Q2 2025 Phreesia Inc Earnings Call
Speaker Change: Good evening ladies and gentlemen and welcome to the free just second quarter fiscal 2025 earnings conference call.
Speaker Change: At this time, all participants are in a listen-only mode.
Speaker Change: We will provide instructions for the question and answer session to follow. First, I would like to introduce Balaji Gandhi, Preja's Chief Financial Officer, Mr. Gandhi, you may begin.
Balaji Gandhi: Thank you, operator. Good evening and welcome to Frigious Earnings Conference Call for the second quarter of fiscal 2025, which ended on July 31st of 2024.
Balaji Gandhi: Joining me on today's call is Haim Indig, our Chief Executive Officer.
Speaker Change: A more complete discussion of our results can be found in our earnings press release and in our related form a case of mission to the SEC.
Speaker Change: including our quarterly stakeholder letter, both issued after the market's closed today.
Speaker Change: These documents are available on the Investor Relations section of our website at IR.readget.com
Speaker Change: As a reminder, today's call is being recorded and a replay will be available on our Investor Relations website at IR.Freesia.com, following the conclusion of the call.
Speaker Change: During today's call, we may make forward-looking statements, including statements regarding trends.
Speaker Change: Our anticipated growth, our strategies, predictions about our industry, and the anticipated performance of our business, including our outlook regarding future financial results.
Speaker Change: Board-looking statements are subject to various risks on certainties and other factors that may cause our actual results, performance, or achievements to differ materially from those described in our forward-looking statements.
Speaker Change: Such risks are described more fully in our earnings press release, our stakeholder letter, and our risk factors included in our SEC filings, including in our quarterly report on form 10Q that will be filed with the SEC tomorrow.
Speaker Change: 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.
Speaker Change: The Undertaker obligation to update and expressly display the obligation to update. These forward-looking statements to reflect events or circumstances, after the data is called, or to reflect new information for the occurrence of unanticipated events.
Speaker Change: We may also refer to certain financial measures, not in accordance with generally accepted accounting principles.
Speaker Change: such as AdjustedEvent.and FreeCashflow.
Speaker Change: in order to provide additional information to investors.
Speaker Change: These non-gap measures should be considered in addition to and not as substitute for or an isolation from our gap results.
Speaker Change: A reconciliation of GAP to non-gap results may be found in our earnings press release and stakeholder letter which were furnished with our 4-may K filed after the market's close today with the SEC and may also be found on our Investor Relations website at ir.fresha.com.
Speaker Change: I will now turn the call over to our CEO, Chaim Indig.
Chaim Indig: Thank you, Balaji, and good evening everyone. Thank you for joining our fiscal second quarter earnings call. We achieved another important milestone in the fiscal second quarter by reaching positive free cash flow for the first time as a public company.
Speaker Change: We believe this milestone marks the start of a new era for Frisha, in which we will be able to utilize internally generated cash to drive stakeholder value.
Speaker Change: Our fiscal second quarter results were solid across all of our key financial and operating metrics.
Speaker Change: We believe we are set up well to execute on our four-year financial plan and plan for continued revenue and profitable growth this year, next year and beyond.
Speaker Change: I feel very good about where we are at an organization and appreciate my teammates for their commitment to our mission of making care easier every day and also to our vision to make every person an active participant in their care.
Speaker Change: I will now hand it over to Balaji to provide some financial highlights.
Balaji Gandhi: Thank you, Haim, and good evening everyone.
Balaji Gandhi: Let me start with a couple of the highlights in our letter regarding the fiscal second quarter.
Balaji Gandhi: Q2 revenue was 102.1 million dollars, up 19% and 16 million dollars year over year
Speaker Change: Just at EVETDA, was $6.5 million.
Speaker Change: of $18 million year over year.
Speaker Change: Our average healthcare services clients for AHSCs increased by 104 from the prior court.
Speaker Change: and Total Revenue per A.H.S.E.
Speaker Change: was 24,494 dollars.
Speaker Change: Down 2% year over year.
Speaker Change: YouTube, fiscal 2025.
Speaker Change: Total revenue per HSE was flat year over year. When compared to Q2 fiscal 2024 total revenue per HSE, excluding the revenue from the clearinghouse client relationship that we wound down earlier this year.
Speaker Change: Turning to our cash flow and balance sheet, we achieved two important milestones in the fiscal second quarter.
Speaker Change: First, we return to positive operating cash law.
Speaker Change: In second, as I mentioned, we achieved positive free cash flow for the first time of the public-related company.
Speaker Change: Operating cash flow was positive at $11.1 million, up to $20.4 million, year of year.
Speaker Change: Free Cashler was positive at $3.7 million of $19 million here over here.
Speaker Change: Cash was at $82 million on July 31st, up to $2.3 million from the end of our fiscal first quarter on April 30th.
Speaker Change: We expect to continue to generate positive free cash flow, while investing in long-term revenue and profit growth.
Speaker Change: Now moving on to our financial outlook for fiscal 2025.
Speaker Change: We are maintaining our revenue output.
Speaker Change: For fiscal year 2025, at a range of 416 million to 426 million dollars.
Speaker Change: We are updating our adjusted event dot outlook for fiscal year 2025 to a range of 26 million to 31 million dollars from a previous range of 21 million to 26 million dollars.
Speaker Change: That's a $5 million increase at the top and bottom end of our range.
Speaker Change: You've also provided an outlook for two metrics.
Speaker Change: Angelses and total revenue per A.J.A.
Speaker Change: We expect AHSEs to reach approximately 4,200 for the full fiscal 2025.
Speaker Change: Compared to 3,600 in 1, we reported in fiscal 2024.
Speaker Change: We expect total revenue per HSE to increase in fiscal 2025 compared to the 98,944 dollars we achieved in fiscal 2024.
Speaker Change: In order to help you model beyond fiscal 2025, we are also sharing our expectations for HSC's, the total revenue per HSC in fiscal 2026.
Speaker Change: We expect AHSEs to reach approximately 4,500 in fiscal 2026.
Speaker Change: Additionally, we expect total revenue per HSC.
Speaker Change: 2 increase in fiscal 2026 compared to fiscal 2025.
Speaker Change: Finally, I would like to reiterate Times' comment that I feel very good about where we are as an organization, and would like to thank and congratulate all my free-get teammates for their contribution to our results.
Speaker Change: Operator I think we can now open the lines up for Q&A session.
Speaker Change: Thank you. If you have a question, please press star 1 on your telephone keypad. To withdraw your question, simply press star 1 again. Please ensure that your line is not on mute when called upon. Thank you.
Speaker Change: Your first question comes from the line of an Samuel with JP Morgan. Your line is open.
Samuel: Hi, I can grasp on the strong results and thanks so much for providing the really helpful modeling color for 2026.
Samuel: I was hoping maybe you could just spend a little bit of time discussing how to think about the drivers of that ramp of the revenue growth provider client just kind of keeping in mind your longer term revenue target of 20% growth beyond 2025.
Speaker Change: and with the new clients growing call at high single digits next year, it doesn't apply a pretty significant insuption. So it was hoping you could talk about what the key drivers of that infection are.
Speaker Change: Sure, thanks Andy for the questions, Balaji.
Speaker Change: So a couple of things I think on your question first, I think you have some good perspective on these growth drivers, having bought us for a long time, and if you think about when we went public.
Andy: That was sort of the or elder than we had in the first year, year and a half of being public.
Andy: So we're certainly capable of driving a lot of revenue both in our base.
Andy: and driving the total value of a deal size higher. And then maybe just to give you some additional color on that.
Andy: If you think about our pipeline, it's been as big right now in the first half of fiscal 25. It was in the first half of 2004, our pipeline win race have been consistent, first half over first half.
Andy: and the size total value of the transactions that we're doing, are about 20% bigger in the first half of this year versus last year. So this is probably something you could sort of go back to fiscal 19 fiscal 20 and look at that and that's how it'll probably play out over the next couple years.
Speaker Change: That's great and happening, I think, sooner maybe than I anticipated. Maybe just a follow-up, what's hoping you could provide some more color on the patient bill pay products and maybe how that differs from how your patients are currently transacting with you? Is there any kind of leveraging of a card on file for any of that? Thank you.
Speaker Change: And this time, yes, there is real leveraging current on file for it, but it's also as
Speaker Change: I'm sure you'll see it some of your doctors' offices, but it's a product where we've invested heavily in and it really provides a significantly better experience.
Speaker Change: or the patient in their ability to pay their bill with.
Speaker Change: Without.
Speaker Change: actually having to.
Speaker Change: do a lot of work and write a check and get a statement. It's been a big investment. We're really proud of the team. The initial response from our clients has been well beyond what we even thought it would be. So hats off to the team that's been rolling out. Probably took us a little longer than we expected, but it was a lot harder than we thought. So it's been really nice.
Blavinda: and Blavinda when you see that your doctors.
Blavinda: We hope to, I can grab you guys.
Blavinda: Dury.
Speaker Change: Your next question comes from the line of Ryan Daniels with William Blair. Your line is open.
Ryan Daniels: Yeah, guys, I'll have my congratulations on the move to freecast flow positive. That's a great milestone. Maybe two questions. I'll start with one for you, Balaji. Really impressive.
Ryan Daniels: Downward Trend in your sales and marketing spend, I think, you know, trend it down from a peak of 40 million to 30 million now. Is that more of a sustainable level going forward? Or should we start to see that maybe modestly trend up a bit, as we continue to drive the growth outlook going forward?
