Q2 2021 Change Healthcare Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the heat change healthcare incorporated Q2 F Y 21 earnings conference call.

All lines are currently in a listen only mode. After.

After the speakers remarks, there will be a question and answer session.

If you would like to ask a question at that time, you may do so by pressing star and the number one on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to hand, the conference over to Mr. Evensen. Please go ahead Sir.

Thank you.

Good morning, everybody and welcome to change Health Care's earnings call for the second quarter of fiscal 2021, which ended September Thirtyth 2020.

I'm joined today with Neil Decrescendo change health, Care's, President and CEO and Fredrik Eliasson change health care as executive Vice President and Chief Financial Officer.

First Neil will provide a business update and then Fredrik will review the financial results for the quarter and provide our outlook followed by closing remarks from deal after that well open the call up for your questions before we begin I'd like to remind everybody that the comments included in todays conference call include forward looking statements actual results may differ materially from the results again.

Adjusted by the comments for several reasons, which are discussed in more detail in the companys as easy filings, except as required by law change healthcare assumes no obligation to update any forward looking statements or information. Please also note that where appropriate we will refer to non-GAAP financial measures to evaluate our business reconciliations for non-GAAP financial measures to GAAP financial measure.

They are included in our earnings release, and the appendix of the supplemental slides accompanying this presentation I want to remind everybody that copies of our earnings release and the supplemental slides accompanying this conference call are available in the Investor Relations section of our website at Www Dot change healthcare dotcom with that I'll turn the call off to Neil Neil.

Thank you Ed and good morning, everyone.

Oh COVID-19 has clearly impacted the way we all go about our day to day activities.

Everyone remains safe and healthy as we continue to manage through the new normal in our personal and professional lives.

Today, I will review change health care strong performance in the second quarter driven by the continued rebound in health care utilization and the sales and product momentum across our platform.

I will provide insights into our ongoing new business successes.

Our continued execution on delivering innovation and value to our customers.

And the strategic initiatives, we completed to accelerate growth and expands our market opportunity.

As you can see by the chart on slide four activity in the health care system has continued to trend positive.

Although we continue to believe health care utilization will return to prior levels by the end of our fiscal year, we're still assuming underlying volatility and some potential negative impacts on these trends as a result of potential changes in COVID-19 infection and hospitalization rates in certain markets as well as the hesitation on the part.

I have some individuals to resume normal health care utilization.

As we indicated last quarter. In addition to improvement in utilization, we're seeing positive indicators in customer activity across all three segments.

Underlying trends for both bookings as demand continued to be positive and above our previous expectations.

[noise] change healthcare industry called COVID-19 Flash report commissioned with the health care Executive Group reported our health care leaders are increasing I T budgets during the pandemic and be on supporting the long term potential of our solution and platform.

Health care leaders are accelerating digital and payment transformation with an emphasis on consumer experience tele health and interoperability.

These are all areas, where we believe we are leading the innovation curve as evidenced by our recently watched connected consumer healthy Commerce suite.

Our interoperability a p. ice to address CMS is interoperability and patient access rule.

As our clinical data retrieval solution.

Now I'll briefly highlight our financial performance for the quarter.

In line with the improvement in utilization and new business implementation timelines as well as our continued market momentum we reported strong results for the second quarter.

Our team produced solutions revenue of $706 million.

Adjusted EBITDA of $232 million.

Adjusted earnings per share of 37 cents per diluted share.

And free cash flow of over $50 million during the quarter.

Given the strength of our performance and liquidity year to date, we repaid $125 million of our term loan b.

Frederic will provide more detail on our financial performance and outlook following my remarks.

Our second quarter results demonstrate our continued focus on the enterprise sales efforts in innovation across our platform, while we continue to optimize our cost structure to accelerate growth and performance going forward.

Now, let me provide an update on our success on the new business front.

More and more kids are recognizing the value of our payment accuracy and coordination of benefits solutions that leverage our front end position and the industry's workflow using our extensive network our value added an extensive data assets and our AI capabilities.

