Q4 2020 MTBC Inc Earnings Call
[music].
The formal presentation.
If anyone should require operator assistance during the conference. Please press star zero and your telephone keypad.
A reminder, this conference is being recorded I would now.
Now I'd like to turn the conference over to your host Kimberly.
Thank you and good morning, everyone and welcome to the MTBC fourth quarter, 'twenty and 'twenty Conference call.
On todays call are Mahmud Haq, our founder and executive Chairman.
Stephen Snyder, our Chief Executive Officer, and a director.
Hey, Howdy, Childree, our president and a director.
And Bill Korn, our Chief Financial Officer.
Also joining us today are Carl Johnson, our chief growth Officer, and Juan Molina Divisional President.
Before we begin I would like to remind you that certain statements made during this conference call are forward looking statements within the meaning of section 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities Act of 1934 as amended also.
Statements other than statements of historical fact made during this conference call are forward looking statements, including without limitation statements regarding our expectations and guidance for future financial and operational performance and expected growth.
And this outlook and potential organic growth and acquisition.
Forward looking statements may sometimes be identified with words, such as will May expect plan anticipate upcoming believe estimate or similar terminology and the negative and lease term.
Forward looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward looking statements.
These statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise these forward looking statements in light of new information or future events.
Please refer to our press release and our reports filed with the Securities and Exchange Commission, where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward looking statements.
For anyone who dialed into the call by telephone you may want to download our fourth quarter 2020 earnings presentation. Please visit our Investor Relations site, IR Dot MTBC dot com and click on events and download the earnings presentation.
Finally on today's call, we may refer to certain non-GAAP financial measures.
Please refer to today's press release announcing our fourth quarter 2020 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results.
And with that said I'll now turn the call over to the Chief Executive Officer of MTBC, Stephen Snyder Steve.
Thank you Kim and.
And thank you everyone for joining us on our fourth quarter, 'twenty and 'twenty earnings call.
We are pleased to report another record breaking quarter and year.
As we have remained focused on empowering health care providers and health systems with our technology enabled solutions, we have continued to accelerate our growth.
For the fourth quarter. We are pleased to report revenue of $32 million. This is a new record and represents an increase of 103% year over year.
And our full year 'twenty and 'twenty revenue of $105 1 million also represents a new high and an increase of 63% over full year 2019.
Quarter, four and full year 'twenty and 'twenty. We're also breakout periods for us in terms of adjusted EBITDA.
As we have accelerated the velocity of our revenue growth. We have also increased our quarterly adjusted EBITDA.
A record number.
And of $5.7 million during the quarter, which surpasses our prior quarterly record of $4 $2 million.
We grew our adjusted EBITDA during the fourth quarter by 105% year over year.
As to full year adjusted EBITDA. We are also pleased to report a record of $10 $9 million.
Our record financial results were driven by successes on a variety of key fronts.
First.
As to our base business, we were able to meet.
And the unique needs of our clients during an extraordinary year, and which the pandemic pressure tested health care practices and systems our.
And our clients responded by granting us our strongest year yet.
As a public company in terms of retention and others increased their commitment by option to expand their use of our solutions.
Second.
Our acquisitive growth strategy and reach new Heights and success.
And so our first acquisition in 2006, we have now acquired more than 20 companies and 2020 represented our most transformative year yet in terms of acquisitions as we acquired care cloud and Meridian.
Both acquisitions have enabled us to add scale.
Scale further strength in our product portfolio and grow our customer base further they have provided us with additional key team members, who are contributing to our growth as they play important roles in terms of operations R&D organic growth patient support customer success and many other key areas.
They've helped to make us even stronger as a company and more capable of achieving our objectives.
Third our increased investment and sales and marketing and.
And bind with our expanded solution set helped accelerate growth.
During 2020, we increased our year over year investment sales and marketing from approximately $1 $5 million and 2019 to approximately $6 $5 million. During 2020, and we were pleased to see that each dollar invested yielded on average $2 of bookings measured in terms of vans.
Recurring revenues.
We believe we are well positioned to continue accelerating our organic growth and the year to come and believe that this will continue to be a cost effective way to enable our growth. In addition to our robust acquisition strategy.
With the backdrop of this historic year, let me shift gears for a moment to briefly previewed something else. We're very excited about name.
Namely our upcoming rebranding or brand merger.
Since our founding 20 years ago, we have embraced our commitment to innovation and a focus on developing powerful and intuitive cloud based solutions to help our health care customers streamline clinical and business workflows, while at the same time optimizing revenue and reducing operating costs, our first generation components of the class.
<unk> platform are launched and 2003.
Since then our platform has evolved significantly and grown to include multiple cloud based electronic Health Records practice management revenue cycle and patient experienced management solutions together with business intelligence and much more.
During the last two decades, our cloud based tools have been increasingly leverage by providers across the United States and manage their practices and deliver care to millions of patients.
In view of our legacy of innovation and continued strategic focus on empowering health care providers with powerful and intuitive cloud based solutions today as it is my pleasure to pre announce that effective March 29, 2021, our company's new name will be care Cloud Inc.
This change will reinforce our unified brand and help further enable a seamless client experience. We look forward to officially announcing this change over the next week.
I'll now turn the floor over to Hardy Hardy.
Thank you Steve.
And thank you everyone for joining us and have a fourth quarter 2020 earnings call.