Speaker Change: Yeah, thanks Ryan. I think you should, it's been in that level, calling it a plus or minus 31, 32 million dollars for 11 quarters or so now. I think you should expect us to continue to get nice leverage out of that number. One thing I will point out Ryan is
Speaker Change: that just won Q to Q sequentially recall that we talked about that clearing house client unwinding. There were actually some sales and marketing costs that were built into that, which is frankly what made it.
Speaker Change: You know, not very profitable to us.
Speaker Change: So that came out from one Q2, so I think sort of being in that range we've been in for a while. We can continue to get nice leverage. We've got a large organization of about 500 people in the sales and marketing organization and we're spending $120 million. So we think that can support a much bigger organization, revenue-wise.
Speaker Change: Okay, very helpful and then
Speaker Change: Just a question on the Meditack Alliance that you announced in the shareholder letter tonight.
Speaker Change: Maybe twofold one, will they actually be a reseller of the freezer product and number two, when will the full product integration be available for the client base? I know that's a pretty sizable client base, especially in the acute care market. Thanks, guys.
Speaker Change: Yes, so they are a reseller of one of our small pieces of the technology for some of their clients.
Speaker Change: But a lot of the clients that I say the Alliance allows us it's really opening the door and making it easier for me to take clients to buy directly from free share from a lot of set of our other products. But they are a reseller of one of our products.
Speaker Change: and then any comments on the full integration that you mentioned when that whole occur. Thank you.
Speaker Change: [inaudible]
Speaker Change: I expect that to continuously roll out over the coming years and we do already have integration with it and we'll keep investing in meta tech as a platform and the customer base has been very, very supportive of what we've been rolling us.
Speaker Change: So we can spend it's very fruit. Then we agree it's a huge, huge product market.
Speaker Change: Yeah, big guys. Okay, thanks again, guys. Cheers.
Speaker Change: Your next question comes from the line of Scott Show on House with Keybank. Your line is open.
Speaker Change: Hey guys, thanks for taking my question, just wanted to poke around the more, you know, the additional color we got on the fiscal 26.
Speaker Change: Target, you know, my understanding was always that, you know, the network solutions would grow, maybe mid to high teens as percentage every year. That's still the right way to think about it.
Speaker Change: For next year and you know what does that really imply on the subscription business if you could break out some of that color more and appreciate it.
Speaker Change: Yeah, Scott, I think what we can do to try to be helpful is we don't want to get into a revenue line item, you know, forecasting.
Speaker Change: But I think, you know, we talk about total revenue and I think we have said that network solutions will continue to be a bigger part of our revenue so as a percentage it will grow over time.
Speaker Change: And so, you know, I think we talked about size and value of transactions being bigger that's inclusive of network solutions.
Speaker Change: So, you know, I think you should just expect that to grow as a percentage of revenue and it's been growing, you know, at or faster than subscription of late but it will fluctuate according to quarter and that's really one of the really nice things about our business.
Speaker Change: that we could be happy sort of three different ways to grow.
Speaker Change: Yeah, that's very helpful Balaji and just as a follow up there, I guess you mentioned about the inorganic opportunities provided by the new cash generation.
Speaker Change: And he's going to call out there in terms of which part of the business you think that there's more attractive and currently market opportunities for M&A thanks.
Speaker Change: Yeah, maybe I'm an hour looking at each other a little confused. I don't think we mentioned anything about specifically by an organic opportunity.
35 Earnings Conference Call. At this time, all participants are in a listen only mode. We will provide instructions for the question and answer session to follow.
Speaker Change: Balaji Gandhi, Chaim Indigated Balaji Gandhi.
Speaker Change: You're free cash generation would help you achieve these targets. So I read between the lines of saying that I think generally you should expect, you know, the common amount of free cash will be.
Balaji Gandhi: First, I would like to introduce Balaji Gandhi, Preesia's Chief Financial Officer. Mr. Gandhi, you may begin. Thank you, operator.
Speaker Change: You know, generating more cash flow, we think that's good, just makes this a stronger company in.
Balaji Gandhi: Good evening and welcome to Preesia's Earnings Conference Call for the second quarter of fiscal 2025, which ended on July 31st of 2024.
Speaker Change: Great to turn a value and work it allows us to keep investing in products and doing the things we're doing. I don't think I'd take anything more away from my problem.
Balaji Gandhi: Joining me on today's call is Haim Indig, our Chief Executive Officer. A more complete discussion of our results can be found in our earnings press release and in our related Form 8K submission to the SEC, including our quarterly stakeholder letter, both issued after the markets closed today. These documents are available on the investor relations section of our website at ir.reja.com. As a reminder, today's call is being recorded and a replay will be available on our investor relations website at ir.reja.com following the conclusion of the call.
Speaker Change: Okay, my bad, thanks.
Speaker Change: Why have you cleared up there?
Speaker Change: Your next question comes from the line of Jessica Tassen with Piper Sandler. Your line is open.
Jessica Tassen: Hi guys, thanks for taking the question.
Jessica Tassen: So, I wanted to understand kind of what changed in your visibility on the average revenue per AHSC. We appreciate the guidance, but just are you guys seeing kind of the size of the pipeline or the magnitude of the opportunity to grow? I think you referenced that. Is it new products or just what's giving you kind of sufficient confidence to be able to guide to growth in revenue per.
Balaji Gandhi: 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 fees. The 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, and our risk factors included in our SEC filings, including in our quarterly report on Form 10Q that will be filed with the SEC tomorrow.
Jess: Yes, thanks, Jess.
Speaker Change: I think what you're seeing today with the new information we shared is more of the output of some things we put in place a couple of years ago in terms of how we wanted to think about the business over the next several years.
Speaker Change: and so we just got a much broader suite of solutions.
Speaker Change: both for providers but also for our clients in Lexines which falls into that network solution area. So when we're talking about breath and total value getting bigger that's a very intentional thing that we started to put in place almost two years ago.
Speaker Change: and so we've been expecting it and seeing it and I think, you know, we're reacting a little bit to conversations. We've had a lot of analysts and shareholders about, hey, where is this going, you know, quantitatively and that's why we share what we did today. So hopefully that's helpful.
Balaji Gandhi: 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 data is called or to reflect new information or the occurrence of unanticipated events. We may also refer to certain financial measures, not in accordance with generally-accepted accounting principles, such as adjusted EBITDA and free cash flow. In order to provide additional information to investors, these non-gap measures should be considered in addition to and not as substitute for or an isolation from our gap results.
Speaker Change: Yeah, that's really helpful. And then congratulations on the Pam Renewal. I was hoping that you guys could just maybe remind us.
Speaker Change: I think we understand why peace and activation is so important, but just what is kind of the opportunity to leverage pan within your existing age at the install date, if at all. Thanks.
Speaker Change: Yeah, I mean, look, first of all, and one of the reasons we, you know, were very interested in acquiring the patient activation measure was that some of our clients were already utilizing it. I think the most easiest, you know, application you can think about is in the biology space.
Balaji Gandhi: A reconciliation of gap to non-gap results may be found in our earnings press release and stakeholder letter, which were furnished with our FormAK filed after the markets closed today with the SEC, and may also be found on our investor relations website at ir.freeze.com.
Speaker Change: where as part of the Kidney Care Choices program, the Centers for Medicare and Medicaid Innovation.
Speaker Change: have launched, Tam is required to be measured.
Speaker Change: So, if you think about a new phrology client of frisias that's participate in the KCC program, they have to measure them. It makes our products stickier, it allows us to do a lot of things around both all the things that frisias does. And over time, integrate that with Pam.
Haim Indig: I will now turn the call over to our CEO.
Haim Indig: I'm ending. Thank you to biology and good evening everyone. Thank you for joining our fiscal second quarter earnings call. We achieved another important milestone in the fiscal second quarter by reaching positive free cash flow for the first time as a public company. We believe this milestone marks the start of a new era. In which we will be able to utilize internally generated cash to drive stakeholder value. Our fiscal second quarter results were solid across all of our key financial and operating metrics.
Speaker Change: But now I think you think about that renewal, and I think it's all public information out there. It gives us an opportunity over a longer period of time to get that included in new models within CMMI. And those new models could be in various specialties or provider settings that visual works with.
Speaker Change: Great, thank you.
Speaker Change: Dao!
Haim Indig: We believe we are set up well, execute on our full year financial plan and plan for continued revenue and profitable growth this year, next year and beyond. I feel very good about where we are as an organization and appreciate. I believe my teammates for their commitment to our mission of making care easier every day and also to our vision to make every person an active participant in their care.
jail-endressing: Your next question comes from the line of jail-endressing with truest securities. Your line is open.
jail-endressing: Thank you and thanks for taking my questions. I actually want to go back to fiscal 26 metrics color guidance you're giving.
Balaji Gandhi: Balaji Gandhi.
Speaker Change: Quick clarification, I know it looks like that modeling data is helpful, it looks like street might be slightly
Speaker Change: Higher on this AHSC count, but you're not trying to talk down the top-line growth expectation. You're essentially saying that maybe we are underestimating revenue per AHSC for fiscal 26th.
Balaji Gandhi: I will now hand it over to Balaji to provide some financial highlights.
