Q2 2020 BioTelemetry Inc Earnings and Sales Agent Agreement with Boston Scientific Corp Call
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Ladies and gentlemen, Safe conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
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2020 earnings conference call certain statements during the conference call in question and answer periods to follow may relate to future events and expectations and that such constitute forward looking statements within the meaning of the private securities litigation that 1995.
Such statements involve known and unknown risks uncertainties and other factors may cause actual results performance or achievements of the company in the future to be materially different from the statements that the company's executive may make today. These risks are described in detail in or public filings with the Securities and Exchange Commission, including our latest periodic report on form 10-K or 10-Q.
We assume no duty to update you statement during.
During this call we will present, both GAAP and non-GAAP financial measures reconciliation of GAAP to non-GAAP measures is included in todays earnings press release, which is distributed and available to the public do the Investor information section in the Biotelemetry website, a go bio dot com.
At this time, all participants haven't placement of listen only mode. The floor will be open for questions and comments. Following the presentation is now my pleasure to turn the floor over to your host Mr., Justin <unk>, President and CEO Biotelemetry, Sir you may begin.
Thank you operator, and good afternoon, everyone, I'm, Joe cap, where president and CEO of Biotelemetry.
With me for today's call is how to get our Chief Financial Officer.
I Hope you all remaining good health and spirits as we continue to navigate the significant challenges presented by the Kobin 19 pandemic.
When we last spoke in early May we were about six to seven weeks into the economic shutdown and we're still trying to get a handle on its potential impact when our daily lives and when our business.
At that time, we stated that we had experienced a 30% year over year reduction in revenue for the month of April.
We also said that we expected it to be our worst performing month with anticipated sequential improvement coming in May and June.
That forecast proved to be quite accurate.
To provide you with an appreciation of how well we are weathering. The current challenges I will start with comments about our second quarter performance and that provide details about how our strategy continues to drive growth and create new opportunities.
In our three major areas of focus.
Health care services clinical research and population health management.
Our diversified structure has served us well in the downturn with approximately 20%.
Business largely unaffected by the events of the day.
After my update headed will provide more details on our Q2 financial results.
I will make closing comments and we'll then open up the call for your questions.
Before providing further detail on the quarter I would like to thank the many dedicated team members biotelemetry for the way you have seamlessly adapted while remaining steadfast in your commitment to the health and wellbeing of our customers and fellow employees your devotion and resolve or nothing short of amazing.
As a result of our organizations team work, we're pleased to report the much better than expected $99.1 million of revenue for Q2.
Revenue contribution by month as a percentage of the total breaks down as follows 30% in April 34% in May and 36% in June.
Demonstrating consistent growth throughout the quarter.
Moreover, it because we quickly implemented certain cost containment steps at the outset the crisis.
We also were able to preserve much.
Our earnings power.
Even at the reduced revenue level.
As a result, we're reporting $25.6 million of EBITDA wake Ptwenty, 5.8% margin for Q2.
Importantly, we were able to keep our team largely intact throughout the quarter.
Only a small number of employees were furlough during Q2 and I'm happy to report.
They have all since been reactivated.
We are once again at full strength and poised for continued growth.
We also generated more cash in the quarter ending with an 84 million dollar balance after paying $70 million towards our credit facility.
As we anticipated our remote cardiac monitoring business, which is driven by physician referrals well see every other company most impacted by the economic slowdown.
Office visit data showed the biggest dip in April down as much as 60% in some areas with a gradual recovery throughout the quarter.
This was consistent with the flow of prescriptions for our monitoring service.
Most encouraging is that by the end of quarter, both and caught and extended wear Holt your volumes were back to over 90% of pre covert levels.
A positive indication for the second half of the year.
The revenue seven stemming from Geneva research and pop health.
Which accounts for over 20% of the business was much less impacted by the slowdown providing some balance to help whether the downturn.
He diversified revenue streams are the product of our multifaceted growth strategy.
Which as you will hear shortly continued to advance even in the face of the current challenges.
Let me short share a bit more detail on each of the three main segments of the business and how our leadership position in the connected health market continues to create numerous exciting growth opportunities across the company.
Naturally our primary focus for the healthcare services segment during the quarter was to stabilize the business and adapt where needed.
