Q2 2020 Computer Programs and Systems Inc Earnings Call
[music].
Good day and welcome to the C. P S I second quarter conference call.
Participants are in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to drew Anderson. Please go ahead.
Good afternoon, and welcome to the CBS I second quarter 2020 earnings Conference call.
During this call we may make statements regarding future operating plans expectations and performance that constitute forward looking statements made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
We caution you that any such forward looking statements only reflect management expectations and predictions based upon currently available information and are not guarantees of future results or performance actual results might differ materially from those expressed or implied by such forward looking statements as a result of no.
And I, none risks uncertainties and other factors, including those described in our public releases and reports filed with the Securities and Exchange Commission, including but not limited to our most recent annual report on form 10-K.
We also caution investors that the forward looking information provided in this call represents our outlook only as of this date and we undertake no obligation to update or revise any forward looking statements to reflect events or developments. After the date of this call.
At this time I will now turn the call over to Mr. Boyd Douglas President and Chief Executive Officer. Please go ahead Sir.
Thank you very good afternoon, everyone and thank you for joining us.
Joining me on the call today, as Matt Chambliss, our Chief Financial Officer.
At the conclusion about prepared comments the two of US along with the EBITDA, our chief growth Officer, and Chris Fowler, Our Chief operating officer will be available to take any questions you might have.
As our country continues to deal with the unprecedented conditions created by the Cobot 19 pandemic I'm very pleased to share the CBS I had another strong quarter on many fronts before I talk about the quarter in detail. However, I want to address the critical role of community health care and navigating this crisis and the need.
For greater support of those providers.
It is no secret that hospitals clinics and skilled nursing facilities and all parts of the country are facing real hard ship during this pandemic.
Rural hospitals in particular have had to take a larger and more challenging role in providing care to their communities and safeguarding public health.
Meanwhile, they're struggling financially to endure the ongoing economic impact of depend on it.
As I shared in our call last quarter, the care sat and subsequent supplemental funding through the paycheck protection program and the health care enhancement at provided a short term financial lifeline for many of our hospital clients. However, more long term support is needed from our federal government to help rural health care.
Providers manage the financial strange created by Cobot, 19, and avoid detrimental workforce reductions during that time of need.
We hope that the pandemic has increased awareness of the critical role of community health care providers and the need for better support and reimbursement for health care in rural communities.
For our part we continue to work with our clients and others to advocate for long term sustainable solutions to these issues.
So these circumstances have challenged our business. We are encouraged by our second quarter performance, most notably total bookings of $20 million, which are up 36% or the second quarter of last year and contributed to an increase of 37% compared with the first half of 2019.
Progress about development efforts towards the delivery of our single platform solution.
In addition to delivering products to help our clients deal with the impact of Cove at 19, which we discussed on our last call releases and the quarter and over the last six to 12 months have include have included improved features functionality and use your experience that we are leveraging across are cute ambulatory.
Three and post acute products.
We believe that this progress is responsible for the increase in post acute bookings, which reached the highest level since the fourth quarter of 2016.
Our operational flexibility continues to serve sepia saw well and confronting the covid crushes in particular virtual implementations and support has helped to ensure the majority of our scheduled go lives remain on track and to allow more than 90% of our staff to continue working remotely protect.
King their health and safety.
We expect the value and efficiency of these new ways of doing business will serve <unk> well into the future.
Despite the headwinds we faced these measures and are conservative management of finances have helped us to drive respectable outcomes and this quarters revenue EBITDA and operating cashflows, which Matt will cover shortly.
Looking at the right ahead, we remain conservative and I'm thinking about the impact of Cove it.
As we entered the third quarter R. Six month sales pipeline is up 10% over last quarter, which is encouraging as we look to the second half of the year.
We are optimistic that the sales pipeline across R. E. H R and services business will continue to convert at a respectable right through the end of the year, albeit lower than pre covid conversion.
Based on these and other leading indicators that we have been tracking we're hopeful that business, where returned to pre covid levels and the fourth quarter of this year and cautiously optimistic that were once again be able to provide guidance.