Balaji Gandhi: Thank you, Hi, and good evening, everyone. Let me start with a couple of the highlights in our letter regarding the fiscal second quarter. Q2 revenue was $102.1 million, up 19% and $16 million year-over-year. Just Adivita was $6.5 million, up $18 million year-over-year. Our average healthcare services clients were AHSCs increased by 104 from the prior court and total revenue per AHSC. Q2 was $24,494, down 2% year-over-year. Q2 fiscal 2025 total revenue per AHSC was flat year-over-year when compared to Q2 fiscal 2024 total revenue per AHSC, excluding the revenue from the clearinghouse client relationship that we wound down earlier this year.
Speaker Change: might be slightly higher on the total AHSC count. Just want to make sure that the message is clear. It's not a top line talking down, but just a mix of the two metric something you want to give some guidance on, right?
Speaker Change: Yeah, I think that's right. I think what we'd say is we haven't.
Speaker Change: Formerly, you know, said anything about fiscal 26 in terms of revenue for the year, but I think that's the right takeaway that we're trying to do is say you will see more contribution from total revenue per age of C and 26 that you have in the last couple of years.
Speaker Change: Okay, then my main question around EBITDA, out performance and guidance raised this fiscal year, would you attribute this out performance to you guys able to find incremental, find cost efficiencies and leverage faster than you previously thought, or are these incremental cost efficiencies which you did not?
Speaker Change: I expect at all just trying to understand if there is any change to your the long-term margin profile in this business you think about.
Speaker Change: Yeah, I think on the earlier question about revenue, it applies really throughout the company. I think there's really a lot of effort and focus by a lot of people at the company around what we want. What kind of company we want to be, what kind of career we want to look like, how are we going to fund our growth?
Balaji Gandhi: Turning to our cash flow and balance sheet, we achieved two important milestones in the fiscal second quarter. First, we returned to positive operating cash flow. Second, as I mentioned, we achieved positive free cash flow for the first time of the publicly traded company. Operating cash flow was positive at $11.1 million, up $20.4 million year-over-year. Free cash flow was positive at $3.7 million, up 19 million year-over-year. Cash was at $82 million on July 31st, up $2.3 million from the end of our fiscal first quarter on April 30th. We expect to continue to generate positive free cash flow while investing in long-term revenue and profit growth.
Speaker Change: And so, a lot of the first moments, acknowledge that a lot of different people at Frisier were part of this.
Speaker Change: and when you put a lot of things in motion, like that's a lendra.
Speaker Change: You know, you don't know the timing with precision about where you're going to be in any particular quarter.
Speaker Change: I think we've done well, but we're constantly looking for opportunities to be more efficient. You know, we still spend a large amount of capital. So I think it's mentioned in the high section of the letter, this isn't some kind of finish line.
Speaker Change: Okay, I'm a last one if you can sneak in here. What was the SDR count at the end of the quarter and any color you can provide as a guidance on that metric band of the fiscal year?
Balaji Gandhi: Now moving on to our financial outlook for fiscal 2025, we are maintaining our revenue outlook for fiscal year 2025 at a range of $416 million to $426 million. We are updating our adjusted EBITDA outlook for fiscal year 2025 to a range of $26 million to $31 million from a previous range of $21 million to $26 million. That's a $5 million increase at the top and bottom end of our range.
Speaker Change: Yeah, and this is something another topic we've talked about a lot internally over the past couple of quarters. I think I talked about on any question about that organization and it's a 500 person organization.
Speaker Change: As we said here today, inclusive of all the work we do in that work solutions.
Speaker Change: were spending over $120 million. I think there is a little bit of confusion from the investment community about SDRs and the context of this. I mean, that 500-person organization has lots of people that are driving.
Balaji Gandhi: We have also provided an outlook for two metrics, AHSEs and Total Revenue Parade. We expect AHC's to reach approximately 4,200 for the full fiscal 2025, compared to 3601 we reported in fiscal 2024. We expect total revenue per AHC to increase in fiscal 2025, compared to the $98,944 we achieved in fiscal 2020.
Speaker Change: Net New growth across the company.
Speaker Change: SDRs have been one tactic.
Speaker Change: So I think we'd rather just sort of say if you wanted to, you know, keep score of how of the inputs on sales and marketing. Think about it as 500, which is about the same as it was last year. And think about it as 120 million. And you know, I don't think it's probably, you know, it's not something we'll plug in, sure.
Speaker Change: Great, thanks a lot.
Speaker Change: Your next question comes from the line of Glenn Santangelo with Jeffries. Your line is open.
Glenn Santangelo: Oh yeah, thanks to my question, just two quick ones for me, you know, back to the fiscal 26th outlook on the provider ads. I'm kind of curious, you know, as we sit here with five months left in fiscal 25th, you know, how much visibility, how much forward visibility do you have on those provider ads at this point? Like I know you're working now for deals towards next year, I'm just kind of curious as to how much.
Balaji Gandhi: In order to help you model beyond fiscal 2025, we are also sharing our expectations for AHC's in total revenue per AHC in fiscal 2026. We expect AHC's to reach approximately 4,500 in fiscal 2026. Additionally, we expect total revenue per AHC to increase in fiscal 2026 compared to fiscal 2025.
Speaker Change: You know, how much visibility you really have and throwing out that forward guidance at this point.
Speaker Change: Yeah, I'll answer the question this way, Glen. We have entering a year when we think about the provider space and we think about the subscription revenue and payment processing. We have lots of visibility. I'm going to say 90% visible.
Balaji Gandhi: Finally, I would like to reiterate Himes comment that I feel very good about where we are as an organization and would like to thank and congratulate all my Phreesia teammates for their contribution to our results.
Unknown Attendee: Operator, I think we can now open the lines up for a Q&A session. Thank you. If you have a question, please press star one on your telephone keypad to withdraw your question, simply press star one again. Please ensure that your line is not on mute when called upon. Thank you.
Speaker Change: And that's the part of our business we have the most.
Speaker Change: and I think...
Speaker Change: In network solutions, we've been pretty consistent. That's where most of the variability is. So even this late in the year.
Speaker Change: and that 10 million dollar revenue range we have most of the variability there is in that work solutions. So we do have, we do have a lot which is why when we're sitting here in September we've given a target for the full fiscal year for next year. So a lot, but not 90% today but entering here, thank you.
Anne Samuel: Your first question comes from the line of Anne Samuel with JP Morgan. Your line is open. Hi, congrats on the strong results and thanks so much for providing the really helpful modeling color for for 2026. I was hoping maybe you could just spend a little bit of time discussing how to think about the drivers of that ramp of the revenue growth provider client just kind of keeping in mind your longer term revenue target of 20% growth beyond 2025.
Speaker Change: Okay, perfect. Then maybe I'm, if I could just sort of follow up on one with you, you know, I'm kind of curious as to, you know, where you think industry penetration rates might be for automated solutions.
Speaker Change: Like what you're selling because I think.
Speaker Change: You know, obviously a great quarter, but some of the pushback may be on the slower provider ads.
Anne Samuel: And with the new clients growing all at high single digits next year, it does imply a pretty significant inflection. So I was hoping you could talk about, you know, what what the key drivers of that infection are. Thanks.
Speaker Change: Next year and so I guess people who is wondering and you know I know you always say this is a hard business You know and I'm sure it continues to be but are you seeing any movement in the competitive landscape from the EHR companies or You know or we start and push up against higher penetration rates like what do you think is going on?
Balaji Gandhi: Sure. Thanks, Annie, for the question is bloody. So a couple of things I think on your on your question. First, I think you have some good perspective on on these growth drivers having followed us for a long time. So we're certainly capable of driving a lot of revenue both in our base and driving sort of the total value of a deal size higher. And then maybe just to give you some additional color on that, if you think about our pipeline, it's been as big right now in the, you know, for the first half of fiscal 25 as it was in the first half 24.
Speaker Change: I think the team is doing a great job. I think we've invested heavily.
Speaker Change: in a lot of new products which are bearing fruit, so I think the investments we've been making in our product organization and diversifying away from just being known as intake so we're really going on more than that which has helped us greatly win.
Charlie: Charlie regularly on a weekly monthly and yearly basis can do more deals and I think we're starting to see.
Speaker Change: More and more of those venture back businesses that or private equity back businesses that are starting to struggle, you know, having not invested and I don't have the ability to invest at the rate they did.
Balaji Gandhi: Our pipeline win rates have been consistent first half over first half. And the size total value of the transactions that we're doing are about 20% bigger in the first half of this year versus last year. So this is probably, you know, something you could sort of go back to fiscal 19 fiscal 20 and look at that. And that's how that's how it'll probably play out over the next couple years.
Speaker Change: So, you know, to be very well, and I think our view is if you continue to invest in product and stop where you what you did, it's what you're doing, then you should, we believe we should have our continuous right to keep growing the business and so far that thesis is played out.
Unknown Attendee: That's great. And, you know, happening, I think sooner, maybe than I anticipated.
Haim Indig: Maybe just a follow-up. What's hoping you could provide some more color on the patient built-up product and maybe how that differs from how your patients are currently transacting with you. Is there any kind of leveraging of a card on file for any of that? Thank you. The Annie this time. Yes, there is. We are leveraging card on file for it, but it's also is. I'm sure you'll see it. Some of your doctors, it's a product where we've invested heavily in.
Speaker Change: And Glenn, what I'm at is we have different ways of growing and that's the point is I think client growth is absolutely important part of it, but so is the revenue so soon.
