Q1 2020 Earnings Call

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Thursday

Good morning, welcome to mtbc first quarter 2020 conference earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference Bachelor by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask question to ask a question. You may press start and one on your telephone keypad to withdraw your question, please press * then two, please note this event is being recorded. I would now like to turn the conference over to Kim general counsel, please. Go ahead.

Thank you and good morning everyone. Welcome to the first quarter 2020 conference call on today's call our our founder and executive chairman Stephen Snyder our chief executive officer and a director our president and a director and our Chief Financial Officer.

Before we begin I would like to remind you that certain statements made during this conference call are forward-looking statements within the meaning of section 27A of the security office of 1933 as amended and section 21e of the Securities Act of 1934 as amended all statements other than statements of historical fact made during this conference call are forward-looking statements, including without limitation statements regarding our expectations and guidance for future financial and operational expected growth business Outlook and potential organic growth and acquisition.

Looking statements May sometimes be identified with words such as will may expect plan anticipate upcoming believe, estimate or similar terminology and the negative of these terms of forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties many of which are beyond our control which could cause actual results to differ materially from those contemplated in these forward-looking statements.

These statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise these forward-looking statements in light of new information or future events. Please refer to our press release and our reports filed with the Securities and Exchange Commission where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward-looking statements.

For anyone who dialed into the call by telephone, you may want to download our first quarter 2020 earnings presentation. Please visit our investor relations site page. Click on events and download the earnings presentation.

Finally on today's call. We may refer to certain non-gaap Financial measures. Please refer to today's press release announcing our first quarter 2020 results for a Reconciliation of these non-gaap performance measures to our gaap financial results with that said, I'll now turn the call over to our chief executive officer Steven Schneider Steve.

Thursday the president of our division and Carl Johnson who was recently promoted to the role of president of our MTC former division today. We're please report including a 45% year-over-year increase in first-quarter Revenue, two thousand point nine million dollars, which was driven in large part by our acquisition earlier this year of care cloud-to-cloud was the 15th acquisition that we have closed since our initial public offering a 2014 and like our other Acquisitions represented a good but never less distress company serving the critical back office and Technology needs as Health Care Program.

throughout the country

Was $767,000 this reflected a planned your rear decline driven by our acquisition of carecloud during January of this year, but never took out perform our internal model consistent with our regular acquisition Playbook. We have already substantially rationalized carecloud operating expenses having now reduced price of $16 of annualized net expense since we acquired carecloud at the beginning of the first quarter it goes without saying that our country and World face an extraordinary change in covid-19 as a company. We have never been stronger or better positioned from an operational technological and financial perspective to support our new and existing customers wage.

And as a team, we have never felt such a profound sense of purpose in our work as we've been reminded time and time again of the privilege. We have to support the heroic wage and men who are serving as health care providers on the front lines of this important battle. We are truly humbled by the reality of in our sport as small as it may seem in a focus on delivering care to those who need care whether it is providing our top-ranked cloud-based clinical charting tools enabling touchless patient scheduling and check in ensuring appropriate Telehealth reimbursement facilitating covid-19 advances from CMS enabling patience to access their medical records online or any one of the other countless ways. We support our customers. We are energized by our mission of enabling Physicians to devote the entirety of their focus to khong.

Livery while trusting us to support the day-to-day needs of their practices those who have been tracking our growth over the years though that we have toned our key approach to identifying acquiring and turning around distressed companies that are providing critical back office support and Health Care Technology Solutions to Physicians long as we have done. So we have become the leading acquire of companies in our segment of the market.

This has enabled us to achieve a compound annual growth rate of 35% And we believe that the current economic conditions will add further velocity Jack are acquisitive growth strategy in the quarters ahead.

Likewise offering has given us another Avenue for partnering with other vendors in our space in a way that enables us to support their objectives while providing great service to their customers and accelerating power growth during the last 60 days alone. We have been selected by throughout history leaders and RCM company a value-added thr reseller and the HR company and we are only getting started with our mtbc Force go-to-market strategy wage our most recent signing with Orthopedic Healthcare Solutions, which I'm proud to announce today demonstrates the power and scope of our offering off with this most recent relationship. We will be developing a customized practice management system for xDrive and Quality Reporting modules for their EHR. Yep.