And what I begin I would like to first and foremost and reiterate how excited I am about this rebranding and what it means for the future of the company.
As I think about this name change two key components come to mind.
First as Steve mentioned is that embedded represents who we have become today and the market and how we are positioned to continue and to help other customers in the future.
And second it gives us a better foundation to create a more unified customer experience and positions of our products and services more strategically under a more streamlined go to market approach.
As always we wanted to provide you a quick update on the transition work across our latest acquisitions 2020 was a momentous year for us and it brought us two incredibly important acquisitions kicked out and Meridian medical management.
While these acquisitions would have been two largest ever. They also played a strategic role in the evolution of our growth company overall more on debt and a minute.
In terms of our transition work, we continued to make great progress as evidenced by the record year, we had in 2020.
As we have stated in the past both the cash cloud and Meridian Medical management acquisitions are now accretive.
Our teams have made great progress as we are focused on leveraging of our proven integration strategy and to.
Loans of new Indian we have transition substantially all of the expenses third party contractors and offshore business process outsourcing onto Mtbc's our scale operation.
And this has resulted in significant margin expansions and produced a and overall operating expenses by 17% and fourth quarter and 24% since the acquisition this summer.
With regards to their care total debt position over the last year, we continued to optimize spend and were able to improve overall operating cost by more than 50% per 2020.
And it's hard work and dedication by all of our team members has enabled us to achieve record revenue and adjusted EBITDA. In 2020. This again represents and the annual rate increases of 63% and 34% respectively.
Nearing 2021, we expect to grow our revenue by 27% to 30% with guidance of 133 million to $137 million.
We expect to generate between $22 million and 25 million of adjusted EBITDA, which would represent growth of 102% to 130%.
We believe our rate of revenue growth is a strong differentiator and the market and we expect 2021 to be another record year.
As I mentioned on our last call, we have seen great opportunities for scale across several functional areas, including over operations professional services client success and R&D teams.
And we look forward to continuing to work with our global team as we forged ahead in 2021.
And 2021 and expect that we will continue to be disciplined with our operating cost, but no two and that would be and excited about of our global teams expansion and support of our ever growing customer base.
And this growing customer base, we believe will be fueled by our continued focus on organic sales coupled with over a patient and disciplined approach to acquisitions and the market and further and we believe that the current cloud brain gives us a much stronger foundation to accelerate our growth strategy.
Turning to our robust solutions as I and as I said earlier, the carrier cloud and Meridian acquisitions were significant as they brought us a much broader set of products and services that we could go to market, but we have now zone of and overall value proposition extensively and.
And the main categories of products, we offer from revenue cycle management practice management software and electronic Health Records to now include industry, leading healthcare business intelligence tools, and precision and beyond and award winning patient experience management platform, and Greece and incredibly exciting.
Opportunities ahead, with a robotic process automation and bars just to name a few.
MTBC soon to be carrier cloud and did not only introduce new solutions and other product and services portfolio and an incredible group of talented individuals but through these acquisitions. We also view our total addressable market by being able to more effectively go after different market segments and both.
The ambulatory and health systems space.
Today, we find over sales and are positioned to be a trusted partner to help customers succeed in this ever changing market, we offer not only the software products total clients require but the services they need to continue to drive their businesses.
For these reasons, we have continued to increase our sales velocity, including more than doubling over sales looking year over year to over organic growth engine.
And while increasing sales in 2020, we are also extremely pleased that over this last year, we were able to achieve one of the best customer retention rates, we have ever had and.
All of this despite of the pandemic and why we foresee even more growth opportunities and customer expansion over the next several years.
And we truly believe net beyond now more than ever and are positioned to offer and one of the industry's most comprehensive suite of cloud based solutions and business services, including mobile unique MTBC force on demand and workforce capabilities positioning us as a truly differentiated market leader.
As part of this rebranding exercise of immediate go to market approach with largely remains the same as other products and services, while continuing to serve complementary go to market.
Others are more suited to different segments, and specialties and both ambulatory and health systems space.
However, with an eye towards of our customers. We plan on continuing to unify over solutions over time and work diligently and crafting a more streamlined and seamless client experience.
We are excited about this new direction and what it will mean per customer prospects of growth.
Tons and how it defines the role we play as we continue to innovate over time.
And we look forward to keeping you updated on our progress and sharing with you. Some exciting innovations we have one day horizon and providing specific details about Av and overall product strategy over the months ahead.
Before I turn the before I turn the floor over to Bill I would like to personally thank all of and employees for their incredible dedication and hard work of our future is bright and I will now turn the Florida over to over Chief Financial Officer Bill card Bill.
Thank you Heidi.
2020 was a challenging year for most of the world. So I'm excited to tell you that it was a year of record breaking performance for MTBC.
As Steven mentioned.
Our revenue for the full year of 2020 was a record $105 $1 million and increase of 63% compared to $64 4 million in 2019.
And was in the upper half of our guidance range of $104 million to $106 million.
Revenue has grown at a compound annual rate of 39% per year.
Mtbc's IPO and a $10 million revenue run rate in 2014.
While the largest portion of our 2020 revenue growth is attributable to the care cloud and meridian and acquisitions.
2020 was also our best year ever for organic sales with bookings that are expected to generate annual recurring revenues equal to more than 20% of our 2019 revenue.
Organic bookings actually contributed 9% revenue growth in 2020 from a combination of new organic customers and <unk>.
Growth and revenue from existing customers.
