Q2 2021 Inovalon Holdings Inc Earnings Call
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Ladies and gentlemen, please many align your program will begin momentarily again. Please from many align your program will begin momentarily. Thank you for your patience and please continue to hold.
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Good day, ladies and gentlemen, and welcome to the <unk> second quarter 2021 earnings call. At this time all participants on a listen only mode. Later, we will conduct a question and answer session. If you would like to ask a question. Please press Star then 1 now as a reminder, this conference is being recorded.
And now I'll turn the conference over to your host Kim Collins. Please begin.
Good evening. This is Kim Collins senior Vice President of Communications at an oval on I'm here. This evening with Dr. Keith Dunleavy, and noble on Chief Executive Officer, and Chairman of the board and Jonathan Boldt, and Overland Chief Financial Officer.
I'd like to welcome you to our second quarter 2021 earnings call. The press release announcing our financial results was distributed this afternoon and a replay of today's call will be available shortly posted on the Investor Relations page on <unk> website.
For those of you listening to the rebroadcast of this call we remind you.
That the remarks made herein are as of today July 28, 2021 and will not be updated subsequent to this initial earnings call.
I'll remind you that certain statements made during this call may be characterized as forward looking under the private Securities Litigation Reform Act of 1995, including statements related to future result.
<unk> operations and financial position, our business strategy and plans market growth and our objectives for future operations.
Those statements involve a number of factors that could cause actual results to differ materially additional.
Information concerning these factors is contained in the company's earnings release and filings with the SEC.
In an effort to provide additional information to investors. This conference call and webcast is accompanied by a presentation, which is available on the IR section of our web site. You are encouraged to download a copy of this presentation to follow along with our prepared remarks.
Our presentation also includes certain non-GAAP financial measures you will find.
I'll survive, finishing of these non-GAAP measures and reconciliation charts at the end of the company's earnings release and on the company's website.
Now it is my pleasure to turn the call over to Dr. Keith Dunleavy.
Thank you Tim Good evening, everyone and thank you for joining our call.
Once again, our second quarter results exceed.
Find them our expectations across the board and demonstrated the success, we are having accelerating revenue growth, while continuing to deliver SaaS industry leading profitability.
We continue to see <unk> growing leadership across the healthcare ecosystem, serving as the enablement layer for data driven health care initiatives.
Across an ever increasing breadth of the health care marketplace.
Strength in market demand sales implementations and execution once again continued to drive topline growth acceleration.
This resulted in revenue again exceeding the top end of our original guidance increasing too.
See the $94 million, reflecting an organic growth rate of 17% year over year and 8% sequentially.
This reflects a further acceleration above the strong results achieved in the first quarter of 2021, which demonstrated 15% year over year growth.
If we look specifically.
100, <unk> at our noble on 1 platform growth, which contributed $172.1 million on revenue or 89% of the second quarter's total revenue. It reveals an even stronger acceleration achieving a growth rate of 19% versus platform revenue in the year ago period.
Second.
<unk>, new sales annual contract value or ACB with $65 million and platform new sales ACB, excluding services totaled $43.2 million.
Both ACB metrics compare to record levels in the same period last year this being driven by the.
Quartering adoption of renewable on cloud based SaaS solutions with marquee industry, leading wins across multiple segments of the marketplace and are contributing to the company's continued strong expansion and it's subscription based platform business.
Solid sales performance in the quarter reflected hundreds of engagements, including both.
Both substantive expansions of existing relationships as well as a record 588 additions to the company's new logo list.
Strength continued to be seen across all business units, where each is not only executing well, but also seeing very strong sales pipeline opportunity levels in the quarter.
The broad light multiple successive quarters of record or very strong deal closures.
Simultaneously <unk> investments and focus on delivering an unmatched total customer experience in combination with the increasing value impact of the available on 1 platform solutions continued to yield.
<unk> strong benefits during the quarter during.
During the period and noble on continued to see strong increases in contract renewal and retention rates extended contract durations and contract expansions. In addition to continuing to realize new substantive contracts have considerable duration of 5 years or greater.
Another 1 is also realizing the extension of contracts well in advance of their exploration.
This was clearly demonstrated with the extension and expansion of <unk> existing relationships with Walmart, we're the world's leading retailers, which expanded and extended its relationship with <unk> into 'twenty 'twenty 8 as announced.
On June 24.2021.