Happens to be one of the most highly-ranked ehrs in the Orthopedics.

Bass we will also be described integrated revenue cycle manager and partner and we'll work to sell our solutions to their provider base. This relationship will position wage to gain additional market share in Orthopedics while increasing revenues and it will enable us to do likewise. We're hopeful that these increased opportunities across the board add recurring revenue from Acquisitions and it's b c force and organic growth will offset the temporary code in downward pressure on our Revenue related to a reduce number of patient-physician encounters across the country. Additionally. We have substantially increased our investment in sales and marketing growing from a team of only a couple members off this time last year to more than 20 team members today. We have already closed more business year-to-date in twenty twenties and in all of 2019 and 2018.

She was one of our strongest years for organic growth in history.

We expect to see our organic growth efforts begin to yield even more fruit during the second half of the year as we target bookings of 45 million dollars in annual recurring revenues per quarter wage starting in the third quarter further. We are targeting an average customer acquisition cost of no more than 50% of annual recurring revenues, which would compare favorably disposed billing industry customer acquisition costs. We believe that our growth initiatives in MTC Force Acquisitions and organic growth will set us up to exit this year at a higher run rate than we had anticipated when we started 2020.

alter for over 2 Hotty Toddy

Thank you, Steve. And thank you everyone for joining us on first-quarter 20/20 call.

Steve mentioned earlier like others we have seen a decrease in our customers overall appointment volumes more specifically with Dixie patient visits trending downward dog in first half of March. This decrease an appointment volume was roughly 40% and then began to stabilize by the end of March.

Based on the data that we are reviewing. We believe that the rebound has already started to take place. In fact our numbers show that we have already made up close to half of the overall declines in appointment volume since then.

While these declines were happening. We also saw an almost immediate and substantial increase in our customers move toward virtual appointment. In fact on March one 2010 the health councils represents less than 1% of all visit types. We then solve this fight tremendously and level out the approx 21% of our visits being Telehealth consoles.

We have been false.

Windies reimbursement Matrix and have seen a nice income stream for our customers from Telehealth consoles specifically as Medicaid provided flexibilities in Telehealth created by the coronavirus relief and economic security the cares Act.

As a result the immediately began Outreach to our customers based on a weekly or sometimes bi-weekly basis on different topics. We provided guidance by webinars Naf announcement on how medical practices could navigate the federal programs available to them and to apply for specific programs that would allow them to request Mouse control assistance for payroll or request Advanced Medical Medicare payments as an example.

We also began immediate training and best practice consultations with providers on how to effectively set up your practice to provide Telehealth services will rejected quickly and pivoted our roadmap and enhanced our technology like a rule-based engines added Cobra lated codes to our financial and clinical systems deployed our own Telehealth Solutions and release new contactless code intact intake questionnaires. We focus the bulk of our efforts on leveraging our billing coding and collection expertise to help our customers manage and effectively Bill and get paid for those Telehealth services.

With the regulations more relaxed. We have seen an overall increase in the amount of reimbursements for Telehealth visits.

while we haven't been completely immune to pandemics effects on medical practices, we do feel that we are weathering the storm quite nicely we have been able to stay on track in our Global distributed Workforce both here in the US and overseas has played a tremendous role in allowing us to adapt and work with our customers in ways that other competitors simply cannot

Of a US team members have continued their same output even as they transition to remote work and our overseas team members were able to remain operational to a host of several businesses continue to Meijer. We instituted this include remote working for certain team members the ability for other employees to continue commute to the office adhering to the public health safety guidelines and several hundred of our employees living at our own site dormitories.

These layers as well as a religion cost management strategies and over technology-enabled Solutions having given as a good footing into the next couple of quarters dead.

