Q3 2019 Earnings Call
Greetings and welcome to the C.P.S. <unk> third quarter, just 19 earnings conference call.
Presentation, all participants will be not listen only mode.
Afterwards, we will conduct a question I'm not sure Sasha.
At the time the question. Please press the one all by the for on a telephone.
Yeah, but anytime during the conference you nutrition operator, Please press star zero.
I was reminded US conference is being recorded Tuesday November 15 2019.
Now lets turn happens over to Jonathan. Please go ahead.
Thank you good afternoon, and welcome to the C.P.S. <unk> third quarter 2019 earnings Conference call.
During this call we may make statements regarding future operating plans expectations and performance that constitute forward looking statements made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
We caution you that any such forward looking statements only reflect management expectations or predictions based upon currently available information and are not guarantees of future results or performance.
Actual results might differ materially from those expressed or implied by such forward looking statements as a result of known and unknown risks uncertainties and other factors, including those described in our public releases and reports filed with the Securities and Exchange Commission, including but not limited to our must reach.
<unk> annual report on Form 10-K .
Also caution investors that the forward looking information provided in this call represents our outlook only as of this state and we undertake no obligation to update or revise any forward looking statements to reflect events or developments. After the date of this call.
At this time I will now turn the call over to Mr., Boyd Douglas President and Chief Executive Officer at C.P.S. I. Please go ahead Sir.
Thank you very.
Good afternoon, everyone and thank you for joining us.
Joining me on the call today, it's Matt Shambles, our Chief Financial Officer at the conclusion of our prepared comments the two of US along with David Our Chief growth Officer, and Chris Fowler, Our Chief operating officer will be available to take any questions you might have.
I'm very pleased with our third quarter results, which included solid performance across bookings revenue and earnings despite having faced headwinds from extended decision, making time frames and lack of urgency among new and existing customers. This year, we achieved a very nice conversion number ourselves pipeline across all of superior SaaS business since the spin.
We are encouraged by this pickup in pipeline activity Ari and are increasingly optimistic that we have turned a corner in terms of sale sluggishness.
Thanks for the quarter totaled $23.6 million with core CBS out bookings, representing $13.4 million and trubridge bookings up $10.2 million $4.6 million up trubridge bookings during the quarter came from contracts outside of our core HR client base, which reinforces our.
Confidence that the news the net new market opportunity for Trubridge services, there's meaningful.
We're especially pleased with the significant new contract win with a large health care organization that brought trubridge onboard to clean up its accounts receivable.
While these types of they are clean up contracts typically aren't recurring in nature and can create some lumpiness in our revenue. We believe these contracts are critical first step and establishing important relationships and creating a meaningful track record in this larger hospital market segments.
As we began to engage with new customers in this segment. It will help position us to take advantage of further long term up market opportunities for Trubridge.
We also had success during the quarter cross selling trubridge into our DHR client base during the quarter for clients converted from the traditional Watson's model to interest our SaaS model that combines trubridge business office outsourcing services with our HR system support and maintenance.
These contracts represented $2 million in bookings in the third quarter. We also saw strong cross sales of Trubridge services, including insurance follow up revenue cycle management medical coding and private pay services into our HR base.
We believe that end time cross sales from our Trubridge offering offerings into our acute DHR client base will replace the strong add on sales we've enjoyed in previous years from the meaningful use packages.
Before I said few words or by the revenue and earnings results I'd also like to highlight another Q3 bright spot, which was our post acute business, where we saw another decent increase in bookings this quarter.
As mentioned last quarter, we believe this improvement as a result of our ongoing development efforts focused on enhancing the user experience and workflow and our post acute product of American Healthtech.
We're pleased to see its development efforts begin to show signs of acceptance from these customers and prospects.
While post acute bookings represent a small percentage of total bookings this $1.1 million a post acute bookings in the third quarter represents a 26% increase from the third quarter of 2018, and 62% increase year to date over 2018.
Turning to revenue our third quarter revenue was $68.7 million, which came in ahead of our expectations due to the strong conversion of system implementation backlog and higher patient volume this quarter from a number of our trubridge clients.
These two areas of strong results helped to balance I delay in some expected topline growth attributed to get real help our recently acquired patient engagement solutions offerings.