During the second quarter no..1 also continued the expansion of its health care ecosystem connectivity. The company added connectivity with additional Ehr's 2 newborns real time data access and interoperability platform, increasing the total number of addressable providers.
More than 800000 across use cases of <unk>.
Surfing and applying data for health care research analyses operations in treatment.
Concurrently <unk> proprietary primary source longitudinally match dataset, the more squared registry climbed to more than 63 billion medical.
Across more than 338 million unique patients the.
The combination of these resources and capabilities reflected within our system design and technology architecture that allows for real time data access and analysis of otherwise disparate data resources was awarded a key patent.
During the quarter on May 18th 2021, specifically U S. Patent number 11.011256 for the systems and method for providing on demand real time patient specific data analyses computing platform, we announced this on may 25th 2021.
Events I think that this is worth spending a minute on it through.
Through this proprietary technology and authorized application, which can be 1 of ours like script med cloud or our customers' proprietary application or a mobile app written by a third party on a mobile phone or tablet or a giant enterprise applications such as the hospital.
HR or our global technology platform, operator can make an API call for data and analysis pertaining to a specific patient and received the answer back within seconds.
The data requests could be simple like what is the person's most recently known blood pressure.
Or it could be complex.
Like what are all the known laboratory tests and results over the past 10 years or requiring advanced AI like what is the person's likelihood for their diabetes to worsen over the next 6 months and what would be the best course of care to prevent it.
In each case, regardless of whether the data might be spread across 15.
<unk> hospitals laboratories pharmacies health claim claim systems and doctors' offices across many different years as the patient moved employers doctors and geographies.
<unk> technology has the ability to combine data already known by and held by an open on multiple additional managed dataset.
Sets and thousands of additional locations and systems with a patient's data resides link that data longitudinally matched the data apply data integrity analyses to normalize and transform the data apply requested analytics to the data and responds to an authorized request all within seconds.
<unk>.
This offering referred to as the <unk> data stream API is being recognized as highly unique within the marketplace and is showing strong reception across many use case applications as the marketplace increasingly appreciates the value of data as a service and its single source real time fiery.
Fire enabled API flexible availability.
Well there are many success stories across all our business units this quarter I'd like to highlight just 1 from a provider business exemplifying. The continued successful innovation and market leadership by our colleagues within our provider team on June 22021.
The company announced a multiyear agreement with Homebase homecare, the leading agency management and EMR software platform for the home health and hospice industry, where they will exclusively offer <unk> ease all payer application to their customers representing more than 25% of the nations home health providers.
To deliver greater administrative efficiencies and increased accuracy of payment processes available as a module of the noble on 1 platform and leveraging data driven routing and sophisticated analytics engine ease all payer is the industry's first fully integrated cloud based workflow engine that combines broad connectivity.
<unk> and advanced data intelligence to empower providers to efficiently manage the entire data and revenue cycle process of clinical encounter data claims and receivables accuracy from all commercial payers and Medicare in 1 integrated platform.
Lastly, I'd like to take a moment.
Welcome to <unk>, New corporate President Aaron Kelly as previously announced on June 28.2021.
Aaron brings more than 20 years of experience in global software and cloud based technology growth as a seasoned executive leader at Amazon and Microsoft.
Aaron reflects not only the company's increasing focus and.
In cloud software leadership, but also the caliber of industry, leading technology engineering talent and executive leadership joining on overland.
Each and every day and <unk> is increasingly being recognized as a leader in data driven health care, a place where mission and meaningful impact matter a tremendous group.
Strength in a great place to work we are honored to have the opportunity to show meaningful empower our customers and the millions of individuals they serve every day.
In summary, the second quarter was another demonstration of our team's outstanding performance the market's increasing demand for our capabilities continued.
People success solid execution, and the vast growth opportunities still in front of us all.
All of which continues to fuel our strong excitement and enthusiasm for many great quarters and years ahead.
Before I turn the call over to John I'd like to also encourage anyone who has not yet had the.
The chance to view, our 2021 Investor day, which was held virtually on may 18th 2021 to do so.
The event highlighted the Companys people technology differentiation and long term growth opportunity and continues to be available for replay on <unk> website in our Investor Relations.
Food sales.
With that please allow me to hand, the call over to Jonathan Boldt, our CFO to walk through the financials and guidance in more detail.
John.
Thank you Keith and good evening everyone.
To begin by highlighting a few key points building on Keith opening remarks first.
