Q3 2020 Tabula Rasa HealthCare Inc Earnings Call
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I would now like to hand, the conference over to Kelvin do corporate counsel for Tabula Rasa healthcare. Thank you and please go ahead Sir.
Thank you and good morning.
Kevin Dill corporate counsel for tubular Rasa healthcare.
The company intends to avail itself of the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Certain statements made during this call will be forward looking statements within the meaning of that law.
These forward looking statements are subject to risks uncertainties and other factors that could cause tabula rasa healthcare's actual results could differ materially from those expressed or implied by the forward looking statements.
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Additional information on the risks facing Tabula Rasa healthcare please.
Please refer to our filings with the FCC, including the risk factor section of our 10-K filed on March 2nd 2020.
A recording of this call is accessible through a link on the Investor Relations page of our website and it will be available for 90 days altered.
I'll turn the call over to Dr., Calvin Knowlton, CEO, chairman and founder of Tabula Rasa healthcare.
Thank you Kevin Good morning, and thank you for joining us for our third quarter Twentytwenty earnings call with.
With me today are Dr., Orsula Knowlton co founder Chief marketing and new business Development Officer.
Sure Bryan Adams, our Chief Financial Officer.
And Dr., Kevin Boson, our chief sales officer.
Worsening Kevin will both be available to respond to questions. After we conclude our.
Prepared remarks.
As a reminder, this conference call and webcast is accompanied by a Powerpoint presentation available at the IR section of our web site and I would encourage you to download the slides to follow along.
With our prepared remarks.
Bobby ongoing pandemic impacted.
Third quarter results.
We are continuing to see signs of recovery that we expect will be meaningful drivers of improved performance in 2021.
Most notably our October 2020 pace net enrollment figures far exceeded our expectations.
I want to focus my comments on four areas as reflected on slide number three.
Okay.
Second bookings third Medwise fourth personic.
First the most encouraging data point heading into 2021 is our October 2020 pace that enrollment, which more than doubled versus September.
And is the highest figure we have seen in two years.
Slide four highlights the trends, we have discussed within our pay sensors, which have now rebounded strongly off of that make trough.
It is important to note these gains were broad based.
With a number of pace organizations recording recording our highest net enrollment figures of any market 2020.
In addition to the array of new entities coming into pace or.
Our current pace organizations are expanding with new pay centers.
As we head into 2021, we have a solid pace space.
Well as a strong pipeline of new centers opening.
Our current backlog of new pace opening foresight extensions over the next 12 months has increased to 31.
We are further encouraged by improved sales activity during the third quarter, which would which we would attribute to pace organization successfully adapting their business models to deal with Kobe during the second quarter and now returning to efforts to grow their membership during the third quarter.
According to the National Pacing Association.
Covering more than 100 pace organizations.
The number of new co bid 19 cases index and the four week period, ending in October 5th and had fallen by 47% and 32% respectively burst.
Versus the prior four week period.
Also the bulk of the confirmed cases and deaths are shared by a relatively small number of pace organizations, mostly concentrated in the northeast specifically.
Specifically nine pace organization comprised 41% of the cumulative reported cases.
And six states, where you're nations comprised 43% of the cumulative reported deaths.
Well into the second topic bookings.
Despite continued cobian related challenges third quarter bookings increased 12% as compared with the second quarter of 2020 and increased 15% as compared with a year ago that excludes the COVID-19 caskets.
Through the first three quarters of Twentytwenty, our total bookings have increased 22%.
Much of this growth was driven by our payer segment, which accounted for 45% of total bookings year to date.
Our wins in the paper segment through the first nine months of Twentytwenty continues to be a bright spot with record third quarter bookings growing 50% sequential basis as compared to the second quarter and more than doubled compared to the first quarter of 2020.
Over 40% of our 2020 bookings will be recognized in 2021.
Third last quarter, we highlighted the July launch of Medwise within our prescribed wellness community pharmacy network of more than 10000 community pharmacies.
This included a new feature known it's bad wise decision support and.
Enabling a pharmacist to simulate changes to a patient's medication regimen and visualize the impact on the Medwise risk score in real time, well not disrupting the actual medication regimen.
This past Monday, we announced a collaboration with pioneer Rx to expand the reach of our med wise on our clinical pharmacy support services to Pioneer's 4700 pharmacies they.
This addition enables us to embed medwise into more than 14000 community pharmacies.
We have two additional cohorts of community pharmacies, we're working on which would bring us up to 20000 pharmacies. We also have a promising pipeline of additional medwise application opportunities with health plans and with government agencies.