I would not like to focus our attention on the important work. We are doing towards the integration efforts of our latest acquisition as we have said it was unlike any requisition we have made in the past with carecloud. We acquired a leading sacks platform in our space which supports small medium and large groups providing fully integrated clinical practice management and revenue cycle Management Solutions to the market. We continue to make great strides and I'm happy to report that the integration efforts are on a contract this of course has been facilitated by our repeatable integration capabilities working in concert with our dedicated and talented teams at mtbc and carecloud month.

We have already begun seeing the benefits of this integration.

In terms of cost reductions in q1. We spoke about our move off of over third-party revenue cycle management BPO. And as of early April, we fully transition money off of this vendor and are realizing significant cost savings associated with this move. In fact this move along with others have yielded a cost reduction test off of 16 million dollars or more than 40% on an annualized basis. We are on track for positive contribution. Margin by the end of Q2.

While we have completed this. Migration more work is required. Of course as we continue to operationalize these functions and drive even more efficiencies into our RC in service offering for carecloud.

As of the overall into integration progress has I will combine teams will continue to work closely to enable our ability to drive high quality outcomes for a revenue cycle management customers and accelerate development capabilities and timelines.

We have also executed on our plans on driving costs out of the model by virtually eliminating the lines on other third-party contractors and focusing our efforts on rampage our offshore resources to accelerate even more capabilities. Additionally. We are highly focused on vendor reconciliation projects that allow us to leverage this wage scale between the two organizations and eliminate the need for technology and other contracts that are redundant or duplicative in nature. We expect to see additional significant changes over the course of several quarters as we continue our integration efforts.

I will not turn the floor over to our Chief Financial Officer belcon.

Thank you for the 2020 was 21.9 an increase of 6.8 million or 45% from the first quarter of 2019.

Our first quarter 2020 results included those of carecloud subsequent to our acquisition on January 8th 2020.

Yet it's 700 practices with over 5,000 providers to our client base 75% of which pay monthly staff fees to use Kare clouds, award-winning cloud-based platform and 25% of which also use revenue cycle Management Services in addition to SAS.

our first quarter 2020 gaap net loss was two point five million dollars as compared to a net loss of $296,000 in the same period last year

The gaap net loss reflects 1.3 million dollars of non-cash depreciation and amortization expenses, 1.3 million dollars of stock-based compensation and $645,000 of integration and transaction costs related to recent acquisitions.

Or gaap net loss was forty-two cents per share based on the net loss attributable to Common shareholders, which takes into account the preferred stock dividends declared during the quarter.

Short-term increase it or net loss was expected when we decided to buy careful out.

Requires businesses typically by companies which are losing money knowing that we will reduce their expenses dramatically over the next twelve months. Just lets us pay significantly less than we were two for profitable businesses and we can attain a similar or better level of profitability after two or three quarters of ownership.

Our acquisition of careful outfits into this pattern are clouds Venture backers had invested well over one hundred million dollars developing an industry acclaimed technology platform wager Cloud lost over twenty 1 million dollars in 2019.

When you when we brought carecloud that it would reduce empty profitability during first quarter 2020, but we also knew we could reverse that Trend quickly and turned this into a profitable acquisition as we've done that many times before.

As we mentioned we've already cut $16 of care clouds expenses. So we are well on our way towards making this acquisition creative towards earnings.

Our non-gaap adjusted net income for first-quarter 2020 was $354,000 or $0.03 per share and is calculated using the end. Common shares outstanding non-gaap adjusted net income excluding non-cash amortization to purchased intangible assets stock based compensation and integration transaction and impairment costs management page that it better reflects our overall operational performance.

adjusted ebitda for first-quarter twenty-twenty was $767,000 or 4% of Revenue compared to one point six million dollars in the same period last year

our adjusted ebitda declined by approximately $813,000 from q1 2019 in large part due to the cloud integration or with the cost reductions would have already taken place off. Your Cloud should not significantly reduced empty adjusted ebitda during second quarter 2020.

Like to talk about typical methodology of cost reductions after an acquisition we go through a proven process of replacing offshore subcontractors and some employees with MTM Global team using technology to streamline workflows and reducing the administrative burden of the team so they can focus on the client experience.

