Q4 2024 Phreesia Inc Earnings Call

March 14, 2024

Can only mode.

We will provide instructions for the question answer session to follow.

First I would like to introduce <unk> Gandhi precious Chief Financial Officer, Mr. Gianni you may begin.

Thank you operator, good evening and welcome to <unk> earnings Conference call for the fiscal fourth quarter of 2024, which ended on January 31 of 2024.

Turning me on today's call is <unk> <unk>, our Chief Executive Officer.

A more complete discussion of our results can be found in our earnings press release and in our related form 8-K submission to the SEC, including our quarterly stakeholder letter both issued after the market closed today.

These documents are available on the Investor Relations section of our website at IR Dot Freesia Dot com.

As a reminder, today's call is being recorded and a replay will be available on our Investor Relations website at IR Dot Freesia Dot com following the conclusion of the call.

During today's call, we may make forward looking statements, including statements regarding trends.

Our anticipated growth.

Our strategies predictions about our industry and the anticipated performance of our business, including our outlook regarding future financial results.

Forward looking statements are subject to various risks uncertainties and other factors.

That may cause our actual results performance or achievements to differ materially from those described in our forward looking statements.

Such risks are described more fully in our earnings press release, our stakeholder letter.

In our risk factors included in our SEC filings.

Including in our annual report on Form 10-K that will be filed with the SEC tomorrow.

The forward looking statements made on this call will be based on our current views and expectations and speak only as of the date on which the statements are made.

We undertake no obligation to update and expressly disclaim the obligation to update these forward looking statements to reflect events or circumstances. After the date of this call.

Okay.

Good evening, ladies and gentlemen, welcome to the Bj's fiscal fourth quarter 2024 earnings Conference call.

In order to reflect new information or the occurrence of unanticipated events.

This time, all participants are in listen only mode.

We may also refer to certain financial measures not in accordance with generally accepted accounting principles in order to provide additional information to investors.

Provide instructions for the question answer session to follow.

Great.

To introduce <unk> Gandhi, Please Joseph Chief Financial Officer.

non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release, and stakeholder letter, which were furnished with our form 8-K filed after the market closed today with the SEC and May also be found.

Charlie you may begin.

Thank you operator.

Good evening and welcome to Frejus earnings Conference call for the fiscal fourth quarter of 2024, which ended on January 31 of 2024.

Turning me on today's call is Haim index, our Chief Executive Officer.

On our Investor Relations website at IR I appreciate dot Com I will now turn the call over to our CEO <unk> <unk>.

A more complete discussion of our results can be found in our earnings press release.

Thank you biology, and good evening everyone.

In our related form 8-K submission to the SEC, including our quarterly stakeholder letter.

Thank you for participating in our fourth quarter earnings call. Our stakeholder letter and earnings release were published about an hour ago. Let me start the call with a couple of highlights.

Issued after the market closed today.

These documents are available on the Investor Relations section of our website.

I am very pleased with our fourth quarter and fiscal year performance, both financially and operationally.

IR Dot <unk> dot com.

As a reminder, today's call is being recorded and a replay will be available on our investor relations website at IR.

<unk> is in a new era that extends our impact beyond patient intake.

A growing set of solutions expands our capabilities outside of the point of care, while still aligning with our mission to make care easier every day.

That frees you dot com following the conclusion of the call.

During today's call we may make forward looking statements, including statements regarding trends alright.

In fiscal 2024, we facilitated more than 150 million patient visits approximately 25% more than fiscal 2023.

Our anticipation.

For the fourth quarter total revenue was $95 million up 24% year over year.

Adjusted EBITDA.

It was negative $3 5 million.

A $14 million improvement year over year.

Before I turn it to apology to discuss our fiscal 2025 outlook.

I'd like to thank Micronesia colleagues for their hard work and commitment to our mission, but also like to thank our clients and investors for their continued support.

We are all very proud of the work we do.

We are excited to continue to deliver growth while returning to profitability in fiscal 2025, let me now hand, it over to balance sheet.

Thanks, <unk> and good evening everyone.

We provided our initial outlook for fiscal 2025, when we released our fiscal third quarter results on December five of last year.

Today, we are maintaining our revenue outlook for fiscal year 2025 at 424 million to $434 million.

We are also updating our adjusted EBITDA outlook for fiscal year 2025 to a new range of 12 million to $20 million from our previous range of 10 million to $20 million.

Our updated outlook reflects our ongoing focus on improving efficiency and operating leverage.

We are also providing a forecast for the number of average healthcare services clients or Hfcs, we expect to add in the first quarter of fiscal 2025.

We expect to see Hfcs increased by at least 100 in the first quarter compared to the fourth quarter as we prioritize HFC prospects that we believe can drive profitable revenue growth across subscription and related services payment processing and network solutions.

It is worth noting that our forecast for HFC growth in the first quarter was incorporated into our fiscal 2025 revenue outlook, which we provided back in December and we are now maintaining.

One final note.

We believe that our current cash and cash equivalents balance.

Along with cash generated in the normal course of business gives us sufficient flexibility to reach our outlook for fiscal 2025 and to plan for continued profitable growth in fiscal 2026.

Operator, I think we can now open it up to Q&A.

The floor is now all thank you for your questions to ask a question at this time. Please press Star then the number one are you kind of phone keypad.

So just kind of fast for a few moments to compile the Q&A roster.

The next question comes from the line of Ryan Daniels with William Blair. Please go ahead.

The law as you wanted to ask you a question about the 100 average client adds it seems very deliberate in your language about prioritizing prospects that can drive profitable growth can you dive into that is that really more of a focus on certain specialties that can add more growth in things like network solutions or have higher billing prospects.

So better payment processing sales just any color there is that stood out to me.

Yes, sure Ryan and I apologize for the I think we had some technical difficulty on the first question. So whoever that was dialing and maybe come back into the queue.

And Ryan.

On your question I think this goes back to some comments, we made last quarter in our letter and I think youre hitting on some of the points, which is its revenue its profitability, but it's also payback and the return we get so we feel really good about the clients.

We're adding currently and I expect to in the future in terms of the type of revenue by the type of profit, we expect to generate off them and that's that's really Bobby I would say at this point.

And probably have some cost associated with that I don't know if its enough to move the needle, but any of those two things can have an impact. Thank you.

Yeah. So I think the event that we talked about was a Q4 event. So both.

Those costs were largely in the fourth quarter.

In terms of change I think we can maybe talk a little bit more about that if anyone else has a question, but I think in terms of guidance or the outlook and the cadence nothing really to call out Ryan I think we'd call out, though there is seasonality around payments.

Stronger, which has an impact on margin.

Nothing new this year versus previous years.

Okay perfect. Thank you I'll hop back in the queue I appreciate the color.

Okay.

Our next question comes from the line of Richard close with Canaccord Genuity. Please go ahead.

Yes, thanks for the question and congratulations on a strong year, maybe just go down the change path a little bit farther.

I noticed in the letter you talked about security investments.

And just curious what you are doing there how you are helping clients with security and maybe just discuss your high level thoughts on change the change hack in any impact positive or negative that you see.

Yes so.

I think the thanks for the question Richard This is volume.

I'll try to break down the question a little bit and then we will try to answer some of the.

Some of the commentary around change.

In the letter we reference our investment in security and.

Sir Please you May go ahead.

And I think Thats really.

Really wanted to call out through all of our stakeholders.

Over the last couple of years have been dramatically increasing our internal spend.

Both as an absolute dollar and as a percentage in security and compliance.

And we think it is really important we take our role as a steward of data.

Okay.

Yeah.

And.

Unbelievably seriously, but also to be fair, we know how much our clients depend on our service and we expect to keep.

Increasing that investment.

And it's and it's baked into our R&D.

Number and blotchy I'm sure can talk more about that but we did think it was really important as we as we have over the last couple of years significantly increased debt net investment level.

Yeah.

And then in terms of change look let's start with its been pretty terrible for a lot of our clients.

Okay.

There is no really no sugarcoating that like a major part of the health care infrastructure was attacked.

It's pretty terrible and were doing everything we can to help our clients.

Okay.

Whereas just collect all layers and making sure that they can they can.

The next question comes from the line of Ryan Daniels with William Blair. Please go ahead.

Keep running their businesses as they were in from what we can tell almost all of them still are although it's really putting strain on them and in terms of how we worked with change they were one of our clearinghouses. So we as part of our service provide eligibility and benefit checks as part of a lot of our services.