And this will further expand the impact of our quality enhancing and life extending safe use of medication platform for 2021.
Lastly, I wanted to welcome our new team members from Personic.
In the first few weeks since the acquisition closed in early October we already partly cross selling to sign a new contract with an east coast pace organization, which starts in 2021.
We're excited to add Personic its pharmacy services that provides us now with more than 27000, new pace members to the CRH see Karen mentioned health care family.
That's one of our five pay spoke as Karen mentioned services, we now touch more than 90% of all case organizations.
Brian will now review the numbers Brian.
Thanks, Kelly I'm going to focus my comments today on three topics Medwise 2020 guidance and 2021 guidance.
Well our care bench in health care segment performed as expected during the third quarter, our Medwise health care segment underperformed as medication safety services fell short of expectations due to two reasons.
In order of importance there one we.
Experienced cobot related delays with two large health plan contracts originally signed during the first quarter of 2020 that went live later than expected effectively in the fourth quarter.
The delays were driven by changes.
That allowed for early refills and increased quantity supplies for maintenance medications at the beginning of the pandemic delaying the need to address medication adherence.
Second new restrictions related to see him ours performed with caregivers and prescribers slowed patient engagement in third quarter.
Subsequently, we have implemented tactics to complete the majority of those C.M. ores in the fourth quarter.
Moving on to slide number six for the full year 2020, we now expect total revenue to be in the range of $294 million to $296 million, the midpoint of which represents 4% growth.
Non-GAAP adjusted EBITDA in the range of $21 million to $22 million.
The key factors influencing our adjustment to 2020 guidance are one the aforementioned temporary CMR challenges and to the negative impact from COVID-19 on medication adherence initiatives that are seasonally weighted towards the second half of the calendar year.
Turning to slide number seven we plan to provide formal 2021 guidance in conjunction with our fourth quarter and full year 2020 results based on all the factors. We know at this time, we're comfortable that overall revenue can grow 20% in 2021, using the midpoint of our 2020 guidance.
Given the performance of our Med wives unit and 2020 I wanted to spend some time to highlight several factors driving growth in 2021.
First we now have a committed timeline in our contract with health Mart, which will positively impact our software subscription revenue growth beginning in the second quarter of 2021.
Okay and shifting to medication safety services as we have noted CMS changes the percentage of Medicare patients for whom it was required to complete a CMR in order to achieve certain star ratings on an annual basis. These percentages increased significantly in 2019, making our 2020 comparisons challenging.
Recently released CMS targets for cm ours are effectively neutral to a potential positive at the threshold for Medicare part C and part D plans to reach a four star rating has increased modestly.
Given the popularity of Medicare advantage, we see health plans investing more in star ratings in order to ensure more of their membership is covered by four star plans were higher too.
To remain competitive as more seniors enroll in Medicare advantage plans.
Third we added several large clients and Twentytwenty and have several new health plans launching clinical programs in 2021.
Fourth in 2021, we will launch our Medwise science as part of our core M.T.M. services, allowing Medicare advantage plans the ability to use our CMR and adherence programs also prevent hospitalizations and emergency room visits.
Adding 4700 community pharmacies as the results of our new agreement with pioneer Rx to our 10000 prescribed wellness community pharmacies gives us further opportunity to drive adoption of our midwife programs.
Last one of the 2020 headwinds, we expect to dissipate and 2021 is our medication adherence focused clinical interventions in prior calls we noted improved adherence rates in 2020 as the result of actions taken by CMS in the wake of the pandemic, including effectively waving prescription refill limit.
Encouraging longer days supply and relaxing restrictions on home or mail delivery.
A recent industry report medication adherence global market report 2020 to 2030, COVID-19 growth and change confirms challenging market dynamics, we have experienced as medication adherence market is projected to decline by 2% to $2.5 billion in 2020.
We expect to return to normal in 2021, and the long term outlook remains positive estimated to grow to $3.6 billion by 2030 with a compound annual growth rate of 13%.
With that I will turn it back over to Dr. Knowlton for closing comments Cal.
Thanks, Brian as we exit Twentytwenty, we are encouraged by many of our leading indicators for gross and 2021.
This includes one the rebound we witnessed with our case membership to our pace backlog of new pace organizations and current pace site expansions three the health of our Medwise sales pipeline and four with recent additions are more experienced team and.
I T operations and sales.
Operator, please open the call for question and answers.
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Please stand by while we compile the culinary roster.
Our first question comes from the line of Glenn.
San Angelo with Guggenheim Your line is open.