Regardless of the path. This recovery takes we remain steadfast in our efforts to build long term value for our shareholders.
These efforts are centered around continued conversion a R E <unk> revenue to a subscription model.
Driving the penetration of tree bridge into a total addressable market of more than $1 billion.
Targeting the robust international market, including most opportunities specific to get real health.
And finally, maintaining a strong balance sheet and healthy cash flow that support amount more opportunistic capital allocation strategy.
I'd like to quickly highlight a few examples of progress that had been made in each of these areas this past quarter.
First I am pleased to share that more than 60% of the second quarter, New system implementations and net acute care EHR bookings, where SaaS contracts, maintaining our momentum to convert our EHR revenue from a license model to a subscription model.
Second Trib Ridge was once again awarded with the prestigious peer reviewed by HMA designation.
Most recent award was for the true Bridge accounts receivable management service, which means that together with the cloud hosted tree bridge RCM products Sweet the majority of tree bridge and in revenue cycle management offering now has the peer reviewed by H FMA designation.
This is a highly sought after and respected designation that buyers typically look for when considering business office outsourcing.
In addition, true bridge launched in EHR agnostic price transparency solution that allows patients to easily shop for services based on price.
The price transparency offering also improves the collectability of the amount owed providers for their services and insurers hospitals can make the CMS price transparency mandate that goes into effect in January of 2021.
Early indications latest to believe that there is a strong interest in this new offering from the hospitals we target.
Third I'm certain many of you saw that we've refinanced our credit facilities in Jean to create flexibility for more opportunistic future uses of capital.
This refinancing increase the maximum borrowing capacity under the revolving credit facility from $50 million to $110 million.
This refinancing has improved the position of <unk> to execute on it's long term breath initiatives and potentially take advantage of the opportunities that the current economic terminal may present us.
And finally, we have seen an increase in a level of involvement with a number of international opportunities in Canada, The middle East and Asia Pacific that are attributed to get real help our patient engagement solutions offering.
We're very pleased with this uptick in sales opportunities and activity outside of the U S market.
[noise] progress, we've achieved here and across all of our businesses and the second quarter has made us cautiously optimistic as we head into the second half of the year.
Before I turn the call over to Matt to discuss the financials I would like to conclude by saying that I'm very pleased with this quarters results, particularly in light of the extremely challenging circumstances and once again I would like to express our gratitude on behalf of <unk> and our employees to all of those on the front lines. During this time.
<unk> health care workers and their families.
With that I'd like to turn it over to Matt for the financials.
Thanks, Boyd and good afternoon, everyone on today's call I'll provide a high level overview of the quarter, including some additional detail on bookings performance.
<unk> walk through our second quarter financial results and some commentary about the impact of Covid 19 on our business.
Starting with bookings total bookings for the second quarter of $20 million were relatively flat sequentially and increased 36% over the second quarter of 2019.
System sales and support bookings increased for 3 million or 43% sequentially and increased to $5 million or 22% from the second quarter of 2019.
Despite the challenging sales environment caused by cope at 19, we saw strong demand for non IMMU three add on applications within our acute care EHR base and a resurgence of activity in our post acute segment, which is Boyd mentioned reached its highest bookings and three five years.
Including add on sales subscription arrangements made up 40% of the second quarters total EHR bookings compared to only 14% and the first quarter and 12% and the second quarter of 2019.
This is encouraging evidence that our strategy to drive long term recurring revenue growth by emphasizing are SaaS offerings throughout the sales process is gaining traction.
While the EHR business posted impressive bookings the headwinds for true bridge bookings where harder to overcome.
Overall, trowbridge bookings were down three $6 million, 38% sequentially, but up to $8 million a year over year nearly doubling the second quarter of 2019.
The sequential impact from the challenging sales environment was most notably felt in our new bookings, which decreased by two $7 million for 38% from the previous quarter.
Nonetheless, we remain confident about the long term opportunities to expand Detrude bridge footprint beyond our EHR customer base.
