Q4 2021 Tabula Rasa HealthCare Inc Earnings Call
Yeah.
Good day, and thank you for standing by and welcome to the Q4 2021, Tabula Rasa Healthcare, Inc. Earnings Conference call. At this time, all participants on a listen only mode. After the speaker's presentation, there will be a question and answer session.
I ask a question during the session you will need to press star one on your telephone. Please be advised this call is being recorded.
If you require any further assistance please press star zero.
I'd now like to hand, the conference over to your host today, Kevin Dill General Counsel. Please go ahead.
Thank you and good morning.
Kevin Dill corporate counsel for Tabula Rasa healthcare.
The company intends to avail itself of the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Certain statements made during this call will be forward looking statements within the meaning of that law.
These forward looking statements are subject to risks uncertainties and other factors that could cause tabula rasa healthcare's actual results to differ materially from those expressed or implied by the forward looking statements.
These risks and uncertainties include the developing nature of the market for technology enabled healthcare products and services and potential changes to laws and regulations that may impact our clients.
For additional information on the risks facing tabula Rasa healthcare, please refer to our filings with the SEC, including the risk factors section of our 10-K, which will be filed today.
Recording of this call is accessible through a link on the Investor Relations page of our website and it will be available for 90 days.
I will turn the call over to Dr. Calvin Knowlton, CEO , chairman and founder of Tabula Rasa healthcare.
Thank you Kevin Good morning, everyone. This morning, we're going to outline three salient points to maximize long term value for our shareholders.
And with Covid behind US. The first point is that we're going to demonstrate today that we have a very solid foundation for continued strong growth in our care adventure and health care business.
Second we also will reveal how we are taking a different approach in our med wise health care business to accelerate growth.
And third we will discuss initiatives that are underway to improve profitability strengthen the balance sheet and become cash flow positive by third quarter and thereafter.
So for the next 15 minutes, we will discuss how we are executing on these strive to thrive initiatives.
Before we delve into these three areas I did want to provide a short summary on our fourth quarter results first fourth quarter revenue increased organically, 11% year over year to $85 $7 million.
And that's at the high end of our guidance.
The first half of 2021 saw 6% growth in revenue, while the second half saw 16% growth.
Second we generated fourth quarter, adjusted EBITDA of $4 3 million within our guidance range.
And also $1 5 million of positive free cash flow.
This is one of the several important steps as we began executing on our focus to materially strengthen our balance sheet.
Last November we mentioned three tactics toward maximizing long term value for our shareholders and while we have for their work ahead of US we have made significant progress in the short time since our last earnings call some of them over those three tactics number one we said that we're gonna have organizational leader.
<unk> changes to better align strategy product and sales.
And what do we do we promoted Brian Adams to co president of TRA Z and I am delighted to announce that we hired Tom can't grow as Chief Financial Officer. This will allow Brian to focus 100% of his time on his new role, which he will explain shortly.
Tom is with US today in Moorestown participating in his first earnings call with Tabula Rasa.
We also restructured our senior leadership team, resulting in $3 million in annual savings.
Second tactic. We mentioned was we were evaluating options to unlock the value of non core assets on.
On February the ninth we announced a letter of intent from a well qualified buyers to purchase our dose me Rx business.
This decision will help us strengthen our focus on our three key markets health plans, including pace at risk provider groups and community pharmacies.
We are continuing to evaluate other noncore assets that could unlock additional shareholder value and expect this process to run through the next few months.
These decisions are being made in conjunction with our new strategy and are designed to materially enhance our balance sheet.
We will not make further comments related to dose me or other potential transactions at this time.
In addition to the organizational leadership changes and evaluating divestiture of noncore assets tactic three was exploring new strategic and transformational relationships.
Since our last earnings call, we have been incredibly active.
In identifying engaging and cultivating several strategic initiatives with companies that could scale, our med wife's division using our med wife's platform in new endeavors as well as partners that can help us optimize our business process and generate cost savings.
We announced in our earnings release, a few of these partnerships, including one for our business.
Process outsourcing.
Carey mentioned Tpa business.
We expect this partnership to generate multimillion dollar savings on an annual basis going forward and Brian will highlight some more specifics.
So at this time I'd like to turn it over to Ursula to report on our care adventure in Health Care Division and then Brian on our Med wives Health care Division as well as to provide a review our financials.
