Q4 2024 Performant Healthcare Inc Earnings Call
Operator: Good afternoon, ladies and gentlemen, and welcome to the Performant Healthcare, Inc. 4th Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode.
But that's our noon, ladies and gentlemen, and welcome to the performance Healthcare, Inc. Fourth quarter 2012 before earnings conference call.
At this time all lines are in a listen only mode.
Operator: Following the presentation, we will conduct a question-and-answer session.
Following the presentation, we will conduct a question and answer session.
Operator: These calls may be recorded on Wednesday, March 12, 2025.
This call is made of Corded on Wednesday March 12 2025.
Jon Bozzuto: I will now turn the conference over to Jon Bozzuto, Head of Investor Relations. Please go ahead. Thank you, operator. Good afternoon, everyone. By now, you should have received a copy of the earnings release for the company's fourth quarter and full year 2024 results. If you have not, a copy is available on the investor relations page of our website at performanthealthcare.com.
John: I will now turn the conference over to John but do it though.
John: That certainly leads to go ahead.
Speaker Change: Thank you operator, good afternoon, everyone by now you Should've received a copy of the earnings release for the company's fourth quarter and full year 2024 results. If you have not a copy is available on the Investor Relations page of our website at performing health care Dotcom.
Jon Bozzuto: On today's call will be Simeon Kohl, Chief Executive Officer and Rohit Ramchandani, Chief Financial Officer. Before we begin, I'd like to remind you that some of the comments made on today's call, including our financial guidance, are forward-looking statements. These statements are subject to risks and uncertainties, including those described in the company's filings with SEC. Actual results may differ materially from those described during the call. In addition, all forward-looking statements are made as of today, and the company does not undertake to update any forward-looking statements based on new circumstances or revised expectations.
Speaker Change: On today's call will be Simeon called Chief Executive Officer, and Brocade, where I'm trying Donnie Chief Financial Officer.
Speaker Change: Before we begin I'd like to remind you that some of the comments made on today's call, including our financial guidance are forward looking statements. These statements.
Speaker Change: They are subject to risks and uncertainties, including those described in the company's filings with the SEC.
Speaker Change: Actual results may differ materially from those described during the call. In addition, all forward looking statements are made as of today and the company does not undertake to update any forward looking statements based on new circumstances or revised expectations.
Jon Bozzuto: Please note page 3 of our earnings release, which covers forward-looking statements. Rather than reading that section aloud, we incorporated it by reference into the prepared remarks. Also, all non-GAAP financial measures discussed during this call are reconciled to the most directly comparable GAAP measures in the table attached to our press release.
Speaker Change: Please note page three of our earnings release, which covers forward looking statements rather than reading that section allowed reincorporated, if I referenced in the prepared remarks.
Speaker Change: All non-GAAP financial measures discussed during this call are reconciled to the most directly comparable GAAP measures in the table attached to our press release I would now like to turn the call over to Sidney and coal.
Simeon Kohl: I would now like to turn the call over to Simeon Kohl. Sime? Thank you, Jon. Good afternoon, everyone, and thank you for joining us.
Sidney Coal: Thank you John Good afternoon, everyone and thank you for joining us I'm excited to host our first earnings call as perform at health care market and the completion of our strategic transformation into a dedicated health care company.
Simeon Kohl: I'm excited to host our first earnings call as Performant Health. marking the completion of our strategic transformation into a dedicated healthcare company. 2024 was another remarkable chapter in our business evolution, as we continue to drive innovation and pursue our mission to combat fraud, waste and abuse in the U.S. healthcare system. a mission that closely aligns with the priorities of the new administration.
Sidney Coal: 2024 was another remarkable chapter in our business evolution as we continue to drive innovation and pursue our mission to combat fraud waste and abuse in the U S health care system, a mission that closely aligns with the priorities of the new administration.
Simeon Kohl: Today, I will begin with our 2024 results, followed by what you can expect in 2025. Performance finished the year on a positive note as demand for our services remained strong, especially with our commercial clients. Healthcare revenue ended the year at $118.3 million, marking another year of double-digit revenue growth for Performant Health. Revenue growth varied across both our client markets, with commercial delivering strong growth of 18%, and government, amidst a variety of macro impacts, still expanded by 3%. Government growth was slower than anticipated, primarily due to election-related sensitivities with our auditing work and the natural maturation of our CMS-MSP engagement.
Today I will begin with our 2024 results followed by what you can expect in 2025.
Sidney Coal: Performance finished the year on a positive note as demand for our services remained strong, especially with our commercial clients.
Sidney Coal: Health care revenue ended the year at $118 3 million, marking another year of double digit revenue growth to perform at health care.
Sidney Coal: Revenue growth varied across both our client markets with commercial delivering strong growth of 18% and government amidst a variety of macro impacts still expanded by 3%.
Government growth was slower than anticipated primarily due to election related sensitivities with our auditing work and the natural maturation of our CMS MSP engaged.
Simeon Kohl: Now in its second successive term and ninth straight year with Performant Health, Performant is a far more diversified business than in past years. When we first pivoted to a healthcare-focused strategy in 2021, healthcare revenues comprised less than two-thirds of our total revenues, and less than one-third of healthcare revenue itself came from commercial clients. At that time, our goal was to leverage the gold standard work we delivered to CMS in order to expand our presence in the commercial market, a strategy that has proven to be highly successful. Fast forward to the end of 24, and commercial clients now account for almost 60% of health care revenue, up from 28% in 2021.
Sidney Coal: Now in its second successive term and ninth straight year with performing healthcare.
Sidney Coal: Performance is a far more diversified business than in past years.
Sidney Coal: On the first pivoted to a health care focused strategy in 2021 health care revenues comprise less than two thirds of our total revenues and less than one third of health care revenue itself came from commercial clients.
Sidney Coal: At that time, our goal is to leverage the gold standard work, we deliver to CMS in order to expand our presence in the commercial market our strategy that has proven to be highly successful.
Sidney Coal: Fast forward to the end of 'twenty, four and commercial clients now account for almost 60% of health care revenue up from 28% in 2021.
Simeon Kohl: Our growth opportunities within the commercial market remain significant. Today, we have contracts with five of the top seven MCOs and are approaching an additional 20 mid-market payers. Expanding wallet share, particularly with the largest MCOs, remains a key focus. As I've mentioned previously, program expansion with an existing client is a testament to the value of our service. Within our existing commercial client base, we've successfully expanded our footprint, achieving an average revenue growth of over 35% within existing clients since 2021. by leveraging proven technology to identify savings and deliver high quality results. We help our clients maintain network harmony while effectively managing medical expenses.
Sidney Coal: Our gross opportunities within the commercial market remains significant.
Sidney Coal: Today, we have contracts with five of the top seven M. C. O's and are approaching an additional 20 mid market players.