We are employing a similar approach to reduce care clouds expenses during second and third quarter 2020, which we anticipate will return back to Gap profitability while improving our non-gaap ability and cash flows.

First like most businesses. We've acquired carecloud relied on offshore subcontractors for most of their revenue cycle Management Services. They also use offshore subcontractors for some of their product development wage. The last four months we have wound down the expensive subcontractors hired by carecloud transitioning the work to our own offshore employees, which will generate Savings of approximately $830 in care cloud subcontractor costs during the second quarter.

Second we make a careful assessment in the employees to determine who would contribute the most to long-term client relationship client retention and growth. It's validating the bulb selected activities or short where we will perform the same tasks for 1/10 across using our offshore employees.

Well, we have achieved over a 1.5 million dollar reduction in care clouds quarterly payroll from June 4th 2019 to do one 2020. The actions wage already taken we anticipate will reduce quarterly payroll costs by another $600,000 during the second quarter.

The largest reduction was GNA payroll where existing employees can handle the tasks needed to keep this new business running.

We also reduced their R&D payroll in the and added 35 employees to our offshore technology team and planted more than double this amount to maintain the excellent that care cloud platform has been known for at a much lower cost are clouds total R&D expense was sixteen times in 2019.

Even after the reductions which are reflected in our financial statements, you'll see that the expense increased 800% year-over-year There Will Be steady reduction over the next few quarters.

third carecloud outspent in sales and marketing during 2019

In this case, we decided to leverage their sales and marketing capabilities, even rehiring a former star of their sales team. So we anticipate that the one point two million dollar increase in selling and marketing expect that you see from Q4 2019 to q1 2020 will continue in future quarters and then it will drive higher organic growth in the future.

Finally like all our Acquisitions carecloud had few tangible assets. So from an accounting perspective, the majority of the purchase price is allocated to intangible assets and Goodwill.

Intangible assets are advertised and we tend to use fairly short lives to get them off the books. So you'll see a 75% increase in depreciation and amortization expense. Which you for 2019-2020. This is not a cash expense and does not impact our adjusted net income or adjusted ebitda, but it does reduce our gaap. Net income and will persist throughout the years.

Is it March 31st 2020 we had approximately 8.4 million dollars of cash.

Used approximately $17 of our year-end 2019 cash balance for the purchase of carecloud including approximately 5.1 million dollars, which was held back from the purchase price you find care clouds negative working capital. This money was used to pay down some of the clouds accounts payable during q1 but in doing so even though it was part of the purchase price is considered cash used in operations.

That's why our overall cash flow from operations is shown as -3.9 million dollars during q1 2020.

During April 2020. We raised net proceeds of 19.1 million dollars by reopening or non-convertible series a preferred stock and issuing 828000 in dog years.

Series a preferred stock is Perpetual trades on the NASDAQ Global Market under the ticker States cash base monthly cash dividends at the rate of 11% per year and can be redeemed at our option at $25 per share starting in November 2020.

I'd like to close by reaffirming our forward-looking guidance for fiscal year December 2020.

We still anticipate full year 2020 revenue of approximately 100 to 102 million dollars which represents growth of 55% to 58% over 2019 Ram.

Most of this growth is due to revenue from customers.

But now that we have a much stronger marketing and sales team as well as more cross-selling opportunities. We anticipate stronger organic growth than in the past.

We had always planned for Revenue to grow each quarter as we added new clients, but with covid-19 and the whole US economy running at half speed during we are planning for lower revenues in life, too. Then we reported in q1. It's approximately 60% of our Revenue relates to Patient visits.

We expect that you will receive the bulk of the impact from covid-19 and that we will see a return closer to normal levels of patient visits during Q3 and Q4. However, we believe the current environment presents multiple Avenues to achieve our annual revenue Target including additional Force relationship.

One moment. We have lost connection with our main speaker. Please. Hold on until we bring them back in.

Hey Bill, they're putting us on the conference Bridge.

Our speakers back. Mr. Corn. Go ahead.

Mr. Mr. Bill corn. Go ahead.

Okay, buddy. All the lines are open.

