Q2 2021 CareCloud Inc Earnings Call
[music].
Please standby.
Welcome to the Coeur cloud second quarter 2021 results conference call.
If you would like to ask a question during today's call. Please press star 1 on your telephone keypad.
Please note. This event is being recorded I would now like to turn the conference over to cannot Blench care clouds General Counsel Ms. Planch the floor is yours.
Thank you good morning, everyone and welcome to the Coeur clouds second quarter 2021 conference call.
On todays call are Mahmud Haq, our founder and executive Chairman.
<unk>, our Chief Executive Officer, President and a director.
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 in our report 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 second quarter of 2021 earnings presentation.
Please visit our Investor relations site by R. Dot care clouds dot com 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 second quarter of 2021 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results.
And with that said I will now turn the call over to our CEO hottie charges Heidi.
Thank you Kim.
And thank you everyone for joining us on November 2nd quarter credit twenty-one earnings call.
So if you don't do on is shaping to be a breakout year for care globe on please to report not just a strong quarter for the record breaking the renewal quarter.
A who team we are truly labov discontinued momentum and IPD creative both with the other countries. So far this year.
As recharge ahead on through the back half of 2021 I'm happy to report that we are raising over full year of books as we continue to integrate and Costolo gross acquired assets and drive increasing levels of organic code.
The team remained focused on delivering gaming technology, an average business solutions for medical practices in sales systems nationwide. This mission is incredibly important as we empower the more than 40000 providers reserve wildly focus on delivering excellent care for patients across blood.
You'll be all communities in the country.
This ability to deliver comprehensive and 2 inch solutions necessary for over customers and prospects to thrive on today's allocated environment continues to be a highly differentiated strength.
It does remind can be rewarding to us towards with such a cross section of over healthcare system, whether we are enabling of $3 per medical group in your neighborhood to run the other businesses more effectively.
Hearing with the health system to automate mundane and debated took task for working with complex enterprise groups and deploying over closed suite of products and services.
The responsibility we are entrusted with to deploy over software solutions to these to incredible healthcare organizations, including Dover certified electronic health record started on.
Your patient experienced management platform and a host of other software applications is what fuels us to continue to innovate on their behalf.
In terms of continued growth we're pleased to see this coming from a variety of drivers across other platforms on strategies.
Other markets continues to reward our expensive value proposition to organic sales or for the award winning software solutions to come to 13, new customers and cross selling opportunities of other industry, leaving services to existing customers open to aligning more of their critical practice functions with tears flow.
He also continued to pursue unique and interesting partnership and leverage of improvement acquisition methodology.
These go sit under the firing nicaean driving consistent growth up into the right.
Other investments on sales and marketing with a focus of driving top line revenue growth, both organically and through acquisitions, while simultaneously finding new and distinctive areas for automation and stripping those cost is paying dividends on.
A significant reason for this ability to continuously show strong performance has been under investment and the technologies.
On that our customers use our sophisticated internal software on process automation, coupled with an industry best cost basis for a large portion of a routine.
For today's call. Our first it's important to focus on how we are evolving and why we continue to remain incredibly bullish on other prospects.
During the last earning call we discussed over new brand in the housing named care cloud better reflects who we are today as a company.
I'll just need more richly encapsulates the technology and neighbors solutions, we take to market and how we have grown to be an industry, leading tech company and for healthcare market.
As CEO I recently had the opportunity to travel across the country and visit somewhat of a tremendous customers. It as a day like to see how we are in following the road clients with solutions to tackle many of the challenges we are facing Bailey. So they can focus on a patient file we focus on their business on.
On a recent trip to a client we discuss toddler microvolts covered robotic process automation bars on increasing the throughput of our respective teams driving out inefficiencies in their workflows and speeding up cash flow saving them tens of thousands of dollars annually and decreasing their days an error.
On another trip, we learned how clients are leveraging our cloud based business intelligence Tag Falls decision.
To perform deep Green Bush French analysis, and discovered payment on gas from insurance carriers to improve reimbursements, and even predict visit trends for new and existing patients.
As we think about the why we do what we do our focus is all about enabling the business of healthcare and giving providers. The solutions day required to deliver the care of needed to their patients. We do this to a variety of means but the primary ready accomplish this is <unk>.
The vast array of software platforms. We have is a part of for those product portfolio as well as of other additional capabilities to Croft customized solutions as needed to meet the unique needs of our customers.
We achieved these results on behalf of overtime because other software products are inextricably linked with over service offerings.
It is this combination of technology and named Bird business solutions that is driving the success of customers enjoy and further propelling us for new Heights.
And that provides a good bridge for this because of the most recent acquisition.
In June of this year, we closed on a strategic acquisition with the specific intent on helping us accelerator low growth in the hospital market, which has historically not been a large opportunity for us and we won't be change that.
The acquisition was a combination of 2 companies that has recently come together center Overstaffing enmity medical consulting associate.