We'd like to refer you back to the tables and the earnings release for the composition and conversion Timeframes for quarterly bookings and the historical volumes and license mix for net new thrive acute care implementations.
With regards to the near term outlook for this metric. We currently anticipate nine new client facilities going live with our drive solution and the third quarter of 2020 with three expect it to go live in a cloud SaaS environment.
Turning to the financial results for the period the impact of the pandemic certainly made its presence failed on our topline with challenges to application adoption pressuring EHR revenues and the expected decline in patient volumes suppressing true bridge revenues.
All told revenues were down 15% sequentially and 10% from the second quarter of 2019.
As we mentioned on the previous earnings call <unk> I made the strategic decision to provide our employees with much needed job security, taking the long term view that this would strengthen our team improve customer satisfaction and better position us to capture opportunities as our markets recover.
The short term consequence of maintaining our team was that the second quarter revenue declines had an outside impact on adjusted EBITDA and non gap net income with adjusted EBITDA, decreasing 38% sequentially and 29% from the second quarter of last year and non gap net income decreasing 36% sequentially.
And 21% from the prior year.
Looking deeper at our segments true bridge revenues for down 13% sequentially and 6% from the second quarter of 2019.
As we mentioned on the previous call the metrics, we used to gauge patient volumes at our clients hospitals first showed notable declines during the week ending March 22nd with volumes bottoming at roughly 40% below pre covid levels throughout the months of April and May.
Patient volume showed improvement during June increasing to 20% below pre coated levels and have remained a roughly that level.
With 80% of true bridge revenues correlated with hospital volumes the impact of these declines on our revenues was significant.
For example revenues for our accounts receivable management services decreased 2 million or 20% sequentially, and one $3 million or 13% from the prior year.
As I mentioned, we did not pull all of the cost containment levers at our disposal during the second quarter sacrificing short term margin to protect capacity for future growth.
As a result, turnbridge gross margins decreased to 45% during the second quarter of 2020 compared to 47% during both the previous quarter and the second quarter of 2019.
Next system sales and support revenues decreased six 5 million or 16% sequentially, and four $9 million or 12% year over year.
The Pandemics impact was greatest in our nonrecurring revenue streams, which were down five $6 million sequentially and three $1 million from the second quarter of 2019.
However, our SaaS revenues also face headwinds is over half of those revenues come from entrust arrangements, where are cloud EHR offering is paired with true bridge services.
Our billings and revenues for entrust contracts are based on a percentage of the hospital customers cash collections, which contracted during the second quarter.
And result was at 10% decline SaaS revenue sequentially, but these revenues were still up nearly $1 million or 79% from the previous year due to the dramatic shift and license mix, we have experienced over the past 12 months.
From a margin standpoint margins remained relatively flat at 55% during the second quarter. Despite the large topline declines with decreased travel costs improved sales mix and lighter third party software cost preserving margins.
Moving onto operating expenses product development costs were relatively flat sequentially.
Capitalization of $500000 a software development costs during the second quarter of 2020 was the leading contributor to a $900000, 10% decrease in product development costs year over year.
As a reminder, the capitalization of software development cost is new to <unk> for 2020, and as the direct result of gap capitalization requirements for the investment we're making into development of our single platform solution for all care settings, a multiyear endeavor that boy discussed earlier.
Sales and marketing cost decreased one $8 million, 26%, both sequentially and year over year.
Revenue declines resulted in decreased commissions travel restrictions drove are related costs down and the impact of Kobe 19 on our 2020 outlook resulted in reduced incentive compensation costs.
General an administrative costs decreased $900000 sequentially, primarily driven by seasonal reductions in legal in accounting costs.
Similarly costs are down one $1 million from the second quarter of 2019 with the largest contributor being the cancellation of our National client conference. Originally scheduled for May of 2020.
Closing out the income statements are effective tax rate during the quarter was a benefit of 4% compared to an expense of 22% during the second quarter of last year.