<unk> second quarter performance once again exceeded our expectations with total revenue exceeding the high end of our quarterly revenue guidance range growing 17% year over year and 8% sequentially.
Second based on our strong second quarter performance, we are once again, increasing our.
Our full year 2021 revenue guidance to 14% to 17% growth year over year and.
And third we are very pleased with the strategic investments we have been undertaking here on in 2021 to further accelerate our growth investing in the areas of sales and marketing product innovation.
And delivery the some of which are driving very positive returns and payback periods.
Now turning to our second quarter results.
Second quarter, 2021 revenue was $194 million, a 17% year over year increase accelerating from 15% year.
Year over year growth in the first quarter and growing 8% sequentially.
This increase was primarily fueled by increased from new customer wins over the last 18 months and the continued adoption of subscription based platform offerings from both new and existing customers.
Focusing.
On our revenue streams subscription based platform revenue in the second quarter was $168.7 million compared to $142.1 million in the second quarter of 2020. This.
This represents an organic increase of 19% year over year accelerating from the 15% year over year.
In the first quarter and growing 7% sequentially subscription based platform revenue for the second quarter equated to 89% of total revenue.
Services revenue in the second quarter was $18.4 million, an increase of 22% from the year ago period and represented.
On a 10% of our second quarter 2021 revenue.
Legacy revenue was $3.4 million and contributed to the remaining percentage as expected.
<unk>, new sales ACB was $65 million and platform new sales ACD excluding services.
<unk> totaled $43.2 million.
Trailing 12 month platform, new sales Acd's totaled $217.8 million representing growth of 30% year over year.
As Keith mentioned earlier, both ACB metrics compared to record levels in the same period.
<unk> last year, which included the broadening adoption of <unk> cloud based SaaS solutions with marquee industry leaders across multiple segments of the marketplace and are contributing to the company's continued strong expansion and it's subscription based platform business in 2021 and.
Years to come.
Despite successive quarters of strong deal closures, we continue to see record sales pipeline opportunity levels in the quarter.
Turning to gross margin second quarter 2021, gross margins were strong at 72, 9% and reflect the address.
Additional investments into increasing our marketplace technology connectivity and delivery acceleration.
Sales and marketing expense for the second quarter was $21.7 million, an increase of $6.7 million year over year.
Sales and marketing as a percentage of revenue was 11.
4% in the second quarter of 2021 as compared to 9.3% in the year ago period.
Given a novel and large market opportunity and increasing market demand for the <unk> on 1 platform. The company continues to invest in net sales and marketing engine to drive further organic revenue.
Revenue growth acceleration.
As we discussed on our last few earnings conference calls on noble and resumed its investment into further expanding its sales and marketing engine and response the strong demand we are experiencing for our data driven technology platforms.
At the end of the second quarter of <unk> sales.
On the marketing team expanded to 301 people from 277 at the end of the fourth quarter of 2020.
Second quarter 2021, adjusted EBITDA was $64.1 million, an increase of 7.4 million or 13% year over year.
Adjusted.
<unk> EBITDA margin for the second quarter was 33, 7%, representing an increase of 60 basis points compared to the first quarter of 2021.
Our profitability continues to reflect industry, leading SaaS profitability.
Second quarter 2021, non-GAAP net income per share was.
Adjusted 18th.
An increase of 27% as compared to Q2 of 2020.
Turning to cash flow net cash provided by operating activities in the second quarter of 2021 was $25.1 million, which is after interest payments of $11.9 million.
Q2, 2021, net operating cash flow and free cash flow decreased from the year ago period, primarily driven by cash tax payments of $10 million and account receivable working capital uses of $13 million driven by our revenue growth and finally, an increased capital.
Spend investment as we continue to accelerate the inova on 1 platform's capability deployments driving our new sales HCV success.
Additionally, the company continues to expect a net federal income tax receivable of approximately $32 million.
Relating to net operating.
Carryback benefit associated with the 2020 cares Act.
Moving to the balance sheet <unk> financial position and liquidity continues to be strong and <unk> cash and cash equivalent balance as of June 32021 was $117.9 million total.
Outstanding debt was $903.1 million.
Reported balance sheet debt was $884.7 million net of issuance discounts and deferred financing fees.
And our net debt position was $785.1 million.
Our net debt leverage ratio as defined.
Find within our debt agreement continues to improve at the end of the second quarter of 2021, our ratio further reduced to 317 to 1 this.