These 2 organizations has been serving the hospital market for over 2 decades and have partners with more than 100 health system over the past 2 years alone.
This is now going to market is made S. R.
We believe there are remarkable for energy is between Medef saw and care cloud to drive new growth opportunities within the hospital market unique.
Uniquely we're not focused on competing directly against other EHR vendors in this segment that is significant upside and a massive addressable market for us to go after we don't need to compete directly with on EHR offering rather we plan to work together and partnering with these companies and meaningful and cooperative.
Ways to best serve over mutual clients.
Through this acquisition Mendes on now has the ability to market solutions for business intelligence with over create precision VII platform and robotic process automation 2 of our vendor specific micro mark deployment and recommended tailored solutions and revenue cycle management intelligent.
To come to see verbal mind zone services provider Credentialing and medical according to name a few.
This is of course editors <unk> Premier healthcare operations considered incompetent and longest stablish fence around vendor agnostic technology transformation, an activation services for their clients.
1 of the biggest sales challenging and the challenges in the hospital market segment is access for decision makers <unk> years of experience stellar reputation. We believe positions us for continued future growth, providing made us or with.
With the capabilities required to accelerate and meet the needs of day or hospital clients.
We couldn't be more excited about this latest acquisition.
1 early proof point of other pieces to drive gross by combining my debt Sars proven processes domain knowledge and deep health system relationship with other operational scale and resources is a recent health system. When in Pennsylvania. This is a great example of for over a sales organization working.
Together to expand share of Florida.
This latest deal is great validation year very optimistic about double growth prospects in the health system space. We believe there is more to come as we are in active conversations and half a dozen other health systems. As we continued towards this exciting pipeline. We expect these deals through shape-up lives any interest.
Price sales and likely have slightly longer sales cycles, and take a bit more time to mature than other major market in smaller practice deals.
Switching focus for a second quarter sales.
Our increased investment in sales and marketing combined with over expanded solution said.
Is continuing to contribute to growth and has resulted in in new customer signings and expansion threw up sales as.
As we have said before organic sales is a relatively new endeavor for us and we are pleased with the steady growth engine. The team is burning.
We continue to place more fuel on this end genetics chose as we have increased it on.
Sure year over year investment in sales and marketing from $1.5 million in 2019 for $6.6 million in 2020 and are on pace to increase that by another 30% to 40%.
We will continue to make these investments so long as we can maintain a our sales momentum and healthy client acquisition cost myeloma cash has historically been hovering around an industry low on <unk>.
On for every dollar invested in sales and marketing for the year $2 and booking we believe that we must continue to constantly evaluate these metrics and adjust as necessary.
I am pleased with the team and the progress we are making and continue to believe that it is not unrealistic for us to be closing by the fourth quarter on this year at the rate of twice the average bookings of Q for 2020.
Allow me to focus your attention on and other incredibly important topic.
Many would agree that catalog is widely regarded for a comprehensive suite of beautifully design projects are flexible and go to market approach and its power for technology platforms power.
However, some might not fully appreciate other market position net is why I am focused on ensuring that we've crystallized on when brand and market position and more explicitly articulate the distinction between us and other competitors.
Our company and technology enabled business solutions debate truly have a distinct position in the healthcare ecosystem.
We have the unique ability to execute well and both the ambulatory and health system market in contrast to many of over peers.
Slightly all for a point solutions, such as Telehealth applications appointment reminder, calming tools and simple mobile labs for charges.
Our country to name a few other means software platforms income path of course, we took provided for Ya and comprehensive core system software for financial clinical patient analytics workflows much held cloud based ERP solutions do the same and the other industries.
This is vastly differing 2 other competitors debt may look similar to us on the surface.
In other mines, there is a very clear line of delineation between traditional enrollment Paul for large medical billing companies Bto's healthcare technology companies like us and pure place as businesses.
While it is true that we go after similar customers across the light market segments, and even offer comparable value propositions, such as electronic Health Records practice management system in revenue met revenue cycle management services amongst other.
The way, we deliver these solutions and the manner in which vs services are performed and executed are fundamentally different in practice.
While there are similarities other opportunities for scale gross and new innovation and enterprise value far exceed those of traditional billing services and Epo's and other opinion, we share more similarities to cloud based fast company was customer user on products.
Then we do 2 large medical billing companies and Bto's, who typically rely on third party software barracks in fact more than 80% of other revenue is directly derived from customers using at least 1 of our technology solutions.
We also believe we have a slight advantage in some areas over pure place Ias company as we are able to <unk> services and drive a much larger average deal size than you would typically see from monthly software subscription fees alone.
In other words, we are neither bto non RV of pure place after lighter clear Tech company, providing healthcare software and services to providers nationwide.
We do this by leveraging technology and services to create valuable integrated solutions for our customers primarily through proprietary platforms.
Further our customers and prospects come to us all over competitor because of a proven ability to provide them with other award winning out of the box software products and tech enabled services as well as our ability to custom developed over corp, customize our systems to meet.