Taking the question, but I just want to follow up on on the the first the revised fiscal 20 guidance a little bit is it kind of implies that you're not really expecting any any sort of meaningful pickup in for Q3, if we use the midpoint of that revised guidance and in your prepared remarks, you seem to suggest that.
It was cold and related delays on to health plans and went live later than expected it kind of sounds like there are a lot of now should those revenues be be flowing through fourth quarter.
And as a secondary sort of consideration given the uptick in cases, it looks like to us that pace enrollment growth is slowing and so what sort of gives you confidence and you know as we head into fiscal 21 with that you know with the with the projection that you've made.
Sure Glenn Thanks for the question as it relates to Q4, we are expecting modest sequential growth.
Polluting the personal Cliniqa acquisition as you know the two larger health plan contract did really essentially get pushed to the fourth quarter fourth quarter is when we have the lowest number of cars that are completed for the payer division.
So we do anticipate that that's going to be up slightly.
Similarly, we will have a contribution from feed these new contracts that did go live later I.
I will say that the reason that those have been delayed are really twofold. One the process for getting some of the communications necessary to launch a new program.
Especially around one that appearance related have been delayed throughout the year due to the fact that internally at our customers' most of the communications that were.
Being reviewed internally by their teams were focused on their their members and and so those.
Those are new programs that were being launched did get delayed and the fact that they were adherents related and adherence rates were up considerably in the first half of the year. It wasn't as much of a focus so.
That did lead to some delays we are seeing very positive signs going into next year and even the fact that these programs have now launched that you know diesel be pretty impactful and meaningful going forward, so modest uptick in Q4, but.
Thinking forward in terms of 2021, specifically as it relates to pay.
We've got a couple of really strong data points that show over the past specifically in October.
That our census growth in our customer base is up.
Considerably from where its been over the past few months and in fact double what it was in September and.
Yes, the Hyatt.
We've seen that enrollment in the past two years, so very encouraging selling gotten FICA that if I could add this is Ken if I could add one thing to that Glenn pace enrollment happens in the first few days of every month. That's the way CMS has set up so three days in as of our report.
Five o'clock last night.
With a couple more days to go we are basically at the same.
Run rate in November.
With new no new patients as we were in October so we haven't seen any any decline.
Okay, and maybe just one quick follow up I was just hoping to get a little bit more color on the comment in the release about the restrictions related to the cm ours could you maybe just a elaborate a little bit but that what you mean and Israeli sort of quantification you can give us on that front to help us as we think about.
No the sort of the sustainability or lack thereof of that trend as we move in to 2021. Thanks.
Yeah. That's a great question Glen I'll take that this is Kevin doesn't that restrictions really have to do with tightening who you provide that CMR too and said there was some flexibility last year to do with caregivers prescribers with this year. The focus is really on a patient themselves. So we've implemented some operational changes that allow us to engage.
Each patient is a little bit more said the overall numbers targets of patients that plans are wanting to have a CMR with has stayed relatively consistent we expect that with the new CMR star ratings to be consistent for 2021 as well I mean, it's it's it's really given us an opportunity to that.
To combine and leverage some of other technologies as far as accelerating some of the integration with our prescribed wellness network well have new opportunities to engage some of those patients directly with the new pioneer partnership as well so.
We've we've made some changes to it to be a little bit more.
Other opportunities to engage patients and Adam made that adjustment. So we're well positioned next year.
Thank you very much.
Our next question comes from the line of Sean Dodge with RBC capital markets. Your line is open.
Thanks.
Joining me.
Maybe maybe sitting on booking there just wanted to make sure I understand some of the comments you've made there.
You said, 43% represents 2021 revenue.
The other 57% I'm, assuming it is 2020 revenue.
Is that revenue from contracts that were implemented this year and potentially later in the year such that there will be a.
I guess a bigger.
Your contribution next year. So some of this other 57% could be 2021 revenue to or am I misinterpreting that.
No you're correct.
Sorry that says I think Sean.
This is Kevin again, I know you're correct. So that Iraq contracts that were signed in 2020, where that revenue programs initiated in 2020 I do carry into 2021 and also relative to the types of contracts that we're signing it.
Many of those and most of them have really are centered around our core Medwise safety science. So not only is it a nice growth and payer contracts and and were optimistic about 2021, but it's it's further aligned with our medication safety strategy and having.
The health plans adopt our core science and in that respect.
Okay, great. Thank you and then to add on to that I would.
I was just going to say that you know that the you the percentage that relates to 2021 is it incremental to our debates we're building off of in a in 2020.
Okay. Good that's a good clarification.
