Q2 2020 MTBC Inc Earnings Call
MTBC Steven Snyder.
Steve.
[noise] for joining us on our second quarter 2020 earnings call. It's our privilege today's review Mtbcs first half 2020 performance and discuss our full year outlook.
We are pleased to report a truly historic first half of the year.
With record acquisitive and organic growth in fact based upon the acquisitions and new business already closed we expect exiting 2020 with roughly two times the annualized revenue as compared to similar 31 2019.
As to acquisitive growth in January we announced the closing of our acquisition of care club, which we described as our largest acquisition to date.
During the second quarter. We were then pleased to announce an even larger acquisition that of Meridian medical management and its affiliated entities.
In addition to be our two largest acquisition they both enabled us to at attractive cloud based digital assets, including highly rated electronic health Records.
Patient experienced management solutions enterprise level business analytics.
Robotic process automation or PA and many more.
These acquisitions also allowed us to expand our bench strength across the entire organization.
Our new team members are already playing a critical roles in operations research and development.
Sales marketing patient support customer success and many other areas.
Hey, helpless become even stronger as a company and a better positioned us to succeed in the future acquisitions and organic growth opportunities.
Our team has been harder for executing our standard integration playbook, which we've honed over the last decade of acquisitions. Our combined teams have now laying the foundation and are working to submit the building blocks that are already enhancing the service levels and technology capabilities of our newly.
Added companies one of the same time working to expand margins and pursues and growth opportunities.
As our acquisitive growth strategy has continued succeed we are grateful also see our organic growth initiatives gain increased traction.
Today, we have already closed approximately twice as much new organic business during 2020 alone.
During all of 2019, and 2019 was one of our organic growth high water marks the company.
Moreover, from a qualitative standpoint, our new business wins are more diversified and broadly based today driven by a renewed approach that we believed to be more systematic repeatable and scalable.
Our organic growth team today is more than five times of size was during Q2 2019.
As we've continued to grow we have reinvested portion of the capital in our organic growth strategy and while the level of our investment has grown we are increasing it with a laser focused on achieving a strong return on our investment.
To that end, we are managing to an internal target of an average customer acquisition costs were approximately 50% of anticipated annual recurring revenues, which compares favorably to prevailing industry customer acquisition costs.
Well, we've been blessed to see healthcare providers respond favorably to our offering.
We all know that the world continues to face extraordinary challenge in 2019.
As we discussed during our last earnings call. We believe that we have never been stronger as a company nor have we been better positioned from an operational technological orphans perspective to support our new and existing clients and I know that I speak for our entire team when I say again that we feel true sense.
Purpose and our work and we've been reminded time and time again of the privilege began to support the heroic women and men who are serving as healthcare providers. During this crisis.
As we turn to discuss our outlook for 2020, we continue to believe that we are positioned to grow revenues by a record 63% to 66% year over year, while simultaneously increasing our adjusted EBITDA by 40, 60%.
In the midst of significantly reduced average provider volumes to our quarter too we are grateful that our growth strategy outpaced as temporary downward pressure, enabling us to still grow our revenues year over year during quarter, two by 17% to 19.
Point $6 million, Paul producing $191000 of adjusted EBITDA, which marked our 13th consecutive quarter of positive adjusted EBITDA.
While average healthcare provider volumes across the country dropped by nearly one half of the darkest sites of the covert 19 stayed home period average volumes in charges have salary cover almost is or prepaid MX levels in January and February of this year.
This is a positive development for our outlook since prices by two thirds of our revenues are directly driven by patient volumes.
As an industry has been pressure tested by the pandemic, we if im proud to see our team rise to the challenge of providing support to our clients and their patients.
As Dave leverage our technology to support their mission.
Our guidance for 2020, now implies a 49% compound annual rate of growth between 2017, and 2020 and it we truly believe that our best days are still to come up.
I'll now turn a four over to hottie audio.
[music].
Thank you Steve.
And thank everyone for joining us on our second quarter 2020 call.
As Steve mentioned earlier, we had increased about this first half of the year and excited about acquisitions, we have closed to date.
In addition to be solid organizations, we have been able to continue to expand our teams with incredible talent and expand our products and services portfolio with additional technology assets.
After the recent acquisitions, we are making great progress executing on our proven integration strategy.
With regards to canceled in particular.
Of already reduced operating costs.
Before proceeding and it does not make leader.
Likewise meridian.
With closing was more recent yet on track and taking the necessary actions required in transitioning all of third party offshore be appeals onto Mtbcs large scale operations team that will improve quality and will expand margins in accordance with over plan.
We believe that radian, there will be accretive beginning quarter three.
In terms of customer retention, we I'm pleased to see that preliminary trends are inline with our exceeding those historic men's marks.
Additionally, these acquisitions have enabled us to onboard hundreds of individuals with industry experience and expertise.
These are the sort of individuals who are difficult and expensive to find in the open market.
Two over acquisition strategy, we are able to bring them onto our team and begin rapidly contributing it's off the broader organization.
From experienced R&D and product management team members to individuals who have decades of experience been appeal board and talented professional services.
Customer success and patient support professionals.
Acquisition strategy enabled us to continue to be award SaaS team. This team has already enabling us to exceed our replying to expectations.
Great and win new business.
We continued to be humbard by the privilege of supporting over healthcare providers and they focus on delivering care to their patients.
Lead support their day to day needs.
Whether it is providing over cloud based clinical starting to empowering their patients that thats that patient scheduling check in and access to clinical information.
Enabling tele health and ensuring that it is appropriately reimbursed.
Providing revenue cycle analytics support what any of the other countless we support our customers. We are energized by our mission of enabling physicians to do more thing tidy up their focus to care delivery, while trusting us to support the day to day needs of their practices.
