Q1 2022 CareCloud Inc Earnings Call
[music].
Greetings and welcome to Coeur Cloud, Inc. First quarter 2022 results conference calls.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
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I'd now like to turn the conference over to your host Kip Blanch General counsel, Thank you and over to you good morning, everyone.
Welcome to the Coeur club's first quarter 2022 conference call.
On todays call are Mahmud Haq, our founder and executive Chairman.
A hearty Chowdhry, our chief Executive Officer, President and a director.
Bill Korn, our Chief Financial Officer.
And Carl Johnson President of care Cloud Forest.
Before we begin I would like to remind you that certain statements made during this conference call are forward looking statements within the meaning of section 27 eight of the Securities Act of 1933 as amended.
In section 21 E of the Securities Exchange Act of 1934 as amended.
All statements other than statements of historical fact made during this conference call are forward looking statements, including without limitation.
Regarding our expectations and guidance.
For future financial and operational performance.
Expected growth.
Business outlook.
And potential organic growth and acquisition.
Forward looking statements may sometimes be identified with words, such as well.
They expect.
Plan anticipate.
Coming to.
Believe.
Estimate or similar terminology and the negative of Easter.
Well, we're looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward looking statements.
These statements reflect our opinions only as of the date of this presentation and.
And we undertake no obligation to revise these forward looking statements.
In light of new information or future events.
Please refer to our press release and our reports filed with the Securities and Exchange Commission, where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward looking statements.
For anyone who dialed into the call by telephone you may want to download our first quarter 2022 earnings presentation.
Please visit our Investor Relations site IR sought care cloud dotcom.
Roll down to news and events.
On first quarter 2022 results conference call 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 first quarter 2022 results for a reconciliation of these non-GAAP performance measures.
Our GAAP financial results.
And with that said I'll now turn the call over to our CEO , how do you charge a party.
Thank you Kim.
Welcome and thank you for joining us today to review of our first quarter earnings call.
First to review of our first quarter 2022 financial highlights.
Revenue of $35.3 million was a record for the first quarter coming in slightly ahead of expectations and represented an increase of 19% year over year.
Adjusted EBITDA of $4 $7 million is tracking towards the full year guidance that we had presented in March when we offered a better initial outlook.
Adjusted net income was $3 $5 million or 23 cents per share.
On the call today, I would like to discuss a few key themes as we continued to advance care clouds mission of becoming the leading technology and solution supplier to health care providers name.
Namely I'm going to discuss number one innovation.
<unk> some of our new products that are forging new and Edison markets number two cross sell success by a further white space penetration.
Number three the health of our sales pipeline and number four partnering characteristics. So far we're successful force initiative.
Who start us off.
Want to highlight.
Two more of our recently launched digital health solutions Geeks out remote and other chronic care management solution.
<unk> kicks out better life.
Launched last month, Jack loved remote gives us an uber like mobile clinician management solution with location services, allowing better scheduling for both clinicians and patients the product is targeted to be home health market and extensive footprint beyond the clinic with the last mile of the health care the home.
The solution helps practice groups to streamline referral management improve staff assignment for home case management and gives administrators and clinicians visibility and control over operational metrics.
Target market for this offering is the larger practice.
At this level of scale the complexities around credentialing coding and revenue cycle requires a disciplined approach to refer to generation and management for which killed cloud remote is ideally suited.
Yeah I felt when this was launched recently to address the needs of our core primary care providers by supporting the treatment and care of their chronically ill patients.
Center for Medicare and Medicaid services CMS towards chronic care management program has increased reimbursement for chronic care effectively incentivising providers to improve connectivity red care coordination and treatment of chronically ill patients.
<unk> cloud wellness is a software enabled services that extend scared to high risk patients with multiple chronic conditions.
Through their providers.
<unk> has endured in wellness receive regular communication from a team of dedicated practitioners and care managers.