During the quarter, we saw increased demand for coating advisor supported by current Tele health trends, which presents a perfect use case, given the dynamic changes in reimbursement and lower average billing per episode.

We replaced a major competitor at a $30 billion Blues plan and signed two significant state Medicaid see Ob deals leveraging our unique data and AI capabilities and bringing additional innovation to this sizable market.

In risk adjustment, we signed a major expansion of our business with a $9 billion health plan displacing one of our major competitors in the risk adjustment space by offering a better ROI with our unique data.

Hi models and workflow capabilities.

In RCM technology, the CMS mandate for improved price transparency is increasing demand for our clearance patient access suite of solution for hospitals and health systems that creates better patient estimates at or before the plane to service to help increase collections and improve patient satisfaction.

In our enterprise imaging business, we continue to grow our pipeline and have signed several new enterprise deals further advancing our position in the market in.

In addition to new sales within our core customer base, including a multimillion dollar strategic expansion for cardiology critical solutions for large west coast integrated delivery network.

We also had three notable new logo wins, representing several million dollars in annual contract value as we continue to take share from our competitors.

In our RCM services business, we continue to expand our pipeline and grow bookings with positive trends in average deal size win rates and ongoing success closing multimillion dollar deals.

I also want to provide some color around the extent of our wins, which underscore the breadth scale and quality of our service offerings.

First we close multiple deals with mid to large scale IDN or hospital groups in New York for patient access services totaling more than $10 million in annual contract value.

We signed a new multi million dollar contract with one of the largest tele health providers in the country.

As well as adding significant new clients like helix, a leading clinical lab supporting PCR Cobot, 19 testing and serving health care providers governments retail pharmacies and other organizations across the country.

These new wins in RCM services further strengthened the foundation for the RCM services transformation and underlying performance to set us up for growth and that's why 22.

During the quarter. We also added 14, new products to our Apiay in services connection marketplace spanning payments medical network patient experience and our intelligent health care platform analytics Center.

Our marketplace now offers over 43, apiay products, providing solutions to power revenue cycle management payments and medical eligibility workflows.

We processed over 50 million apiay transactions in Q2 more than doubling the volume compared to the first quarter.

In our view to be payments business. In addition to volumes recovering we continue to win new business, including contracts worth several million dollars annually with two large national dental plan companies.

We also signed additional deals for our connected consumer health suite, and specifically our shop booking pace solution, which allows patients to play a more active role in their health care choices.

Just announced in June we have already signed several clients and have a large number of additional opportunities either in contracting or in RFP processes with organizations were addressing the rise of consumerism in healthcare.

I also want to note that Frost <unk> Sullivan has recognized our efforts in the health care consumerism space with the enabling technology leadership award for patient experience solutions in North America.

We were recognized for our strong overall performance and helping solve provider challenges related to price transparency patient satisfaction and improving revenue.

During the quarter. We also executed on three key objectives to strengthen our market position and accelerate our growth.

First we launched new solutions in both our pharmacy network and clinical decision support or inter qual franchises.

Second we acquired and better technology for both our enterprise imaging and value based healthcare software franchises.

And third we continue to expand our software and analytics distribution capabilities with the signing of a two year agreement with disease.

Now, let me provide a little bit more color on these.

And our clinical decision support or inter qual franchise, we launched a new AI application that automatically extracts diagnostic data from clinical notes to increase the efficiency of automated medical necessity reviews by over 20%.

To put this in perspective this task can take as much as 30 minutes for a typical review and places a significant administrative burden on highly skilled clinical staff.

We continue to innovate with payers and providers as we answer it more intelligence into clinical work left to.

To this end, we signed a multimillion dollar agreements for inner qual, with both payers and providers, including signing a deal with one of the largest service providers need dialysis market as they navigate changes in reimbursement models.

In our pharmacy network, we introduced the new service that now enables pharmacies to easily process and receive reimbursement for COVID-19 tests within their regular workflow. This.