Deployment delays in a couple of Canadian provinces for get real help.
Our this revenue to a future quarter.
Our strong third quarter revenue along with continued management of operational costs led to inline EBITDA results of $12.2 million for the quarter.
We enjoyed strong cash flow in the third quarter, while we continue to aggressively de lever the balance sheet, which result in more dropout or for future acquisitions.
Year to date strengthen our cash flows has enabled a net reduction in our debt of $10.4 million and that includes the $11 million up additional borrowings for the acquisition of get real help in the second quarter. This year.
Before I turn the call ever to Matt to discuss the financials I would like to conclude by saying that I'm very pleased with this quarter's results and that we're cautiously optimistic as we head into the final quarter of 2019.
We are encouraged by the strength of our sales pipeline in each business of note in early October we signed a little over a 2 million dollar E HR system contract in the Caribbean.
This international deal represents a significant win and our continued efforts to execute on the opportunity in English speaking countries outside of the U.S.
Furthermore, we remain confident in the long term growth opportunity of Trubridge and continue to maintain strong retention rates about existing E HR client base.
With that I will turn the call over to Matt.
Thanks, Boyd and good afternoon, everyone on today's call I'll provide a high level overview of the quarter, including an update on our recent acquisition of get real health or GR age. Some additional detail on bookings performance and major non financial metrics and walk through our third quarter financial results.
Most notably the third quarter saw significant improvement in bookings, which increased 61% sequentially and 25% year over year.
While the slow pace of decision, making has not fully abated, we're beginning to see a diminishing impact of that constraint on our acute care each our bookings. Meanwhile, trubridge achieved its second highest bookings performance ever propelled by $4.6 million and bookings from outside our each our customer base a market that has become a strip.
TJ growth focus for Trubridge.
As the trajectory of bookings improved we're pleased with our continued execution on our profitability initiatives.
As a reminder, we identified $10 million of cost savings during 2018 and $3 million during 2019, with all $13 million, having been decision and flowing through our income statement, which has allowed cps side to not only preserved but to increase profitability in the face of revenue fluctuations.
Excluding the impact of GR H expenses included in our measure of adjusted EBITDA have decreased $2.2 million or 4% compared to the third quarter of 2018 and are down eight and a half million dollars or 5% on a year to date basis.
Despite a 1% decrease in revenues from the third quarter of 2018, and an EBITDA loss from GR rate of $700000. Adjusted EBITDA has increased 2%.
From a year to date perspective revenues are down 2%, while adjusted EBITDA has increased 7%.
This higher profitability, coupled with reduced headwinds from financing receivables has led to significant improvements in our cash flow.
With financing can receivables contributing a net 800000 dollar tailwind to cash flow the third quarter of 2019, So operating cash flows of $8.1 million, a 15% increase from the third quarter of 2018.
On a trailing 12 month basis, we now boasts roughly $34.6 million of operating cash flows compared to $20.2 million on a trailing 12 month basis at this time last year.
This improved strengthen cash flows has allowed us to reduce our bank debt by nearly $17 million over the past 12 months. Despite funding the $11 million acquisition of GR range with revolver borrowings.
Speaking of GR age we remain excited about the opportunities that this acquisition has created.
Reaches products technologies and relationships and the growing patient engagement market contribute directly to three of CBS size strategic focus is strengthening the HR platform expanding trubridges capabilities in opening international markets, particularly Canada.
As a reminder, GR rage pre acquisition was a small and frankly subscale business with a mix of revenues from license subscriptions and services approximately 40% recurring that can make for lumpy results. We expect that lumpiness to continue while we integrate the business and builders technologies into new products like Trubridges chronic.
Mint service.
GR Rage acquired on May 30 of this year contributed an adjusted EBITDA loss of $700000 to our third quarter results on revenues and half a million dollars with a year to date adjusted EBITDA loss of $1.4 million on $700000 of revenues.
Inclusive of pre acquisition results GL rates year to date has produced revenues of $3.3 million and an EBITDA loss of $900000 prior to any adjustments related to AMC six of six.
Because of the lumpy nonrecurring revenues the range of potential outcomes for GR rates in 2019 is fairly wide with some large deals in the pipeline that could fall into the fourth quarter of 2019, where the first quarter of 2020.