Uh huh.
Thanks, Cal very exciting indeed.
Thanks to the growth of pace and our term mentioned health care Division first broadly.
19 has been to Kimberly for restarting pace organization expansion and new program launches across the U S.
Pace as an alternative to nursing home placement is not very attractive to not for profit <unk>.
Entity.
And being a pace participant has immense value.
That is show that pace enrollees were less likely to contract COVID-19, then there's over 65 and nursing home setting pace.
Pace enrollees are less likely to be hospitalized with a 24% lower hospitalization rate.
Re hospitalized with a 16% lower re hospitalization rate and less likely to go to the E. R. With one less ER visit per year per person compared to their over 55 door residing in nursing homes.
There are now 144 active program 272 centers in 30 states servicing more than $55000 plus about 10000 participants with Medicaid only.
According to the National Association. There are 116 communities that have the potential for over 500 participants that currently do not have access to pace, which represents 174000 participants pace.
<unk> is growing to meet the needs of our expanding elderly population.
The MTA also reports that 11, new pace organizations opened in 'twenty, one and Theyre currently estimating 32, new pace organizations to start.
In 2022 and 'twenty three.
A key part of this growth is the entry of for profit pace organization purchase will be health, a long time partner of Tabula Rasa we.
We are supporting their aggressive expansion across the U S. In addition, we recently started Onboarding concerto pace on the East coast.
With regard to caravan health care growth.
'twenty one.
Implemented 28, new solutions with nine of those coming in the fourth quarter across a number of new pace organization and Kerr mentioned health care service line.
Entering 2000 to 2022, we are on track to implement 62 solutions across all of our service line equating to an annual revenue of $45 million when at full capacity.
How are we managing this we have reorganized our business development activities into an account management structure, allowing us to better support clients, while leveraging the increase in cross selling opportunities driven by the sheer number of our new clients.
New structure includes 14 team members with only two open position, who will manage all service lines and pace and.
In other similar value based care settings.
Six regions across the U S.
Once again, our net revenue retention intervention healthcare exceeded 100% in 2021 and I believe that this is a reflection of our unique Midwest technology and superior service that we're providing our clients and a testament to our longstanding relationships.
Lastly, I want to highlight another piece of legislation.
Right drug dose now act, which would foster a national effort to expand the incorporation of pharmacodynamic testing into clinical practice to improve patient outcomes.
Since we are already doing this we are pleased to see the diffusion of innovation.
Now why is the only software platform that digitally incorporates the entire science behind the appropriate application of pharmacogenomics.
Our pace programs with our pharmacokinetic clinical services covered by part D have started to make this precision pharmacotherapy option available to the appropriate participants on there Seth.
This is a clear humanistic value proposition only offered by Tabula Rasa and we have the published results to demonstrate the positive impact it makes.
With that I will turn it over to Brian Adam.
Brian Thank you Ursula.
First of all I want to say, how excited I am about my new role and working more closely with our dedicated tabular rasa members to tightly align our strategy sales product and operations teams.
Made a lot of progress over the past few months to position tabular rasa for growth in 2022, and beyond and I look forward to sharing with you. Some of these initiatives that we have underway.
We believe we will materially impact our business outlook and balance sheet over the coming months.
In addition to a short recap of our financial results I want to focus on a few areas, including some of the primary drivers of our growth in care bench and med wide segment sales <unk> commercialization and guidance.
For the fourth quarter and full year, we grew total revenue, 11% and 7% respectively on an organic basis. Once again, our revenue growth was driven by care bench in health care, which accounted for 75% of total revenue and increased 20% on a reported basis and 14% on an organic basis.
We expect to care bench in health care to remain the key revenue driver in 2022.
Spend on this further in my guidance commentary.
So turning to care a bench in health care and slide number four which shows the monthly sequential census growth in our care Kinesis service line.
As a reminder, care kinesis delivers medication management and pharmacy distribution services, leveraging our med why science and continues to represent a major growth driver for Tabula Rasa.
The main takeaway from this slide is our census growth was materially consistent with the last 10 months of the year, averaging near our targeted rate of 1% monthly sequential growth.
With respect to the first two months of 2022, we experienced positive monthly sequential growth in both January and February , albeit was below the 1% monthly sequential growth rate that we target.
But it was in line with internal expectations and what we've seen in past beginning of each year.