Good managers work in partnership with a provider to coordinate care plans that considered a holistic approach to chronic care management inclusive of nutrition medication and lifestyle management.
I believe the solution has great appeal to the provider as there is no upfront investment to use the service in fact, the brightest can drive revenue to their practice to the use of services, including E Prescribing and chart review.
Target market represents approximately 50% of the clients that are using are a core solution.
We believe that if half of food eligible practices use goodness, we have the potential to generate in the millions of dollars of revenue long term.
I'm incredibly pleased that 75 customers have already expressed interest in wellness and just the first week since the launch.
We believe both wellness and remote represents a thoughtful approach to the cutting edge innovation that our customers have come to expect from care club.
Next I would like to briefly touch on other forest partnership.
As we have discussed in the past relating to enforce program. The initiative is a powerful example of care cloud striking mutually beneficial agreements with potential partners instead of acquiring them. As one example, we are working with a large national provider of revenue cycle in EHR services augmenting their workforce and.
A series of back office tasks, leveraging both of our onshore and offshore capabilities. This relationship started off small and has increased in size and scope as a result of the quality in Brazil, we have been able to demonstrate.
Since launching forced two years ago. The program still contributes only a small amount of revenue at this time, but has enormous potential as you're just scratching the surface here.
Although force pipeline has increased exponentially as I will explain shortly consistent with our three pronged strategy of organic growth acquire and partner we continue to evaluate additional partnerships on an ongoing basis that would either be a strategic fit with our core business or have the potential to forest.
In your markets.
As you know required made us all last year in part to augment our capabilities in consulting and project management by creating meaningful opportunities to cross sell over technology in RCM services. One example of a cross sell success since acquiring medisoft that I would like to share is the work we are doing from a multilocation behavioral health.
System and the mid Atlantic Maiden saw was initially contracted to provide consulting services for new EMR implementation. They didn't hiatus to work down the legacy accounts receivable remaining from the old system.
There are a number of results there the client hired us for full outsourcing of their entire billing system. So what started as a six month consulting assignment evolved into 100% RCM services engagement leveraging multiple services. We are pleased with the early results of Medisoft and look forward to talking more about future.
Excessive.
The final topic I would like to cover is the health of our sales pipeline.
As we discussed in our fourth quarter earnings call. We are excited about the many solutions in our portfolio, which we have amassed both through acquisition and internal development that can move the needle for our customers things like telemedicine and automated tools to support the chicken process and improve patient experience to name just.
A few weeks.
We stated last quarter that we intend to increase sales and marketing spend by 20% to 25% to execute on the growth opportunity that ever platforms presents.
As such I'm pleased to report that for the first quarter of incremental sales pipeline is up nearly 50% year over year to $22 million.
And that's the level of interest in our products is exceeding pre pandemic levels.
Our total pipeline stood at approximately $40 million at quarter end.
Can get more granular look not only was it a pipeline up meaningfully year over year it accelerated as the quarter progressed, mainly.
Namely, we increased our pipeline by $4 $6 million in January and by $11 $2 million in March an increase of 142%.
I'm pleased that these positive dynamics have followed through in the second quarter, Israel, essentially aided by our new product releases.
A closer look into the composition of our pipeline revealed that enterprise accounts, which we define as 25 or more providers represented 36% of the pipeline improvement in Q1 of 2021 and increased to 50% as of the latest quarter.
Conversely, small group, which we define as one to five providers was about 35% of the pipeline creation in the year ago quarter and declined to 28% in Q1, 2022 ish.
<unk> is deliberate and represents a pivot towards larger enterprise deals.
All service technology enabled solutions remained the largest component of the pipeline increase increasing from 50% in Q1 of 2021% to 55% this quarter.
And a little more color around force voice.
Bush represented just 2% of the pipeline growth in the year ago quarter and accelerated to 10% this quarter.
Entering a fivefold increase year over a year.
