Q4 2020 Earnings Call
[music].
Good morning, ladies and gentlemen, and welcome to the Felicia fiscal fourth quarter and full year Twentytwenty earnings Conference call.
This time, all participants are in a listen only mode.
We will conduct a question and answer session and instructions will follow at that time.
I would now they introduced Lockheed Gandhi Vice President Investor Relations for Frejus. Mr. Gandhi you may begin.
Operator.
Good morning, and welcome to freezes earnings conference call for the fourth quarter and full fiscal year 2020, which ended on January 31st 2020.
Participating on today's call freeze young our Chief Executive Officer, and co founder I'm in dig Chief Financial Officer, Tom out here and senior Vice President Life Sciences, David I'm asking.
I went and remarks I haven't.
We will conduct acuity session.
Complete disclosure of our results can be found in our earnings press release issued yesterday evening as well as it related form 8-K submission to the FCC both of which are available on the Investor Relations section of our website at <unk> Dot Frazier Dot com.
Reminder, today's call is being recorded and a replay will be available.
Following the conclusion of the call.
During today's call, we will make forward looking statements pursuant to the safe Harbor provisions or forward looking statements contained infection 27, a other Securities Act section 21 of the Securities Exchange Act.
Including statements relating to the expected performance of our business.
And your financial results.
Our strategy.
Ownership.
Back to the watches products and services long term growth and overall future prospects.
These statements are subject to known and unknown risks and uncertainties.
Could cause actual results to differ materially from those projected or implied during this call.
In particular, those described in our risk factors, including in our form 10-K, which will be filed with the FCC later today.
You should not rely on a forward looking statements as predictions about future events.
All forward looking statements that we make on this call based on assumptions and beliefs as of today and we undertake no obligation to update them, except as required by applicable law.
We've also refer to certain financial measures not in accordance with generally accepted accounting principles in order to provide additional information to investors.
These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Reconciliation of GAAP to non-GAAP results, maybe found in our earnings release and supplemental materials, which were furnished with our form 8-K filed after markets closed on April 22nd with the FCC and May also be found on our Investor Relations website and IR at <unk> Dot com.
I will now turn the call over to our CEO I'm into it.
Thank you Bill luxury.
Good morning, everyone.
No. This is a very challenging time for everyone, let's begin.
We hope you are all managing through that as well as possible.
Well I'd point out the real participating on the call on todays call from four different locations. So we appreciate your patience with us we'd like to knowledge or healthcare provider organization and medical professionals on the front line the coded 19 pandemic their bravery dedication.
Our CFO Tom culture will begin today's call reviewing our fiscal 2024th quarter for your results Tom.
Thank you Jaime.
Let's start with our fiscal fourth quarter 2020 results.
Revenue was $32.8 million up 24% year over year.
Provider revenue, which combines our subscription and payments revenue.
Was $26.8 million up 22% year over year, where the following contributing factors to growth.
The average number of provider clients was 1600, three or 4% year over year.
And our average revenue per provider client was 16007 are way up 18% year over year.
Life Sciences revenue was uneven $6 million up 33% year over year.
And our adjusted EBITDA was $1.3 million.
Over $900000 year over year.
Let's turn to the full fiscal year.
Revenue was $124.8 billion off 25% year over year.
And provider revenue was 102.9 million up 27% year over year, where the following contributing factors to grow.
The average number of provider clients was 1500 71.
5% year over year any average revenue per provider client.
65486 up 21% year over year.
Life Sciences revenue was 21.9 million up 15% year over year and adjusted EBITDA was 4.8 million up one point threemillion year over year.
Cash flow from operations was $826000, representing a 3 million dollar improvement year over year.
And our first you're ever with positive cash flow from operations.
We ended fiscal 2020 with just over 90 million in cash on the balance sheet.
We had $20 million about standing borrowings under our credit facility.
We have a 25 million dollar revolving line of credit which is on drawn.
We're extremely proud of our entire team for delivering these results and we would like it particularly acknowledge our provider and life Sciences sales Dan.
And our implementation English for their strong push into the ended the fiscal year.
There is additional detail in our fiscal fourth quarter and full year 2020 results in our earnings press release and form 10-K, and we encourage you to review them and follow up with any questions.
I will now turn the call back over time.
Thank you Tom.
Now turning to the currency to pre show in light of the ongoing pandemic and the related federal state and local guidelines that are affecting all about.
We'd like for you to come away from today's call, which is solid understanding of the following three topics first the currency to freezes operations.
Our teams overall health safety and engagement.
Second how we are currently engaging our clients.
