Tabula Rasa HealthCare Inc. Q1 2023 Earnings Call
[music].
Good day and thank you for standing by welcome to the first quarter 2023, Tabula Rasa Healthcare, Inc. Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question.
During this session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Frank Sparacino.
Yeah.
Good morning, this is Frank Sparacino.
<unk> of Investor Relations and corporate development for Tabula Rasa healthcare.
As we start I want to make clear that certain statements. We make during this call about the company's future plans and prospects.
And expectations constitute forward looking statements for purposes of the safe Harbor provisions of the <unk>.
Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by these forward looking statements, which should be considered in conjunction with the cautionary statements contained in our earnings release and in our most recent annual report on Form 10-K filed on March 10, 2023, which is available under the heading financial reports.
In the investors section of our website Tabula Rasa healthcare Dot com.
While we may elect to update such forward looking statements at some point in the future. We specifically disclaim any obligation to do so even if our estimates change.
Therefore, you should not rely on these forward looking statements as representing our views as of any date subsequent to today.
When we discuss our results on this call unless indicated otherwise we are referring to results from continuing operations.
For additional information on our results from discontinued operations. Please refer to the financial statements contained in the earnings release issued on May eight 2023, and the notes to the financial statements indicated in our 10-K for 2022.
Also during this call we will be referring to certain financial measures not prepared in accordance with GAAP. A reconciliation of those non-GAAP financial measures to the most directly comparable GAAP measure is available in our press release of our first quarter 2023 earnings and also available under the heading press releases in the newsroom section.
Of our website.
A recording of this call is accessible through a link on the Investor Relations page of our website.
I'll now turn the call over to Bryan Adams, President and CEO of Canada roster of health care.
Thanks, Brad Good morning, and thank you all for joining us.
You saw from our relief we've had a great start to 2023. The top line, we had revenue growth of 32% and adjusted EBITDA growth of 337% compared to first quarter 2022.
These numbers represent one of the highest levels of organic growth, we have generated as a public company.
With the divestitures of dose me in Symphony Rx completed during the first quarter of 2023 behind Us we.
We're focused on executing on our longer term strategic objectives, and continuing to drive profitable growth and improved cash flow over the coming years.
I wanted to take a few minutes to talk about how we're going to continue to do that with an update on three specific areas. One the paste market to our commercial sales organization and then three a sales update.
I'll start with pace, our primary market today.
Pes is arguably the most successful example of value based care and has demonstrated material reductions in hospitalization rates ER utilization of health care costs compared to those individuals in long term care settings.
Recently Senator Ron Wyden Chairman of the Senate Finance Committee was quoted saying dollar for dollar basis, the best care possible.
In late March I attended the National Pace Association Spring policy Forum with some of our team.
One statistic that stood out to me was that the pace model has been around for roughly 50 years.
Over that timeframe approximately a 150 pace organizations have opened.
Now over the next 24 months, we estimate that another 50 pace organizations will open representing the foundation for accelerated growth.
Given that there are more than 2 million individuals currently eligible to participate in state offering pace and penetration is less than 5%.
This expansion is desperately needed to support these vulnerable seniors.
Also in March of this year, a key advisory committee to health and Human services Secretary Javier with Terra endorsed the expansion of pace for older adults residing in rural areas.
Part of the report by the National Advisory Committee on Rural Health and Human services eight policy recommendations were delivered.
A few of these include <unk>.
Fortinet pace pilot focused on Medicare only beneficiaries, which comprised less than 1% of pace participants nationwide today.
Administrative flexibility to support multiple paste applications simultaneously and allow <unk> to have an expedited approval process for expansion into new service areas and.
In partnership with critical access hospitals to leverage existing facilities.
In comparison to urban areas rural areas had a higher prevalence of adult with multiple chronic conditions.
21% or $2 6 million dual eligible individuals live in rural areas.
Advancing health equity to focus on underserved population as a key CMS strategic objective.
We are working with a number of pace Center, serving rural America today.