We realized that the pipeline is just that a probability weighted set of opportunities in various stages and that there's work to do to bring these deals to completion, but given the exponential increase in deal activity and positive early read through the first quarter, we have confidence in achieving our 2022 targets.
And a high degree of optimism regarding over emerging organic growth opportunities.
To conclude my prepared remarks, we are pleased to report a solid start to the year by exceeding our revenue expectations and tracking toward our full year outlook for both revenue and EBITDA.
We released two new digital health solutions to the market to improve practice efficiency and drive revenue that is getting strong reception from our customers our sales and marketing efforts are ramping up as planned demonstrated by the improvement in number of pipeline and nearly evident of cross sell success on the acquisition front, we continue to.
We execute against our robust pipeline of both small and large potential acquisitions, we look forward to keeping you posted on our progress throughout the year.
At this time I will turn the call over to Bill for a closer look at over first quarter results Bill.
Thank you Heidi.
And thank you everyone for joining the call today and for your interest in the care cloud story.
I believe that we are off to a great start for 2022.
First quarter results demonstrate that our solution set is meeting the needs of the market today.
On today's call I'm going to review, our first quarter financial results and reiterate our 2022 outlook.
But the first quarter, we generated revenue of $35 $3 million, which increased 19% compared to a year ago.
Taking a closer look revenue from our technology enabled solutions represented 85% of total revenue and consisted of 48% from clients using our core technology suite of electronic Health Records or practice management solutions.
15% from clients using one or more components of our technology like our business intelligence software.
And 22% from clients, where were providing services utilizing our technology processes and know how.
Our remaining revenue is derived from 4% from clients using just revenue cycle management services.
9% for managing several clients entire medical practices.
And the other 2% from other services.
All of these breakouts can be found in our 10-Q.
Revenue growth in the quarter was driven by strong results from Med S are the company. We purchased in mid 2021 to give us a larger presence in the hospital space.
<unk> achieved record revenue during Q1.
And so I'd more business than the revenue they recognized increase.
Increasing their backlog and positioning themselves for additional revenue growth during Q2.
GAAP net income of $1 $1 million compared very favorably to a net loss of $2 million last year.
Despite a $500000 increase in sales and marketing expenses.
We have now reported at least $1 billion of GAAP net income for three quarters in a row.
non-GAAP adjusted net income of $3 $5 million represented a 20% year over year increase.
Adjusted net income was 23 per share.
Adjusted EBITDA of $4 $7 million increased 28% compared to $3 $7 million last year.
Our adjusted EBITDA growth was driven by.
Primarily by our increasing revenue and reduced expenses as a percent of revenue.
Our adjusted EBITDA margin increased to 13, 4% compared to 12, 4% a year ago.
100 basis point year over year improvement was the result of a decrease in our G&A and R&D expenses as a percent of sales.
Offset by a small increase in our sales and marketing as a percent of sales.
Now turning to the balance sheet and cash flow.
We ended the first quarter with $10 $1 million in cash, including restricted cash and $6 million drawn on our SBB line of credit.
We generated $3 $1 million in cash flow from operations during the quarter and net working capital of $8 $7 million.
Finally for guidance, we are reiterating our outlook at this point in the year.
Can you do expect revenue to be in a range of $150 million to $255 million, which represents 10% growth at the midpoint.
And adjusted EBITDA to be between 24, and $26 million, reflecting an adjusted EBITDA margin of 16, 3% at the midpoint.
During the quarter.
We issued $26 $6 million of series B preferred stock.
And redeemed $20 million of series, a swapping an 11% coupon for $8 75 per cent.
Our goal is to continue lowering our cost of capital. So you can expect to see further redemptions of series a preferred stock in the future.
Our series a preferred is redeemable at $25 per share anytime going forward.
We continue to evaluate creative approaches to retiring our series a with a keen eye on minimizing dilution to our existing common shareholders.
To wrap up our strong first quarter results give me good confidence that we will achieve our full year goals.