For Us this has never been more evident and then over this first half of Tony Tony.
Along with the expensive technology offerings, we enabled our customers bid during the peak of quoted 19, we were able to and continue to be in tremendous position to strategically deploy a global workforce. Both here in the us to work the multi as needed and oversee the cost of remaining at campuses.
This global distributed workforce allowed us to mitigate that strong headwinds produced by the pain domain.
Because of this strategic advantage in business continuity planning other operations continued forward without the level of disruption experienced by over industry peers in the market that that reliant on third party vendors to manage their back office operations.
This differentiator in fact allowed us to retain customers and accelerate growth.
Again, we thank our employees worldwide for their hard work and dedication during this time.
Finally in addition to these core software technology enabled services I just mentioned our largest our latest acquisition of median medical management has expanded the speciality end markets. We can now service.
We have also added additional technologies to our comprehensive product portfolio.
Two examples of these new products include and enterprise grade business intelligence platform.
Vision Beinn netted currently deployed across larger enterprises powering data analytics for thousands of providers.
We believe there is opportunity to enable our current customer base that this to potentially up sell this product within our install base and effectively go to market Dr. large enterprise accounts.
Additionally, Meridian also significant investment in in developments of micro barbs.
These other martik process automation barts deployed to automate mundane repetitive tasks associated with mostly financial workflows today that medical practices conduct onemain basis.
We are exploring ways to integrate these RPM board into other offerings to enable additional efficiencies and scale and drive better margin expansion in our business.
These micro bar skin also expand our value proposition middleware customers.
One such example of this is or the recent conclusion of the boards as part of our MTBC force offering.
These virtual ft will allow MTBC for customers to automate their own businesses and expanded margins even further.
All in all we are excited about our product and service portfolio and we look forward to continuing the journey on behalf of foreign customers as we continue to innovate and bring solutions to market.
I will now turn to upload over to our Chief financial officer build corn.
Bill.
Thank you hottie.
Revenue for second quarter, 2020 was $19.6 million, an increase of $2.8 million or 17% from the second quarter of 2019.
It's approximately two thirds of our revenues are directly tied to our client activity levels.
Spread cobot 19, lockdowns that reduced the number of patient encounters also negatively impacted our quarterly revenues.
However by July we saw the weekly volume of patient visits return to within 6% of the weekly averages during January and February.
Our second quarter GAAP net loss was $4.8 million as compared to a net loss of $771000 in the same period last year.
The GAAP net loss reflects $2.4 million of noncash depreciation and amortization expenses.
$1.9 million of stock based compensation and $456000 of integration and transaction costs related to recent acquisitions.
GAAP net loss was 65 cents per share based on the net loss attributable to common shareholders, which takes into account the preferred stock dividends declared during the quarter.
The increase in our net loss was expected when we decided to acquire meridian and care cloud.
We find that most economical to acquire businesses, where we know we can improve profitability by using our technology, our offshore employees or both.
So we expected the negative profit contribution for one or two quarters.
In addition.
Businesses MTBC acquires do not have substantial tangible assets to most of the value is aside the intangible assets like the value of client relationships and technology.
We advertise these intangible assets over an average life of four years, which reduces our GAAP.
Profit.
This amortization is not a cash charge, but it is an important noncash line item in our GAAP net income or loss.
Our adjusted EBITDA for second quarter, 2020 was $191000 compared to $1.1 billion in the same period last year.
It was our 13th consecutive quarter of positive adjusted EBITDA right. The fact that patient visits and our revenue were reduced due to covert 19.
Revenue for the first half of 2020 was $41.4 million, an increase of 30% as compared to $31.8 million in the first half of 2019.
We also signed new clients, including MTBC forced partnerships, which will yield annual recurring revenues of greater than $8 million, which is more than we signed during the whole full year 2019.
For the first half of the year, our GAAP net loss was $7.3 million or one dollar seven per share compared to a GAAP net loss of $1.1 billion in the first half of 2019.
Our GAAP net loss includes noncash amortization and depreciation expense of $3.7 million.
Stock based compensation expense of $3.2 million and transaction integration cost of $1.1 million.
Also included $361000 of impairment and unoccupied lease charges related to excess leased office space assumed during two recent acquisitions.
Noncash depreciation and amortization expense increased by approximately $2.1 million year over year and accounts for half of our.
GAAP net loss.
You could expect to see our amortization expense increased during the second half of the year as we amortize the customer relationships technology and other intangible assets acquired as part of the Meridian acquisition in June.
But remember it's not cash it's a small price to pay for 65% year over year growth.
Our first half results included approximately $562000 of transaction cost related to Bridion and care cloud.
And we incurred $538000 of integration costs to achieve future efficiencies from acquisitions.
This includes the cost of winding down subcontractors and reduction enforce severance as well as exiting from facilities, we no longer need as we utilize our technology and cost effective employees over offshore.
We expect to see the benefit of these cost savings during the third and fourth quarters as indicated by our full year adjusted EBITDA outlook.
Adjusted EBITDA for the first half of 2020 was $958000 as compared to $2.7 million in the first half of 2019.
Our first half revenue was reduced.
There was less routine patient visits Utica over 19.
And while we pursued the normal post acquisition cost cutting that we always do we did not reduce our investments in R&D or sales and marketing and did not for a lower downsize our offshore team.
Turning to place ourselves in a position to take advantage of growth opportunities.
The increase in our GAAP net loss.
The reduction of our adjusted EBITDA was anticipated.
Those who have followed MTBC in the past no our typical methodology of cost reductions after an acquisition.
Methodology works well even in times of Cobot 19.