This compares to $3.69 to 1 at the end of the second quarter of 2020 and $3.109 to 1 at the end of the first.
First quarter of 2021.
At the end of Q2, 2021, <unk> weighted average interest rate on its debt was 494% of which 78% of the principle is fixed.
Now, let me conclude by sharing updates the company's 2021 financial outlook.
Once again, we are raising our revenue guidance range based on our second quarter strong performance from.
The full year, we now see revenue ranging between $760 million to $778 million, representing an organic growth rate of 14% to 17% with subscription.
Kim based platform offerings contributing 88% of our total 2021 revenue.
We continue to see strong profitability and strong cash flow generation and we are reaffirming our adjusted EBITDA range of 265 million to $275 million represents.
<unk> adjusted EBITDA margin of 35%.
Non-GAAP net income growth of 18% to 21% and net cash provided by operating activities growth of 23% to 33%.
Additionally, we are raising our capital expenditures guidance by 5.
$5 million.
To 64 million to $70 million as we continue to accelerate our new platform product and functionality release schedules for.
For the third quarter of 2021, we are providing guidance of $191 million to $197 million in revenue reflecting year over.
Renting in the organic growth of 18% to 22%.
Adjusted EBITDA of $66 million to 71 million and non-GAAP diluted net income per share of 19 to 20.
We encourage you to refer to today's earnings release, and our second quarter supplemental deck.
Per year more details on our 2021 guidance ranges and quarterly revenue cadence for the rest of the year based on our views today.
Before going to Q&A I'd like to reemphasize Keith comment.
First on <unk> performance was strong coming in above our expectations for the second.
Productive quarter.
Second we are seeing strong demand for our platform with significant new sales and a continued robust sales pipeline.
Third implementations of prior sales continue to come online as planned.
<unk> and a compounded subscription base growth.
Fourth.
We are seeing a rising appreciation for the differentiation of our data and our analytic capabilities across the marketplace.
And fifth our investments and further accelerating our growth increasing our sales and marketing delivery and innovation are showing very positive results.
With that.
Let me turn the call back over to the operator to conduct our Q&A session.
Thank you as a reminder to ask a question you will need to press star 1 on your touched on telephone again Thats Star 1 on your Touchtone telephone to ask a question to withdraw your question press the pound key we ask that you. Please.
That strict yourself to 1 question and 1 follow up please standby, while we compile the Q&A roster.
Our first question.
Comes from the line of Sandy Draper of true Securities.
Your line is open.
Thank you very much on not congratulation.
<unk> on another really strong quarter.
The net.
First question.
When I think about the raised revenue guidance and maintaining EBITDA guidance, Jonathan you highlighted.
On the investments when you think about are there any new areas sort of came up.
For the quarter.
Order or is this just basically okay. We had another good quarter, we're going to reinvest it.
Or is there something new that's going on.
It's going to be investing in.
Sandy Thanks for the question before I go to your question if I could just.
First day.
And before we go through the rest of Q&A.
I just wanted to convey that we are very much aware of the reports by Bloomberg mentioning an herbal on as and the potential acquisition of the company that came out late on Monday evening.
And I want to make sure it's clear that as a matter of corporate policy, we will not be commenting on market rumors or speculation and therefore as you are currently.
Q&A here Sandy we will not be answering any questions on that topic, but we'd like all questions be kept on the topic of the Companys Q2 performance our outlook and other such matters. So standing to your question.
<unk>.
We're seeing fantastic demand for our capabilities and the number of.
<unk> asks.
Applications of our technology continue to increase it is abundantly clear to us that the continued investment in our ability to drive greater sales marketing delivery and innovation expansion is returning a tremendous results on those investments so.
That does continue to be our focus with the excess dollars that we're driving with the acceleration of our top line growth. So no during the quarter there wasn't any change from that strategy or any specific element other than the multiple happy to talk about the multiple different areas.
EBITDA for our offerings.
<unk> that we are very excitingly accelerating.
Yes.
Great that's really helpful. Thanks, Keith.
On a related follow up.
You addressed the Youre starting to see some people renewing before contracts are coming up obviously very notable with Walmart when I think about it that.
It could be because maybe you're coming out with new offerings that they want to go out and add now they're getting a higher ROI than they expected and said they want to lock in for longer what is driving it is there a common theme or.
Missing something else, it's obvious that hey, this is what's bringing to the table people back to the table sooner. Thanks.