Third how we are preparing for near term uncertainty and long term growth.
Let's start with the currency of our operations in cheap.
The week of March 1st we restricted all non essential travel and soon after that equation or New York City, Raleigh, North Carolina, and auto, Ontario offices began working remotely.
We took steps to ensure Archie you had access to the required resources to adapt to professional and personal challenges associated with this transition.
She is a significant undertaking across our organization I'm very proud of our teams resilient during such a challenging time.
I'd like to acknowledge our human resources and IP services team.
Making the transition as soon as possible for our entire team.
Moving on to how we're responding for our clients reserves mission is to create a better more engaging health care experience.
It has been amazing to watch our entire team embody our mission mobilizing for our clients in the wake of the pandemic.
Let me share a few specific examples.
Back in February our provider clients began asking feature to bring the same automation be brings to their patient intake process into their kobin 19 screening process in order to trio at risk patient and avoid putting their office staff at risk of infection.
In February.
Quickly deployed our Cobra during June screening module based on CDC guidelines.
The module lounge providers to identify patients with Kobin 19, brisk factories before they arrived for their point or upon arrival at their visit.
And alerts patient data could take appropriate action based on teaching responses, we've been updating the module and CDC guidelines change and they've been able to change the screen or multiple times per week across are quite organization. We have screen 2.5 million patients are proven 19 screening module.
Many of our provider clients also began to talk too much about bringing the automation our platform delivers for in person visits took are true.
Our virtual visit is similar to an in person disease patients need to checking for virtual visit breaches platform Clecs patient information processing payments seamlessly integrated most electronic health records in practice management systems.
March we introduce depreciating take for Tal.
Patients Preregistration isn't that using presumable, which includes education about how the visit will work just before the appointed.
Patients receive specific instructions and information for the session.
Such as a link change or the virtual waiting room, we worked alongside many tele health vendors, including Microsoft teams.
You mean.
Well intellectual and doxey Dauphine.
We have made the decision to include intake for Tele health, it's part of our base registration operate at no additional cost to quiet.
You are preparing for a future that is less reliant on the physical waiting room.
You could find additional information on all of our coal good 19 response initiatives product offerings and sign up for updates on the trees your website.
I'd like to knowledge or product management in engineering and marketing teams for their effort to bring these important offerings to our clients in a matter of just weeks.
Let me take a moment to highlight a new clients.
Memorial Health systems, a nonprofit health systems, serving Ohio in West Virginia, We went live with Memorial November 2097 of its locations.
Over the past several months drew the coated 19 pandemic, we've accelerated our rollout the freeze your platform across the rest of memorials outpatient service site.
Provider clinics and hospitals approximately half of the rollout of memorial will be completed virtually by our team.
The health system is leveraging freezes no generally available bidirectional discrete integration with meditech to capture demographic and payment information from patients during in check.
The data is automatically center staff in real time should they can more fully understand the patient individual status.
Memorials currently using preaches coated 19 screening module to screen patients for self reported risk factors, including extensions and exposure to date Memorial health system screamed roughly 19000 patients.
To minimize exposure during inpatient visit memorial is using freezes your own contact intake, which supports in a way to workflows, including mobile check informations homes or cars not solutions lives into emergency department locations, one urgent care clinics and memorial.
Clinic for patients with Cobot 19.
Memorial. He's also using frees you can take for total health.
Memorials a good example of how freezes continued to deliver for clients and this more challenging work environments.
Let me now address the Pandemics impact on free show, how we are preparing for a lot of near term uncertainty and long term growth.
We believe the steps, we're taking or the right thing to do for our clients for employees and for our investors.
As we disclosed in our 8-K filed with the FCC on April six our business realized in part from the growth and success of our clients in certain revenues are driven by patient engagement.
If the number of patient visits to our provided quite locations decline it will reduce our subscription related services.
Payment processing and life Sciences revenue streams.
The week ending March 28, 2020 breaches provided claims experience a 55% decline in patient visits compared to the weekend. Due March 720, 20, as nonessential elective visits were cancelled to reschedule.
The decline will directly impact our patient payment processing in life Sciences revenue for the fiscal quarter ending April Thirtyth Twentytwenty.
The future impacted coated 90 patient visit train difficult to predict but we believe that patient visits could continue to slow during dependency.
Despite the decline in total patient visit.
We just provided clients are experiencing a significant increase in telehealth visit.
Providers increasingly shift away from in person visit and towards virtual care.
We believe our intake from telehealth offering is helping our clients engage with the patients virtually for certain on urgent dawn procedure oriented because it.