Hey, guys can you hear me.

Hello can you hear me.

Okay.

And we've been working with change as one of our clearinghouses for years.

Brian.

Yes can you hear me.

To call out our team over the last couple of weeks really quickly when they identified it started moving to our backup and alternate clearinghouses to move the vast majority of our volume they did that above and beyond normally what they do it was a ton of work I can't thank them enough I know it made a big difference to our clients so that it.

Yes, Brian we can hear you.

Okay perfect.

Really didn't disrupt their business, but it look this is this was a pretty big attack on American on the American health care infrastructure, and I think it's pretty shitty.

Better payment processing sales just any color there is that stood out to me.

Yes, sure Ryan and I apologize for the I think we had some technical difficulty on the first question. So whoever that was dialing and maybe come back into the queue.

Okay. Thank you.

And Ryan.

Our next question comes from the line of Anne Samuel with Jpmorgan.

Go ahead.

Hey, guys. Thanks for taking the question.

You called out in your letter that payment processing was helped in some part by better utilization and I was just wondering if maybe you could touch on what kind of utilization you're embedding within your full year forecast for the year.

<unk> on the type of profit, we expect to generate off them and that's yeah, that's really probably all we'd say at this point.

Well thanks.

Thanks for the question I think this is something we've talked about a lot on these calls is the swing factors. The biggest swing factors on payment processing is things like weather and things like dip different days on the calendar fall in a given quarter and how we sort of model that we might work with years of history, an experience like that.

Okay, and then a quick follow up for you anything we should consider with the profitability cadence in Q1, given number one some of the noise would change and then number two I noticed you had an all employee event probably have some cost associated with that I don't know if it's enough to move the needle, but any of those two things can have an impact. Thank you.

<unk>.

Obviously weather can play a role which is not as predictable, but thats sort of it I don't think we sort of talk about like specific patterns and usage utilization of services as being as big a swing factor.

Yeah. So I think the events that we talked about was a Q4 event. So.

Those costs were largely in the fourth quarter.

In terms of.

Great. Thanks, and then maybe just one more I was hoping you could touch on your postscript engagement product.

Change and I think we can maybe talk a little bit more about that is sitting around for the question, but I think in terms of guidance or the outlook and the cadence nothing really to call out Ryan I think we'd call out, though there is seasonality around payments.

How that works and is there are you partnering with our pharmacies, maybe Chad can measure follows where is there an opportunity to do that.

Which are stronger which has an impact on margin that is nothing new this year versus previous years.

We will not get through who we are.

So why don't I I am very excited about this project sorry, I was jumping right to the end of any.

Okay perfect. Thank you I'll hop back in the queue I appreciate the color.

This is a product thats been worked on for quite some time.

Okay.

I'm really excited about it I know the team is to and this is.

Our next question comes from the line of Richard close with Canaccord Genuity. Please go ahead.

At its simplest form when you get a script from their provider it just makes sense.

Yes, thanks for the question and congratulations on a strong year, maybe just go down the change path a little bit far there I.

So much sense to be able to get a reminder to fill at building. Your prescription is just so important in every stage right. If your doctor thinks that you need to be onto therapy.

Notice in the letter you talked about security investments.

And just curious what you're doing there how you're helping clients with security and maybe just discuss your high level thoughts on change the change hacked and any impact positive or negative that you see.

Should they should nudge you as many as much as possible to fill that therapy and answer any of your questions and frankly also know why why and if youre not doing it today to better inform you as to why it's important.

And so we've been working on this project for some time. It was developed all in house early indications are it's the response has been phenomenal the impact to patients has been low.

Yes so.

I think the thanks for the question Richard This is volume.

I'll try to breakdown the question a little bit and then we will try to answer some of the.

Looking very tremendous and we're pretty excited about it and early on I don't think we're talking about who we're partnering with it but.

Some of the commentary around change.

In the letter we reference our investment in security and <unk>.

Personally I'm pretty excited about it it's a nice it's a really nice valuable add on to our patients and providers.

And I think that's really a.

Really wanting to call out to all of our stakeholders.

Great sounds exciting thank you.

Over the last couple of years have been dramatically increasing our internal spend.

Both as an absolute dollar and as a percentage in security and compliance suite and we think it is really important we take our role as a steward of data and.

Our next question comes from the line of John Ransom with.

With Raymond James.

Hey.

Hey, good afternoon.

So it looks like you guys are kind of settling into a nice groove.

Unbelievably seriously, but also to be fair, we know how much our clients depend on our service and we expect to keep.

With G&A leverage and.

And the like as we think about your company, let's just think five years out.

Increasing that investment.

And it's and it's baked into our R&D.

I assume because it's easy math that you can grow your top line 20%.

Number and blotchy I'm sure can talk more about that but we just we did think it was really important as we.

For the foreseeable future how should we think about.

Concurrent growth in G&A, and marketing and R&D that would accompany that theoretical kind of 20%.

As we have over the last couple of years significantly increase that that investment level.

<unk>.

And then in terms of change look would start with it its been pretty terrible for a lot of our clients.

Yes, John this is <unk>.

So first of all I mean, I know youre trying to project out but.

There's no really no sugarcoating that like in major part of the health care infrastructure was attacked and it's pretty terrible and were doing everything we can to help our clients.

We're really normally talking about fiscal 'twenty five.

But let me try to be helpful. I think we made some pretty specific comments about G&A, where we did a lot of analysis on public company costs, and we felt that to be a <unk>.

Whereas just collect dollars and making sure that they can they can keep running their businesses as they were in from what we can tell almost all of them still are although it's really putting strain on them and in terms of how we work with change.

World Class public company and have all the right processes and procedures and people in place we're going to have to make some investments we could choose to delay them.

We're one of our clearinghouses, so we as part of our service provided eligibility and benefit tax as part of a lot of our services.

We chose not to so we feel pretty good about where we're running now to support a larger organization, but there is obviously the cost of things go up every year, but it's not like there is an order of magnitude increase in the resources we need.

And we've been working with change as one of our clearinghouses for years.

To call out our team over the last couple of weeks really quickly when they identify did started moving to our backup and alternate clearinghouses to move the vast majority of our volume they did that above and beyond normally what they do it was a ton of work I can't thank them enough I know it made a big difference to our clients so that it <unk>.

I think you've seen.

You're seeing that operating leverage happened for years now.

Yes, the dollar amount that changes.

Let's give you a question that you might answer the DSD and our hiring season, that's coming up how do we think about you've had some.

Really didn't disrupt their business, but it look this is a this was a pretty big attack on American on the American health care infrastructure in it I think it's pretty shitty.

Yes different thoughts about how quickly youre not quickly you grow that has seen our fourth so maybe talk about your goals for hiring and kind of your learnings of productivity as you tried to ramp that up a couple of years ago.

Well I think.

Okay. Thank you.

There is a couple of things around the ramp up.

SDR team that were really important one we ramped it up a lot quicker also acknowledging that we really had been out of the STR market for about because of COVID-19 for over a year. So some of it was just filling in a lot of hiring that we.

Our next question comes from the line of Anne Samuel with Jpmorgan.

Go ahead.

Hey, guys. Thanks for taking the question.

We really didn't hire any net new STR is during COVID-19.

During the peak pandemic period, so that was some of it John.

We were really back filling sort of.

Well thanks.

Thanks for the question I think this is something we've talked about a lot on these calls is the swing factors. The biggest swing factors on payment processing is things like weather and things like where did different days on the calendar fall in a given quarter and that is how we sort of model. It we might work with years of history on experience like that.

Running season.

Productivity of our STR team not only just keeps quite frankly, we're liking the productivity improvement it keeps improving.

But I think how and how we hire and also how we qualify and drive opportunities into the provider organization now I think we have not just str's, but we have a lot of other tools at our disposal, which have been also proving to be very effective.

<unk>.

Obviously weather can can can play a role which is not as predictable, but that sort of it and I don't think we sort of talk about like specific patterns in usage utilization of services as being as big a swing factor.

Right now, we're pretty happy with the cadence that we see on the provider sales organization and the STR organization on landing and expanding our provider footprint than it's been.

Great. Thanks, and then maybe just one more I was hoping you could touch on your postscript engagement product on how that works and is there are you partnering with the pharmacies, maybe Chad can measure follows meters or an opportunity to do that.

Didn't really excited and proud of that team they've been executing very well.

Driving driving really good returns for all of us.

Why do you want to add a number to that part answer or treated qualitative.