This means pharmacies can now electronically built for COVID-19 test just as easily as they built for prescriptions and flu shots, helping support the expansion of U.S. testing capabilities.

I'll move on to the strategic acquisitions, we completed in the quarter.

During the quarter, we acquired nucleus Io to advance our cloud native enterprise imaging efforts and Promedia see analytics to enhance our value based care initiatives.

Nucleus Io is a classic buy versus build assessment that provided a quicker development timeline for our cloud Native diagnostic Bureau, with superior workflow and rendering capabilities.

Nucleus I also expands our market opportunity with individual radiologists and radiology practices given their installed base of 7500 users for their image exchange service.

Our second acquisition from Ethiopia analytics helps health care payers optimize their provider networks under value based care reimbursement models.

The solution analyzes episodes medical care create value based payment models.

Valuate provider performance identifies care variations and improves network efficiency.

Having already leverage that from Ethiopia analytics methodology in our help Qx solution. This acquisition is a great example of our try before you buy acquisition strategy.

Lastly, we continue to expand our channel strategy by signing two multi year contracts with vizio, the largest health care purchasing group in the country.

These agreements give busy at members, which include 95% of academic medical centers and more than 50% of acute care providers in the U.S. access to our change health care enterprise imaging and cardiology hemodynamic monitoring solutions.

So in closing the pandemic has highlighted the need for the health care industry to move more decisively towards consumer Centricity, where digital front doors and virtual health are central to improved access and care delivery, where health care organizations manage throughout the patient journey and not just the.

Discrete elements or episodes.

And where data and insights are even more critical deliver enterprise wide innovation, which is necessary to reduce costs improve efficiency and deliver outcomes.

Therefore, we remain confident that change health Care's platform, which provides best in class connectivity transaction management insights and integrated experiences will continue to play a central role in helping our customers through this transformation.

Now, let me turn the call over to Frederick who will review, our financial performance and outlook rhetoric.

Thank you Neil good morning, everyone.

I'm happy to report a strong second quarter underscoring the central role we play in the healthcare system.

Health care activity continued to improve throughout the quarter.

We believe the recovery to pre co bid activity levels was a result of the trend towards more normal underlying demand and some catch up of previously deferred visits and procedures.

As Neil mentioned, we continue to see underlying strength in our sales efforts across the platform, including positive market reception for our newly introduced solutions.

I want to note that the second quarter results reflects approximately $50 million in lower SDMA costs, primarily related to a one time change in benefits policy reduced health care expenses as a result of lower health care utilization by employees and timing related to deferred hiring as a result of covance.

19, we anticipate a majority of these expenses to come back starting in the third quarter as business activity continues to normalize.

Let me now move on to provide more detail what corded performance for the second quarter and our outlook for the third quarter of fiscal 21.

Starting with slide seven for the second quarter solutions revenue was $706 million, including a deferred revenue adjustment of $39 million as part of the fair value adjustment associated with the Mckesson exit compared to $739 million in the same period of the prior fiscal year.

Results reflect the negative impact of COVID-19, partially offset by the net positive impact of M&A activity of $50 million and new sales and organic revenue growth in the quarter.

Net of the impact of deferred revenue in M&A activity revenue declined 1.3%.

Adjusted EBITDA for the quarter was $232 million compared to $218 million in the same period of the prior fiscal year.

The increase in adjusted EBITDA reflects the items to outline related to revenue and a lower than normal SDMA cost I also mentioned as well as incremental synergy realization of approximately $5 million in the quarter.

Net loss for the quarter was $43 million, resulting in a net loss of 13 cents per diluted share compared with a net loss of $100000 was zero cents per diluted unit for the second fiscal quarter of 20.

Adjusted net income was $104 million, resulting adjusted net income or 32 cents per diluted share compared with adjusted net income of $87 million or 27 cents per diluted unit for the second fiscal quarter of the prior year.