For the full year 2020, our GAAP net loss was $8 8 million or $1 79 per share, which included $9 9 million and noncash depreciation and amortization expense.
And $6 5 million and stock based compensation expense.
GAAP net loss per share is based on net loss attributable to common shareholders, which takes into account the preferred stock dividends declared during the year.
Non-GAAP adjusted net income for 2020 was $8 5 million or <unk> 63 per share and improvement of $1 $7 million compared to last year and a new record.
Non-GAAP adjusted net income per share is calculated using the end of period common shares outstanding.
Adjusted EBITDA for the full year of 2020 increased 34% to a record $10 9 million.
As compared to $8 $1 million and 2019.
Adjusted EBITDA was within our $10 million to $12 million guidance range.
Adjusted EBITDA excludes $9 9 million and noncash depreciation and amortization expense $6 5 million and stock based compensation expense and $2 7 million of integration and transaction costs related to recent acquisitions.
As we continue to scale our business through both organic and strategic means such as the carrier cloud and Maria and acquisitions.
We are able to spread our fixed expenses over a larger revenue base and generate larger adjusted EBITDA and adjusted net income and we ever have before.
Turning to the fourth quarter.
Our revenue and fourth quarter was $32 million, which was double the revenue and the corresponding quarter of 2019.
We saw a small decline and patient volumes due to COVID-19 during the latter part of the fourth quarter.
The decline averaged approximately 5% of historic levels, which was much less significant than we saw during second quarter of 2020.
Fourth quarter GAAP operating income was $410000 and non-GAAP adjusted operating income for the fourth quarter was $5 1 million or 16% of revenue, which was a new record for MTBC.
Fourth quarter 2020, adjusted operating income represents an improvement of $1 $5 million from adjusted operating income and third quarter 2020.
And double the adjusted operating income and fourth quarter 2019.
Our fourth quarter 2020, GAAP net income was $154000 as compared to net income of $332000 and the same period last year.
GAAP net income was positive.
By $3 million of noncash depreciation and amortization expenses and $1 $6 billion to stock based compensation expense.
Non-GAAP adjusted net income for fourth quarter, 2020 was $4 9 million or.
Or <unk> 37 per share why more and new record.
On a fully diluted basis non-GAAP adjusted diluted earnings per share for.
2009 sets.
Adjusted earnings per share are computed using and day period shares outstanding and adjusted diluted earnings per share.
Includes common shares issuable upon exercise of in the money warrants investing of outstanding restricted stock units.
Adjusted EBITDA for fourth quarter, 2020 was $5 7 million or 18% of revenue against $2 8 million and the same period last year.
And our final new record.
Fourth quarter 2020 cash.
Cash flow provided by operations was $3 4 million.
Here's an update to a slide I showed last quarter and response to investor questions about what type of margins they should expect us to generate.
Looking at our annual results isn't very helpful. Because we regularly by additional businesses and these businesses typically depress profits for up to four quarters as we wring out costs.
The better way is to look at our quarterly results and to look and the segment note of our 10-K or 10-Q. So you can focus on the healthcare it segment, which excludes $12 million practice management business.
Our gross margin was 43% during Q4 and increase of four percentage points from Q3.
We reported gross margins of up to 50% and the past, but each time, we do a major acquisition our margins take a hit until we eliminate duplicative and unnecessary costs.
And would expect to see our gross margins returned to 45% to 50% over the next few quarters.
And unless we consummate and other large acquisition.
That's because more than half of our revenue is either pure software as a service or a bundled fee, including SaaS as well as revenue cycle management.
Our adjusted EBITDA margin is a good estimate of our overall profitability and cash flow from operations and.
Adjusted EBITDA for our healthcare it business was 22% during Q4.
Up six percentage points from Q3 and up 18 points from Q2.
It was 25% in Q4 2019, before our acquisitions of care cloud and Meridian.
We have already taken many steps, which will continue to increase our margins throughout 2021 zone.
Turning to 25% or more during 2021 is very realistic.
As of December 31, 2020, we had approximately $29 million of cash with nothing drawn on our $10 million Silicon Valley Bank line of credit.
And we had positive working capital defined as current assets less current liabilities of approximately $16 million.
In addition to our common stock will you also have the series a preferred stock, which trades on the NASDAQ level market under the ticker MTBC P.
Our preferred stock pays monthly cash dividends at the rate of 11% per annum and while it is perpetual it can be redeemed at our option at $25 per share.
We paid 63 consecutive monthly dividends.
During 2020, we raised net proceeds of $44 5 million by issuing $1 9 million shares of our Nonconvertible series a preferred stock some of which was later used for acquisitions of care cloud and meridian.
I'd like to close by talking about our forward looking guidance for the fiscal year ending December 31 2021.
As already mentioned we.
Anticipate full year 2021 revenue of approximately $133 million to $137 million.
Presents growth of 27% to 30% over 2010 revenue.
And implies a compounded annual growth rate from 2017 through 2021 of approximately 44%.
This will be our fifth consecutive year with anticipated annual revenue growth of 25% or more.
Which is a record few public companies have been able to achieve.
Revenue guidance is based on our expectations regarding revenue from existing clients recent acquisitions and new clients acquired through organic growth agile tuck ins.
But excludes the effects of any additional material acquisitions.
Our adjusted EBITDA is expected to be 22% to $25 million for full year 2021.
