Q4 2024 TruBridge Inc Earnings Call
Greetings and welcome to the TruBridge Q4 earnings conference call. At this time, all participants are in a listen-only mode.
A brief question and answer section will follow the formal presentation.
Speaker Change: Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Drew Anderson. Thank you. You may begin.
Speaker Change: Thank you. Good afternoon and welcome to the TruBridge 4th quarter, 2024 earnings conference call.
Speaker Change: Leading today's call, our Chris Fowler, President and Chief Executive Officer, and Vinay Bassi, TruB Financial Officer.
Speaker Change: This call may include statements regarding future operating plans, expectations, and performance that constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Security's litigation reform act of 1995.
Speaker Change: The company cautioned you that any such forward-looking statements only reflect management expectations and predictions based upon currently available information and are not guarantees a future
Speaker Change: Actual results might differ materially from those expressed or implied message forward looking statements as a result of known and unknown risks uncertainties in other factors.
Speaker Change: including those described in public releases and reports filed with the Securities and Exchange Commission, including, but not limited to, the most recent and report on form 10K.
Speaker Change: The company also cautioned investors that the forward-looking information provided in this call represents their outlook only as of this date, and they undertake no obligation to update or revise any full looking statements to reflect events or developments after the date of this call.
Speaker Change: At this time, I will turn the call over to Mr. Chris Fowler, President and Chief Executive Officer. Please go ahead, sir.
Chris Fowler: Hey, thanks, Drew, and thanks to everyone for joining us today. I would categorize 2024 as a year of constant improvement, highlighted by a rebranded TruBridge, acceleration in our global workforce strategy, and dramatic improvement to our financial
Chris Fowler: By Q4, however, there are a few one time items included in Q4, the Benet will cover in just a few minutes lastly, cash flow from operations of $10 $3 million was $23 million improvement compared to a year ago.
Chris Fowler: Turning now to our full year highlights revenue for the year came in at 339 million with an adjusted EBITDA of 53 million exceeding the high ends of our guidance ranges as a result of our focus on increasing operation operating efficiency and physical Prudence, we were able to grow cash flow from operations to 32.
Chris Fowler: $2 million from just over $1 billion last year.
Chris Fowler: We deployed capital effectively through judicious use of capital expenditures and reduced our leverage ratio from four to three times and we will continue to focus on de levering going forward.
Chris Fowler: We remain on track with the integration of Google Our ambulatory offering that we acquired in Q4 of 2023 and are currently working through our second wave of customer transactions.
Chris Fowler: Bookings for the full year were in line with expectations at $82 million for the fourth quarter. We saw 14 $314 $3 million in bookings as few deals. We had hoped would be signed in the fourth quarter have taken longer to finalize.
Chris Fowler: One of those deals is already signed in the first quarter and the rest we expect to be completed in the first half of 2025.
Chris Fowler: Well I am a bit disappointed by our fourth quarter bookings performance I'm still pleased with the strength of the first three quarters and with where we landed for the full year going forward, though there are two things to keep in mind that could prevent continued lumpiness in bookings.
Chris Fowler: First while I ultimately believe the changes in Washington will be a net positive for our space. There is uncertainty associated with how this administration will address the funding of health care, which could have a slight impact on the timing of deals and secondly, as we scale up and see deals getting larger the concentrations of bookings in those in those.
Chris Fowler: Specific contracts could provide an increase in short term volatility.
Chris Fowler: That said, we are already learning from this M being proactive by making tweaks to our sales force incentive structure that we believe will continue to drive bookings execution and I'll touch based on that more in detail in a bit.
Chris Fowler: The past few quarters I've talked about how our entrust offering our integrated financial health and patient care solution is critical to our long term success and share my confidence that this is gaining traction in the market with 2024 behind US. We're now able to add a new data point did did the demonstrate that client and <unk>.
Chris Fowler: <unk> thousand 24, I'm, sorry in 2020 to entrust had 14 unique wins in 2023, we had 18 in this past year. We reached 24 Amtrust deals a recent proof point of the value interests delivers as seen in the announcement, we made after Lady let's see General hospital from Louisiana.
Chris Fowler: The true bridge leidy or the C was a longtime customer that left in 2018. However in 2024, they decided a change was needed after a competitive evaluation trowbridge stood out to them based on our reliability of our RCM service and the progress we have made on modernizing our EHR solution.