<unk>, we're making progress on all of our growth initiatives setting the foundation for sustainable above market growth.
With that.
I'll turn the call over to Mahmud for his closing remarks.
Thank you Bill I'm thrilled that our year is off to such a great start setting.
Setting us up for another strong year.
I'd like to thank our customer shareholders.
In all our associates for their trust loyalty and support of care clouds mission.
We will now open the call to questions operator.
Thank you.
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One moment, please while we poll for questions.
Thank you.
The first question comes from the line of Jeffrey Cohen.
With Ladenburg Thalmann. Please go ahead.
Yeah.
Oh good morning her holiday.
And Bill how are you.
Good yeah. Thank you good morning, how are you.
Just fine so your questions for Marin Firstly could you talk about the size of the commercial team domestically here and any efficiencies that you're seeing there now.
Now and potentially throughout the balance of the year.
Alright. Thank.
Thank you Jeff.
Jeff as we mentioned even on the last call and from the couple of last quarter that we continuously have been focusing on improving our sales and marketing team as far as we can keep seeing the success and increase in our not only on the pipeline, but also on the closing the deals. So we do see that uptake and.
In terms of the number right now in the U S. You have about roughly 32 resources.
In addition to those we have about 22 Str's digital marketing in the on the offshore side, which is helping the U S side. The there is another probably five or so senior position that we are currently hiring for.
Because we do see is the thing has been significant significantly started doing too long on the demand generation and on the sales pipeline.
Okay got it that's helpful and could you talk about some of the growth drivers that you anticipate from the.
Sure Cloud force.
You know going forward and talk about that funnel and the predictability of your.
Our estimates and those revenues for a moment from the force program.
Sure. Let me just started this off and then I'll hand, it over to Carl.
Can you can talk about that a bit more detail and as I mentioned in over during the call that we do see the if we look at from.
From the pipeline perspective, a significant increase which.
It is about fivefold compared to the last year when it when it comes to the divorce.
The opportunities the pipeline that we have been able to generate in addition to that our booking for the first quarter has also increased proportionately tens of a percent.
On the <unk> site.
There are some of the large possible anticipated opportunity we are working on and none of those have yet materialized, but we are almost at the final stages of.
The decision in the deal and get into the decision making process with it.
In order to call.
Good morning, everyone, Yes, as he mentioned earlier the initial concept of force was to provide sir.
Potential M&A targets.
They weren't a good fit for us, but yeah, we could offer them something that they could make their businesses healthier and provide us excellent margins. Since then we've really a ball could become a staff augmentation solution for larger groups and hospitals, and especially interesting moving into other companies that are providing electronic health records.
In services to physician practices. So that's where we've seen a big shift I think on top of that we have seen.
Close working relationship with the Medisoft team and as they are in two.
Facilities with with consulting and support services and natural flow of that has been on two providing backend services for for US either on a project basis and frequently then moving into an ongoing basis.
Hope that's helpful.
Yeah. Thank you and then lastly are familiar and bill if you could provide any commentary on.
Pace and cadence of your anticipated top line for the years, we correct in assuming that it looks like.
Sequential quarter over quarter for Q2, and Q3 and a softer Q4.
You brought out in prior years.
Yeah. Thanks, Jeff So, yes, you're right you're correct.
As you know and and I'm sure everybody knows we always go through a period as did most of the industry in Q1 people see the doctors, but they have deductibles and without revenue as a percent of what the Doctor collects the revenue goes down sequentially. So Q1 is following that normal cadence.
With Q2, you'll see just normal visits and by the way last year and the year before there had been some impacts from Covid I'd say by now we're really not seeing a major difference between the level of visits and what you would've seen in 2000 1918 than in previous years.
So so that means you'll see sort of the normal the normal cadence Q2 will be a little more activity.
Q3 will be our seasonal peak it always is our seasonal peak, especially with lots of back to school visits people getting flu shots and then in Q4.
