Q1 2020 Earnings Call

Greetings and welcome to the Oscars first quarter 2020 earnings call. At this time all participants are in listen only mode. A question and answer session will follow the formal presentation. If any would require operator assistance. During the conference. Please press star zero on your telephone Keypad. As reminder, this conference is being recorded I would now like to turn the conference over to your hosts.

Mr., Stephen Chill steam Vice President of Investor Relations for all scripts. Thank you you may begin.

Thank you very much and good afternoon, and welcome to the Allscripts first quarter 2020 earnings Conference call. Our speakers today are all Black Allscripts, Chief Executive Officer, and Rick Poulton, our President and Chief Financial Officer.

We'll be making a number of forward looking statements during the presentation and the Q and a part of a call. These statements are based on current expectations and involve a number of risks and uncertainties that could cause our actual results may vary materially.

We undertake no obligation to revise these forward looking statements in light of new information for future events. Please refer to our earnings release and SEC filings for more detailed description the risk factors that may affect our results.

Please also referenced the GAAP and non-GAAP financial statements as well as the non-GAAP tables in our earnings release and a supplemental workbook that are both available on our Investor Relations website.

With that we'll get a hand the call over to all black to begin.

Thanks, Stephen and thanks, everyone for joining the call healthy are staying safe during these unprecedented times.

I'd like to begin by thanking our associates for their dedication to our clients who on the front lines at this pandemic, who are 100% focused on providing the best patient care possible.

This pandemic is challenged our industry and our clients I'm proud of how Allscripts has been able to help our clients in real time to stand up solutions to manage through this health crisis.

There is no playbook for what we are all experiencing on a global scale I.

Im pleased with our leadership team in the teams who are leaning in everyday is for clients on the frontline to this pandemic.

We have demonstrated how mission critical already HR and other solutions are in helping provide optimal patient care, while also helping clients manage to the upheaval to their business operations.

I'd like to cover two topics.

First let me walk you through what we are already done doing internally to manage through this environment and I'd like to share. Some examples of how power solutions are being used by clients to manage to pandemic.

All associates have been equipped to work remotely with full capabilities available in all company facilities.

We have created processes to ensure supporting services team are fully staffed allscripts also has great flexibility with the staff around the globe, enabling us to pivot resources as needed to adapt to evolving crisis.

While our teams are not visiting clients, except for essential travel we are in daily contact with our existing clients.

Our managed services and support teams are helping clients build coated 19 related configurations enhancing client decision support virtual trios EDI established pop up locations and use analytics to immediately close the loop that the bed side or the clinic.

We're also very proud to get immediate feedback from our clients reaction data recently conducted a US healthcare survey of six of the largest key suppliers in delivering new functionality and services to help provider organizations deal with this pandemic.

Allscripts received the highest scores among the companies surveyed.

Our clients remain focused on pursuing new opportunities using video conferencing technology.

And the virtual demo capabilities.

This has been well received by prospective clients and will continue to uses capability post the crisis crisis, enabling us to utilize this medium to become more efficient and our new client pursued activities.

One example of how we were able to pivot rapidly when hence was canceled we could quickly moved our onsite activities to complete a virtual platform with less than a weeks' notice. We offered a total of 22 sessions throughout a three day event and had nearly 900 total registrations in attendance.

Feedback from clients and prospects was overwhelmingly positive.

Now, let me turn to what we have done to enable and rapidly help our clients with innovative new solutions I'll begin with our tele health offering which was implemented as part of our HR agnostic followmyhealth patient engagement platform.

Our consumer strategy has at its core in HR agnostic patient record that record of connected to the consumers care team that is why we architected platform architecture to our telemedicine solutions.

This strategy contrast, favourably to a bunch of cool apps that further perpetuate isolated silos of inoperable data.

Allscripts created a specialized plan for clients to swiftly implement tele health organizations through Followmyhealth. This expedited implementation includes a step by step client decision workbook and a bunch of other capabilities that allow them to be up and running in a matter of days.

By converting appointments to Tele health, we can now help clients limit no shows and cancellations, while delivering care to those who needed.

Most importantly, this solution gives our clients the opportunity both retain inefficiently care for their existing patients as well as acquire brand new patients with our universal Q functionality.

We've been able to scale this tele health offering from essentially no demand prior to the pandemic to over 70000 total visits in April so.

Since March clients have represented nearly 6000 providers have selected Followmyhealth Tele health.

Another important distinction of Allscripts architecture has been our long term commitment to open.

This strategy has played an important role and clients having immediate access to the HR data and through analytics create new insights to the rapidly changing cobot 19 landscape.

Using allscripts Sunrise DHR, Dana Northwell positions and data scientists, we're able to quickly summarize presenting characteristics co morbidities and outcomes of over 5500 patients hospitalized with coated 19 in the greater New York area.

And our outpatient clinics northwell is able to create and deploy real time clinical decision support tools embedded in the note documentation and the TTOT touchworks solution in a matter of days.

Over 900 providers have leverage these tools to healthcare for people, who fear they have the corona virus.

Together acute and ambulatory data is now being used with predictive modeling to health plan and forecast the current and future outbreaks.

Another highly relevant example is our verisign business.

Paradigm is participating in and evaluation by the FDA Sentinel program to monitor Prudential drug shortages brought on by coated with.