Our subscription and related services revenue will be negatively impacted by current travel restrictions and our provider office closures in the wake of Kobin 19, because of disruptions. The sales process is quite implementations and the loss equates.
At this time, we cannot predict the extent to which could be 19 will negatively impact our business into the situation remains in place.
Many of our investors about just how we're positioning ourselves for the long term.
Evan and I have led freeze your for 15 years through several economic cycles, Tom has seen even more cycle as a few up over the course of his career or their priorities we're focused on.
First take care of our team.
We believe it's important to support our employees health and welfare and the best of our abilities.
That can make him a solid liquidity position.
We're comfortable navigating the current environment with our current balance sheet.
Third maintain are critical value to clients, making our crowbar screen or zero contact intake and then take for total health widely and rapidly available are examples of how we are delivering value for our clients.
Before we move onto questions I'd like to address or current view on guidance for fiscal 2021, ending January 31st 2021.
We do not know how long federal state and local guidelines and restrictions related to the pandemic will stay in place.
Our clients are currently restricted from seeing patients for elective treatment, but the impact on visits from new guidelines has extended beyond elective treatment.
Once restrictions begin to loosen and be removed, we do not know what the piece of recovery will be.
For these reasons, we will not be providing guidance for fiscal 2021.
That concludes our pre prepared remarks, operator, we can now open up the call for questions.
Thank you at this time it will be conducting a question answer session.
The question. Please press Star then another one on your telephone keypad in order to allow for as many questions as possible. We ask that you. Please limit your questions. So one question with one related follow up your first question comes from the line of.
JP Morgan.
Guys open.
Hi, guys. Thanks, so much for all of that really helpful. Color I was hoping you could maybe speak to what you're seeing in the software business around selling decisions being made having its all differently in this environment, what's going on there.
Any a big so the question Oh, we have been.
Able to do some selling but I must say the entire market's been impacted.
Yeah, it's impacted sales to our current clients, it's impacted sales through our prospects that being said, we had been able to convert some of those opportunities.
But what we've really focused our sales team on.
In the near term, though is really helping our clients.
And educating them around 219, screener and intake for tele health and or zero contact work flow applications and frankly, what we've seen is that.
And we continue to believe is our sales organization is a huge strategic asset that that will remain a strategic asset once once the country comes out of this.
That's really helpful. And then maybe you know obviously, it's really difficult at this point to predict what the recovery is going to look like but are you expecting to see some pent up demand within your practices. Once they start reopening and you know maybe you know it's that kind of on a you know a rolling regional basis.
How are your providers carrying a you know for for that pent up demand if they're expecting it.
So those like three questions and it was.
Let me.
Do you mind repeating that to start to get them all down I don't have the luxury sure. Yeah. I mean, it's it's really just you know writer.
I agree with the sorry.
You know are you expecting pent up demand from procedures that are being deferred and how are your provider is preparing to address that.
So first I will say I'm, you know I'm not an epidemiologists nor.
Do I have a crystal ball and if I did I'd, probably be doing a lot better things I would that crystal ball, but what I will say is I think that and I'm going I'm going to defer quickly so.
After I answered the question to David when it's great who's on the line.
I think side.
[laughter] people go to the Doctor's office and visit their doctors because they need to right. So there is no they need their wellness visits they need to get.
Their cancer is treated they need to understand why they have a weird lesion grow another skin and so my general belief is we don't go to doctors office. That's the society because it's a fun thing to do we go because we need to.
And you know these doctors want to treat their patients and so we've been working closely with them. So they could turn back on their offices, while keeping themselves their staff and their patient safe is euro contact work flow I do believe the work flow of the practice is going to change within than your and near and.
Long term.
Because people want to limit the amount of unnecessary contact got their patients have and we've been building product and deploying it to allow that to happen because even today because he does those physicians and their SAP, they're seeing patients that can't wait and I'm really proud to be able to partner with them on that I do think it's a good.
We did.
We released right before Vicki keynote at Midnight Tonight, or Monday last night.
Hey paper with the Commonwealth funded Harvard University, we co authored and what we did as we use visit data from the freezer platform.
That paper is now available on our web sites and it includes detailed patient visit trends through April and I wanted to.
I wanted to introduce David when it ski RSVP life Sciences to join during today's call because he is the call to the paper and his team worked closely with the Commonwealth Fund at Harvard teams to publish the paper, we really want to contribute creatures network data.
To.
Research publication or sporting advocate for our clients are patients, so oh sort of defer any questions around trends that we're seeing and provided practices to David at that point.