Growth of 102% to 130% over 2020 adjusted EBITDA as we continue to reduce expenses from the carrier cloud and Meridian acquisitions completed during 2020.
I'll now turn the floor over to our chairman Mahmud for his concluding comments.
Thank you Bill while 22, and he has been a challenging year for the world.
We are fortunate to be in our strongest position ever.
As we generated another record breaking growth with increased profitability.
We thank our investors customers and employees for their continued support.
We will now open the call to questions.
Operator.
At this time and will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad copper.
A confirmation tone will indicate your line is and the question queue.
And the press star two if you'd like to remove your question from the queue.
And participants using speaker equipment and may be necessary to pick up your headset for question and I'll start Keith.
And good time constraints all participants are limited to two questions at a time.
One moment, please while we poll for questions.
And our first question is from Jeffrey Cohen with Ladenburg Thalmann.
Hello, Good morning.
Steve Hardy and Bill can you hear me okay.
Yes, we can and yes, good morning day.
Wonderful.
Taking my question. So just a couple so could you talk a little bit about more specific areas of growth over the past year and going forward as far as.
Revenue cycle management practice management electronic Health Records, just relative to the issue of course, where you see strength or possible weakness and.
Organically, where would you expect.
And there has to grow during 2021.
And.
Okay.
Thanks for the question, Jeff and we also with US Karl Johnsen, who is our new chief growth officer. So.
Maybe Karl I'll invite you to jump in as well, but if we just step back for a moment, Jeff and think about the last couple of years and we think about the investment from a sales from an organic sales and marketing perspective that we made in 2019 of about a million and half dollars.
And then we increased that in 2020 to about $6 $5 million and this year. Our plan is to increase that investment by another 40% to 60% and what we've been managing to is our CAC and the neighborhood of about $1 of investment for every $2 of recurring revenue.
Bookings and and.
That's the number that we think is extremely compelling and if we can continue to achieve that we will continue to invest further debt investment during last year as Bill had mentioned really enabled us to significantly accelerate our organic growth.
Much of that organic growth came from Upselling, probably about a quarter of that organic growth from a bookings perspective came from up selling our existing base and acquired base.
Primarily upselling to revenue cycle management.
And other part of that came from Standalone SaaS solutions.
And then additional amounts of that came from MTBC force and from other bundled solutions, where focus now in particular on ramping up our large group and enterprise and enterprise sales group and that's a newer area of focus for us, but we believe as we look to.
The year ahead that something close to 50% of our overall wins, we believe will come from those larger groups and force deals and let me turn the floor over to Karl to provide a little bit more color.
Thank you Stephen and that is an excellent question.
As Steve mentioned, managing net customer acquisition cost is critically important to us, particularly.
Particularly pleased.
We're at a two to one ratio of 201 recurring revenue to cost.
That's very different and the industry standard most of our competitors or more and a one to one rig and.
How do we do that I.
I think the one of the real tools that we have is the ability to use global resources.
And we've expanded our global team that's doing sales.
And to make up nearly one third of our sales team of over 50 individuals.
What we're doing with those teams as we are using them to support the onshore salesman.
Two really have them working at the top of their skill sets and those offshore resources, where it tends to cost of a person onshore.
It's really kind of the same play and as we're doing and revenue cycle management and software development using the right people and the right places.
So what are these sales come from and I.
I think I would also like to state that I'm confident that our sales and marketing plan that we put together for 2021 will result.
Doubling of our organic growth rate by Q4 of 'twenty, one and so we're very excited about that prospect.
I think what's different today than it was a year or two ago is we really have a lot more options to present two prospects, we have multiple software platforms between coffee HR and care cloud.
We have revenue cycle management services that are provided by our direct employees.
The ability now to work on what I call host RCM system. So if somebody is on a software platform. They don't want to change, but they need help and revenue cycle work.
And connect them there through the creation of course, we can provide ftes.
And the forces then go ahead and gang Busters. So great question and thank you [laughter]. Okay. Thanks Crown and just secondly for me could you talk about so should we be thinking about the business as far as the the number of users and the increase and the number of users.
Uhm or should we thinking more toward the large groups and enterprise and as well as perhaps the D T D business and director Docs.
For smaller practices. Thanks that does it for me and thanks guys.
Thanks and.
And for that question. It really is kind of all day. So we are looking to enhance our marketing activities to go directly with campaigns to smaller group practices and continue to grow that segment, we're not abandoned and that but also at the same time with our new tool sets to go after large group practices and hope that <unk>.
With your question.
Perfect. Thanks very much.
And our next question is from Mark Weisenberger with B Riley Securities.
Yeah, Good morning, and thanks for taking my question and your 2020th guide and you're talking about let's say roughly 28 per cent year over year growth and what.
Like about 13 million and might be coming from the E R or derived and 2020, which leaves still navy and other $17 million of unemployed growth and I'm wondering if you could talk about where you expect that to come from.
Sure. Thanks for the for the question Mark So yeah growth is coming from a from a couple of different angles. Yeah. So so one of the things that happens is and we sign up clients and 2020 and even if they go alive during 2002.
20, and sometimes they're not fully alive and they're off and not fully live for the whole 12 months. So you get you to see to see a full year's worth of revenue.
And then you get some growth and are you from the clients, we sign up and nine and 2021 and.
No I think that that right now we're seeing that that that volume as a patient visits are probably about five percentage depressed from where they were sort of a year two years three years ago, So to steady state on a on a per doctor basis.