In summary, we have tabula Rasa believe there is significant opportunity to not only drive continued organic revenue growth, but to make a profoundly positive impact on the lives of the individual eligible for that service.
Surely in rural areas of the country.
Now on to priority number two our commercial sales organization.
During our last call I talked about our effort to build a best in class commercial sales organization for profitable scalable growth inside and outside of Asia.
Support those efforts, we have implemented a voice of the customer program in 2023 to capture client feedback to enhance our support product roadmap and ultimately our client relationships and retention.
Also during the first quarter, we held our 2023 sales kickoff meeting, which allowed our team members to gather it participated in a number of sessions covering areas such as strategy product training sales.
Account planning and social media.
A meeting with key to establishing alignment between all parties of Tabula Rasa that touch our go to market approach.
These initiatives along with our renewed focus on our core value based care market.
Have contributed to a number of notable wins I'd.
I would like to highlight a couple of as part of the sales update.
We had a recent win with a seven figure expansion contract with a <unk>.
Shifting pace client in Virginia.
This client adopted our <unk> and pharmacy services, allowing us to displace their legacy provider.
Example of our continued cross selling efforts.
We continue to see significant opportunities to drive greater adoption of our solutions and pace and are focused on this effort has resulted in the average revenue per pace participant increasing 22% versus a year ago to $523.
Another recent win from the quarter with a contract procured outside of pace with a Medicare focused provider group, serving rural America for our risk adjustment services, which represents one of our strongest growth areas inside and outside of pace.
This further supports our strategy to target senior focused at risk providers.
In addition, we continue to see growth in our backlog during the quarter, which increased more than $6 million to $84 million on a sequential basis versus the end of 2022.
We've previously highlighted the growing presence of for profit operators, such as well be health, a long time periods D. Parker.
A positive influence on the awareness and future growth of pace.
This trend is evident in our backlog is for profit operators represented 38% of pharmacy services backlog at the end of the quarter.
And pharmacy services accounts for the majority of our overall backlog.
I am proud of the work our sales and account management teams are doing they feel great relationships with our existing clients and are ensuring prospects to understand the value of our solution.
I will now turn the call over to Tom to review our financial performance.
Sure.
Thank you, Brian and good morning, everyone I will focus my comments on three areas.
First quarter results key operational metrics and our updated 2023 guidance.
First quarter revenue of $88 3 million increased 32% versus the year ago quarter.
Comprised of medication revenue growth.
At 35% and.
In technology enabled solutions revenue growth of 21%.
Medication revenue growth was primarily attributable to continued strong year over year pace participant growth.
And higher revenue per piece participants as seen in the operational metrics disclosed in our earnings press release.
Technology enabled solutions growth was led by our Pbms and risk adjustment services.
Our revenue outperformance during the first quarter was driven primarily by two factors.
Higher than expected drug price inflation.
And an increase in pharmacy capacity due to staffing and automation, which will be important in meeting customer demand inherent in the growth we're experiencing.
Adjusted gross margin as a percentage of revenue was 24, 1% for the first quarter.
Up 30 basis points from 23, 8% a year ago.
Medication adjusted gross margin of 23% increase versus 22, 8% a year ago and technology enabled solutions gross margin of 27, 9%.
Increase versus 26, 7% a year ago.
Our GAAP net loss for the quarter of $7 1 million.
Compared to a net loss of 24 million a year ago.
Adjusted EBITDA of $4 7 million from continuing operations for the quarter.
Increased from $1 1 million a year ago.
Our strong revenue growth combined with disciplined cost management.
Has helped improve profitability.
Our adjusted EBITDA margin for the first quarter was five 4%, which represented a nearly 380 basis points improvement.
A year ago, and 40 basis points on a sequential basis.
The fourth quarter of 2022.
With respect to our key operational metrics. There are three numbers I would like to highlight.
Medication census.
<unk> average revenue per participant per month for medication.
<unk> average revenue per participant per month for technology enabled solutions.
Okay.