You find people when they can avoid it they don't schedule.
Visits with their with their internet the week between Christmas and New year's So you sort of get one less week in the in the year and I would expect to see that in 2022 as well.
Okay perfect that goes across thanks for taking the questions.
Thanks, Jeff.
Thanks, Dan.
Thank you.
Question comes from the line of Allen Klee with Maxim Group.
Please go ahead.
Yes, good morning.
Could you talk a little more about care cloud wellness in terms of.
How you are positioning this product competitively.
You mentioned you had a lot of interest in the beginning kind of.
Whats the feedback youre getting for y.
Why that is.
Good morning, and a great question. Thanks for the question.
One thing the way we started looking at it and if you could go back to the history I think we all understand the chronic care management was one of the initiatives the Tms I think.
Launched in around 2013 timeframe and are very restricted in just to get it mature over the next couple of years. So net net the backdrop this year.
Shifting the focus towards more digitization in this upcoming year. The CMS has increased the reimbursement rates by roughly about 50% in some of the chronic care management the procedures.
So a very unique situation in this whole equation was so forever clients. They are already using but if you talk about the clients who are using the core technology components in between the quarter end and part of the at least one of the core of one of the technology component declines that are using that number is over 70% of OTA client base today.
So those for those clients all what they need to do as a check off a button, saying, you'll be yes, and signed the contract and we will take it over from that point.
The current operation expenses will not be increased we will be providing all the care managers and the people who will be needed to providers will be required helping them create the plant in denim or technology plays in by for example, the checking the eligibility of the patients who can be eligible.
For these chronic care management procedures than the outreach will be done.
With the help of our chronic care management team and in that.
The documentation of the procedure that has to be they know where they're using they tell us that the telehealth.
Document based on the dialogue communication takes place and then again back to over technology with submits the claim and in fact, the claim to make sure. It gets paid and at an appropriate level. So I think the other blend uniqueness. In this thing is an integrated combination of technology and the services. So if a company is a difficult.
We would just offer the chronic care management services, they still have to rely on someone else's technology. When it comes to claim submission tracking reimbursement at the right rate correct rates documentation of the charge the care management plans and all of that so that's how we believe is over one.
One unique element now when we when we launched this product just hardly about two weeks back it's basically they just going back to the client saying.
Just count on Us and gave US a chance and you don't have to worry about getting the additional expenses you had at current expenses will not increase we will generate additional revenue for U N V. N V charger certain fee out of it. So this is literally a risk free model whatever existing client as we stepped back and looked at over.
Existing client base, who are using our entire core technology component of one of the core technology components about 50% of our client base today is eligible for this chronic chronic care management services. So even if we let's say are successfully able to sell this to the 50% of that.
Potential illegible client base, even that will add for us.
A couple of million dollars in additional.
Annualized recurring revenue.
But this is how this love we are excited about it.
That's great. Thank you and then I was just looking at page 10 of your.
Investor presentation I'm, just curious from that can we back into what.
Meta Sars revenue was for the quarter.
So I'm not sure.
Yeah, I'm not sure that you can get the Medisoft revenue directly from from there I think when you are when you look at the at the 10-Q Youll see in the footnotes that it'll it'll give you some more detail.
But oh.
Sorry, I had it had a great strong quarter in Q1.
You can.
As a first glance sort of look at what it was in Q3, and Q4 and and it'll be.
Pretty similar and in terms of Q1.
That's great. Thank you so much.
Thank you.
Thank you.
The next question comes from the line of Mark reason worker with B Riley. Please go ahead.
Yes. Thanks. Good morning. Appreciate you taking the questions just following up on that last question regarding kind of page 10 in the slide deck.
If we back into it it looks like that 22% of our professional services. It's about $7 8 million in sales, that's pretty strong growth, but kind of the 65% coming from the the remaining technology carbon solutions was maybe or just over $22 million.