We go through a proven process of replacing offshore subcontractors and some you asked employees with Mtbcs global team.
Using mtbcs technology to streamline workflows and reducing the administrative burden of the U.S. team. So they can focus on the client experience.
We're employing a similar approach to reduce care clouds expenses during third quarter 2020.
As well as meridians expenses during third and fourth quarters, which we anticipate will return MTBC back to GAAP profitability, while significantly improving our non-GAAP profitability and cash flows.
Like most businesses, we've acquired both meridian and care cloud relied on offshore subcontractors for most of their revenue cycle management services.
Their cloud also used offshore subcontractors for some of their product development work.
The first half of 2020, we wound down the expensive subcontractors hired by care cloud transitioning the work to our own offshore employees.
That process is starting at Meridian.
And we're also looking at ways to replace selected onshore employees with offshore employees striving to maintained or improved service levels as we do this.
As of June Thirtyth 2020, we had approximately 12 and a half million dollars of cash.
During July we raised net proceeds at $25.6 million by issuing approximately 1.1 million shares right Nonconvertible redeemable series a preferred stock.
Series, a preferred stock as perpetual based on the NASDAQ level market under the ticker MTB CP pays monthly cash dividend at the rate of 11% per annum antebi redeemed at our option at $25 per share starting this November.
This replenished the cash that we raised in April a portion of which we used very an acquisition.
I'd like to close by reaffirming our forward looking guidance for fiscal year, ending December 30, Onest 2020.
In July we raised our guidance for the full year revenue to $105 million to $107 million, which represents year over year growth of approximately 65%.
Most twice as high as our six year compound annual growth rate through 2019, 35%.
We have seen patient visits returned to 94% of their pre covered levels during the last six weeks.
And while there continues to be a large number of new covered 19 cases world nationwide at this point, we're not seeing a major impact on the volume of office visits as we did in April and May.
We believe that we're on track to generate $130 million to $135 million in revenue on an annualized basis during the second half of 2020.
Which is significantly higher than we originally anticipated.
Radian and care cloud account for the majority of of the growth.
We also signed more do business during the first half of 2020.
Then we signed an all 2019.
This new business goes live it will contribute to our record revenue during the second half of 2020.
There's no way to estimate the impact to covert 19 will have on the U.S. economy during the second half of the year.
But even our most conservative assumption cross for revenue growth of at least 60% this year.
We expect our adjusted EBITDA to be $12 million to $13 million for full year 2020, representing growth of 48% to 50% over 2019, adjusted EBITDA as we integrate the meridian and care cloud acquisitions.
The actions, we already taken significantly reduce care cloud the operating expenses.
Increase its adjusted EBITDA contribution for the second half of the year.
We started on this process with meridian in parallel.
We expect to see a steady significant increase in adjusted EBITDA during the third and fourth quarters.
Nationwide, we are seeing higher levels of economic activity than we did in April and may and with patient visits closer to normal levels revenues, excluding meridian will be higher than they were in the second quarter.
During the third quarter, you will see a reduction in care cloud expenses.
Businesses, adding to our overall profitability from already and will be neutral.
During fourth quarter Meridian will be accretive to profits and care cloud will continue to achieve additional cost savings.
I do expect as big an increase in adjusted EBITDA from third to fourth quarter as you'll see from second to third.
I'll now turn the floor over to our chairman Mahmud.
For his concluding comments.
Thank you Bill White is going to guarantee the challenging year for all of us too new to coordinate key mtbcs fortunate to be in a very strong position as we generate another year of record breaking growth with increased profitability.
We thank our investors customers and employees for their continued support.
We will now open the call for questions.
Operator.
Thank you we will now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you will hear tone acknowledging your request. If you are using a speakerphone. Please pick up your handset before pricing any key.
To withdraw your question. Please press Star then too.
Please be aware questions are limited to analysts.
Each analyst should limit themselves to two questions and then get back in the queue of they have more well pause for a moment as colors join the queue.
The first question comes from Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.
Hi, Steve Buhaly removed or were you.
Good thing good morning, John.
Sure.
Sure it tends to grow the look I appreciate the very much a liver, we're sort of teachers to cope also.
Could you talk little bit about digesting use our positions fours or your efficiencies internally you getting easier or is it getting faster for you and maybe a little more flavor on the types of.
Thank you Susan specialties.
Sure.
Sure Great question, Jeff would be happy to do that I'll I'll get started than loop in hottie.
So care cloud and Meridian represented the 15th and 16th acquisition since our IPO. So as your questions questions suggests candidly the overall processes that we follow on or a playbook. We really do believe it's continued to improve and it's been well honed.
With each successive acquisition both in terms of the technology that we continue to enhance them that he men and the overall approach so without a doubt that even with larger acquisitions or two large is.
Our belief is that we're better equipped to be able to handle them today than we were three years ago or two years ago or.
Or one year ago for that matter and how do you maybe you could provide a little bit of additional detail with regard to integration and what you're seeing with regard to the specialty mix.
Yes sure. Thank you Stephen and thank you Jeff for the question.
As Steve mentioned submit Radian is one up on the most recent acquisition, but we already have started making significant progress in the in from the integration standpoint.
Since the first integration focus to date has been the shift from the radiance cutting revenue cycle beep yields to our employees at our wholly owned off your subsidiary, which is currently in progress and then similar to Q cloud. We have also been working on reducing the reliance on offshore engineering content.
Actors.
As with any of our previous acquisition, we are working on consolidating facilities that acquired as part of the transaction.
And the same way aligning their sales organization with ours as we did with care cloud.
Aside from the in this case and also in the cloud gates.
From significant cost improvement. Our plan is also to provide greater resources to our talented product and engineering teams at radian.