Our pace medication census, during the first quarter of 2023.
Increased 18% versus a year ago.
About two thirds of which was driven by same center participant growth.
<unk> average revenue per participant per month for medication increased 14% to $1110 during the first quarter of 2023.
Our pace of technology enabled solutions census, increased 8% a year ago and our peer average revenue per participant per month for technology enabled solutions increased 10% to $98 during the first quarter of 2023.
Our average revenue per participant per month in aggregate increased 22% to $523 during the first quarter of 2023.
As Brian indicated the biggest driver of that growth was cross selling pharmacy services through our technology enabled solutions clients.
As a reminder, last quarter, we noted that if a client is all of our paid services.
We would expect the average revenue per participant per month.
To approximately $200.
As of the first quarter of 2023.
We have more than 20% of our participants at or above this figure.
Turning to guidance, we are introducing second quarter 2023 guidance.
And we are increasing.
The previously provided full year.
2023 revenue and adjusted EBITDA guidance.
We feel comfortable increasing our guidance due to our renewed focus and consistent execution of our financial and strategic objectives.
We demonstrated over the last four quarters.
Second quarter revenue from continuing operations of 88 million to $90 million.
Represents growth of 23% versus a year ago.
Midpoint of the range.
Adjusted EBITDA of $3 5 million to $4 5 million represents growth of 94% versus a year ago at the mid point.
Second quarter revenue guidance reflects the off boarding of a client who joined us temporarily in the second half of 2022, while they transition to a long planned in house pharmacy solution.
And as I highlighted during our last earnings call the.
Second quarter adjusted EBITDA is negatively impacted by annual salary increases versus the first quarter of 2023.
For the full year 2023 revenue from continuing operations of 355 million to $365 million represents growth of 20% at the midpoint.
Adjusted EBITDA of 19 million to $22 million represents growth of 120% at the midpoint.
And an adjusted EBITDA margin.
Five 7%.
Which compares with three 1% for 2022.
As I noted during our last earnings call, we expect revenue growth comparisons in the first half of the year.
Can be higher.
In the second half.
Due to the on boarding of a significant number of new participants in the second half of 2022.
I will now turn the call back to Brian for some concluding remarks.
Thanks, Tom for those updates.
Second by our strong start to 2023.
<unk> from our 700 plus team members that are enabling tabula Rasa debuted successful. Thank you for your dedication.
As we look ahead to the remainder of 2023, we're focused on building a strong foundation to drive future growth and profitability to create long term value.
With that I will turn the call over to the operator for Q&A.
Greater.
And as we queue up the first caller I did want to clarify one comment first.
I said for profit paced operators represent 38% of our pharmacy backlog.
It's actually 54%.
And thats more than double what it was last year at this time.
So with that why don't we open up the call.
Operator.
Thank you.
A minder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Yes.
Our first question comes from Jared <unk> with William Blair <unk> Company you May proceed.
Yes, hi, good morning. This is Jared on for Ryan Daniels, Thanks for taking our questions.
Brian you talked a little bit about the commercial sales organization and I think you mentioned the voice of the customer program as a way to sort of better incorporate client feedback to enhance retention and overall customer relationships. Just curious if there is any particular learnings you've had through that program or data points you could share about maybe some successes with the commercial sale.
<unk> organization or maybe some continued opportunities for improvement.
Sure Great Great question and thank you for that.
We recently launched that program, we've only had one event. So far we have another one planned for next month on the West Coast.
With a number of our customers. The feedback then been very positive so far I think there's a real appreciation for.
Our ability to listen and take customer feedback in and include that as part of our our roadmap going forward I think what we're trying to really identify are common themes throughout our customers.
So that we can focus our resources around those.
There are things that are going to be the most impactful for our clients and provide the most value. It's also giving us an opportunity to share with them, where we are making investments and.
So it's been.
Really.
A good dialogue so far.
Sure.
Great.
Sorry to hear.
And then I will just ask a follow up on the Q2 guidance.