We were able to leverage our industry, leading patient dataset to advanced research around Kobin 19 as well.

Paradigm as a founding collaborator of a consortium of leading healthcare companies, who recently announced the launch of the Kobin 19 research database.

This database is repository HIPPA compliant de identified and limited patient level datasets that are intended to be made available to public health and policy researchers pro bono, enabling them to extract insights to help combat the pandemic.

As a collaborator of the consortium paradigm is committed to provide de identified DHR data for nearly 60 million us patients with a recent encounter.

In the first week of being live more than 500, Cobiz researchers have applied for access through the web site.

Our care Port solutions are being used on the front lines to enable safe efficient patient transitions between hospitals and post acute providers hospitals throughout the United sent the United States Sand 18 million referrals annually through Careport to skilled nursing home health hospice long term acute and acute rehab accounting for nearly 40%.

Of all acute to post acute transitions nationally.

We launched the coded 19 transitions of care hub as an educational resource to share current learnings latest trends and best practices for safe and efficient transitions for coated 19 patients across the healthcare system from a day to day workflow standpoint, Careport. Its is instrumental to helping hospitals space. The next pressing issue.

Where will the hospital hospitalized cobiz patients recover.

From a data standpoint, we have a very unique view in what happens to these kobin patients during their acute hospitalization and the recovery period.

Our platform was built to track patients across the continuum to have real time data coming from both hospital and post acute phrs. This allows us to see coded patients from the moment they enter into the EDI through the hospital stay in then their recovery course at places such as nursing homes.

As a result care for can recognize trends that are not just localized to one care setting, but that spanned care continuum as they are occurring rather than after the fact.

To date Careport has tracked the care trajectory of 22000, cobot patients, which like elite represents one of the largest linked datasets.

Early data gathered by and analyzed by Careport sort of the viruses, killing one in 10 hospitalized middle aged patients in foreign 10 older than 85 in the United States.

On interoperability for 20 years Dbmotion has been delivering world class interoperability connecting some the most complex in diverse clinical ecosystems worldwide.

Semantic normalization analytics and seamless point of care workflows are hallmarks of this robust interoperability platform.

Now as coded 19 stretches capabilities of most like vendors Dbmotion has been at the forefront of supporting our clients in their battle.

Israel is an example of the benefits of the connected community of health health data from the country's entire 8.7 million population is connected no matter, what the HR provider Orcad care setting via one solution Allscripts Dbmotion Dbmotion is confided directionally connected to every healthcare system the minister.

We have held as leveraged it as part of their for park approach against coated 19.

By linking Dbmotion did that with epidemiological research operations notifications and access the Ministry of Health has made measurable strides to quality pandemic.

This robust interoperability initiative was done without any need for additional tech technical infrastructure faxing interfaces are data extracts the ministry of health solution was deployed within five days of engagement.

These powerful connections mean, Israel's healthcare community community will may be able to make early accurate predictions about the diseases spread and if it should happen any reemergence once the current wave subsides.

These examples demonstrate the importance of mission critical HR and the success of our strategy of an open architecture.

It also demonstrates.

The importance of creating connected communities of health through data interoperability, providing actionable insights at the point of care. We believe this system distinguishes us from our peers.

This distinction have been validated recently by external parties. This week, we were recognized by a new Black book Research as top rated patient DHR vendor for hospitals between 101 and 250 beds.

Based on the responses of more than 2000 individual users of electronic Health Records Allscripts ranked number one and 10 client satisfaction key performance indicators compared with our top competitors, including in categories for innovation Accountability, FX reliability and best of breed technology.

Allscripts has earned top honors and client satisfaction four times running in reports from Black book, which is especially meaningful given the firm's extensive in objective survey methodology. This morning. We also received the number one ranking for physician practices in physician practices from the size of 26 to 99 caregivers.

We also received number two ranking for 100 and above clearly our ambulatory electronic medical records are also providing great value to our clients in the marketplace.

Looking ahead to the rest of 2020 and beyond we will be intensely focused on its assisting our clients. During this uncertain time, while providing excellent service and innovative solutions, our ability to step up with new solutions to help our clients. During this health crisis has been inspirational and highlights the mission critical work that our company does every.

Day.

With that let me turn the call over to Rick Rubin review, our financial performance thoughts around the balance of 2020 and provide an update on our margin improvement initiatives.

Okay. Thanks, Paul.

To start I'd like to Echo Paul's comments thanking our allscripts team members for their adaptability.

Therefore to suit and most of all unwavering commitment for our clients during this unprecedented fun.

I'm going to structure my comments today around three main areas first a brief review of our business model and our first quarter financial performance.

Second a review of our margin improvement program and how we expect that to impact the second quarter and beyond.

And finally I want to provide some color around our new business segment presentation, and what to expect going forward.

We know that many of you have questions about how the impact of coated 19 on our clients impacts our business model. So let me try to provide some insights to help their understanding.

We have 82% recurring revenue and we have one of the most diversified revenue streams in the healthcare I to universe with substantial revenue from large acute small acute large physician small physician post acute.

Payer lab.

Karma and public sector clients.

So we have a very resilient business model.

Of course, we're not immune to the impact of the co that covert pandemic on patient volumes and Klein priorities.

The best way for you to think about how these factors impact us is through the framework of recurring and nonrecurring revenue that we provide in our supplemental data schedules.