Adjusted net income reflects the increase in adjusted EBITDA as noted earlier as well as a benefit from lower interest expense as a result of the year over year reduction in our outstanding debt.

There were 321 million fully diluted shares outstanding in the second quarter fiscal 21, compared to 324 million fully diluted units in the same period of the prior fiscal year.

Now, let's take a look in more detail at the performance of our segments on slide eight.

Starting with revenue the software analytics segment declined by 4.9% year over year.

Our software analytics segment was essentially flat with the prior year after taking into account the 17 million dollar impact of the connected analytics divestiture.

Revenue in our subscription based solutions grew low single digits, which was offset with an approximately 10% decrease in a non subscription contingency based businesses, primarily in RCM and legacy imaging solutions due to cobot 90.

We continue to see momentum across the segment with increased pipeline activity in payment accuracy decision support risk adjustment.

Well as new wins in the cloud based enterprise imaging solution, which we believe bodes well for the remainder of fiscal 21 and fiscal 22.

Our network solutions revenue increased by 27.6% year over year, which includes $33 million in revenue from acquisitions. Thanks.

Excluding the impact of acquisitions network revenue grew 4.8% in the quarter.

Key drivers include growth from implementation of new customers and data solutions and B to b payments businesses, both growing mid to high teens.

We also benefited from increased market penetration and market expansion opportunities for our network, resulting from new solutions increased apiay driven volumes this offset volume headwinds of about 5% from Cove at 19.

In our technology enabled services segment overall revenue declined 6.2%.

We saw RCM services business exhibit a strong recovery all the revenue was still approximately 5% lower compared to pre cobot, 19, and 15% lower in the communication and print business.

RCM turnaround efforts remain on track and we continue to see positive trends in both RCM win rates and deal size.

Turning to adjusted EBITDA of software analytics increased 5.8% year over year.

Well continue to make investments to support our AI initiatives that enterprise imaging transformation, we were able to effectively manage our cost to offset the impact of COVID-19, and the sale of connected analytics.

Network solutions, adjusted EBITDA increased 18.8% in the quarter, driven primarily by underlying growth across the network and the acquisition of Trx and predicts.

Results also include our continued investment to support the significant number of new product launches and market expansion initiatives, we have underway.

In technology enabled services adjusted EBITDA declined 26.6% in the quarter, driven primarily by lower volumes related to COVID-19 in our RCM services in communication and print businesses.

To further support our RCM service transformation, we're implementing additional business optimization initiatives to strengthen the performance of the business I'll provide more details on this in a moment.

Moving on to cash flow and our balance sheet on slide nine.

Free cash flow for the quarter was $68 million compared to $77 million in the same period of the prior fiscal year.

Overall improved business performance and stronger working capital has increased our confidence in our full year cash flow outlook.

Adjusted free cash flow was $84 million compared to $113 million in the second fiscal quarter last year.

Our liquidity remains strong ending the quarter with over $167 million of cash and cash equivalents and $780 million in undrawn revolver capacity.

Total long term debt, including the short term portion net of cash at quarter end was slightly under $4.8 billion, which includes the repayment of $50 million in term loan facility obligations during the quarter.

Credit agreement net leverage ratio was 5.2 at quarter end.

Given the incremental improvement in working capital and our outlook for free cash flow for the year subsequent to the quarter end the company repaid an additional $75 million in term loan facility obligations.

Let's move to slide 10 for financial guidance for the third quarter, along with certain assumptions and supplemental information for the full fiscal year.

For the third fiscal quarter, we expect solutions revenue to be 725 million to $745 million, which includes the impact of the fair value adjustment related to the Mckesson exit which reduced reported revenue due to reduction in deferred revenue in the third quarter Bye.

$24 million.

Adjusted EBITDA to be 250 million to $235 million and adjusted earnings per share to be 28 to 33 cents per share.

Let me provide additional color by segment.