And then on the New pay center opening you said 31 now under contract to open over the next 12 months I, how long does it generally take a center to reach full capacity and then I guess based on the timing of these as they kind of slow through the next 12 months.
Do you have a sense for how much incremental revenue just those new centers should add it to 2021.
Yes, that's a good question this is Bryan again.
In terms of the amount of time it typically takes for a center to get to full enrollment what we've seen is it's somewhere between two to three years.
And the interesting thing that I'll note is that.
That many of the newer customers that we've brought on recently have been growing at even faster rate than than what we've seen in the past. So we would anticipate to get to those levels quicker than a that the two to three year timeframe.
Of the centers that are planned to open you know they're spread out over a 12 month period. So the contribution from those will be relatively low next year, but I would estimate it's going to be about 5 million in terms of contribution Justin Twentytwenty, one related to those new centers.
Okay very helpful. Thank you again.
Our next question is from the line of Ryan Daniels with William Blair. Your line is open.
Hey, guys. Good morning. This is Jared Haas in for Ryan Thanks for taking my questions.
What did you maybe just speak with some of the pace of enrollment dynamics I think in the press release, you mentioned, you're seeing outsize contribution from for profit just in terms of the enrollment.
I'm just curious if there's anything more specific you can add to that to provide some more context on you anyway to maybe quantify sort of that impact and you know how sustainable do you expect that just when thinking about the enrollment trends for 2021.
This is Kent I you know, it's it reminds us of hospice back in the day when we were in the hospice business when the for profits came in.
Turning to sales in 2000, it all bodes rose, but they were much more.
Aggressive and bringing on new clients and we're seeing the exact same thing with the new for profits that are coming into the pace, they're much more aggressive they're much more business center focused so it and I think it's just the start we've had some recent cost with a couple of them that are coming in.
Ladies yesterday and I think it's just this quarter, you're going to see a lot of for profit activity in 2021, and a lot of growth pace.
Got it. Thanks, that's a that's helpful. And then maybe just just one other quick follow up so just on the first wanted to ask that you know it sounds like you expect that you obviously be accretive in Q4 and have a positive contribution in 2021, when when thinking about kind of the potential cross selling that you can do with that.
That you know are there more investments needed at this point or more integration related efforts to kind of get to that point or is there anything unique with maybe the typical cadence of the sales cycle, just trying to get a sense of how impactful cross selling can be the 2021.
Hi, This is on for I guess, it's a wonderful acquisition.
Great Company, that's been in the market for a decade, and we definitely see opportunity there CMS actually is requiring new programs to have a company like Pharmas DARPA sonicone in place prior to starting so that was one of the drivers.
Our desire along with the [laughter].
Increased scrutiny of pace organizations, very similar to and they plan and their audit expertise is certainly something that we desired as well to add to our list of services. So we see a great opportunity for cross selling and are starting to see that already.
As far as integration.
Good and vision that it would make our data analytics more robust than where appropriate.
And that will take some integration, but nothing.
I think too big.
I think is key I think to your point of extra assets. The answer is no we won't take any extra assets to make this happen.
Got it okay. Thanks, guys. That's a that's helpful color.
Thank you and our next question comes from the line of David Grossman with Stifel. Your line is open.
Good morning, Thank you.
I was wondering if we could just go back to the bookings.
For a moment you know perhaps you could.
Quantify or give us some order of magnitude in terms of.
What that 43% you know represents as you know in terms of dollars a visibility into next year and.
And just as a you know a follow up to that question. You know we've had you know.
[noise] fits and starts in terms of visibility over the last couple of years as it relates to you know contract routes et cetera.
I I am just curious you know whether you feel or why you would feel that youve got better visibility now than maybe you've had yeah, ticking, obviously and stripping out the COVID-19 impact visibility, but even before that we were having again some some issues at least with predicting timing so again.
Just curious on you know kind of quantifying how much you know that base represents going into next year and why you think youve got better visibility today than you maybe had over the last couple of years as it relates to bookings conversion.
Yes, David I'll take that I. Appreciate the question I think that you know to address the issue relative to visibility, we've really done a lot to enhance that sales team and our sales processes over the last year. So we came into the year with that.
I'm, a pretty small sales team, we've expanded that quite a bit throughout the year and due to the challenges that we faced with co bid and trade shows and getting our word out we've really brought in more of a higher level executive group of sales reps that allow us access to decision makers a little bit quicker the.
That helps in terms of really understanding the pipeline tracking that and being able to manage that a little bit better.
The other component that gives us confidence is the types of contracts that we're signing are more specific to our core medication safety technology. So they're much more predictable in terms of that a patient population that we're serving when clients need to start those programs.