Great. Thanks, very much did I answer your question. Thanks, any I hope you're getting things that are healthy and say, Greg I am. Thank you you as well.
Your next question comes the line Ryan Daniels with William Blair, Brian Your line is open.
Yes, thanks for the details and hope you guys are all doing well Oh, Hi question for you on the core business. If we think about the moved to Tele health.
What's the like for like revenue capture for one of those visits versus a typical office visit.
That's right and it's a great question. So today you know in office space is it is still I think for most payers and you'd be I'm not actually I know what the team is educated me about and whatever providers educators, but right now most of our provider, especially with Medicare and a lot of the forward thinking plans.
Our allowed to get reimbursed for a like for like in office visits.
That being said or a large portion of a provider, especially in especially space. The revenue comes from procedures and other ancillary services. Obviously most of those services cannot be daughter provided over tele health, So you're able to see visit volumes at a certain level does a charge.
As a are often comparable but it's the answers services I think that will be impacted in the near to that will be impacted with <unk>.
Okay. That's helpful. And then maybe a more philosophical question as you think about your product offering going forward I know, there's some challenges in the sales environment with travel restrictions and focus on covert 19, but his office is think about preparing to reopen in what consumers will want to see before they're comfortable going.
And it seems like the virtual waiting room, the ability to check in in your car and wait to say come in and go into room eight.
Immediately versus sitting in a waiting room with a bunch of sick people is going to be very attractive. So I'm curious internally. What you think this could do as a potential silver lining longer term for the growth in your business in client additions. Thank you.
Joe I want to be really careful because I don't think there's any silver lining to a pandemic other than I hopefully bring.
Our country closer together and making everyone knows that the impact that healthcare workers are having on sought our society and have necessarily they are I would say that.
The traditional waiting room as we've known it is not going to exist for some time I don't think people want to sit in a way degree or with other potential.
Generally sick people and I don't think providers won't then I also don't think there they want to put their staff at risk with unnecessary exposure.
I think that we're in a unique position to provide solutions to keep staff patients and providers safe.
And you know to us that that was where we prioritize all of our resources how do we make sure that we continue to allow.
Doctors to treat their patients staff to be able to be employed and in that environment and if we keep doing the right thing over and over again.
The company that I think.
A lot of people will continue to be excited to be part of and.
Most importantly media and everyone else. So it's it's really nice that we've been able to to do our part and where possible.
We're always talking with our providers in understanding how we could just continuously improve whether that's on the product or whether that's with implementation.
Your next question comes from the line have Sean Wieland with Piper Center, John Your line open.
Thank you good morning.
On the the adoption of intake for Tele health can you give us a sense of what percentage of your your client base has adopted that this so far how many will adopt it and.
What specialties are most receptive in your view in transitioning to telehealth.
So I don't think we're sort of Sean I think that's great question.
Right I think I understood, which is sort of what's the what type of adoption are we seeing until the health is that correct, that's where you're looking well yeah. I mean, specifically of the orientate, but I'm trying to get a sense of where the pockets within specialties that seem to be quite receptive to transitioning that business to tele health.
So what I'll do is I'm not going to pass it over to David I think he'll give some some visibility based on the data, we published which should provide some color to that but I think that's what.
We're seeing it broadly what I will say as I think we're seeing it broadly adopted but David you want to jump in and answer.
I'm sure Sean Good. Good question. We report, we published along with Harvard and Commonwealth Fund does highlight the really rapid uptake as Tele health. We're now seeing about 30% of all visit volume transition over to Tele health, which has been really impressive we did not.
Specifically report on uptake within certain specialties, although we are planning on doing a follow up report about that I think that it's safe to say, we certainly do you see a lot of variability between.
Different specialties.
Has had a very easy time transitioning out you know as an example behavioral health.
Was that just that not told transition in many ways to see that virtual model, whereas other procedure specialties.
Are going to have a tougher time transitioning their their business over there were able to do consultations that obviously procedures can be done that way.
Right and I have not had a chance to go through that Ah report that was published late last night, but.
Maybe you can you call out some of the key findings better that are in that report.
Yeah, absolutely and overall, we were talking about would be really rapid drop in visit volumes.
That all the practices that are network and I think all practices nationally experienced in mid March immediately following the declaration of a national emergency we started to see practices cancel all non essential does it.
In appointments, we saw starting on or about March 15th and for the next two weeks really rapid declines and visit volume.
We saw those drop.
By about 55%.
But over the last few weeks since.
The week of marks claims seconds through through last week those visit volumes have stayed low but those declines of stops so they've been relatively stable for the last few weeks. It goes lower levels that was really the main finding we found that those that that same pattern in declines in visits was neared across the country.