Tom I think you mentioned there is a little bit of sequential growth impacts coming from the off boarding of a temporary client im sort of curious how unique is that relationship where you have the.
Our pharmacy client that's sort of temporary in nature, and then just any way you could size that impact and it's sort of a Q over Q basis relative to that temporary client and then do you think there is opportunities to sort of eventually bring them back over time, it's kind of a full service customer.
Yes, that's a great question. This is Brian I'll take the first part and then I'll turn it over to Tom.
Pretty unique scenario.
In that this clients reached out to us last year with a pretty immediate need we were able to onboard the customer within 60 days, which is.
Fantastic effort by our team here and I think shows that scalability of our platform.
The client again, it's pretty unique in that it's part of a larger health system has multiple lines of business.
Don't see this anywhere else really.
In the pace market today, they do have an in house pharmacy.
In many cases over the years, where clients have had an in house pharmacy or part of a system that has an in-house pharmacy.
We have successfully been able to.
To onboard those clients to our pharmacy services. So I think longer term, we look at this as a real opportunity for us.
And.
We hope to to retain the business at some point, but right now.
This is the.
The desire of the program today, which is really taking.
Broader approach as they look at their whole book of business, which again, it's much larger than just pace. So I don't see this at all is indicative of anything in the market our backlog remains extremely healthy.
EBIT with programs that arguably could have an in house pharmacy.
Yes.
Your question about sizing it.
Depending on how quickly they are.
Roll off in second quarter.
You're probably looking at 1 million and a half to two and a half million dollar.
Headwind.
So that kind of explains why revenue at the midpoint is flattish to first quarter.
Understood I appreciate all the color guys and I'll hop back in the queue. Thanks.
And while we're just waiting for the next person in queue up I did want to just round out one of the.
One comment related to <unk>.
The voice of the customer I think one of the things that we're hearing and there is a real desire for us.
R R.
Our pharmacy to have an agnostic.
Our API right. So we want to be able to work with any EMR out there and provide our solutions through that from a medication management perspective.
And so that's an area, where we will continue to make an investment.
There is a real desire from the customers to see that happen.
Thank you. Our next question comes from Craig Jones with Stifel. You May proceed.
Thank you.
So I guess just as a quick follow up to the last question, David the one happened to $5 million headwind and <unk> is it a further headwind in the third quarter as it will have completely rolled off at that point.
It has a slightly less.
Headwind in the third quarter some of it will depend on how much if all comes off in the second quarter in which case it wouldn't be a headwind at all.
Is it is it could bleed into July a little bit.
But not of the magnitude that it would impact the second quarter.
Got it okay.
And then just looking at the.
<unk>.
The services gross margin so.
And that line used to be prior to all these acquisitions that you may need not divest it used to be it looks like in the 60% range and now it's sort of mid 20 is there an opportunity to get that higher now that you've sort of clean that that revenue line up and sort of how high could it potentially get us now.
Okay.
Greg I'll, let Tom talk about the specifics, but I think there is an opportunity to drive that number higher.
I'm, making a lot of investments and refocusing our resources on really driving efficiencies.
At the same time trying to focus on how we contain our cost structure.
More closely so I would say more broadly there is theres absolutely.
An opportunity and a desire from the business to see that increase.
Yes in terms of some of the specifics.
Whats weighing down.
That margin a bit.
Is <unk>.
External costs, we've incurred two.
Our consultants and others too.
Two.
Integrate multiple platforms.
So we talked about how over the last six months since Brian assumes his CEO role.
Focus on efficiencies in our operations on reducing operating expenses and we've had some success there but in the background. We're also focusing on optimizing.
Our platform our product offerings, so that they meet the needs of our customers and.
Became clear it was a little bit of spend.
Necessary to.
To integrate.
Multiple acquired platforms.
Perhaps hadn't been integrated to the satisfaction of some of our clients.
Get everybody on one platform slip more efficient that lets us get back to.
Those higher margins.
And some of these businesses to retain.