The unique challenges by leveraging other large global team of RMB niet professionals.
When you analyze the market landscape. This strategy is highly differentiated and gives us a competitive advantage.
This approach provides up with deeper client engagement, enabling a more complete service offering 2 of our customers across and larger portion of their total business.
Our technology DNA is enabling over enterprise sales team to win deals with other simply do not have the solution needed on our ability to execute against stated requirements..1. Recent example from this last quarter was that we're closing gross Springdale management services organization.
Strength hailed as a pioneer and burning and operating extended care and rehabilitation communities. While also utilizing the other more patient monitoring system.
The executive that spring Hills, and missile fate burdened by the disintegration of technology and service providers, they would need to implement integrated RPM system's been actively support their entire continuum of care, including post acute care assisted living memory care and home care services.
They spent close to a year analyzing inverting several options without finding a partner debt to provide them with the end to end software they needed to effectively manage their business.
Because of our ability to leverage over more than 500 cost effective R&D team members to tailor a solution to meet their needs. We now call to spend hills of care cloud client and we are the strength to work for them to deploy the solutions for they need to care for their patients across certified locations.
The work, we do is important and we are making great strides as a company.
We have seen how important healthcare workers are on of our daily lives, especially this past year or so.
I want to thank all of our team members for the work you do day in day out to help other customers delivered care to patients and upgrade their businesses.
I will now turn on the floor over to Bill's to walk us through over financials Bill.
Thank you Heidi.
Second quarter of 2021 was another quarter of exceptional gross for care cloud.
Revenue with a record.
For $1 million, an increase of $14.5 million or 74% from the second quarter of 2020 at.
6% above our previous all time high.
Our average.
At our annual revenue run rate.
Is now a $136 million, which is 29% above or 2020 revenue and 111% above or 2019 revenue.
This is proof that our strategy of growing through a combination of organic growth and acquisitions continues to propel our gross to a level significantly faster than the industry as a whole.
Our second quarter of 2021, GAAP net loss was $227 as compared to a net loss of for $8 million in the same period last year.
The 2021 net loss for reflects $3.1 million non-cash depreciation and amortization expenses $1.7 million of stock based compensation.
GAAP net loss was 27 cents per share based on the net loss attributable to common shareholders, which takes into account the preferred stock dividends declared during the quarter.
I mentioned that our revenue grew by 74% on quarter of 2020.
Our total operating expenses grew at a much lower rate, 41% year over year, enabling us to reduce our net loss bite and 95% for.
For the second quarter of 2022nd quarter of 2021.
Our non-GAAP adjusted net income per second quarter of 2021 was for $5 million for 31 per share calculated.
Calculated using the end of the period common shares outstanding.
By non-GAAP adjusted diluted net income per share is 26 cents using and day period shares outstanding plus common shares issue will upon exercise of in the money warrants investing of outstanding restricted stock units.
Our adjusted EBITDA for second quarter of 2021 was $5.7 million or 17% of revenue compared with $191000 in the same period last year.
Our adjusted EBITDA increased by an eye popping, 2861% or.
For approximately $5.5 million from Q2.2020.
In large part due to the cost savings, resulting from integrating the businesses we acquired last year.
This was our 17th consecutive quarter of positive adjusted EBITDA.
And was just $50000 shy of.
Of our record adjusted EBITDA debt in fourth quarter 2020.
Revenue for the first 6 months of 2021.
$63.8 million, an increase of 54% cash.
To $41.4 million in the first 6 months for 2020.
As our service offerings have grown work complete.
And a fraction of clients directly utilizing our technology is growing.
We have updated the details we provide in our 10-Q and 10-K.
To describe our revenues.
The vast majority of for.
Proximately, 81% of our revenue first half of 2021, which directly driven by the use of our technology assets.
This includes 52% of our revenue which comes from clients using our core technology Sweet.
23% of our revenue comes from clients for use 1 component of our technology.
6% of our revenue comes from clients, where we are providing professional services using our technology processes and knowhow.
Another 8% of our revenue came from clients, where we are providing revenue cycle management services, where we're using the technology ourselves for our clients or not.
9% of our revenue is from clients, where we are managing their entire medical practice.
And approximately 2 per cent of our revenue comes from other services.
You'll see the new revenue breakdown when you read our 10-Q, which will be filed later this afternoon and.
And we believe this will better assist the market and understanding who we actually are.
A technology company and the healthcare space that serves a diverse group of clients and an incredibly large addressable market.
For the first 6 months of 2021, our GAAP net loss was $2.2 million or 63 cents per share.
To a gap net loss of $7.3 million in the first 6 months of 2020.
Are non-GAAP adjusted net income for the first 6 months of 2021 with $7.4 million or 51 cents per share.
During the first half of 2021, our adjusted EBITDA was $9.3 million, an increase of $8.4 million for 876%.
From $958000 on the same period last year.