In in all regions, although that the declines for greatest in new England in the mid Atlantic States. So I don't think will be surprising to anybody.
We also saw that that number in office visits a truck even more steeply.
No merely down they got down to nearly 70% decline you know that Delta there was really made up for in the adoption of Tele health.
I wish <unk> overall, because it's down to about 55% because we had disclosed a couple of weeks ago.
And again, the we saw very very rapid uptake or tele health.
You look back at the beginning of March virtually none of our visits were well get kind of how no less than 1% and starting on about March 15th.
Over the next two weeks, we sorry incredibly rapid growth there and we're now running at about 30% of our visit volume it's happening through some sort of telehealth platform.
And again that does declined in visit volume. We also reported on those across various specialties and the declines were generally larger among the surgical and procedural specialties and smaller and other specialties like primary care and well be Gi Lan oncology and behavioral health.
But some that were really severely impacted.
Ophthalmology Idling college in dermatology, we saw very steep declines into that line.
That's different held about things, but that's our general thing no problem.
Yeah. Thank you.
Your next question comes from the line of Jamie Stockton with Wells Fargo. Jamie Your line is open.
Thanks, Good morning, I guess, maybe my first question. This is a little bit of outdoor shown with asking but if we think about the 55% decline in visits.
Including some benefit from higher telehealth visits is there a way to to bucket that between hey, elective procedures have had been put on hold and as a result that theyre visits that are not happening.
That want to elective procedures start back up I should start to happen again.
Versus.
You know people just not wanting to go to a doctor's office, because they don't want to risk getting a infected by someone else who might be there because they have I covered 19.
I guess I sense that.
A number of states will start to green light elective procedures at some point in the next let's say month or so, but maybe that won't completely change people's behavior around more discretionary visits is there way for us to think about how to bucket that 55%.
Well that Oh look David.
Answer some of the color on that where we can.
Hi, Jamie it's a really good question I think it's very difficult to tease apart those factors right now we know for sure that both are contributing one.
Central visits we saw mass cancellation of the visits by many practices. We know also that patients are trying to social distance are trying to stay home and are not necessarily wanting to go to the doctor's office, if they don't need to so there's certainly a combination of both in this report that we published we did not do that.
I mean, Allison I think that would be a difficult one to do quantitatively.
It's something that we'll certainly take as a follow up but anecdotally, we haven't heard from many of our clients and it works very closely with Dr. Hillary hatch here and I know that she has done tremendous amount outreach to our practices in what she has been hearing both from some primary care practices and from specialty care Frac that is that they are really.
Really serious about treating their patients they want to be treating as many patients as possible and they really look forward to being able to do that again and so they are thinking about how they will fill their schedules as quickly as possible. How they can do active outreach to patients that are in need of clear that's no chronically ill patients that have been skipping care.
During the pandemic as well as people that know deferred elective procedures. So they are really thinking about how to come out of this as quickly as possible when conditions on the ground allow for it.
Okay and then maybe my other question just on the life Sciences business has historically am I understanding as you guys haven't.
You know, let's say used all of your.
Intake encounters.
To.
Conduct a campaign.
And so while you've seen a huge decline and the number of encounters.
You know potentially you could be increasing the percentage of encountering that involve some sort of campaign.
Our at least that's my sense can you can you just talk about that dynamic.
Should we think about the life sciences business as being directly impacted by the.
Declining visit volume or is there some mitigating factor, which is that maybe historically you haven't haven't been using every single encounter as an opportunity to do a campaign that'd be great.
Yeah Excellence my other players.
Yeah, I'll, let David Yeah.
That's a great question I think you know the answer is yes.
We certainly are impacted by a decrease number of of ER visits.
We are very very thoughtful about how we engage with patient so and that.
One thing for us to always be delivering the most relevant and impactful content to a patient to make sure that we are driving a positive outcome. We continue to focus on that one of the things that has been really incredible to watch over these last few weeks is how well our patient engagement platform has adapted.
To the new ways of working to these new workloads. So all as I mentioned all of those tasks that has to happen in advance. So did that are the same whether that visit you. The virtual does it yeah, tele medicine or whether it's in person visit and our ability to engage patients for either type of as it.
He is because it's the same so we were we've been really effective in that environment, which has a nice.
In terms of using a higher percentage of our of our patients I think we continue to stick to the what we think are the right criteria for every single campaign in two delivered to the most relevant patience and in some instances, where we're not using all of a available patients that meet those criteria.
We're able to.