And that actually would be a decline year over year. So bill if you could talk to those dynamics with regards to what really was driving med S. R. And then the technology.
Potentially year over year decline.
So in terms of in terms of bad debts are and recognize you haven't you haven't got the Q. So you haven't got all the final numbers so.
Taken taking the percentages. It gets you close but doesn't get you it doesn't get you exactly there.
In terms of in terms of Med S are there's been a there's been a good response from from clients I think the fact that Theyre now part of care crowd and we've got a lot of capabilities and they're part of us.
Public company means that the clients are interested in working with us so that business is growing really nicely.
This is the third full.
Full quarter that they've been part of us.
And it's a I would say that that deal has worked out very well.
In terms of the the remaining core business I'd say that it's roughly flat from that from where it was last year.
I Wouldnt say theres major increases decreases I wouldn't read too much into that.
Got it Okay, and I guess based on Med Srs <unk> results and maybe your expectations for the remainder of the year does that impact your thoughts on on their ability to hit any of the earn outs.
Well, it's hard to know how they'll they'll wind up with the with the earn outs, although I'd say on a on a quarterly basis, we always re estimate what will what we will pay in terms of the earn out and as is required by.
GAAP and by our auditors Grant Thornton.
Each quarter there.
It becomes a small adjustment to the income statement.
It's showing either an expense if you think we're going to pay out more than than originally anticipated or a credit. If we think we will pay out a little bit less so I'd say the revenue was the revenue was really strong.
Our criteria that we designed were pretty strict and require hitting a number of things. In addition to revenue. Most importantly profitability. So I don't know whether there'll be a a payout or not I'd say, whether there is or is it the business is doing really nicely and exceeding our expectations and if we if it.
Turns out we don't have as big a payout as originally anticipated.
Strike that up to doing a good job negotiating the terms of the earn out and in order to get a.
People enthusiastic about selling it then and still keeping the cash in the bank. So I think we've done a good job in terms of structuring that.
Very helpful. I appreciate all that color and it wasn't that excuse me nice to see some more university system wins I think UMC was your six RCM win and the oral pathology space and then the one you put out this morning with the University of Tennessee was the the seven I'm wondering are any of the.
Fire wins lead to broader adoption of the care ploughed care com platform across those health systems, and maybe why has oral pathology been an area, you're getting traction and maybe relative to others.
Thank you Mark for the question I think one of the reason is simply to prove that we have been able to perform really well with the combination of our technology enabled RCM services in some technology pieces of course every time to first win is more difficult one and if we prove it to decline that big.
Can add real value and improve the profitability and the revenue decline it automatically becomes D to Florida for the next one so a number of these are also the result of some of the referrals from the prior clients in the same space and then once we go to especially this early in this.
Morning. The press release, you must have looked at we went through an RFP process, which they have literally decade betted us out every single possible.
With a whole list of questions and then evaluated and reviewed the numbers compared us with other competitors.
And the earlier ones literally after that closing in within the next week.
<unk> started working with another opportunity.
We need to see if you are able to close it or not but this seems to have started to give us a lot of attraction and attention towards gay cloud product and service, especially in this place in this space.
Helpful. Appreciate it and then just a final one for me with regards to care cloud wellness and remote or are these incremental revenue generating offerings or are they bundled with the kind of current pricing and how should we think about those going forward. Thank you.
The good thing tomorrow, so for acute cloud elements when it comes to the value they will be in a different and additional pricing on top of because in this case, if you think about it.
They will not be any additional expenses for.
For the for the existing clients and in order to perform these services, we are going to need care managers providers may be nurses nurse practitioners. So all that additional staffing of course needs more expenses at a higher rate or a higher expense versus a regular RCM services and the like.
It does come with additional expense.
The additional fee to the collection to the revenue they will receive but again this will be tied to the additional revenue that they will get so in terms of the additional expense on their existing the books there won't be any additional expenses.
And when it comes to the remote we typically similar to how.