Having accomplished that enable us to post a solid and productive quarter.
The progression of the recovery is looking more and more like a V shaped rebound with MCT, an extended or hope to volume nearing three colby highs.
This is occurring even in awake.
Have a continued low all in Dr. office visits and double digit unemployment rates across the country.
Over the years as many of you who have followed US know our primary growth theme has been to continue to solidify our leadership position in the cardiac monitoring market to innovation and strategic investment.
This approach has produced the most technologically advanced and expansive offering in the industry.
It is well it is also led to the acquisition of complimentary assets like the Geneva business, which we purchased in early 2019.
Geneva increased our addressable markets like over $1 billion and for the first time provided us with a meaningful recurring revenue business.
Driven by the investments in additional sales resources, we continued to add new accounts and active patients to the Geneva platform throughout the quarter.
So far has with everything we'd hoped for and more.
An important part of our growth plan is to add additional recurring or continuous care related revenue streams to the platform where possible.
To that and we recently took advantage of attractive opportunity to augment our continuous care offering by expanding our at home IR monitoring service used to help remotely manage a patients coming in therapy.
As you May recall, we began providing at home IR testing several years ago as a natural extension to our cardiac monitoring business.
If a patient is not equipped to self monitor from their home it must be tested in a clinic or hospital setting not an optimal solution, especially in the time of cobot.
Since the outbreak many institutions have been directing patients to providers like us to monitor them remotely, causing an uptick in demand.
To bolster this capability during the quarter, we acquired a service business from Roche diagnostics for a modest future royalty, which they had in place to support the use of their at home I in our testing device.
By integrating IR results into our existing physician portal, we will create even greater workflow and data management efficiencies for the thousands of cardiology practices we service.
We will seek to enhance this continuous care offering in order to build on our recurring revenue business.
Also in the spirit of expanding our capabilities, we entered into an advantageous agreement with Boston scientific to help commercialized or recently at the FDA approved Lux system.
As you may be aware Lux isn't instable cardiac milder use for patients requiring long term cardiac monitoring.
We have long scene I see hands as complimentary to our portfolio of short term externally warm monitoring systems.
In terms of the agreement our cardiac organization will function as a sales agent and his boston's preferred remote monitoring partner.
Training and preparation have been ongoing for sometime and sales activities are scheduled to begin in the fall.
We view this partnership has an excellent opportunity to further enrich our cardiac offering and we are honored to be selected by such a high caliber organization as Boston scientific to support flux.
Turning to the restarts business.
Our commitment to expanding our service offerings and improving our competitive position in research led to a period of accelerated annual growth of over 20% from 2017 to 2019.
At the outset 2020, we spoke about the research business in terms of a down cycle.
Remember the revenue flow in this segment tends to be a bit choppy given the nature of deal flow specifically studies vary in size and Lynn, which result in an inconsistent revenue stream from year to year.
As a result, we expected a dip for the full year 2020 of possibly into 2021.
We're now seeing signs of a more rapid resurgence and all indications are that this period of softer sales may be much shorter than originally expected in fact revenue for the first half of year was above our expectations in spite of Covance.
And bookings, which had a leading indicator for sales were a record high for the first half of 2020 up 34% year over year.
Another interesting leading indicator is the number of sites that are qualified for new potential studies.
In June worst sites will qualifies and doing any month in the previous two years, a strong indication of future sales growth.
We also continue to see margin expansion in this segment as a result of our ongoing investments in technology.
In the area population health management, we have begun to step up our commercial efforts.
As you May recall, we first ventured into this business a few years ago with a small investment.
We then spent time upgrading our technology building out the capabilities of our cloud based platform, improving our analytics and expanding our service capabilities from diabetes management to a more comprehensive solution.
Given the progress of our internal development efforts and the rapid growth in market demand for these types of connected health solutions. We are now entering a phase of more aggressive commercial activity.
Clearly one of the lessons be and learn from the cobot crisis is that we need to improve the health care systems capability for providing care to people remotely.
During the quarter, we deployed additional sales personnel focused on target market segments. We expect these investments to generate results later this calendar year or early 2021.
As we start to see the returns on these investments materialize, we will add more resources as warranted.