As of June 30th 2021, we had approximately $9.5 million of cash.
During second quarter of 2021 cash flow from operations was approximately $1.1 million.
However are spending included approximately $4 million during the quarter to resolve a preexisting matter from our purchase Carecloud Corp. In 2020.
Cost of this settlement was entirely burned by the seller.
For for did $4 million at the purchase price in the form of shares of our series a preferred stock which was held in escrow.
This 1 time payment was contemplated at the time of the acquisition.
And without it our cash flow from operations would have been approximately $5.1 million similar to our adjusted EBITDA and are adjusted net income.
Our net working capital on June 30th 2021 was approximately $8 million.
Based on our record breaking second quarter revenue I'd like to close by updating are forward looking guidance for the fiscal year ending December 31.2021.
Our second quarter revenue set a new record and surpassed expectations and we anticipate continued strong momentum during the second half of 2021.
We have increased our full year revenue guidance from a range of $133 million to $137 million.
To a range of $135 billion to $138 billion at or above the mid point of our prior guidance range.
This represents growth of 28%.
For 31% over 2020 revenue.
This includes organic growth from new clients as well as cross selling new services to existing clients and includes revenue from the met <unk> acquisition, which occurred on June 1st 2021.
We anticipate this will be our seventh consecutive year with annual revenue growth of 25 per cent or more.
A record few public companies have been able to achieve.
We still expect our adjusted EBITDA to be $22 million to $25 million for full year 21.2021.
Growth of 103.
2.131% over 2020 adjusted EBITDA.
As we realize the benefits of cost savings and a full year of additional scale from the care Clauda meridian acquisitions in 2020.
When we look at our second quarter of 2021 adjusted EBITDA.
Take into account the normal revenue seasonality, which caused our first year adjusted EBITDA to be seasonally low as always.
And we consider the cost reduction, which we've put in place we are very comfortable reaffirming our $22 million to $25 million for year adjusted EBITDA guidance.
I will now turn on the floor over to our chairman Mahmood for his concluding remarks.
Thank you will.
It truly is a pleasure to see how we continue to evolve and per way, leading technology enables business solutions to healthcare organizations across the country.
There is no question in my mind that this will be yet another record for breaking year for growth and profitability.
I would like to thank our investors customers and employees for the continued support.
We will now open the call to questions operator.
Thank you as a reminder, if you would like to ask a question. Please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Please limit yourself to 1 question plus 1 follow up again, that's star I wanted to ask a question.
And will pause for just a moment to allow everyone an opportunity to signal.
Our first question comes from Jeffrey Cohen with Ladenburg Thalmann.
Good morning, Mahmud Hardy billing Kim how are you.
Hi, Good morning, Joe.
Thank you.
So just couple for marijuana in just a moment so could you talk a little bit about the commercial organization.
The sales force and talk a little bit about.
Some of the pipeline there we should expect out there how you look here and we're may be coming from as far as your your multiple channels for the quarter and for me. Thank you.
Thanks, and thank you Jeff. Thank you for the question and I can give some.
Some color and then I'll have current jump in for some more details we continue to believe in in the dosage.
On the first half of this year, we see.
Steady sales from 2 Upselling cross sales activities. The key areas. They call reserve included coming from RCM services to RCM to SaaS lines and incorporating BVI with these RCM deals.
We are still billing the team further as you mentioned this is still a new endeavor for us as we started investing more and more in the last year and this may day saw acquisition. This was for Emily.
Explain this early as more of a strategic acquisition and the whole idea behind this was a foot in the door and all other opportunity or leverage the connections that day of established that the different health systems. So it will be back for Ya.
Excited and optimistic about the upcoming opportunities in debt space.
I think we are tracking very well and building team in the pipeline.
The non specifically undergrad net basis quarter per quarter dark talk about the numbers in terms of the booking but based on where we are to day. We believe for the for the year, we will be able to increase of overall sales bookings alluded last year and we don't think it's unrealistic as we have mentioned earlier for us to be closing by the fourth quarter.
At the rate of twice the average of Q for 2020, and some of the notable ones. The new logos include a large software company that is using force to perform.
This is and it's for over 100, Ftes, we will be billing.
Be providing from the force kicked out for steam standpoint, and also be able to partner with Springhill as the as mentioned that's on multiple 1 day of about 35 skilled nursing moment assisted living facility facilities and the many others.
There is new logo that we have been able to do 2 partnered with.
Conference for you and what would you like to add yet.
Yeah, Thanks for it.
That I would respond respond to that is in those expectations of where we should be by 2 for for.
For firmly being supported by the growth in the pipeline, we've seen a very significant growth in our pipeline or opportunities for people that were in discussions with we've been working very hard with the sales team.
We made that big investment.
Last year on early this year and increasing the size of the sales team they've been working very hard on.
Cross selling services, so what I mean by that is in addition to just selling revenue cycle services or software services now we have the ability to add in Credentialing services coding services robotic process automation.