Speaker Change: I don't hear people often saying, wow, my experience in health there has been amazing, it's so seamless.
Glenn Santangelo: Okay, appreciate the comments, guys.
Speaker Change: Your next question comes from the line of Stephanie Davis with Barclays. Your line is open.
Haim Indig: And it really provides a significantly better experience for the patient and their ability to pay their bill with without actually having to do a lot of work and write a check and get a statement. So it's been a big investment. We're really proud of the team. The initial response from our clients has been well beyond what we even thought it would be. So hats off to the team that's been rolling out. Probably took us a little longer than we expected, but it was a lot harder than we thought. So it's been really nice. And let me know when you see that your doctors. We'll do.
Stephanie Davis: Hey guys, congrats on the corridor!
Stephanie Davis: We have really seen you pushing the gas pedal and that revper metric when it has a scale before.
Unknown Attendee: Congrats, guys.
Stephanie Davis: So I hope that you can give us an insight into the balance of how much of it is from New Deals of Scale that you've talked about, which might have a bit longer to flow through. How much of it is that cross-fail of the broader solution, please.
Speaker Change: And when we think about your client base and the reason offboarding you had in one cue, is there any further offboarding that might make sense as an appliance art at a sale or to specifications at this next stage of your platform?
Ryan Daniels: Your next question comes from the line of Ryan Daniels with William Blair. Your line is open. Yeah, guys, I'll have my congratulations on the move to free cash flow positive. That's a great milestone. Maybe two questions. I'll start with one for you, Bellagy. Really impressive downward trend in your sales and marketing spend. I think you know, trend it down from a peak of 40 million to 30 million now. Is that more of a sustainable level going forward or should we start to see that maybe modestly trend up a bit as we continue to drive the growth outlook going forward?
Speaker Change: What was the last part of that? Is there further what? Any further authoring the client relationships that might not be able to scale on this own way that you folks are. I look at the deal.
Speaker Change: Yeah, yeah, I got it. So a couple of things I'd say really two things around your question. First of all, what you're seeing in fiscal 25, you just, it's, and I think we've tried to unpack this and what we've shared is just that when you take $8 million out from that.
Speaker Change: You know, guys.
Speaker Change: Playing house client that was a very unusual client for us.
Speaker Change: which is one age of three with eight million. It distorts a lot of, you know, the trend.
Ryan Daniels: Yeah, thanks Ryan. I think you should it's been in that level, call it, you know, plus or minus 31 32 million dollars for 11 quarters or so now. I think you should expect us to continue to get nice leverage out of that number. One thing I will point out Ryan is that just one Q to two Q sequentially recall that we talked about that clearinghouse client on winding. There were actually some sales and marketing costs that were built into that which is frankly what made it, you know, not very, very profitable to us.
Speaker Change: The second thing though is, and I think I mentioned this earlier, you think about the pipeline, it's the same as it was a year ago.
Speaker Change: But the size of these, the value of these deals is larger, and I think it's, you know, as I said, about 20% larger compared to a year ago at this time, that flows through into the future, and that's how you get a list on revenue profile.
Speaker Change: And you guys have seen a lot of leveraged on the sales and marketing fund. Should we think about a change in your go to market? Maybe a more narrow focus or a bit more up market focus?
Ryan Daniels: So that came out from one Q to two Q. So I think sort of being in that, you know, the range we've been in for a while, we can continue to get nice leverage. We've got a large organization of, you know, about 500 people in the sales and marketing organization and we're spending 120 million dollars. So we think that can support a much bigger organization revenue. Okay, very helpful.
Speaker Change: No.
Speaker Change: No, I think it's been pretty consistent. I think there's lots of analysis you can do now with over five years of data on visits and clients and the revenue associated with them and it's, you know, the size and composition is pretty much in the same. It bounces around some quarter to quarter but it's pretty much been the same over that whole period of time.
Haim Indig: And then just a question on the the meta tech alliance that you announced in the shareholder letter tonight. Maybe two fold one. Will they actually be a reseller of the freezer product and number two, when will the full product integration be available for the client base? I know that's a pretty sizable client base, especially in the Q care market. Thanks guys. Yeah, so they are a reseller of one of our small piece of the technology for some of their clients, but a lot of the clients that I'd say the alliance allows us.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Joe Ruink with Beard. Your line is open.
Joe Ruink: Great, thank you. On the expectation for customer counts, obviously those are net numbers. I'm wondering if you could speak.
Haim Indig: It's really opening the door and making it easier for meta tech clients to buy directly from freezer from a lot of sub set of our. I don't know about their products, but they are a reseller of one of our products. Great. And then any comments on the full integration that you mentioned when that poker? Thank you. I'd say I expect that to continuously roll out over the coming years. And we do already have integration with it and we'll keep investing in Meditech as a platform.
Joe Ruink: the gross experience retention on maybe even a logo basis or dollar basis over that stretch of time and I guess wondering.
Speaker Change: Hi, you talked about the progress you've had on kind of new deals and new transactions and insulator pay box and those cohorts.
Speaker Change: I'm wondering if the economics have changed for the better within the established installed base and that's driving some of the good updates where we're now seeing.
Haim Indig: And the customer base has, you know, has been very, very supportive of what we've been rolling out. So we've been, it's been very fruitful. I think we agree. It's a huge, it's a huge potential market. Yeah, big house. Okay. Thanks again, guys. Cheers.
Speaker Change: Yeah, I'd say yes is the short answer on the second question and on the first part we've been in a very tight range of 94 to 96% on grows revenue retention since we went public. So and we continue to be in that range.
Scott Schoenhaus: Your next question comes from the line of Scott Schoenhaus with Keybank. Your line is open. Hey, guys. Thanks for taking my question. Just wanted to poke around the more, you know, the additional color we got on the fiscal 26 target. You know, my, my understanding was always that, you know, the network solutions would grow maybe mid to high teens as a percentage every year. That's still the right way to think about it.
Speaker Change: Okay, thank you. And then a second question, you know, the way you framed and the prepared remarks, incremental, you bit that.
Speaker Change: and the incremental free cash flow both year over year. I'm wondering if you just have an expectation for that conversion rate and where the relationship might settle over a rolling what's a 12 month basis.
Speaker Change: Not at this time, Joe. I mean, I think it will continue to be nice pull through. I think if you're comfortable now saying I wouldn't be modeling 100% pull through, but we still think it'll be very strong in the next year.
Scott Schoenhaus: For next year and, you know, what does that really imply on the subscription business if you could break out some of that color more. I'd appreciate it. Thanks. Yeah. Scott, I think what we can, you know, do to try to be helpful is we don't want to get into a revenue line item, you know, forecasting. But I think, you know, we talk about total revenue and I think we have said that network solutions will continue to be a bigger part of our revenue.
Speaker Change: We'll tell you more in December.
Speaker Change: That's it for me. Thank you.
Speaker Change: so
Speaker Change: Your next question comes from the line of John Ramson with Raymond James, your line is open.
Scott Schoenhaus: So as a percentage, you will grow over time. And so, you know, I think we talked about size and value of transactions being bigger. That's inclusive of network solutions. So, you know, I think you should just expect that to grow as a percentage of revenue. And it's been growing, you know, or faster than subscription of late, but it will fluctuate quarter quarter. And that's really one of the really nice things about our business that we could be happy sort of three different ways to grow. Yeah.
Speaker Change: Is this your way of trying to get to a revenue number for next year, John?
John Ramson: No, it's a way to try to understand how much expenses will grow.
Speaker Change #101: I think we have said, you shouldn't expect that expense number that you talked about, which is around $79,000,000,000 in a quarter, going up much over the next couple of years, as we continue to grow it, that's a pretty healthy clip.
Balaji Gandhi: That's very helpful. And just as a follow up there, I guess you mentioned about the inorganic opportunities provided by the new cash generation. Anything to call out there in terms of which part of the business, you think that there's more attractive in currently market opportunities for M&A. Thanks. Yeah. Maybe I'm in a little confused. I don't think we mentioned anything about specifically by an organic opportunities. You know, your free cash generation would help you achieve these targets.
Speaker Change #101: Okay.
Speaker Change #102: And then secondly, just kind of trying to re-between all adds a little bit, and this is a state school, reading between the lines, which is always in question.
Speaker Change #103: So for you to drive a higher revenue for client, not only do you have to tackle bigger clients, but I'm assuming that you're...
Speaker Change #103: also targeting clients that...
Speaker Change #104: Have a bigger willingness to write prescription so that the data flow through to pharma would be more valuable. So are you looking at groups that might be more hyperscribers than maybe what you were in the past?
Balaji Gandhi: So I sorry, I read between the lines of saying that I think generally you should expect, you know, that comment around free cash flow to be, you know, generating more cash flow. We think that's good. Just makes us a stronger company and creates a ton of value. And work, it allows us to keep investing in products and doing the things we're doing. I don't think I'd take anything more away from that comment. Okay. My bad. Thanks. Well, we cleared it up there.
Speaker Change #104: John, no, I think the way we think about it is making sure that we drive.
John Ramson: More of our holistic solutions across the board to the provider on initial sale.
John Ramson: So as opposed to it, and I think we've mentioned this on a couple of calls, where it's, as opposed to going in with a lower entry product.
Speaker Change #105: or A.M.
Speaker Change #105: or just one of our offerings praying with a fuller suite initially to drive more value. Early on, the reality is, I think, the other thing that we're seeing is the investment that we've been making in R&D and product is starting to pull through as we have a broader offering to take to those clients both initially and ongoing.