In order to accelerate our commercial efforts. We also recently established a multiyear partnership with Centene Corporation, a large health insurance company.
As part of the agreement, we acquired Fifteens population health management solution branded on demand.
Which we will fully integrate into our current offering.
When demand is a remote patient monitoring and coaching platform focused on diabetes hypertension and chronic heart failure.
We also become the exclusive provider to Centene Medicaid members currently utilizing or in the process of implementing this platform.
In concert with Centene sponsors, we will market the program to all Centene plans and the rest of the 12.5 million beneficiaries in order to reduce cost and improve outcomes.
We are excited to add on demand to our portfolio a time when connected health solutions are increasing importance across the health care continuum. We're also delighted to partner with an organization like Centene, which has demonstrated a clear commitment to improving the lives of so many people and communities.
As I planting progress as we will share details on what we anticipate will be more substantial but measured investments in this business.
To sum up as you have heard today.
We were as busy as ever in Q2 executing on our strategy despite managing through the numerous challenges posed by the pandemic.
This speaks to the quality and depth of our leadership team just like could not be more proud of.
Short of any major step back associated with coping 19, when you expect our momentum to continue throughout the second half.
The additional capabilities, we have developed in our cardiac monitoring of research businesses will pay dividends for years to come.
And as importantly, the increased investments, we're making the commercial efforts of our population health management business are designed to develop this segment into another meaningful contributor to our topline growth.
I'll now turn the call over to Heather for detailed financial review the quarter header.
Thank you Joe and good afternoon, everyone I can just in there. We said 2020 in the second quarter with 99.1 million of total revenue down 11.4% versus prior year as expected eco revenue within this negatively impacted by coded and from there we saw sequential growth in May and June.
Healthcare revenue was 84.4 million driven by patient volume impact and extended were holter as well from a recurring monitoring revenue.
We also received a grant 19.7 million for a portion of lost revenue due to Colgate, which was included in healthcare segment numbers.
Our research revenue was 11.5 million benefiting from a higher proportion of longer duration imaging study lastly revenue from our corporate and other segment was 3.3 million, resulting from a higher percentage of revenue coming from or digital population health business.
Moving to gross profit.
Our margin for the second quarter was 62.1% versus 62.8% in the prior year period. The inclusion of the grant funding positively impacted margin by 420 basis points, excluding the grant our gross margin was approximately 58%.
The lower margin is largely attributable to inefficiencies caused by the drop off in volume in our health care segment. This was partially offset by higher margins in our research segment due to efficiency created by automation put in place later in 2018.
Our second quarter adjusted EBITDA was 25.6 million 8.5, 0.8% return on revenue excluding the stimulus even it was 15.9 million or a 17.8% return.
Our EBITDA margin was supported by the flexibility in our business to adjust the cost structure to the appropriate level in response to the demand for our services, we struck the balance between removing excess cost and ensuring we were appropriately staffed as volume recurrence to prepare that levels.
As for tax rate in the second quarter, we had a GAAP tax rate of 22% our year to date rate, 39%, which is more indicative of what we expect for the full year 2020.
This higher year to date tax rate exceeds the statutory rate primarily as a result permanent differences largely due to stock that is not deductible when expense.
Ultimately, we will get a GAAP benefit when the related stock options are exercised.
In terms of cash taxes, we're expecting to only pay about cleaning have to 4 million in state and local taxes in 2020 due to the use of our federal net operating loss carry forwards.
Moving to our balance sheet.
We ended the quarter with $84 million in cash an increase of 15.4 million versus year end.
As previously mentioned in the quarter well received a grant of 9.7 million that does not have to be repaid and in advance of 23.7 million for Medicare claims, which will be offset against future payment.
Also in Q2, we paid back that $35 million, we drew on the facility in the first quarter plus an additional 35 million, leaving us with only a 158 million of indebtedness and a debt to EBITDA ratio of less than one time.
Year to date, we generated 70 million in cash from operations any 17 million for capital expenditure.
And a charge was driven by purchases of our end cetane extend the will hold for patch devices as well as for capitalized software and hardware as we invest in our IP infrastructure.
Free cash flow was 52 million, which includes the grant and Medicare advantage.