With regards to recurring revenue the areas of our business that are most directly impacted by patient volumes at our clients our ambulatory revenue cycle management services.

Our payment clearinghouse.

And some transactional service lines, we have around lab conductivity prescribing preauthorizations and sharples.

Collectively these represent approximately 10% of our recurring revenue in any given quarter.

And of course are nonrecurring revenue in any given quarter is driven by mix of in period sales as well as backlog burn down.

Over the longer term stability and nonrecurring revenue is highly dependent on new sales activity.

But in the near term are substantial backlog helps cushion against any in quarter weakness in sales activity or sales mix.

So with that as a backdrop, we estimate the covert pandemic negatively impacted revenue in the first quarter by approximately $7 million to $10 million.

Reflecting some impact of lower revenues excuse me of lower volumes as well as delayed purchase decisions driving lower nonrecurring revenue.

Were it not for this impact we believe our revenue results would have been right in the middle of the guidance range that we've provided for the quarter on our last earnings call.

Overall for the first quarter, we were pleased to see sales activity exceed the high end of our guidance range.

The bookings of 205 million was broad based and very balanced across our company.

It included two new hospitals, adopting our sunrise solution and nine new client logos in the independent physician practices segment.

And as Paul highlighted we saw surge of growth for in our for our integrated Tele health solution.

Equally importantly, we had several significant client extensions that signed during the quarter, including Memorial Sloan Kettering Cancer Center, and Sinclair Hospital in Pittsburgh.

Altogether, representing over $100 million and renewed business in our inpatient basis.

As a reminder, extensions of existing business do not count in our reported bookings, but they do add to our backlog, which stood at $4.5 billion at the end of the first quarter.

We were disappointed in our margin performance for the quarter at all levels of piano from gross margin down to EBITDA margin.

We were slow to rightsize, our cost structure for the client attrition that we discussed at length on our last call.

And the cobot driven revenue shortfall by highlighted a moment ago was highly dilutive to margins.

As I'll discuss in more length and just a moment in late March and early April we took significant and decisive steps to address these costs problems and expect to significantly improve this margin outcome in future quarters.

But finally on the first quarter, excluding our settlement payments for the DJ.

We generated $54 million in operating cash flow.

As a 50% increase year over year.

We are intensely focused on maintaining strong liquidity position in this business environment.

And at the end of the first quarter, we had $212 million of cash on the balance sheet, along with $684 million remaining capacity under our senior secured credit facility.

And I want to shift and update you on the status of the margin improvement plan that I outlined on our last earnings call.

As a reminder, I indicated our intent to begin a comprehensive operational review focused on efficiencies resource alignment and streamline decision making to improve upon our performance.

Shortly after our last call we hired the from Alixpartners to assist us in this effort and we have been working with an experienced team of their advisors for the last seven weeks to identify and capture and margin improvement opportunities.

From the last week of March through the end of April we have implemented permanent reductions to our cost structure, representing $75 million in annualized value.

These reductions across all functional disciplines of the company.

But all we are focused on low value work and redundancies. So we expect that delivery of value and responsiveness to our clients will actually improve as a result of these actions.

We recorded a restructuring charge in Q1 of $9 million and expect an additional charge of approximately $30 million in Q2 related to these actions and this overall initiatives.

Equally importantly over the last month for the service lines around the company that are most influenced by patient volumes, we've taken steps to do a better job matching our cost for these volumes on a more real time basis and that should not see as much variability to margins as we have in the past when volumes fluctuate.

So given the combination of cost reduction actions already taken plus a greater confidence in our ability to match costs with with anticipated revenue.

We expect adjusted EBITDA margins to improve significantly from Q1 levels.

We will realize less than a full three months to benefit from these cost actions in the second quarter.

But compared to first quarter, we would still anticipate adjusted EBITDA margins to increase by more than 300 basis points in the second quarter.

And by more than 400 basis points in the third quarter.

Notwithstanding our confidence on the cost side of equation. There are still so many unknowns about the duration of the impact of the pandemic and the pace or recovery.

And while we have no doubt that our clients are anxious to return to normal behavior as soon as possible.

The myriad of federal state and local rules will impact both the ability and the psyche of patients to do the same.

So we cannot reasonably forecast clients or patient behavior for the rest of the year and as a result, we thought it was appropriate to withdraw our 2020 full year financial guidance.

What we have achieved through the end of April is a good start to the margin improvement program, but it's only a start.

In addition to margin improvement initiatives. We are also reviewing our extensive solutions portfolio to determine what is core to our long term strategy and if not if any should be candidates for sale.

Due to the requirements to work remotely the timeline to complete our operational review has extended slightly from the 10 to 12 weeks that I outlined on our last earnings call.

And I now expect us to be done with is the with the identification and planned development stages closer to the end of June.

As promised our intent is still to schedule and Investor day. After that work is complete to provide more details on expected impact and timing from the plan.

We will schedule this investor day as appropriate taking into account the quarterly reporting cycle.

Now I want to conclude my comments by discussing some changes we've made to our segment reporting that you will find that our 10-Q filing when it's filed tomorrow morning.

In the first part of 2020, we are a lot we realigned our segment reporting structure to further enhance visibility between our core clinical and revenue cycle solutions.

And our HR agnostic businesses, which we have combined into a segment called data analytics and care coordination.