2018 revenues were four and a half million dollars and depending on deal timing, we could see 2019 amounts ranged from something similar to double that number.
As a result, GR reaches EBITDA contribution for the full year could reasonably be slightly negative to moderately positive.
Our current expectation is for GR reach to perform more towards the slightly negative negative EBITDA scenario for 2019 with opportunities to significantly increase that contribution depending on the timing and performance of the existing pipeline.
We continue to look for tuck in acquisitions like GR rage, and other opportunities that advance our strategic initiatives such as the partnership with Sunnybrook Health Sciences Center announced in May to create a first made in Canada Hospital information system.
Turning to bookings performance as I mentioned earlier total bookings for the third quarter of $23.6 million increased 61% sequentially in 25% year over year.
System sales and support bookings saw a 15% sequential and 16% year over year increase due mostly to strengthen non in Q3 related add on bookings for our acute care. He HR segment.
In terms of net new acute care he HR bookings the impact of the elongated decision time frames that we've mentioned on the past couple of earnings calls seems to be lessening someone leading to a 700000 dollar or 19% sequentially accretion related bookings.
So we're still seeing headwinds against the prior year comparisons with net new acute care. He HR bookings lagging third quarter, 2018, but $1.9 million 31%.
Trubridge posted stellar bookings for the quarter that certainly bodes well for the resumption of significant growth for this segment, increasing roughly 231% sequentially and 40% above the third quarter 2018.
This segment's $10.2 million of bookings Mark the second highest in Trubridge history second only to the $10.6 million in bookings from the third quarter 2017.
This near record bookings performance was driven primarily by $4.6 million of bookings from customers outside of our traditional DHR customer base with GE RH contributing less than $400000 to the periods bookings.
Up to $13.4 million and system sales and support bookings roughly $800000 is included in our third quarter revenues $6.4 million represents non subscription sales that should trickle into revenue over the next 12 months with an average lag between booking and install a five to six months.
$6.1 million represents each our subscription revenue to be recorded over a weighted average period of five years with the start date in the next 12 months and similar to our non subscription sales in average lag between booking and install a five to six months.
Our $10.2 million bookings from Trubridge includes two and a half million dollars of onetime aer work down bookings that were largely expect to capture in revenues during the third and fourth quarters.
The remaining $7.7 million at bookings are nearly all comprised of recurring revenues to be recorded over a one year period, starting in the next four to six months.
As for key non financial metrics five customer side issuance went live with our thrive acute care products compared to six in the previous quarter and six in the third quarter of 2018.
As for licensing mix one of this periods go lives was under cloud or subscription model compared to three during the second quarter 2019, and none in the third quarter of 2018.
The five thrive go lives during the third quarter marked one less than we had anticipated as customer driven delays have shifted one of these implementations to the fourth quarter of 2019.
At this time, we expect 15, new client facilities to go live with our drive solution in the fourth quarter of 2019 with nine expected to go live in a cloud environment.
These cloud implementations include a for hospital Eltek chain.
Our employee head count as of September Thirtyth was roughly 1931, roughly 1% decrease from June Thirtyth.
Turning to the financial results for the period Trubridge posted results that were up 4.5% sequentially and 11% over the third quarter 2018 strong volumes for our accounts receivable management services drove the sequential increase with GR, each contributing half a million dollars and trubridge revenues during the quarters.
An increase of $400000 over second quarter amounts, excluding GR rates Trubridge revenues increased 3% sequentially and 9% year over year.
Compared to the third quarter of 2018, our accounts receivable management services revenue increased $1.2 million or 14%, while the continued strong bookings performance during the trailing 12 months for our Trubridge RCM solution resulted in another strong showing by our insurance services division with revenues, increasing $700000 or not.
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Demand for our hosting services drove IP managed services revenues to a 400000 dollar or 12% increase.
As we've highlighted all year the trailing 12 months for Trubridge has seen some operational decisions made by a few of our larger customers that decrease their related patient volumes and consequently had a negative impact on our revenues for the quarter. These operational decisions were primarily related to the curtailment of lab services and closure of certain under.
Performing locations, creating $600000 headwinds against Trubridge revenue growth for the quarter without these headwinds trubridge would have posted 12% organic growth the third quarter of 2018.