As a reminder, in January 2020, we refinanced our term debt to an upside five year 400 million dollar revolver with more favorable terms.
Being lower pricing of about 50 basis points. The company will benefit from this additional capacity notes that amortization payments and the flexibility to pay down into on the facility, while maintaining access to the capital.
Currently has approximately 240 million of unused capacity and remain well positioned to fund our business and growth opportunity.
Shifting gears I will now petrone outlook for 2020.
On our last call, we would drill our full year guidance on a month, but we would be unable to provide specific guidance for Q2 due to the uncertainty surrounding the extent and impact of the pin down.
At this point, where recovery, we are still unable to provide quarterly or full year guidance.
Our results are still being affected by the pacing, which states and localities are opening or we closing parts of their economy that being said, we ended Q2 with and caught and extended wear wholesale volumes at 90% of their Q1 high point.
And expect our overall business to continue to grow into the third and fourth quarter.
As demonstrated in Q2, our business is flexible in terms of our ability to quickly adjust the cost structure to the appropriate level in response to the demand for our services. We believe we will continue to have sufficient operating cash flow to meet our operating caching along with the added insurance of our credit facility.
We are successfully weathering the storm and we're confident that we will come out in a healthy position when will that I will now turn the call back to John Thanks Heather.
As you've just heard we had a much better than expected Q2, given the challenges posed by the Koby 19 outbreak. We started 2020 strong out of the gate police the shatter expectations.
On the crisis hit we made the necessary adjustments to scale back our operating cost structure without dramatically change in our capabilities.
These modifications coupled with our flexible business model allowed us to generate excellent EBITDA margin in the quarter.
Naturally our primary focus is to guide the company through this crisis as effectively as possible as you can see however, we have not let the current conditions the vertis from our growth plans.
On the contrary, we remain quite active on all fronts to recap during the quarter, we generated better than expected Q2 revenue and earnings we pay $70 million square credit facility.
We have been experiencing a V shaped recovery with respect to MCT and extend it were holter volumes.
We continued to grow Geneva, Activations, we acquired Lucius in our service business expanding the continuous care revenue in our cardiac business.
We partnered with Boston scientific to help commercialize their new discernible cardiac monitor broadening our already comprehensive cardiac monitoring offering.
We experienced record high growth in our research study backlog.
We added business development resources to the pop health team.
We acquired the on demand assets from Centene Corporation and entered into a partnership to provide comprehensive pop health services to their members.
At the outset as the Cobot 19 crisis, we made a conscious decision to remain as active as possible throughout the economic slowdown and recovery phase.
From today's commentary it is clear we have done just that.
We now expect to grow into the third and fourth quarters barring any major changes that would trigger another slowdown.
We also have reason to be extremely optimistic about the longer term prospects for the company.
This crisis has necessitated rapid change of healthcare much of which will be permanent.
Regulatory and reimbursement organizations, the traditional obstacles to chains have adapted like never before.
The postponed a healthcare environment will demand greater access and payment for tele health and remote monitoring applications as one of the largest fastest growing the most profitable connected health companies in the market, we could not be better position.
With that will now pause and open the call to your questions operator, we're ready for our first question.
Thank you as a reminder to ask the question you will need to press Star then one on you touched on telephone to withdraw your question from the Q. Please press the pound cake.
First question comes and Kayla Crum with Suntrust. Your line is now open.
Great. Thanks, Hi, John how there. Thanks, so much for taking our questions I'm sorry.
First you guys called out just the grant from out from loss revenue of about 10 million in the quarter. This may be just a simple question to start out but can you can you give us a little detail on what this is should we view it as a onetime item going forward I'm just additional clarity there would be helpful.
It was part of care Zack.
It was gear tour for Medicare providers. It was a calculation based on previous from previous years business and it was designed to cover loss revenue in the quarter, which it did not all of it but it's certainly helped and it is a onetime event as far as we exit today.
Great. Okay, and then I want to talk about somebody announcements you've made over the last time 40 hours and starting with the on demand.
Can you give us a sense for how much revenue that the acquired business generated perhaps over the last six to 12 months or so and really how big this business could be for you guys over the next two to three years I'm just to be curious if you could talk about that no more detail.