All our plans with redundant lines everybody's what happened. So I apologized you to everybody. I'm not quite sure where I where I dropped off. Let me let me just wrap up the the revenue guidance Portion by by saying with the prospects for economic growth vmc team as well as additional Acquisitions, which these prospects have never been better now expect to exit 2020 at a higher Revenue run rate than originally anticipated lack of confidence that we are one hundred million dollar Revenue guidance.

Life As We integrate the carecloud acquisition the Acquisitions the actions we've already taken will significantly reduce care clouds operating expenses.

We anticipated carecloud will add to our overall adjusted ebitda for the impact for operating results to be home with lower Revenue anticipated during the second quarter. We are not counting on generating positive adjusted ebitda during this quarter, but we plan to age twenty with carecloud as well as additional second half strategic initiatives contributing significantly to our growth and profitability in future years.

I'll now turn the floor over to our chairman. Mehmood comments.

Thank you Bill while 20/20 is a challenging are for the world. We are fortunate to be in a very strong position and we anticipate another year of record-breaking growth with increasing profitability. We think I registered our customers and our employees for their support team will now open the call to the question operator.

We will now begin the question-and-answer session to ask a question. You may press star than one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two, please limit to two questions. If you have more questions, please reenter the Q. We will pause at this time to counter Lee Ascender of roster.

Our first question is from Jean meinheimer from Dover D & Company. Go ahead. Thanks. Good morning and great. Great start to the year guys. I wanted to ask you with respect to your your sense that month that visits are going to return to normal in the back half. I think that's contemplated in your outlook. What what gives you that confidence in the I know you saw a little bit of a pickup or since the March lows, but why do you feel that that we're going to return to a normal Cadence of of doctor visits and utilization?

I can you hear me back on and we just got got him back on.

Did you hear my question took a trip and I think you're seeing we're tracking it on a daily basis and they're seeing the the the projector to be back in the third quarter as I mentioned. So it's based on our actual tracking of patient encounters today. And again, they could be you know, the check-in way with these other issues with things go to change but at this point we believe that the third quarter will be back to normal. Okay. All right, very helpful. And and then my follow-up would be in your in your outlook. I think you said you're going to your tracking exit rate higher than than what you said what you thought previously wage.

What level of acquired growth if any is contemplated in your in your 2020 Outlet? Thanks.

Great. Thanks Gene for the question for you on the line.

On the I think is having trouble connecting but the answer your questions mean as we look at the year. There's no doubt that the covid-19 packed with be there in terms of the full year. So for us if we look at your there are multiple paths for us in order to achieve guidance. And as we think about the wage doing that because the primary one being a force deals and the other being through Acquisitions and we see a a an opportunity there to add additional Revenue above and beyond what we had indicated on January one of probably eight or nine million dollars for the year through one of those two Avenues or a combination of those Avenues.

Well, that's great. So eight to nine million above your current Outlook or is that is that concentrated in the outlet in the outlet? That's right. I got you right. Thank you, Steve.

For sure. Thank you, Jean.

Our next question is from Allen Kelly from National Securities Corporation. Go ahead.

Yes, hi for your offshore centers. Can you talk about what you're doing in your confidence that they can continue to run as well. They have given covid-19.

Make sure the thank you and this is a good question earlier. So there are off the advantage that we have in in many of our competitors. We have a global Workforce we have about over four hundred plus team members in the on the US side and about 2500 between the different offices of short. So the different layers that we have taken so there is about a 30% Workforce that are working from home. We already have set them up and they are working directly from home. They are wage 30% There are commuting to the office on the daily basis and and working under the strict health safety guidelines and working closely with the health agencies Thursday. We are commuting to the work and and are working from there and then it rest of the employees. They are even literally living in the on-site dormitories that we have in our back office.

One of the at one of the locations so between those three, we have enabled you provide the the turnaround time which is which was far better than any other competitor out there, uh and wage right now. It's completely caught up nothing pending and we have a lot of excess capacity and that's why we also have started at steam mentioned. The other opportunities are providing these Partnerships at the back office facilities and the support can be provided to provide it to the other vendors. Right? And this is this is removed. And if you look at the Pakistan wearing a major back office is whether it is the temperature difference with much harder harder harder over there or whether it's a malaria type applications. The the infection rate is with a country of two hundred million. I think the the cases reported are less than $35,000.