Our own offshore employees and give us an ability to scale faster than we could have otherwise. One example is the as such as the the RFP is the micro barge with our engineering team, we can increase the pace at which the new parts can be added.
And if I talk about from Ed for Kids out some ventilation standpoint, there are number of things that has already been completed and they are certain things, which are still going on such as our CMBS deal transition that has been completed and then the near shore and offshore engineering contractors that transition.
Has been completed.
The number of other departments, such as professional services Onboarding Tonight success. So we are currently in the process of utilizing get it allows leadership in these areas and also the proven best practices across our entire organization.
And Steve can talk about lead to more on the alignment of the sales and marketing organization that has been significantly working together has been improved. So this is this is the neenah between cloud and mcgrady and there's still more work that we need that needs to be done then we're making great progress.
Okay got it and then.
Secondly for me talk a little bit about further do your own electric or a bunch of integration is first through your your peers superior for Meridian.
And.
How that's.
Affecting your current customer base mr. versus your with practices and what trends you're seeing a proxy servers are so much is increasing or books.
Thanks.
Sure. Thank you and I can start and then and long can jump in for some some more details. So when you talk about the micro March so.
So do two things one you already have started adding more engineering resources to increase the and the pace with which the micro marks or being developed and the second thing was the integration with existing Mtbcs back Palm Mtbcs technology, whether that's MTBC for brightree or from our.
During this acquisition of cash flow so that that piece is currently in the and then and this isn't the design and that season vs. Currently working on it as we speak we already have included.
The micro markets as part of our MTBC ports offering the two ways, if I step back and just to give some some overview. So they are truly though they integration one is the health of the enterprise.
If the vendor the platform offers to that functionality can being integrated been that platform using in the apiay.
The second part and just using the screen scraping technology. So of course the preferred in many cases in EPA base. If the vendor offers that and in some cases via the EPA integration is not available. We go with the screen scraping technology up to the up to the level of possible. So then the and in addition to that.
There are many other platforms mid range the RFP integration already exist. So as we started moving moving forward. So with MTBC forwards for example, so low in the new opportunity comes in either if the integration already exist. We can get that just quickly little light when does that matter of.
And in other case, if it's a new platform it can be done between either than apiay or using this game scraping technology.
One would you like to anything here.
Yes, Thanks holiday. So I think you covered it well and Steve I think.
The question around really RPH can really be looked at across two vectors right. So when you think about about vector backed or one would be what I would think of is kind of last mile software features so.
Think of that is this is where like third party PM to reiterate systems either have not built up pull up full functionality that's required to support a very specific customer need or had built this functionality, but the functionality per perhaps is currently or doesn't work effectively right and this is really kind of on third party third party applications outside of the care cloud.
MTBC.
Systems and were able to deploy these Mike robots to services particular use cases and makeup that last mile for customers things of think of things like eligibility checks or refer authorization management.
Automated payment applier as et cetera, and we're also able to connect these things directly to our opening CPI is both on the care club tighter on the talk each our platforms to enable additional capabilities.
That.
Matt.
Customers don't have enough a workforce to to do that so that's really where vector to comes and which is really all around kind of this workforce enablement. So this is where we're able to take these highly repetitive tasks and training program. These bonds to execute these routines and allowing our customers.
Or partners to deploy staff in two to leverage will work on more meaningful activities, but helped to reduce at to ease and drive profitability within these medical practices.
Okay got it Thats Super helpful. Thanks for taking my questions.
Yes.
The next question comes from Richard Baldry with Roth Capital. Please go ahead.
Thanks can you maybe look a little deeper into the strength in signings in the quarter I would assume that.
A lot of prospects would have been very much sort of deer in headlight now I don't want to change anything to try to figure out.
What's happening in the very chaotic world. The backdrop, we have right now so could you talk about it was that really headcount driven so maybe the productivity per head count will.
Still below average because of the macro or.
How did you get that strengthened bookings and how do you see that trending in the second half one I would believe that people bandwidth to address sort of changes like this will actually improved versus the June quarter. Thanks.
Well, thanks rich thanks for the question.
And the also group and we have west store on the phone call with thoughts sees our SVP of sales joined us during the end of the first quarter. So he can provide some additional color, but but as you alluded to.
During Q.
Q2.
Maybe even kinda talk more broadly as we think about where we stand today year to date, we've closed twice as much business year to date permit ACB perspective.
As compared to all of 29 team.
And for US 2019 was a strong year of gross.
And while we don't publicly disclosed for booking details.
You may recall from our last earnings call we spoke about.
The aspirationally goal of by Q3 being at a point, where we've been able to close $4 million to $5 million in bookings and from an ACB perspective during Q3 and I can tell you. We're really pleased to be able to have achieved that even earlier, we achieve that.
During Q2.
I think there maybe a couple of things and you alluded to one of those.
Clearly part of it is our increased investment.
So in terms of the size of that team we have roughly 35 individuals today focused on sales and marketing.
And that's a significant.
The difference from the the amount of.
Investments that we've made in prior years, because as we've had increasing cash from operations, we look for ways to invest that in our continued growth and that's exactly what we've done having said that.
When we look at the overall metrics and the cost of acquiring those customer relationships, we're managing to attack of about 50%.
Which when we look at some of our peers, you will see one times or greater often times spoken of as kind of acceptable parameters with regard to the cost, but we think we're still doing this in a very cost efficient way.
And then the question is why have we been.
Alright that growth and succeed how much of it relates to the size of the team how much of it relates to the time that we find ourselves in right now the Mr. Cope is now much relates to the new products and solutions I.