We've taken the staff because not only other solutions in this new segment DHR agnostic.

Relative to our core segment. They also have very different customer basis.

Very different expected growth profiles.

Very different financial profiles and in the aggregate very differentiated from our traditional competitors.

This new segment structure more closely aligns with how we actually manage and run the company today.

And the data analytics and care coordination segment reflects not only teradyne, but our careport engagement and precision medicine solutions as well.

So this quarter, we provided the segments on a GAAP reporting basis, only and still have significant amounts of unallocated operating costs between the segments.

It's our intent to continue to enhance the segment information in future quarters to both fairly allocate a large percentage of the operating costs between the segments as well as to provide GAAP to non-GAAP reconciliations such that you will be able to see a breakdown of profitability of the company on both the GAAP and non-GAAP basis at the segment level.

So with that I'd like to open up the call for any questions you may have.

Thank you at this time will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad a confirmation total indicate your line is in the question can you maybe Chris start to if you'd like to remove your question from the Q.

Students using speaker equipment, it may be necessary to pick up your handset before pressing the star team.

Our first question comes from the line of Michael Cherny with Bank of America Merrill Lynch.

Hi, Good morning, good afternoon, sorry, Thank you for the colors, so far the I want to die been.

So the work you're doing around the Koby response.

Paul you referenced some of the words, you don't Varagon somebody role, but you have.

Relative to our research going in utilizing the data that you're providing.

And I know its little bit weird way to think about that but how do we think about the revenue model in terms of some of these ancillary and.

Co bid specific services that you're providing and how should we think about the as well in terms of will that be an incremental costs were reviewed as you ramp up any extra expenses to get these ready for market.

I think on the economy revenue side, we are we get paid for what we're doing on Mattel medicine component and while that probably doesn't necessarily move the meter financially in the quarter. It's certainly something over long period of time, because it's a recurring revenue we're going to it will enjoy that.

The benefit of that it also helps to put build concentric circles of capability and value around the.

Chronic medical record that exists for consumers so to the extended that as a.

So to us so solution that our clients have that may have come up for renewal at some point in the future heavy another reason for them to renew and continue on with that solutions over the hidden benefit there as well I think on the larger inpatient.

Solutions that are out there that just further accentuates the need for a really strong mission critical electronic medical record and to the extent that people have sunrise with touchworks or pro installed there are very hunker down making sure that they are building analytics around that and getting data out and then putting data back again in the form and.

These clinical decision support capabilities to better take care of the people that have been identified as being coded positive that's completely different.

Care process I.

I think also.

Cities that we have around the hospital like Q solution that we have that will be a very big piece in the recovery when people talk about scheduling patients about on scheduling.

Surgery centers about scheduling new surgeries, and making sure that all the downstream capabilities are there from a supply standpoint from a acuity level of staffing standpoint, and just to make sure as you restart the engine on me.

Surgeries that basically started over the course last five or six days. The elective procedures that is also very important capabilities that we are that we think that people are going to ask ask war and pay for it'd be quite I'm thrilled to have we have some Michael us solutions that we have put out there for three we actually.

Through ESI.

The now some free capabilities around modeling for cobot as their modeling for what has happened as well as to prepare.

The budget seem to think about how they're going to look at the rest of 2020, given whats happened to on this year.

So Mike just the summer I mean did that recurring revenue Paul mission on solid health is incremental.

That's direct.

There is cost with backlog.

It's.

Certainly on a profitable add ons solution.

Better known sell out.

Solutions that are spoke on solutions for many health care providers.

In that it's again, it's fully integrated.

For the for the client and it's kind of you know keep safe grade, what we think should be sacred which is a patient. Dr. Relationship. You don't you don't just call up and get whoever happens to be.

Hanging out on the couch that day, you get your Doctor.

So you know it's valuable it it keeps a strength with our clients with their patients and we think it very much the lines there for with our clients interests.

It's the revenue model is a pro provider from on top model.

And.

So far that seems to be working well so it's not volume defend it.

For us.

And we think you know, we we think <unk>.

Volumes have gone up a lot as we indicated that he thinks they're going to stay strong and grow from here I mean, that's the least or expectations.

Great. Thanks, so much good.

<unk>.

<unk> I next question comes from nine <unk> Goldman Sachs. Please can we get question.

Oh, great Yeah, it's actually the questions I you know acknowledging that you know poorly visibility is is really <unk> Oh right now as far as you know converting back log into revenue.

Yeah, you guys did offer that seven to 10 million dollar impact for Q1 was wondering if maybe you could just talk a little bit about you know the timing of that how how it came through and then I guess ultimately and I know you're not providing yeah forward guidance, but you know is that a decent proxy.

Is how we should think about maybe the near term in.

Packed to revenue you know in in the coming quarters.

Yeah, well Bob <unk>. The so the range you know is the range I would say more more of that came from any impact or <unk>.

Feels pushing in the last seven to 10 days at a quarter deals that we were yeah, we're kind of counting on and expecting more we put our original guidance and and so what we saw was and you can see this in our numbers.

You saw that are non recurring revenue was significantly lower than it typically is right and so that's representative some you know some incremental software sales that we would have expected to have had occurred during the quarter. That's also why they have a high margin attachment to them.

There was a little bit from lower volumes. The last you know again, we for 10 days or so the quarter almost two weeks I guess, but you know that was kind of that.