And it's our expectation, although we don't have a crystal ball.
That that some of that is gonna go away as the year progresses, certainly not and the and the first or second quarter, but maybe as we get to the second half of course some of that decline you know.
Kids and not playing close to either kids are wearing a mask and not picking up calls you know maybe that piece of the decline doesn't doesn't come back.
And you know finally, when we when we were given our expectation yeah, we've excluded major acquisitions.
But we always reserve the right to to do some minor tuck ins during the year to the extent that we see a business and it looks attractive that can be acquired it yeah and a good rate it may not be big and material in terms of strategic importance like a care cloud and meridian, but look at that as sort of wholesale customer acquisition that that gets at.
Added to to the the work that's done by our our great sales and marketing team.
Understood. Thanks, and then can you talk about where you are in terms of the costs rationalizations from Meridian I think that had been below kind of your your trend the levels and.
I'm wondering if those are back on and kind of the normalized track and and how much we more and cost cutting we should expect from there going forward.
Yeah. Good good question, so yeah with with Meridian, I'd say, the cross cutting with a little different and then most acquisitions because of the fact that and and 2019 long before we bought them. They brought on new management and they were focused on try and who had to return to to profit.
Stability, so I'd say the the good news is they embarked on the on the beginnings of cross cutting even before before we bought them. So in fact, the and when when somebody has started and reducing crossed and there isn't quite as much room, but but nonetheless, I would I would say that yes. We are we are on track. We are we're doing a good job and.
Reducing the cost and we also recognize that that meridian.
On average brought bigger clients and in some cases with big Big Hospital systems, There's some cracks contractual obligations to do work onshore or do you have to do things and a particular way and that means we we need to be sensitive to that and you know and and not when the and.
And when the skirmish on and the cost reductions, but lose the war in terms of losing the the client, but I'd say the the cost reductions. There are are very much on track with with our expectations.
Great and then just one one final and for me can you talk about the the cadence of activity and 2021 and are you anticipating any changes to the the normal seasonality of the business and and maybe there's some pent up demand from kind of delayed services and 2020 that that might alter.
Kind of the the normal cadence that we see thank you.
Our normal cadence is that the Q1 for us and and for everybody. In this industry Q1 is always a cyclical low lots of people have deductibles and their health care plan. So when they see the doctor and Q1, even when the the claim is is within the bounds.
Insurance doesn't pay anything and then you wait for the for the patient to pay and sometimes they pay a little slowly and sometimes and.
And they pay very slowly so I guess I'd say, you know and sort of a typical year you see five per cent decline and Q1 and and I remember Jonathan Bush answer and that question and I don't know five seven years ago, and Athena and it it.
For for Us as well.
So I think you're going to see the same thing and and in 2021, but.
But I also think that you know as a as a country, we're sort of facing some of these headwinds from.
Partly from Covid and partly from the second order effective COVID-19.
And I mean pediatric visits her down a lot.
And and if and if half the Pediatrician's patient volume is either the result of colds or the sort of the second daughter effects of the calls like the the ear infections and the and the exasperation of asthma, yeah. If it gives not sick, it's not they're they're not sick and you're not going to see that so I expect you're going to see you know probably a.
Little more back and loading to the to the revenue cadence and 2021 and we usually see.
Alright, Thank you very much.
And our next question is from Al and Queen with Max and group.
Yes, good morning could could you tell us what the bookings were in the fourth quarter and.
<unk> had a comment that you and.
And did did I hear you say that whatever that number is it could potentially be double that by four two of of 21. Thank you.
Oh and thanks for the question and we don't.
Released publicly on a granular basis quarter by quarter bookings numbers, but I can tell you for full year total bookings, where approximately $15 million and Carl had mentioned that we continue as we invest and that growth continued to be manager managing towards that CAC of rough.
We signing $2 worth of recurring revenue for every one dollar invested.
So if we invest another 40 to 60 per cent and sales and marketing this year, we'd anticipate all things being equal being able to likewise increase the overall bookings accordingly, and candle, if we're able to to really be able to invest and see a return on the investment in.
That and that area will continue to increase that investment as the your progresses. So I think if you think about.
15 million for the full year and if we break that down and we look at what was that on average per quarter as we're ramping up the sales and marketing team during 2023, and a half to $4 million on average per quarter, and if we think about where we hope to be by.
The fourth quarter of 2021, and we think based upon our investment and the trajectory and speed that we anticipate in terms of the ramp up of the the newly hired a sales team members and been added to our existing team. We do think it's realistic that we could be closing by the fourth quarter.
At a rate of twice that average from 2020.
Okay, Great and just so I understand and when you say you want to increase 40% to 60% and you're talking about your sales and marketing spend.
That's correct yeah, approximately so if we think about the baseline from 2020, having invested about six and a half million dollars, roughly and sales and marketing during twenty-twenty, which.
So far surpassed the million and a half that we invested the prior year and you think about 2021, and we anticipate taking that six and a half million dollars of investment and increasing that by 40 to 60 per cent based upon the results that we see that we're getting as your progressive and.
Uhm and we'd be very excited to see that sort of resolve because we really contrast that to the market norms, which we believe are roughly one dollar of investment yielding one dollar or less of recurring revenue and SAS and fast enabled tech enabled.
Service company like an hour or so we'd be very excited to see that sort of investment and we believe it's achievable and the the year is a progressive will tell us whether work correct or incorrect I suppose but even if even if we are wildly successful in terms of that overall strategy and the rich.