Just customer decisions and the related volume declines will fully anniversary during the fourth quarter. So we don't expect these headwinds to have nearly the same impact on next quarter's comparative results.
Trubridge gross margins expanded to a record 49% during the third quarter of 2019 compared to 47% during the second quarter and 45% for the third quarter 2018, as a side note GR each contributed $400000 trubridge cost of sales for the period absent the impact of GR rage Trubridge gross margins.
For 50% for the third quarter.
Next system sales and support revenues increased $1.3 million sequentially with non nvthree add on sales within our acute care HR segment, increasing $1.7 million to 6.3 million compared to a $5.1 million average over the previous eight quarters.
Year over year quarterly revenues were down $3.4 million, mostly due to immune three related revenues decreasing $1.9 million as we near the end of this nonrecurring opportunity.
Net new acute care he HR implementation revenues decreased $1.8 million. Despite thrive go lives remaining flat and six in each period as license mix and lower average contract value put pressure on revenues.
Our cost of system sales and support increased $1.1 million or 6% sequentially as our cost of third party software in content increased $800000 due to onetime charges, resulting from a vendor audit.
Note that these onetime charges are not included in the adjustment for nonrecurring charges in our measure of adjusted EBITDA and non-GAAP net income.
Despite these onetime charges for third party software and content year over year cost decreased $800000 or 4% as recent cost savings initiatives. How you have yielded improved payroll efficiency.
These onetime charges also pressured gross margins with system sales and support margins for the third quarter of 2019, arriving at 54% compared to 55% in the second quarter year over year revenue declines outpaced cost improvement, resulting in margins deteriorating from 56% 54%.
Absent these onetime charges gross margins for system sales and support would have been 56%.
Product development costs were essentially flat sequentially and year over year GR each product development costs of $400000 were largely offset by improved payroll efficiency and lower contract development costs.
Sales and marketing costs decreased $400000 sequentially and $900000 year over year has decreased commission marketing program costs and payroll costs more than offset the $300000 year over year increase in sales and marketing from GR rage.
General administrative costs decreased one point in the $1 million sequentially with GE reach making up only $200000 in the quarters expenses.
As we mentioned on our previous earnings call. We hosted our annual National client conference in San Antonio in May, resulting in a million dollars user group cost for the second quarter compared to only $300000 at such costs during the third quarter.
Bad debt expense decreased nearly $800000 behind improved collectability, while severance and other nonrecurring charges decreased $600000. These cost decreases when combined with other cost containment efforts more than offset the sequential $1.8 million increase and employee health costs driven by severe claims activity during the.
Third quarter.
Year over year costs have decreased $200000 as a result, as a combined $1 million decrease in bad debt and severance and other nonrecurring charges was largely offset by increased employee health costs driven by severe claims activity.
Despite the severe claims activity during the third quarter 2019 year to date employee health costs have decreased $3.9 million or 36% from prior year amounts due to plan design changes intended to drive down costs, while still providing competitive benefits to our employees and their families.
Lastly on the income statement, our effective tax rate during the quarter was 4% a significant reduction from the 22.2% effective tax rate during the second quarter 2019.
The third quarter benefited from provision to return adjustments related to R&D credits claimed on our 2018 federal tax return, which benefited the periods effective tax rate by 9%.
Conversely tax shortfalls from stock based compensation and non deductible cost associated with the GR each acquisition increased the effective tax rate during the second quarter by nearly 8% for combined 17% swing and effective tax rate.
Normalized for these discrete items, we expect an effective tax rate of 16% to 17% for the next 12 months.
In closing our third quarter results reflect the progress we've made in both strategically growing our bookings pipeline and improving our cost structure and cash generation the size and the mix of our third quarter bookings suggest that the pace of decision, making in the market is quickening and that the sources of opportunities are growing and diversifying between cross.
These within our loyal and sticky customer base Trubridges expansion beyond our HR customer base GR reach and our nascent international presence. We are excited about our prospects for delivering profitable growth to our shareholders and with that we'd like to open up the line for questions.
Thank you Hey, if you like to Whats. Your question. Please mr., one followed by the foreign and telephone.
You will hear three Tom prompt technology request.
It's a question I had been answered any led to US drive a distraction. This is the one followed by the three.