I think candidly, it's probably a combination of all of those things together, but the overall closing approach of the overall kind of organic growth strategy that we have today is allowing us to be in our overall focus is really focused on a more diversified.
Rob the scalable approach as opposed to.
Relying more so on larger outliers.
We have what we think to be really.
We are getting traction on really developing a an overall approach is system thats repeatable broad base scalable and as we continue to look for and actively.
Work on closing those larger outliers, the Fox Rehabs unlikely we've closed than in past years, those will be additive to the overall strategy.
But less maybe you can walk us through a little bit somebody areas, where you have the team have been having success or the being the cross selling or or other key parts of your overall strategy.
Well, the Steven Hey, rich.
Let me give you some color on on Q2, which I think is a validation.
This new approach of sales and marketing working together those first few days of Cove. It in the quarter. They success was not a guarantee and it was great to see our marketing team out amongst our clients and our prospects.
Doing surveys understanding their key problems the needs and we really pivoted fast to be able to to communicate art, what our how our products and services would fix those problems in its uncertain time, and I think it that that fast execution of sales and marketing working together that allowed us to get ahead of where.
Maybe other competitors were waiting for the market of Q1 to come back when we knew it will likely wasn't.
I think that there's there's some other tailwinds I think that are that are helping us when you think about the core value props.
The RCM service, where the work is done away from the place of care.
And then the fact that the economics of in RCM services, typically a variable cost not a fixed costs.
I think that that's that's a helpful value prop to to the bringing back up and this environment.
And then Steve mentioned the up sell campaigns that were embarking on right now we see tremendous opportunity with these acquisitions to go into the current client base and educate them on the additional products and services that they MTBC family of companies now has and how thats going to help them not only.
Now but into the future. So we've been very laser focused on that up sell campaign and trying to create relationship with every one of the clients. It's now under our our portfolio.
Thanks, and then read it would just from.
Rigs.
Sorry, rich this is minimal exists to answer that led the lack of the last point on that we've been very fortunate the location of our offshore offices Siri to Africa and Pakistan.
As being significantly less impacted then the Indian locations and most of these.
The this has helped us because the people who feeds the challenges.
Because of India being gone down came over there the last factor there contributor to increase in our second quarter sales.
Okay, Thanks, and how about when we look out.
Have you seen maybe it's too early to know any change in the pipeline of potential acquisitions like have the coal that pressures maybe put more people willing to consider.
Selling any possible way to know if valuations of or People's expectations are down maybe more affordable when everyone to call. It.
In an acquisition scenario given the challenges externally.
Question Rich.
And I think you're right it'll be interesting to see how things develop over the next couple of quarters.
And that's anyone I guess gas at the end of the day, but I can share with you what we've seen so far I think if we think about.
Even.
If if we think about the care the brilliant acquisition.
From the perspective over the overall dynamics of that acquisition I believe that Cove bid was helpful. Overall in terms of the valuation I believe as Mehmood scribe, when all said and done our.
Ability as an organization.
Using our distributor workforce with employees throughout the United States Coast to coast employees in Sri Lanka and Pakistan.
That that ability to continue to serve our existing clients needs and also that excess capacity for growth enabled us to be able to step in and to be able to very confidently and quickly go from a first discussion with.
The the shareholders that meridian.
Who are closing going through due diligence, unlike and feeling very comfortable that we were ready to to be able to hit the ground running.
And that we'd be in a position to build to add value using our technology using our team.
And that we'd be able to achieve another one plus one equals three four or five.
But transaction.
So, but coming back to what we're talking about it I think the as we look at the landscape today. Our thesis holds true. The same thesis we've had candidly for glass 12, 13 years, maybe even longer than that which is that the health care REIT T. and RCM space remain highly fragmented there right.
For consolidation I think thats more true today than it was last year were three years or five or 10 years ago that just continues to.
That continues to be even more obvious obvious to us today and it and I think as we think about the even more broadly than coded the that two transactions we closed this year.
The two larger transactions in our history, we believe the reality is.
We have really gotten to the we have been able as a team to get to the point, where increasingly we're able to acquire larger companies and acquire them at a faster pace or were able to to be able to integrate them whether valuations long term.
Remain at lower levels is anyone's guess, but what I can tell you is that right now what we look at a CAC associate with buying.
Customers from companies that are.
Good companies by experiencing some element of financial distress, we think it continues to be very attractive today.
And as we move forward, we would expect that to remain the case.
Great. Thank you.
Thank you.
The next question comes from Mark Westenberger with B. Riley. Please go ahead.
Good morning.
Hoping you could provide a little more granularity contrasting the operations of tier cloud and meridian it'd be the ultimate go to market strategy in terms of integrating under a unified MTBC banner and normalized run rate expectations for these businesses.
For sure absolutely we'd be happy to maybe we can break that into a couple of different sections.
And maybe how do you from the perspective, the operations would you mind speaking a little bit about.
From an operational perspective.
Some of the differences and similarities that we see at care cloud and also up meridian.
Sure. Thanks. Thank you seem so one is the operation side and then the second piece will be.
The technology part of it.
So the it's sort of any time soon the RCM. There is some standard things, which are which are the.
Some of the claim processing standpoint, because there's a b appeals in more than third party be appeals that has to be transition. So that's the same would we have seen.
Whether that was cloud or meridian. They were third party contractors anymore. So that work is being transitioned to mtbcs on employee. So we already have that suspicion, ladies and gentlemen, specialties skill set available and our team has either has already taken a door and or in the process of.
Taking all would that work.
And as I mentioned earlier.
In my last question so they are.
At the departments are areas such as the client success side effect or the onboarding process that could that kits out being used to follow so there's some good practices. They were falling in with the leadership into the talented leadership that be Onboarded. We have started to utilize those even to MP made some.