Okay.

Well not just through who're.

So why don't I am very excited about this product sorry, I was jumping right to the end of any.

Qualitative.

Sure.

I think youre dogleg.

This is a product that's been worked on for quite some time.

That's my neighbors cognizant annoying poodle, but that's okay.

I'm really excited about it I know the team has is to and this is.

They're all.

Like all me it now.

<unk>.

At its simplest form when you get a script from the provider it just makes sure.

Thank you.

So much sense to be able to get a reminder to fill at building. Your prescription is just so important in every stage right. If you're if your doctor thinks they you'd need to be honest therapy.

Our next question comes from the line of Jesse session with Piper Sandler. Please go ahead hi, guys.

Hi, Thanks, so much for taking the question.

I was hoping you could maybe talk a little bit about what beyond <unk> dot com today.

Should they should nudge you as many as much as possible to fill that therapy and answer any of your questions.

Obviously providers by specialty clinical trials.

That are open for enrollment.

They also know why why and if youre not doing it today to better inform you as to why it's important.

Thank you Paul for a particular condition.

And how much how many of those items are you monetizing today, if any at all and just the extent to which you've integrated the.

And so we've been working on this product for some time when it was developed all in house early indications are it's the response has been phenomenal the impact of patients has been is looking very tremendous and we're pretty excited about it and early on I don't think we're talking about who we're partnering with it but.

With that.

That include management platform.

So there is a great question Jess.

Thanks for asking about maybe the integration effort is very much well on its way we're booking.

I am personally pretty excited about it it's a nice it's a really nice valuable add on to our our patients and providers.

Thousands of appointments everyday now forever, and it's going very well and they are being done in real time.

Great sounds exciting thank you.

So from a technology integration I think thats on track from a monetization effort I think we were very we've been very specific on that we're going to take a pretty slow in the monetization. We are monetizing I'd say the vast majority of the traffic.

Our next question comes from the line of John <unk>.

With Raymond James.

Hey.

Hey, good afternoon.

So it looks like you guys are kind of settling into a nice group of.

So the site still has not monetize.

With G&A leverage in <unk> and.

But we expect that change over the coming.

Like if we think about your company, let's just think five years out.

Sorry did you say you expect that to change over the coming years or is that in FY 'twenty FY 'twenty five event.

I assume because it's easy math that you can grow your top line 20%.

For the foreseeable future how should we think about.

Over coming years philosophy is nodding his head on years years, yes.

Concurrent growth in G&A, and marketing and R&D that would accompany a theoretical kind of pioneer and 20%.

Okay and my follow up is just on postscript engagement is that that's kind of first time that you all have monetize the I guess the inventory and I'm curious to know I think you said it launched in the fourth quarter is that it is.

Yeah, John this is <unk>.

So first of all I mean, I know you're trying to project out, but you know, we're really formally talking about fiscal 'twenty five.

But let me try to be helpful. I think we made some pretty specific comments about G&A, where we did a lot of analysis on public company costs, and we felt that to be a.

Like revenue generating in the fourth quarter or just sales convention and for Kim.

Hi.

I'm pretty sure it was.

Revenue generating in Q1.

World Class public company and have all the right processes and procedures and people in place we're going to have to make some investments we could choose to delay them.

Andre you can follow up if we could follow up with you on that if I don't get the notes right now from the team who I'm sure someone's going to assume you know.

We chose not to so we feel pretty good about where we're running now to support a larger organization, but there is obviously you know the cost of things go up every year, but it's not like there is an order of magnitude increase in the resources we need.

Okay.

We have had other products in the post script engagement area. I think this is probably the most robust and this is built off the learnings a lot of the previous products that we've had in this space.

And I think you've seen.

Yes.

You're seeing that operating leverage happened for years now.

To confirm that is correct. It's Q1, it's really in Q1 that we started.

Yes, the dollar of metal.

Jason.

Revenue on it.

Well then let's let's give you a question that you might answer of the DSD and our hiring season is coming up how do we think about you've had something.

Got it thank you.

Thanks.

Our next question comes from the line of Daniel Cross site with Citi. Please go ahead.

Any different thoughts about how quickly you're out and how quickly you grow that has seen our fourth so maybe talk about your goals for hiring in.

Hey, guys. Thanks for taking my question and congrats on the quarter.

One of your learnings of productivity as you tried to ramp that up a couple of years ago.

To touch on connect on call a little bit. So you added I believe a 120 clients from from them through the acquisition have you been able to cross sell some of the.

Las Vegas.

There is a couple of things around the ramp up on our STR team that were really important one we were at we ramped it up a lot quicker also acknowledging that we really had been out of the STR market for abadi because of Covid for over a year to some of it was just filling in a lot of hiring that we because we really didn't hire any new.

Core for you type products to those clients.

And then have you been able to make any of the cross sells the other way to your kind of core <unk>.

<unk> clients connect Hong Kong.

So well first.

New STR is during COVID-19.

First.

Core product I think we've rebranded as free zone call. So I think thats already happened.

Just sort of during the peak pandemic period, so that was some of the John <unk>.

We were really back filling sort of the running season, but the productivity of our SDR team not only just keeps quite frankly, we're liking the productivity improvement it keeps improving.

Expect us to keep referring to this <unk> call I think we I think it's still early I don't know that I would comment that.

No the team is having.

Early success with cross sell up selling the old connect on core client base, but to be fair, we frankly shared a lot of clients and that delta was mostly clear.

But I think Halloween how are we hiring and also how we qualify and drive opportunities into the provider organization.

Now I think we have not just SCR. So we have a lot of other tools at our disposal, which have been also proving to be very effective.

Clients that.

Yes, we didnt share right, so I'm sure that.

Right now, we're pretty happy with the cadence that we see on the provider sales organization and the STR organization on landing and expanding our provider footprint and it's been driving really excited and proud of that team they've been executing very well.

Know that the team is out there.

With them and trying to cross sell upsell, where possible where it's the right thing and I know we're still in the early days of rolling out for each phone call to our client base and the response from our clients our provider clients on for each one call has been.

Driving driving really good returns for all of us.

It's been amazing.

If we had an expectation side on the value proposition is.

<unk> you want to add a number to that broad answer or contribute qualitative.

Early indications are this is it's far exceeded even.

Hockey qualitative.

Yeah.

I think your dog liked it.

My expectations and it's.

And our neighbors cognizant annoying poodle.

As a beautiful product.

Yeah, Yeah, and then on cash flow there was a bit of a step up in capex this quarter sequentially to around seven.

Offering our.

Ally Gollum you'd now.

Thanks, what we're saying.

Seven 9 million.

Thank you.

Is that the right run rate.

Right.

Our next question comes from the line of Jesse session with Piper Sandler. Please go ahead hi, guys.

We should be thinking about for our.

For 2025.

I mean, I think there is some fluctuation quarter to quarter.

Hi, Thanks, so much for taking the question.

I don't think you'd be.

I was hoping you could maybe talk a little bit about what beyond <unk> dot com today.

Wrong, and if you just run rate of that number, but there will be quarters, where it's a little lesser little higher but in the high <unk> Daniels one.

<unk>, obviously providers by specialty clinical trials that are open for enrollment.

Payable for a particular condition.

For the year.

Yep. Thank you.

And how much how many of those items are you monetizing today, if any at all and just the extent to which you've integrated the <unk> site.

Our next question comes from the line of Glenn. Thank you Joseph with Jefferies. Please go ahead.

Right.

That's the intake management platforms.

Hi, yes, thanks for taking my questions just two quick ones for me.

So there is a great question Jess.

I appreciate the <unk> provider number.

And thanks for asking about maybe the integration effort is very much well on its way, we're booking appointments thousands of appointments everyday now forever, and it's going very well and theyre being done in real time.

You gave us and caveats that youre looking to add profitable growth and so I'm kind of curious to get your take.

On where we are from a penetration perspective and <unk>.

So from a technology integration and I think that's on track from a monetization effort.

Incrementally harder as you're getting to add these profitable providers and so.

And just for us.

We were very we've been very specific on that we're going to take a pretty slow in the monetization. We are monetizing I'd say the vast majority of the traffic.

For those that are trying to take a little bit of a longer term view I just wanted to get a sense for where you think we're at and then maybe I'll give you my follow up right now maybe just following up on John's question.

So the site still has not monetize.

But we expect that change over the coming.

It's been an interesting two to three years.