One moment. Please for the first question, it's coming from the line of Jamie Stockton with Wells Fargo. Please go ahead.
Hey, good evening, thanks for taking my questions.
I guess maybe to start.
Strong to Trubridge bookings during the quarter, I guess, maybe especially outside the base.
A couple of questions. There can can you give us any perspective on I mean, historically, how much have you actually booked outside of the Trubridge base, how should we think about that.
I think you said $4.6 million and then maybe.
I think you guys called out two and half million of that was kind of onetime in nature that was going to fall into Q3 in Q4, how much of that was actually in Q3, and how should we think about.
The ramp in Q4 thanks.
Hi, Jamie this is Chris so I'll take the second part first.
I think we recognized about 900000 revenue.
From the onetime deal.
On average I would say, we've seen closer to the $1 million, maybe one to two per quarter and bookings on the outside I think what's exciting about this quarter is.
Notwithstanding the large onetime deal as it were starting to see.
Across the across the spread of services that we offer and also in different slices. So we've got.
Position.
Physician clinics.
Surgical clinic that we've got in bookings it's about $600000.
Recurring revenue year over year Meditech facility that will start to billing for the first of the year, that's about 1.2 million.
So we're starting to see some momentum in different areas that we think we can below.
Okay, that's great and then maybe just one more.
Get real health.
I think this is the second quarter in a row, where you guys have kind of said hey.
The revenue from this business could be lumpy in the near term.
A lot of potential outcomes here.
Can you just give us a sense for kind of.
What is the sales pitch that you're going out with.
You know.
I guess I'd love to just.
I understand from your viewpoint, how potential clients or thinking about this and what would get them over the hump that would allow.
Significant amount of business to flow from that acquisition.
Yes, Jamie this is David dye good afternoon, I'll hit that on two fronts first of all.
It's large international opportunities either provincial wide or an entire country typically our opportunities that we've experienced thus far are.
Government based healthcare provinces in Canada.
And countries in Europe in the Middle East.
And in Australia, Slashed, New Zealand, where we have offered active opportunities.
And our licensed in such a way that it's based on the population usage of the portal.
So that as it rolls out the ability to recognize the revenue goes up.
As a result.
Particular, the opportunities in Alberta, and so Scott you won.
Although they've gone well as the rollout as in Alberta has has occurred I think we have about 95000.
Live.
Active.
Individuals that are live on the portal there in Alberta, right now and.
So Scott you on that a soft rollout of beginning about two weeks ago.
What's been delayed is the.
Provincial wide marketing rollout and in both provinces and Alberta. It was due to a called election that occurred in the spring.
And the change in government.
And there is still very much an expectation that that will happen.
In the near term in both provinces. So thats part of the reason why there's an expectation of some increased substantially increased revenue.
And we just have to wait until.
The large rollout occurs.
Domestically the opportunity right now is around chronic care management and the ability for trubridge to go out and sell that to our existing customers into run that program for them.
It's obviously, it's exciting for our customers in that it gives us an opportunity to increase their revenue and it's exciting for us because we get the charge a percentage of that revenue that we increase.
Okay. Thank you.
Thanks, Dan.
Okay.
The next question comes line of Donald Hooker from Keybanc. Please go ahead.
Great Great. Good afternoon, so the big how do we think about gross margins at Trubridge going forward with that big uptick in the quarter I mean, what it's at what does a normal run rate I think thats. The highest gross margin here you had for a long time.
Can you walk us through how to think about that kind of in the context whats going forward.
Yes, Donald this Chris.
Yes, I think our traditional margins are going to stay intact that date, the onetime deal is having a little bit of an impact on that so.
Notwithstanding the one time.
$5 million bookings will will hold.
Holes are pretty much as it relates to margin. So our accounts receivable management will be just north of 30.
Swing it up to our Trubridge RCM begin mid.
Seven.
Yes, thanks for the consolidated Trubridge should we assume kind of in the mid mid Fortys.
Mid Fortys consolidated yes, yes, yes, the sand and one of these onetime events that we get yet.
Hopefully, we'll see these come in but.
We're not going to have those projected in the run rate.
Gotcha Gotcha Super.
