Hinge Health, Inc. 2026 Q2 Earnings Call

Welcome to Hinge Health's second quarter 2026 earnings call. I'm Bianca Buck, Head of Investor Relations. With me on the call are Daniel Perez, our Co-founder and CEO, Jim Pursley, our President, and James Budge, our CFO. I want to thank everyone for joining us. As a reminder, this conference call is being recorded. All relevant materials are available on the investor relations section of our website. Today's discussion will include forward-looking statements which are subject to various risks, uncertainties, and assumptions. These statements reflect our current views and expectations regarding future events, including expected performance of our business, future financial results, and growth strategies. While these statements represent our good faith judgment and beliefs, actual results may differ materially from those projected or implied. We undertake no obligation to update any forward-looking statements except as required by law.

For a detailed discussion of the risks, please refer to our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2025, and our quarterly reports on Form 10-Q. We expect to file our quarterly report on Form 10-Q in the coming days. All income statement measures discussed today, other than revenue, are non-GAAP. These measures should be viewed in addition to and not as a substitute for our GAAP results. Reconciliations to the most comparable GAAP measures are included in the appendix to our earnings release. With that, I'll turn it over to Dan.

Thanks, Bianca. Q2 was another strong proof point that our vision of automating care delivery is working. We delivered excellent financial results, made meaningful progress on our product roadmap, and are set up well heading into the sales season and beyond. Today, we'll walk you through a few key areas. First, I'll give you a snapshot of our Q2 financial performance and why we feel great about how the business is tracking. Second, I'll share updates on our product expansion, specifically how we're moving from being a clear leader in automating care for MSK conditions to automating care across conditions with real traction in migraine and our entry into gastrointestinal health. After that, I'll hand it over to Jim, who will dive into the commercial side: our pipeline strength, the wins we're seeing in both enterprise and SMB, and how our multi-product strategy is driving deeper relationships with clients.

James will take you through the financials in detail and share our updated guidance for the year. Of course, we'll open it up for your questions at the end. With that, let me jump into the numbers. Q2 was an outstanding quarter across the board. We delivered revenue of $213 million, which represents 53% year-over-year growth. Our last 12 months calculated billings came in at $862 million, up 52% from last year. These numbers reflect the strength of our business model and the value we're delivering to our members and clients. On profitability, we're seeing substantial operating leverage. Our operating income more than doubled from a year ago to $62 million, and operating margin expanded to 29% from 19%. We also generated 3X more free cash flow in Q2 this year at $100 million, compared to $33 million last year.

That was a 47% free cash flow margin in Q2 compared to 23% in Q2 last year. James will walk you through all the details in a bit, including our updated expectations for the rest of the year. The short version is the fundamentals of the business are strong, execution remains solid, and we're continuing to build a platform that delivers clinical outcomes, growth, and cash flow. Let me shift to what we're building on the product side. Over the past 12 years, we've built Hinge Health into a leader in musculoskeletal care. We serve nearly 3,000 clients, including more than half the Fortune 100, and we've helped millions of people reduce their pain and avoid unnecessary procedures. Our foundation in MSK is incredibly strong. What's even more powerful is that the platform enabling it isn't limited to MSK alone.

It was designed to scale across multiple conditions. Our vision has always been to use technology to automate the delivery of care within MSK and beyond. This quarter, I'm excited to share that we're making that vision even more real. We're not just talking about TAM expansion, we're proving the vision with real products, real client demand, and real member engagement. Let me walk you through two big areas of progress. First, migraine. Last quarter, we launched our migraine care program. We now have over 450 clients signed up, covering more than five million lives. This is meaningful adoption in a short period of time, and it shows that employers see migraine as a real pain point they need to solve. The early signals on the member side are strong as well.

Both enrollment and early engagement metrics are coming in as expected. We're excited to continue building on this baseline. Our migraine care program has gained traction quickly because we've built our capabilities as reusable components that can be customized for new indications while sharing the same go-to-market motion we've built over a decade at MSK. Essentially, we've been very intentional about not just what we build or what we sell, but how we build and how we sell. When we roll out new products, we benefit from existing platform capabilities and an established distribution footprint, meaning we can build and sell new products much faster versus starting from zero every time. As with everything else we do, we intend to hold our migraine care program and all future programs to the same standard of clinical rigor that we have brought to MSK.

Second, gastrointestinal or GI, our next big adjacency. We're following the same playbook we used with MSK and migraine, identifying area of unmet clinical need and then applying technology to automate care delivery. GI checks all those boxes. Digestive health issues affect one in four U.S. adults and drive $135 billion in annual medical spend. Traditional care is fragmented and hard to access. 69% of U.S. counties don't even have a gastroenterologist. People cycle through primary care and urgent care visits without a clear treatment plan. We hear consistently from our clients that GI is a major challenge they're struggling to address. To accelerate our entry into this space, we've signed a definitive agreement to acquire Cylinder Health for $105 million in cash, essentially the free cash flow from Q2 alone. This acquisition gives us a strong foundation to build from in GI.

Cylinder has nearly 100 clients across 2 million lives and has already treated 150,000 people with a clinically validated ROI. They also have established partnerships with two of the three largest PBMs and three of the top five national health plans. They've done great work reinventing the paradigm of care for GI, and we're excited to integrate their capabilities into our platform. GI conditions are also highly comorbid with the MSK, pelvic floor, and migraine conditions we already treat. They share the same gut, brain, and central sensitization mechanisms, and a large share of the people we're already serving are also managing chronic digestive conditions, which makes this a natural extension of our care model. We anticipate GI will have a modest contribution to this year's sales season, with a broader rollout targeted for 2027.

There's still much work to do on the product side. We need to integrate it into our tech stack, but we're moving quickly. This acquisition reflects a commitment I made in my IPO letter, where we said we'd move with urgency to further solidify and extend our current position while also developing several new products to scale and automate other aspects of care. That's one of the many reasons that gives us confidence in the durability of our revenue. Because we can build these products efficiently and sell them through the same commercial motion and the same distribution channels, it becomes a compounding advantage. Multi-product isn't just a yield lever, it is a moat. We're extending our platform to address multiple high-impact conditions, and we're doing it in a way that drives all aspects of the triple aim: better outcomes, better experience, and lower cost.

With that, let me hand it over to Jim to talk about what we're seeing on the commercial side.

Thanks, Dan. With this year's sales season, our active pipeline remains ahead of last year. Converting this pipeline as we move through the back half of the year will be a key driver of our 2027 billings growth. Our win rates continue to be up year-over-year, which leaves me optimistic as we enter the peak months of our sales season. This quarter, we saw strong momentum in our enterprise business, highlighted by a notable win with a Fortune 15 company where we displaced a competitor to secure nearly 300,000 lives. Beyond our continued large enterprise success, our strategic investments in SMB distribution late last year are also paying off. Our lives have grown more than 100% in the first half year-over-year.

We've also recently been selected as the default solution for a large national health plan's SMB segment, specifically their under 3,000 lives book of business, where again, we replaced a competitor. This will function as an opt-out model whereby clients will automatically get Hinge Health unless they elect not to participate. We'll begin seeing these clients added in early 2027. These investments take us deeper into one of our lowest penetrated categories, SMB, where deals close fast, and it complements our large enterprise wins. We're winning across the board from smaller employers all the way up to the biggest names out there. The third area I want to highlight is how our multi-product strategy is driving deeper relationships with our clients as we can impact a wider array of outcomes and therefore drive greater cost savings. This is the land and expand motion we've been talking about.