Sidney Coal: Spanning wallet share, particularly with the largest MTO is remains a key focus as I've mentioned previously program expansion with an existing clients is a testament to the value of our services.
Sidney Coal: Within our existing commercial client base, we successfully expanded our footprint achieving an average revenue growth of over 35% with an existing clients since 2021.
Sidney Coal: By leveraging proven technology to identify savings and deliver high quality results, we help our clients maintain network harmony, while effectively managing medical expenses.
Simeon Kohl: Ultimately, our clients seek to grow with a trusted partner and at Performant, that's not what we strive to be, it's what we've become. The strategy has led to another record year of program growth, with 42 commercial programs implemented during 2024. We currently anticipate these contracts to generate over $18 million in annual revenue at SteadyState in the next 2-3 years. Despite delays in the sales and implementation cycle stemming from the changed healthcare disruption, we successfully met and exceeded our target for new implementations in 2024.
Sidney Coal: Ultimately our clients seek to grow with a trusted partner and at performance that's not what we strive to be it's what we've become.
Sidney Coal: This strategy has led to another record year of program growth with 42 commercial programs implemented during 2024.
Sidney Coal: We currently anticipate these contracts to generate over $18 million in annual revenue at steady state in the next two to three years.
Despite delays in the sales and implementation cycles stemming from the change healthcare disruption, we successfully met and exceeded our target for new implementations in 2024.
Simeon Kohl: Our sales pipeline remains robust, enabling us to set a similar goal in 2025.
Sidney Coal: Our sales pipeline remains robust, enabling us to set a similar goal in 2025.
Simeon Kohl: Turning to our internal achievements, building a world-class organization begins with our people, and fostering a strong, engaged workforce remains a top priority. In 2024, we made significant progress in key talent metrics, including higher engagement scores, improved retention, and expanded performance-based incentives. We also launched an employee stock purchase plan, further reinforcing our commitment to shared success. This follows performance recognition with a Comparably Award for Best Company Outlook in 2024, a testament to our team's confidence in the company's future. Our results and industry recognition reflect the strategic investments we've made in people, technology, and quality since our business transition in 2021.
Sidney Coal: Turning to our internal achievements building a world class organization begins with our people and fostering a strong engaged workforce remains a top priority.
Sidney Coal: In 2024, we made significant progress in key talent metrics, including higher engagement scores improve retention and expanded performance based incentives.
Sidney Coal: We also watched and employee stock purchase plan further reinforcing our commitment to shared success.
This follows performance recognition with a comparably award for Best Company outlook in 2024, a testament to our team's confidence and the companys future.
Sidney Coal: Our results in industry recognition reflect the strategic investments we've made in people technology and quality since our business transition in 2021.
Simeon Kohl: Over the past four years, we have laid a strong foundation for sustainable growth and strengthened our solid reputation in the payment integrity sector.
Sidney Coal: Over the past four years, we have laid a strong foundation for sustainable growth and strengthened our solid reputation in the payment integrity space.
Simeon Kohl: The decision to remove financial from our name and fully embrace performant healthcare marks a pivotal turning point. This milestone signals the beginning of phase two of our transition. One focused on profitability and margin expansion. Rohit has previously shared the two key themes of our Margin Expansion. One, reaching a more scaled business at $150 to $160 million of revenue. And two, the timely accomplishment of our technology initiatives to deliver workflow efficiency. In terms of revenue, when I consider the client base we have built and the implementations we have scheduled ahead of us, we have visibility into the majority of the path to scaled revenue.
Sidney Coal: The decision to remove financial from our name and fully embraced performance healthcare marks a pivotal turning point.
Sidney Coal: This milestone signals the beginning of phase two of our transition.
Sidney Coal: One focused on profitability and margin expansion.
Rohit as previously shared the two key themes of our margin expansion, one reaching a more scale business at $150 million to $160 million of revenue and two the timely accomplishment of our technology initiatives to deliver workflow efficiency.
Sidney Coal: In terms of revenue when I consider the client base, we have built and the implementations. We've scheduled ahead of US we have visibility into the majority of the path to scaled revenues.
Simeon Kohl: Coupling with the planned operational efficiencies gives us confidence in the path to scaled EBITDA margins. Let me pause to emphasize the significance of this statement. We firmly believe that a majority of our path to scale the just a bit EBITDA margins is driven by visible growth within our existing client base and improvements in our operational efficiency. Since we began recording the expected steady state revenue of our new commercial program implementations in 2022, we have successfully implemented over 100 programs. with an expected cumulative ACV. of approximately $46 million. A significant portion of new commercial implementations completed during the last two years of our back-to-back record years are still rampant.
Sidney Coal: Coupling with the plant operational efficiencies gives us confidence in the path to scaled EBIT margins let.
Sidney Coal: Let me pause to emphasize the significance of this statement.
We firmly believe that a majority of our path to scaled adjusted EBIT margins is driven by visible growth within our existing client base and improvements in our operational efficiencies.
Sidney Coal: Since we began reporting the expected steady state revenue of our new commercial program implementations in 2022, we have successfully implemented over 100 programs.
Sidney Coal: Expected cumulative ACB.
Sidney Coal: Approximately $46 million.
Sidney Coal: A significant portion of new commercial implementations completed during the last two years of our back to back record years are still ramping as.
Simeon Kohl: As I've mentioned before, these programs require upfront investment before generating revenue, let alone reaching steady-state margins. Our strong implementation success has created a substantial front log, temporarily compressing margins as we scale operations. The New York State RAC and CMS RAC Region 2 contracts add to our portfolio of subscale contracts, many of which are currently operating at negative margins. Successfully ramping these contracts is critical, and we have a proven track record of doing just that. In addition to scaling contracts, our commitment to improving workflow efficiency is evident through our strategic investments in technology initiatives. Central to this effort is the Project Touring Technology Initiative.
Sidney Coal: As I've mentioned before these programs require upfront investment for generating revenue, let alone reaching steady state margins.
Sidney Coal: Our strong implementation success has created a substantial front log temporarily compressing margins as we scale operations.
Sidney Coal: The New York State rack, and CMS rack region, two contracts add to our portfolio of subscale contracts many of which are currently operating at negative margins.
Sidney Coal: Definitely ramping these contracts is critical and we have a proven track record of doing just that.
Sidney Coal: In addition to scaling contracts, our commitment to improving workflow efficiency as evidenced through our strategic investments and technology initiatives.
Sidney Coal: To this effort as the project touring technology initiatives.
Simeon Kohl: As we entered 2024, we had a clear vision to transform our technology strategy and enhance our workflows, while also making strategic investments into our sales, marketing, and business development. We've made significant progress, having attracted key talent to maintain our competitive edge and win new business. Regarding our technology roadmap, we are in the process of implementing what I consider next generation technology. including AI and Natural Language Processing. Our approach remains thoughtful and measured as we roll out these technologies, all aimed at improving KPI. Early results continue to validate our thesis of shortening the contract implementation timeline while increasing productivity, all in support of our goal to achieve 20% adjusted EBITDA margin.