Staff augmentation from alike. So really there's strong reasons for why we think that debt sales goes achievable. Thank you.
Would you say that you know.
In a non M&A environment.
Which is pretty short for you are you seeing the additional revenue coming from a bolt on an add on services and utilization or are you seeing the increase coming from a purely new accounts or what might be the competition on there.
It's actually a combination of the 2 so what we're seeing is we're seeing new logos that are coming on board there to using a broader range from our services than they may have in the past and we're also seeing up sales to existing clients, adding and services.
Okay, Great and then lastly for me any specific special leash to call out that you're seeing some traction in or some more significant uptick in out there.
I think that with the acquisition of Med S. R.
We're looking at larger multi specialty hospital groups, but we've also had.
Very good traction number of special please.
To simplify it typically looking at specialties with larger average revenue per claim like orthopedics vs. Pediatrics. So we're really pushing hard on those specialties the generate more revenue for us as a company <unk> that.
That have complexity on their needs, where we come in and make a good pet for.
Is that included any issues today.
Okay.
Tangentially, yes.
Got it perfect that those are for us. Thanks for taking the question is very scary.
Thank you day.
Our next question comes from Richard Baldry with Roth capital.
Thanks.
Maybe discuss sort of very broadly how normal lines you feel the operating environment is with regard to COVID-19.
And made from a few different angles for my.
Their patient volumes, you're seeing coming through how much back to normal outlooks.
For the the M&A environment, Terry seeing people start to feel like they're getting their own businesses back in order, which makes them more willing to consider.
I'm looking at and M&A, what their operations not so much under distress, let's say at any other aspects. Just so we can sort of feel like how normal this quarter felt.
Great and thank you Richard good very good question.
Let me just try for answering an acute in a couple of different ways.
In terms of the patient volume so would be on looking at it's almost back to the free COVID-19 levels.
The mix my civil a little different from when I say makes.
<unk>.
Ah more and more trend towards the utilization of the telehealth services look for us from when we look at free Covid during Covid and post Covid now it's back to the normal almost close to the close to it it should be with a slightly different mix.
<unk> Corp, just in terms of some other we're talking about the telehealth.
We conducted in other survey earlier or later in the last year from the the Telehealth standpoint on me. The question dozens of customers across of our organization. So the participants who responded about 11% mentioned in their practice reported frequent 2 occasion of this deadly.
To use during COVID-19 debt and then number ramped up to for the same population physical 93% of the practices reported frequent the occasional telehealth use and after COVID-19 that number is at 63%. So we can see on even then the same thing speaks to envy actually look at it from the overall.
<unk> organizations telehealth numbers before Covid then we have shared these numbers before the telehealth was 1% on 110th of the overall appointments and debt number went up to somewhere around 25% to 30% of range of the total appointments during during depend on.
Mick and fullest pandemic, we're tracking get somewhere around 7.8% range.
So.
So the debt from from the go back perspective.
There is another code survey conducted in terms of from the do the same day to day will be able to survive as a as a medical practice organization, except for 1 who said they are thinking about shutting it down.
Either all of them are completely opened or back to normal and these are those are even day when you get a chance you can access the other.
Fact, I suppose.
Survey results on from the cloud website as well.
And then would you like to add some.
Suddenly Richard.
Steve wants to add some color it'd be great.
Sure sure I'd be happy to and and thanks for the question Richard maybe just addressing the M&A part of your question and I think as you alluded to.
The reality is with regard to Covid Covid related factors have certainly added some property nest evaluations.
Of course, that's been seeing a cross.
Most industries in segments of the market, including valuations within our space.
Likewise, if we think about the types of companies that historically have been the targets are for acquisition strategy. Many of those companies could be classified characterizes distressed companies.
And for those companies some of the governmental relief.
Together with some other the.
Extended credit terms from.
Lenders and also increased.
Grace from.
From landlords and like have enabled some of the investors must dress companies to the ladies inevitable exits, but I think as your question really alluded to we really see this these trends normalizing as we move forward and of course, if you're an investor and a company.
That has within the financial statements that has experienced some element of a decline in revenues or profitability has been negatively impacted by COVID-19 related factors that if you feel like you're you've turned the corner and things are are progressing and turning in the right direction.
As a seller if you have the ability you probably would rather wait until you have a couple of quarters at least of proof in.
On your financial statements that you really turned a corner and your back the steady state.
So our belief is that for many of the companies who have the ability to hold on a little bit longer until they have the proof from the putting as it were on the financial statements. Many of them will having said that again for many of the distress types of companies that we really focus on.
There may still be opportunities.
Okay to follow up if I looked into the Opex side, the sales and marketing stepped up pretty significantly in the quarter and year over year, it's growing pretty strongly how do you see that continuing a trend in the second half how much more of a scale up or change in per cent allocation there.
And then for tied to that day, the R&D actually went down which I might not have expected now where do you see that training turned on near term long term. Thanks.