And on that investment, we still look at our historical growth our current growth and our future growth and continue to believe that the majority of that growth in the future just as in the past will really come through clearing customers through wholesale through these acquisitions and <unk>, that's really really believe we have.
Uhm, a strategic advantage visa visa competition because of our experience and the technology. We have built that facilitates that and the significant fragmentation does exist and the market. We believe we can add real value and we believe that that's the the most attractive way to continue to grow and scale and that the majority of that growth.
We'll continue to come from that strategy.
Mmm great. Thank you so much.
Thank you.
And then our next question is what your boundaries and walk capital.
Thanks, and given and how efficient you know that sales and marketing or Roy is does that create and sort of a natural cap on what you'd be willing to pay and and M&A situation and.
It seems like as those multiples would expand those dollar had naturally sort of look more attractive built into organic gross and I'm, sorry curious if you've done that breakeven point or even a ballpark that process around and maybe multiples to revenue succeed per.
And which thanks for the question is a great question and if we think about historically the costs for acquiring customer relationships for MTBC has been somewhere in the neighborhood of 0.5 0.7 times the the sales.
Associate it with our customers in good standing and if we look at some of the other acquisitions that we've done more recently care cloud and meridian, you'll see that overall costs as a percentage of revenue was a bit higher but that's really was higher because in addition to the the revenue base and the customers that weird.
Acquired we're also acquiring additions to our product portfolio in terms of those digital assets and also a brand equity that came with those larger acquisition. So.
Back to your question. If we can continue at a CAC of about one dollar invested yielding $2 a recurring revenue why not solely focus on that if in fact, it's going to be slightly more expensive to acquire those relationships and some scenarios and acquisitions I think the answer that would be.
And when we look at it there's another element at play and that's scale how quickly can we scale and the reality is from and and organic growth perspective, there's just a more natural limiting factor that applies and that model that we can essentially override or we can accelerate or.
And we can bypass through a combination of.
Both organic growth and also through acquisitions and in terms of the acquisitions day. They continue to be a very cost efficient way far more cost efficient and.
And the the norms and the market in terms of customer acquisition gives us the ability to quickly scale and also we're uniquely capable by virtue of our experience and our technology and the processes, we've home and over the last two decades to be able to grow effectively through these acquisitions.
And in terms of the pipeline for acquisition sort of curious how cold it has impacted that <unk>.
<unk> historically people would've looked at things like patient visits is a pretty steady easy to plan, maybe easier to execute market given COVID-19 challenges and disruptions people might have seen day is that created more opportunities where people are more willing to either look at partnering with that maybe M. T V.
[laughter] force or outright.
Willingness to look at selling the company at a fair price because of the disruption obscene and sort of less appetite to face those battles again going forward. Thanks.
Which I would say at virtually every year for the last five or six years, our pipeline has grown year over year and and I would say that continues to be the case today part of it.
Could very well be COVID-19, but it's also it also candidly it is consistent with the overall trend.
Great. Thanks.
Thank you.
And our next question is from June Manheimer with Dark Green Okay.
Thanks, Good morning, and congrats on the strong finished 2020.
Guys I wanted to ask a couple of things one is as your revenue profile has gotten so much bigger how how is the rate of natural attrition and in the business changed over that time.
Thanks, and and thanks for the question <unk> This is Harvey and a.
Good question.
And our industrial and we haven't been talking about before was debt typically any number around 12 and 13%.
Expiration due to a number of factors and this or see them and dress industry considered to be and acceptable number because of the merger because of the practices be marked by other larger groups and integration and so and so on and many times. It are they are and practices. Let me I ended up finding some other solutions and.
And so and so on.
But businesses.
Even two years back Beaver retaining about the same 87 and kind of the number in terms of the patient retention and and this year, we're even slightly below 10 per cent numbers of putting this year 2020, and we anticipate to even improve that number further and the and the.
To come and so we're happy to report that and even even we were able to so pass over even on expectations.
Oh, that's really great hottie. Thank you.
I'm good.
Good good trends there and.
How about with respect to the care cloud acquisition.
I believe there was some are now target set at that time that hinged on their revenue and I'm going to assume that they were not achieved given the pandemic can you provide any color on on that and how the ultimate purchase price played out there. Thanks.
Yeah, and you're you're you're correct that that the that there was no earn out earned by the day care cloud sellers and I'd say candidly when we set the the ear and out parameters and.
And as we usually do we were pretty aggressive and they would have needed a year and probably 10 per cent better than their best year ever to around one dollar of her and out. So so therefore, you know and the best of times without Covid, earning a a real earn out would have been.
Very difficult and of course.
And then and then they lost a little bit of revenue so.
Nothing nothing paid in terms of the year and that which which candidly that was pretty much our expectation from the from the beginning.
Okay makes sense.
And with respect to the acquisition pipeline guys I I imagine there are there are even more robust now and all given the struggles from the pandemic.
Smaller vendors that had been struggling you did two very large deals last year. I mean is it reasonable that we would see at least one more of this year and he color there would be great.
Yeah, and I <unk> I think it's absolutely the insight is correct that the especially the.
Acquisition strategy that we pursue where the majority of the targets that we focus and on our targets that.
Have an element and their business model that we think we can strengthen that we can address that we'd be stronger together as a combined company.