Sidney Coal: As we enter 2024, we had a clear vision to transform our technology strategy and enhance our workflows, while also making strategic investments into our sales marketing and business development teams.
Sidney Coal: We've made significant progress having attracted key talent to maintain our competitive edge and win new business.
Sidney Coal: Regarding our technology roadmap, we are in the process of implementing what I consider next generation technologies, including AI and natural language processing.
Sidney Coal: Our approach remains thoughtful and measured as we rollout these technologies all aimed at improving kpis efficiency.
Sidney Coal: Early results continue to validate our thesis of shortening the contract implementation timeline, while increasing productivity.
Sidney Coal: All in support of our goal to achieve 20% adjusted EBIT margins.
Simeon Kohl: We are excited to keep advancing our workflow automation and integrating our AI and NLP technologies throughout the business. Performant is uniquely positioned to realize significant gains from AI technology thanks to the vast trove of health care claims data we've amassed over the years. As we've been implementing our model and testing our workflows, we've already seen positive adoption of new technologies by our nurses, coders, and other frontline employees.
Sidney Coal: We are excited to keep advancing our workflow automation and integrating our AI and NLP technologies throughout the business.
Speaker Change: Performance is uniquely positioned to realize significant gains from AI technology. Thanks to the vast trove of healthcare claims data we've amassed over the years.
Speaker Change: As we've been implementing our model and testing our workflows, we've already seen positive adoption of new technologies by our nurses and coders and other frontline employees.
Simeon Kohl: While these initiatives are still in progress, I want to emphasize that we are highly focused on improving our efficiency and eliminating sources of friction across the enterprise, which will be key to delivering meaningful margin expansion over time.
Speaker Change: While these initiatives are still in progress I want to emphasize that we are highly focused on improving our efficiency and eliminating sources of friction across the enterprise, which will be key to delivering meaningful margin expansion over time.
Simeon Kohl: I'll now take a few minutes to recap what you can expect for Performant in 2025. Our business transformation and investment strategy has focused on our people, technology, and quality to build a strong reputation. positioning us to effectively create a sustainable growth pipeline for commercial, state, and federal opportunities. 2025 is an exciting year for Performant as it marks the first year in which we are ramping contract cohorts in all three end markets. In the state market, we are excited to launch our first state RAC contract with New York. The contract was officially signed in February, and a full-scale implementation is expected to begin in early April.
Speaker Change: I'll now take a few minutes to recap what you can expect for performance in 2025.
Speaker Change: Our business transformation and investment strategy is focused on our people technology and quality to build a strong reputation positioning.
Speaker Change: Positioning us to effectively create a sustainable growth pipeline for commercial state and federal opportunities two.
Speaker Change: 2025 is exciting year for performance as it marks the first year in which we are ramping contract cohorts and all three end markets.
And the state market. We are excited to launch our first state rack contract with New York. The contract was officially signed in February and a full scale implementation is expected to begin in early April.
Simeon Kohl: Thanks to our early efforts to understand process and data flows, we are optimistic about generating revenue ahead of the typical contract ramp cycle. potentially before the end of 2025. As I've mentioned before, this contract is a key milestone for us as we now look to expand our presence and reputation in the state Medicaid market. I've already discussed at length a significant commercial opportunity, but it bears repeating. We currently have over 100 commercial programs in various stages of maturity, and we are highly encouraged by the growth in this area. Finally, on the federal front, this is our most established and mature market.
Speaker Change: Thanks to our early efforts to understand process and data flows we are optimistic about generating revenue ahead of the typical contract ramp cycle potentially before the end of 2025.
Speaker Change: As I've mentioned before this contract is a key milestone for us as we now look to expand our presence and reputation in the state Medicaid market.
Speaker Change: I've already discussed at length, a significant commercial opportunity, but it bears repeating we currently have over 100 commercial programs in various stages of maturity and we are highly encouraged by the growth in this area.
Finally on the federal front. This is our most established and mature market.
Simeon Kohl: Over the years, we have built a sterling reputation by consistently delivering high-quality work for CMS and HHS through multiple administrations. At Performant, our operations are centered on policy, standards, and data. Nonetheless, 2024 presented its share of challenges, particularly as the scope of the RAC program was tamped down, influenced by the election of President-elect Joe Biden. However, we remain optimistic based on early signals from the new administration and from DOJ, which has shown a clear interest in pursuing fraud, waste, and abuse oversight within the federal government. Performant is uniquely positioned to support these efforts should the program be reprioritized, which is in direct alignment with the government's stated objectives.
Speaker Change: Over the years, we have built a sterling reputation by consistently delivering high quality work for CMS and HHS through multiple administrations outperformance our operations are centered on policy standards and data.
Speaker Change: Nonetheless, 2024 presented its share of challenges, particularly as the scope of the rack program was tamped down influenced by the election cycle.
Speaker Change: However, we remain optimistic based on early signals from the new administration and from dose, which has shown a clear interest in pursuing fraud waste and abuse oversight within the federal government.
Speaker Change: Performance is uniquely positioned to support these efforts should the program be re prioritized, which is in direct alignment with the government stated objectives.
Simeon Kohl: Given the evolving landscape, it is crucial for us to remain agile and adaptable. ensuring we can either impact or quickly pivot our approach as circumstances warrant. We do acknowledge that currently much remains to be determined as new leadership appointments occur and policy agendas take shape. The need for our services remains clear and undeniable. According to CMS's 2024 Improper Payment Fact Sheet, an estimated $31 billion in accurate payments were made within the Fee-for-Service Medicare program alone. This highlights the importance of the role we play in safeguarding the integrity of the government program. Looking at our current book of business with CMS, we anticipate that by the end of 2025, the CMS RAC Region 2 contract will reach steady state.
Speaker Change: Given the evolving landscape. It is crucial for us to remain agile and adaptable, ensuring we can either impact or quickly pivot our approach as circumstances warrant.
Speaker Change: We do acknowledge that currently much remains to be determined as new leadership appointments occur and policy agenda takes shape.
Speaker Change: The need for our services remains clear and undeniable.
According to CMS as 2020 for improper payment factsheet, an estimated $31 billion and accurate payments were made within the fee for service Medicare program alone.
This highlights the importance of the role we play in safeguarding the integrity of the government programs.
Looking at our current book of business with CMS, we anticipate that by the end of 2025, the CMS RAC region, two contract will reach steady state.