Chris Fowler: Yeah.
Chris Fowler: Along with cross sell success part of our long term growth strategy is our plan to use our financial health offerings to build a larger presence in 100 to 400 bed hospitals from 'twenty to 'twenty three to 'twenty 'twenty for this part of the market grew from 5% of the financial health opportunities in our pipeline to just over 20% and we.
Chris Fowler: Intend to capitalize on that.
Chris Fowler: As reimbursement and billing become ever more complex most hospitals still operate their own RCM efforts internally.
Chris Fowler: Well bill either as a great. There are great opportunities for growth ahead of us in fact, 75% of the time no decision remains the reason, we don't close a deal not a loss to a competitor.
Chris Fowler: Looking ahead to 2025, we have no intention of slowing down the progress we have made with the plan. We set forth in 2024, we will continue to focus on fine tuning our operations across the board our top priorities for the organization or improving customer satisfaction and retention and increased profitability and growth.
Chris Fowler: In that spirit, we recognize that to see long term success, our financial health business unit must operate seamlessly. So in January we brought in new leadership to build on the work being delivered by the team Meredith.
Chris Fowler: Meredith Willson brings over 25 years of health care technology leadership experience to the Trowbridge team, including 20 years with experience experience. She held several roles, including heading up their revenue cycle solution and leading their successful offshoring initiatives. In addition, Meredith has extensive experience optimizing RCM solutions.
Chris Fowler: Regardless of hospital size are invaluable experience made us confident she was the right choice for her role where she'll be focused on customer satisfaction and retention the global transition pipeline expansion and revenue growth. We welcome her leadership and look forward to benefiting from her wealth of experience as a reminder, in 2024, we made there.
Chris Fowler: A decision to elevate the role of general manager to report directly to me, increasing autonomy and accountability for both Meredith and David Horse.
Chris Fowler: Covid has a 20 year veteran who joined us from starting two years ago to lead our patient care business unit.
Chris Fowler: In February we made additional corporate governance enhancements further demonstrating continuous progress to enhance all aspects of the business. We are taking steps to declassify our board in an effort to align better with shareholder expectations and we have expanded the board by adding two independent directors, Jerry Canada, The former group President.
Chris Fowler: Harriss computers healthcare group, Andrew Shapiro, who is the head of Ocho capital his family office and who sits on the board of directors of separate several private companies with these new additions seven of the nine directors on our board are independent and we look forward to benefiting from the unique skill set new perspectives of the four board members.
Chris Fowler: We have added in the last two years.
Chris Fowler: When we began our journey last year, we were very transparent about our financial initiatives and provide you with updates on our progress each quarter, we'd like to take a similar approach this year with our operational initiatives and they can be bucket at under three categories financial health care and sales and marketing.
Chris Fowler: Let's start with the business unit financial health.
Chris Fowler: Our global work force execution will be a top priority in 2025.
Chris Fowler: As of year end, 30% of our CBO clients are being supported by our global team. While our goal for 2025 is to double that number to 60%. We do not view that as the end of this process global workforce remains a major level for us to achieve our margin expansion goals and we are working hard to ensure that this trans.
Chris Fowler: <unk> is as smooth as possible from a customer perspective, our first wave of customer transitions taught us a lot and we have since been implementing best practices from an employee ratio standpoint, we're committed to investing in stability and continuity for our customers early in the process, but expect it will show continued improvements in efficiency.
Chris Fowler: The overtime.
Chris Fowler: Renewables are another focus for the financial health business unit. This year, we have approximately 60 key C. B O customers that are up for renewal in the next 24 months and Meredith and her team are on top of this with plans and monitoring in place to ensure retention of these customers and we intend to give you insight into our progress as the year unfolds.
Chris Fowler: Now turning to our patient care operational initiatives. Our first patient care initiative is measuring client success by revenue retention, except for century, we have over 95% client retention, but remain focused with a dedicated team to enhance customer satisfaction.
Chris Fowler: The next area of focus is to expand the wallet share of our customer base by delivering new offerings.
Chris Fowler: Looting HCN centric EHR was a flat business. However, we expect growth in the business from offerings, such as our own analytic solutions and partner solutions like ERP for multi view, we believe that the uptake of the new products are key to our long term success.