So thanks, Richard So in terms of sales and marketing we as we've mentioned we are continuing to put more emphasis on on this week.
We do intend to continue increasing on investment in sales and marketing and and frankly, we've told the sales team. There's no finite budget for what you can spend as long as you continue to deliver results, where you where you sign up $2 a new business.
New annual recurring revenue for every dollar that's invested keep adding people keep thinking about more innovative ways to to grow the business and so we will continue to do that so I would I would anticipate that you will see a sales and marketing continue due to increases as we move forward in the in the rest of the year and.
And frankly hottie mentioned it.
Yeah. They were they were going to be growing our bookings dramatically from where they were in 2020 well the.
The only way you do that is you need to be making more increased investment. So we'll we'll continue to to do that.
In terms of of R&D I guess, there's just a couple of phenomenon going on here because.
Some of the.
Some of the cost of R&D are people, who are who are you on base onshore employees.
Some are are offshore employees.
If you think about 2020.
Right. After we bought care cloud, we actually had a fair number of R&D subcontractors overseas larger.
Largely moved all of that work back to to our our team, but we continue to look at the tasks and say what can get done leveraging offshore resources more cost effectively if we can get the same results and spend a few dollars less why not do that we will continue to keep the the <unk>.
Braintrust here in the in the U S.
The architects the product managers day visionaries. The other folks that are that are controlling the design and integrating the other various technologies that we that we have.
But will always look to to do that as cost effectively as possible.
Thanks, Congrats on a go cart.
Yeah.
Thanks.
Thank you.
Our next question comes from Mark Verizon Burger with be Riley security.
Thank you good morning.
I'm wondering if you could highlight some of the marquee customers that med S. R.
What works with what.
What percentage of the business operates under any type of recurring or repeatable relationships and also their business model is pretty different than a lot of your prior acquisition. So I'm wondering if you could contrast, the integration and costs rationalizations going forward relative to how we thought about that with other deals.
Good morning margin. Thank you for the question being able to the CEO of minutes, our windows J, So I'll J over to you. Please.
Sure. Thank you I appreciate the call.
For pleased to be involved with with care cloud and merge our business and with with Carecloud. So just probably the best background I can give you just.
We have we have for primary service areas.
And there are around system implementation of.
Healthcare systems on the <unk>.
<unk> clinical revenue cycle on the ERP business.
We support all vendors equally.
Second is strategic services.
Around planning operational consulting.
Some business intelligence and analytics.
It is.
T manage services whereby organizations are turning over some of their I T support to us.
And then lastly revenue cycle, we have a revenue cycle practice that now has a significantly more capabilities, but we've always been involved with.
<unk> consulting in the revenue cycle space as well our clients include a wide variety of.
Academic health systems larger health systems community hospitals as well as some large physician groups. They include on the on the hospital saw on the health system side organizations like.
Ken Medicine in Philadelphia N Y U Medical Center in New York City. Some of those are 2 of our bigger clients.
Kaleida health system in Western New York.
We've got a strong group of community hospitals that we're providing primarily meditech services to in and around the Boston area.
D C H health in in Alabama is a big.
Meditech client of ours, so it's a pretty wide variety of organizations coast to coast that are using our services.
We have moved rapidly within the.
The last 2 months to integrate I think you asked about immigration and.
Cost of delivering services, we've moved aggressively to integrate our back office systems with care cloud corporate so we've taken significant steps to streamline our operations and finance human resources payroll and iced tea.
That's all gone all gone very well for us.
I guess also about the recurring revenue versus.
Revenue that we need to sell.
Ah continuously and also the relationships we have with our customers. So most of our most of our contracts, though we're signing for services probably the typical time is that we're involved 6 to 9 months on an initial basis, but most of those customers.
Represent.
Relationships. So we have the other continuous year over year. So we are working on different projects and different initiatives, but most of our client relationships are multi year.
We also have a number of contracts that we put on the managed services category, where organisations may be moving from 1.
Hospital information system to another.
We they are turning over parts of their operations to us and we're doing for example legacy system support of all of their existing applications, while the transition to a.
A new application.
This is probably represent somewhere between 10.
10, and 15% of our business.
You've never services space.
And lastly.
We are very bullish on the.
The revenue cycle management work, we can do now within the within the hospital on acute care space.
We are aggressively working towards cross selling those revenue cycle management services into our into our client base. They're very excited about we actually did have 1 new contract with them on the list 2 months, where we're working with where will be working with a behavioral health.
Rider.
That is going to be utilizing for.
Traditional care cloud services for our management, a or run down as well as non.
Going RCM relationships, so we believe it.
Great proof of concept.
We are also talking to a couple smaller community hospitals for the same scope of services so very.
Very optimistic about.
Our new position within within Carecloud.
Thank you.
Hopefully that would be very helpful. If that answered your question hopefully they'll answer with a yes.
It is very helpful. Thank you.
You're welcome.