Stop those programs.
Some of them are still related to the Medicare compliance and where we've been able to add on the.
Medication safety technology similar to what the MTM model is and so that's given us a little more confidence in the predictability for next year.
And that's that's that's been that the key driver for for that relative to quantifying that we'll be able to provide a.
More insight to that as we in the future as we provide more guidance for 2021.
Okay freight savings here just to kind of build on that I know your question is how do we have to kind of bridge to to the 2021 numbers and get comfortable with that so.
So if you assume right now based on the numbers that we've put out there that you know we're going to have about $60 million of growth next year.
Call It 30 million coming from the organic growth within pace that we're seeing a return to normal levels. So we're encouraged from that standpoint.
Other 15 million or so coming from the the persona.
Acquisition, you've got close to another 5 million from Health Mart Mckesson.
Go lives at the.
End of the first quarter next year.
And that puts us yes.
Yeah, where the gap of probably about 10 million, which is much smaller than what we started out this year with.
And given the fact that.
We've talked about that a number of the bookings this year relate specifically to 2021.
I think that you know we have a much higher degree of confidence in the figures that we put forward at this point as it compares to last year coming into the year.
Got it thank you for that however, full.
And Brian just back to your comment about the revision to the fourth quarter.
Some of that being you know the seasonal downtick in.
C N bars, I mean, I would've thought that would have already been factored into guidance. So did something change in the you know as it relates to the fourth quarter and then that seasonality.
No so in <unk>.
My comment earlier may have been a little bit misleading I was just noting that typically we do have a lower level of Mars that take place in the fourth quarter, we had been anticipating some.
Additional adherence related work in Q4.
And as Kevin talked about that.
Yeah, that's really been de prioritized in 2020 for a lot of plans.
That does represent a good portion of the.
Production for for Q4, keep CMR levels should be consistent with prior forecast.
But somebody adherence work that we typically see in the second half of the year did not materialize as we anticipated.
Okay, and then just I mean, obviously, you know pretty impressive pace enrollment in October.
However, I mean do you have any sense I mean, obviously, we've been at depressed levels. So I'm, assuming some of that represents pent up demand.
So if in fact, that's the case.
Do you have any sense for when you know whether you satisfied a lot of that in October or whether you know you could see those elevated levels extending throughout the quarter. So that the base entering next year.
It was even a higher you know that what you're projecting today.
Well, what I mentioned discount what did mentioned David.
It was that we actually are seeing a replication of october's numbers in November.
And we're only three days into November.
So I I don't know the answer your question, but.
It's speculative, but it seems to be.
Stop demand, it's not happening.
It seems to be it seems to me that the plant plus I think also you know we mentioned before the.
There is an impact on the floor with the for profits coming in I mean, they are much more aggressive.
Right.
So I think that the well see what happens, but it looks to us from this vantage point today that this EPS is going to continue growing like it like it is.
And did you see an inflection.
Sure.
I was just going to add that with the challenges that we've seen in long term care facilities, there's a greater desire for people to be in the community to receive.
Managed long term care as opposed to and in a institutional facilities. So we would envision and pace organization certainly see this as an opportunity to get the message out about the benefits of being home.
And being take care up from a long term perspective.
Right and of course, what did you see you know some.
Some you know Paul.
Pause with the not with the for profit pace organization, you know at the beginning and are independent I like that because I think we have pretty good momentum going into it with four profit. So are we just starting to see the inflection point that was you know manifesting itself for the pending like or is this kind of too early to really tell what's going on.
Oh, we did not see the for profit stopping they opened their facilities on time that they had plant. So I would envision that this type of growth will continue.
We only actually represents one of <unk>.
Right.
I'm sorry, we opened one for profit of one nonprofit November 1st So there's still there's still moving.
I was just going to add David that the number of poor profits in our.
Pipeline of centers to open its materially higher.
So we're seeing a significant contribution from the for profits.
I think I think Brian I think thats, putting putting pressure on no problem, just because we're seeing a lot of site extensions, where they're adding a adjacent sites now which they hadn't been doing before so I think it's a.
Giving them some pause to.
Uh huh.
All right. Thank you very much good luck for the balance of the year. Thanks.
Thanks, Thank you.
The next question comes from the line of Matthew Gilmore with Baird. Your line is open.
Hey, good morning, I guess I've got a follow up on the on the conversation you're just having so the 30 million of growth you need for 2021.
Again, a side from from pace enrollment can you give us a sense for what you're assuming within that is that.