Quarter of 2020 saw some outsized benefit related to R&D tax credits, which don't necessarily correlate with pretax income, resulting in a heavy benefit to the effective right.
Turning to one of the clear highlights for the quarter operating cash flows of 17 million for the second highest and company history and nearly match the record 18 million.
Quarters ago.
This strengthening cash flows is a testament to the resiliency of our community hospital customer base and what we view as successful efforts by the federal government to provide emergency funding to health care providers.
The impact of <unk> was a $3 million work down the financing receivables and a 6 million work down a accounts receivable, while dsos improved to 49 from 50 at the end of the first quarter and 52 at the end of the second quarter of 2019.
Trailing 12 month operating cash flows now stand at $51 million or 110% of adjusted EBITDA over the same timeframe.
Compared to $34 million or 67% of trailing 12 months adjusted EBITDA a year ago.
This continued strengthened cash flows has allowed 40 net reduction in bank debt of $27 million during the past 12 months with balance sheet cash increasing $12 million over the same timeframe.
Before we open the line for questions I'd like to cover just a couple more subjects.
First our current outlook and the return of guidance.
When we step back and look at the health of our markets and customers the continuing improvement in patient volumes and the financial support from the federal government through the overall 175 billion provided relief fund much of which was specifically aimed at rural and other safety net hospitals have increased our confidence that our community hospitals has survived.
The worst of the Pandemics economic effects.
All indications out of Washington, or that additional substantial funding is likely to follow which bodes well for our hospital customers ability to whether this storm and maintain their commitments to keep partners like seat BSI.
Despite this view there are still too many unknowns and too much inconsistency in the recovery to comfortably provide guidance at this time.
Direction Holly we continued to expect hospital volumes to return to near normal levels by the end of the fourth quarter alleviating much of the topline pressure on Trowbridge revenues.
Likewise Ah returned to normal operating environments for our hospital customers paired with continued federal support for safety net facilities and the prospects for a vaccine in early 2021, all point to a more normal cells environment as we entered the new year.
We feel it's important to lay out these expectations as they've influenced a response to the pandemic so far.
As I mentioned earlier, we have been uniquely committed to our employees during the past four months with the expectation that the pandemics impact on our financials will be both temporary and short lived.
If the Pandemics impact on our hospital customers volumes, an hour financials extends beyond our current expectations, we will revisit our response to this challenge, including whether additional right sizing of our cost structure makes sense.
Pulled very few of the levers at our disposal, so far and fill we have ample room to right size in the event of a prolonged downside scenario.
Second I'd like to spend a little time on our recent refinancing.
We mentioned on the last earnings call that we were comfortable with our capital availability with March 31, cash a $4 million and revolver capacity of $34 million.
With a strong cash flows this quarter and the successful refinancing of our credit facilities. The balance sheet now boasts $19 million of cash and $81 million a revolver capacity nearly tripling, our overall capital availability from a quarter ago.
June refinancing the successful completion of the goal set towards the end of 2019, the aim of which was to create additional dry powder for more opportunistic uses of capital.
We now have the flexibility to act decisively on strategic tuck in M&A opportunities invest in new and existing products and services and potentially pursue value driven share repurchases.
This enhanced Optionality has us excited about the opportunity set in both the current and eventual postcode environments and with that we'd like to open up the line for questions.
Thank you well now begin the question and answer session to ask a question you May poster then 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 Star then too at this time, we will momentarily.
Cause momentarily to assemble a roster.
Our first question comes from Jeff Girl from William Brewer and company.
Please go ahead.
Yeah. Good afternoon. Thanks for taking the questions I think I'll start off by just asking a little bit more about the health of the end market clearly it's shows them resiliency, but I think it would be helpful. From here. If you could parse out near term survival of community hospitals in rural health facilities generally with the.
Appetite of those providers to pursue strategic iced tea initiatives.
I think.
With the.
With the increased attention from the government.
They seem to be financially viable even.
As recently as yesterday.
Some new initiatives coming from President Trump, So we still feel good about it.
It's really.
I think brought to life, how important rural health care is.