Thanks, Sandy so I want to be careful to not specifically overreach to specifically talk about Walmart, but let me talk more broadly to your question.
On the cloud based nature of our platform and the ubiquity of its connectivity data assets and analytical capability.
Pleasingly being built into the business strategy and the business design and operations of our customer base as they are seeing that value and are incorporating it within their longer term business strategies. They are looking to secure that access to that capability a secure pricing.
<unk> capabilities.
And very often expand the capabilities that they are using is Walmart did both extending the length of the agreement and adding additional modules of capability. So what we're seeing is increasing value demonstration in the product offering as we connect more to.
Through the system as we aggregate larger sums of data as our analytics are becoming smarter and smarter informed by that data capability.
We are delivering more value for our customers. They are recognizing this value and they are building it into their longer and longer term views of how to run their businesses.
Great. Thanks, so much.
On those sandy.
Thank you. Our next question comes from David Larsen <unk>, Inc.
Your question please.
Hi, congratulations on a on a very good quarter.
Can you maybe talk a little bit about the trending HCV.
Obviously your revenue was very good.
Expectations beat our estimate.
Television was down a bit year over year, just any color or comments on that and any impact that COVID-19 has had especially with like this delta variant.
Sure David I appreciate the question, let me hit the first 1 first the ACB question we.
<unk> been very pleased with our sales pipeline and the sales process flowing through that pipeline. As you know we do have an aspect of lumpiness of our sales, but we're seeing very strong very strong sales opportunity pipeline, both in the quarter and following the quarter.
During the quarter you might.
But from our prepared remarks, we had 588, new logos, which was a new record, which is all part of our land and expand strategy of the company has expanded our sales capability on the pipeline was hitting records during the quarter extremely strong as we stand today.
Number.
Recall, great wins, not only another 1 in the pharmacy space, which we did not press release that came in towards the end of the quarter, which was another adjacency expansion of our specialty pharmacy capabilities. This 1 in the hub space are demonstrating our ability to further extend our.
Demonstrate the extensibility of the script med cloud platform into the pharmacy Adjacencies.
<unk> added another top 10 major payor in the nation adopting our EPS decision support platform and many other great sales like it and just as a reminder, these ACB.
<unk> wins are just showing the initial part of revenue that was from a signature and don't show things like the impact of Walmart extension and other organizations that are extending their contracts. So in summary on the first piece.
The year over year compare we get your point you are comparing to.
A record in last year's second quarter, but extremely strong pipeline and closure of sales.
Throughout and now here in the third quarter as well to your second piece on Covid.
We are not seeing.
The change in the business environment from Delta.
On to or those changes of late in the marketplace. We continue to operate per the projections that we expected in the earlier parts of the year as you might remember COVID-19 predominantly was impacting our services area and our legacy area. We've made a number of adjustments to the offering.
Offerings and to our projections to account for that as you might recall, we expected just approximately 2% contribution in the first half of the year and for the full year only approximately 3%, we still see ourselves marching well within those tolerances and felt very comfortable raising the guidance today.
Barry.
Great. Thanks, Congrats on a good quarter.
Thank you. Our next question comes from Jessica Tucson Piper Sandler Your question. Please.
Hi, Thank you for taking my question.
So I think as of last quarter, you guys, bringing 25 of the top 20.
5 global pharma on 24 of the top 25 health systems in 7 of the top 10 specialty pharmacies.
So can you just help us understand I guess the continued investment.
On the sales force now that you guys have already got a footprint in most major players across all end markets.
How are the sales team structure to fees.
And what's the strategy to drive.
Penetration.
Great.
Thanks for the question. So certainly we're super happy to have those top players at the top our wallet share penetration in that space is still only approximately about 3%. So we have a ton more selling inside.
Those top 25 top $25.24, and 7 of 10. So that is part of the sales force effort as we continue to.
Evolved to also embed people within these really larger organizations, which is being very effective another part of that go to market strategy is also we have been.
Then building out more and more of what's called a total customer experience approach, which some organizations have as part of delivery some organizations that part of what they call customer success.
We are evolving the total customer experience and have changed our incentive programs this year to make that groups.
<unk>.
Focus on delighting, the customer and expanding that relationship further there is a lot of moving downstream that we're working on so we have an amazing sales force at the lower end of the Quintiles in the marketplace and on the upper end of the Quintiles of the marketplace.
What we're doing now is we're converging on the middle if you will we're doing that through.