Assumption to be kind of get back to normal or that you know the elevated trends you've seen in November and October continued just sort of where you know I wouldn't just wanted to understand kind of how aggressive or not aggressive.
The assumption is behind that 30 million.
The numbers that.
We're assuming are kind of art, our historical growth rate.
While October November very strong.
You know, we're not assuming that or any sort of elevated enrollments is included in that forecast. It's it's really based on historical trending.
Okay, and then as we as you know many of US track from the National pace enrollment would you do you think that you <unk>.
It seems like maybe what you're saying is that the PSEP, there's a wider separation between.
Where are your patient enrollment has been versus what we see with the national numbers, maybe there's some noise in the national.
Numbers, but I was just kind of curious if you would agree with that that there is maybe some separation or or maybe the national numbers are just still lagging a little behind what you're actually seeing on the ground.
I would say that in general we have a higher concentration of the start up programs that tend to grow at a much faster rate than what you're seeing at a national level is.
Kind of weighted by some of the larger program that I think weve historically seen.
Either not grow or or being challenged by some of the issues related to cope with the cow was referencing during his comments.
Comments earlier, specifically and in the northeast and that's not where we have a very large footprint. So I would say that our our programs do seem to be growing quicker. We also had a large presence in California, where there is a higher concentration of the Medicaid only purchased.
Vince enrolled in pace programs, which are not represented in the Medicare statistics and those those are growing quite quick.
Okay and then last question I had was it is there any update you can provide with respect to the enhanced MTM pilot with Dan I'm I was just curious how that how the latest here that's gone and when we might expect to see some data out of it. We we Scott we were very fortunate about three or four.
So does it.
The pace group up in the Northern Plains.
The Blue Cross programs here gave us the green light to go ahead and publish because heretofore, we have not been able to.
But if anything.
So we now have two papers that are impure view.
Should be out very shortly.
One talks about the.
Three years.
The first three years of the program that we intervened on out of the 250000 people. We intervene on the highest risk is going to be known about 42000 of them.
And we say Medicare $128 million or mostly on hospitalizations. So.
Papers are forthcoming finally finally.
Well allowed to talk about it a little bit.
So you will see some publications come yeah, probably in the next month.
Anyone else okay.
Great. Thanks, a lot thanks, Matt.
The next question comes from the line of Sandy Draper with <unk>. Your line is open.
Thanks, very much and good morning, I guess the first question probably is for Brian just to make sure I'm comparing apples to apples.
When you guys report bookings are.
Is that cap on an annualized basis or for example, if you have a bookings event that could take over a couple of years and he could inflate bookings I'm just trying to think when you're talking about the growth in bookings is that apples to apples are there things in there that could inflator deflate the actual percentage growth since we don't get a dollar number I'm just trying to.
Any kind of triangulate bookings growth versus future revenue growth.
Yeah, so that is on an annualized basis.
Not you know, it's not gonna be multi year.
Okay, Okay great.
And then the second question that relates to one or two previously asked ones you guys seem to have pretty good visibility on the pace business, it's been a little bit more challenging on a.
On the tech side of getting people to.
Just sign up the timing you commented in that health Mart is now I think contractually down so that therefore, basically you're going to start generating revenue on a certain date, regardless of go lives and then also why is it why is it hard to get these customers that there's so much value why did they keep sometimes kicking the can down the road.
And not to say, let's get this done as fast as possible. Obviously co that may have an impact but it seems like that has been a longer trend that things get pushed out maybe they actually get done but there's this kicked down the road, we'll we'll do it next quarter or next quarter I will now we'll get to it.
I can take the first one and maybe Kevin you want it or you want to take the second on the health Mart Mckesson deal or we do have.
Committed a timeline to launch the project and in fact, they have already paid.
Pretty significant impact.
Implementation and setup fees.
That's happened those fees would be recognized over the course of the contract once it goes live.
So those fees have have been paid we've been doing work to prepare for the launch.
So you know it's a mutual agreement in terms of the the launch date based on having everything.
As part of the.
Offering that they want to kind of set up ready to go. So we're in a good position to launch that at the end of the first quarter, and then Ursula and Kevin maybe ill okay.
Yes.
Yeah. This is Kevin.
This is Kevin I I do think one of the things tied to program watch, particularly in the pharmacy space is a lot of that new programs, New technology I would typically launch that summer trade vendor shows the wholesaler shows which were all cancel this year. So that was the primary reason.
To not launch some some projects the other thing that I think is one of the most exciting things that but I don't want to have downplayed is the the integration that we're doing with pioneer Rx. So in addition to the work with health Mart pharmacies, the integration of that Medwise technology with them prescribe.