So it's we believe that this the epidemic would not affect affect fan as much as it has other countries.

Okay. Thank you very much, and I was trying to understand a little better the the organic growth rate from your legacy business and off and maybe you said it and I missed it when you said 40% volume declines. Maybe could you help with what the patient volume declines were in the first quarter and and maybe how the Legacy business did on a stand-alone and and have you would think about how the Legacy business by Legacy. I mean exclaim cloud is anticipated in kind of the following quarter's. Thank you.

Thanks Allen. So during during q1 there was a small decline in in patient volumes, but remember wasn't a big deal in January wasn't a big deal in February. And even in in March in most of the country people were still basically going about normal activities going to the doctors. So we saw a decline in in patient volumes during the last two weeks of March in certain areas, so that reduce our Revenue by a little bit, but but not a very large amount during during q1 again. We we think most of the impact from covid-19 candidly issue that you're going to see in is during Q2.

When when we see 40% less visits to the doctor and again, we've seen we've seen other people talk about numbers ranging from 40 to 52, maybe even 6% decline depending on the the Specialties. They're serving only about sixty percent of our revenue is tied to to the value of of the doctor encounters off. So so for for some of qq2 and again, we we don't have a crystal ball, we know that the country is is starting to reopen. You know, we've seen many. Starting to you at the see patients in house. And and of course many of our doctors were already using Telehealth. So the fact that that there were less in-person visits didn't hurt her Revenue so long, so I think that that if you're trying to think about Revenue, I would look at you to revenue being a little less than it was in in q1, and I'm sorry, I can't be a lot more specific wage.

Cuz I can't tell you whether or not on June 1st. Everyone's going to declare a victory in and start going back to bringing their children in for for well, baby visits, you know, or whether we'll start to see a second rebound in certain areas. So given that I think we we can't really be as specific on the short-term. What we can do is is we can look at the whole the whole year and say there are a lot of paths by which we could hit are hundreds and hundreds of million dollar guidance, you know candidly we see a lot of opportunities to significantly less our guide and and we feel totally confident that with the various things that we could do. We've got a we've got a a way to to hit the overall numbers.

But telling you how much will come from each piece especially during second quarter. It's without a crystal ball and tried to predict.

Okay. Thank you. That's helped my last question, and then I'll get back in queue is two areas of growth that you highlighted was telemedicine and your and force you made an interesting comment on how you were seeing increase in reimbursements for Telehealth. I was wondering if maybe you could just expand on that that I could get educated on that. And and and is this something that is likely to be longer-term post the economy gets back to normal and and then on for maybe if if you could just go into a little of what you know what you're seeing and and your thoughts about that. Thank God. Thank you again.

Thank you for the question. I'll start with force and then I'll loo potty in to talk some more about the help. So empty as you may recall is an outgrowth of our lungs acquisition strategy. So we think there's a there is then the remains a significant addressable Market some of the opportunities that were participating today or opportunities that initially came to us through our acquisition Pipeline and for a variety of reasons, whether it's insufficient alignment regarding valuations or structure or time or size. They weren't necessarily candidates for our acquisition growth but phenomenal candidates potentially for MTC Force. So we lost in 2019 the second half of 2019.

In an effort to be able to benefit from and provide benefits to other vendors through this alternate arrangement of working with them off if we just kind of level said in terms of the the overall offering what it includes is it includes Workforce augmentation revenue cycle management back office services administrative support R&D support for provided to other vendors in our space generally speaking at a at a 50% or greater reduction in or discount compared to similarly situated and educated US based Resources with similar outputs. It also includes some of its variations off-white labeled Healthcare IT solutions and also sometimes has a you know, an aspect of a customer referral that's that's part and parcel of that overall wage.