Channel partnerships like the 1 we mentioned today on the provider space, where the post acute care space dominated by 'twenty are dominating 25% of the marketplace has chosen our platform as their exclusive.
Live offering within their customer base and we're also expanding our sales teams to go after that middle market. If you will or Theres middle tiers, and then also Jessica it's a lot of what's called Adjacencies rates or you can have a relationship with the classic poster child health plan.
Pharmaceutical company or specialty pharmacy, but in the adjacent spaces, you have things like durable medical equipment distributors you have home infusion operators do you have nursing home companies. So theres a lot of other health care organizations that don't land in the classic center points of each 1 of those verticals.
<unk> or who are building out our sales and go to market capabilities as we build out more offerings and network impact capability for them so tons of opportunity that we're growing our forced into both on the sales side, the product side and the delivery and customer experience side.
Debt.
Got it and then if I can just follow up with that.
So I think you you highlighted a couple of large expansions at <unk>.
Pay your customers in pharmacies, maybe if we can focus on.
On the payer expansion can you just help us understand what the progression of our contract kind of looks like maybe from.
Our net revenue retention based debt and then is that revenue growth driven by utilization or is that non fuel base and.
Just any color you could provide in terms of the progression of the contract expansion over time.
On your market specifically.
Sure so to.
So historically.
Let's take 2 different approaches so historically, Jessica obviously, we sold with what we have right. So so the.
You want to look at the longer term progression of a client that started with US 5 years ago, it's going to provide a pattern of they started with the products we had 5 years ago.
And have added the products, we've developed and implemented since then very consistent with how we've rolled out those products. So it's a different answer for adding a new customer today, who can select from a much broader arsenal of products that might be the first product our second product or a.
Third product so the pattern today is.
Is very different than the pattern before for that hopefully very obvious reason so today, we're seeing.
<unk> come in for many different reasons, because theyre pains are different than each other but whenever they start with whether it be quality improves.
Whether it would be risk score accuracy improvement, whether it be vaccine adherence whether it would be.
The consumer health Gateway in compliance with the interoperability rules of the 20 <unk> century Cures Act, whether it would be.
A data lake or something else whatever their first starting point is what's key to us is theyre doing a master servicer.
With us they're doing day to authorization and business Associates agreement documents with us and we're setting up our connectivity with them, which lays the groundwork for them to add number 2 number 3 number 4 so I would say today, a new customer coming in today doesn't have a classic pattern like they might have 6 years.
The Greek as the classic pattern 6 years ago was what did we have to offer whereas today, it's a much larger arsenal to offer but be that as it may we typically see those customers signing for a second product usually within a year. So it takes a little bit of time for them to gain confidence in the impact on the capability of the offering.
Offering start to see that translate into the financial or clinical quality goals that they set out for us and for them and as they start to see that we're seeing them buy more and more and maybe an easy poster child example for you Jessica is the Humana released from roughly a month ago. So humana.
Obviously, 1 of the top payers in the United States, a fantastic organization is well known for its reliance on leading edge technologies, often built themselves but in this case are partnered with US started in 2019 with their first engagement and as of the announcement.
2 months ago, or so they had done.
I think by the time that release came out it was 5 or 6 product engagements for multiyear expansions with us ranging from work in electronic decision support to vaccine adherence to.
Specialty pharmacy as well so.
A lot of different patterns, Jessica but the point is as we land them in we expanded by demonstrating value.
Thank you.
Thank you. Our next question comes from Daniel gross.
Citi. Your question please.
Thanks for taking the question guys.
And congrats on the continued momentum.
You've previously ranked the strength of your pipeline based on customer type payer provider life Sciences, and pharmacy Wonder if you could do the same for net sales momentum youre seeing this quarter and looking forward to 2022.
Thanks Daniel.
Thanks for the question.
We actually we're just hitting on this prior to the call today, we're seeing the same pattern that we saw in Q1, our pharmacy is still on fire and blazing, a really well on quickly and out in front.
Behind that is.
Tied horse race between payer and life Sciences.
And then.
Quite impressively accelerating as the provider by the end of this year provider might might be getting up to neck and neck with the.
Payer and life Sciences, but right now they are.
<unk> accelerating.
But technically still we'd have to put them a number 4 and then the other 1 that we would start layering in there as we're seeing more and more direct data and analytical.
Business strength.
Very very significant expansion there in things like our data stream capability.
On our provision of data to the major.
Players in both life Sciences and provider world today so.