So there's an element of stress that usually exists and the business models of the companies were acquiring and there's there's no doubt that COVID-19 increased stress.
And on the flip side some of the mitigating factors that have enabled some of these companies to nevertheless, avoid from and investors perspective avoid and exit for a period of time probably comes down to a very effective strategy from the federal government perspective and particularly.
Killer with regard to the P. P P and other incentives and other cares act that have and our estimation and I've really done a very good job in terms of helping to show up companies and enabling companies that otherwise would have been exiting to temporarily delay the exit nope that combined with a more.
Broadbase understanding amongst creditors that COVID-19 impact is real and that is we believe has cause <unk>.
Lenders and is also cause landlords and to like to provide forbearance and extend grace in terms of the overall payment terms again, that's only for a period of time and addition that if you're and equity holder, you're very you're very Congress and the fact that this is probably not the ideal time to to exit if.
You can avoid it so I think all three of those factors haven't changed the fundamental dynamics per se. In fact, COVID-19 has if anything in large the universe of opportunities, we believe and we'll see what that does relative to the overall valuations. However, those three elements have created some additional time.
And that's built into the overall exit strategy, we believe and in terms of maybe these companies are back to your <unk>. Your question in particular will there be a larger acquisition. This year, we certainly hope so it might be this year could be next year.
But what I can tell you is that the pipeline today and.
Is bigger than it was last year at this time and was that was bigger than it was the year before and that that's the trend.
Great very helpful color. Thank you.
Thank you.
[noise] and our next question is from seven deed with a C Wainwright.
[noise] and James <unk>, Steve could you just give us a little more color on the on the brand change or amalgamation or however, you'd like to look at it do you see MTBC going away, how do you see addressing.
Larger.
Larger practices vs a smaller ones.
And and maybe just some insight on.
Pretty dynamic sheriff's, great and the base your business over the course of the year. So maybe you could just talk to the brand and.
And how you see it addressing your clientele and future clientele.
Good morning, Kevin and give thanks to get for your question Great question, and you're right at a pretty significant shift and we're very excited about it and in the months ahead will provide some more granular details, but let me just briefly address your question and maybe we think about the one and the Y in terms of the overall change and.
With regard to what are we doing what we're doing is as you alluded to we're changing the name of the parent company and the brand more broadly throughout the the organization from M. T. B C Inc, which is the acronym that we've leverage more recently and that initially came from medical <unk>.
Transcription billing Corp from 20 years ago, we're changing that name from M. C B C and to care cloud ink and.
We're not planning on changing our stock ticker that will continue to be M. T. B C for our common shares M. T V. C. P. Four hour preferred the solution set and the services remain unchanged the values that have.
Scared us from the very beginning one and then booed founded the company continued to steer us today. So so those fundamental things haven't changed and stirred really it's this rebranding or the brand merger and again from the beginning the focus of Mehmood and and then by extension. The rest of US has really been focused on on building something that will.
Last delivering value and meeting the evolving needs of health care providers throughout the market and doing that and a way that leverage is our proprietary technology, which has grown and evolved and also our global team and and over the over the last couple of decades. So it's been increasingly going in this direction and there's.
And then this expansion of or over a health care platform the scope of the solutions the power.
Of the solutions and the elegance and solutions and it's as a company we've grow we've long since grown well past the billing and the transcription and with a real focus on the technology and our belief increasingly has been that MTBC itself doesn't fully and body or doesn't fully convey.
The the overall value proposition that we're offering today to the market in terms of being able to provide assistance.
Assistance with regard to deliver and care to patients that through a cloud based platform. So from the perspective of a good cause I go forward and and go to the market will go to market. After the official date that the end of March will go to market under care cloud ink and.
And in terms of our existing customers for the overwhelming majority of those customer relationships will be working with those customers under a unified brands that will also help us create a more seamless client experience and that'll be care cloud.
Yeah, Okay, that's that sounds great do I I hardly the the the Big question falls on your shoulders and my friend.
Can you talk a little bit about what you're gonna have to do on the upside in order to.
You know project this amalgamated image to your customers.
[noise] two notes and thank you the Kevin. Thank you for the question no you're right silly and as Steve mentioned and be able would the next 30 days and you have a number of things lined up too.
To keep and working on in terms of the internal communication, even to the employees and how they will start representing the company as a Kid club to the client and instead of MTBC at any one of our other subsidiaries. So we have a plan in place and it will be working with and we did one announcement and we had and and the first round of conversations but over the.
Next 30 days, they are much more and and plan.
To make sure that the representation is done properly.
Is a client communication that we are working on with some individual one and one conversation with the enterprise level clients and be able to and and in charge of you have a plan in place over the next 30 days to address and tunnel communication and external communication.
And what about you know just.
Indulge me a little bit what about just in terms of systems.
I mean, I I think you know basically what you're what you're talking about is it and I'd expect everything to be integrated on the back and two whereas I mean is at least as I understood. It you had package care clubs offering while continuing to offer M. T V C's and I I guess I'm just kinda wondering.
And how you know the full execution that business goes through and me on that day.
Back and.
Sure Kevin So it's good too few things and number one and it's Steve mentioned and I mentioned and are and and call that day.
And will be more detailed press release coming up and the coming weekend and we have some more things planned over the next couple of weeks and months weird, even more specifically, we'll talk about that with products, we anticipate replanted strategically to address which type of customers, let's say for talk EHR what.
Is it the right.