Simeon Kohl: This contract has ramped nicely and we expect that positive momentum to continue. Regarding CMS RAC Regions 3, 4, and 5, we are actively engaged in the ongoing RFP process. This includes Performance Recompete for Region 5. which we've held since 2016 and expires in 2025, as well as the opportunity to win Regions 3 and 4. As I mentioned last quarter, we will encounter some short-term disruption in our existing RAC Region 5 work due to the typical wind-down activities associated with this process. Given the strong track record we've had as a healthcare company, both with government and commercial plans, this disruption is not expected to hinder our double-digit growth expectation.
Speaker Change: This contract has ramped nicely and we expect that positive momentum to continue.
Speaker Change: Regarding CMS rack regions three four and five we are actively engaged in the ongoing RFP process.
Speaker Change: This includes performance Recompete for region, five, which we've held since 2016 and expires in 2025 as well as the opportunity to win regions three and four.
Speaker Change: As I mentioned last quarter, we will encounter some short term disruption in our existing rack region five work due to the typical wind down activities associated with this process given.
Speaker Change: Given the strong track record, we've had as a health care company, both with government and commercial plans. This disruption is not expected to hinder our double digit growth expectation and is incorporated into our upcoming 2025 revenue guidance.
Simeon Kohl: and is incorporated into our upcoming 2025 Revenue Guide. The operational momentum we've built positions us well as we head into 2025. We are forecasting revenues to be in the range of $131 to $135 million for the year. and we are forecasting adjusted EBITDA to be in the range of eight to nine. which is nearly a double that of our 2024 adjusted EBITDA at the mid.
Speaker Change: The operational momentum, we've built positions us well as we head into 2025.
Speaker Change: We are forecasting revenues to be in the range of a $131 million to $135 million for the year.
Speaker Change: We are forecasting adjusted EBITDA to be in the range of $8 million to $9 million, which is nearly double that of our 2024 adjusted EBITDA at the midpoint.
Simeon Kohl: We believe 2025 is an important year for performance, but our efforts to expand the company's margins will continue beyond 2025.
We believe 2025 is an important year for performance, but our efforts to expand the Companys margins will continue beyond 2025.
Rohit Ramchandani: Rohit will provide more detailed insights on our expectations later in the call.
Speaker Change: <unk> will provide more detailed insights on our expectations later in the call.
Simeon Kohl: As I wrap up, I want to express my gratitude to the team for their exceptional work. The optimism I feel today is a direct result of our strategic decisions we've made and the dedication that has brought us to this point. What I am most proud of is how effectively we've invested in our future. Looking at our contract wins that are set to scale, I am genuinely excited about the growth visibility we now have. A solid foundation we've collectively built positions us for long-term success and I couldn't be more confident in what lies ahead for performance.
Speaker Change: As I wrap up I want to express my gratitude to the team for their exceptional work the optimism I feel today is a direct result of our strategic decisions. We've made and the dedication that has brought us to this point.
Speaker Change: Im most proud of is how effectively we've invested in our future.
Speaker Change: Looking at our contract wins that are set to scale I am generally excited about the growth visibility. We now have the solid foundation, we've collectively built positions us for long term success and I couldnt be more confident in what lies ahead for performance.
Rohit Ramchandani: With that, I'll hand it over to Rohit Ramchandani, our Chief Financial Officer, for a discussion of the financials. Rohit. And good afternoon, everyone. Building on Sim's highlights, 2024 was indeed a strong year for performance, with consistent performance and sustained growth delivering another record quarter and year. In the fourth quarter of 2024, our success in capitalizing on previously implemented opportunities and scaling operations was evident. Total company revenue in the quarter was just shy of $35 million, with healthcare revenue contributing over $34 million, showing growth of about 10% over the same prior year period. Full year revenue ended at $123 million, including health care revenue, which grew 11%, ending the year at just over $118 million.
Rohit: With that I'll hand, it over to Rohit <unk>, our chief financial officer for a discussion of the financials.
Speaker Change: And good afternoon, everyone.
Speaker Change: Building on since highlights 2004 was indeed, a strong year for performance with consistent performance and sustained growth delivering another record quarter and year.
In the fourth quarter of 2020 for our success in capitalizing on previously implemented opportunities and scaling operations was evident.
Speaker Change: Total company revenue in the quarter was just shy of $35 million.
Speaker Change: With healthcare revenue contributing over 34 million Sterling growth of about 10% over the same prior year period.
Speaker Change: Full year revenue ended at $123 million, including healthcare revenue, which grew 11% ending the year at just over $118 million.
Rohit Ramchandani: Given the broader industry dynamics we discussed throughout 2024, we're extremely pleased to have delivered results within our expected range. This highlights the resilience of our growth strategy in the commercial market and the strength of our overall business model. Our services are mission critical for payers, particularly in a time of rising utilization and ever-stressed MLR ratios. We are encouraged by the new administration's objectives to reduce waste, which is a core facet of payment integrity. However, we realize there is a level of unpredictability in the actions that may be taken by this administration. Our 2025 guidance ranges take these factors into account, reflecting both on the evolving landscape, as well as our ability to have delivered results in 2024, despite facing headwinds.
Speaker Change: Given the broader industry dynamics, we discussed throughout 2024, we're extremely pleased to have delivered results within our expected range. This highlights the resilience of our growth strategy in the commercial market and the strength of our overall business model.
Our services are mission critical for payers, particularly in a time of rising utilization and ever stressed MLR ratios.
Speaker Change: We are encouraged by the new administration's objectives to reduce waste, which is a core asset with payment integrity. However, we realize there is a level of unpredictability and the actions that may be taken by this administration.
Speaker Change: Our 25 guidance ranges take these factors into account, reflecting both on the evolving landscape as well as our ability to have delivered results in 2024, despite facing headwinds.
Rohit Ramchandani: Turning to our results by submarkets. Within our claims-based business, also known as claims auditing, revenue in the fourth quarter of 2024 reached over $16 million, contributing to a full year total of $56.4 million, reflecting growth rates of 10% and 25% respectively, compared to the prior year period. These revenue amounts reflect both a quarterly and annual record for our Planespace service. Our comprehensive one-stop shop set of claims auditing products continues to bear fruit as our growth within commercial clients continues at breakneck speed. In 2023, we had spoken about reconfiguring the factory workflow with a few larger clients through specific audit types.
Speaker Change: Turning to our results by sub markets within our claim space business also known as claims auditing revenue in the fourth quarter of 2024 reached over $16 million.
Speaker Change: Attributing to our full year total of $56 4 million, reflecting growth rates of 10% and 25% respectively compared to the prior year periods. These.
Speaker Change: These revenue amounts reflect both our quarterly and annual records for our claims based services.
Speaker Change: Our comprehensive one stop shop set of claims auditing products continues to bear fruit as our growth of and commercial clients continues at breakneck speed.
Speaker Change: In 2023, we had spoken about Reconfiguring the factory workflow with a few larger clients through specific audit types. Those projects have also proven effective as we saw both an increase in revenue per an audit and a decrease in cost per ton it and our internal metrics. We expect these trends to continue particularly on the cost side in.