Adjusting for accordingly.
Okay. Thank you.
<unk>.
Your next question comes from the line as Matthew Gilmore with Baird. Your line is open.
Hey, Thanks for the question.
I would ask about implementation processes and and whatever backlog may have been created by that and then it sounds like a good selling season in the fourth quarter and I guess I presume.
Implementations of and put on hold so can you give us some sense for sort of what got implemented in the fourth quarter versus what's on hold and hopefully.
Well get implemented later this year.
That's a great question and.
So I would not say our implementations have been put on hold I think certain implementations have.
Hi, there because the product practice.
As in the middle of dealing with the pandemic or they don't have the resources available because it had to furlough some of those resources and this is this just can't be done at this point, but we also have other implementations where we've done.
Done virtual implementations and the team is.
In memorials, a great example, that where we actually sped up a lot of the implementation remotely add more than half of the implementation was done without our people on the ground.
They work hand in hand, with the team at memorial to accelerate it.
Hi, good to get it in place it more broadly faster. So I think we'd seen both some acceleration and we've seen some slowdown.
No I would say the team is just <unk> for our organization that does or implementations and everyone that supports them. It's just a phenomenal job I'd just be.
Wildly and readily available I know of some of the teams, but to just fit into schedules. They were putting overnight to make sure that they were able to support our clients to get them live.
Our practice and safe and so I'm just been amazing to watch it really painful.
Got it and then a follow up on intake for Tele health and I was I just trying to understand how differentiated.
That would be sort of in this environment. So it if you're not using a freeze.
Intake process for Tele health, what what would those practices be doing and is that sort of more cumbersome.
Versus the traditional in person intake process.
I think what we're seeing.
There's interest coverage than we're seeing a higher no show rates when they don't use us tied to their tele health.
That's the anecdotal or what were hearing early on because obviously it is pretty quick.
Turnaround on it we're seeing a lot more manual work had a significant level and we're seeing a lot less data and information and frankly patient responsibility captured so it's sort of across the board.
All the buckets and a lot of the work in the short term is also just being transferred to the providers.
Who are just typing it in because they just didn't have a lot effect.
So what we're seeing is that you know all those things that have to happen.
In person still have to happen.
Out of the office right you still need to Nsaids you still need your information updated you still need your copays collected you still need.
Clinical histories, Dawn and you still need to remind people to show up in told them give instructions what to do what they do show up and so the choices either throw bodies that it skip doing goods or use free show that's generally the way.
We've seen that.
And also it's a platform that our providers or know what are comfortable with and it gives them scale and automation, it's been really helpful.
We got 1.2 million.
People doing it Jones.
Okay, great. Thanks, a lot.
Yes.
Your next question comes from minus Donald Hooker Keybanc Donald Your line is open.
Oh, great. Thank you good morning.
Okay, everyone as well in terms of what I think about Youre PNNT all in your capital spending.
Yeah plenty of balance sheet liquidity of course, but can you give us a senses to kind of the different line items, what what's discretionary what's not how much sort of flex you had I guess at some level everything's variable of variable cost but.
You know kind of what what kind of actions you can take if things get a lot worse or things.
Don't get worse or what actions have you take and sort of on across the piano and Capex line.
So I'll, let Tom.
Trumpeter and talk about.
Yeah, we got a significant amount of flexibility in the piano.
Pretty much up and down the income statement with the exception possibly of payment processing revenue.
ER, which is directly tied a payment processing expenses directly tied to our payment processing revenue, but sales and marketing.
Implementation developments, Oh can flex or has the situation develops here.
Also on the Capex side would pads or we've got some.
Flexibility there as well.
And learning as you said when we got plenty of money.
One of your capital.
And let me be cleared Tom and I have been through multiple cycles I've been running for you with Evan for.
15 years, and Oh, we definitely lived through more than one cycle and Tom is time as CFO has been through.
Many many cycles so from our standpoint, we've we think we've started already taking necessary appropriate actions around hiring where we were frozen old on critical roles in the near term.
And Oh, we're really taking a hard stance on what are necessary expenditures just in the near term.
Super Thanks for that discussion and then maybe one other sort of different question.
I hear a lot of anecdotes in the press Oh sort of.
Pretty substantial financial hardships by physician practices all around the country.
Is that what are what are you seeing in terms of.
Maybe business in practices closing are looking to be acquired by larger health systems are you.
Seeing any sort of pressure on your price points or their needs for maybe some temporary concessions or how do you. How are you managing some of the struggles that I'm I'm certainly hearing about.
So this europe's.