That was how we saw so I think the you know they impact from volumes slightly higher probably this quarter.

Offsetting some of that slightly higher is we do have some.

Angela's her revenues Psycho services business has been a gross business for us and so we continue to add clients.

To that and that represents incremental growth.

Ah, but incremental growth from certain clients offset by you know reduce volumes across a broader number clients right is kind of the dynamic that's heading that's going on there.

But I think you know volumes will be down a little bit than they were relative to first quarter and you know it's hard to have a crystal ball, but I I don't I don't think that the non recurring businesses.

There's no reason to believe that's going to be a lot worse at least sitting here today than it wasn't press corps. So.

So.

<unk>.

Are the ones. That's that's you know that gives you a picture.

No no. That's helpful and then I I guess richest on the on the cost side. You know you said you take some steps in March and April you feel like you're in a better position to manage profit you know given the unfolding you know covitz situation I'm. Just curious you know kind of what levels of of you know revenue fluctuation.

You think those those steps you took would be able to help offset and then just hurt for clarification clearly sound very competent in the margin margin improvement story is that is that kind of inter related or is that 300 400 basis point improvement you talked about you know kinda completely independent of the.

Steps, you took and and independent it's kinda yeah, the current environment and how things you have quit unfold from yeah.

So the message we're trying to deliver above is I mean, we we took that we took the cost that's right. So those are behind that they're not and again, we're not done with the overall program, but what I referred to as $75 million <unk>. Those that's been gone so not something we're hoping to do it's been done.

And so we can quantify that pretty you know pretty easily.

And what I was saying in addition to those steps is we feel like we've done a better job variabilizing our costs are.

Around areas that are more volume sentra volume sensitive.

And so a combination of those two things. It gave me the confidence to say I think we can manage either Dom Arkin's you know to the levels I describe whether you know, whether we see revenue fluctuate or not.

You know if revenue took a dramatic twist you know I might it might change my change have some bearing on marching calculation, but.

But you know that goes back to again, how I framed for you you know.

10 per cent ballpark of our recurring revenue to subject the volumes.

And you know you can make we had some volume impacting keyuan. So that wasn't you know we didn't have 100% volumes if you want.

We'll have some volumes and keeps you down for April for sure made for sure unclear, whether we'll see you know and increased backup in June.

So now you're back into kind of forecasting and that's purposely why we stayed away from revenue forecast because we don't we're no better projecting that really then you are.

So all boils down and feel good about cost side and think within a reasonable revenue range given our actions, we've taken and the variance normalization of our costs.

Areas that we feel like.

We could you saw confident we can share those people die expectations with you.

<unk>.

That's super help specs Rick.

Well.

<unk>. Our next question comes from the line of Charles range with counting company. Please proceed with your question.

[noise] Hi, it's actually James on for Charles Obviously reports from bookings. This quarter can you give up fight us some more details on the makeup of bookings also maybe talk about what you're seeing in terms of hospital purchasing in light of Kobe. It maybe some contacts round the magnitude of to lay purchases.

Since the pandemic started.

Yeah, I'll start paying for it but that's more color to be you know the book into with as Rick said was pretty much across the board decent you know given what we ran up again, especially the last couple of weeks when things really we're starting to.

Come apart.

I'm from a client perspective, whether people or you know, especially in in the on the close where people are really starting to hit the emergency rooms in other areas. So we're able to keep it a decent focus there on the ambulatory business. We had you know if there's brick isolated these comments from nine new logo is we felt good about that expanded some of our existing client relationships to take on that.

Revenue cycle outsourcing capabilities for them there.

We had decent international momentum, we didn't have a lot necessarily brand new but can you there, but we have a lot of pipeline as being built in that in that part of the world and we just highlighted the fact that we had a lot of new business activity that while not bearing a lot of fruit in the first quarter. We had a couple of deals we still.

Will have a fair amount of activity there that we feel good about about for the year. It's it's the timing of one that will actually happen.

From a delay standpoint, you know we can to point you to even though we had good booking three or four transactions did not occur that had the right kind of margin profiled in them that would've is rich that any comments would have done that we needed it to do <unk> the middle of our revenue guidance. So that that happens every single quarter. This was a very.

Bad Puerto from the standpoint of a wildcard that we have never seen before in the history of this country and that impacted ability of people to make final decisions.

Okay. Thank you.

But.

<unk>. Our next question comes from line, Jamie Stockton with Wells Fargo. Please proceed with your question.

Hi, Thanks, I guess, maybe first as far as the disruption is concerned around the ability to actually get stuff I can't limitations and upgrades done and how much that might be constraining you know the client service is part of your business you know any any com.

Terry There you know are you able to do most up remotely is there is there going to be pent up demand or anything on that would be great.

Hmm.

So for the most part Jamie you know our search teams are not going on site anywhere right now so.

As a little impact, but there's obviously some impact from that but there isn't it there isn't pretty good.

Remote opportunity for to work on it is particularly with respect to somebody upgrades.

So.

Physical proximity is not critical for upgrades and really it's more about bandwidth and attention span of clients to really get involved in that type of activity. So.

You know sitting here today clients are still required to do and upgrade because some the C.M.S. rules those rules may get relaxed those deadlines make it relax.

And if so then you know maybe we'll see some reduction in that activity later in the year.