Those higher margins some of them, we're working to get them there.
Okay got it thank you.
And then.
So it looks like the <unk> growth sequentially in the fourth quarter was pretty solid at mid single digits is that is that a normal seasonality. We should expect just like January one pricing.
Yes pricing tends to increase in the first quarter and always in January last year came a little later in the first quarter.
Which is part of the reason why you didnt get to big bump in first quarter of last year, but it did happen. This year that is the biggest driver.
So you won't see that sequential.
Bump quarter over quarter, but you will probably see.
Low to mid single digits each quarter.
As our contracts.
<unk>.
Got it Okay and then.
And then it looks like if we calculate the non pace revenue.
It looks like that declined about 12% sequentially as anything that you'd call out there that drove that and then how should we think about that.
Balance of the year.
I don't know I don't think there is anything significant going on there. It's just maybe the ratio from.
The pace to then on pace.
I don't think there's anything significant going on there.
Okay sounds good that's all for me thanks.
Thank you.
Our next question comes from Stephanie Davis with FCB Securities You May proceed.
Thanks for taking my question and congrats on the continued momentum.
Brian .
You have had a bunch of hires you officially have the CEOC, where you've been hired itself and you've got a bunch of assets.
What are the biggest go forward changes you should think about from a strategy perspective, now that kind of your house cleanup is behind you.
Stephanie Thanks for the question.
Yes.
There is not going to be a huge shift in what we've been communicating over the past couple of quarters right.
<unk> talked about refocusing around pace and focusing around the solutions that are going to be relevant to adjacent markets serving similar demographics.
Strengthening our commercial orientation, and making some investments to ensure that.
<unk> that we have are scalable and deliver high value to our clients.
We're also committed to improving profitability and investing in efficiencies and ultimately managing our cost structure more closely. So those are some of the bigger priorities for us looking forward to over the coming quarters being able to provide some more specificity from.
Our go to market perspective, we're right now launching strategic.
Strategic planning for the year.
For the for the longer term as well so.
Coming into the into next quarter's earnings will be able to share a bit more in terms of some of those priorities but.
The management team is.
Very focused on.
The areas that I was just mentioning.
Well, let me maybe ask that in a little bit of a different way.
How are you spending the majority of your time.
So yes.
There is a kind of a split at the time.
One of those is with customers today and there has been.
A good bit of time.
Listening right so.
It is listening to customers after listening to the.
The employee base to understand where they're at is as we continue to build out.
And refocus around our new <unk>.
Vision and a new mission for the company, they're not necessarily new but there <unk>.
Recap in terms of what we want to focus on and our focus as a business. The why we're here is to ultimately provide simplified an individualized care to improve the health of those that we serve.
So we want to make sure that all of our solutions.
Fit squarely within that.
And so we're.
We're making sure that the team understands that that's the focus of the business.
Lining their individual goals.
With the corporate goals associated with that mission.
And as I was describing also listening to the customers. So we can make sure that our strategic priority.
Are aligned.
So that we can provide significant value there so.
There's a lot of work being done.
A lot a lot of listening as well.
Alright, one last quick one from me talk about this stuff in your control, let's talk about this that completely.
Please turn to Australia.
It has been accelerating sequentially and it looks like it's been pretty wild quarter to date can.
Can you just touch on what's going on with that market. How sustainable this acceleration is and anything else, we should think of there.
Yes, we're pretty excited about the.
The growth rate within the pace census, especially within our customer base today.
As I was mentioning in my prepared remarks I was at the NPA Spring policy conference, just a little while ago and the one stat again that stood out.
There are 50 paced operators set to open their doors over the next 24 months. So I think thats indicative of the investment in this space the understanding and awareness that this is a model.
That can make a really meaningful difference for those vulnerable seniors, specifically dual eligible which represent roughly 12 million lives across the U S debt.
We need to serve better.
And so I think that that investment itself.
We are seeing is going to yield some really positive things for tabula rasa as we continue to support our customers. So that they can scale and grow and support those patients even better.