Two.
To deliver in healthcare.
The U S and so we feel good about where the end market is at this point.
Jeff Hi, David Dog here I'll added a little bit.
We touched on this from the prepared comments, but another thing that we're happy with in the first half of the year is that in the deals that would be willing to our perspective visit the average contract sizes up rather significantly from where it was.
Last year.
And we've seen that.
Is hospitals are buying systems in in particular, there buying the evidence EHR system that they're contrasting for the entire sweet of products.
And again that's.
Increases substantial over last year in the hospitals are out there in the marketplace.
Are looking for the full sweet and they're coming off of whatever system. There on now they've got all the products already installed. So we continue to see that in the second quarter. We actually saw the average contract size continue to go up so there's a few less hospitals that are actually made decisions, but those that have.
I've seen an increase in what they're buying.
That's all the evidence side as we touched on on the Truebred size on the Truebred side of the business.
The volume there from a total bookings perspective, and the second quarter was overall disappointing, but given that we were in the cupboard environment. We don't believe that it was disappointing, but that's what we're going to be more curious to see in the second half of the year is how that comes back as we resume more of a normal environment.
Great to hear great validation of the product sweet and and of your efforts to partner with your client.
I have a little bit deeper unbroken so maybe.
Put a client of aspect to it and help us frame expectations last year, the first half with a little bit slower, but you're finished stronger and the second half of the year and that momentum has continued in the first half of 2020, despite the challenging environment. So.
You said now, whereas the confidence in delivering full year bookings growth or or maybe even year over year growth for bookings and the second half of the year sure Great question, Jeff, Yes, we did of course.
To put more simply we had a relatively easy comp for the first half of the year and.
We're excited that we were able to.
Execute and significantly outperformed that cop in the first half of this year, especially with Kobe been so predominant since the mid March.
Do have a more difficult comp in the back half of the year is.
Avoid mentioned in his prepared comments or six month waited pipeline as of June 30 is that an all time high so that gives us some confidence that we will be able to perform well in the second half of the year in order to achieve on that we are going to need to pick up on we're going to need to continue to execute on the evident EHR front, which.
Which we're confident we can do we're going to need to continue to execute on the entrust front, which we're confident that we can do.
And we're going to have to see some pick up and what we're seeing from a tribute standpoint more like what we saw on the first quarter as compared to what we saw on the second quarter. It's in the pipeline is just a question of a of course can we execute would be.
Our customers in particular that up market Meditech hospitals et cetera, we were having a lot of early success and penetrating with through bridge are we going to be able to do that in the second half of the year. We're optimistic that we can but it remains to be seen.
Great.
Understand understood the optimism and that through ridges.
There's a little bit more uncertainty yet.
One last question I wanted to dive and a little bit more specifically on the the Trump initiatives announced yesterday and clearly.
Very early but maybe you could just speak more broadly about how <unk> can further public health in the U S and and maybe more specifically the ability to hop client navigate efforts by CMS to pilot new reimbursement schemes for rural hospitals.
Yeah, and you hit the nail on the head.
Just for everybody on the call what Trump came out with yesterday was basically a volunteer voluntary pilot program value based program and his comment which adult was spot on was just going to help streamline the reimbursement from CMS for Medicare patients.
At a time to see the reimbursement.
Have been flow significantly from month to month and part of his initiative is to have streamline that out and make it.
Easier I guess to run those businesses, because obviously, it's difficult to to run a business. When you have the changes you have with the reimbursement from month to month as R. As our clients.
Experienced that as far as what we can do we think we we continue to offer products and services that are affordable to them that their cost structure their facility, but help deliver that help them deliver the best patient care. They can to their communities and that's everything from obviously that starts with the HR.
But that it goes over into the Turnbridge with the services with.
Care management services and the.
Patient portal services and patient engagement services that we're offering them.
Great. Thanks for taking the questions.
You bet Thanks, Jeff.
The next question comes from Donald Hooker from Keybank. Please go ahead.