But right now that you know you know again, we had we had some right sizing to do in terms of the level.

As as a team relative to business activity.

But you know the team is still saying at this juncture now is pretty you know pretty decent utilization yeah with the clients right now so they're finding ways to effectively work them up.

Okay, and then maybe just to other quick ones the.

Ah you know I think Bob was asking about this earlier, but but.

Do you need any magnitude how much of a decline you guys have seen in what sounds like maybe a a 35 million ish type bucket that is more heavily tied to the client volume you know people are thrown numbers out there like 40% or 50%.

For the month of April is that is that a reasonable ballpark to think about and then you know we can just make our own assumptions about when things recover.

<unk> thesis, Jamie I don't expect any kind of impact that that solves.

We're not seeing that right now.

But you know we may still see you know they may maybe there's more volume data to be seen that or flow through on a lag basis, though that that'll come through but right now that's that's pretty high for what we're seeing but.

Again, I I reiterate the point I made when Bob asked a question is you know it is a growth area that business.

And we are you know that would that's an area that would otherwise be growing in a pretty nice clip. So the net impact is I think soft or it's it's much less than and number here having your mind.

But could you have you know could you have.

<unk>.

I mean I.

I think you'd just have to take that into account when did you, Matt, but I think volumes across you know they vary a lot across different specialties, how much they're down.

Yeah, but.

Yeah. We've heard the same data you have with respect to potential volumes and so you know you can kinda triangular to.

And then just lastly, the D.O.J. payment that you made in Q1, just like what's the expectation the rest of this year as far as completing payment.

If they all gonna happen. This year is some other kind of spill into 2021.

Yeah, Yeah. Originally it was supposed to all get done this year candy, but we did ask for some deferment on that given the circumstances are going on and and so.

It's not it's not a big amount, but there will be about.

Back up about 25 issue million dollars that'll drifted into 2021 problem.

Okay. Thank you.

Okay.

Thinking our next question comes to mind I'm George Huh, what thank you. Thank you, especially with your question.

Hi, this child on French Orange things, you're taking my question can you speak to the <unk> clothing 19 on client training I guess <unk> are you seeing any data that's indicative of an increase or decrease in claims sticky. Nasa's then you know do you have clients are planning to turn off the platform or they sang longer then plan because it kind of at 19.

That's a pretty early cattell I would say there's a couple of things you know leading indicators would be the just the financial position that they find themselves. Then if they are under a process to replace US where we you know we're.

Ah.

[noise], where the income it would've been there for a long time, they've got a contract with US we've been doing good work. There's a lot of folks that are putting that decision on process to me pause.

And I would expect that to continue until such time they would have.

I'm, a little bit better understanding what their demand is and what their economics look like depending on who you talk to there's large <unk> a practice, where it's a large position enterprise I'm, sorry, large hospital enterprise there pretty capital constrained right now as a result of the hit that they have taken or <unk>.

Throughout the course of March April potentially main timeframe until they get their like the procedures back on track I would say that that broadly added to the under the category of turn this will be something that will cause decisions to be pause.

Okay. Thanks.

Question.

Thank you.

Next question comes on line and Eric <unk> with next on research. Please proceed with your question.

Thank you Oh, I guess it to start off line. One you know what your thoughts are on the submission practice marketplace feels like a lot of pressure in some experts to alleviate that.

Where's your take on whether we where we are and whether we're have each mark consolidation.

Yeah, the consolidation peace Eric has been talked about for a really long time.

And you know the data show that there has been called consolidation in many cases, the consolidation has been with the other position on groups, which actually typically based on our market share. Their we we believe we have one of the largest market shares in a standalone physician practice arena.

They would benefit us because one of our large clients you will <unk> aggregating more but there's still a lot of independent positioned groups do have voted they're bored levels that they want to continue to maintain their independence.

And so I've I've not you know I've not seen a bunch of that continuation.

Then there's also a bit of the fatigue, the the rapid nature, which with with which I.D.N. in academic Middle School centres affiliated with our purchased physician practices over the course lab.

Five or six years and those not maybe performing as well financially. They thought they were going to so I've seen before this you know before the pandemic coming that being something you don't have event that slowed down but I do also see these days is a fair amount of aggregation from private equity firms depending upon the specialty.

Well, that's not you know of scale yet across the United States, It's a new trend.

Alright in record click one on me margin.

Commentary are you expecting 300 in 400 quarter after quarter is not a year over year.

Oh, it's relative to to run.

No it obscuring thank you.

Okay.

Thinking our next question comes online I've Donald Duck are we keeping capital markets. Please proceed with your question.

Okay. Good afternoon, maybe there was another question about attrition clam electrician last quarter. I think you were you explicitly called out.

50 million paid when from attrition and the acute care space. These were decisions are made a long time ago sort of gifts were going to hit your P.M.L., perhaps this year I mean, it you can can we safely assume that maybe.

Doesn't happen. This here maybe gets pushed out hmm.

Ah style I think on the on the is a bad that's possible that we'll have we'll retain some of that a little water and that all you know clients, who thought they have their migration strategies. All lined up you know probably got thrown off but you know you see.

You know.

<unk>, you see that coming into the core though right I mean, our our year over year numbers are down not just because <unk>, but we already see some of that fits into our numbers. So I think you know yeah. So maybe a small piece of it but in general that message that we shared last last call is still.