I think the the final rule associated with the the no surprises Act was recently passed and it goes into effect in early 2022 on.
I'm wondering how that could impact care clouds, RCM business, and if you've done anything to potentially quantify potential impacts.
Okay. Then thanks, thanks for the for the question.
Marketing via currently just from viewing the details.
I don't think you have a good material information right now to share, but we can we will look into it and can we have the capability to exist any on all of those things.
Got it Okay and then 1 final 1 for me cyber crime ran somewhere across the health system has obviously been a big topic lately I'm wondering if you could talk about care clouds current capabilities to ensure customers are protected and if maybe the additional investments might be needed and potential opportunities for any new vertical in the future. Thank you.
Great question, and you're right. It is continuously been on the rise, especially on the health system side or the healthcare sector across the award.
Recently over the last 6 months in addition to over internal data security and compliance team, who make sure that on the best in the industry standards and best practices have been implemented we contracted with another external security from who basically monitor across the network and low.
Julianne internationally and keep on monitoring the traffic. In addition in addition to just the conventional way off.
Making sure that the computers and day nodes and other servers are predicted so if there is any abnormality, even at the network traffic level. The alerts on a raised and iniquity jump and so the day or approaches basically the eliminate if there is anything that's too much suspicious automatic DNF dose.
Anything that needs to be blocked and <unk>.
Concern is ways to us day delays, but our team is closely working with them and nowadays tie in organizations network is actively monitored internally and externally.
I hope that answers the question.
Thank you for them. Thank you very much.
Thank you.
And our next question comes from Allen key with Maxim Group.
Oh, Hello, you've mentioned that in the hospital market a challenge is <unk> challenge, it's getting to the decision maker.
A big challenge is also.
Of all the different doctors or nurses and file but they can integrate all the information correctly and often if if you don't have a family member who's an advocate who's there.
Mistakes happen and there's a lot of problems. So is there anything that said that you're looking for doing that that can try to.
Work on that.
And thanks for the question on good morning, and good great.
Great question.
Think other this in terms of the day to day operations from the existing RCN standpoint, or smaller technology solution standpoint, we have been working on the different health systems for the for the last 20 years and especially since the IPO bye.
By acquiring some of these bigger companies the number of hospitals number 10 system, who became partner plus a VIP of partners for them. So you have sort of figure it out many of these operational issues that housing best need to deal with an almost literally in virtually every single Keith and we have examples of Greg.
Sample will there be a significantly improved the overall performance of this update health systems from the RCM from day revenue standpoint vs.
And go back to them to improve their from the denial rates perspective to improving the ER insulin so on and the estimated where technology helps me look into many disintegrated systems within the hospital and yes, it's a bigger.
Task for any hospital to come to come to a decision of implementing 1 consolidator full system, but we provide the help is okay. We can look into disintegrated pieces and we come up with a customized solution, which can sick and mcmeen and tried to eliminate many redundancies, we just very basic.
Single example of business NFPA system being used near the cardio system being used both of them margin reading a different screen. So we take the extreme can.
Solid dated using over a small piece of software custom developed towards from debt specific area creator for example, a day or the surgery conducted.
Proceed.
They have to be 2 games, 1 coming from anesthesia and other coming from cardiology safe EBIT..1 of those 2 is missing our system flags it and that's how we start to add value. This simple basic examples.
Earlier point for even though we have a lot of these capabilities. The problem is finding that opportunity to be standing in front of them that we have these capabilities and so the decision makers can hear from us from on where sales team that these other things that we can do so that's where we believe this made ASR relate.
<unk> ships will be really helpful.
Pardon.
The jury Amish answer.
That was just a little bit of color on the.
On the met US our side with with the health system work that we've done for the last 20 years, we've really focused on services and.
Technology enabled solutions, we we have not traditionally provided the technology, but our experts are working with our clients.
To use the technology more effectively and within our within our market segment certainly over the last 10 years for sure with the wide adoption of for.
Physician order entry an automated clinical documentation our consultants have worked with all of our leaving clients on.
Using that technology more effectively.
And coordinating care and the different segments on the health system, and also providing for medical better clinical outcomes and better patient experience..1 project I think it's good representation that were just kicking off now with a large health system in the.
Virginia, Maryland area.
They've been a long term user of a leading clinical information system, but they feel that they are clinical business processes are not aligned with the effective use of technology. So you are having patient waiting for for too long to get <unk>.
Bounces back from a contact center et cetera, So we will be working with them to use that technology more effectively but also help them modify their processes to again and improve the patient experience. So I think we're working right at the forefront of that other critical need.
Thank you very much thank you.
Thank you Ed.
Our next question comes from Kevin D D with H C Wainwright.
[noise], Hi, moving Hardy you've mentioned.
He met S. R. D O puts you in a better position to partner with other firms in addressing hospital systems could you elaborate on that maybe give us a few examples on how you see that growing.
And and talk to the.
I guess for espousing the care cloud brand within.