Rohit Ramchandani: Those projects have also proven effective, as we saw both an increase in revenue per audit and a decrease in cost per audit in our internal metrics. We expect these trends to continue, particularly on the cost side, in conjunction with the technology initiatives being introduced through Project Tipping to our eligibility services, revenue in the fourth quarter of 2024 was just over $18 million, contributing to a full year total of $61.9 million. This represents year-over-year growth of roughly 11% and 1% respectively. Promerphal clients were a driving force behind our eligibility growth as well. I'd like to highlight that even though the mature CMS-MFP relationship is providing a growth headwind, we are consistently setting new records in impact delivered to that client, despite the different economic terms of this second performant contract compared to our first.
Speaker Change: And with the technology initiatives being introduced to project Julien.
Speaker Change: Shifting to our eligibility services revenue in the fourth quarter of 2024 was just over $18 million contributing to a full year total of $61 9 million. This represents year over year growth of roughly 11% and 1% respectively.
Speaker Change: Clients were a driving force behind our eligibility growth as well I.
Speaker Change: I'd like to highlight that even though the mature Vms MSP relationship is providing a growth headwind. We are consistently setting new records and impact deliver to that client. Despite the different economic terms of the second performing contract compared to our first and we are doing so without losing sight of our profitability goals.
Rohit Ramchandani: And we are doing so without losing sight of our profitability goals. In thinking about commercial implementations overall, we completed 42 in 2024, which we currently anticipate will generate over $18 million in annualized revenue at SteadyState. This includes 10 new implementations in the fourth quarter. Since early 2022, we have implemented over 100 commercial programs. In the past, in the last three years, we've also introduced estimations for annual steady state revenue of these implementations to assess revenue growth and near-term margin impact as these new contracts ramp up. This framework provides a clear view of our estimation for the transition from implementation costs to breakeven and ultimately profitability, details which can be seen in our investor presentation on the website.
Speaker Change: And thinking about commercial implementations overall, we completed 42 in 2020 for which we currently anticipate we will generate over $18 million in annualized revenue at steady state. This includes 10, new implementations in the fourth quarter.
Speaker Change: Since early 2022, we have implanted over 100 commercial programs in the back in the last three years. We've also introduced estimations for annual steady state revenue of these implementations to assess revenue growth and near term margin impact as these new contracts ramp.
Speaker Change: This framework provides a clearer view of our estimations for the transition from implementation cost to breakeven and ultimately profitability details of which can be seen in our investor presentation on the website.
Rohit Ramchandani: I share this because, before this, our business has been subscaled against our margin target. However, when we consider the substantial volume of implemented programs that have yet to reach steady state, what Sim referred to as the front log, we gain visibility into both the path to scale revenues and margin expansion as these cohorts mature. We are excited to see our revenues continue to scale, which in tandem with our technology initiatives, we believe will help us achieve our 20% adjusted EBITDA margin target.
Speaker Change: I share this because before this our business has been sub scale against our margin targets.
Speaker Change: When we consider the substantial volume of implemented programs that have yet to reach steady state what's been referred to as the front log we gained visibility into both the path to scale revenues and margin expansion as these cohorts mature we.
Speaker Change: We are excited to see our revenues continued to scale, which in tandem with our technology initiatives. We believe will help us achieve our 20% adjusted EBITDA margin target.
Rohit Ramchandani: Before pivoting to the expense side, I want to take a moment and quickly discuss the results of our customer care outsource services market. It contributed approximately half a million dollars in revenue for the fourth quarter of 2024 and four and a half million for the full year. As I mentioned last quarter, we did make the decision to de-emphasize our focus on this market and wind down our customer care operation. This will also mark the last time we discuss the isolated revenue results for customer care, and we are pleased to announce we have identified another student loan service provider to transition our remaining staff.
Speaker Change: Before pivoting to the expense side I wanted to take a moment and quickly discuss the results of our customer care outsource services market.
<unk> did approximately half a million dollars in revenue for the fourth quarter.
Speaker Change: 2024, and $4 5 million for the full year.
Speaker Change: As I mentioned last quarter, we did make the decision to deemphasize our focus on this market and wind down our customer care operations.
Speaker Change: This will also mark the last time, we discussed the isolated revenue results for customer care and we are pleased to announce we have identified another student loan service provider to transition our remaining staff too.
Rohit Ramchandani: We are deeply grateful for the hard work and dedication of that team and wish them all the best in their future endeavors. Looking ahead, we do not anticipate meaningful revenues in customer care for 2025. With that, going forward, we will no longer need to splice out healthcare revenues from total revenues, but they should be treated as one in the same, further reinforcing our focus on Performant Healthcare Inc. as a dedicated healthcare strategy.
We are deeply grateful for the hard work and dedication of that team and wish him all the best in their future endeavors.
Speaker Change: Looking ahead, we do not anticipate meaningful revenues and customer care for 2025.
Speaker Change: With that going forward, we will no longer need to splice out healthcare revenues from total revenues should be treated as one and the same.
Speaker Change: Reinforcing our focus on performance Healthcare, Inc. As a dedicated health care strategy.
Rohit Ramchandani: Now, shifting back to operating expenses. They were $35.5 million in the fourth quarter of 2024, or $4.8 million higher compared to the fourth quarter of the prior year. and roughly $132.5 million for the full year or $12.5 million higher compared to 2023. This was primarily driven by increasing salaries as we scale the business and technology initiatives related to Project Adjusted EBITDA for the fourth quarter of 2024 was a positive $3.1 million and for the full year was within our expectations at $4.4 million, representing $1 million of growth from 2023. The discrete investments related to project touring alongside sales, marketing, and business development suppressed our profitability in 2024.
Now shifting back to operating expenses.
Speaker Change: They were $35 5 million in the fourth quarter of 2024, or $4 8 million higher compared to the fourth quarter of the prior year.
Speaker Change: And roughly $132 5 million for the full year or $12 five higher compared to 2023.
Speaker Change: This was primarily driven by increasing salaries as we scale the business and technology initiatives related to project join.
Speaker Change: Adjusted EBITDA for the fourth quarter of 2024 was a positive $3 1 million and for the full year was within our expectations at $4 4 million representing $1 million of growth from 2023.
Speaker Change: The discrete investments related to profit Julien alongside sales marketing and business development. The Presto profitability May 24, we have estimated these investments at three to $3 $5 million at the start of 2024 and despite these discrete investments and the smaller revenues from customer care, our adjusted EBITDA margin.