Those.
The procedures all across the enterprise.
To help us into the efficiency of effectively Onboarding new clients for example, or from the decline success standpoint. This leaves the lead those needs to be conducted and then closing the loop on those things are there many things. Some operationally we are taking care of.
When it comes to the technology side.
And one can talk about termed.
On the road map standpoint.
But our team has has already starting to Pico, whereas as you know we have about 480 R&D team members to the already have started to include those team members to take over.
The different elements of the for example, adding more modules into the current software system. The current platforms started working on the integration between.
Radian system through Mtbcs platform to kids out to them to be seeing weisler sign in softer ability between those systems. So our team has already started to locate and work on those integrations to provide a one.
End of the this standard the platform and also noted.
If one feature is not available on one platform with that tells me that integration.
Additional feature can be utilized for example, if I think example of believes we can start using the belief that patient checking application depletion front end application of care cloud with across the other platforms.
I hope I answered the there was a question that I mentioned and get on into right direction.
Our one you can fill in any gaps therapies.
I'm sure no I think.
I think that you covered it when we think about kind of a unified unified banner I'm not sure. If your question was more specific around kind of a unified platform. So if you want to do you want to clarify that.
Oh sure unified platform kind of that the ultimate goal kind of and then the go to market strategy is maybe a one MTBC or out of that controllable.
Sure. So I think they'll have Steve.
I don't know one. Please you go forward then I'll jump in.
Okay, great. Yeah. So I mean, when you think about kind of our over or go to market strategy and really kind of our product strategy. It's important to maybe the first take a step back and help your understanding how we think about.
The overall product and services strategy and at the end of the Dave look we're really focused on trying to meet our customers exactly where their needs are right and we address these problems that they are trying to song through what we think of is kind of come. This very comprehensive curated solution sets and then a high level. When you look at our product and services portfolio, we've built a framework where we.
Categorized these across four general pillars, and the four pillars are really kind of what we think about as core practice software as the purse and these are the core systems that power medical practices across clinical financial patient workflows traditionally known as the chart, where you think about practice management's Bert as how do you mentioned breeze, which is what we.
Categorized as are our patient experience management platform secondarily, we think of the second pillar is kind of these core technology enabled service offerings, which you think about as revenue cycle management coding credentialing and so forth and then thirdly, our on demand workforce, because we have as Moloon mentions.
This distributed global workforce, we have all this capacity that enables our own core business, we're able to sell this had scale directly to partners into customers right. So that's where from a product perspective or go to market perspective, we product ties that around MTBC force and that's a combination of both operational ft ease off shore and engineering.
Passively offshore and then lastly, our platform extensions. So these are technologies that are either built by us whether you think about mobile applications or micro about analytics and so forth or apps that are built by by the industry that connect into our into our platforms. These are specialize assets are very niche problems.
So what this does is that this provides us kind of this product and strategy framework that allows us to one continue to acquire companies of which we'll we'll we'll see various different products and services and expand our own capabilities, but this enables us to combine key aspects of these pillars to build the appropriate go to market approach with.
As unique solution sets up either service very different markets segments are specialties, but as we continue to innovate across all of these pillars and will and we'll continue to launch new and breakthrough products on behalf of our customers and many by the way our currently under development and we're incredibly excited for what they mean for our customers and the.
Market when we release. These next generation solutions over time, but naturally we may end up collapsing multiple products and applications into unified solutions that continue to win and serve these specific segments or for specialty than like.
Well, that's a tough on point.
Sorry, Mark I was going to mentioned it to one point when we think about unification whether be with regard to.
Products and integration or brand.
We stepped back a little bit for a moment would just kind of think about the reality of the over the last five six months and.
And our focus really as you would expect has really during Tobin 19 in particular, especially during the second quarter, there's really been on pulling out all the stops to support our clients through one of the most difficult times many of them will experience.
Potentially during the professional lives.
And we believe that our work has not gone unrecognized ER and the efforts that we've put in.
But the team has has really we believe is really going above and beyond has been passionate about the way that were double support our clients and as we've done the right thing as we've prioritized the needs of our clients.
We think that by extension.
Just naturally holistically, that's generated additional goodwill, it's enhanced our relationships with their customers on the market and just by extensions naturally enhance our overall brand equity. So if we take data. We also then factor in the reality that.
Since the beginning of the year from a revenue perspective on a run rate annualized basis, we've doubled the number of digital assets that we've added.
Has been significant.
Team has significantly grown.
The client base as as double.
Roughly as well we think about all of these things together so while it's been a it's been an exciting beginning of the year and we think that the second half of the year will also be very exciting and during the second half the year one of the things that we're excited about is beginning to talk more about overall brand unifill.
Asian, or overall strategy when it comes to product unification like.
So those are things that we've been very focused on as a team and I think the reality is that at least as our sense that from the perspective the market our client base potential clients. There is that kind of a limit to how much can be digested a one point in time. So we think we're at that point where.
During the second half of the year.
We can begin flushing out or our strategy and thoughts on those those fronts. So if you stay tuned.
Looking forward to continue with those conversations during the balance of the year.
Great I will stay tuned and look forward to hearing that and then just a final one from me can you talk about the stickiness of the telehealth offering as the economy has opened in late May early June and interesting trends that might indicate some behavioral changes and then progress on international development.
End of the telehealth offering thank you.
For sure we'd be very happy to do that.
As we think about it our belief more generally are more broadly is that companies that will be the leaders.
Long term, playing along game and health care, REIT Ti or those who deliver comprehensive integrated solution you know throughout the last 20 years.
Folks who have followed the healthcare space can rattle off probably a dozen.