Okay, great, but afternoon, congrats on making that through a top quarter clearly.
So I guess my question around Purebreds, I know, you're not providing guidance but.
A number of moving parts with him Clearbridge.
And.
My understanding is that the revenue recognition for some of those park lags.
The underlying client patient volume, so what would it be fair to assume that theirs.
Another step down in Q3 before then there's a sharp recovery <unk> and the 221 I just want to make sure we have.
The cadence of expectations.
Correct.
Yeah. So darn I don't necessarily think that Q3 is going to be a step down from Q2 is going to be more of like a lateral staff from where we were in the second quarter with Q4 significantly outperforming versus where the milk two quarters of the year where.
Okay, That's fair and then.
The other thing that jumped out I did see you guys had that press release around the transparency solution, which is interesting and I know there's these requirements from CMS as you mentioned around interoperability provisions of the cure Zac.
Is there something you can put it.
Climate for your entire client base in some way that can we put a number on that is there a particular sale revenue associated with and install like is similar to M. U one two and three can we use or to think about that.
In terms of kind of.
Okay.
Yes.
Great question, and that's a really good way to think about it.
Very similar to the meaningful you so and I'll give you an analogy kind of stay in with that idea.
So the position documentation that application that was available to be purchased stand alone that was a requirement.
The meaningful meaningful use initiative.
Similar to that the price transparency.
Service that we are now offering is built upon other applications that we have available already for the customer base.
And when when we're looking at the installed base.
The price range.
Price transparency by itself.
Is not a huge needle mover per.
Curb customer however, when we look at the add on applications that are required to get to the <unk>. The prerequisite applications required to get the price transplant transparency.
Sorry, we're looking at about $11 million.
To recurring revenue with about a potential at $10 million an implementation fee. So it's a nice little bump that could be that could be.
Recognized I think the question is going to but I think the big questions that are outlying right. Now is one will it be delayed an two will there be any changes based on.
The rural hospitals.
We'll see how that plays out by the end of the year. The feedback that were receiving from our customer base right now is very positive.
They like what they're seeing and assuming that there's no changes to the deadline, we anticipate that continuing to uptick as we go.
Okay, and then just one lascar. Thank you for that one last one of you guys canceled your user conference you commented on that and you're prepared remarks is there something to think about around there does that does that seniors Herbert marketing in some way.
Is there concern or are you going to reinstate that next year.
We're certainly bond on reinstating and I don't know that it has.
I think it's more of an educational experience for our users. There is certainly a sales and marketing touch to it and certainly people find out about maybe a new application our new service that we are offering from truebred, but the whole focus of the conferences Con education.
And clients really communicating with each other collaboration with themselves and with us So that we can get feedback so.
I don't I wouldn't expect a tech a big hit from a sales and marketing perspective for the company, yeah and to that point down and we're going to be offering some of the classes virtually we're in the process right now building that al obviously, we're disappointed that we're not able to get together face to face, but we're going to make sure that that education is available throughout the year.
Great. Thank you I'll, let someone know jump on thanks.
The next question comes from David Larson from Verity. Please go ahead.
Hi can you remind me what the number of expected installs are for the third quarter and I think it's a pretty significant sequential increase and then how are you actually doing those installs with the pandemic can you do those installs remotely.
So we mentioned in the prepared remarks that we've got <unk>.
Currently we have nine.
Some implementations for thrive scheduled for the third quarter and again three of those are going to be in a cloud or a SaaS environment.
And I'll, let Chris kind of speak to whether what the mixes virtual versus kind of on site implementations.
Yeah, So David I think our success and doing those implementations remote obviously shows the resiliency and flexibility of both the customer base and our employees.
I think Matt gave the number or travel costs are down obviously significantly in that points directly to those implementations and so through.
Through the through our ability to do either.
Webex conferences or have classes available for the implementations. The feedback has been quite positive of us being able to install the software remote.
Okay, and then I think you had.
[noise] taken some steps to improve the cost structure of the organization can you just remind me like where are you in that process and what is the incremental benefit expected to be do either operating income or adjusted EBITDA.