How we sell the rest of over packaged services either it can come as a 1% for the entire package or in some cases, one or two.
The products can be separately into services can be separately.
<unk> for example in some cases, we price credentialing separately, because that's all of the clients want them to be based on their setup.
It could be that the reward.
The app.
That's part of the overall package declines might say, okay. So im fine paying 5% or 6% whatever the agreed upon he is where all the rest of the services, but this broad. This app for example, we will not be using it more extensive there'll be using more extensively so let's come up with a separate pricing. So just to summarize we're less.
Come up with the separate additional pricing out of the revenue and the remote is it just the article the regular the way we sell over best of the technology neighbors RCM services.
Got it. Thank you appreciate it congrats on a good quarter. Thank you. Thank you. Thanks a lot.
Thank you.
Again, if you would like to ask a question. Please press star one on your telephone keypad.
Thank you. The next question comes from the line of.
Richard Baldry with Roth Capital Partners. Please go ahead.
Thanks, given the volatility in the tech sector recently I was curious if you've seen any impact on the M&A pipeline sort of what people are looking for or has it stalled out anyone's willingness to transact in this markets are waiting out maybe a better market down the road or maybe the pressures of put more people into the pie.
Brian just any discussion about changes that you're seeing in that part of your business.
Good good good question Rich you know, we continue to have great opportunities for M&A.
I would say that we as we have since before we went public.
We have a strong pipeline and I would say the <unk>.
<unk> of potential deals.
Portfolio of companies that we might potentially do deals with us.
It's probably stronger than ever.
At the same time, we continue to have really high standards and so.
At this point, we don't have a another acquisition to get to talk about but I'll say that we're always talking to people and.
Just stay tuned.
Hey, you talked about sort of the front of the sales funnel growing pretty quickly of late can you talk about maybe looking deeper into the funnel have you seen any changes in sales cycles.
At all or would the makeup of the front of the pipeline argue for any changes either.
Lengthening of durations are win rates.
Given the end markets that are sort of filling into the front of the pipeline. So we can kind of gauge how we think that that increase in the front will impact your ongoing growth rate. Thanks.
Great. Thank you thanks rich for the question.
But one factor that we mentioned, which was the deliberate transition which is what we see is a higher percent towards the enterprise pipeline versus the smaller wins. So that comes with it. So there is an advantage in some temporary short term disadvantage because the enterprise deals that typically take a little longer than two.
And then he went to go live.
To the smaller practices the closing cycles are completed typically shorter.
But in the go lives at all disorder. The heightened the enterprise deals as they are more sticky they are they come with a higher margin. So in the combination of all that we absolutely see a much better growth opportunities in the in the quarters to come but yes.
Closing cycles might be little longer and then by the time they will be completely ramped up it will be slightly slightly higher and if I talk about in terms of the months with <unk> and an average the closing cycle.
Six months on an enterprise deal and could be another then everything completely goes up and running fully ramped up somewhere between three to six months for the smaller ones are small to mid size. It could easily be between 30 to 60 days in terms of the closing cycle and then between one to three months in term.
As of end Effectors goes lies in the <unk>.
Ramped up fully on the revenue side.
Okay and Tucson.
<unk> quicker ones. The R&D line has been oscillating a bit lately could talk about what a good run rate would be and then what will pace the exchange process for the preferred.
Both seem to be trading at premiums held seems like demand.
And for the New series demand is good so how quickly do you think you'll run through that process and what is the real determined are behind that thanks.
Okay.
Good questions. So in terms of R&D right now what I'd say is recognized at the Ah <unk>.
Developing new products.
The expense that the expenditure.
Rates to things that are not yet in production is capitalized and then you see that on the in the cash flow statement.
And then if the product is actually in production than it does then it hits the income statement.
Total dollars had been about the same.
There is an accounting treatment that are that again, we discussed with that with grant Thornton as well as the sort of the timing of when things go into production.