That has gone well.
I'll hop back in the queue. Thanks, guys alright, thanks Stephanie.
Thank you.
Our next question comes from Jessica Tucson, with Piper Sandler you May proceed.
Hi, Thanks, so much for the question and congrats on the results.
Hoping you could offer maybe some color on the back half launches to the product mix between medication and tech enabled solution.
I'm going to let Tom dive in on that this is Bryan go ahead Doug.
On the product mix for the second half of the year you mean.
The relative growth rates.
Yes, yes that would be helpful. Thank you, yes, I think.
<unk>.
We grew.
<unk> pretty significantly this quarter over the same quarter of last year in part because the first quarter of last year was.
A weak quarter.
There are a number of things going on there.
That down a bit.
Going forward I think you'll see something.
Much more in line with our recent traditional averages. So if we forecast the midpoint of growth for the year.
At 20%.
I think youll see medication revenue grow a little bit above that maybe low twenties.
Youll see the technology enabled solutions grow.
Kind of mid teens, some of them a little higher than mid teens, but on average low to mid teens, but because of the medication revenue is.
80% of the total.
The total will average out around 20% growth.
Got it and then I was just wondering is there any kind of cost or margin dilution associated with these bonds.
One says it doesn't look like it but I guess, just how should we think about the counter balance of kind of omnicare contract terminating versus a bunch of new contracts ramping.
Thank you.
I didn't hear the first part of your question Stephanie.
Yes.
Yes.
Is there any costs or kind of margin dilution associated with the new customer launches in the back half of the year. It doesn't appear that way from your guidance, but just how should we think about and the termination of an older or mature contract versus.
The ramp of several new ones.
There is typically very little if any integration costs occasionally.
Someone coming on for Tech enabled solutions will need a migration for installations that even those tend to not be terribly significant.
In terms of cost.
Okay, great. Thanks.
Thank you.
Thank you and as a reminder to ask a question you will need to press star one on your telephone. Our next question comes from Bill Sutherland with Benchmark Company you May proceed.
Thanks.
Congrats on a good quarter guys.
Brian Im curious if theres any updates on your initiatives in the adjacent markets.
Sure. Thanks, Thanks, Bill for the question I.
I did mentioned in my prepared remarks that we did have a win.
In the.
Non pace market.
It is.
Provider focused on the rural space.
And it's focused primarily on primary care in delivering primary care to Medicare beneficiaries.
It's not clinic based as you might expect given the rural focus.
It's a it's an early win I think it's a sign of some success and I think youre going to hear more and more wins like that in the future as that continues to be an area of focus for the company.
I would continue to.
To send a message that we are leveraging existing solutions that we built within the pace market. So this is not requiring significant investment to target some of these adjacent market.
Got it.
The <unk> relationship.
Expansion potential.
Yes, with Oak Street things remain very strong.
Are starting to expand into the paste market. So we're hopeful that we'll be able to support them with that as well.
Great.
Last one.
In your discussions with the pace.
Organizations Brian .
The Medicaid Redetermination issue come up and how are they thinking about it.
Yes, it really has not been.
An area of focus built to be honest with you.
Okay. Okay.
That's it from me Thanks, guys alright, thank you.
Thank you.
Sure.
Our next question comes from David Grossman with Stifel. You May proceed.
Hi, Thanks, good morning.
I hopped on a little bit late so I apologize if this has been asked but.
Sure.
Maybe you could talk for a minute about.
The penetration rates of pace.
Program.
And then the things that you may see on the horizon, either structural or regulatory or things that you're doing for that matter that that may.
Kind of results in those penetration rates going up.
Hey, David Good question Bryan.
One of the things that I did talk about was the relative growth of the pace. The operators that's expected over the next couple of years.
And we're going from about 150 page programs.
That took 50 years to get operational.
Close to probably 200 over the next 24 months, so I think thats indicative of the interest and awareness in the space, but you do highlight one of the.
The areas that.