Wellness pioneers one of the fastest growing pharmacy dispensing systems in farm.
Pharmacy space and there are really.
Really working at a rapid pace to get Medwise integrated now that we've signed.
The contract with them. In addition to some other technology integrations that we're doing with them that puts us closer to having.
Having information right at the point of dispensing within the pharmacy, so although a lot of that the business was slow just the way the programs typically do product launches.
There's a lot of optimism heading into next year with some of these new integrations and we're seeing the pharmacies come out of that that that transition.
I think this is Ken I think the other thing too. It's a very good question. The other thing is that the clients of Mckesson and Amerisourcebergen and Cardinal pharmacies have been inundated ER and really.
Almost closed their doors for long time.
No they were doing walking their walking stuck out to the cars to people didn't think there was no time to implement it was that not the right time to implement a new program for them. They were trying to survive and help their patients I mean, it was very difficult time for pharmacy for the first few months of the code. So it makes sense not to start and then a new program.
Even though it was ready to go and even though mckesson that paid us a lot of money to get started with which would have recognized yet I think it's just had to do with the clients. They were they were struggling they were having tough time.
Okay, great. Thanks, guys.
Thank you.
Our next question comes from the line of Stephanie Davis with SVB, leaving Inc. Your line is open.
Hey team. Thank you for taking my question.
How I sent me.
Can you hear me.
Yes, you hear me perfect [laughter] that's good.
Oh, how I noticed the tone in the press release and the comments is a bit more hate.
Tim.
<unk>.
Am I reading, a little too much into that or is that indicative of the growth between 20 line.
And just the follow up to that how should we think about the mix.
As you're kind of seeing this healthy growth and pays and some some choppiness and Metlife died.
Definitely I I apologize I, the first sentence or two I could not discerning could you ask me that again I'm sorry.
No no worries about that I think.
Also on services and then with the world ending up [laughter] I'm, just saying be the comment in the press release.
They all seemed a little bit more <unk> centric is that it is the mix for the coming year.
Well I don't think so but you know there's just so much going on right now on pace. It's it's it's unbelievable what is transitioning I mean, what's happening with the for profits and.
You know and the growth the growth we've never seen so many pace organizations expand.
To the next county over New sites. For example, we've never had this type of expansion.
And I think it's prompted probably because of competition you know they they want to make sure they're capturing their zip codes that they can before some for profit comes [laughter] you know, but it's really it's a it's just it's just the fact that we've never seen this type of growth, it's a real spurt with with the pace organizations as far as.
The other things going on Weve never had an opportunity like this that too but this is a longer range thing to get ourselves involved and almost 20000 community pharmacies with our software and.
And the model that we used in M.T.M. with 400, pharmacies, and and 400 pharmacies that we certified in med wise in the community pharmacies is.
A good example of how we know we can we can propagate this in tens of thousands of community pharmacies throughout the country. So.
That's a really exciting thing that's what we always wanted to do is get the software out there, but that's going to take you know it's one one pharmacy your time's going to take a while.
Pay stuff seems to happen quicker.
Quicker so maybe that was probably the accent on pace I guess, but as far as a long term thing it's a spectacular for us to be able to have these real.
Relationships with so many.
People and Andy and then we didn't even mention the academics. We've also now I got an opportunity to penetrate that 100 schools. The pharmacy as a kind of a farm team to get the students certified <unk> when they're in school before they graduate and that will roll out over the next year or two so theres a lot of stuff going on outside of pace, but it's just that.
The pace kind of took the center stage, because how robust it is right now.
Understood the more a function of the excitement around that growth and stepping back from Medwise girls.
And then just follow ups is for Brian when I look at the 20 claim on outlook and see better reflects 20% breaking ground.
How much of that is a function of easy comps this year versus the ramp up of new bookings.
And looking at a commentary in 2021 that went from double digit growth to 20% in this quarter.
What would that growth look like if not that easy comp.
Well I think that you know going into next year, you know account just had the opportunity to expand on on pace to mean that it's been a very.
Consistent in healthy part of our an important part of our growth in the past and it's certainly been challenged in that area over the past six months or so so starting to see that that rebound back.
Back to normal levels it.
It's really critical as we go into next year. So.
It's exciting to see what's happening in pace right now because of that as.
As I was kind of doing the crosswalk before if you think about the $60 million of incremental revenue.
Get paid represents close to half of that.
So that is that it's very important that we we do continue to see those those same levels.