Company you were very profitable then you were very unprofitable and now you're back to sort of profitability as you look over the.

Sorry did you say you expect that to change over the coming years or is that in FY 'twenty FY 'twenty five of that.

The next couple of few years, obviously, you made great gains on the efficiency side do you see any major investments on the horizon or do you feel like the infrastructure is at a pretty good place to continue to be able to leverage and grow and I'll stop there. Thanks.

Over coming years philosophy is nodding his head on years years, yes.

Okay and my follow up is just on postscript engagement is that the kind of first time that you all have monetize the apple today, the inventory and I'm curious to know I think you said it launched in the fourth quarter is that.

Well there is a lot of questions from my range of process really quickly and I'm sure I'm, sorry up and downs.

That like revenue generating in the fourth quarter, or just sales, Connecticut and for Kim.

It's okay. It's okay.

Thank you.

What I see.

All right, let me, let me start and try to answer as many of these as I can there was like seven questions.

I'm pretty sure it was.

Revenue generating in Q1 that sounds right. We can follow up if we could follow up with you on that if I don't get the note right now from the team who I'm sure someone's going to assume you know.

Realize you thinks its funding so.

<unk>.

Let's start with I still think we are making a lot of investments right.

We have.

And.

Pending a lot on R&D.

We have had other products in the post script engagement area. I think this is probably the most robust and this is built off of learnings and a lot of the previous products that we've had in this space.

We're spending a lot of our sales and marketing organization.

We are doing is we are spending less continuously as a percentage, but I would say look even looking back to when we went public we spent significantly more today than we did then is a dollar amount and we're able to put out.

And to confirm that is correct. It to Q1, it's really in Q1 that we started to.

<unk> products that address a phenomenal amount of value to our clients of all different kinds of clients in our life Sciences clients.

Our revenue on it.

Got it thank you.

Thanks.

Our next question comes from the line of Daniela Cross site with Citi. Please go ahead.

Our provider clients and frankly, more and more the consumer itself.

So my view is yes.

Hey, guys. Thanks for taking my question and congrats on the quarter.

We will keep making investments because ultimately we're a growth company and we have a growth mindset I think all we're excited to do is just returning back to profitability.

I wanted to touch on connect on call a little bit. So you added I believe a 120 clients from from them through the acquisition have you been able to cross sell some of the core freesia products to those clients.

It's frankly.

More comfortable place for us but.

We're still making investments in and to answer. Your first question is it harder to win clients I think it's always.

Then have you been able to make any of the cross sells the other way to your your kind of core.

For each of clients.

Hard to win clients in an environment like health care like where margins are tight and.

On call.

So well first.

The core product that I think we've rebranded as free John call. So I think that's already happened.

Spectra <unk> to keep referring to it as three John call. I think we've had I think it's still early I don't I don't know that I'd comment that.

Expectations are high end.

There is just a lot of noise and frankly I think the reason we've been successful at it is the team.

No the team is having.

And the team builds great product in sales, great product and does a phenomenal job of implementing and supporting our clients our customers.

Early success with cross sell up selling the old connect on core client base, but to be fair, we frankly shared a lot of clients and that delta was mostly clear.

Appreciate the value we bring them. So I don't take I don't take the job lately, but I think we've been pretty good at it for going on almost 19 years.

Client set.

Yeah, we didn't share right. So I'm sure that I know that the team is out there speaking with them and trying to cross sell upsell, where possible, where it's a very thin and I know we're still in the early days of rolling out for each on call to our client base and the response from our clients or provide.

Glenn I was just going to add a VIX relates to John's question too.

I think we've tried to be pretty consistent about growth and profitability matter and they both go together and just some numbers to throw out at you.

We actually have increased expenses operating expenses by 13%. If you look to two years ago in the fourth quarter to today. So the highest point, we've invested a lot, but what's really important is that the revenue has grown 64% over the same period. So that's going to be important to continue to grow but also getting operating leverage and being profitable.

Our clients on for each one call has been.

It's been amazing.

If we had an expectation set on the value proposition is the early indications are this is it's far exceeded even.

My expectations.

So hopefully that's helpful.

And it's a beautiful product.

Thank you very much Jonathan.

Yeah, Yeah, and then on cash flow there was a bit of a step up in capex this quarter sequentially to around $7 9 million.

Jonathan is a long question.

Okay.

Our next question comes from Sin doubts with RBC capital markets. Please go ahead.

Is that the right run rate.

That we should be thinking about for 2025.

Hey, Good afternoon. This is Thomas Keller on for Sean Congrats on a nice quarter and thanks for taking the question.

I mean, I think there is some fluctuation quarter to quarter.

I don't think you'd be.

Just a quick modeling one here in kind of a follow up on an earlier question, but how should we think about the EBITDA cadence kind of heading into fiscal 'twenty five and then over the course of the year.

Wrong, and if you just run rate of that number, but there will be quarters, where it's a little lesser little higher but in the high Twenty's Daniels Wang.

And a little seasonality on the payment side, but any other particular cost efficiency actions, creating some variability that we need to be thinking about where should we expect this to be pretty lumpy.

For the year.

Thank you.

Our next question comes from the line of Glenn Sankey, Joseph with Jefferies. Please go ahead.

Definitely definitely not linear.

One of the reasons I think you brought up the seasonality on payments.

Hi, yes, thanks for taking my questions just two quick ones for me.

I think the other thing to keep in mind is we've mentioned this in the past too, but we've seen a lot of operating leverage over the past eight or nine quarters, and it's not going to be as much. This year. Just if you sort of look at the outlook, we provided for revenue and EBITDA. So it will improve throughout the year, but <unk> has.

I appreciate the <unk> provider add number.

You gave us on the top.

Savviest that youre looking to add profitable growth and so I'm kind of curious to get your take.

On where we are from a penetration perspective and <unk>.

Lower margin associated with more payment revenue.

Incrementally harder as you're getting to add these profitable providers and so.

And then you just start sort of dropping incremental pretty good incremental margin down as revenue grows. So outlook. We can tap you to talk to you about your model.

And just for those of you know for those that are trying to take a little bit of a longer term view I just wanted to get a sense for where you think we're at and then maybe I'll give you my follow up right now maybe just following up on John's question.

We're not providing quarterly guidance, but feel free to follow up.

Alright, Thanks, a lot I'll leave it there.

It's been an interesting two to three years.

Comes from the line of Jeff Walsh with Guggenheim Securities. Please go ahead.

Company. You were you were very profitable then you were very unprofitable and now you're back to sort of profitability as you look over the.

Hey, Thanks for taking my questions.

I wanted to ask about the growth algorithm going forward, particularly as you target more profitable.

Customers thinking about the growth in revenue per customer and how much of that should we be thinking about coming from legacy, but may be underpenetrated products versus some of the newer products you've rolled out both in R&D as well as some tuck in M&A deals. Thank you.

Well Glenn there is a lot of questions from my brain to process really quickly and I'm sure I'm Sato and downs.

It's okay. It's okay.

Maybe I can start and can talk about the acquisitions a little bit more.

I think.

Youre right, let me, let me start and try to answer as many of these as I can there was like seven questions.

Look one number Jack to look at is for the full year fiscal 'twenty four total revenue per client was up it ticked up a little bit.

Realize you thinks its funny so.

Let's start with I still think we are making a lot of investments right.

Which was a sign of things to come and I think what we can say is it should be up more in fiscal 'twenty five over 24 than it was in 24 over 'twenty three and Thats a combination of everything I mean, it's debase.

And look we.

We have we're spending a lot on R&D.

Spending a lot of our sales and marketing organization.

New clients that we think can be profitable as well and then in terms of the products or the new the acquisition date and we want to.

We're doing is we're spending less continuously as a percentage, but I would say look even looking back to when we went public we spent significantly more today than we did then is a dollar amount and we're able to put out phenomenal products that status a phenomenal amount of value to our clients of all different kinds of clients in our <unk>.

Okay. Thank you.

The adoption of the different products. We have has been going very well I think our CSM team has been doing great job and.

A lot of that is the testament to these products, adding a ton of value to our clients are very very quickly and I think our go to market, which is clearly differentiated.

Life Sciences clients on net.

Our provider clients and frankly more and more the <unk>.

Consumer itself.

So my view is yeah, we we will keep making investments because ultimately we're a growth company and we have a growth mindset I think all we're excited to do is just return back to profitability.

And being able to get them into the hands of clients.

Very easily and a lot of that's a lot of that is based on the work of our technology organization, just making the products are easy to turn on.