We witnessed strong improvement in the sequential growth rate in February 2022 versus January 2022, and expect this trend to continue into March.
Important to note that we have seen we've not seen any material change in the death rate among our pace participants.
Lastly, we continue to grow faster than the pace figures reported on a monthly basis by CMS year over year.
In February 2022 at 12% or two times the CMS rate.
We know that investors follow Cms's monthly reports on pace census, one caveat as those numbers only reflect the number of Medicare participants that have elected pace.
The other cohort, which is growing rapidly at least in our pace clients is Medicaid only participants who are not yet eligible for Medicare. This number is becoming more significant and has recently grown to be as high as 10% plus of the pace organizations enrollees.
For those new to Tabula Rasa health plans with Medicare coverage are required to offer medication therapy management or MTM services, which includes a comprehensive medication review, our CMO to beneficiaries that meet certain requirements a.
Difficult portion of our medication safety services revenue is derived from CMS, which is down this year due to the loss of the Cvs contract that we previously announced.
We are encouraged by the strength in our top 10 med <unk> payer division revenue accounts, which in aggregate increased 23% in 2021 and are helping to counter headwinds.
This year from the CBF loss and declining revenue from our CMS enhanced medication therapy management program in its final year.
Our newer offering addressing a Medicare part C star measure for care of older adults represents an important growth opportunity for tabula rasa.
Launched at the end of 2020, this new offering generated over $2 million in revenue during 2021 and is expected to materially be materially higher in 2022 based on contracts in place and large scale opportunities in the pipeline.
Moving onto sales activity and excluding sales related to Covid testing, our overall 2021 bookings of $37 $9 million increased modestly compared to 2020.
But our med <unk> payer division finished 2021 on a very strong note with the highest quarterly sales in company history, winning business in new and existing accounts.
Slides five and six highlights some of the important output from a recent report titled the prescription of Trust. This report explores the role a pharmacist in the U S health care system.
Important takeaways from this report, which are key long term growth drivers for <unk> include first by 2025 164 million Americans will have a chronic disease accounting for four trillion dollars in health care costs.
Patients with chronic disease account for 81% of hospitalizations and have increasingly complex medication regimens accounting for 91% of prescriptions filled.
The sweet spot for our <unk> solutions.
Holly chronic and poly pharmacy patients.
Second <unk>.
Pharmacist are positioned to fill more direct care patient care gaps and become more integral parts of the health care delivery system, including patient counseling preventative care and care management.
Today, we are working with a number of at risk provider groups and as the industry continues to transition to value based payment models are met wide solutions and telephone Missy network can play a major role.
Turning to our <unk> commercialization efforts, we recently appointed Dr Fair, Matt hat to our newly created position of Chief product Officer, <unk> background, as a pharmacist and technologist heading our prescribe wellness business positioned well to lead our product development efforts.
<unk> leadership, we have begun to develop a series of <unk> clinical solutions, starting with one focused on type two diabetes that will be launched in the second quarter. We.
We plan to continue to develop and launch new clinical solutions rooted in our med wide science, but targeted to address certain populations with various conditions and disease states.
We've already tested the market and are seeing significant interest in this new solution.
We're excited too in the future tell you about the pipeline of new solutions that we will be bringing to market that leverage our existing capabilities to.
To that end, we've begun the search for a chief commercial officer, focusing on the Med <unk> segment, which we hope to have completed during the second quarter.
Between the pipeline for our existing solutions and the solid interest in our emerging offerings I am confident that we will be able to hit our target of 2% to 4% of incremental growth as noted in the press release.
Last I will turn to guidance for the first quarter and full year of 2022. Please reference slide eight for our full year bridge.
In addition to driving higher revenue in 2022, we're committed to improving profitability and free cash flow along with strengthening our balance sheet.
Our first quarter revenue range of $84 million to $86 million reflects 10% to 12% growth versus a year ago and is consistent with the sequential patterns that we've witnessed in the past two years.
Our adjusted EBITDA range of $3 million to $4 million does not fully reflect the cost savings initiatives that we've implemented as noted earlier and cited in our press release as well as other efforts that were currently evaluating.
We expect to see the full benefit of these actions starting in the second quarter of 2022.
For the full year 2022, our revenue range of 371% to 377 million represents growth of 12% to 14%, which is consistent with our initial projections provided during our November earnings call.