Yes. This is a really interesting for us we had been dealing with.
With this group for some time as a partner and I think between the two organizations, we're partnering with them to help them build up their internal care management program I think between the two organizations. We came to the conclusion that was better for us to take over full control for lot of different reasons for so long answer, but it was just a better.
Set up for us take over control.
The platform and so we're in the process of fully integrated it we were early on.
Early on in that that was probably a few million dollars worth of of revenues. So far I think important thing is.
They had just signed several plans and were in early stages are ramping up those plans now.
How much business could it potentially be the plans that are under contract already I think amount to about 3.7 million lives.
And you could want to calculation that maybe 8% of them, 10% of have diabetes, what percentages, we ultimately pull through to the program is yet to be seen.
And then together will market will continue to market too. There are other plans I think in total is about 12 and a half million lives. So, but I think the important thing okay.
Think about this as probably our first meaningful commercial step a few years back we had acquired technology.
In this space and we for lack of a better terms so to put it on the shelf for a year or two and then we started to upgrade the technology build out the platform.
Some some resources to that so sales and marketing resources, but really kind of incremental steps.
We had other things to focus on with the acquisition of Geneva, and a few other initiatives, we hadn't a company, but we always sold this as a really important segment.
As the market kind of unfolds right and or develops in the market has developed a lot in the last couple of years as evidenced by a one of the big players out there who's who's.
Running relatively on challenge.
So we see it is that sort of cardiac monitoring business, our core business is a great market.
Three 4 billion dollars' worth of total available market.
When you start talking pop health and care management, you're talking hundreds of millions of dollars of potential market. So this could be really big they say a commercial partnership anchor anchor customer that will help us get started a lot faster and we anticipate continuing to invest much more aggressively in the commercial side of this business.
We think we think it can make a beautiful third leg to the stool.
Great now that that makes a lot of sense on and then I I wanted to touch just on the IC ATM partnership as well because again. This is a another item that we think could be augmented that to growth.
What is sort of that this subset of customers I think you guided to headset in your press release. This morning that it would be a subset of your customers that you would act.
Or subset of Boston customers that you doctors as sales agent for can you just speak to how big sort of that group of customers is or give us a sense for <unk> for the size there that would be helpful.
I cannot give you an exact number how big that that segment will be again I think the if we back up I think the important point to get across is pro forma relationship with quality organization to help them launch what looks like a competitively superior product in the marketplace and we're we're happy to be part of that we don't have.
A aisle or IC ATM in our current monitoring portfolio, we stop at 30 basis and these are the only products that go beyond 30 days. So I think working together. We can help you can help them extend the reach of their current sales organization that can leverage our relationships and frankly as it relationship builds more unlikely.
We'll be able to leverage their relationship. So I think if it's pretty exciting opportunity.
Got it Okay, and then just I guess one one last question and then I have wells.
Cut off but I, just interpret that the growth profile the business I mean looking at some of.
These recent partnerships and opportunities that you guys are investing in I mean are the is sort of opportunity is things that could potentially push the growth rate.
Significantly higher over time I'm, just be curious, how you're thinking about these being sort of additive to to the long term growth profile of the business.
You for taking taking the questions, yes, Kevin we do we see them as as all do all of doing that.
As weve sort of message in the past the business has been kind of a double digit organic growth companies, sometimes a little bit lower sometimes a little bit higher.
Pre cobot and.
We were accelerating back to that earlier in the year January February we're seeing is double digit numbers and we were kind of kind of getting back into that phase. We see all these things as Ics as accelerators.
Obviously, it will take us a little bit longer to build out the pop health business, but but that's probably the biggest market opportunity, but the other one certainly should should help accelerate our growth.
Thank you guys.
Thanks.
Thank you in the next question comes from Brooks O'neil with Lake Street capital markets.
Your line is now known to.
Great. Thank you good afternoon, congratulations on the terrific performance I too want to focus first just a little bit on these new opportunities. So obviously you have the relationship with 17 here the pop health.
And you talked about making investments to accelerate the commercialization of that effort.
I'm guessing, but I would like to hear from you guys.
Your opportunity to go to other commercial health plans are Fred the United Healthcare some of the blues or whatever and how you think about that opportunity developing.