Jessica Tassen: Your next question comes from the line of Jessica Tassen with Piper Sandler.
Jessica Tassen: Your line is open. Hi, guys. Thanks for taking the question.
Haim Indig: So I wanted to understand kind of what changed in your visibility on the average revenue per AHSC. We appreciate the guidance, but just are you guys seeing kind of the size of the pipeline or the magnitude of the opportunities grow? I think you referenced that. Is it new products or just what's giving you kind of sufficient confidence to be able to guide to growth in revenue per? Yeah, thanks, Jess. So I think what you're seeing today with the new information we shared is more the output of some things we put in place a couple of years ago in terms of how we wanted to think about the business over the next several years.
Speaker Change #105: Throughout the patient journey.
Speaker Change #105: I think this is what we really wish our investors are giving us the road to invest in product to be able to do this.
Speaker Change #106: Right. So just thinking about your sales and marketing.
Speaker Change #107: What has been done to, I mean, the productivity has gone up. Obviously, you did an experiment where you hired a bunch of people, and you did the Scrooge experiment now, you're on the done.
Haim Indig: And so we just got a much broader suite of solutions both for providers, but also for our clients in elected sciences, which falls into that network solution. So when we're talking about breath and total value getting bigger, that's a very intentional thing that we started to put in place almost two years ago. And so we've been expecting it and seeing it. And I think, you know, we're reacting a little bit to conversations we've had with a lot of analysts and shareholders about, hey, where is this going quantitatively? And that's why we shared what we did today. So hopefully that's helpful. Yeah, that's really helpful.
Speaker Change #108: to improve the productivity of your sales and marketing team because it's pretty evident in the numbers, but I'm just curious about the specifics.
Speaker Change #109: Yeah, I mean, John, I wouldn't think of him as two experiments, I don't understand why you asked it that way, it was really, we took, we took capital in that we thought was, you know, very, you know, very
Speaker Change #109: Appropriate, but it to work with the idea that if we got faster growth, we would be able to drive a lot of operating leverage.
Speaker Change #109: Now, the way you do that is you focus on a lot of operating metrics and getting good results and returns. I think we've been pretty clear. You don't get everything right. So when you don't, you gotta look at it and measure it and sort of take care of that. So I think that's what you're probably seeing a lot of numbers.
Haim Indig: And then congratulations on the PAM renewal. I was hoping that you guys could just maybe remind us. I think we understand why patient activation is so important, but just what is kind of the opportunity to leverage PAM within your existing a H at the install base if at all? Thanks. Yeah, I mean, look, first of all, I'm one of the reasons we, you know, were very interested in acquiring the patient activation measure was that some more clients were already utilizing it.
Speaker Change #110: I have not done anything. No, it's easy to reach up.
Speaker Change #111: And I think last one, you're the only company I follow this completely virtual, but you've had this good return on R&D. How do you keep people in so many locations going with developing product at such a pace? Thanks.
Speaker Change #111: Good night, bye!
Haim Indig: I think the most the easiest, you know, application you could think about isn't in the apology space where as part of the KD care choices program that the centers for Medicare and Medicaid innovation have launched PAM is required to be measured. So if you think about a nephrology client of freezes that's participating in the KCC program, they have to measure PAM. It makes our products sick here. It allows us to do a lot of things, you know, around both all the things that freezes us.
Speaker Change #111: I think we are very purposeful John in how we think about.
Speaker Change #112: Communication, documentation, and engaging. But the team does pull together on a fairly regular basis.
Speaker Change #113: But it also allows us to attract or attain.
Speaker Change #114: Ta-ta-ta-la from all over.
Speaker Change #115: and I think so we recognize that it's not the same as in person but we try to try to find our strengths being fully virtual but also recognizing that we have to get together and we have to have a really focused time on that collaboration as we do on a regular basis.
Haim Indig: And over time, integrate that with PAM. But now I think you think about that renewal and I think it's all public information out there. It gives us an opportunity over a longer period of time to get that included in new models within CMMI. And those new models could be in various specialties or provider settings that for your work. Great. Thank you. Yeah.
Speaker Change #115: Thank you.
Speaker Change #115: Your next question comes from the line of Richard Kults with Tanakor Genuity, your line is open.
Richard Kults: Great, thank you for all the information in the letter. Unproduct updates, Ryan took the meta-tax, so I guess I'll hit medication and hearings. Can you remind us what the revenue model is associated?
Jailendra Singh: Your next question comes from the line of jail and dressing with trueist securities. Your line is open. Thank you. And thanks for taking my questions. I actually want to go back to fiscal 26 metrics color you guidance, you're giving quick clarification. I know looks like that modeling data is helpful. Looks like street might be slightly higher on this AHC count. But you're not trying to talk down the top line growth expectation.
Speaker Change #117: with that offering is that be impaid for by Farma, the part of network solutions.
Speaker Change #118: And if that is the process, is it like a drug by drug that the client signed up for or do you go to each farmer company and say, hey, you know, we'll show you all the prescriptions. Just curious how that all works.
Jailendra Singh: You're essentially saying that maybe we are underestimating revenue per AHC for fiscal 26 might be slightly higher on the total AHC. Just want to make sure that the message is clear. It's not a top line talking down, but just a mix of the two metric, something you want to give some guidance on, right? Yeah, I think that's right. I think what we'd say is we haven't formally, you know, said anything about physical 26 in terms of revenue for the year. But I think that's the right takeaway is that what we're trying to do is say you will see more contribution from total revenue per HSC in 26 that you have in the last couple of years.
Speaker Change #119: So, I'll give some detail probably not as much as you'd like, so just be clear we don't action.
Speaker Change #119: just closed any information back to the pharmaceutical company on.
Speaker Change #120: who were wise, you know, patient identifiable information is over back to them. And the vast majority of that revenue is...
Speaker Change #120: would probably be realized on our network solutions line and it would more often enough be part of an offering, the suite of offerings around the patient's journey that we would work with our network solution clients.
Balaji Gandhi: Okay. Then my main question around EBDA outperforming some guidance raised the fiscal year. Would you attribute this outperforming to you guys able to find incremental like find cost efficiencies and leverage faster than you previously thought or are these incremental cost efficiencies which you did not expect at all. Just trying to understand if there is any change to your the long term margin profile in this business you think about. Yeah. And, you know, I think on the earlier question about revenue it applies really throughout the company.
Speaker Change #120: to provide them access to that network, but it would be one of multiple things that they'd often pick up as opposed to just like we're going and selling that face.
Speaker Change #120: Okay, that's helpful. And then maybe Balaji on the pipeline being the same year over year.
Balaji Gandhi: you know, you obviously focused or stated last quarter you're focusing in on, you know, the shorter payback. So I assume, you know, some stuff probably fell out of the pipeline.
Balaji Gandhi: I think there's there was really a lot of effort and focus by a lot of people at the company around what we wanted, what kind of company we wanted to be, what kind of a look like, how are we going to fund our growth. And so a lot, first of all, just acknowledge that a lot of different people at Free Asia were part of this. And when you put a lot of things in motion like that, so Indra, you know, you don't know the timing with precision about where you're going to be in any particular quarter.
Speaker Change #121: You know, just because they were maybe, you know, not as broad, you know, from a product offering, or interested in the broader product offering, is that fair to say?
Balaji Gandhi: I think we've done well, but we're constantly looking for opportunities to be more efficient, you know, we still spend a large amount of capital. So I think it's mentioned in the high section of the letter, this is some kind of finish line.
Richard Kults: No, I don't think that'd be fair to say, I think what you're, you know, I talked about size earlier and if you just think about the value That's what we've been driving and a lot of this Richard is the output of things we put in place a couple of years ago So I think our comment really is just that by blind still good it's about the same size and the others, you know, are bigger
Balaji Gandhi: Okay, I'm a last one if I can sneak in here. What was the SDR count at the end of the quarter and any color you can provide as a guidance on that metric band of fiscal year. Yeah, and this is something another topic we've talked about a lot internally over the past couple of quarters. I think I talked about on any question about that organization and it's a 500 person organization. As we said here today, inclusive of all the work we do in network solutions, we're spending over $120 million.
Richard Kults: That's what'll get us to the place we're trying to get next year.
Richard Kults: Okay, and...
Speaker Change #122: Okay, that's helpful. And then final question here is, I appreciate the retention, comments, a couple questions earlier. Can you just talk to us a little bit about, let's say, a...
Balaji Gandhi: I think there is a little bit of confusion from the investment community about SDRs in the context of this. I mean, that 500 person organization has lots of people that are driving net new growth across the company. SDRs have been one tactic. So I think we'd rather just sort of say if you wanted to, you know, keep score of how of the inputs on sales and marketing. Think about it as 500, which is about the same as it was last year and think about it as 120 million. And yeah, I don't think it's probably, you know, it's not something I can share.
Speaker Change #123: you know, client decides to switch, you know, from one vendor to, you know, let's say epic. What's your history in terms of, you know, keeping that client on the patient access side and just curious there?
Unknown Attendee: Okay, thanks a lot. Good.
Speaker Change #124: Yeah, I'm here.
Speaker Change #125: I don't think we talk about any specific, you know, EMR vendor, but I think, you know, we talked about our retention rates, we talked about the breath we have and, you know, we're focusing on starting with these clients in a bigger way.