It's frankly, a much more comfortable place for us but.

So thank you to everyone, but it's so far we see a lot of our products for all different clients being adopted new or newer acquisitions, but also some of those things.

No, we're still making investments in and to answer. Your first question is it harder to win clients I think it's always.

You know hard to win clients in an environment like health care like where margins are tight.

The products that we've been working on for years and having our bag for many many years so.

I think all in all like the team is doing a very good job.

And.

Around adoption.

Our expectations are high and you know, there's just a lot of noise and frankly I think the reason we've been successful at it is the team.

I'm pretty proud of them.

I appreciate that and then if we're thinking about <unk>.

Sources of.

Gross margin expansion, how should we think about.

And the team builds great product in sales, great product and does a phenomenal job of implementing and supporting our clients or customers.

Mix shift versus some of those.

Products getting to scale.

And then lastly, if I can sneak a third in there.

Appreciate the value we bring them. So I don't take I don't take the job lately, but I think we've been pretty good at it for going on almost 19 years.

Wonder if we get enough Dr. Kevin Thank you.

Yes.

So first of all on the.

Yeah, Glenn I was just going to add a VIX relates to John's question too.

Gross margins.

I think we've talked about this not a ton of opportunity there relative to the other three lines.

Think we've tried to be pretty consistent about growth and profitability matter and they both go together and just some numbers to throw out at you.

We still see over time, there may be a little bit of opportunity, but if you were sort of modeling 2025, we.

We actually have increased expenses operating expenses by 13%. If you look to two years ago in the fourth quarter to today.

We feel really good about where those gross margins have gotten too and a lot of the leverage we've gotten and I would focus more on the other three line items as a source of operating leverage for this year and I will Jack I will come back with the STR count for you.

Highest point, we've invested a lot, but you know what's really important is that the revenue has grown 64% over the same period. So that's going to be important to continue to grow but also getting operating leverage and being profitable.

So let me describe that number for you.

So we can go to the next question.

So hopefully that's helpful.

Okay.

Thank you very much Jonathan.

Hopefully this questions for me.

Jonathan a long question.

Yes.

Okay.

Next question comes firms seen doubts with RBC capital markets. Please go ahead.

Operator, I think we can go to the next question.

Yes, and our next question comes from the line of Joe <unk> with Baird. Please go ahead.

Hey, Good afternoon. This is Thomas Keller on for Sean Congrats on the nice quarter and thanks for taking the question.

Hi, great. Thanks for taking my question.

One on network solutions, just when you look at.

Maybe standing of later stage clinical activity at some of the customers that you help in that business or even just the propensity to spend here at year end with marketing decisions.

And the little seasonality on the payment side, but any other particular cost or efficiency actions, creating some variability that we need to be thinking about where should we expect this to be pretty light.

Are you starting to get maybe in a sense that the backdrop for new campaigns and just the broader macro that business might face in fiscal 2025 and beyond do you think that might actually be a better environment, because it's obviously been a.

Definitely not definitely not linear for the.

One of the reasons I think you brought up the seasonality on payments.

I think the other thing to keep in mind is we mentioned this in the past too, but we've seen a lot of operating leverage over the past eight or nine quarters, and it's not going to be as much. This year. Just if you sort of look at the outlook, we provided for revenue and EBITDA. So it will improve throughout the year, but <unk> has.

Pretty challenging here over the last 18 months or so.

I don't think.

That's a fair question I think it's too early to tell how the year will play out, but I think the team's doing a great job I feel really good about sort of the execution and related pipeline works looks.

Lower margins associated with more payment revenue.

And then you just start sort of dropping incremental pretty good incremental margin down as revenue grows. So outlook. We can tap you to talk to you about your model and.

But generally speaking I think.

Not providing quarterly guidance, but feel free to follow up.

There's a lot of months in a year.

Perfect. Thanks, a lot I'll leave it there.

So having done this for so many years now.

Say whenever I thought its going to get easier I'm, usually wrong and whatever I think it's going to get harder.

Comes from the line of Jack Wallace with Guggenheim Securities. Please go ahead.

Often wrong on that too so I would say very quickly we hire great people and we provide great returns on our network to our clients.

Hey, Thanks for taking my questions.

I wanted to ask about the growth algorithm.

Particularly as you target more profitable.

And we try to make sure that the right patients the right messages all the time that drive a phenomenal amount of value to those patients and keep doing that I think we have the opportunity to keep growing our network solutions revenue for years to come.

Customers thinking about the growth in revenue per customer and how much of that should we be thinking about coming from legacy, but maybe under penetrated products versus some of the newer products you've rolled out both in R&D as well as some tuck in M&A deals. Thank you.

Okay.

Okay. That's great and then I wanted to dig in a bit more than just what it means to try to prioritize customer prospects that drive profitable growth I guess.

Maybe I can start and I could talk about the acquisitions a little bit more.

Look one number Jack to look at is for the full year fiscal 'twenty four total revenue per client was up ticked up a little bit.

In practice that kind of sounds to me like Youre expecting your gross retention to move higher over time.

Which was a sign of sort of things to come and I think what we can say is it should be up more in fiscal 'twenty five over 24 than it was in 'twenty for over 23, and that's a combination of everything I think it's the base. It's new clients that we think can be profitable as well and then <unk> in terms of the products or the new the acquisition date.

The right way to think of it so as the average tenure in the installed base is maturing and moving higher that obviously there is a favorable revenue mix implication it definitely factors in things like customer acquisition costs is that kind of what you see happening.

Okay. Thank you.

The adoption of the different products, we have has been going very well I think our CSM team has been doing great job.

For <unk> over the next few years at this point.

Yes, sure. So Joe absolutely retention is something we are very religious about so absolutely focusing on profitable growth and profitable customers. We expect to have an impact on retention.

And.

A lot of that is the testament to these products, adding a ton of value to our clients are very very quickly and I think our go to market, which is fairly differentiated.

Number two though is payback.

I think thats really the thing you underwrite a certain amount of time that you think you can get revenue and how much revenue you can get and so that's what that's the other thing thats sort of changed but those two things influence revenue growth and profitability growth is that helpful.

And being able to get them into the hands of clients.

Very easily and a lot of that's a lot of that is based on the work of our technology organization, just making the products are easy to turn on.

So that he can everyone, but it's so far we see a lot of our products for all different clients being adopted new or newer acquisitions, but also some of the older and so the products that we've been working on three years than we had in our bag for many many years. So I think all in all like the team is doing a very good job.

Yes, no that's great I'll leave it there thanks.

Great and the STR count for January 31 was 107.

The next question.

And the next question comes from Joe and dressing into Securities.

Got it.

Around adoption.

Good evening, Thanks for taking my questions feel clarification, if I can.

I'm pretty proud of him that he has.

I appreciate that and then if we're thinking about.

With respect to the quarterly provided add help at least 100 in Q1 is that a good quarterly run rate to use as a module is to the euro.

Sources of gross margin expansion, how should we think about.

Mix shift versus maybe some of those.

Specific to Q1.

Products getting to scale.

Yeah, I mean, Joe lender I know you are.

And then lastly, I can think of third in there.

Getting more familiar with us.

And if we can get enough Dr. Calvin Thank you.

We have in historical periods, given that next quarter number we do have a decent amount of visibility and we will keep sharing that with you as the year goes out.

Yes.

So first of all on the.

Gross margins.

I think we've talked about this not a ton of opportunity there relative to the other three lines.

We don't want to be.

Give you a specific number but I think it is.

There are like sort of watermark to think about just know that we've got revenue guidance. So whatever you're sort of modeling for client growth, it's going to it's going to have a different revenue per client.

We still see you know overtime, there may be a little bit of opportunity, but if you were sort of modeling 2025.

We feel really good about where those gross margins have gotten too and a lot of leverage we've gotten and I would focus more on the other three line items as a source of operating leverage for this year and I will Jack I will come back with the STR count for you.

Okay, and then I want to go back to change healthcare issues.

Thanks for all the color about that you were you guys able to switch to the clearinghouses pretty quickly without much disruption to pay providers, but have you seen.

So let me just grab that number for you.

So we can go to the next question.

In general any impact on utilization trends at your providers.

Okay.

Hopefully this questions for me.

Basically because your payment processing and your network solutions business is exposed to installation transfer any impact on that and related to that.

Yes.

Operator, I think we can go to the next question.

And a lot of providers across the country.