Rohit Ramchandani: We have estimated these investments at $3 to $3.5 million at the start of 2024. And despite these discrete investments and the smaller revenues from customer care, our adjusted EBITDA margins expanded year over year. We continue to remain optimistic that as we scale and wind down some of these discrete investments, they will translate into efficiency gains and where we'll see margins truly scale. We also believe our capital structure remains appropriate at this time. We ended the year with a net cash position with $9.3 million in cash and $8 million drawn under our revolve. We had our best year of operating cash flows since transitioning to a pure play health care company and currently believe we will be cash flow positives by the end of 2025 as we scale and continue to realize efficiencies from project We remain confident in our ability to grow organically and scale our business while still making the necessary investments to drive future growth.
Speaker Change: This expanded year over year.
Speaker Change: We continue to remain optimistic that as we scale and the wind down some of these discrete investments that will translate into efficiency gains and while we will see margins truly scale.
Speaker Change: We also believe our capital structure remains appropriate at this time, we ended the year with a net cash position with $9 $3 million in cash and $8 million drawn under our revolver we.
Speaker Change: We had our best year of operating cash flow since transitioning to a pure play health care company and currently believe we will be cash flow positive by the end of 2025, as we scale and continue to realize efficiencies from project join.
Speaker Change: We remain confident in our ability to grow organically and scale, our business, while still making the necessary investments to drive future growth.
Rohit Ramchandani: I'd like to now dive further into our financial guidance for 2025. Regarding revenue, I'd like to reiterate that we expect minimal to no revenues from customer care and that the total revenue guidance and shared of $131 to $135 million is exclusively focused on health care markets. It also contemplates the transitional wind down of ARAP Region 5 and does not account for any potential upside from DOJ or other government program integrity initiatives. Turning to adjusted EBITDA, we are guiding 2025 to be in the range of $8 to $9 million, which nearly doubles our results from 2024 at the midpoint.
Speaker Change: I'd like to now dive further into our financial guidance for 2025.
Speaker Change: Regarding revenue I'd like to reiterate that we expect minimal to no revenues from customer care and that the total revenue guidance. Some shared of 131% to $135 million is exclusively focused on health care markets. It also contemplates the transitional wind down of our rack lesion size and does not account for any potential upside.
Speaker Change: From dose or other government program integrity initiatives.
Turning to adjusted EBITDA, we are guiding 2025 to be in the range of $8 million to $9 million, which nearly doubles our results from 2024 at the midpoint.
Rohit Ramchandani: I do want to highlight a few metrics within our adjusted EBITDA guidance that affect the potential profitability of this. First, with respect to ramping contracts, based upon our announced new commercial implementations over the past 12 quarters, coupled with our illustrative contract ramp cycles, which can be found in our investor deck, we currently estimate approximately $3 to $4 million in net ramp-up spent for new commercial implementations across 2025. Of note, the investments needed for our recent record levels of implementations are, in effect, partially offsetting the run rate profitability of some of our older, fully ramped implementations.
Speaker Change: Do you want to highlight a few metrics within our adjusted EBITDA guidance that affects the potential profitability of this business.
Speaker Change: First with respect to ramping contracts based upon our announced new commercial implementations over the past 12 quarters, coupled with our <unk> contract brand cycles, which can be found in our investor deck. We currently estimate approximately $3 million to $4 million and net ramp up spend for new commercial implementations across 2025.
Speaker Change: <unk>.
Speaker Change: Of note the investments needed for our recent record levels of implementations are in effect, partially offsetting the run rate profitability of some of our older fully ramped implementations.
Rohit Ramchandani: In addition, we estimate the recently awarded New York RAC contract will result in approximately $1.5 million in additional ramp-up costs in 2025. Collectively, this estimates at $4.5 to $5.5 million in net implementation costs in 2025. This couples with the expected ongoing project touring spend of approximately $1 to $2 million in operating expenses for 2025, in addition to our more normalized technology OPEX spend during the year. Note, I'm not saying an extra $1 to $2 million compared to last year, but an extra $1 to $2 million compared to what we'd expect at steady state once the project Now, while not indicative of what we actually expect for Adjusted EBITDA in 2025, which remains at $8 to $9 million, after backing up the investments I described, we believe our Adjusted EBITDA would have been in the range of $13.5 to $16.5 million.
Speaker Change: In addition, we estimate the recently awarded in New York Rock contract will result in approximately $1 5 million additional ramp up costs until May 25.
Speaker Change: Collectively this estimates at four five to $5 5 million in net implementation costs in 2025.
This coupled with the expected ongoing project to understand of approximately $1 million to $2 million in operating expenses for 2025. In addition to our more normalized technology opex spend during the year.
Speaker Change: No I'm, not saying, an extra $1 million to $2 million compared to last year, but an extra $1 million to $2 million compared to what we would expect at steady state once the project completes.
Speaker Change: Now while not indicative of what we actually expect for adjusted EBITDA in 2025, which remains at $8 million to $9 million. After backing out the investments I described we believe our adjusted EBITDA would have been in the range of 13, 5% to $16 $5 million.
Rohit Ramchandani: While the guidance of Adjusted EBITDA of $8 to $9 million reflects these costs, we did want to provide this illustration into our margin profile, which, coupled with forecasted increased revenues, illustrates a path toward our margin target of 20% plus Adjusted EBITDA. In the interim, we'll continue to invest and do what is best for our business in the long term. Of course, we will still have continued implementation costs and potential project current costs in 2026 and beyond, which will suppress our true adjusted EBITDA potential. We have identified tangible benefits from AI and NLP technologies and believe this is the critical time to integrate those advanced technologies into our work.
Speaker Change: While the guidance of adjusted EBITDA of $8 million to $9 million reflects these costs. We did want to provide this illustration into our margin profile, which coupled with forecasted increase revenues illustrates the path toward our margin target of 20% plus adjusted EBITDA margins.
Speaker Change: In the interim we will continue to invest and do what is best for our business in the long term.
Of course, we will still have continued implementation costs and potential projects are in cost in 2026, and beyond which will suppress our true adjusted EBITDA potential.
Speaker Change: We have identified tangible benefits from AI and MLP technologies and believe this is a critical time to integrate those advanced technologies into our workforce.
Rohit Ramchandani: The spend on this, alongside other components of project touring, is a short-term margin detractor that will ultimately drive long-term efficiency and directly contribute to our margin expansion. When considering earnings seasonality, we expect stronger year-over-year revenue growth in the first quarter, after which we will see the wind-down effects of WRAC Region 5. Even so, we expect a similar pattern to 2024, with the first quarter being the lightest in terms of revenue and adjusted EBITDA, and growing throughout the year.
Speaker Change: The stand on this alongside other components of project joined as a short term margin detractors, but will ultimately drive long term efficiency and directly contribute to our margin expansion.
Speaker Change: When considering earnings seasonality, we expect stronger year over year revenue growth in the first quarter after which we will see a big wind down effects of rock, reaching five even so we expect a similar pattern to 2024 with the first quarter being the lightest in terms of revenue and adjusted EBITDA and growing throughout the year.