I would expect the total dollars to be roughly constant over the year although.
Having said that it'll be roughly constant maybe it will decline a little bit quarter over quarter, not a lot but.
But I'd say, we've got a strong team.
But as we get a get things completed we may not be adding as many new people. So we may see a little bit of a slowing of the growth that's.
There.
The amount that hits the income statement yeah.
Last year there were some some.
Some fluctuations I think you can sort of see where we were in Q1 and think about that as being the right run rate for <unk> for the rest of the year.
Yeah.
Redemption as at year end and the series a series a and B preferred is an interesting question because I'd say for the life of US we can't figure out why the series a stock that.
We initially sold at $25 a share we redeem $20 million of the series a $25 a share we've said that we plan to redeem more series day and it will be at $25 a share.
People are willing to pay a close to $27 for it which I guess is that they are that they don't believe us. So and then probably the only rationale reason there is they say Gee are we know youre not going to sell common at these prices and they're probably right about that but.
But we have other ways that we could that could potentially raise raise capital as we did a few months ago starting to sell at a lower coupon series B. So.
I can't give people guidance as to as to when we're going to redeem.
The remainder of the series, a but rest assured that that you'll see that our that happening bit by bit as.
As we think about any redemption. Our first criteria is really how do we be accretive to our common shareholders. So we're not going to do this in a way that cost us more we're not going to do this in a way that that adds risk.
But we are going to deliberately reduce the amount of series day. That's a that's outstanding because frankly the market is is very happy to to give us money at eight and three quarters percent. So there's probably no reason to do it to keep paying 11% as we have in our series J.
And then the last to be on the today's announcement, you've Tennessee, you've touched on it but was that a competitive win is it something that's meaningful in size just some sort of broad based there it doesn't seem like there's some momentum is not our university segment. Thanks.
Okay.
Good question, Yes, it's a it's a competitive win and then when it comes to the revenue because typically we do not talk about their respective clients revenue.
But I would say it's absolutely.
Our basis on the annualized recurring revenue basis, I'd say its a few hundred thousand dollars.
Is it just and I would say the first is another one into the list of that order pathology for these universities and we are getting more momentum just because of these consecutive or the continuous win in this space.
Alright. Thanks.
Thank you.
Yeah.
Thank you. The next question comes from the line of Bill Sutherland with benchmark. Please.
Please go ahead.
Thank you good morning, everybody.
All my questions have been largely answered I was thinking hard about.
Some of the product introductions, you were talking about last time.
Conductor suite, primarily maybe update us on.
Where those stand.
We're going to do some additional mark.
Jules and.
And whatever traction that you're seeing with those.
Thank you bill for liquids and good morning.
I think in terms of the other adding more products to the suite, yes, we will be doing over the next quarters each quarter, we are anticipating at least launching something.
And as we as we get closer to that of course, we will make an announcement, but we are on track towards towards those plans.
In terms of the traction again, it's part of the pipeline and unfortunate not I shouldn't say an unfortunate part the one inherent limitation is because again. This is the kind of the deal which needs more time to sell do mature to understandable. The both parties they need to look at our best.
If a patient document they need to make sure that the team understand how to do the initial integration and all that so we are making progress in terms of the opportunities in the pipeline. We do not have a win yet, but we are still optimistic and we will share whenever people have the next way and we will keep on adding more products that are in the queue as part of the <unk>.
Inductor suite.
We are on track for it.
Okay.
That's all I've got thanks, guys.
Great. Thank you Bill.
Thank you.
Ladies and gentlemen, we have reached the end of question and answer session.
I would like to turn the call back to Kim lunch for closing remarks.
Thank you to everyone who has joined US today, we appreciate your participation and your interest in us as a company. We look forward to speaking with you again next quarter. Thank you all and have a great day.
Thank you. This concludes today's conference you may disconnect. Your line at this time. Thank you for your participation.
Yeah.
Okay.