So what you should be expect.

True, although maybe one last one just curious how you all you have a lot of different businesses, I mean, you're dealing with counterpartys that or.

Many of whom are probably likely financially struggling struggling how how how do you manage credit risk.

From your perspective against you know with respect to your to your clients.

Oh, there has it changed at all with this are you sure other areas of concern or optimism.

Well I mean, so I'll start with the last part optimism my optimism is you know the the strain on health care providers is not lost on the federal government then so the federal government continues to.

Why not programs that are at a time to support healthcare providers and.

You know you you I'm sure know all about though so I won't bore you with them, but there's a there's a lot of money. So that's the reason to stay optimistic notwithstanding the impact that low.

You know canceling of elective procedures things like that had on our client this.

You know our credit beyond that is there more risk you know, it's all possible now we're trying to be as diligent as possible or trying to be as vigilant as possible with managing.

Receivables, we are structuring new contracts.

That had a lot of labor context to them meeting if there's a lot of what we call managed services or other forms of services that accompanies agreement, we are structurally taking less credit risk on.

And you know we're trying to ensure that.

Yeah. If you don't pay your bills on time than you know, we manage that through others drivers that we have so you know we're trying to we we have I think appropriate business levers to pull but we're also you know recognizing the times, we're in right now and we're trying to.

The as collaborative as possible, but at the same time, you know, making sure you know our clients don't think where where the federal government.

Okay. Thanks for that perspective.

<unk>.

Okay.

<unk>. Our next question comes to mind, Stephanie Davis think out with S.P.B. mean, please proceed with your question.

Okay. Thank you been taken that question on that.

I have less is a question for the quarter itself and more kind of bad connection a lot.

So <unk>, obviously being at all skits for a loud, but you're now back in the C.F.L.C.

Now that you've had almost the full court or <unk>, Hey, what heads, making up at your top priority areas twinkie like change over the kind of yeah.

Thanks for the question Stephanie So just to declare then 65 days I think [laughter].

Job.

I look I a lot of the things are important to me and what you can expect there are a lot of things I touched on today, so maniacal about liquidity, we've been very aggressive about.

What I call right sizing across periods, we've done a lot and it's pretty short period of time.

And I think it's important for us to continue to a more.

Maybe more actively not continue more actively review our solution portfolio and decide whether we're really the appropriate long term owners for certain assets and.

No. There's there's nothing [laughter] code for that other then I think that's just good old you know business management practices that we should be doing and we will do so you know I I think goes to be the tenants of what you should expect for me for the next several quarters is it's all going to be about cash.

Costs deficiencies and portfolio simplifications.

So now that you're into portfolio kinda simplification c. at all so are there any areas, but you'd think would be important can add or subtract just.

And getting into the next phase them, where you want [laughter] today.

Well look in the near term you know again, given the operating environment. We're in.

And given where our soccer is I don't see the point a lot of capital in the one in the near term.

And so I think the bias would be more towards is there are things that I got under our better owners up for the long term and if we did so then you know that.

Well, we'll take those actions so I don't wouldn't be any more specific with that with what solutions, but but I'm just telling you that I know now body of work.

And assuming you'd get maniacal about capital and you can get <unk> want it could they.

Would you ever consider something like a dividend as opposed to Oh, they're used the cash kit that sounds get periods have done that with that.

Well look I I mean, I can never say, we'd never consider right right, but when we look I think you know what where the rather than you know bigger picture Stephanie were showing you that we have kind of an interesting portfolio. We have are really solid core business with lots of great cost.

Hummers that isn't a mature segment of the industry and you know probably should think about managing sounds like a value kind of you know enterprise and then yet we have another segment of the business, which is higher growth higher profitability and you know longer term.

Can and should deployed more capital to cap it keep wrong because it can be can expand on its industry leadership positions that it's in.

So how do we think about that at a full enterprise level you know.

Soon we'll <unk>, we'll keep thinking about it.

I'll be sitting back and you know there's no shame in the value game, none at all.

Thank you can take my question <unk>.

Well.

Thank you are next question comes from line I've <unk> he's supposed to your question.

Hi, good evening, Thanks for taking my questions. So you had a a fairly rapid ramp from I think what you described as basically a standstill to 6000 providers until health I was hoping to just to dig around for a few more metrics. There isn't the first is is that predominantly deploying to your ambulatory base or did you also get some uptake on the on the acute side.

And thinking about this being part of the follow my health It should I think about that being.

In short run the tandem net you could you know the addressable audience that you could deploy that too and what number would that be.

So first part of the question is.

The client base that are adopting it both ambulatory and a cute.

So extended on both sides of the house.

And I would say our.

<unk> with only a few exceptions most of our clients use to follow my health platform.

The H.R. clients.

And there are clients outside our airport base that use that platform as well. So the addressable market. You know is inferior <unk> considerably bigger than we are now you know I'd say, it's you know right five back some more bigger than it is now some of those clients you know in fairness you know maybe.

Decisions to incorporate bolt on stuff a long time ago, and you know like all things you know we may see some revisitation at some of those decision. So yeah I I don't I don't know that you know six is going to turn into you know five x. back in and you know short timeframe, but I think there is a lot.