Net census, enrollment over the coming months and quarters and I think we're really encouraged about what we've been seeing over the past couple of months.
And the pipeline that is sitting in front of us of new centers that are planned to enroll or are certainly going to help to support that.
And then you know the persona acquisition, adding another 15 million at some of the other things that we've already won that are set to roll out next year.
You know I don't necessarily think of it. It's a it's a you know it's an easier comp going into next year.
There's still a lot of work that needs to be done in order to get to those numbers, but.
What I think we're optimistic about is the fact that a lot of the bookings that we had.
Had this year really relate to 2021, a in fact almost half of them. So while we've had really nice progress. This year much of the focus has really shifted to 2021 versus 2020 and.
So I think we're pretty encouraged by what we're what we're seeing at this point and so you know if you back out the persona contribution you're probably looking at about 15%.
Organic growth.
And of course, you know going into next year.
You know, there's still some uncertainty around what's going to happen with with cobot, but we feel very comfortable that that these numbers right now accurately reflect the.
The visibility that we have a into the business.
All right that's it.
Yes.
Your next question comes from the line of Steve Halper with Cantor Your line is open.
Hi, I was just wondering if you could provide a little bit more detail on the restrictions.
And around see amar's.
What sort of happened there and was this something that sort of cropped up during the quarter.
Was it.
For.
Or should you have been expecting this to have happened.
In advance of the quarter.
No I'll address that it is something that did come up during the quarter. It's we were able to pivot relatively quickly, but its still created a little bit a lag in terms of.
Being able to reach the more difficult to reach patients for whatever reason.
Whether it's a patient population that is Ah has phone numbers that are difficult to reach community pharmacy relationships that make it difficult to reach.
Maybe even health literacy issues, so they're a challenging patient population, so having to sort of change strategy and pivot I took a little bit of a an operational shift, but it's something that we've been able to overcome.
And what were the exact restrictions that were imposed.
So in in many times with difficult to reach patients you had the opportunity to provide cmrs with their caregivers their prescribers and theres there that's no longer Oh.
A loud.
And is that <unk>, and that's and that stays in place.
Correct well if it is allowed in an instance, the person is.
Uh Huh a competency issues. So there is an instance, it's very specific it's not just because they cannot be reached.
Got it thank you.
Your next question comes from the line of Sean Wieland with Piper Stanley is open.
Hi, Thank you for taking the question I send just on for Sean.
Our first question is just on for Sonic that I'm curious to know where it falls kind of on the spectrum of your piece portfolios you outlined that at the analyst day and then.
And you said it.
The acquisitions, adding incremental capabilities to the pace pharmacy offering or if it's more a matter of just kind of expanding the footprint into and that I think 40% more peace pharmacies, where you've been previously.
So I'll take the first piece and that are slowly maybe you want to jump in on some of the capabilities but.
The revenues related supersonic are going to be split between the persona fill a piece of the business, which is pete's pharmacy, so you'll see that in our care bench in product revenue.
And then the the remainder amount will be related shift pharma star and incorporated into our care bench and pay solutions line item.
Yes, and on the specific competencies. It brings to US is there in addition to that relationship and the opportunity to cross sell is the focus on the pace specific part D requirements all of pace organizations go through a one third financial audit.
Which routinely we're in the process of in collaboration with Personic. Good now as part of the team that gives us an opportunity to two and also enhance what we know from a pharmacy perspective into the.
Benefits management space.
And their audit expertise is something of great value in particular because of the scrutiny I don't let's say greater scrutiny, but.
Scrutiny, that's coming up to the Medicare advantage level for pace.
And the ability for them to be charged for anything that they thought many of their findings, which was not true in the past. So we really see it as an opportunity to bring that additional level of experience to our clients.
And our mutual clients.
Got it and then just curious you know kind of how funny and PMPM has been trending year to date I think and in January the averages around 490 on it at Personic that acquisition going.
Is that adding incremental potential PMPM or is it still differently and overall, how it's trending.
Intervention solutions year to date.
The majority of the revenue on a on.
On the non pharmacy side of persona is built on a per claim basis. So it it's a very low a mill, which will effectively reduce the overall PMPM.
That you see on average for our peace members, but.
But you know incrementally BRC expansion on Oh absolute dollar basis, so well be communicating more on that with our year end numbers.
Got it thanks.
Thanks Seth.
Thank you and I'm not showing any further questions. So I'll now turn the call back to management for closing remarks.
Well. Thank you very much for joining us today and we hope that this provides some information that was helpful. And then your decision making.
Ladies and gentlemen, this does conclude the program. Thank you for participating and have a wonderful day.
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