Our growth and profitability will be driven primarily by care bench in health care.
With that I'll turn it back over to Cal for closing comments.
Thank you Brian .
First thing we mentioned was we were going to demonstrate that we have a solid foundation for continued strong growth in our.
<unk> mentioned health care business.
On the intervention side, we're looking at a steep trajectory of new pace participants and associated revenue from current client expansions from conversions of non clients to TRA Z already with 3000 additional participants contracted for care kinesis This year.
And thirdly, no numerous pace startups under contract as Ursula mentioned.
Second salient point was reviewing how we are taking a different approach and our Midwest health care business to accelerate growth.
On the med <unk> side as mentioned, we have completely revamped our structure processes and strategies. These changes launched this quarter.
And third discussing initiatives underway to improve profitability strengthen the balance sheet and become cash flow positive by Q3 and thereafter.
Our successful ongoing focus of divesting of noncore assets, coupled with our very strong <unk> growth and our pivot in med wise, all bode well for a banner year in 2022.
Our team is very excited we're very pleased that two years of Covid stagnation is behind us while cost us our bottom line. We believe that we made the right choice by focusing on employee retention during COVID-19 , especially with our current tailwind by doing so we are fully equipped operationally to absorb the 2022.
Both.
We are very bullish on our sustained successful future for tiara HC and also for a meaningful return for our stakeholders and for our spectacular Trh Sea team.
Operator, we're now ready to answer your questions.
And thank you.
As a reminder to ask a question Youll need to press star one on your telephone to withdraw your question post the balance sheet. Please standby, we compile the Q&A roster.
And our first question comes from Sean Dodge from RBC capital markets. Your line is now open.
Thanks, Good morning.
In Med wise, Brian you mentioned.
Pivoting a bit they are now focusing on developing new clinical solutions is there anything you can share.
Around the incremental costs or investments required to support that.
I guess why is it an area, where you've already made some significant investments or efforts.
Over the last 18 months can you talk maybe about the kind of broader.
Organizationally structured cost structure are there any areas you are looking at where you think you could generate some savings.
Help offset that.
Yes, Sean that's a great question and the beauty of this strategy at this point is that we're going to be leveraging our capabilities. So there's no incremental investment and in fact, we've shifted some of the existing resources to focus.
More around these new clinical solutions that we're going to be launching so in fact, we do anticipate there is going to be overall savings versus incremental cost to launch these programs under <unk> leadership and I'm really excited about having her in the physician she'd been charged with leveraging the existing.
<unk> capabilities versus creating something new that requires further investment. So it's really about repositioning some of the tools that we have in place today to focus on some of the really interesting parts of the market that are getting a lot of attention right now.
Sean I would just add to Brian's.
March which were right on target that.
Three of our.
Strategic partnerships that we're working on right now.
Or in the mid wife's division and so youll see that once we can.
Solidify it.
And announce it but we were using as Brian said, we're not it's not going to be an expense, it's going to be a revenue enhancement.
Okay and then.
At the outset, you talked about asset sales you mentioned the dose me.
Divestiture.
Is there.
I know these things are sensitive to talk about it but it was there any anything you can kind of provide with a high level.
Where youre at thinking wise around other.
Maybe more significant potential asset sales when when can we expect to hear more about that and maybe how significant are we are we talking.
Yeah.
We.
I've been advised that we can't really talk about that.
But we will.
I would say by the second quarter Youll here.
What's going on.
That's fair.
Yes.
Yes.
Okay, great. Thanks.
Okay.
Thank you.
Next question comes from Glenn <unk> from Jefferies. Your line is now.
Yes, thanks, and good morning, Thanks for taking the question.
Also wanted to follow up on on Med wise.
I think what a lot of us are having trouble trying to understand maybe a little bit longer term what the growth algorithm may look like in med wise, you know obviously last year.
It was impacted by Cvs this year will be impacted by MTM and Youre talking about new clients that are going to add 5%.
Just to the specific division and you're also talking about new business in 'twenty, two that'll add 2% to 4% of total revenues and I guess, what I'm, what I'm really struggling with is just trying to understand what the growth algorithm should should look like for both software subscriptions and medication safety services. So could you maybe talk us through that a little.
And how we should think about things maybe even beyond 2022.