Okay. So David I think you're referring to some initiatives that we had underway say, maybe 12 or 15 months ago. When we had initially announced at $10 million cost savings initiative that we executed on.
I believe it was 3 million a additional.
<unk> layer on top.
We have achieved all of that run right cost savings so related to those initiatives. There's nothing there's nothing on the com.
Okay, great. Thanks, a lot.
The next question comes from Stephanie Davis from S V B.
Leerink. Please go ahead.
Hi, This is joy.
Any thanks for taking my question.
This is a little earlier, but it's fine to dig into volume a bit more can you speak how your internally modeling volume through the rest of the year and whether you're expecting a stabilization at the present level, you mentioned or bakeman and potential seconds late.
Yeah. So.
We're looking at a handful of indicators are RCM.
Claims transmission volume medical coding.
Counts receivable management volumes those are the leading indicators that we're looking at right now.
We're hovering in about a 15% to 20% off of pre Covid.
<unk>.
We have not.
Soon to any sort of second wave into our golf to the second year, but obviously, that's a concern which I think speaks to the uncertainty and and while we stayed where we are relative to guidance for the rest of the year.
Gotcha, that's helpful and I can follow up understanding answering your telehealth solution at no charge through 20th 20th but looking ahead are you planning on monetizing it and maybe adding and more features for a larger value prop any of that the case, what kind of pricing model and what kind of new features with your internet. Thanks.
Yeah. Thanks, Julie we we are continuing to offer that at no charge through the end of 2020, we do.
Plan to begin to charge for that on a per.
Physician.
Per condition license basis recurring revenue basis beginning in.
January of 2021, I can give you some rough figures at the penetration right.
Where we are right now that would come out to about $315000 annually incremental additional revenue.
We stayed on the last call I believe and we still believe that.
As we entered 2021 will be on at least the rate of about you'd have about 500000 $5 million incrementally annually.
With the talk with your dog product going into next year, we are certainly to answer to your question.
<unk> new features and are actively receiving client feedback now for those features but I think it's important to note that we'd also that product is integrated with incident, PHR, which is to get real health a patient engagement portal product.
And it's also integrated with our care management feature that we're rolling out now with true bridge.
Which will help us as we as we tried to penetrate our market with those products and services.
Yeah, and one additional follow on there Joy is that I think the final piece of that secret sauce from an integration standpoint is into the Ehr's, which makes which makes the product that much more appetizing dollars install customer base.
Alright, Thank you very much.
Thanks Joy.
The next question comes from George Hill from Deutsche Bank. Please go ahead.
Hi, This is Charlotte on the French Orange. Thanks for taking my question given the mid corner financing activity increased flexibility change the way you're thinking about M&A and what functionality do not have that you would like to have and where do you see the way.
So I mean, obviously one of the primary motivations behind our refinancing was to create this additional dry powder and when we reference more opportunistic uses of capital is clear that M&A is a priority with that we mentioned in the earnings or in the press release announcing the <unk>.
Finance that not only that would increase the or upsize the size of the revolver. We also remove some of the dollar amount restrictions on both the annual basis and over the term at a credit agreement around around M&A activity. So absolutely.
Have a nice towards increased activity in that area going forward.
As far as areas of focus obviously from attributed perspective.
Eric.
Efficiency is one of the key value drivers for us so areas, where we can identify opportunities to make our service much more scaleable.
And deliverable to both the installed base and that the net new market are obviously a hard.
Area of focus.
Hi.
Fishel intelligence out there just because it's such a catch all but obviously when we're thinking about how we can leverage.
The ability to use that for me.
Automation standpoint to again deliver more value to the customers as we're providing the service for them. That's that's a key focus for us.
Okay, great. Thanks.
The next question comes from Sandy Draper from true Securities. Please go ahead.
Alright. Thanks. This is a stand on for Sandy Thanks for taking my questions.
Maybe if you can start off can you tell us the contribution get real health had in the corner and a quarter.