And then maybe whether you see big opportunities in Medicaid and Medicare advantage as well.
Yes, we do so Brooks, we have already had kind of a portfolio of customers are a set of customers that was growing our pop health revenue was increasing.
Outside of the Centene relationship. So we were starting to get traction it was really important for us.
Over the last few years.
To make the service offering as competitive as possible. So we spent time building out the program.
Building out the the service capabilities.
Centene is probably one of a bigger customers and the partnership has taken on a different type of relationship.
But there are other customers that we currently service and other customers that are growing well having.
Nice early success, leveraging the remote patient monitoring Kosik Medicare activated in early 2019.
And among other some other tactical activities.
With the team.
We plan to continue to market and probably market more aggressively within that Centene will and certainly with up outside of 17, well so you'll you'll see us add more resources for this program.
Oh.
All right that's great.
Let me just ask you a little bit above the BSX agreement.
Do you have any sense for why they pick do you guys versus.
No.
Your neighbors that I rhythm or.
Proventus, which I think I remember the might own 25%.
I cannot speak to why but I will just take it as another endorsement of the quality of our service as a best in class provider, we were looking forward to working with them.
Yeah, there are great company, congratulations and keep up all the great work. Thank you.
Thank you. Our next question comes from Bill Sutherland with the benchmark company.
Your line is now open.
Thanks, operator.
Sorry about the printer north scars as everybody doing out there.
Okay. Thanks, we're doing a good thing though.
So.
The.
The on demand business, so kind of curious so you're bringing your platform that you've developed the by itself platform.
To bear on there.
On the 3.7 million lives correct, there's no Terry or is there a technology an on demand that you're assuming and and I guess integrating into what you have.
There was some through yes, there was some technology more into coaching side or on how they manage the patient base and that'll be easily integrated into our platform.
So, but you've got to superior technology and analytics and so forth in your mind I means that the but thats kind of couple questions. Yeah. I think we didn't develop some nice capabilities together and it just I think the combination of the two was really becoming a formidable offering but it just made more sense given the.
You know their focus in our focus it made more sense for us to take control of it.
[noise] you.
With with what you guys have done show as you have you.
As you approach mostly.
Other health plans or are you focused more on the self insured employer market does.
Curious, where you have gotten traction.
Little bit of traction on a couple of different fronts, but look the effort has the commercial effort has.
Been relatively limited because of the way we've resource the business over the last few years, we think theres opportunities to sell at multiple different levels.
At the employer health self insured market.
The payer market.
Within the payer market the Medicaid Medicare market.
But also the commercial market.
Leveraging the RPM codes at the provider level, especially at providers were at Wolf for cost of care to become wonderful target customers.
So there's ample opportunity it the important thing for us was tighten up the offering.
Before we started to really add a lot of commercial resources.
And so this began to impact as soon as the current quarter to per quarter.
And and does it began immediately with monetizing 3.7 million lives with the normal kind of metrics that.
These businesses have.
If we if you'll start to see some impact that nearly it will be small to start out with it will take time to just to pull through lives on those and those programs.
Okay.
Is the BDX deal and exclusive where there are other sales agents involved.
Just us is exclusive to us.
Okay anyway, and then and that'll start.
And you said that starts this quarter as well.
Yeah, no it'll probably probably won't start a sales activity so little bit later in the year, maybe the fall timeframe.
Okay.
And then Heather would you mind breaking down the monitoring the cardiac monitoring our components a little bit force whatever.
Sizing you'd like to provider growth relative growth.
Yeah, it's that the the Emcp the percentage of total health care revenue entities that we reconciled.
Yeah, Yeah, Yeah. So MCC was about 66% that will be Levin holdco with 14, and what we're calling recurring with Geneva is 9%.
And holter includes extended.
Correct.
Okay. What else is in there is such an uneven in them and that of the clinical.
That's what we're including Geneva, and our iron ore business. So any of the less drilling cardiac any of the recurring cardiac revenue. It's always been in that number right now those data points will integrate for the same portal. So we'll commercializing the same way.
Right Okay.
Okay, I'll hop off with someone else on thanks, guys. Appreciate it thank you bill.