Quite a bit of strength across all all 4 areas all really solid.
Double digits and some.
Impressively high.
<unk> double digit and I don't mean in teams I mean, much higher double digit growth rates, we're seeing so we're pretty pleased across the board.
Got you that's helpful and then as a follow up I just wanted to focus a little bit on legacy. Obviously it is not that important of a revenue stream now for you, but it's still a little depressed coming in less than 2 percentage of revenue.
This quarter you are guiding for the full year is still that that's going to be 3 percentage of revenue, which would imply more than doubling of that in the second half of this year.
Curious, what's keeping that at sub 2% and what gives you confidence that you'll be able to kind of get that back up to around 3 percentage of total revenue for the full year.
Yeah. Thanks Danielle.
As we commented in the first quarter, we expected that through the first half of this year. So we expect it to be at 2% for the year, we have a lot of visibility into how that progresses in the second part of the year. So certainly that is a reflection of.
<unk> very very mild expansion of youth and very conservative compared to the utilization expansion, we're seeing across the health care industry in general most utilizations have accelerated.
Nearly back up to normal and we're still holding our estimates quite a bit conservatively.
Below that but we've got a nice bit of cushion in there on that projection.
Got it thanks, Congrats again guys. Thank you.
Thank you. Our next question comes from Stephanie Davis of SBB Leerink. Your line is open.
Thank you for taking my questions and I Echo my congrats as well.
First 1 just a quick housekeeping 1 I think on ACB.
We think that this company I think you had cardinal on your Walmart and true Q of last year, but it was still a big deltas versus debt numbers.
Much of that is just on this modeling versus maybe a pushout with MTGE reported.
Your larger deals that we've been talking about the pipeline.
Hey, Stephanie Thanks for the question.
So certainly we are very pleased with what we're seeing in sales.
Key thing that we have learned now is with the client sign when their.
Client is ready to sign.
And avoid pressuring them to sign by the magic of <unk>.
June 28th June 2019 June 30.
We have a tremendously robust sales pipeline and closures here in Q3.
So.
This to us.
This is very.
Very much.
The norm than expected we have things that are what we call singles and doubles and then we have things that are triples, and home runs and the home runs in the bigger ones layer in as we see them come through the pipeline and we don't we don't want to push on rush them, we want to treat them with.
The care that they.
Need so.
We have.
Plenty plenty of the sales that we've already done on a closing and implementing now in 'twenty in Q3, and Q4 that I am quite confident you'll be pleased with.
Perfect.
Thanks.
I agree with that philosophy, though that themselves or the us.
Especially with the lack of science on that now.
And then my second question is on a little bit more kind of far reaching strategy. Okay. So far on your on kind of long term here.
I was hoping to hear a bit more about the day.
<unk> you'd like to go on for your life Sciences business.
You have your more squared database, it's got a ton of different law has got a lot of access to folks who left there's a lot of demand for real world evidence solution and platform out there in the life Sciences side of the world.
What kept you more on the advisory side of the life Sciences business and less into this real world data.
Okay.
And is this something you are considering is it something that youre looking at by the from the United The build or is there a structural reason why you wouldn't want to go into that.
Stephanie is a really great question.
We completely agree with you. This is a massive opportunity from us for us.
That we are taking from 2 sides.
Side number 1 is the software platforms to service debt space and the software platforms that are out there.
Day in the.
Clinical trial process flow management arena and in the.
Patient selection identification recruitment and engagement and.
Retention.
Marketplace and also in the analytical research space. These are very very large opportunities for us.
That we are.
In the process of working towards.
That will be.
A very strong expansion area for us, but importantly also there is another angle that we think is really important in life Sciences and this is driven by the data stream capability. If you take.
Take a look at the capabilities of data stream, which we've been awarded.
Feel them pretty important intellectual property protection on this quarter. It is the only platform.
And the country, perhaps arguably therefore also the world that gives you the ability to identify all of the data for a particular patient connected.
<unk> it into the network.
On the EHR is the the claim systems lab systems pharmacy systems.
<unk>.
Decision support systems, whether they be in a hospital, a doctor's office or 5 hospitals and 5 doctors offices.
In aggregate that data in real time.
Either identified or D identified across the marketplace within seconds. So this is enormously valuable to the clinical trial marketplace and incredibly valuable to the post market.
Surveillance and monitoring of patients and also the underlying research on patients.
<unk> because identify primary source data allows you to longitudinally match and link across all data sources.