Speaker Change #125: But I don't think there's anything specifically to call out, there's we don't win every deal, but you know, when the situation's happened, it's not, there's not one specific theme to bring out. And obviously we're pretty big player in the space.
Glenn Santangelo: Your next question comes from the line of Glenn Santangelo with Jeffries. Your line is open. Oh, yeah. Thanks for taking my questions. Just two quick ones for me, you know, back to the fiscal 26 outlook on the provider ads. I'm kind of curious, you know, as we sit here with five months left in fiscal 25. You know, how much visibility, how much forward visibility do you have on those provider ads at this point?
Speaker Change #126: Thank you. Congratulations.
Speaker Change #126: Thank you.
Speaker Change #126: Your next question comes from the line of Daniel Grosslight with City, your line is open.
Glenn Santangelo: Like I know you're working now for deals towards next year. I'm just kind of curious as to how much, you know, how much visibility you really have and throwing out that forward guidance at this. Yeah, I'll answer the question this way, Glen. We have entering a year when we think about the provider space and we think about subscription revenue and payment processing. We have lots of visibility. I'm going to say, you know, 90% visibility.
Daniel Grosslight: Hey guys, thanks for taking the question. I wanted to go back to the components of Rev for a HSE growth in 2006 and beyond. First, I wanted to confirm that you are still committed to that 20% top-lying growth for your medium term targets.
Speaker Change #128: And then if I look at your growth algorithm back in the 2018-2019 timeframe, obviously much of that growth was driven by a subscription revenue or provider given the life sciences segment. That time was relatively nascent.
Glenn Santangelo: So that's the part of our business we have the most. And I think in network solutions, we've been pretty consistent. That's where most of the variability is. So even even this late in the year, that $10 million revenue range, we have most of the variability there is in network solutions. So we do have, we do have a lot, which is why, you know, when we're sitting here in September, we've given a target for the full fiscal year for next year. So a lot, but not 90% today, but entering a year signed.
Speaker Change #129: That's where today, you know, the network's business is your fastest growing segment. So as we think about Rev for HSC growth in the future, is, you know, is networks really going to drive the majority of that now. And how does that impact the visibility that you have in achieving those longer term targets?
Speaker Change #129: Sure, so first point Daniel, you know, the network solutions.
Haim Indig: Okay, perfect. And maybe behind if I could just sort of follow up on one with you, you know, I'm kind of curious as to, you know, where you think industry penetration rates might be for automated solutions like like what you're selling because I think, you know, obviously a great quarter, but some of the pushback may be on the slower provider ads next year. And so I guess people are always wondering, you know, I know you always say this is a hard business.
Speaker Change #129: Reven you is actually the first.
Speaker Change #130: Revenue line, open the history of the company, going back to 2005. So I just want to make sure, you know, when you said nascent, it's the earliest revenue we had in the first product we had. I think what you have to appreciate is how much smaller the network was then.
Speaker Change #130: and you know we had done 54 million visits the year we went public. And so one of the reasons that network solutions has grown so much we're now working with over a hundred brands.
Haim Indig: You know, I'm sure it continues to be, but are you seeing any movement in the competitive landscape on from the EHR companies or, you know, are we starting to push up against higher penetration rates, like what do you think is going on? I look, I think the teams doing a great job. I think we've invested heavily in a lot of new products, which are bearing fruit. So I think the investments we've been making in our product organization and diversifying away from just being known as intake.
Speaker Change #130: I think that's because the size of the network has grown so much that it gives us a nice tail and to be able to have a lot of these conversations with a lot more people, frankly, that we couldn't.
Speaker Change #130: a few years ago. So...
Speaker Change #131: I think that is a very different.
Speaker Change #132: You're the thing.
Speaker Change #133: And you know, I think you talked about it next year. I want to also clarify. We've never talked about 20%.
Speaker Change #134: Growth is any kind of target. I think we'll talk to you, you know, we'll keep giving you updates about things. We'll talk about 26 in December, but that's really, I mean, I think you'll get updates from us. But this year, you obviously have a growth in the revenue that we're targeting.
Haim Indig: So we're really, well, I'm on that, which has helped us frankly win fairly regularly on a weekly monthly and yearly basis. And I think we're starting to see more and more of those venture back businesses that or private equity back businesses that are starting to struggle, you know, having not invested and I don't have the ability to invest at the rate they did. So, you know, to be fair and I think our view is if you continually invest in product and it's not where you what you did.
Speaker Change #135: Guided. Thank you.
Speaker Change #135: Go!
Speaker Change #135: Your next question comes from the line of Sean Dodge with RBC Capital Markets, your line is open.
Sean Dodge: Thank you. You mentioned, with respect to the guidance, the variability in that range being associated with network solution selling activity, I guess there are big seasonal components or cadence in that business or Q3s and Q4s still but the heaviest.
Haim Indig: It's what you're doing. Then you should we believe we should have a continuous right to keep growing the business and so far that pieces has played out. And what I'm going to add is we have different ways of growing and that's the point is you're I think client growth is absolutely important part of it, but so is the revenue associated with clients. I don't hear people often saying, wow, my experience in healthcare has been amazing. It's so seamless. Okay, appreciate the comments.
Speaker Change #137: for that segment. And then just anything you can share on visibility, you have at this point into that revenue heading into the back half of this year.
Speaker Change #137: Thanks.
Speaker Change #138: Yeah, so you're right, Chaim. Absolutely. That's been the case every year. We were pretty intentional about having a wire revenue guidance range for this year because of that. And so there will be a lot of balls up in the air in the fall and we'll keep you up a prize for that as we get through it. But that is the that is the time you were doing a lot of sales.
Unknown Attendee: Let's go.
Stephanie Davis: Your next question comes from the line of Stephanie Davis with Barclays. Your line is open. Hey guys and guys on the corridor. We haven't really seen you push on the gas pedal and that rev per metric went at the scale before. So I was hoping you can give us an insight into the balance of how much of it is from the deals of scale that you talked about, which might have a bit longer to flow through.
Speaker Change #139: Okay, thank you.
Speaker Change #140: Your next question comes from the line of Jeff Garrow with Stevens, your line is open.
Jeff Garrow: Yeah, good afternoon. Thanks for taking the questions. He'd be follow up a little bit on that last one. If you could just give any comments specifically about any impact you've anticipated from it being an election year, you know, I would imagine maybe you guys are an attractive non-media channel for life sciences, given the increased spend as far but curious to get your comments there.
Stephanie Davis: How much of it is that cross sales of the broader solution. And when we think about your client base and the recent off-boarding you had in one huge, is there any further off-boarding that might make sense as some of the clients aren't at the sale or sophistications that fits this next stage of your platform? What was the last part of that? Is there further what? Any further off-boarding, the client relationship that might not be able to scale in the same way that you spoke there. I look into it. Yeah, yeah, I got it.
Speaker Change #142: Yeah, no, I'm looking at how I'm doing, I don't think there's anything we call out about elections season and you know, we went through this in 2020 and 2022 as well and frankly well before we were a public.
Speaker Change #143: There are not one more for me, just want to see if we could get an update on modified curious what's working there in terms of customer adoption within the freezer basin and yearly insights on the value realized by clients that are using that service.
Haim Indig: So a couple of things I'd say, really two things around your question. First of all, what you're seeing in fiscal 25, you just, it's, and I think we've tried to unpack this in what we've shared is just that when you take $8 million out from that, you know, clearing house client that was a very unusual client for us, which is one AHFC with 8 million, it distorts a lot of, you know, the trend.
Speaker Change #143: Yeah, no, look, it's just crossed the one year anniversary in July.
Speaker Change #144: I think, you know, talking to our life science team, it's helped, you know, spark a lot of good conversations, where I have can bring value just, you know, beyond what we've done historically.
Speaker Change #144: with this asset and I think, you know, it's going to be a driver of our growth in the future. So when you think about the conversations like Total Revenue for Client and Networks Solutions, that's absolutely a metaphysical need to be part of that.
Haim Indig: The second thing, though, is, and I think I mentioned this earlier, you think about the pipeline, it's the same as it was a year ago, but the size of the value of these deals is larger. And I think it's, you know, as I said, about 20% larger compared to a year ago at this time, that flows through into, you know, into the, into the future, and that's how you get a lift on revenue provider.
Speaker Change #145: Great, thanks for taking the question.
Speaker Change #146: Your next question comes from the line of Rai McDonald's with Needham, your line is open.
Matt Shea: Yeah thanks, this is Matt Shea on Ferai and thanks for taking the questions and congrats on the quarter year guys. One of the follow up on the new provider at to the back half of 25 kind of below that 100 plus per quarter rate.
Haim Indig: And you guys have seen a lot of leverage on the sales and marketing fund. Should we think about a change in your go to market, maybe a more narrow focus or a bit more market focus? No, no, I think it's been pretty consistent. I think there's lots of analysis you can do now with, you know, over five years of data on visits and clients. And the revenue associated with them and, and it's, you know, the size and compositions pretty much been the same. It bounces around some quarter to quarter, but it's pretty much been the same over that whole period of time.
Unknown Attendee: All right, thank you.
Speaker Change #148: Should we view this as the baby new selling seasonality going forward that new deals might be more first half of the year or first half of the fiscal year waited going forward or this more of a signal in the shift towards fewer.