You know.
Pure plays kind of single product offerings, whether they be patient portals are clearing house or you can kind of go down your entire with Standalone pmts in like a particular parts or particular aspects of the overall kind of ecosystem of of health care REIT tea.
Locations that were exciting to the market at one point in time, but the reality at least as we see the market. We believe that ultimately truly going to be in our estimation. The vendors who are able to provide a comprehensive integrated solution.
And the integrated solution that broad enough, it's easy enough to use and understand its intuitive and usable by the healthcare provider that it really becomes.
Part and parcel of the daily work flows of a practice from a clinical perspective from a business work flow perspective from the back office perspective, and the like that we believe that will be the solutions that continues to to prevail. When all said and done as the industry continues to move towards more complex payment.
Models and towards greater integration across the system in the focus on reducing costs and the like.
So with this to come back now to Tele health, we believe that Tele health.
Is it is important in an increasingly.
Necessary component of any comprehensive solution, which is why we've now included that at no additional costs within our care cloud platform concluded and has been included for some time as part of our standard offering.
On the MTBC talkie, charnvit like so whether its providers leveraging our platform or per or providers leveraging another platform that ideally is integrated with our platform, we think that tele health.
Is here to stay in our estimation now if you talk a little bit more specifically in growth annually with regard to the actual utilization. We go back to the beginning of the year and I'll just use as a frame of reference if we look at our care cloud platform and we looked at scheduled in counters.
Less than 1% of all the scheduled encounters.
Of our thousands of care cloud providers were scheduled for Tele health.
We advance and we then look at the end uses a frame of reference the end of March beginning of April that number goes too close to one quarter 20, 25% of all encounters.
As a the stay at home orders are promulgated and as individuals are looking for ways to be able to continue care.
From a remote locations.
Now as we continue the fast forward, what we've seen since that point in time is the overall percentage of those encounters.
As you would expect as individuals are no longer required to stay at home. The overall percentage of the telehealth encounters decline.
And today when we look at our numbers roughly again, it's just a snapshot in time don't know what it will look like tomorrow or a week or month three year from now well what we see is that the level of the percentage of the Obama counters that are scheduled through tele health, whether it be our solution or another solution.
Remains 789 times as high today as it was pretty coated.
But still is a fraction of what it was at the height of stayed home orders or maybe say more simply.
Those numbers are somewhere between five and 10% of on counters that today.
As it using a snapshot in time are are occurring through tele health at least relative to our care cloud the population and I just use that as a point of reference.
I believe that that are larger base is similar in terms of that percentage.
That's great just a final piece on the international development and thank you very much.
I'm, sorry, I missed the in terms of international development.
Yes for the Telehealth rollout I think you had plans to kind of.
Some international expansion or.
Offerings there.
Okay got it okay understood sorry about that.
Yes, so so there.
Well health for a moment there are two parts to its one is the SaaS component and the other one is what we've spoken about and continue to be focused on albeit that rollout will be.
We will be something will make a final decision on and would be.
Probably not for another.
Couple of quarters that would relate to providing not only the staff solution, but also providing be actual care.
Model that it would be more akin to what we see sometimes in the marketplace.
From companies like Teladoc and the like.
So as we began the year our focus was on deploying that and rolling that out in devoting time and energy and resources to a roll out during the.
Second or third quarter 2020.
Families. We fast forward in time, what none of us could foresee in January was the reality is there would be cobot 19, and we quickly shifted our resources and focused on doing things like making sure that the care cloud platform, which we had just acquired.
Had its own telehealth component that was integrated and we worked on making sure that the SaaS solution that was then tied into integrate it with our overall platform was completely ready to support the needs of our practices since we solve the utilization rates go from.
Less than 1% to a quarter of on counters almost want to make sure that we were meeting our clients' needs and meeting them, where they were at so we quickly reprioritize than we think that was the right thing to do.
Which is a reprioritize our focus our energies our R&D resources.
To supporting our existing clients. So they can make it through and be effective in seeing their patients during in the midst of Cove at 19 and that pushed back a that other part of the overall tele health strategy.
And and frankly, even that roll out the international rollout that remains to be seen will make final decisions in terms of.
Directionally where to go we think Kobin 90.
The change in terms of the overall Tele health has really been a game changer and as we think about where we are today.
Again more than twice the size of where we were.
At the beginning of year I, we think about.
The other solutions that we have today, the RP, a and we think about our enterprise business intelligence than we think about the fact that you know today as we look at providers London component of our platform for.
Mm one that we would estimate that.
One out of every 30 35, a provider their provider positions of the U.S.
In some way shape or form leveraging one component of our platform whether it be the business intelligence or York see them or the HR. The PM. So we have the significant opportunity today to really cross sell and to continue to build on the platforms. So that was one of the things that.
That we will continue to talk about your progress is we'll talk more about her overall strategy in terms of how do we keep the rate of growth or into the future that we've been able to experience now what are the best avenues for doing that meet our clients' needs.
Excellent. Thank you very much.
Thank you.
The next question comes from Allen Klee with National Securities Corporation. Please go ahead.
Yes, Hi can you tell us how much the.
Doctor visits was down on an organic basis in a two Q and then for your for the New Enterprise business intelligence.
Software that you're going to cross sell can you.
Tell us a little bit about who.
The value add of that and where and why you think that.
That can be attractive thank you.
For sure so from the enterprise level, and then Oh, well loop and Bill and Bill can provide some more color.
In terms of physician volumes from an enterprise level business intelligence solution, we really see the opportunity.
Being being able to continue to partner with other vendors and the way that weve been increasingly doing over the last number of years partnering with other vendors being able to round out their solutions with our business intelligence.