Thank you. Our next question comes from Jason Bedford with Raymond James Your line is now open.
Hi, good afternoon.
Everyone is well just maybe just to follow up in the last question Heather.
The percentage of the percent of healthcare does that include the grant money or is that backing that out that's backing that out okay. And then just similarly on that you gave a breakdown of.
Revenue by month percent was that the whole company or was that just healthcare ex the grant.
That was the whole company.
Right.
Well when did you receive the grant it to get granular, but every week, we write it over we assumed it was spread evenly across that Fremont okay perfect.
And I apologize, but can you just walk through the math on the Centene agreement a little unclear as to how many folks are currently usually utilizing the on demand platform. We did not share that what we said was the current.
Agreements that are in place to their plans.
Amount to about 3.7 million covered lives.
Then from that you'd have to estimate the number of people that are eligible for the program and then start.
To sell to those people to try to engage them enroll them and ultimately retain them to show a good outcome.
Okay. So it's a sub segment of that 3.7 million that you're targeting correctly.
Okay. Okay.
And then I guess.
It.
What's the expected revenue contribution from from the agreement with a with Boston.
We didn't put that out it's too early to tell.
Okay.
I don't like you mentioned, the the service business from Roche.
I guess, how big was your existing home in our business and then is there any way you can kind of.
Racket, how big this could be for you.
That was our own business was a few million dollars revenue a year.
And I cannot give you that yet to give us give us some time to two we just took the business over and we want to see what's really there.
And as soon as the patient base looks like see what portion of patient basis actually testing on a recurring basis. So we'll have a better handle fortune handle on it for you soon.
Okay. Thank you.
Thank you. Our next question comes from Mitra Ramgopal liquidity.
One moment.
I'll now open.
Yes, hi, good afternoon, thanks for taking the questions.
Just a couple first Joe I know you mentioned based on these new initiatives you plan on Aggressing invest.
Investing aggressively and I'm, just trying to get a sense in terms of what some of these investments investors I looked like it as it relates to maybe expanding the sales force or technology et cetera, maybe just give us some color on that.
Mitch anything that you would typically see in a commercial plan sales marketing studies.
Technology enhancements partnership agreement.
It's it's a business that we've come to the point in time, where we've said as an organization that.
Makes sense right.
We did some of the early investment we have all the infrastructure in place.
To scale the business, but we've made sure it's a scalable platform.
Now we need to start to take it take it to market. So all the above.
So I don't want to think that all the sudden we're going to go crazy and and they.
Monumental investments will be measured in investments, but we are focused more on driving top line.
Right No I know for example, with Geneva, you're committed to dedicated sales force.
I am assuming now to digital population has started to really take off especially with these new agreements that you probably will have a dedicated sales force so that also.
So, yes, just trying to get a sense on that but.
Got it I guess you had a focus will be on the topline.
Also with the so as you are seeing with Covidien a number of states based on your comments in terms of the second half. It certainly seems it's not going to have.
Anywhere close to the impact.
You probably saw back in April on the business.
I would say from your lips God's ears, we have not seen.
We have not seen a business that trend back down.
We are we kind of came up.
Very quickly in May and June and July we've seen some growth that obviously at a slower rate because we're starting to get get back up to says more normalized levels. Unfortunately for us.
From business perspective, the station to be affected or some of our late stage.
Florida, Texas.
California or similar businesses.
So far.
Okay great.
We don't know.
It's going be hardness tell you as we sit here today, what Q3 will actually looked like at its current trends.
It will look halfway decent by Q3 is usually a seasonally soft quarter for us as you may recall.
With the dynamics of people.
Ticket vacation and turn it back to school all that is up in years. You later on an unusual seasonal cycle because of this as well so.
That's why we're not we're trying which what we're trying to indicate to you today is the business is trending in a good direction like where it is.
Came back better than we had anticipated if it continues along these trends will have a good quarter, certainly we anticipate third fourth quarter to be better right. How much better. It's just hard this hard to say at this point.
We're not trying to be quite we just don't now.
Right No noted that does chair.
And then I know.
The cash flow from operations is really strong this quarter.
I just wondering if there was anything in particular that drove that.
Well you have within me.
Cash from operations lines, you have the advance on Medicare claims, which was 23.7 million and then we had to 9.7 million green.