Group of clients. So the category of the clients there'll be going forward with it so I think I I leave that for the for the.
Much detail that we will be relaying because that's something that has some of those things are still being worked on and he will continue to do to sell almost all of the products that we have to day with maybe just few exceptions, which female and up merging into and let's say talking about Greece total will be will take the price events and.
Of patient experience management, Delaware some of the existing products that behalf.
On the other side, we continue to work on the integration between verdicts such as precision B I a analytics to the engine already we have competed and the integration with mtbc's product and already have rolled out to one of our enterprise level clients containing over 1800 best provider.
So they already have started to use it and production so and.
Same way if I step back a number of things one of the are working on integrating the different product. So you don't need they don't need to go and work.
The clients after work between the isolated products the numbers second of yet addressing that rich tarek is it right for which target market size or type of claim that communication will be done with the proper dress and he's along with some leather.
Announcement.
And the right way over the next couple of weeks and the months and the thing is nothing will change day, one sort of declines via non going to eliminate any of the existing products and the short term. So if someone is using let's say can't cloud system or talk EHR system rewards <unk> doctor system, none of that.
Is going to go away and they will be based on the direction can be and maybe and over the time transition.
Very good hearty. Thank thank you so much. Thank you so much for the details and I appreciate a gentleman and thank you.
Okay. Thank you Kevin.
Uh-huh.
And that and the next question is from David Larsen with B T I G.
Hi, congratulations on a good quarter can you talk about the utilization rates for telehealth and how that's impacting your revenue and like what portion of your revenue is coming from telehealth is related to your client base and what.
What are your expectations for that going forward. Thank you.
And thank you David for that.
And this is Harvey.
Well first of all and we do not specifically disclosed though that revenue stream from the different type of practices a different type of products that we have and but I'll be happy to share some of the the trains and the numbers.
Even I mentioned before if we go back January 2020, and tried to look at the telehealth encounters the total utilization was literally went and of 1% of the total encounters pandemic started and early or in the in the late for a squadron debt number went up to about over 20 per.
Change of the encounters day now seems to have settled down somewhere around 7% of the and the total encounters seems to be the daily health day related encounters we did do even a survey at the end of 2020 and also the details of this service available on the <unk>.
Web site and would be trying to ask for is what the the practices. How they look at that from the technology adoption perspective post COVID-19 and the ear to come and about 78% of the participants first of all noted that day either light on the technology more since depend NAMIC and vindictive.
And can you to see that day will be utilizing more and more technology and and the top most number was out of bed. The entire survey that 73% of the participants and believe that day will be utilizing more and more tele health related services and the future.
Others, too, but the daily health number seems to be at about 753% of the participants participants believe that that there will be a adaption tours more on the day of the health site.
Okay. So you come in and energy and the year to them.
And.
Great. Thank you.
Thank you.
And our next and final question this and Bill Southerland with his benchmark company.
Thanks, and running everybody I think maybe a quick question for Carl focused on the enterprise initiatives.
Thank your products that will there be the same.
Customer.
And the same mix of products that will resonate with this customer base as you and as you get into that and and I'm also curious.
If you believe a cat and that area will be similar maybe better and.
The new traditional customer profile. Thanks.
Certainly so let me address the product sexual first I think particularly the care club product enhanced by precision B I becomes extremely attracted to the larger enterprise practices and and we think that's a really good resonating fit with them.
As far as the Cat goes that kind of 201 $2 and revenue one dollar spend we're continuing to match to that certainly we always look to make an incremental improvements along the way but.
But we think that that's a worthwhile investment and the company.
Thank you.
And maybe bill if I can just add to call. This is one so as you think about kind of our products and how we go to market right and you and you really kind of take a step back and look at the different markets, not only and the ambulatory space and and and the health system space, but when you specifically try to understand the segments and which we operate and those spaces and differences be.
<unk> and a small one to two doctor practice, and a 20 to 25 Doctor practice, and let's say or 50 or 100 physician practice, that's come together under a consolidated tech savvy or being bought by private equity et cetera.
Needs of those particular segments are very unique and I think that's what differentiates us and the market is that we have kind of a purpose built technologies or purpose built products that can really addressed those capabilities well, we don't necessarily have to go or need to go into every single specialty segment, but because of the way that the products architected the and.
The only for us to have kind of a very broad solution across multiple products and I'm, sorry, multiple specialties and we can go up and down that segment stack. So to speak gives us a very unique opportunity I think vs. Some of our peers and the market. So I think we're cargo mentioned earlier that we have an opportunity to know kind of.
Make it simple carry more and our bag that combined with the ability to have kind of those three legs of the store a patient experienced management solution that really attacks kind of what patients need right and Breeze and then you have.
The the financial systems, and the practice management and revenue cycle management solutions and clinical systems and our Ehr's.
Coupled with our other ancillary services whether it's.
Absolute are built by us like the precision B I R. R. P a or even MTBC force I think it really gives us an incredibly strong value proposition as we go out into the market and and specifically as we go out into these larger and more complex enterprise deals.
And interesting thanks for the color and everyone have a great day.
[noise], ladies and gentlemen, we've reached the end of the question and answer session and I would like to turn the call back over to Kim pledge per closing remarks.
We'd like to extend our thanks to everyone and has joined US today. We appreciate your participation and interest and us and the company and we look forward to speaking to you again next quarter. Thank you and have a great day.
[noise].
Yeah.
Okay.
[noise].
Yes.