So first and foremost I do think physician groups and health systems across the country are struggling.
And it's not it's not limited to.
Anyone type or size or region.
We're seeing large health systems being materially impacted all the way through too you know the four dock practice that serves underserved communities and we are the first off we're trying to work with them where possible and offer a deferral program broadly speaking across organized across all of our client base.
And we think that that's just important.
Probably the right thing to do and where they were necessary, we're having to do forgiveness to just make sure that there's they're able to keep seeing patients, which is a priority, but I don't think anyone.
And that we're talking too is just talking about throwing the towel I think what there number one priority is how did they serve their patients in this really challenging environment.
I don't think that got also don't think that.
Health systems are or saying, Hey, we're we're doing great either.
So this is broadly across the board.
That's fair thank you for that.
Thanks, Mike.
Your next question comes from the line of John Ransom with Raymond James Your.
Your line is open.
Hi, good morning, everybody out there by saying well.
My question is.
If you look at the doctors, who have a subscription model versus a per visit model, they're probably holding in a little better and I'm thinking mostly accounts the air site ER physicians.
Do you see any risk with your user base at least on the primary care side moving more to subscription based type pricing and you know cutting out some of what you guys are able to add or do you think that that really doesn't change and all this.
Uh huh.
John that's a that's a really interesting question I don't see any when talking about changing their business model right now I think with date.
What was working before it's still generally working what they what they really want it is just get back to treating their patients in a scalable.
Meaningful way, but I don't we are hearing anyone oh lease I'm, not saying that they're very interested in change their business model I think those that are doing cause years are probably just as worried about the economic longer term economic impact.
Large scale unemployment, which could happen.
Right.
A couple other ones and this is where I ask you to play Nostradamus, then [laughter], but at the if you if somebody put a gun to your head and said, okay. When things normalize it where sometime in 2021 and things are normalized what what would you guess that are set of visits with permanently shift to a tele health.
It's a situation versus returning to an office.
Yeah, the guest where you're going to.
Going to make me advocate for gun control, there Oh [laughter] [laughter] so what.
So you know I think that what I don't know what the answer is in terms of what are the material like how much visit volume are we going to see.
In telehealth, but I know, it's here to stay broadly speaking and not just from using providers I think what we're seeing and hearing from providers is this is no here to stay in a portion of our patient flow can now be seen this way.
But I think what would the big question marks are what is reimbursement gonna look like outside of this crisis, what our license levels going to be license levels and Anda state regulations are going to be allowed a post crisis.
We will be.
What type of visits post crisis will.
Be better served with tele health versus not and what's really interesting about this is we're getting massive public health data that basically says is this work or does it not work in large scale. So I think a lot. It you can you do a wellness that visit well this way or can you do a check up because it can you do a pre surgical.
Screen this way and I think we're going to end up finding out a lot of information.
Because of this which hopefully will benefit our society as a whole would be able to provide.
More effective care.
You know where people needed at a cost effective manner, but I think of Tele health is opening up a satellite location to serve more patients right. So it is.
It is it's just amazing that.
For years people used to told me that providers don't embrace technology and they are when it's what I had I believe very strongly that providers will embrace things that help them help their patients and what this but this study that we put out with Harvard and a couple of fun shown as but that that rings true providers will embrace.
Technology.
Very quickly if they believe it will help them treat their patients most effectively and it's just it it really is a wonderful to see.
Sure and so my last question for you is.
You know perfect World.
You know that if 100% of your revenue was software license versus the the payment the innovative payment model you've built.
So in theory you'd have a more resilient revenue stream is this something you guys are thinking about maybe maybe in the future. We tilt the economics, a little bit more to the permanent software license and maybe a little less toward the payment or do you think the the current structure will survive intact.
I'm not prepared to change where business model because of pandemic I hope, we as a nation learn to better.
Prepare and manage through this but I'd also say that right.
Where people are broadly seeing that just because you have subscription dollars doesn't mean that you always receiving like there's a lot of SaaS businesses that sell to the restaurant industry, where it's a subscription and they're just not getting paid right. So I think having some level of flexibility also aligns us.
Well with our clients and that's an important thing.
Right.
Okay, because frankly very stable so.
Well, it's just it's just interesting I mean, obviously nobody is pro formas ever contemplated the 50% to 70% declines in volume. So it's is it's not something that the where black Swan is not even the beginning to describe you know the level that nobody ever saw the something like thats coming so.
From our standpoint, just the survivability and getting the other side of the CASM is really just as the key question, though.
I like the thing about this is an interesting backlog but.
Like like we're in a black quake right now.