It allows you to also impact care. So not just the research of a particular disease and treatment combination, but also the ongoing treatment and outcome management and improvement.
Of a patient.
There is no other platform in the country that can do that.
On the the capability of our data stream API system, not just for de identified data, but for the applications on life Sciences and the identified marketplace. We believe.
We will rapidly be seen is second to none.
On in the country. So that is a process that we are very focused on we're getting a nice response on that it will take time and it is not.
In our numbers, obviously, but we see it as a very large opportunity going forward. We're excited about it.
The scaling up Bill day Bye bye.
Okay.
Bill.
Perfect.
Thank you Anthony.
Thank you.
Thank you. Our next question comes from Vikram <unk>.
Butler.
R. W. Baird your question please.
Yes. Thank you for taking the question I wanted to follow up on the ACB, obviously it looks like it's.
It's been a bit lumpy here over the past few quarters I guess could you just help us frame what a normalized ACD growth rate should look like for the business in particular any color on what we should be expecting in the second half of the year just based on the state of the pipeline right now.
Sure Vikram I think if you take a look at our ACB and conversion.
Pay TV platform revenue in our slides on our supplement youre going to see debt. The pattern is a very consistent pattern I know wall Street measures everything at 90 days, but our clients don't so the pattern is a very.
A very consistent sort of pattern that we have.
But the underlying pipeline is hitting records the conversion of the pipeline is doing fantastically well. So we would expect to see.
Very strong performances here in the second half of this year, let alone third quarter <unk>.
Fourth quarter, meaning both.
So we.
Zero concern over that.
Given the strength that we're seeing in that process.
Any.
Anything else, specifically vikram on that.
No I think thats helpful. I mean, I guess, just a follow up questions debt and I. Appreciate this may be tough to answer, but just given the strength of the pipeline at this point.
And the rising contract durations that you talked about curious if you can just give any early commentary on what the growth potential of the business could be in 2022, just given relative to the long term range on what Youre seeing right now.
Well Vikram as I hope we are.
Demonstrating very well to wall Street is our theme has been.
Under promise and over deliver.
Raised our guidance now successively increasing coming into the year at 11% to 15 than raising 12 to 16 today, raising 14% to 17% and on.
Fourth quarter, we're seeing 18%.
2% so.
Our theme to you is under promise and over deliver it's premature for us to give guidance for 2022, but we see a very strong growing momentum and our ability to execute on it is absolutely getting better every day so.
On to 'twenty, we're excited for it we have to keep our head down work hard and continue to perform.
But the team is doing a phenomenal job to achieve exactly that so I hope that helps.
Great. Thank you.
Thank you Vikram.
With that I'd, just like to thank everybody for taking the time to join us. This.
But before I wrap up I, just want to reiterate if I may on a few key points.
First of all <unk> second quarter performance was really strong came in well above our expectations for the second quarter, our second quarter in a row as well and another strong demonstration of the team's outstanding performance and solid execution for which.
Which I am very grateful our second strong demand continues to be seen across all of our business units. It's not 1 cylinder and the engine that is firing but it is all of the cylinders in the engine that are firing and for things like data and data stream and the points that Stephanie brought up we are adding cylinders to this machine.
Even as we speak and we're excited about them and we're seeing the strong sales and pipeline opportunity at record levels. Both during the quarter on here already now in Q3.
Third implementations on prior sales are continuing to come online as planned and that is resulting as youre seeing in a compounding subscription based.
As tailwind of growth and revenue acceleration.
Fourth we're continuing to see a rise in the appreciation for the differentiation of our data and our analytical capabilities with that data across the marketplace as evidenced by the numerous contract expansions longer term contract durations, the strong increases and contract renewals in.
The retention rates that we're seeing all of which are moving very strongly above our historical metrics and fifth our investments in future accelerating of our growth are doing extremely well increasing on our sales and marketing delivery and innovations are all showing very positive results, we're seeing that in our 2.
<unk> 2021 revenue outlook of 14% to 17% organic growth and continued strong profitability with adjusted EBITDA up 15% to 19% as well as our guidance for third quarter, where we see growth accelerating at 18% to 22% year over year. So clearly we have a lot of excitement and enthusiasm.
What we're seeing on now and ahead of us.
And we thank you for your time this evening and all of your ongoing interest in an open on thank you and good night.
And this concludes today's conference call. Thank you for participating you may now disconnect.
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