Within that endeavor.
Thank you and thank you for Kevin an outlet J take it to work, but I can just just recreated the same point I just.
Mentioned net.
And in this hospital space, 1 challenge always VB historically have to deal with is getting in front of the decision makers, but other than that and leave it to J&J right on to jump in please.
Sure. So what what we are working with our sales force who have relationships across the health systems.
That we've traditionally called on.
So we have traditionally called on the Chief Information Officer, and Iced tea executives now with the care Club Association. We are working actively with our sales teams to call on Chief financial officers, Vice President of revenue cycle.
And discuss with them the capabilities that now the new med ASR has around.
Around hands on staff supplementation for for ER management operational consulting about optimizing the revenue cycle and then the ongoing the ongoing challenges of revenue cycle management outsourcing.
For 1 of our 1 of our clients that.
Has been a good client of ours, we got the oil got the introduction to move from the from the I T area and to the financial space had some discussions with CFO and the V. P of revenue cycle and introduced our care cloud services to them. So.
We're in the process of.
Crafting an agreement where we help them do.
M. A R wind down on some old accounts that they had put in some processes to ensure that there ER performance continues to improve as well as on an ongoing basis and this is still on the discussion discussion phase 2.
Have them move there or move their revenue cycle operations in its entirety or in or in parts.
2.2 occur cloud RCM relationship. So we believe it's a it's a model for continued.
Continued success with a lot of our clients.
For community hospitals in rural settings or singles sites within a community are all struggling on the revenue cycle performance aspect. So.
The solution or this combination of services and technology.
Definitely enables them to take advantage of our capabilities at a at a reasonable at a reasonable cost.
For something that we can that we we believe it was kind of fuel a significant growth for us.
And how do you Ah for.
For questions.
Yes, that's certainly helps Jerry thank you.
Hi, you're obviously and.
Sales and marketing grow with you had a head count right, that's clear, but given that that care cloud brand and the fact that you've embraced it.
Across the entire operation.
I'm curious to see how you're promoting it or advertising it.
Across the country at this point.
Can you speak to that sales and marketing budget, that's not specific the head count and perhaps more specific advertising.
Sure Great. Thanks for the question came in and I'll I'll handle flowed over 2 billion a minute for for in terms of the specific to the numbers and Antonio point is absolutely right. The first thing was for us to change the name earlier in the year on the reason was the rationale was this is net cash flow named <unk>.
<unk> will be our 2 day in and there were commitment to providing all the cloud based solutions and to the customers segments. We serve I think non we're feeling to your point, it's very important.
That we get this message across very clearly to the industry and and even if you think about it today as bill mentioned, even from our revenue 9 description of perspective.
Change you have emerged from the revenue cycle and fast to avoid any confusion and does can talk about the details of those looking further.
B. It also in the process of engaging with an PR from so many income.
From the from the PR from to help from other IR People's to changing Ah, making the appropriate changes to the web site to making the changes in different findings from 10-Q, 2 all others and helping address to these earning called the right now hitting on all of the different areas to get this message across.
<unk> changed over time, and it's time now for us to crystallize, who we are.
Just not done nearly the name change and as a matter of fact, if I talk about in terms of lifting numbers for the first half of the year. If I look at the overall revenue up 52% of the revenue is coming from the clients who utilizes the core technology components and then you say core it's the certified EHR system and effective manner.
Men system in patient engagements solutions about 23% of the revenue to day comes from the clients, who are using either 1 or more components of there for where technology, such as either <unk> or precision and Absenter light and then 6 per cent for.
This comes from the different professional services. So it's about 80% revenue is all on technology related.
So that's that's the message will be will be giving in every possible way, but would you like to share in in terms of sales and marketing any specific numbers. Please.
No I don't think I don't think we want to share specific numbers of exactly what we're going to spend and how we're gonna have a portion of it other than.
Did you say that you.
In the.
And in the World of 2021, Yeah, we're we're probably doing less of the.
People getting on an airplane and and visiting visiting customers.
Having said that.
We're working on maximizing engagement with with customers potential customers.
Focusing on clients, where we think there's an opportunity to improve their business bye bye cross selling and letting them use additional services. So we're doing a variety of things and I guess I would say that that any time, you're trying to get a a culture to a to a new brand, it's a long process and it's.
It's something that that the whole company is is always focused on.
And we know Kevin you've you've been a proponent of the single brand idea for a for a long while so.
We've we've totally embraced that that concept as well and we think that is bringing benefits you on to our clients.
Great well, thank you gentlemen, thanks for entertaining the questions.
Thank you again.
And that concludes today's question and answer session. At this time I would like to turn on a conference back to Kim Blanche for any additional are closing remarks.
We'd like to thank everyone, who joined US on today's call. We appreciate your participation in your interest interest in the company and we look forward to speaking to you again next quarter. Thank you all and have a great day.
Thank you.
That does conclude today's conference. We thank you for your participation you may now disconnect.
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