In software analytics, approximately 75% of the revenue is subscription for maintenance and is expected to grow in the low single digits, while 25% this contingency or renewal base, which is currently estimated to have a negative impact of about 5% in the third quarter.

$15 million impact on our revenue per quarter.

It just it EBITDA will also be impacted and exacerbated by the lag between revenue decline and related costs takeout related to this contract.

As part of our ongoing efforts to further improve our operating performance and test. We've started the implementation of an accelerated and enhance transformational program with a cost saving opportunity of approximately $60 million on a run rate basis.

This value creation over 24 month period would allow us to continue increasing customer innovation and shareholder value.

Increased investment in AI enabled automated workflows will deliver greater customer value through enhanced collections and accelerated cash flow. Additionally, we are focused on driving productivity and fixed cost efficiencies through further facilities operating and vendor optimization as well as inquiry.

Strategic global offshore partnerships of certain functions across our existing services portfolio.

Last let me provide you with some supplemental information and assumptions for full fiscal year 21.

First we continue to expect that healthcare realisation will gradually improve throughout the remainder of the fiscal year and there will be no material changes and covid related volume trends or procedure restrictions.

Second we are increasing our free cash flow assumption as I noted because of improved earnings outlook and working capital trends specifically collections. We now expect full year 21 free cash flow to be in the $250 million to $300 million right.

Incorporated in the improved free cash flow guidance is an assumption that capex as a percent of solutions revenue will be around seven 5% to 8% this year, whereas our prior guidance of around 7% of solutions revenue, excluding the impact of fair value adjustments and integration related capex in both cases.

The reason for the increase is due to the strong growth opportunities. We see ahead of us in the very temporary decline in revenue due to COVID-19 this year.

Integration related operating expenditures is estimated to be approximately $80 million and integration related capital expenditures approximately $20 million no change from the prior quarter.

As a result of a repayment of death, we now expect interest expense to be in the range of $245 million to $255 million for the fiscal year.

It just it effective tax rate of approximately 25% and basic and fully diluted shares outstanding will be about $321 million, which includes the minimum number of shares for the to use.

Now with that let me turn it back over to kneel for his closing comments.

Thank you Frederick.

To summarize we believe the combination of the positive reception to new solutions and growing demand from existing and new customers across our platform will enable us to deliver accelerated growth and improved performance.

Thanks for the dedication of the change health care team members, we continue to deliver innovation in value to our customers and the communities, we serve helping them navigate the current market environment and future opportunities to lower costs enhanced access and improve outcomes.

Thank you and we will now take questions.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question pressed the palanquin. Please stand by while we compiled Q&A roster.

Our first question will come from the line of John ran some with Raymond James.

Hi, good morning.

Is it fair to say that.

Just triangulating your comments that your market share and innovation when's are more pay or facing in the short term.

Oh, I think it's a balance between the two.

I think there's a lot of demand on the provider side, particularly perfect consumerism oriented solutions that we have and also where we have differentiation, particularly due to our data.

Hi elements that we're we're able to innovate on behalf of our customers, but as described are discussing what we've been doing in the payment accuracy space, including with coding you guys are in leveraging in network as well as the CLC wins I think we're seeing innovation across the board. It's just I think the increase in a track.

<unk> for consumerism oriented solutions and providers has been particularly dramatic rationally, obviously as we walk through the pandemic.

Great and my follow up would be.

If I look at your slide deck and look at the October.

Utilization numbers at 102%.

Archie shredding above.

What your initial guidance was in terms of recovery. So if if it continues to this level when you be when you get there a little faster than you initially said.

Well I think what you see there on the slide is the combination as we said in our prepared remarks between market share gauged of our medical network and underlying utilization. So we still think utilization levels. She's still at 5% are still below re covid level, but because of the games have received market share.

You can see on that slide that we're at 100% and that's reflective of.

Assistant with our guidance.

Gotcha.

Okay. Thank you.

The next question will come from the line of least again with J P. Morgan.