Yes, Glenn that's a great question. This is Brian thanks, Thanks for that.
What I would point you to is first as I mentioned in my comments.
The top 10 payer clients that we have today grew 23% this year.
So.
That's an indicator of the type of growth that we would expect on the <unk> side of the house.
We do believe that based on all of the investments that we've made to date that this can be a real growth engine for our business going forward and as we kind of reposition a bit our go to market strategy, we feel like.
There's no reason that that business should not grow north of 20% so.
In the longer term.
But I do think that outside of those two events right as you pointed out Cvs.
And of E. M. T M. I think that that is a good indicator of where we would expect to see.
The growth levels.
This is Kyle I think that.
As I mentioned, just a couple of minutes ago, the three strategic partnerships that were.
Working one right now.
Or on the midwife side and they're all with.
Large companies that you would know so.
I think once we can get those congeal and we can make an announcement you'll get a lot more.
And direction on that.
But early saying anything.
Financial about it yet.
Hey, tell me if I could just follow up with two quick ones for you I think the other thing that's sort of on a lot of People's minds is the margin and I was just curious to get from your perspective, what do you think are the biggest levers to bring that margin back into double digits. I mean, you talked about the <unk> deal you mentioned in the press release, a new <unk>.
So I think which we'd love to understand a little bit more about the leverage on the margin side and then secondly on the balance sheet, a considerable amount of debt and I think through these asset sales is your goal to get that debt down in a meaningful way or are you kind of not overly concerned with the level of debt on the balance sheet at this time.
I'll, let Brian hit that but I'll tell you. The answer is what you said, it's a very meaningful way.
And what we're doing.
So on the margin side Glenn.
Obviously, we've been investing over the past couple of years and as Cal mentioned his remarks, we feel like we're well positioned to absorb a lot of the growth that we're expecting this year without having to incrementally add.
Workforce in order to support that business so.
That's going to be a big lever for us this year. Some of those initiatives that were mentioned in the earnings release and in <unk> remarks are going to contribute meaningfully to margin expansion not just this year, but in the go forward. So we anticipate significant.
Efficiencies and cost savings related to those activities and Theres a number of other things without being too specific that are underway right now and we will be able to communicate in the coming coming.
Coming months.
But our goal is to have meaningful margin expansion and.
And increased cash flow and profitability, so maybe segue into the to the debt question.
Right now I will tell you that we have ample liquidity there are no concerns there.
Not in danger of tripping any covenants, we've got a great relationship with our senior lenders.
And there is no debt thats coming due anytime soon so.
Feel very comfortable about the liquidity of the business and our charge to become cash flow positive by the third quarter, we feel really confident about that.
Okay. Thanks for the comments.
Thank you and our next question comes from Ryan Daniels from William Blair.
Your line is now open.
Yes. Good morning. This is Jared haase in for Ryan Thanks for taking the questions and I. Appreciate all the disclosures here wanted to kind of ask one around a similar theme with <unk> growth and specifically the disclosure that you grew 23% with the top 10 clients in that segment I'm curious just I guess, maybe more of a blocking and tackling.
But the drivers of that growth should we think about it is largely coming from an increase in the number of medication reviews with that cohort or is that a reflection of sort of increasing your level of contract penetration by adding more of the sort of technology services and kind of expanding the scope of those engagements beyond just the basic medication review.
Yes, it's not it's not the former to the latter we've not really an expansion of <unk> at all.
It's an expansion of the use of med wise.
Her say software.
And in the SaaS model.
All three of the.
Strategic partnerships, we're working on right now.
Address that issue of using midwives wages now in new places in new ways.
Jared what are the what are the pieces that I talked about in my commentary was kind of expanding some of the services to address different star measures and.
That's been and we consider a real growth driver and opportunity for the business going forward. So it's going deeper into our existing customers with new offerings as Cal was describing.
Okay perfect. That's helpful. And then just as a quick follow up I'm going to flip to that Karen mentioned side of things, but the disclosure around $427 per member per month with pace client in Q4.
Appreciate the growth there can you maybe remind us how to think about sort of the all in pnp on potential.
Across your suite of care invention services, and how you sort of expect.
To continue to penetrate that total PM TM opportunity over time.
I can give you the total and the nurse look until you on how we're going to capture the rest of the P. M. P. M. So.
Just quickly it's $1200 P. M. P M. If somebody were to.