With part of the the strategy or the end game.
We are the objective being to be able to wind RCM business and being able to cross selling up sell so it's a this solution. We think is a phenomenal solution. The kids larger practices, which increasingly are our sales targets were west and the team increasingly we're focusing it gives us a.
And ability to be able to start a relationship with some of the larger practices.
And to generate revenue from that business intelligence relationship, but then having as the ultimate objective being able to leverage that relationship with larger groups in particular.
To be able to cross selling up sell to higher revenue generating.
Solutions and Bill if you can provide little additional color with regard to physician volumes.
And the decrease that we saw.
During Q2 please.
Sure. Thanks, Dave.
So so obviously, what we saw sort of mirrored what we were seeing in the country as a whole so as the cobot Pandemics Brad first there was a decrease in volumes.
In New York, New Jersey, California, Washington, now, obviously, the the decreases more in the a in the south southwest.
But I think overall during for example, during April and May or the value of the the visits.
Ducted by our doctors was down about 33%.
Compared to the to the volume in January February and again differs by specialty differs by geography delivers over out overtime.
At the time, you fast forward to the June and data it led to exclude meridian that dead. The joined US in a in mid June at that point. The overall volumes were about 94% of what we saw in a in January February so.
I think certainly have that as they as a country has gotten a lot better dealing with the would coveted as patients feel more confident as as doctors have figured out how do I schedule, Yeah, we see and work come up now that's an overall number and it includes telehealth visits as well as in person visits.
As Rob perspective, if the Doctor is seeing the patient than providing service the patients getting what they need the doctors getting reimbursed and then there's no real difference to add to us in terms of the fee.
So I guess I'd say you know in some ways, we're a little bit in different Dutton err on the level of Tele health going forward as long as doctors can continue to let the C. Patients in 19 can you do want to get paid.
Thank you very much.
Thanks Alan.
Once again, if you have a question. Please press Star then one.
Our next question comes from Gene Mannheimer with Colliers Research. Please go ahead.
Thanks, Good morning, Congrats on all the good progress here I wanted to follow up on an earlier question on your on your acquisition strategy, even with with your two largest purchases ever in the first half.
What do you do for an encore in other words are there still many large RCM like opportunities in the market or would you consider veering.
From your traditional sweet spot of RCM and get into new markets. Thanks.
Thanks Gene.
And ER to your point, if we step back for a moment just think more broadly about the acquisition strategy why do we acquire what's our overall approaches we think about it. We believe it continues to be a very cost efficient needs of customer acquisition. It enables us to grow at rates that are really unheard of than ours.
Phase through a sole focus on organic growth, but two prong strategy with a heavy focus on acquiring customer bases for acquisitions.
We believe is is a stretch it makes a lot of sense and is this strategy. It really has enabled us to be able to consistently grow at the rates, we've been able to grow at.
It's also a great way for us to to be able to hire talent retain talent with experience and expertise.
That's a then enables us to continue to.
The best position for the next organic growth when or for the next acquisition. So it's a phenomenal way is already alluded to before and our estimation to really build a world class team.
Thank.
You know having for us having been through.
Other means of hiring and trying to build team for US we think it's a hands down winner.
And I think it even think about what's the folks on this call and our leadership that really attached to that the talent, we've been able to bring onboard through that strategy.
So as we think about it.
You're right, it's been a busy an exciting first half of the year.
But from our perspective as we sit here today, we believe the industry is.
Every bit is ripe for.
Consolidation today as it ever was and I think the two largest acquisitions.
Occurring this year really reinforce reinforce that point.
We don't obviously don't publicly disclose our acquisition pipeline.
But again, if we think about the acquisitions year to date.
And if I add to that that.
I sure everyone that we're continuing to actively worked on identifying.
Appropriate companies and target companies and well continue to deploy the same kind of patient and disciplined approach and only move forward. Obviously on the acquisitions that we think a are the best use of capital.
But from a capital perspective today, we have more capital deployed.
Virtually than ever before the close to $25 million of cash untapped credit line of $10 million.
Other means to of being able to move forward and creative ways on acquisitions. So we're excited we're as excited if not more so than we've ever been in terms of the opportunities we've seen the market, whether they'd be RCM health care, REIT T or or related industries to the extent that we can find companies, where we believe we can add.
Value with our technology with our team with our expertise.
Then we're interested in having a conversation and exploring or whether or not or thesis relative to that particular company holds whether or not so whether it will be six quarters from now or four quarters or two quarters.
Only time will tell that but in terms of the overall opportunities that were.
We remain very bullish and excited.
Very good Steve Thanks, and just quick follow ups I know, it's getting laid is.
How much revenue came from MTB see force in the second quarter.
We don't we don't separately breakout revenue relative to MTBC force, but what I can say what I could tell you is as we think about.
The bookings year to date.
Out of those overall bookings from a HCV perspective.
As the ramped up.
Roughly about a third of that of those bookings a in terms of ACB, where MTBC force driven somewhere between about us about roughly 30% of that and if we think about the actual recognize revenue during Q2.
Again, we don't break that up separately, but I can tell you that that was minimal you know, it's an increasing share overall, but in terms of the overall revenue mix.
Getting a lot of traction on MTBC force.
And it's something we weren't offering nine months ago sort represented zero percentage of revenue and it's fairly much more than that today, but but still it's a it's a relatively small percentage of the overall revenue, but increasing.
Very good thank you.
Thank you gene.
This concludes the question and answer session I would like to turn the conference back over to can blend for any closing remarks.
We'd like to thank everyone is joining today for your continued support we restored speaking here again in the near future. We hope you all take care and had a great that.
Thanks, everyone.
Okay.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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