Speaker Change #149: But bigger new clients, I guess just trying to understand if we should expect new provider ads to be linear in FY26 or more from half way to that.
Speaker Change #150: Yeah, you should take away and this is some feedback and conversations we've had with a lot of folks.
Speaker Change #151: This is a very intentional.
Joe Ruink: Your next question comes from the line of Joe Ruink with Baird. Your line is open. Great. Thank you. On the expectation for customer accounts, obviously, those are net numbers. I'm wondering if you could speak. The gross experience retention on maybe even a logo basis or dollar basis over that stretch of time. And I guess I'm wondering. You know, you talk about the progress you've had on kind of new deals and new transactions and shorter paybacks and those cohorts. I'm wondering if the economics have changed for the better within the established install base. And that's driving some of the good updates where we're not seeing.
Speaker Change #151: effort on our part to get out of the quarterly.
Speaker Change #151: Caden's of HSC's and giving you a bigger runway. And so what we're saying is, you know, we're giving you a set for where we think we'll be for the full year on average and we'll be next year. But I do think I'll confirm that this is not anything about seasonality or anything like that. It's just a point of time where we're choosing to set expectations and longer term.
Speaker Change #152: and then just to follow up on the Pam Renewal.
Speaker Change #153: Just curious, we get hit against any other vendors in that process and then as we think about the expansionary opportunity, those four potential additional models, is that create a revenue uplift as CMS as you do additional models, or is that just included in your renewal contract kind of happens? There is no revenue uplift.
Balaji Gandhi: Yeah, I'd say yes, is the short answer on the second question. And on the first part, we've been in a very tight range of 94 to 96% on gross revenue retention since we went public. So, and we continue to be in that range.
Matt Shea: Yeah, so first of all, one of the reasons we were very excited about that measure is it is very unique. I think there's public information out there, Matt, on why and was selected and what makes it unique.
Speaker Change #154: that you could probably chase down and then in terms of the programs. Yeah, there's opportunity there. I think that's also, you know, out there publicly that we can, if we can get into some more models that create revenue opportunities which we're excited about.
Joe Ruink: Okay, thank you. And then a second question, you know, the way you framed in the prepared remarks incrementally that the and incremental three cashflow both year over year. I'm wondering if you just have an expectation for that conversion rate and where the relationship might settle over a rolling what say 12 month basis.
Matt Shea: Okay, great, thank you.
Chaim Indigand: Gandhi, Chaim Indigand, Chaim Indigand,
Speaker Change #156: Your next question comes from the line of Jack Wallace with Guggenheim, your line is open.
Balaji Gandhi: Not at this time, Joe. I mean, I think it will continue to be nice pull through. I think we'll feel comfortable now saying I wouldn't be modeling 100% pull through, but we still think it'll be very strong in the next year.
Jack Wallace: Hey, thanks to you for taking my questions and congrats on getting across all positive.
Jack Wallace: wanted to send another question your way about the growth algorithm for next year, wanted to, you know, maybe ask about the same source sales growth.
Speaker Change #158: It sounds like you've got a bigger deal.
Unknown Attendee: We'll tell you more in December. That's after me.
Speaker Change #159: You may be moving up a market a little bit, but thinking about the client you do have, how much additional upselling.
John Ransom: Thank you.
Richard Close: Your next question comes from the line of John Ramson with Raymond James. Your line is open. Hey, good evening. A couple for me. If we think about your overall expenses outside of payment, which is variable. What kind of revenue do you think you could support with that level of expense compared to what you have today? Is this your way of trying to get to a revenue number for next year, John? No, it's a way to try and understand how much expenses will grow.
Speaker Change #160: Um... this is...
Speaker Change #161: I've been contemplated within the Algo for next year, there's already price.
Speaker Change #162: We should be considering and then just kind of the general impact or lack there of any of the sun setting of the initial, the demo periods. Thank you.
Speaker Change #163: No, nothing you should take away from that in terms of change to any of our go-to-market. And I think, you know, when you, I wouldn't characterize it as off-market or down-market, we're just talking about value.
Speaker Change #163: and like I said, there's the total value that we can drive in the business and that's gotten bigger. This hat first of last half. And that's why you know, we feel sort of, you know, we feel comfortable sharing our outlook for next year.
Richard Close: Yeah, I think we have said you shouldn't expect that expense number that you talked about, which is around $79 million in a quarter, going up much over the next couple of years as we continue to grow it at a pretty healthy clip. Okay, and then secondly, just kind of trying to read between the lines a little bit. And this is state school reading between the lines, which is always in question. So for you to drive a higher revenue for client, not only do you have to tackle bigger clients, but I'm assuming that you're also targeting clients that have a bigger willingness to write prescription so that the data flow through to farmer would be more valuable.
Speaker Change #164: I appreciate that so maybe another way to ask it is at least on the subscription line. You can hovering around the little higher than a third.
Speaker Change #164: Appenitrated against your per provider, Tam, which we expect that that penetration to go up next year was really just a function of the larger deals in higher value deals coming in.
Speaker Change #165: And again, I think what we're going to emphasize when we say value is total revenue. Some of them will be larger on subscriptions, some of them could be larger on payments, and some could be larger on every solution. But really when we say total value, we mean all for it.
Richard Close: Looking at groups that might be more hyper-scribers than maybe what you are in the past. Hey, John. No, I think the way we think about it is making sure that we drive more of our holistic solutions across the board to the provider on initial sale. So as opposed to it. And I think we've mentioned this on a couple calls where it's as opposed to going in with a lower entry product or a, or just one of our offerings going in with a fuller suite initially to drive more value early on.
Speaker Change #166: God, thank you.
Speaker Change #166: Your next question comes from the line of Aaron Kimson with Citizens JMP. Your line is open.
Aaron Kimson: Thank you. You're not still available to you at Preju on the Oracle Healthcare Marketplace at the Andujalai and an integration with Oracle EHR. You talk about what you've seen from the partnership and integration in the first month and the potential you see for it to help Preju when a customer is going forward.
Richard Close: But the reality is I think the other thing that we're seeing is the investment that we've been making in R&D and product is starting to pull through as we have a broader offering to take to those clients, both initially and on going throughout the, throughout the patient's patient journey. I think this is what we really do are investors giving us the rope to invest in product to be able to do this.
Speaker Change #168: Yeah, and it's early. I mean, you know, and we just announced that, so I don't think there's anything particular called out where, you know, we're happy to get, you know, formalized that. But I don't think there's anything specific to call out.
Speaker Change #169: Okay, thank you.
Yoke: Yoke. This concludes the question and answer session. I will turn the call to him for closing remarks.
Richard Close: So just think about your sales and marketing. What has been done to, I mean, the productivity's gone up. Obviously, I mean, you did an experiment where you heard a bunch of people. And you've been on this, you did this growth experiment. Now you're on this productivity experiment. What have you done to improve the productivity of your sales and marketing came to this? I mean, it's pretty evident in the numbers, but I'm just curious about the specifics.
Yoke: Thanks a lot everyone for joining us. I hope everyone's gotten back into the fall swing and everyone's happy that they're kids are back at school and I look forward to seeing everyone in the next 90 days and we'll talk to you all in December. Thank you very much.
Speaker Change #171: This concludes today's conference call. We thank you for joining. You may now disconnect your lines.
Richard Close: Yeah, and I mean, John, I don't, I wouldn't think of them as two experiments, but I understand why you asked it that way. It was, it was really we, we took, we took capital in that we thought was, you know, very appropriate, but it to work with the idea that if we got faster growth, we would be able to drive a lot of operating leverage. Now the way you do that is you focus on a lot of operating metrics and getting good results and returns.
Richard Close: I think we've been pretty clear. You don't get everything right. So when you don't, you got to look at it, measure it and sort of take care of that. So I think that's what you're probably seeing a lot. And I think last one, you're the only company I follow this completely virtual, but you've had this good return on R&D. How do you keep people in so many locations going with your developing product at such a pace?
Richard Close: Right. Okay. I think we are very professional, John, in how we think about community. Communication, documentation, Iguiding, but the team does pull together on a fairly regular basis. But it also allows us to attract and retain top talent from all over.
Haim Indig: And I think so, we recognize that it's not, it is not the same as in person, but we try to, we try to play to our strengths being fully virtual, but also recognizing that we have to get together, and we have to have a really focused time on that collaboration, as we do on a regular basis.
Unknown Attendee: Thank you.
Richard Close: Your next question comes from the line of Richard Close with TANICOR Genuity. Your line is open. Great.
Haim Indig: Thank you for all the information in the letter. On product updates, Ryan took the meta-tax, so I guess I'll hit medication and hearings. Can you remind us what the revenue model is associated with that offering? Is that being paid for by Pharma, the part of network solutions? And if that is the process, is it like a drug by drug that the client sign up for, or do you go to each Pharma company and say, hey, you know, we'll show you all the prescriptions.
Haim Indig: Just curious how that all works. Yeah, so I'll give some detail, probably not as much as you'd like. So just be clear, we don't actually disclose any information back to a pharmaceutical company on who we're wise. I think the suite of offerings around the patient's journey that we would work with our network solution clients to provide them access to that network, but it would be one of multiple things that they'd often pick on as opposed to just like we're going and selling that thing.
Balaji Gandhi: Okay, that's helpful. And then maybe a bloggy on the pipeline being the same year over year, you know, you obviously focused or stated last quarter, you're focusing in on, you know, the shorter payback. So I assume, you know, some stuff probably fell out of the pipeline, you know, just because they were maybe, you know, not as broad, you know, from a product offering or interested in the broader product offering. Is that fair to say?