Yes, and our next question comes from the line of Joe truly Codebase. Please go ahead.

Disrupted by desk.

Is that impacting in any way the sales cycle like in terms of Europe data willingness to work with you to roll out new solutions as they are dealing with this change healthcare issues just curious.

Hi, great. Thanks for taking my question.

One on network solutions, just when you look at the.

Maybe it's going to go beyond just the clearinghouses, which impact from change healthcare.

Maybe standing of later stage clinical activity at some of the customers that you help in that business or even just the propensity to spend here at year end with marketing decisions.

So.

From what we can say, we havent seen providers not seeing.

Any significant.

Utilization changes.

At our provider groups.

I think I say this all the time most of our providers.

First and foremost want to treat their patients.

So we haven't seen any change.

In utilization patterns that I know of and I would probably hear about it if we did.

From a.

I don't think.

The others are selling environment selling environment no I don't.

That's a fair question I think it's too early to tell how the year will play out, but I think the team's doing a great job I feel really good about sort of the execution and the way the pipeline works looks.

You've seen a material change the selling environment, but obviously if this goes on for months and months and months its just can be pretty shitty.

Okay. That's fair and then last one I know, maybe but I think maybe you might not want to give any color there, but just in terms of like as we think about <unk> segment.

But generally speaking I think.

There's a lot of months in a year.

I guess I'm, having done this for so many years now I'd say whenever I've thought its going to get easier I'm, usually wrong and whenever I think it's going to get harder.

For modeling purpose and need that external guidance I want to provide in terms of how should we think about the growth.

For each segment in fiscal 'twenty five compared to your overall.

Am I wrong on that too so I would say like quickly we hire great people, we provide great returns on our network to our clients.

Purpose fiscal 25 down <unk> <unk>.

Overall, our revenue guidance for the year any individual segment guidance.

And we try to make sure that the right patients see the right messages all the time that drive a phenomenal amount of value for those patients and keep doing that I think we have the opportunities to grow in our network solutions revenue for years to come.

Yeah, So I don't want to be clear about the terminology here to lender to be these are not segments. The revenue lines, but I think thats. The spirit of your question is more around where the revenue lines right.

Yes.

Yes. So obviously there is cost that are spread.

Okay.

Okay. That's great and then I wanted to dig in a bit more to just what it means to try to prioritize customer prospects that drive profitable growth I guess.

Across all different areas of the company and we're able to have three different revenue lines and I think we've been consistent in the past in 2000 fiscal 2025 is no different.

Is payment processing lags, so that will be the slowest growth rate of the three.

In practice that kind of sounds to me like you're expecting your gross retention to move higher over time.

An outlook range of 20% to 22% I think it's safe to say that.

The right way to think of it so as the average tenure in the installed base is maturing and moving higher that obviously there is a favorable revenue mix implication that definitely factors in things like customer acquisition costs is that kind of what you see happening.

Subscription and related services and network solutions revenue lines with outpace.

Payment processing.

Thanks, guys.

Sure.

Our next question comes from the line of Stephanie Davis with Barclays.

Please go ahead.

<unk> over the next few years at this point.

Hey, guys Hello from Miami. Thank you for taking my question.

Yes, sure. So Joe absolutely retention is something we are very religious about so absolutely focusing on profitable growth and profitable customers. We expect to have an impact on retention.

I had more questions on the profitable client gosh, because im looking at the 100 ads for one Q is that a question of you being choosy here with the pipeline this quarter.

Number two though is payback so I think thats really the thing you you underwrite a certain amount of time that you think you can get revenue on how much revenue you can get and so that's what that's the other thing that sort of changed but those two things influence revenue growth and profitability growth does that helpful.

A subset of the opportunity, but historically cultivated and as you kind of refocus on there can be build the pipeline of client growth can pick up closer to prior levels.

Or is this something where we should think or it takes more time to ramp up and HSE. That's more profitable maybe there is more cross sell.

Yes, no that's great I'll leave it there thanks.

So first of all I mean, I think one thing that's important to know as many of these clients. This is months in the making right.

Great and the SDR count for January 31 was 107.

You can go to the next question.

And if you think about our go to market strategy. So this was something that we went about over the past couple of years and really starting to look at the returns and obviously the environment change last year and look at the returns. We're getting so this is sort of now youre seeing the output of that shift and.

Yes, and the next question comes from Chilean dressing and choose Securities. Please go ahead.

Good evening, Thanks for taking my questions a few clarification if I can.

With respect to the quarterly provided add help at least 100 in Q1 is that a good quarterly run rate to use as the model is to the euro.

I think we're constantly looking at that and looking at obviously cost of capital is different.

It is especially to Q1.

I think that your lenders question, we will keep you updated as things go, but I don't think theyre going to dramatically change we feel pretty good about the decisions. We made last year that led to the clients. We added this past quarter and then the 100 plus that we expect to get in <unk>.

Yeah, I mean, Joe lender I know you are.

Getting more familiar with us.

We have in historical periods, given that next quarter number we do have a decent amount of visibility and we'll keep sharing that with you as the year goes out.

But I think as it relates to I think Joe's question earlier to think about it is we're trying to drive lots of good client retention, we're trying to drive revenue per client, we're trying to drive profitability.

So we don't want to give you a specific number but I think it's just.

Just bear like sort of watermark to think about just know that we've got revenue guidance. So whatever you sort of modeling for client growth, it's going to it's going to have a different revenue per client.

And so thats.

For the next quarter, that's 100 plus.

If its higher or if its lower it will be through the lens of those those metrics that I just talked about.

And I don't want to go back to change healthcare issues I think thanks for all the color about that you were you guys were able to switch to the cleaning houses pretty quickly without much disruption of pay providers, but have you seen.

Helpful and for the SDR count.

To clarify before I got my question do you see a 107.

Correct.

Provider yes.

That's just on a provider organization that's right.

In general any impact on utilization trends agile providers basic.

Does that comp to the 175 last quarter, so a 40% decline.

Basically because your payment processing and your network solutions business is exposed to installation claims though.

Any impact on that and related to that.

He is locating these notes yet so I'll ask.

And a lot of providers across the country kind of disrupted by desk can offer is that impacting in any way the sales cycle like in terms of Europe their willingness to work with you to rollout new solutions as they are dealing with this change healthcare issues. Just curious like maybe it's going to go beyond just the clearinghouses, which impact from Jane Health care.

Two 100 comps to a 139 last quarter a lot of those which is the.

Same number right.

So is there did this spur a layoff as he had between focus on on kind of a certain subset of your clients or is there any opportunity to remap. Your SCR that maybe historically had our less profitable channel assignment downmarket.

So.

From what we can say, we havent seeing providers not seeing it.

Or are they or are those at Sierra.

Any significant.

Utilization changes.

Graduated into other roles in the organization.

At our provider groups.

And there is general attrition in that role.

I think I say this all the time most of our providers.

As well.

First and foremost want to treat their patients.

Okay.

Alright.

So we haven't seen any change.

Thank you.

Yep.

In utilization patterns that I know of and I would probably hear about it if we did.

Our next question comes from the line of Scott.

Keith Please go ahead.

From a.

Those the others aren't selling environment selling environment no I don't think we've seen a material change the selling environment, but obviously if this goes on for months and months and months its just can be pretty shitty.

Hey, <unk>. Thanks for taking my question so.

You seem pretty happy and you're executing on your go to market strategy.

Teams rapidly building out solutions, helping the needs of clients just wanted to follow up on the change healthcare over the last three weeks have you guys been able to deploy new solutions.

Okay. That's fair and then last one I know, maybe but as you maybe you might not want to give any color there, but just in terms of like as we think about Pes segment.

For your clients to help mitigate.

For modeling, but any directional guidance you want to provide in terms of how should we think about the growth.

The change health care issue.

And then also on.

Payment side Im wondering if youre seeing any unusual activity over the last three weeks.

Ed for each segment in fiscal <unk> 25, compared to your overall.

Fiscal 'twenty five down prior to your comp.

So I don't appreciate.

Overall, the revenue guidance for the year any individual segment guidance.

To answer your question Scott around have we been able to deploy new solutions.

Yes, so I don't want to be clear about the terminology here to lender be these are not segments. The revenue lines, but I think that's the spirit of your question is more around where the revenue lines right.

Even new solutions to our clients, but some of our newer products and starting to get more adoption.

If you use some of the change products for payment and collections in the backend.

Yep.