Chris Fowler: Lastly, leveraging the advent of these offerings, we will continue to focus on converting our customer base to one of our two SaaS solutions are pure SaaS model or our entrust for the past few years, a 100% of our new EHR system sales have been fast our volume base and stressed offerings right.
Chris Fowler: Now only about a third of our customers are on one of those models, but we remain optimistic that with the continued investment in the EHR and the entrust model, we will see meaningful movement to SaaS.
Chris Fowler: Finally, I'll discuss our sales and marketing focus for 2025.
Chris Fowler: Well, we have continually improved the sales team and processes to align with the growth needs of the business in recent quarters evolve the commission structure to reward sales of newer product offerings in renewals, we still have plans to improve this year, we intend to increase investments in brand and lead generation that are weighted toward financial health. This is aimed toward.
Chris Fowler: Improving pipeline stability for consistent bookings and improved win rates.
Chris Fowler: As you can see we're proud of the headway we've made on the goals we set for ourselves in 2024 to kick start this journey and now have a renewed determination to further this progress in 2025.
Chris Fowler: For this year through the priorities I have laid out for you. We are setting our sights on higher client retention increased profitability improved cash flow and capital allocation and core business growth of 4%.
Chris Fowler: Over the next few years, we will continue to achieve mid single digit revenue growth and EBITDA margins in the mid twenties, our financial outcomes are directly related to the progress we make all of these initiatives and therefore, our rapid progress on each as imperatives.
Chris Fowler: Moving forward, we feel encouraged about our several tangible avenues to further growth entrust cross selling expansion expanding our presence in larger hundreds of 400 bed hospitals and wallet expansion of our existing customers. We spent last year of course correcting now we're able to shift our energy and resources toward.
Navy: Execution, and we will continue to invest in our team to ensure we are in the best position possible to succeed we're making meaningful progress on all fronts and I look forward to seeing what's to come with that I'll turn the call over to the Navy for a deep dive in the financials today.
Speaker Change: Thanks, Chris.
Speaker Change: Welcome everyone.
Speaker Change: Today, I will begin by providing an update on our key financial initiatives.
Speaker Change: Review fourth quarter results.
Speaker Change: The 'twenty 'twenty four full year highlights and close by providing color on our initial 2025 outlook.
Speaker Change: Overall, we had a great 2024, ending the year on solid footing with a strong Q4.
Speaker Change: I'm also very pleased with the progress we made on each of our key initiatives, which I will share.
Speaker Change: Starting with our priority to improve cash flows and working capital management Q4 was another.
Speaker Change: Once we have been making all year and our continued focus on accounts receivables and collections in Q4 cash flow from operations was $10 $3 million up approximately $23 million compared to the prior year.
Speaker Change: Q4 accounts receivable balance was down 5% sequentially and down 10% versus the prior year and Dsos improved 10 days over the last 12 months.
Speaker Change: For the full year, we generated $32 $1 million in cash flow from operations compared to just $1 million in 2023.
Speaker Change: Free cash flow, which we defined as cash flow from operations less capex was $15 $5 million in 'twenty 'twenty four compared to a negative $22 million a year ago, an improvement of $38 million year over year.
Speaker Change: The year over year growth is primarily from increased profitability improved book and capital management and lower net capital expenditures free cash flow as a percent of adjusted EBITDA was 29% in 'twenty 'twenty four up significantly from the negative percentage a year ago while.
Speaker Change: While there is still some room for improvement I'm pleased with the results we saw in 2024.
Speaker Change: As a result of these improvements of EBIT able to pay down an additional 4 million of principal on our debt, bringing the total year to date repayments of $23 million.
Our net leverage ratio in Q4 improved to three times down from over four times a year ago.
Speaker Change: While we are pleased with the progress to date.
Speaker Change: <unk> of debt and capital expenditure spend domain, a critical part of our capital allocation strategy as we continue to work towards our goal of being in the range of two five times.
Speaker Change: In addition, we continued to see progress in our efforts to optimize the business and expand profitability.
Speaker Change: As discussed last quarter, we saw a meaningful impact on margins from our continued focus on expense management, including the cost rationalization actions. We completed in Q3 that provides its slightly better than expected cost savings with approximately $6 million in year and over 8 million.