Balaji Gandhi: No, I don't think that would be fair to say. I think what you're, you know, I talked about size earlier, and if you just think about the value, that's what we've been driving. And a lot of this Richard is the output of things we put in place a couple of years ago. So I think our comment really is just that pipeline is still good. It's about the same size and the deals, you know, are bigger. That's what will get us to the place we're trying to get next year and beyond.
Richard Close: Okay. And okay, that's helpful.
Haim Indig: And then final question. No question here is I appreciate the retention comments, a couple questions earlier. Can you just talk to us a little bit about let's say a, you know, client decides to switch, you know, from one vendor to, you know, let's say epic. What's your history in terms of, you know, keeping that client on the patient access side and just just curious there. Yeah, I mean, I don't think we talk about any specific event, you know, EMR vendor.
Haim Indig: Richard, but I think, you know, we talked about our retention rates, we talked about the breath we have and, you know, we're focusing on starting with these clients in a bigger way. But, you know, I don't think there's anything specifically to call out. There's, we don't win every deal. But, you know, one of the situations happen. It's, it's not, there's not one specific theme to bring out. And obviously, we've, you know, we're pretty big player in the space.
Unknown Attendee: Okay.
Unknown Attendee: Thank you.
Unknown Attendee: Congratulations.
Daniel Grosslight: Thanks. Your next question comes from the line of Daniel Grosslight with city. Your line is open. Hey, guys, thanks for taking the question. I wanted to go back to the components of Rev for a HSC growth in 26 and beyond. First, I wanted to confirm that you, you are still committed to that 20% top-line growth for your medium term targets. And then, if I look at your growth algorithm back in the 2018, 2019 timeframe, obviously much of that growth was driven by subscription revenue per provider, given the life sciences segment, that time was relatively naced and fast forward to today, you know, the networks business is your fastest growing segment.
Daniel Grosslight: So as we think about rev per HSC growth in the future is, you know, is networks really going to drive the majority of that now? And how does that impact the visibility that you have in achieving those longer term targets?
Haim Indig: Sure. So first point, Daniel, you know, the network solutions revenue is actually the first revenue line opened in the history of the company going back to 2005. So I just want to make sure, you know, when you said nason, you know, it's the earliest revenue we had in the first product we had. I think what you have to appreciate is how much smaller the network was then. And, you know, we had done 54 million visits the year we went public.
Haim Indig: And so one of the reasons that network solutions has grown so much, we're now working with over 100 brands. You know, I think that's because the size of the network has grown so much that it gives us a nice tail end to be able to have a lot of these conversations with a lot more people, frankly, that we couldn't a few years ago. So I think that is a very different sort of thing.
Daniel Grosslight: And, you know, I think as you talked about next year, I want to also clarify, we've never talked about 20% growth as any kind of target. I think we'll talk to you, you know, we'll keep giving you updates about things. We'll talk about 26 in December. But that's really, I mean, I think you'll get updates from us, but this year you obviously have the growth and the revenue that we're targeting. Got it.
Sean Dodge: Thank you. Your next question comes from the line of Sean Dodge with RBC capital markets. Your line is open. Yeah, thanks. Good afternoon. You mentioned with respect to the guidance, the variability in that range being associated with network solution selling activity. I guess there's a big seasonal component or cadence in that business or Q3s and Q4s. Still, a little bit the heaviest for that segment. And then just anything you can share on visibility I have at this point into that revenue heading into the the back half of this year. Thanks. Yeah. So you're right, Sean. Absolutely. That's been the case every year.
Sean Dodge: We were pretty intentional about having a wider revenue guidance range for this year because of that. And so there will be a lot of balls up in the air in the fall. And we'll keep you up. Surprise to that as we get through, but that is that is the time of year we're doing a lot of sales. Okay. Thank you.
Jeff Garrow: Your next question comes from the line of Jeff Garrow with Stevens. Your line is open. Yeah. Good afternoon. Thanks for taking the questions. Maybe you've talked about a little bit on that last one. If you could just give any comments specifically about any impact you've anticipated from it being an election year. You know, I would imagine maybe you guys are an attractive nonmedia channel for life sciences given the increase spend this fall, but curious to get your comments there. Yeah, no, I'm looking at I'm doing.
Haim Indig: I don't think there's anything we call out about election season. And you know, we went through this in 2020 and 2022 as well. And frankly, well, before we were public.
Unknown Attendee: Fair enough.
Haim Indig: One more for me just want to see if we could get an update on modified curious what's what's working there in terms of customer adoption within the freezer base and your early insights on the value realized by clients that are using that service. Yeah, no, look, it's, it's just crossed the one year anniversary in July. I think if you know talking to our life sciences team, it's, it's helped, you know, spark a lot of good conversations where I have can bring value just beyond what we've done historically.
Haim Indig: With this asset, and I think, you know, it's going to be a driver of our growth in the future. So when you think about the conversations, like total revenue per client and network solutions growth, absolutely. Metafine is a part of that. Great.
Ryan Macdonald: Thanks for taking the questions.
Matthew Shea: Your next question comes from the line of Ryan McDonald with Needham. Your line is open. Yeah, thanks.
Matthew Shea: This is Matt Shay on for Ryan. Thanks for taking the questions and congrats on a quarter of your guys wanted to follow up on the new provider ads for the back half of 25 kind of below that 100 plus per quarter rate. Should we view this as the baby new selling seasonality going forward that new deals might be more first half of the year or first half of the fiscal year weighted going forward or this more of a signal to shift towards fewer but bigger new clients.
Matthew Shea: I guess just trying to understand if we should expect new new provider ads to be linear and FY 26 or more front half weighted. Yeah, no, Matt, actually, you should take away and this is some, you know, feedback and conversations we've had with a lot of folks. This is a very intentional effort on our part to get out of the quarterly cadence of AHSC and giving you a bigger runway. And so what we're saying is, you know, we're giving you a set for where we think we'll be for the full year on average and we'll be next year. But I do think I'll confirm that this is not anything about seasonality or anything like that. It's just a point in time where we're choosing to set expectations and longer.
Haim Indig: Okay, start off the other make sense. And then just to follow up on the Pam Renewal, just curious, we can hit it against any other vendors in that process. And then as we think about the expansionary opportunity, those four potential additional models, does that create a revenue uplift as CMS adds you to additional models, or is that just included in your renewal contract kind of passes, no revenue uplift? Yeah, so first of all, one of the reasons we were very excited about that measure is it is very unique.
Haim Indig: I think there's public information out there, Matt, on why Pam was selected and what makes it unique, that you could probably chase down. And then in terms of the programs, yeah, there's opportunity there. I think that's also, you know, out there publicly that we can, if we can get into some more models that create revenue opportunities, which we're excited about.
Unknown Attendee: Okay, great. Thank you.
Jack Wallace: Your next question comes from the line of Jack Wallace with Guggenheim. Your line is open. Hey, thanks for taking my questions and congrats on getting a casual positive. Wanted to send another question your way about the growth algorithm for next year, wanted to, you know, ask about the same store sales growth. It sounds like you've added some bigger deals. You may be moving up market a little bit, but thinking about the clients you do have, you know, how much additional upselling is contemplated within the, you know, the, the, the algorithm for next year, there's already price. You know, that we should be considering and then just kind of the general impact or lack there of any of the sunset and the initial demo periods. Thank you.
Haim Indig: No, nothing you should take away from that in terms of change to any of our go-to-market. And I think, you know, when you, I wouldn't characterize it as up market or down market, we're just talking about value. And like I said, there's the total value that we can drive in the business and that's gotten bigger this half versus last half. And that's why, you know, we feel sort of, you know, we feel comfortable sharing our outlook for next year.
Haim Indig: Appreciate that. So maybe another way to ask it is, you know, the, at least on the subscription line, you've been hovering around a little higher than a third. You penetrate it against your per-provider, Tam. Should we expect that, you know, that penetration to go up next year? Was it really just a function of the larger deals in higher value deals coming in? Yeah. And again, I think what we're going to emphasize when we say value is total revenue.
Haim Indig: Some of them will be larger on subscription. Some of them could be larger on payments and, you know, some could be larger on network solutions, but really when we say total value, we mean all for it. Got it. Thank you. Sure.
Aaron Kimson: Your next question comes from the line of Aaron Kimson with citizen's JMP. Your line is open. Thank you. You announced the availability of prezo on the Oracle health care marketplace at the end of July and in an integration with Oracle EHR. You talk about what you've seen from the partnership and integration in the first month and the potential you see for it to help prezo land customers going forward. Yeah, Aaron, it's early.
Aaron Kimson: I mean, you know, and we just announced that. So I don't think there's anything particularly call out. We're, you know, we're happy to get, you know, formalized that. But I don't think there's anything specific to call out.
Haim Indig: Okay.
Unknown Attendee: Thank you.
Unknown Attendee: This concludes the question and answer session.
Haim Indig: I will turn the call to him for closing remarks. Thanks a lot. Everyone for joining us. I hope everyone's gotten back into the fall swing and everyone's happy that their kids are back at school. And I look forward to seeing everyone over the next 90 days. And we'll talk to you all in December.
Unknown Attendee: Right with this concludes today's conference call. We thank you for joining. You may now disconnect your lines. You You