Yeah. So you know obviously, there's cost there's better spread.

And we've just prioritize making sure those clients.

Across all different areas of the company and we're able to have three different revenue lines and I think we've been consistent about the past and <unk> fiscal 2025 is no different.

Get access to those products as soon as possible.

So they can keep operating their business.

Is payment processing lags, so that will be the slowest growth rate of the three.

<unk>.

But all in all I wouldn't say, we've built new products just for.

With an outlook range of 20% to 22% I think it's safe to say that.

Hoping these clients it's mostly been.

Accelerating rollout of certain products that have been built for being built for 11 years.

Subscription and related services and network solutions revenue lines with outpace.

Payment processing.

<unk>.

And what was the other question.

Thanks, guys.

Scott what was the other question.

Sure.

That shouldn't be in payments along just on the payment side is have you seen any behavior changes I guess over the last three weeks on the payment side.

Our next question comes from the line of Stephanie Davis with Barclays. Please go ahead.

Hey, guys Hello from Miami. Thank you for taking my question.

Sure.

No no nothing to call out okay.

I had more questions on the profitable client growth.

Okay. Thanks, very much guys.

Yes go.

Go ahead.

Looking at the 100 ads for one Q is that a question of you'd be choosy here with the pipeline this quarter.

Our next question comes from the line of Jeff Garrow with Stephens. Please go ahead.

We are pursuing a subset of the opportunity, but historically cultivated and as you kind of refocus on there can be build the pipeline your client growth can pick up to closer to prior level.

Yes. Good afternoon. Thanks for taking my question. So wanted to ask about network solutions revenue in that business and my rough math says network solutions revenue per visit was up about 5% in FY 'twenty four so wanted to see if you would call out any key driver among mix pricing or adoption to drive that.

Or or is this something where we should think or it takes more time to ramp up and HSE, that's more profitable I mean, theres more cross sell.

So first of all I mean, I think one thing that's important to know is many of these clients. This is this is months in the making right.

Per visit growth and also to put a strategic lens on it.

Any comments on what the runway is for network solutions to continue to create additional value for your life Science partners.

So we think of as a mixture of all I would say probably.

A mixture of all of the above.

That drove continued success along that was investment in product and execution of our team and.

I think we're constantly looking at that and looking at obviously cost of capital is different.

Thoughtful use of the network.

We do expect our life Sciences.

<unk> to be the driver of our success moving growth moving forward.

Yeah, and Jeff I think you could actually go back to one of your earlier questions I wish I could remember who asked it but I think I really talked about just the power of the network being bigger and thus providing the right relevant content to the right patient and we have seen a lot more opportunities to do that and a lot more brands and I think we put in our slide deck, we're working with over 90 90 brands today.

But I think as it relates to I think Joe's question earlier to think about it as we're trying to drive lots of good client retention, we're trying to drive revenue per client, we're trying to drive profitability.

And so that's for <unk>.

For the next quarter, that's 100 plus.

If its higher or if its lower it will be through the lens of those those metrics that I just talked about.

Yeah.

I appreciate that great to see the additional value being driven across a bigger base of visits on the network.

Helpful and for the SDR count.

To follow up a little further on this thread you given the SDR Cowen and talked about.

To clarify before I got my question do you see a 100 and Kevin.

Correct on their preferred provider yes.

The kind of priorities there, but maybe you could talk a little bit more about your investment in sales and marketing and network solutions is there incremental investment there and how should we think about the ability to work with more brands and create and drive cross selling of more.

That's just on a provider organization that's right.

Does that comp to the 175 last quarter, so a 40% decline.

She's locating these notes yet so I'll.

Yes, hi off to 180 comps to a 139 last quarter a lot of those which is the.

Products.

That our life Sciences co.

Same number right.

Go to market team is.

So is there did this spur a layoff as he had between focus on on kind of a certain subset of your clients.

They are rock stars.

And we expect to keep investing in them.

Yeah.

Or is there any opportunity to remap your SCR that maybe historically had.

Frankly.

They work hard they're fun.

And we expect them to continue to be a growing part of our organization, but we also expect to keep getting significant leverage off those organizations.

Less profitable channel assignment Downmarket.

Or are they or are those at Crs.

Graduated into other roles in the organization.

And there is general attrition in that role.

Provider and our life Sciences teams.

Well.

No.

Yeah.

Okay.

Proud of them they are doing really well.

Alright Super helpful. Thank you.

And Jeff I mean, let me just point out that debt.

Yep.

Team that the revenue associated with that area was.

Our next question comes from the line of Scott.

$20 million diverse.

Thank you Beth.

Public and our entire sales and marketing expense that year was $32 million.

Please go ahead.

Hey, I'm in velocity. Thanks for taking my question so I'm.

So I mean, the investments have been made to highest point, we'll continue to do that but significant ones have been made.

You seem pretty happy and you're executing on your go to market strategy.

Your teams.

Rapid Lee building out solutions, helping the needs of clients.

Got it thanks again for taking the questions.

Just wanted to follow up on the change healthcare over the last three weeks have you guys been able to deploy new solutions.

Yep.

Our next question comes from the line of Ryan Macdonald with Needham <unk> Company.

For your clients to help mitigate.

Got it.

The change health care issue.

Hi, Thanks for taking my questions and congrats on a nice quarter as we think about the focus on more profitable prospects is there any portfolio management going on where you're looking to proactively turn unprofitable customers and as we think about the freeze your first sort of.

And then also on the payment side wondering if youre seeing any unusual activity over the last three weeks.

So I don't appreciate so to answer your question Scott around have we been able to deploy new solutions until they've mostly been new solutions to our clients, but some of our newer products are starting to get more adoption, if and if they use some of the change.

Event is this sort of like would you consider as kind of like a sales kickoff, where you can kind of re strategize.

Go to market motion to try to drive and deliver larger initial lands more and better cross sell motion in the effort to drive more profitable profitable growth. Thanks.

Products for payment and collections on the backend.

And we just prioritize making sure those clients.

So I'll start with <unk> first and then I'm going to remain and then I'm going to ask you about the first question, which was I I've already forgotten it.

Get access to those products as soon as possible.

So they can keep operating their business.

<unk>.

So for your first was into sales kick off it was our first of all company meeting.

But all in all I wouldn't say, we've built new products just for.

Helping these clients, it's mostly been accelerating.

We have done in seven years and it was just really important to bring the teams together.

Accelerating rollout of certain products that have been built for being built for rather than years.

The company has changed.

So much in the last seven years and a lot of teams that work collaboratively with each other.

<unk>.

And what was the other question.

Scott what was the other question.

Didn't get a chance to meet each other.

That shouldn't be in payments along just on the payment side is have you seen any behavior changes I guess over the last three weeks on the payment side.

<unk>.

As I should remind all of our stakeholders. We are a fully virtual company. So this is and it wasn't a significant investment but it also allowed us to really talk about our mission vision and what our values work along with talking about it.

No no nothing to call out okay.

Okay. Thanks, very much guys.

Yes.

Go ahead.

Moving beyond intake and see that we talked about the go to market motion, but we also celebrate our engineering team and we celebrate our network solutions organization and we celebrate our support team that's on the front lines. So this isn't just about.

Our next question comes from the line of Jeff Garrow with Stephens. Please go ahead.

Yes. Good afternoon. Thanks for taking my questions I wanted to ask about network solutions revenue in that business.

Our go to market motion. This is about our organization.

My rough math says network solutions revenue per visit was up about 5% in FY 'twenty four so I'll ask you. If you would call out any key driver among mix pricing or adoption to drive that per visit growth and also to put a strategic lens on it any comments on what the runway is for network.

And the people that make it make it valuable and make it all happen.

Your first question was.

Portfolio.

Portfolio management I think we're always doing that we think about capital allocation regularly as an organization, where we continue to invest and where we where we doubled down on that investment even or tripled down in other areas, where we pulled back a little bit and try to drive better returns from the investments that we've already made.

One is to continue to create additional value for your life Science partners.

So we think it was a mixture of all I would say probably.

Mixture of all of the above.

And I don't think our view is pruning clients I think our view is.

Yes, hi that drove continued success in a lot of that was investment in product and execution of our team and.

And really making sure that clients that we do have kept the most value out of being a freeze your clients.

Thoughtful use of the network.

Helpful and maybe just a follow up wanted to ask about Pam obviously, it's a longer term opportunity here, but.

We do expect our life Sciences.

<unk> to be the driver of our success moving growth moving forward.