Rohit Ramchandani: In summary, 2024 was a milestone year for the company. The investments we made are driving tangible results and providing clear evidence of sustained growth. Despite unique industry headwinds, we delivered fully results squarely within our expectations. These results, along with other significant business wins throughout 2024, gives us confidence to guide to double-digit revenue growth in 2025 alongside meaningful margin expansion. This next phase of our company's evolution is focused on profitability, and we remain committed to our goal of approaching 20% adjusted EBITDA margins. which may be achieved upon full execution of Project Touring and if we are able to sustain revenues of $150 to $160 million plus.
Speaker Change: In summary.
<unk> 2024 was a milestone year for the company and the investments we made are driving tangible results and providing clear evidence of sustained growth <unk>.
Speaker Change: Despite unique industry headwinds, we delivered full year results squarely within our expectations.
These results along with other significant business wins throughout 2024 gives us confidence to guide to double digit revenue growth in 2025 alongside meaningful margin expansion.
Speaker Change: This next phase of our company's evolution is focused on profitability and we remain committed to our goal of approaching 20% adjusted EBITDA margins, which may be achieved upon full execution of project touring and if we are able to sustain revenues of $150 million to $160 million plus.
Rohit Ramchandani: I once again want to thank our team for their relentless execution and commitment to our vision.
Speaker Change: I once again want to thank our team for their relentless execution and commitment to our vision.
Operator: Operator, will you please open up the lines for questions? Thank you.
Speaker Change: Operator would you please open up the lines for questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone you will hear a prompt that your tenants have been raised.
Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star 2. If you are using a speakerphone, please lift the handset before pressing any key.
Speaker Change: Should you wish to decline from the polling process. Please press star two.
Speaker Change: We are using a speaker phone please lift the handset before pressing any keys.
Jacob Stephan: Your first question comes from the line of Jacob Stephan from Lake Street Capital. Your line is now open. Hey, guys. I appreciate you taking the questions. I just wanted to ask, you know, when you say kind of your average revenue CAGR of existing clients on the commercial side is 35%, I think that would imply, you know, net dollar retention of 135%, obviously, assuming no churn. But maybe you could kind of help us piece out, you know, any churn of commercial clients or any headwinds that, you know, may ultimately bring that 35% CAGR kind of down.
Speaker Change: Your first question comes from the line of Jacobs Stefan from Lake Street Capital. Your line is now open.
Jacobs Stefan: Hey, guys I appreciate you taking the questions.
Jacobs Stefan: Just wanted to ask you know when you say kind of your average revenue CAGR of existing clients on the commercial side is 35% I think that would imply net dollar retention of 135%, obviously, assuming no churn, but maybe you could kind of help us piece out any churn.
Of commercial clients or any headwinds that.
Jacobs Stefan: It may ultimately bring that 35.
Jacobs Stefan: <unk> CAGR kind of down.
Simeon Kohl: Jacob, I think that's a good question. Good to hear from you. You're thinking about that right, that is a net number. And so if there was downward movement in the client, upward movement in that same client or other clients, it would blend together to the 35. We generally don't have attrition in our customers. And so really, it would just be the ebbs and flows of utilization, programs, volumes, that could be things bringing that down. But the 35 is a net number of all of that blended together.
Jacob: Jacob I think good question good to hear from you.
Speaker Change: Youre thinking about that right that is a net number and so if there was downward movement in the client upward movement in that same client or other clients. It would blend together to the 35.
Jacob: We generally don't have attrition and our customers.
Jacob: So really it would just be the ebbs and flows of utilization programs volumes that could be things, bringing that down.
Jacob: But the $35 is a net number of all of that blended together.
Rohit Ramchandani: Okay, great. Thank you. And then next one, you know, is the three to four million of incremental OPEX for your commercial programs, kind of per 18 to 20 million in commercial revs, a good way to, you know, think about, you know, moving forward, as we look at kind of, you know, incremental expense take needed to ramp commercial clients. Sort of. I think I'd still point to the illustrious economics and extrapolating that for each cohort as they show in our investor deck. And so the three to four is meant to be our estimation of what's going to show up in calendar year 25 as a result of not just last year's implementations, but some of the work still going on for the year before and a little bit of the tail end of the 2023 ones.
Okay, great. Thank you.
Jacob: And then next one.
Jacob: Is the three to 4 million of incremental Opex for your commercial programs.
$18 million to $20 million in commercial Rems, a good way to.
Jacob: Think about.
Moving forward as we look at kind of incremental expense take needed to ramp commercial clients.
Jacob: Florida, I think I'd still point to.
Alastair: Alastair the economics.
Alastair: Extrapolating that for each cohort as they show in our investor deck and so the three to four is meant to be.
Alastair: Our estimation of what's going to show up in calendar year 'twenty five as a result of not just last year's implementations, but some of the work still going on for the year before and a little bit of a tail end of the 2023 ones or sorry, 2022 excuse me.
Jacob Stephan: Or sorry, 2022. Excuse me. Okay, got it, understood. I'll head back in the queue. We appreciate the caller.
Speaker Change: Okay got it understood I'll hop back in the queue.
Speaker Change: I appreciate the color.
George Sutton: Your next question comes from the line of George Sutton from Craig Hallam. Your line is now open. Thank you. Sam, you mentioned the pre-election sensitivities that had some impact in the latter part of 24. I'm curious, now that we're two months in, can you give us a sense of how those sensitivities might have changed thus far? And how would you, you know, with your best guess at this point, assume we're going to be acting going forward? Yeah, so look, still in the early innings, as we've mentioned, policies are still shaping, we're still seeing some of the appointments.
Speaker Change: Your next question comes from the line of George Sutton from Craig Hallum. Your line is now open.
Thank you Sam you mentioned the pre election sensitivities that had some impact in the.
Speaker Change: The latter part of 'twenty four I am curious now that we're two months in can you give us a sense of.
Speaker Change: How those sensitivities might have changed thus far and how would you.
Speaker Change: With your best guess at this point assume we're going to be acting going forward.
Speaker Change: Yes.
Speaker Change: It looks still early innings as we mentioned.
Speaker Change: Policies are shaping we're still seeing some of the appointments clearly the appointment of the administrators confirmation doesn't happen.
Simeon Kohl: Clearly, the appointment of the administrators, confirmation doesn't have to So, things are still a little bit of a long way. No, look, as we get the overall tenor in the theme, and as we think about DOJ, et cetera, you know, it's hard not to be cautiously optimistic. Certainly, it's helping to identify and reduce wasteful spend is the core of what we do. And that is, as we said in prepared remarks. is well-aligned, and some of the leadership change that we've already MS in terms of appointment. One in particular has extensive background in Medicaid, Medicare program integrity.