When you back those out we still had very strong operating cash flow. So back half of it was related to that stuff.
Which is going into the quarter, we did not anticipate once this happens because it's the organization responded really well and were able to generate cash.
Right. Okay, no that's great and then finally I don't know if you could maybe give us a.
Updates in terms of the reimbursement environment.
No new news.
Leading.
Okay.
Thanks, again for taking the questions great quarter sharing second.
Next question comes the gene Mannheimer with Taleo. Your line is now open.
Oh, Thanks, good afternoon sounds like you guys been busy.
Hey, congrats on the quarter I wanted to ask if you can disclose how much your and Cod volume declined in Q2, one a year over year basis, I know it was way down in April than than bounce back some but.
How do we look at that.
On a quarter over quarter base, so posted year over year year over year.
Year over year.
It was about.
17%.
Okay.
That's good.
Thanks, and the Medicare advance payment that you talk about.
Why could you just tell me why you've got that and what is the timeline to repay that.
Yes, so that that was something that was offered to all companies who had prior billings with Medicare and it was based on line, yes, some formula that they used to end. It. We just an advanced on future calls so that is something that we'll get offset in the future.
Sure we expect that it'll start in Q3 at least that's what they indicated when.
The who received the money, but that could change.
Okay, and right now getting as a liability on our balance sheet.
Okay. Good.
Great helpful to understand that.
And just so I'm clear on the on the.
Business with Boston scientific.
What is their share of the IC ATM market today.
And are you going to leverage or DTF to monitor patients that are.
At that are wearing that Lux monitor and does this deal compromise anything that you're doing it on the Geneva side with respect to monitoring.
Medtronic Implantables and alike.
As it did neither platform is an impartial platform, hence the name.
We do not your preference to to one device over another.
And.
This is we do hope that we have preferential treatment.
With the Lux system moving it into the Geneva platform, but but we'll see.
I really this was an opportunity to leverage our sales organization to help them getting more rapid rapid launch of that product. The product is just that the approved so I believe the shares next to zero.
Okay, great. Thank you congrats again.
Thanks.
Thank you and our next question comes from Alex Silverman with HW on investment. Your line is now open.
Hey, good afternoon everybody.
Hey.
The vast majority my questions have been asked and answered.
With the exception, we're seeing lots and lots of articles.
About.
Cardiac damage related to coal did wondering if those are some of the studies that you were alluding to a ramping up that you're being that you're you're you're devices are being used for.
We we are being used in some studies around coated I don't know if it is directly pertains to what you're talking about.
And we have seen those same studies about long term impact with potential long term impact.
Cardiac related to patients that have killed it that.
Nothing like it nothing significant that I can share with you other than our devices are participating in some of those funds.
Okay and are you seeing ER physicians at this point prescribing.
Any of your devices to monitor post kobin patients.
No not not post we saw all.
Kind of a spiked up of utilization around coated.
Early on.
Because and caught has a specific at FDA indication for use when trying to protect.
Problems with the Qt interval, which is one of the potential side effects of one of the medications but.
We haven't not that I'm aware, we haven't seen a whole lot of post covert monitoring yet.
Okay.
Got it the rest of my questions have been asked and answered. Thank you guys. Thanks out.
Thank you and we have a follow up from Brooks O'neil with Lake Street Capital markets. Your line is now open.
Once again you have a question from Brooks O'neil from Lake Street Capital markets. Your line is now open.
Sorry, I was on mute guys apologize I think Joe said.
You guys expect to grow in the third and fourth quarter and I was just curious if you're talking about.
Quint jewelry or year over year.
Yeah, I'm comfortable stay is sequentially not a big risk.
But given what we're saying what I would I would Paul I was stopped short of saying year over year at this point books. It may well be able to see the trends continue we will but I'm I'm not I'm not.
Making that that prediction at this point given all the activity.
Okay got it takes a lot.
Thank you and I'm showing no further questions in the queue at this time I'd like to turn the call back to the speakers for any closing remark.
Thanks, everybody and thanks again for your continued support and interest in the company. We will speak to you. After next quarter operator that concludes today's call.
Okay.
Thank you ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program you may now disconnect.
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