And run rate savings. In addition, we tightened up process on hiring and vendor management to further optimize our expenses both of which we expect to further provide further saving opportunities in 2025.
Speaker Change: Finally, we saw a positive impact on margins in Q4 from the global book for the initiative as the Trump transition. The first wave of clients. This year and started to see the cost savings flow through as a result, Q4 adjusted EBITDA margin increased to 19, 7% this quarter an improvement.
Speaker Change: Of approximately 580 basis points compared to the prior year and $3 25 basis points sequentially.
Speaker Change: Throughout 'twenty 'twenty four will remain.
Speaker Change: Committed to improving the quality of our reported earnings we implemented additional reviews on all our major investments with an increased focus on ROI and work diligently to clean up our balance sheet and rationalized our real estate footprint.
Speaker Change: Capex remains a key driver for our organic growth strategy, we have taken steps to rationalize our spin and sunset projects with a low Ottawa two backed in capitalized software as a percent of total revenue was four 3% in Q4 down 150 basis points compared to the previous year.
Speaker Change: And down 84 basis points sequentially.
Speaker Change: The year total capitalized software of $17 5 million down $5 $6 million versus prior year, primarily driven by sunsetting centric and other lower rois projects.
Speaker Change: Full year of capitalized software represented five 1% of total revenue an improvement of approximately 160 basis points compared to six 8% a year ago.
Speaker Change: As mentioned last quarter in October 'twenty 'twenty, four we rationalized our real estate footprint in mobile, Alabama and received net proceeds of $2 5 million.
Speaker Change: Finally, I'd like to highlight the progress we have made in 'twenty 'twenty four to improve our forecasting and accounting processes over the course of 'twenty 'twenty four we strengthened our finance and accounting teams and continued implementing more robust processes and controls bylaw financials are getting more predictable for 'twenty two.
Speaker Change: 25, there could be a couple of million dollars of nonrecurring items relating to short term projects the impact of collections of receivable and other items that can trickle in any quarter. We have also increased accountability and rigor of our monthly reviews of results leading to greater predictability and more effective controls on box.
Speaker Change: Or to remediation of the control weaknesses as a result, veeva able to set achievable at meaningful guidance expectations and looking back we met or exceeded those goals forecast accuracy and building predictability remains a key initiative in 2025 and there is still some room.
Speaker Change: To grow on our accuracy estimating expenses and further strengthening our processes and controls.
Speaker Change: Now turning to the fourth quarter review, we delivered another strong quarter that exceeded our prior guidance estimates due to solid performance across both business units.
Speaker Change: Quarter also benefited from some one time revenue in patient care and labor cost timing as well as additional seasonality in G&A.
Speaker Change: As Chris mentioned bookings in the fourth quarter was $14 million down $7 million sequentially, primarily due to the timing of closing a few large deals worth a combined $6 million that is expected to close by the first half of 2025, the decline impacted mainly new business sales.
Speaker Change: And both finance she'll help and patient care.
Speaker Change: Fourth quarter revenue was $87 $4 million up approximately 2% compared to the prior year driven by the growth in our core <unk> product line and Hugo partially offset by the divestiture of ASD in January 'twenty ready for and the impact from sunsetting centric.
Speaker Change: Excluding viewable ESD and centric Q4 revenue was notably higher compared to the prior year.
Speaker Change: Financial health revenue of $54 $7 million was up seven 3% compared to the prior year and represented approximately 63% of the total revenue.
Speaker Change: This revenue growth was primarily driven by our core CBO offerings and approximately 2% of the financial health revenue growth came from vivo.
Speaker Change: Patient care revenue of $32 $7 million decreased six 3% compared to Q4 of last year driven by the impact of revenues from ESPN centric in the fourth quarter of 2023, excluding <unk> centric patient care revenue was meaningfully higher year over year.
Speaker Change: Partially driven by one time contract settlement and an uptick in non recurring revenue in Q4, both of which are key.
Speaker Change: Countered for just over $1 billion combined.
Speaker Change: Total gross margins in the quarter was 53% up 390 basis points versus the prior year and up 355 basis points sequentially.
Speaker Change: Financial help gross margins are 49, 1% increased 545 basis points versus prior year, driven by vehicle core revenue growth and a combination of permanent savings from cost rationalization actions and the first wave of global offshore initiatives discussed earlier and some times.
