou in a very similar fashion that back in 2013 and 2014, we had integrated our first acquisitions of very similar sized and similar natured companies.
Great. That's really helpful, Mark. Just to make sure I understand, were 100% of their customers now using telehealth was offered, or was that part of every single bundle, so all their customers have that telehealth service bundled into their pricing?
Yep, that's exactly right. They sell this bundle of products and services. The interface includes the ability to get a telehealth visit. A lot of the tools actually funnel a consumer to a telehealth visit. Sandy, I mentioned about a third of their telehealth visits were generated by people who started interacting with the app and with the provider finder looking for a doctor, and they were funneled to a telehealth visit. That telehealth interface, as well as the service behind it, was all bundled into all their accounts.
Okay. That's helpful. Maybe just two quick final questions. One, when you think about, obviously the small market, to me, it makes a lot of sense because these small guys don't have a lot of resources, so buying a bundle approach makes sense. How do you think about when you go to the large employers who may be more willing to say, "Hey, we're going to take a best of breed approach, and so we took Teladoc for our best of breed telehealth, but we've got a best of breed pricing transparency tool or prescription finder, a doctor, and we've got other best of breeds, and we're willing to do that work." How do you think about, the opportunity and the sales challenges to sell the bundle solution to the large market? The final question would be, any thoughts about any issues?
Obviously, United will now be a notable shareholder. You've done very well with some other large and managed care companies. Any thoughts on any risk of channel conflict now that United is going to be a notable shareholder for you guys? Thanks.
Let me start with the second question. I don't see any channel conflict there at all. We have 30 health plan clients already. We've really avoided that by being upfront and saying, "Look, our job is to bring the best products and services to all of our clients." We haven't seen any concerns there. With respect to bringing it to the larger end of the market, I would say in order of priority, we're going to have greatest opportunity to bring the HealthiestYou product into the mid-sized employer market and the TPA market, sort of first. The mid-sized health plan market, probably second. The very large, Fortune 500, third for exactly the reasons that you described.
I think there are a lot of people who make their living on selecting point solutions one at a time for many of the products and services that are bundled into the HealthiestYou app. I think it will be some time before we demonstrate the effectiveness and the greater engagement that's delivered by a single bundled solution for the larger end of the market. I do ultimately think we'll get there. I would say in order of priority, it'll follow the progression that I just described.
I appreciate it, congrats again, guys.
Thanks, Sandy.
There are no further questions. I turn the call back over to the presenters.
Thanks so much. I really appreciate it. Again, I know it's short notice for everybody. Sorry to get you up early for an early call. I hope everyone has a great Fourth of July weekend. We're very excited, as you probably hear in our voices, about the prospects of this acquisition, and the opportunity to work with just a great team at HealthiestYou. We've been incredibly impressed. The cultures are very well-aligned. I think the opportunity for us to make a very significant impact on the market is there for us to take. Thanks again, and, of course, we'll always make ourselves available, as best we can for any follow-up questions that you may have.
This concludes today's conference call. You may now disconnect.