Hi, it's any Samuel on for Lisa you spoke to the software and analytic subscription business upload singles I was just wondering you know is there any hope of disruption that you're seeing within that segment around purchasing and how quickly can that segment ramp up to your longer term target of mid single digits.

Well I think actually we're beginning to see the ramp but as we described in Frederick was talking about our expectations for Q3, they're still of lag to some degree from early in the year around implementations and just catching up with what would be as you describe the more normal level I don't think we're saying maybe it's much disruption.

As others may be feeling but that's in part because you know our solutions really focus on pretty directly either increasing people's revenues are reducing their costs are a combination of both so I think even in some of the healthcare systems that are concerned about the impact.

Of either demand or some of the complexities of handling Covid. This winter look at their future financial performance, where particularly well positioned to help them out with our solution just because of the nature of how they help our customers.

That's really helpful. Thank you and I you know I was just wondering if maybe you could provide a little bit more calling the cost savings initiatives that you announced what title is that just how should we think about the cadence of of one that will come to the piano.

Yeah, and so the way you should think about that is really we started that process. There's obviously ongoing productivity savings right now as well, but really what we expect to see basically the beginning of our fiscal year of FY 22, and 24 months. Following is how we measure the $60 million that is this an enhanced.

And it's coming across the gamut of things that we're doing between AI enabled workflow solutions, that's going to improve the collections. There's automation initiatives. There is increased opportunities to offshoring, there's consolidation of some benders and also some facilities savings. So it's across the board to drive not only a lower cost struck.

Sure for us, but also better customer value.

For our test customers.

And I really think about your you know kind of six 8% longer term marching glad target is this incremental to that.

We continue to see utilization gradually increasing and getting back to what we consider a normal level.

Our next fiscal year towards in the spring period, and I think if there are some disruptions as we're seeing in some locations we've accommodated that in our guidance and we're able to do so again, because it's sort of breadth and balance of our business.

Got it. Thanks, that's helpful and then thinking about the eventual approval of a common vaccine I guess would you anticipate that covert vaccine distribution would connect your network and would revenue from a basket vaccination in the U.S. population moved the needle for you.

Yes, I think any time as you know there's more activity in the U.S. health care system because of the nature of our solutions were able to benefit from that and of course as you know with the purchase of the Rx network in Pdx, we've established a very strong position in the pharmacy market and again I'm sure you're aware the pharmacies in pharma.

To see companies are going to have probably a particularly important role has already been mentioned in the press regarding vaccine distribution as well as if you want to call. It the traditional healthcare system. So I think you know given the breadth of what we provide including across the pharmacy segment, we would expect that to be beneficial to our company, but again in the.

In the midst of a 3.6 trillion dollar us health care system, we have to look at all of these activities as having a measured impact.

Excellent Thanks, a lot.

Thank you.

Our next question comes from the line of Daniel gross light with Citi.

Hi, guys congrats on the strong quarter here.

Going.

The deeper into the SNA a this quarter.

You know if I adjust for some of that onetime 15 million dollar benefit in a takeout connected analytics. It looks like adjusted EBITDA grew around 6 million Bucks, whereas revenue fell slightly around 1.4. According to my estimates can you can you spike.

Got a little what exactly drove the strong EBITDA result in in essence, they apart from a portion of that $15 million onetime benefit.

Yes, I mean, I think every quarter has a few different items I can't point to anything specifically you are right that obviously, the 50 million and is after they have we've said that probably good to allocate the 15 based on revenue.

And then on top of that and this would therefore SNA gets a pretty big portion of that $50 million and on top of that there was continued cost initiatives that our team they're executing on which is great to see and so this quarter was a little bit more favorable perhaps than what you would indicate the run rate to be overtime, but that happens from.

On time, so there was nothing specific or one time in nature that drove that it was just very good very good quarter and well executed by the team.

Got it Okay and I think you've previously said that you expect the fourth quarter to be essentially flat from last year. When you take into account some of the deferred impact any any M&A.