Opportunity since launching empty Force you've signed close to half dozen of those relationships that half of those are revenue cycle management companies and the other half are either of ehrs or in one case in the HR value-added reseller. I also have a car all the phone. Uh, and Carol was offered it to the role of president has to be Sports and has already been doing a great job in terms of helping us drive business and helping we do not take many of these opportunities to the next level and to to launch them. So, of course we believe is a really promising Avenue for additional growth and an Olympian hoti to talk to some about the Telehealth and in particular. I think we were talking about the fact that as we see in our in our practice magic system is we look at the schedule and counters and a phone number.

Look at the the pre covid-19.

Is a key part of our offering is ensuring that Health Care Providers receive appropriate reimbursement for their encounters. There's no mention how much of our Revenue the majority of our Revenue comes as a percentage of the overall collections received by our health care providers. And how do you will talk a little bit about some of the changes that were made as covid-19 became a reality, unfortunately in mid-march, but but but actually very helpful changes that were made through an executive order and through subsequent changes from CMS wage that related both to reimbursement levels and also that expanded the universe of Technologies above and beyond the traditional hipaa-compliant technologies, that could be leveraged by Health Care Providers office and and then by extension generate additional capabilities of healthcare providers to use Telehealth Technologies, so over to a hottie on this point,

Thank you. Thank you Steve. Steve points the number of different we all understand it's going to be a new Norm there will be more and more counters transition towards the Telehealth even postcode so during this Public Health Emergency under the executive order. So they have announced for as an example that the law enforcement levels can be will be at the same level at it would have been otherwise in the regular course of business. So for how long this will continue we're not sure yet. But for for now in terms of Public Health encounters are also being paid at the same amount that otherwise would have been paid in an in office or at home at home visit. So so so Choice One and the second thing is the even and then we had another Point here even using a non hipaa-compliant initially during the public health emergency even using uh, the FaceTime.

That's almost the other methods of connectivity and there are new codes that have been added for audio-only treatments. For example, your example audio only calls. So all of those has started to age forty started to add the the revenue for the time sometimes standpoint. We will be launched or First Health product in the last year-and-a-half and we continue to focus on the tasks and as we are going through now nowadays more focusing on making sure that the right coding is being done for those encounters. The right jobs have been created in the system guiding the practices and providers to make sure that they achieve the right level of reimbursements. And then in the the next coming quarters, we will continue to talk to avoid the update in launch the second phase of our Telehealth solution called which we have talked about in the earlier quarters, and we are making progress on those lines as well.

Thank you so much.

Our next question is from Mark weisenberger from B Riley FBR. Go ahead.

Thank you. Good morning. Can you talk about your ability to move customers up through the value-added services you offer for example on carecloud going from kind of concierge concierge Pro and how did the economics differ there and maybe help us think about what types of practices would use the respective tears of service that you offer.

Thanks, Mark for the question great question. I'll fit it first and then Loop in one who's the president of our division big picture exactly as you alluded to as we think about the average revenue associated with a s only client versus a plus billing or as you said concierge client, the the the difference is a kind of a 1-2-3 difference says we take for argument's sake as you take a $400 and the price varies, but let's use four hundred dollars. You take a $400 a month only provider to billing you're going to generally speaking take that that overall Revenue per Provider from $400 to $12 to $1,300 per month. These are monthly numbers were talking about. So for us a key part of our focus in terms of organic growth has been that upsell campaign, and we've completely revamp

The overall structure of the the sales team, uh at at Kirkland's we brought it in another individual who has a real significant experience with the RCM up-sell within technology companies to come in to leave that effort and he's been working on launching that upsell campaign. We have special motions. So more more news come on that subsequent quarters, but that's where we really see a significant amount of that promise. Even as we're talking about the CAC, you know, a natural question would be why why do u n t b c believe and why are you targeting a cat? That's so much more favorable. These would be the competition. That's largely because we see the opportunity of very cost efficient way to grow through up selling and also through leveraging our Global team, but over to want to talk a little bit more about the the up-sell opportunities, please

Thank you Steve appreciate and appreciate the question. I think you're absolutely right Steve. We we do see a huge opportunity for the ability for our sales teams to be able to sell into our customer base is in particular, you know with the new expanded services and and offerings that we're able to offer now because of the MTC capabilities and scale including things like some significant coding capabilities. We think about referral and authorization management pre-authorization work the ability for us to dive deep into other specific Specialties, like work the PDX and workers comp npip claims. We see a huge opportunity to be able to upsell these practices where we normally wouldn't have been able to do this in the past when I think about surgical subspecialties like Ortho and others and folks that are required to take off of actual transcriptions are out there reading notes the ability for us to do this poses a unique opportunity for us versus some of our other competitors that really don't offer the depth or breadth of these types of birth.