Yes to answer Gabriel health had revenues of about $400000 for the quarter.
Brings them to one $7 million year to date and four $9 million over the past 12 months from bookings standpoint bookings for Gia from 2200 300 K.
Got it.
And then.
Looking at bookings.
Maybe particularly on the cross sells I'm just curious.
Is there any change in the product minutes that you're seeing now versus a year ago.
Yes from an EHR standpoint.
Stan.
We did have is Matt mentioned as prepared comments, we did have a nice nice quarter I think the best quarter, We've had down a couple of years in terms of adelman sales.
We are seeing a good volume of our Edie product now and we're also seeing a good volume of our ambulatory solution into our current customer base.
I think other than that again.
Compared to last year, we are down in terms of the number of of hospitals that we've signed.
But.
But the average contract volume is more than made up for them. So those would be the key differences from a year ago.
Got it that's helpful.
And then maybe leaving it off on an open and the question, obviously, a very new quarter.
For you guys on the industry it large.
I'm just curious has anything surprised you positive or negative and whether youre looking internally or on the client side.
Managed to this quarter.
I'll start this is Chris.
Probably one of the biggest surprises has been our ability to move the workforce home and not really Miss a beat.
Again, I think that.
Sometimes timing and play a little bit a part of the things and we have made some conscious decisions prior to covid or actually prior to the beginning of the year as far as.
Are hiring policies looking more than a diversified workforce across the U S, which put us in a remote workforce environment.
<unk> staff has been a huge.
Of the success as far as getting all of our employees to the house.
And then just just being able to see that the productivity and the customer satisfaction levels have not decreased at all through the period. So I would say from my perspective that that's probably been the largest highlight.
And I would add to that.
Just the resiliency of our customer value.
And it needs to not go on notice that.
They've been there on the front lines they've been <unk>.
Some cases, Dale and lots of covered patience and another cases, not having many conversations at all but dealing with severe drop in volume and.
As you can see from Cashbox and everything.
The government quite a big part of this but they've been very resilient.
In delivering care to their communities and working with us still installing new software that helps them deal with with Cove. It in other issue. So I would answer that with the resiliency of the customer base.
So I guess, maybe they give you one on balance on the other side of negative would be just a slow down in the true bridge.
[noise] bookings and obviously, that's that's based on just the uncertainty from the hospital standpoint, I do think there's an opportunity for entrust to catch even a higher demand self we're going to make.
Some lemonade out or something just based on the fact that right now the vast majority of our customer support as of static monthly fee and moving to entrust would make that variable based on the volume's that they're saying and so I think that there's an opportunity for us to use that as of as a lever to help continue to drive the interest domagala.
Forward.
Got it very helpful. Thank you.
The next question comes from Steve Helper from Cantor Fitzgerald. Please go ahead.
Hi.
Operating cash flow was quite impressive as you called out.
Had a couple of.
Good good.
Line items on the receivable side.
Hello, and financing receivable, so should we be thinking about the same levels of operating cash for the.
Second half of the year.
Yes, Sir Steve I wouldn't necessarily expect the same level of operating cash clothes for the second half of the year. It's important to remember the second quarters cash flows were mostly the collection of pre Covid revenues. So we do expect the back half of the year to come down just a little bit based on true bridge invoicing coming down due to lower volumes, but even with that we're.
Still thinking that somewhere in the ballpark of $20 million of operating cash flows in the back half of the year is achievable.
For the six months.
That's right for the back half of the yes. Thank you so much.
This concludes our question and answer session I would like to turn the conference back over two boys Douglas for any closing remarks.
Alright, I want to thank everyone for being on the call today.
I'd just like to reiterate that we're pleased with the results this quarter and in spite of the Covid pandemic, we're very proud to support the healthcare provider supply such a critical role in community health care all of US here remain focused on the efforts and opportunities ahead of us and we will build long term value for our shareholders. Thanks, everyone for your time today and have a great.
Afternoon.
The conference is now conclude thank you for attending today's presentation you may know disconnect.
Alright.
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