[laughter] a lot bigger.
All right. Thanks, so much.
Sure.
Your next question comes from the line of Stephanie Davis Stemco with SPP Stephanie Your line is open.
Hey, guys. Thank you taking my question.
Just given many of the tell how platforms I am all have their own embedded payment tech is the revvy modeled for the telehealth product.
In your question version and how should we think but the revenue streams in comparison.
We have a fair number clients running us in conjunction with and well and Intergraded to it. So we think about it very similarly, I'd just like a lot of.
Bars often have.
Integrations to them, we still often.
Looking at our when the payments business for that so I. Just think of this is just that some level of overlap, but generally speaking it's been fairly consistent across the board.
Got it and then we sat in mind.
The Commonwealth Fun publication is that marginal visit volume recovery in April, reflecting greater usage of tele health or would that be upside.
Down, 50% track and as you patient shipped Q and take like.
That's something that's a great question I I think that.
It's a little early Q to point to you know.
In gold one or two percentage changes over the last couple of weeks and call. It.
Move towards recovery.
I think some of that could could be statistical noise, we have seen those be relatively April.
I think it and Tele health will both ultimately when you can win recovery happens they'll both double contribute.
It's hard to say in advance which will.
Which will be that driving factor first but certainly.
We have seen that offices its would have have dropped much more significantly than overall visits a telehealth has really help bridge that gap.
Understood. Thank you guys.
Your next question comes from the line of Sean Dodge with RBC capital markets. Sean Your line is open.
Thanks, Good morning, and maybe going back to the implementation for a moment behind you you mentioned with memorial being able to accelerate the rollout they're using more virtual proplet. He wasn't about memorial that allowed you to accelerate their and not others is it just to dig into that willingness and re.
Resources have been specific clients or is there something else mechanically or or I don't physically constraining.
Other other sites or other practices to too.
Kind of continue their rollouts over the course of this.
It's that's a great question, it's mostly tied to.
The capacity willingness and I'm, just general needs and a decline themselves. We also prioritize.
Any organizations that we're going to be receiving front line coated patients. So we prioritized.
And our implementation any of the Covitz screening sites about anyone else, we we prioritize sort of car screening above other types of screenings with the whole thesis is you know if you do right take care providers and their staff in the patients that's always the that the the right Northern star So thats, how we thought it.
And that's how we'll continue to think through but memorial made a point of making this a.
Tier one priority and we supported them through that and we will support all of our claims that memorial is just a good example, when they reach though wanting to talk about.
What they did with us.
To help other organizations.
Okay. That's helpful and then.
On the hardware that good pads and kiosk you put in in clinics.
Your supply chain for all that I'd admitted and maybe some of the components that go into it at our source from.
For the geography, the fact that validates our has there been any any disruption in supply chain how much inventory you have on hand, there any any reason to be concerned there at all.
We were watching those levels pretty closely beginning of year, we try to keep some.
A couple of months a buffer it at a minimum.
Okay in the U.S. at our manufacturing facility of all of our components. We did have to do some work grounds, but today, we feel pretty comfortable with it but it also say that frankly, we see use of the hardware.
Going down right, we think overtime this is accelerating.
Then move to mobile at a much faster rate than we would have equal or we wouldn't even predicted and the use of hardware diminishing even more so.
So I I think.
That's also driven for the less of an issue on supply chain.
Okay and thank you again.
At this time and have type of one last question. Your final question comes from a line of Sean Wieland with Piper Sandler Sean Your line is open.
Hi, Thanks for squeezing in the follow up so I understand the you know no. We're uncertain about the full year and the lack of guidance that makes sense, but with a week left in the quarter is there anything you can tell us to to.
Get us to be little bit more precise on our Q1, our Smith.
Try to thing.
The luxury room, Sean I I do anything for you here are awesome.
Some larger kids and you didn't so fast enough.
I didn't meet myself.
And John the good news is we report our first quarter results right around the corner so.
Just a 10 got it thanks for the question, but it looks <unk>, Sean I will say that looking at the data you can sort of see when it started the impact us.
And that's why we also tried to publish the the information to so we could.
Give as much visibility also to all of our stakeholders, while the kids aggressively for par for providers in their patients.
Okay. Thank you very much.
Sure as might be sick.
And its conclusion that note.
Yes.
And I note I'd like thank everyone for their support and I hope, everyone and their families stays a healthy and.
Tries to get through this period of time as best possible. Thank you very much and thinking about everyone pictures.
Ladies and gentlemen, this concludes today's conference call on behalf of Felicia. Thank you for participating you may now disconnect.
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