Outside to go and I think we're getting good feedback on the solution and you know frankly, what's exciting costs is it's not just the customer retention vehicle for our clients. It's actually a customer acquisition tool right now to so many of our clients are plugging into their website the ability to just schedule to tell a health visit.

Without even being pretty register at that clinic. So we've developed queuing capability that allows them to lines <unk> Customs officer basically acquire them stations. So that's that's exciting and we think is you know work continues to spread about that and again, it's it's a practice or physician.

Unfriendly tool in that it you know really some men the relationship the position annotation.

Yeah, I got it thanks for that Rick you've you've touched on a few different things are on Capitol I wondered if on a couple of specifics are you seeing any change in in your A.R.D.S. shows or air aging and then totally separately later on in the year is it's still the plan to.

Essentially retire the convert into the revolver and deal with it that way just thinking about near term near term attorneys.

Yeah Yeah.

So and number one I mean look you'll you can do you know the S.R. <unk>. What we produced here you know idea shows have have changed a little bit, but but I'd say you know.

Bigger picture I'm really at the core your question I think there's I was really pleased with our cash receipts for my table.

Very strictly.

And that it's on top of what was you know I think are pretty good first quarter. So so far so good on that front would be my my you know what I'd have you take away.

Okay. That's the second part of your question, yes. The the we've we've that converts that are mature in July and yes aren't 10th is to use our revolver capacity to retire. So obviously retiring that that you know that there's no change the next yet when we do that but.

But it does.

At.

Title of of our capacity.

Understood. Thanks, you for the answers.

Okay.

Thinking I next question comes from line and Freaky Goldwasser with Morgan Stanley, especially with your question.

Yeah, Hi, good afternoon, Paul earlier, you talked about giftedness money and has got that there's a lot of funding going into hospital that direction. [laughter] administration are there. This week released some details and added transparency around how these dollars it'd be now located D.N. I think sense when you think about.

To take care of customer base, how they're doing in in terms of off getting their fair share of <unk> of the budget.

Yeah, I've actually been in contact almost daily with a number of our different clients I was actually with a couple of yesterday in appropriate states that allows for social distancing you say it that way, but you know at hospitals the opens business and.

Mapping all appropriate conditions, we were able to have have meetings, but I talked a lot of folks not only in the United States, but outside the United States just to get the polls.

In the U.S., there's been three different programs that have been rolled out and they're both people.

You know to a to a client have been participating very nicely and those programs. So that helps them in the short term certainly what they're the quality and it also helps him in the short term to make sure that they are able to you know make pay payroll in other things.

That they had is that they've you know a lot of their costs have gone up they are in the hospital side. They have spend a lot of time retro fitting in anticipation of a search which in many cases didn't happen.

They had you know building additional bed capacity for negative pressure beds in by putting a new doors, new windows and things like that but 10000 Bucks a bed until there's a fair amount of that that got done that's not throw away capabilities or capacity in the future, but it's also something that you know in the short term caused a pretty big blip on there.

On their financials put broadly I am not hearing any of them complain about the fact that they did not get their appropriate amount of money from the government.

The rural hospitals are substantially hurt and there was a new build it.

Getting past for those folks to get approximately $4 million apiece, and that's a pretty big chunk of change for a rural hospitals. So that will help them in a hurry and I I would just say broadly these stimulus programs in the Medicare Medicare loans that are being put out there are very important to these people in our clients are participating.

Very nice windmills.

And in one thought put onto market doing with Alixpartners. When you talk about the potential danger <unk> do we think about a mocking for the next couple of years [laughter] is to focus on looking at divesting.

Pause data are lower margin.

Or are you looking at all and I was gonna make also kind of like strategic decisions here, even if if if their businesses that are marching to create it.

Ricky I think I think you may be just a little over our ski trips there on that question I mean, what I'm seeing on to you is that you know everything's in scope right now and that were.

Evaluating what do we think strategic for long term or whatnot and you know somewhat I think it's just good management somewhat maybe a desire to ensure that if something's worth a lot more outside of our company than inside it that we capitalize on that and so we're reviewing.

I think you know.

What strategic and what's not you know the margin <unk> calculus is part of that but that's not entire sometimes so I think we'll evaluate something and then you know we would expect to receive at least fair value for the asset so if.

We conclude something's not strategic but we can't get fair value for that we're not going to do it right. So the last thing you should take away from this was that work committed to sell anything because that's not what we're saying.

But what we are committed to do is reviewing and if there is a better answer then we'll go do it.

And it's done thank you.

Thanks.

Thank you maybe sometime in that concludes our question and answer session. I think I tend to forget backed Mr. Black for any final comments.

Thank you all for attending today to call and I liked again, they card Allscripts associates for what they're doing in the company to help our clients and also to advance the cause of the company also want in fact, our client heroes for everything they're doing they're putting themselves at risk literally everyday when they were on the front line to this and it's it's a very for voting task.

They have and it's very much appreciated and this is not only the comment around the United States, but also outside the rest of the world filling the U.K., Canada in the Middle East and Singapore, Australia clients all over the world that are facing this pandemic. It's unbelievable as we all know and as I said at the outset there is no.

Playbook, so we're all managing it well working hard rock committed to the final outcome here and we'll get through it but it's it's an important important event in the world history.

We appreciate your trust and all scripts and we thank you for your time today.

Thank you just complete stays conference you mean, just connecting lines at this time. Thank you for your participation.

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