Given the inclusion in the midst calculation this year.

Yes, and Jeff I think you could actually go back to one of your earlier questions I wish I could remember who asked it but I think that really talked about just the power of the network being bigger and thus providing the right relevant content to the right patient and we have seen a lot more opportunities to do that and a lot more brands and I think we put in our slide deck, we're working with over 90 90 brands today.

Just curious how youre going about.

Sort of trying to get that in the hands of more physicians.

Really start to drive that greater usage to create more maybe opportunities for 2026 and beyond.

So just for everyone's edification.

Depreciation Pam is the patient activation measure and it's a performance measure.

Yeah.

Appreciate that great to see the additional value being driven across a bigger base of visits on the network.

Right.

We are the.

I wonder if the license.

Maybe to follow up a little further on this thread you given the SDR Cowen and talked about.

From a go to market motion there is a whole team that's really working with our provider clients and getting it lies in on were performing.

We've kind of priorities there, but maybe you could talk a little bit more about your investment in sales and marketing and network solutions is there incremental investment there and how should we think about the ability to work with more brands and create and drive cross selling of more.

<unk> thousands of bands on a regular basis.

I think we have a lot of clients that have already put up their hands, we're always adding more and that body of work is still in its early stages.

<unk>.

And Im getting a note now we've already have over a million unique patients that have done a pam. So we feel good that the body of work and the data that we're going to start producing we will help.

Products.

That our life Sciences, Yes go to market team is.

Further our.

Our view and generally in the warrant community skew that driving activation drives better outcomes.

They're rock stars.

And we expect to keep investing in them.

You know frankly third they work hard they're fun and we expect them to continue to be a growing part of our organization, but we also expect to keep getting significant leverage off those organizations.

All across the board and Ryan in addition to the Mips program that you mentioned, we have spent a lot of time with the kidney care community to kidney care choices program.

Help them drive a lot of great results, we think.

<unk> life Sciences teams.

Excellent thanks for the call.

No.

Yeah.

Okay.

We're proud of them they are doing really well.

Our next question comes from the line of Aaron Kimpton with GC JMP. Please go ahead.

And Jeff I mean, let me just point out that that that team that the revenue associated with that area was sub $20 million of diverse year. When we went public and our entire sales and marketing expense that year was $32 million.

Great. Thank you for the question I'm sure you guys saw the general catalyst announcements.

I assume the health in northeast, Ohio early in January with the thesis.

I mean, the investments have been made to highest point, we'll continue to do that but significant ones have been made.

Kind of building modern tech enabled health care delivery platforms at scale.

I'm wondering if you could share your thoughts on nonprofit networks slipping before profit over time and the opportunities and risks you see there for fresher and then secondly from a patient care perspective as someone Franklin who was born in the health care system and grew up in that I'm curious, how you think about the potential of these types of transactions.

Got it.

Again for taking the questions.

Yes.

Our next question comes from the line of Ryan Macdonald with Needham <unk> Company. Please go ahead.

Hi, Thanks for taking my questions and congrats on a nice quarter as we think about the focus on more profitable prospects is there any portfolio management going on where you're looking to proactively churn unprofitable customers and as we think about the freeze your first sort of.

To drive better patient outcomes. Thank you.

Okay.

Alright so.

I'm going to tread carefully or masks they tend not to.

Publicly give a lot of issues, but I would say that whether it's a health system as nonprofit.

Event is this sort of like.

Would you consider as kind of like a sales kickoff, where you can kind of re strategize.

By tax stature or for profit I think they still have to.

Go to market motion to try to drive and deliver larger initial lands more better cross sell motion in the effort to drive more profitable profitable growth. Thanks.

Be able to provide great care and they do often.

And not frankly.

Frankly do at a loss maker right. So that they can keep operating the business and what we're really talking about the difference between for profit and nonprofit.

So I'll start with Frazier fast.

I'm going to remind that I'm going to ask you about the first question because I, probably I've already forgotten it.

Is their tax status.

So for each advanced raws into sales kick off it was our first of all company meeting we've done in seven years and it was just really important to bring the team together.

Have.

If you look at ambulatory care.

Most of the country.

Unbelievably dedicated professionals that operate in a for profit manner that deliver care across the manner and nonprofits and I think.

Because the company has changed.

So much in the last seven years and a lot of teams that work collaboratively with each other.

America's healthcare system is able to support both nonprofit and for profit.

Didn't get a chance to meet each other.

Often it's as worried as I should remind all of our stakeholders. We are a fully virtual company. So this isn't in it wasn't a significant investment but it also allowed us to really talk about our mission vision and what our values work along with talking about moving beyond intake and see that we talked about the go to market motion, but we also.

Care delivery systems and.

Okay.

We have clients in the for profit space that are just doing a meeting zing work with their clients.

And to their patients so.

I actually think it has more to do with the organization and its tax status.

That's very helpful. Thank you.

Celebrate our engineering team and we celebrate our network solutions organization and we celebrate our support team that's on the front lines. So this isn't just a vote.

There are no further questions I will now turn the call back over to Archie for closing remarks.

I want to thank everyone for.

Our go to market motion. This is about our organization and the people that make it make it valuable and make it all happen.

For listening and supporting freezer, and we look forward to seeing all of you in the coming months.

Your first question was.

And I hope everyone has really nice spring and I'll talk about <unk> as you soon thank you.

Portfolio management I think we're always doing that we think about capital allocation regularly as an organization.

We continue to invest and where we where we doubled down on that investment even or triple down in other areas, where we pulled back a little bit and try to drive better returns from the investments that we've already made and I don't think our view is pruning clients I think our view is.

You know really making sure that clients that we do have kept the most value out of being a freeze your clients.

So maybe just a follow up wanted to ask about Pam obviously, it's a longer term opportunity here, but you know.

Given the inclusion in the midst calculation this year.

Just curious how youre going about.

Sort of trying to get that in the hands of more physicians.

It's sort of really start to drive that greater usage to create more maybe opportunities for 2026 and beyond.

So just for everyone's edification.

Depreciation the Pam is the patient activation measure and it's a performance measure.

We are the.

The owner of the license.

From a go to market motion there is a whole team that's really working with our provider clients and getting it live and on we're performing.

Thousands of bands on a regular basis.

I think we have a lot of clients that have already put up their hands, we're always adding more and that body of work is still in its early stages.

And I'm getting to know now we've already have over a million unique patients that have done a pan. So we feel good that the body of work and the data that we're going to start producing will help.

To help further the our view and generally in the walk community skew that driving activation drives better outcomes.

All across the board, Yes, Ryan in addition to the Mips program that you mentioned.

I have spent a lot of time with the kidney care community to kidney care choices program.

And we help them drive a lot of great results, we think.

Excellent thanks for the color.

Okay.

Our next question comes from the line of Aaron Kimpton with GC JMP. Please go ahead.

Great. Thank you for the question.

I'm sure you guys saw the general catalyst amounts for.

The Biosimilar health in northeast, Ohio in late January with the thesis of.

Kind of building modern tech enabled health care delivery platforms at scale.

I'm wondering if you could share your thoughts on nonprofit networks slipping before profit over time on the opportunities and risks do you see there for for Asia.

Then secondly from a patient care perspective again as someone who was born in the health care system and grew up there now.

I'm curious how you think about the potential of these types of transactions to drive better patient outcomes. Thank you.

Alright so.

I'm going to tread carefully or masks or 10 nanometer.

Publicly give a lot of issues, but I would say that whether it's a health system as nonprofit.

Taxed at catcher or for profit I think they still have to.

Be able to provide great care and they do often.

And not frankly.

Frankly, do it a lossmaker right. So that they can keep operating the business and what we're really talking about the difference between for profit and nonprofit.

Is the tax status, but we have you know.

If you look at ambulatory care.

The country theirs.

Unbelievably dedicated professionals that operated in a for profit manner that deliver care across the manner and there's nonprofits and I think Youll America's healthcare system is able to support both nonprofit and for profit.

Care delivery systems and.

There's cases like we.

Have clients in the for profit space that are just doing a meeting work with their clients.

And to their patients so.

I actually think it has more to do with the organization and its tax status.

That's very helpful. Thank you.

There are no further questions I will now turn the call back over to Archie for closing remarks.

I want to thank everyone for.

For listening and supporting freezer, and we look forward to seeing all of you in the coming months.

And I hope everyone has really nice spring and I'll talk about Bosnia hotels you soon thank you.

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