Be using all of our <unk> solutions today.
And then over time for instance, this morning, we had a contract commenced on the new program in Miami that contracted for all fixed services. So for existing for a new startup pace organizations, we're selling all of our services at the same time typically we have at least one service.
Individual pace program is about 90% are using at least one so with our new account management strategy. Our goal is to really educate.
Our clients about other services that are integrated that.
That would benefit them and how they would economically clinically and then humanistic lead benefit their participants and their team.
Okay. Thanks for that that's all I had and I'll hop back in the queue.
Thank you.
And thank you and our next question comes from Stephanie Davis.
The leerink.
SBB, but.
Stephanie Your line is now open.
Thank you and thank you for the Valiant attempt at the company name.
Yes.
I guess this one is best for cow, but I'd appreciate any of your thoughts.
So now just two years from now you are done with striving to thrive.
Does tabular razo look like what the team look like where are you positioned to secure you brought in the market what what moves have been made strategically to kind of get to that next level that can be security that we are done with these initiatives.
Yeah.
Well.
Thanks, Thanks steps nice talking with you.
We're really pumped up to be honest, where we've got such a.
We've never had this type of a pipeline ever.
And we've never converted so much in the first two.
Months of the year that will unfold throughout the year.
So we've got enough.
<unk> power now.
As I mentioned, we didn't.
Let anyone go or furlough any one and so everybody has been.
Active.
We've added new.
Initiatives to help with.
Hearings.
Actually it's more like velcro to our pace clients for example.
Going very very well on that side.
Very excited about what we're doing in med wise, it's a new initiative, a new a new pivot, where we took and it's exactly where we wanted to be.
Well I pushing the software out there too.
Many many many places where its not right now.
These initiatives that we have strategic partnerships that.
I wish we could announce some break today, but we're not quite there yet.
Youre going to advanced <unk>, and that's our whole goal.
And our our researches in great shape, we published a number of papers just to show again over 100 peer reviewed papers in the last 36 months to show again that this is this is not fake.
Big News.
It works, we're helping people were saving lives and we're keeping them out of the hospital.
We're right on target or our Atlanta Linux Group also has now.
Stepped up a bit a lot actually and so we were able to show people better dashboards than we ever had before to let them know where they are.
The pace.
Milliman has allowed us to put pharmacogenomics services.
To the part D bid for our pace programs, which is huge and that's what we need to do to move from personalized precision pharmacotherapy.
Very excited about that that's really taking off nicely. So.
Post Covid, we are feeling good.
Got a lot of a lot of gas in the tank and we got a huge trajectory. So this is it's a really good feeling right now for us.
And I guess the follow up on that it sounds like the care of engine business and the census growth is going really well.
Brian mentioned to view that as more of the majority of the business. How do you think about the balance between care invention versus med wise given some of your initiatives.
To make sure the focus stays mean.
Yes.
Ned wise is going to you're going to see a lot of growth and that was not in the traditional C and more stuff, but in the midwives software per se this year.
The challenge is that the as far as the percent the challenges that the cure mentioned stops growing so darn fast.
Also so it's going to be hard I think for us to get to like a 50 50 for example, anytime soon.
Because of the pure venture growth that's huge.
Brian obviously, what do you.
Yes, I think that Thats.
But could comment Cal in terms of the underlying growth rate in the care of engine business to see.
Significant shift in the revenue mix today.
Would be challenging because we actually see great opportunities even beyond pace, we've learned a lot in that market for the convention product suite.
That we could leverage into adjacent markets and that's something we're doing some work around right now so that business could grow even quicker.
But.
I think that the med <unk> side.
We've clearly made a lot of investment there we can leverage a lot of what we've already done as I was talking about with my comments for Sean we don't need to invest significant amounts.
Capitalize on what we've what we've built and I think that the.
The goal.
I've stepped into this role has been to really refine that focus and go to market strategy and thinking so.
We've been making some efforts.
To stay lean as he set Stephanie so that.
There is a real focus and we're putting a lot of resources around a few big market opportunities, where we think there's the most potential so.
We're excited to tell you more about that in the future, but I think that.
Yes.
We're acutely focused on just a few areas of the business at this point.
And I think.
So it's likely a merger of the client base at some point, we are seeing more and more care mentioned health care service lines being requested.