Speaker Change: So things are still a little bit of a loan.
Speaker Change: Look as we get the overall tenure.
And as we think about those et cetera.
Speaker Change: It's hard not to be cautiously optimistic certainly helping to identify and reduce wasteful spend is the core of what we do as we said in prepared remarks is as well aligned.
Speaker Change: Some of the leadership changes that we've already.
Speaker Change: In terms of appointment one in particular.
Speaker Change: Has extensive background in Medicaid Medicare program integrity, so thats another encouraging data point right. So.
Simeon Kohl: So that's another encouraging data point, right? So look, this was an already well-established program to kind of further pursue improper payments consistent with the DOJ and what we're hearing with this administration. It might seemingly present some potential tailwinds, and we're cautiously optimistic about that.
Speaker Change: Look this was an already well established program to kind of further pursue improper payments consistent with dose and what we are hearing with this administration.
Speaker Change: It might seemingly presents some potential tailwind and we're cautiously optimistic about that.
Simeon Kohl: But as we've mentioned in the prepared remarks, it's just a bit too early to kind of further speculate or attempt to quantify that, George. Just asking it a little differently, you mentioned a potential reprioritization from the DOJ effort, and I'm curious how that might make its way to you. Would you assume that a RAC region would have a larger revenue opportunity? Just kind of curious how you would think that would flow through for you. Yeah, I mean, if we think about it, you know, ultimately, DOJ and this administration has been signaling that, you know, pursuing improper payments is clearly a key objective.
Speaker Change: But as we've mentioned in the prepared remarks, it's just it's just a bit too early to kind of further speculate or attempt to quantify that George.
Speaker Change: Just asking it a little differently, you mentioned a potential re prioritization from the doe's effort.
And I'm curious how that might make its way to you would would you assume that our.
Speaker Change: Iraq region would have a larger revenue opportunity.
Just kind of curious how you would think that would flow through for you.
Yes, I mean, if we think about it ultimately.
And this administration has been signaling that now pursuing improper payments is clearly a key objectives as we've discussed the and I think just even yesterday.
Simeon Kohl: As we've discussed, and I think just even yesterday, the General Accountability Office reported a pretty significant number of improper payments in the Medicare Fee-for-Service program, right? And so, as we think about that, clearly, the opportunity to further pursue and expand some of the audits, right? So, if we think about today, the RAC program has various governors in place, different than our commercial opportunities. And so, this might present that natural opportunity to kind of release some of those governors and maybe expand the audit opportunities. And so, that's where we see the potential slowdown in terms of increasing opportunities kind of region by region.
Speaker Change: The General Accountability office reported a pretty significant number of improper payments in the Medicare fee for service program right and so as we think about that.
Clearly the opportunity to further pursue and expand some of the audits right. So if we think about today.
Speaker Change: <unk> program has various governors in place different than our commercial opportunities and so this might prevent present that natural opportunity to kind of release some of those governors.
Speaker Change: And maybe expand the audit opportunities.
So that's the.
Speaker Change: Where we see the potential slowdown.
Speaker Change: In terms of increasing opportunities kind of region by region.
Simeon Kohl: But, again, really, really hard to speculate on that at this point in terms of what that means, how do we further quantify.
Speaker Change: Again.
Really hard to speculate on that at this point in terms of what that means how do we further quantify our hope is once we see.
Simeon Kohl: Our hope is, once we see, you know, the confirmation of the new leadership here at CMS working closely with the Centers for Program Integrity, et cetera, you know, we'll start to see, I think, things shape and get a little bit more details and be able to update you guys in further order updates.
Speaker Change: The confirmation of the.
Speaker Change: The new leadership here at CMS working closely with the centers for program integrity et cetera, we will start to see I think things shape and get a little bit more details and be able to update you guys further quarter updates.
Simeon Kohl: Lastly, for me, just to clarify, you had talked about your AI or your technology road map, which includes more with AI, and the AI investments that you've made thus far, mostly through acquisition, had been more focused on the cost side. I'm curious if there is a revenue dynamic that you would anticipate with some of these AI investments you're making. Yeah, again, early innings, but if you think about AI, it helps us ultimately select claims that have the highest likelihood of being paid improperly, right? And so as we think about that, it clearly gives us a greater opportunity to increase our hit rate, and so we're not having to audit as many claims. And so to your point on the cost side, that's certainly a helpful component there.
Speaker Change: Lastly, lastly for me just to clarify you had talked about your AI or your your technology roadmap, which includes more with AI and <unk>.
Speaker Change: Investments that you've made thus far mostly through acquisition had been more focused on the cost side I am curious if there is a revenue dynamic.
Speaker Change: You would anticipate with some of these investments youre, making.
Speaker Change: Yes, again early innings, but if you think about AI and it helps us ultimately select claims that have the highest likelihood.
Speaker Change: <unk>.
Speaker Change: Paid and properly right.
So as we think about that.
Speaker Change: It clearly gives us a greater opportunity to increase our hit rate and so we're not having to audit.
Speaker Change: <unk> as many claims.
Speaker Change: So to your point on the cost side, that's certainly a helpful component there and then ultimately our scoring ability when we think about prioritizing those claims trying to find where we think there is the highest opportunity from a dollar standpoint.
George Sutton: And then ultimately, our scoring ability, when we think about prioritizing those claims, trying to find where we think there is the highest opportunity from a dollar standpoint, so that's what helps us on the revenue side, George. Great. Thank you very much.
George Sutton: That's where it helps us on the on the revenue side George.
Speaker Change: Great.
Speaker Change: Thank you very much.
Speaker Change: Sure.
Operator: There are no further questions at this time.
Speaker Change: There are no further questions at this time I will now turn the call over to our CEO Simeon call for closing remarks. Please go ahead.
Simeon Kohl: I will now turn the call over to our CEO, Simeon Kohl, for closing remarks. Please go ahead. Thanks, Operator. And thanks, everyone, for joining us today. As we reflect on 2024, we're super proud of the progress we've made, as we shared in our prepared remarks and kind of all facets of the business. And as I mentioned, we do have strong visibility into our growth trajectory and we remain super focused on expanding our margins and increasing our profitability. So we appreciate everyone's support. We look forward to sharing further updates in the coming quarters. And if you have any questions, please don't hesitate to reach out in the interim.
Simeon Call: Thanks, operator, and thanks, everyone for joining us today as we reflect on 2024, we're super proud of the progress we've made.
Simeon Call: We shared in our prepared in our prepared remarks, and kind of all facets of the business.
Simeon Call: And as I mentioned, we do have strong visibility into our growth trajectory and remain remained super focused on expanding our margins and increasing our profitability. So we appreciate everyone's support and we look forward to sharing further updates in the coming quarters and if you have any questions. Please don't hesitate to reach out and any interim thanks again.
Simeon Kohl: Thanks again.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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