Revenue cycle Management Services. So we see that organize organizations are are moving and and really thinking through what this new normal looks like.

You're really looking to see how you you know Outsource a lot of these non clinical operations and ensure really kind of a more streamlined approach and a more streamlined organizational footprint themselves off. And we see that happening through a myriad of ways whether they're adopting new technologies like the like or electronic health care records or practice Management systems or also the revenue cycle Management Solutions that we can now offer.

That's really helpful. Thank you prior to the pandemic. You guys had a very busy conference schedule lined up presumably with your new reps going out with a new offering and and the combined company a lot of Buzz. He might be talking about some of the things you're you're doing to kind of mitigate the the loss of the conferences and get out there off of clients to get new ones.

Good question. And as you as you correctly allude to those conferences have either been canceled by the conference holders or converted to electronic references. We don't actually see a whole lot of Promise in most of the electronic versions of those conferences. And even the conference's themselves were never anticipated to be one of the key drivers of opportunities. So we've really been doubled down on the Avenues that we think are we thought Frank covid-19 continued to think will be the key drivers of growth the upsell campaign. We through building referral relationships with other industry vendors, which have been really critical to our growth and also through driving referrals from our existing clients. There's really no more powerful and successful lead from a conversion perspective than the lead that's coming from a satisfied client wage.

Is recommending a colleague of his or hers who that particular physician customer knows or believes may benefit from our service. Those leads are golden to us and our our efforts of really been oriented towards driving those referrals and and then executing all those and closing those. So those are the key things that we're doing a frankly the approach is really not that much different than pretty

That that's helpful as well and and one more for me and then I'll jump back in the queue. We're hearing a lot about disruption and dislocations in some of the smaller medical practices and the country as they're shut down and they're unable to have cash flows and maybe potentially survive as you think about maybe potential consolidation of these smaller practices and or going out of business. How do you think about that evolving through the back half of the year and maybe into twenty one and then the impact on your business if there is consolidation

A great question Mark and maybe one maybe you can jump on that if you would please.

Sure. Thanks. Steve a great question Mark, you know, you can one can argue I would say that smaller medical practices are probably the most impacted by by the pandemic as they were probably the least likely or the the organizations that were at least likely to whether this financial storm. However, as as we've indicated before we are seeing kind of this bounce back and we're even seeing smaller medical practices are starting to bounce back on their appointment volumes and not gain their footing as they continue to expand and start seeing patients again, we do think however, though that will see larger probably more well-funded medical groups likely to start acquiring some of these struggling practices over the next couple of quarters where regardless of the fact I think then we believe that the independent Medical Group space is very strong and will continue to thrive we do feel that regardless of size though them both because of our breath and our death of Technology tools were able to really work very closely with a larger groups that are requiring these smaller practices or the smaller groups as they need as they do need a new tag.

Technologies, so as a new normal begins to take shape, I would say that our conversations with prospects are really shifting. And as I mentioned they're really looking at how do they, you know, Drive some more sophisticated and and and some better leverage and margins in their business. So we do see that these medical practices. Um, you know, even smaller ones will will likely Thrive but if they do get caught by these larger groups, we're perfectly positions, I think to help both both segments of that market space.

Very good. Thank you. Appreciate it.

again, if you have a question, please press * then 1

At this time, there's no more questions. So we'll conclude our question-and-answer session. I would now like to turn the conference back over to Kim grant for closing remarks.

Thank you, and we would like to thank everyone for joining today and for your continued support. We look forward to speaking to you again in the near future. Take care and have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.