And then from a free cash flow as it seems like you've had some good progress there which is good to see there's still a lot of financing receivables on the balance sheet.
My understanding was that was part of M., you three or a lot of that was part of EMEA three if im not mistaken.
I guess with that program Rolling off now are we going to see some of those balances come down and turn in the cash flow for yes.
Yes, John So this is Matt you're exactly right that a significant portion of those finding some receivables, particularly the current portion on the balance sheet our from from IMMU three and if we continue to work down the collection of those we should continue to see findings crucibles pulling down. This was the third straight quarter that we saw positive cash flow.
From findings to receivables and we do expect that tend to continue for at least the next 12 months.
Super and then one last one for me.
With regards to GE or age I think you have some earn out payments.
That are based on the EBITDA performance it generates so.
Any any thoughts there as to maybe a cash outflow with regard to those earn outs I think in early 2020, if I recall.
Yeah, so any any cash outflow would happen I believe it has to take place by the middle of March of 2020.
So as of today, and we feel that especially with the de levering steps. We've taken that we're we're probably positioned to be able to accommodate that with the existing sources of capital between now and then.
Okay.
Okay scenario.
So thats I guess yeah okay.
Thank you. Thank you very much.
Thanks Scott.
The next question comes line of Jeff Garro with William Blair and company. Please go ahead.
Yes, good afternoon, and thanks for taking the questions wanted to ask about bookings and could maybe dive in a little bit more on why things have turned the corner if you could help.
Bifurcated, whether anything has changed in the broader market or if theres something that really specific to Cps side, that's helping more of these deals close the finish line then and fuel in the pipeline from here.
Yes.
Good afternoon. So first from the DHR perspective, yes, there has been a change in and out.
Obviously, the fact that Athenahealth is not.
Actively pursuing any new businesses that changed from the market since the beginning of 2016.
And given that they were certainly one of the major players competitively during that period of time, if you have anywhere from 30% to 50% of your competition sort of drop out.
Thats a positive.
So we're benefiting from that.
On the HR side.
And we feel that we will continue to benefit from that obviously, if we take a look at the.
Obviously, we had a good quarter, but if we take a look at the way. We've started this quarter in the way the pipeline looks on the HR base going forward, we're really confident in our ability to increase sales there going forward.
For two on the Trubridge side, especially the Trubridge, we called Trubridge up market or outside of the Cps I'd HR base.
A couple of things one we've been actively more actively working on that over the course of the last 12 to 18 months, we've increased our sales effort there both in terms of marketing and in terms of the number of people on the ground that are working that and we also made a change in leadership. There early this year that we think is that a significant.
Has helped us significantly as well.
Great to hear that's that's very helpful. One one more for me on the implementation schedule for next quarter. It nice to see it at a higher level that would would welcome comments from the team on your your capacity your confidence and implementing all 15, and then related margin impact of.
Getting that done.
Yes, as far as the capacity of implementation teams absolutely.
We don't have any issues there at all as Matt mentioned in his prepared comments for those to our long term acute care facilities. So they don't require near the near the implementation staff the larger so full system does.
I'll, let Matt speak to the margin side of your question.
Yes, so naturally with that full of unemployment implementation calendar, even with that being heavily tilted towards.
Subscription deals, we do expect to see.
Some some fairly moderate.
Margin lift for Q4 versus Q3, so we'll have a positive impact.
Got it thanks for taking the questions guys.
Thanks, a lot yet.
The next question comes a lot of Stephanie Demko with Citi. Please go ahead.
Hi, guys. Thank you for taking my question Congrats.
So thanks.
Bookings came back in a really meaningfully this quarter.
And.
We have the same sort of pride fleet. So what do you think change in the environment.
Is it approaching more distressed hospitals that were really ready to outsource looked at the local hiring initiatives that you talked about last quarter or was there something else that just came together.
Hey, 70, this is Chris I'll kind of build on David's answer to Jeff The second together.
On the of the HR front and the distributors that do I think that third part of that is when we're looking at the end for us and.
How.
Just over the course of the last.
Lets say, let's say six to six to 18 months just from a education of both to customer base and from our sales staff.
Really finding those opportunities to drive the.
The return on investment for the customer and looking at it from two fronts, one obviously, where we have customers that are.
Looking at specific add on applications to date that they would like.