Amongst other types of value based care organization.
Even health plans, our opening pace organization. So I think we will see an interesting feature.
Okay, well listen you guys. The best of luck on that and I'm, hoping we can hear more next Brian . Thanks.
Thanks, Jeff.
Thank you.
And our next question comes from Jessica <unk> from Piper Sandler Your line is now open.
Hi, Thank you for taking my questions and thanks for all the detail this morning.
Can you kind of help us understand when the role of tabular rather begins as the pace than a ramp.
Is there a way that tabular help centers quietly launch and start enrolling patients.
Interested to know when one tabular asked as well really start thanks.
So really when blood new startup starts we start probably.
Six months before that implementing electronic health record getting people up to speed on medication safety and getting our technology and equipment in place and educating the team.
Our.
Third Party administration group comes in right around the start date.
Our PGM services actually are contracted as part of the part D applications. So that's really good.
First.
Could be the first time, we hear of a new program because they have contacted them.
<unk>.
Nicole assistance Center.
Two our shared partners with the National Pace Association and then on the start date really all services are a go.
Our risk adjustment services when there's data are able to do the look back at <unk>.
Appropriate coding of diagnosis for the Medicare side of the payments that they receive.
Yes.
Jessica just to add onto that if theyre slow was mentioning with our with our tack or technical assistance consulting team. These folks are involved very early on in.
In many cases, even before a organization decides to start a pace program in the evaluation feasibility studies. They are helping with the application process. So these organizations get exposed to us very early and and our services.
Describing that one that we.
We signed this morning.
For all of our services.
It's a great pipeline and funnel for us and it is a really important part of how we are generating the significant backlog that we have in place today.
Which is why it was so high.
Yes, integrate our account management system across the service lines.
That's really helpful. Thank you and then just one quick follow up when you mentioned the 3000 additional enrollees are those individuals' kind of ramping over the course of the year and included in that 1% sequential growth.
Incentives or are they incremental.
Yes, they'll be coming in probably mostly second and third quarter.
They're all those signed contracts are signed.
Those are not included in the 1%.
Numbers. So we do anticipate those are those are back half of the year loaded.
Awesome. Thank you so much.
Thanks, Jeff.
And thank you and our next question comes from Bill Kitchell fulfill race asset group.
Your line is now open.
Thank you good morning.
Kal you started your comments by referencing the initiatives too.
Create.
And recognize shareholder value.
And.
Clearly you've been challenged by execution over the last couple of years.
And yet you've got some tremendous assets that.
Don't seem to be recognized and or underperforming.
Their potential.
If you look at some of the transactions that have taken place.
In the health care.
Area.
Prescribe wellness.
You know it could be worse.
Potentially on a revenue multiple based on what we've seen in the industry twice your.
Equity market cap right now this is before even.
Thinking about the growth vehicles that you have in convention.
In.
You know a year or so it could be a $300 million business.
So my question is what is the extent that is the board involved.
How involved is the board in the oversight.
Seeking and maximizing shareholder value.
What is their tolerance.
For what's transpired so far.
And what.
What commitments.
Have they.
<unk> been able to offer to their.
Initiatives to support you in maximizing shareholder value because I think investors have been.
I had a very challenging period and potentially some of these assets should be in other hands.
Yes, thanks for the thanks for the comments and the question. The board is very involved we call. It financial engineering is what we've been working on with the last for the last.
Probably almost six months with the board.
And we've had numerous meetings rather than our quarterly outstanding quarterly meetings with the board and we've had a subgroup there that's helping us of the Boyd's, it's helping us with this financial engineering, if you will.
And we do recognize your.
Sure.
Evaluation that you mentioned.
We are well aware of that.
We just weren't able to.
Reveal anything at this point further than what we have built.
Everybody is pushing in the sled together I'm telling you.
Wonderful board, we have and they're very supportive and taking the taking the lead with us actually on this financial engineering.
So there their commitment is beyond.
Asset sales of particular segments.
I mean, the question is really yes.
It could be that these some of these.
Divisions are worth more separately to others than they are operating.
As a combined entity.
That is correct. So the board the board is committed to pursuing shareholder value that's been rationalized.
That's why I mentioned it right out of the gate, that's our number one focus right now.
Thank you good luck, yes, thanks for the question.
And thank you.
And our next question comes from David Grossman from Stifel. Your line is now open.