No I think just the core again going into my estimates that implies sort of a high single.

Single digit sequential growth over Threeq, you, where do you anticipate that growth come in from apart from the return of normalization I encoded.

Yes.

It's obviously, we were living this strange world quarter by quarter at the moment, which is why we give the third quarter guidance, but you're right. I've said this in the past and I don't think anything has fundamentally changed with our fourth quarter.

Except perhaps a little bit more visibility a little bit more certainty to it and we would expect in the fourth quarter that between the third and fourth we probably would have the same sort of picked up year over year in revenue as we did last year we.

We probably the mix of business might be a little bit different.

At that point and clearly we're going to be fighting the impact of the RCM customer that is leaving us.

In in that quarter as well in the end the delay of being able to take the cost out, but I think overall, you're going to see broad based growth sequentially from between the third and the fourth as we said before that but thats more consistently well consistent with what you've seen prior year and in addition to that of course, the kind of the continued normalization that we expect right now.

In our underlying business as we go through the rest of the fiscal year.

And the next question comes when assessing Davis with Sep.

Hey, guys, taking my question congrats on the quarter.

First one for me I've noticed a very high margin flow through here, we can be.

As there has been increasing ability to serve including new and fast growing customers like the tele health companies, particularly through the Apiay growth that we've seen from the investments we've made there over the last year as well.

Maybe a quick follow up kind of the definition dimension like the patient experience.

How are you differentiating your solution with.

The broad set of data that you have compared to a lot of the existing player market.

Sure well, Sean a couple of things one.

This is a customer that actually.

Even though they decided to insource part of the services they do with us because they believe they had reached a scale that they felt that this was something they wanted to handle themselves its been a very orderly and as Frederic mentioned in terms of us.

And I think one of the reasons for your question that we continue to do well in that business because.

Payors are beginning not beginning, but particularly appreciative of people who have been ahead of the curve on this particularly our use of AI to link claims and encounter data upfront and not be as reliant on coating for understanding how to optimize the revenue that's appropriately.

Appropriately earned by the payers any circumstances. So I think it's a good example of the underlying complexity thats not always appreciated in these areas. Then why frankly, we have to invest ahead of the curve in a <unk> models and other mechanisms in order to make sure we serve our customers as their needs get more complicated and more expensive.

Okay. Thank you very much.

Thank you.

And our next question comes from Leerink, Sandy Draper liquid security.

Okay.

Thanks, very much and good morning first question just on the acquisitions I Didnt hear you say it Frederic <unk> is there any materiality to the revenue contribution.

In these deals.

In terms of nucleus.

I would just say from a slow perspective, it was certainly even more rapid on the physician side.

And now are seeing that begin to equal out as I think the healthcare system. As we described while not probably at full utilization that we otherwise would have seen pre cove. It is in the 90% to 95%.

Percent level, so I think thats, what weve seen in terms of a coded claims we have indeed seen in the daily reporting that Frederic Enine hundred senior executives of the company get an increase in coated claims that you would expect given the number of cases inpatient admissions that have been reported I think it's frankly unfortunately.

Turning to trend not dissimilar to what we saw back in the spring, but I think its Ben again reported by many people hopefully with a lot less.

Four hours and U S health care, we have over 5000 digital health companies that were accessing in order to increase the growth of all our businesses, but you know in particular are network business because of the connectivity that virtually all those companies need and again the investment we've made our enterprise sales and marketing or.

Online investments in digital marketing E commerce, the growth I pointed out in our API marketplace are really indicative of not only our innovation, but our ability to access new and you know given the pandemic very fast growing in some cases, you know versus pre pandemic customers, which is real advantage for us in the market.

Our continued and even accelerating productivity initiatives and really the demonstration is fredrick was just mentioning the strength of this very balanced and diversified business, which makes it so important to our customers, but also hopefully continue to track that to investors as well. So thanks to all of you for joining us today.

This does conclude today's conference call. We thank you for your participation and ask that you. Please disconnect your line.

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