To acquire the debt that creates an opportunity for us to bring in the interest opportunity specifically thinking about the emergency Department application and also our ambulatory.
Application being the main drivers there and then secondly from a our performance standpoint. So we have obviously, our our customer base, we have a lot of smaller hospitals and some remote locations and from an access to talent and ability to to deliver.
Deliver quality service on the accounts receivable management side can be a challenging. So those are the two areas at the sales staff is really zeroed in on being able to speak too.
Adequately to make sure that we're positioning the service and we're really start to see the uptick in that obviously from a bookings in the third quarter to David's point, we're off to the store and the fourth quarter as well.
Understood. That's good to hear because my broad based and you've alluded to before to some election uncertainty maybe basing it on this before so are there certain pockets of solutions. There just really selling some of the ones you mentioned versus some that are getting paused or is that just off the table.
I don't know Theres necessarily any any additional Paul is going on I think there was a bit of a lag.
And again.
We've seen the pipeline fill up we've seen some nice decisions being made but we havent exhausted the pipeline. So I think there was just a little bit of a delay between.
The regulatory demands and the force decisions that people were having to make and that subsided.
And people are back to being in a buying.
Got it. Thank you guys appreciate the color.
Thank you.
The next question comes line of Dave Windley with Jefferies. Please go ahead.
Hi, Thanks for taking my question good afternoon kind of follow ups. The last couple of questions. So.
Heard your comments about thinking kind of vacating.
Our area of the market from a competition standpoint.
Wondering if you are seeing any any of the same medium to bigger players.
Actually coming down and competing so any any kind of gross new adds to the competitive set.
Understanding that you kind of run under the radar screen of the biggest players, but but nonetheless interested in whether you see anybody coming down in and kind of replacing the other thing the competition.
Certainly.
Not anymore, so since Athena, let the market and we would say it's early right, but we would say at this point potentially less.
We believe.
That some of the larger players were down in our market a little bit more during athenas entrance and sort of during their time there over the course of three years, then a desire to compete with them downstream so that they potentially would be active upstream down the road someday and now that that thread appears to be gone at least for the time being we believe.
We're seeing a little bit less of those players down in our space, but it's a little bit early to declare that that's an absolute.
Okay, and then certainly understanding that was less competition should come from a pricing.
But wondering there and relative to your comments about.
Quickening pace of of decision, making and more people more of your your target or pipeline.
And willing to make decisions I, just wonder what the pricing environment.
It feels like right now and if maybe some of that quickening decision, making is being incented.
To be done thanks.
We're seeing though we're actually seeing again this is a.
Short term observation to this point, but the pricing environment is improving in our favor.
Due to the lessening in competition, we believe that Didnt wasn't necessarily reflected over the course of the third quarter, because we did sign some specialty hospitals and some long term acute care facilities in that timeframe, but in terms of what we saw from the acute case acute care sector.
In the third quarter and what we've seen thus far in the fourth quarter, the pricing environment is notably improving.
Okay, great. Thank you appreciate the answers.
Thanks, Dave.
And this was a cross line of Donald Hooker with Keybanc. Please go ahead.
Yes, just one other kind of housekeeping item in terms of the Mthree sales in the quarter I think you said it was down.
Billion nine year over year. So I guess is about a million two in the quarter. If I did my quick math here.
For the third quarter or are we done what those bonus those software sales from you three years or any kind of reason for revenue there to be recognized in Q4 in 2020.
Yes, Don you're exactly right Q3 revenues from maybe three were $1.2 million bookings were 600 k. So today throughout the life of this opportunity we've recognized $32.7 million of bookings or revenue with $32.7 million of bookings. So as I've 930, we've completely.
Exhausted the backlog, there and while Theres still some opportunity going forward, we certainly don't expect it to be to be meaningful.
Okay.
That's all from me thank you.
There are no further questions at this time.
However, if you like what's your question if that's the one followed by therefore on a telephone keypad.
There were still no further questions at this time I'll now turn the call back to discontinue the presentation and are closing remarks.
Sorry, I just want to thank everyone for being on the call today and I Hope you have a great rest so that day and great rest. So the way thanks a lot.
That does conclude the conference call for today, we thank you for participation and asset to please disconnect your line.