Yes, I think that we're focused on very acutely, which is the fact that the <unk>.
<unk> program, which supports primarily dual eligible is less than 5% penetrated within the markets and service areas that it exists today.
And so the fact that there is more for profit investment in this space right now about 54% of our pace pharmacy backlog.
As represented by by for profit providers, which is more than double what it was a year ago.
I think it's also a pretty positive sign that we're going to continue to see.
And even.
Enhanced level of investment in this space and Theres a lot of regulations right now that are proposed that support the model. There is a lot of awareness at government, both federal and state levels.
That are supportive of the program and the expansion of the program.
Call out, Florida in particular, theres been quite a bit of expansion in the state of Florida recently.
And so I think that's the more macro view what can we do as an organization.
Ultimately, we can continue to support our our pace.
<unk> operators to the best of.
Our ability so that we can ensure that they are prepared to scale and are not wasting precious resources in other areas of their business.
And so it's incumbent upon us to make sure that we're delivering really high value <unk>.
Solutions.
But I think that what we're seeing is the set up a foundation that can support significant expansion going forward.
Got it.
You just said so youre opening so it sounds like 50, new centers over the next 24 months or so of those <unk>.
These centers are are you involved in all of that expansion or is that just a market statement.
That's more market today, but I would tell you that we are involved with with the majority of those.
Okay.
You do disclose the backlog number.
Im wondering if you could give us a sense of how we should think about the rollout of that backlog now.
I think in the past you had given a number but just curious whether that's changed at all now.
The business has evolved quite a bit over the last 12 months. So just curious of that I think it was an $84 million number.
How we should expect that to rollout over the next several quarters.
Yes so.
The immediate impact is pretty minimal.
I would say because most of these programs that we're quoting and our backlog are startups. So.
As they onboard.
Sensus, which is actually happening at a much more rapid rate with some of these for profit providers. So what I would tell you and this is really anecdotal today is that I would anticipate.
To date that Onboarding and ramp of these customers that are in our backlog today given the.
Penetration.
For profit.
It's going to happen at a much quicker rate in the past has taken anywhere between 24 to 36 months to get the full full ramp in capacity I do believe that.
We're going to see that happen.
More quickly going forward.
Okay.
Okay, and then just one last question and it's really just on better understanding.
What impact pricing.
Has on your revenue growth or what it will have or do you expect it to happen this year and how that May contrast, with prior year since it's pretty much consistent with prior years or are we getting a little bit more of a lift with.
Higher drug prices or whatever other inflationary dynamics are in your model.
I'll, let Tom take that one.
Yes, I mean, you have to break it down into two elements of it right. There is the <unk>.
External.
Drug price inflation, but then there is the impact of.
Re contracting and CPI and players Etsy.
Et cetera.
Got it built into contracts.
Drug price inflation is probably.
Mid single digits impact.
To our revenue and our Pnp.
For example, if you take the <unk> four.
First quarter over guidance about two thirds of that $5 million was drug pricing happening quicker than we thought.
Another just under $1 million of it.
Was the.
The impact of.
New contract pricing.
Pricing.
Pricing has stepped up over prior contracts.
<unk>.
And a little bit of it was due to slightly higher census growth you don't see the census growth. So obviously because you also had that customer who was spinning off.
And so the totals are marginally.
Higher than December , but they're actually quite a lot more in there than we typically expect in the first quarter and that drove the beat a little bit.
And that's likely to persist the rest of the year I think you see.
Four 5%, 6% impact of drug price inflation carrying through most of that's a pass through but there is some margin on it.
That answer your question.
Yes, yes, and just on the contract turnover what impact do you think that has for the year.
Now that we have.
Disclose this through the year.
I can tell you as I mentioned in the first quarter it was a little over.
Roughly $1 million.
Alright.
Okay, great. Thank you.
Thank you.
This concludes the today's conference call. Thank you for participating you may now disconnect.
Okay.
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Okay.
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Thank you.
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Okay.
Yes.
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Okay.
Okay.