Thank you.
Tough that's a tough question to follow but.
Let me just I had a.
Couple of.
Quick follow ups to some of the questions that were asked earlier so.
The first question is about.
The guidance itself I, just wanted to make sure I understand the mechanics. So is 10% of the 13% growth that you've guided to in backlog currently.
Wanted to confirm that.
What are your.
Your communicator.
So right now bill.
Sorry right.
We've got 2% to 4%.
That we need to go get to sell into when this year, which is 6% to $13 million we closed.
And and recognized $13 million of in period revenue in 2021. So we feel like that is a very reasonable target for <unk>.
<unk> this year.
Right and did you include I don't think it's that material, but it's dosed me in your guidance or have you pulled it out of your guidance for 2022 dosing is currently in the guidance.
It's pretty immaterial as you note.
Right got it.
<unk>.
Did you give I think you talked about hitting.
Our free cash flow positive in the third quarter.
Any thoughts on what the cash flows we should think about free cash flow for the year.
So right now I would I would assume kind of a neutral basis for the year I think that thats. The right place to start we do anticipate that we're going to be able to materially throw off some cash in.
In 2023, but 2022 we.
We anticipate.
Going as I said cash flow positive in the third quarter.
Right.
And then.
Sorry, if I missed this but we talked about and you announced some of the cost initiatives that you were able to execute.
And you talked about I think in your prepared remarks $2 billion.
Of cost savings from restructuring the management team can you give us any better sense, even if you don't want to talk about specifics by initiative just.
Frame the cost savings and the timings from what you've already executed.
Without getting into too many of the specifics.
We have.
The goal here is to ultimately have a better go to market.
<unk> strategy around the midwife division, we feel like we're very well positioned as Cal shared on the care venture side of the house.
<unk>.
From a sales perspective under her leadership.
Fantastically well.
Where we needed to do some more work it's around <unk>.
<unk> and <unk>.
Our commercialization strategy. So that's really where we've spent a lot of time and effort and some of the restructuring efforts have taken place in terms of the leadership.
From a strategy from a product standpoint.
There's some work that needed to be done to better align with sales.
So.
That's.
That's what I would tell you today.
Yes.
Brian I think the question was really more about the deal with Accenture with the pizza, alright et cetera.
I thought I was going to a different way.
So just in terms of you've executed those changes.
The cost savings.
Fully recognized in the 2022 guide or is there something coming here that we can start expecting in terms of incremental cost savings that gets to one of the margin questions. I think yes, I'm sorry, I missed that one so yes, there are incremental savings that we would expect to generate it's not fully baked into our 2022 guide we start.
To see.
Some of the savings in the second half of the year.
Then they become much more material in 2023.
So that's that's where we are.
We are going to really see the savings, but as Cal mentioned in his.
Talking points.
Especially with the BPL of the Tpa multimode.
Multimillion dollars on an annual basis of savings that we expect to generate and as these businesses grow.
We're on a much.
More efficient cost structure than if we were to keep that didn't help today.
Okay, but you kept pace any more specific about just what you would expect.
Exiting the year in terms of cost savings from this initiative.
Initiatives.
So I would say from the three combined effort.
It's north of $5 million on an annual basis.
Okay, great. Thank you for that and then.
You talked about the top 10, and otherwise clients growing 23%.
Just is there any way you can frame that just going.
Let's say in 2022.
Would you expect similar growth from that cohort or.
Is it really to stabilize after that first year or is that kind of what.
What youre seeing now in that new logos are going to drive the vast majority of growth just trying to get a sense for how much of it is same store growth versus new logos.
As you sign these new clients.
I don't see that growth rate slowing with our top clients.
We've got a lot of interest on some of the newer programs that I was mentioning earlier on the call. So I don't see that slowing down in fact, I think that we've got a number of new customers as well that.
Are really going to help the growth rate going forward. So it's a combination between getting deeper within our existing customers as well as some of these new logos that we're bringing on.
So are you getting double digit growth in the same store base.
Some of these newer clients.
Yes, great.
Alright, great that was it for me thanks very much thanks, David.
Yes.
And thank you.
And I am showing no further questions. This concludes today's conference call. Thank you for participating you may now disconnect. Thank you speakers.
Thank you.
Okay.
Sure.
Okay.
[music].
Yes.
Okay.