Speaker Change: <unk> of labor hiring.
Speaker Change: Patient care gross margin of 59, 6% were also up approximately 50 basis points year over year, primarily due to the cost rationalization actions and the uptick in onetime and nonrecurring revenue.
Speaker Change: Total reported operating expenses of $46 million in the fourth quarter represented 46, 5% of total revenue down 670 basis points from 53, 2% in prior year, excluding goodwill and intangible impairment in 'twenty two 'twenty three.
Speaker Change: Decrease was driven by reductions in product development, primarily from the divestiture of ASD and lower non recurring expenses, including severance partially offset by the increased expenses from vehicle.
Speaker Change: Q4, adjusted EBITDA of $17 2 million increased 44% compared to the prior year with a margin expansion of 580 basis points from 14% in Q4 2023 grew 19, 7% this quarter.
Speaker Change: As expected we saw consistent improvement in our adjusted EBITDA margin each quarter throughout 2024 from 11, 4% in Q1 14, 8% in Q2 and 16, 5% in Q3, primarily driven by increased revenue and financial health cost optimization actions and global offshore savings.
Speaker Change: And one time benefits normalizing for the one time revenue in patient care and labor cost saving I previously mentioned and some seasonality in G&A, which together accounted for a couple of million dollars net impact in Q4, adjusted EBITDA margin would have been slightly more than the Q3 'twenty four.
Speaker Change: As we head into 2025, we look to build on this momentum by continuing to find areas of efficiency, both people and non people and maximizing the value of the global offshore in the Shadows.
Speaker Change: Next I'd like to provide a few full year highlights.
Speaker Change: Bookings for the year, but $82 $1 million up two 3% compared to the prior year.
Speaker Change: This reflects the decline in bookings from divestiture of ESP in January 2024.
Speaker Change: Partially offset from the full year impact of bookings from Hugo.
Speaker Change: Financial health bookings of $49 million roughly flat to the prior year and patient care bookings of $33 million were up 6% driven by a mix of both add on sales and new businesses.
Speaker Change: Full year revenue of $3 $39 $2 million were roughly flat to prior year as growth in both financial health core revenue in vehicle was offset by the impact from divestitures and sunsetting centric.
Speaker Change: Excluding vehicle ESPN centric revenue would have been up moderately.
Speaker Change: Financial health revenue of $216 million.
Speaker Change: It was up 11, 4% compared to the prior year driven by fuel and growth in core products patient care revenue was $123 million down 15, 4% versus prior year, excluding ESPN centric patient care revenue would have been almost flat on the year.
Speaker Change: 'twenty 'twenty four adjusted EBITDA of $53 $1 million increased 12% year over year with margin expansion of 164 basis points.
Speaker Change: Moving to the balance sheet, we ended the quarter with $12 3 million in cash up $8 5 million versus the prior year and up $3 7 million sequentially net debt at the end of the quarter was $159 million with a net leverage ratio of approximately three times.
Speaker Change: Finally, turning to guidance for the full year 2025, we expect.
Speaker Change: Revenue to be between 345, and $360 million and adjusted EBITDA to be between 59 and $66 million.
Speaker Change: This guidance range be via create our previously shared goal of mid single digit top line growth with approximately 200 basis points of margin expansion in 2025, the 4% year over year revenue growth implied by the midpoint of this guidance range is driven by growth in our financial health business, primarily in CBO and new.
Offerings in patient care.
Speaker Change: For the first quarter, we expect revenue to be between 85, and $88 million and adjusted EBITDA to be between 14 and $16 million the midpoint of the quarter, one guidance range implies 4% revenue growth and 600 basis points of margin expansion.
Speaker Change: Versus the prior year, when comparing Q1 guidance to Q4 2004 actual results I'd like to once again point to point out that the fourth quarter adjusted EBITDA benefit from a couple of million dollars of one time nonrecurring items similar to 324, we expect margins to step down sequentially in <unk>.
Speaker Change: You too because of our annual client conference and merit increases with an uptick in the second half from improved operational and financial performance.
Speaker Change: In conclusion as I reflect on my first year with Trowbridge I am very pleased with the 'twenty 'twenty four results and the many improvements we implemented in 2024 in 2025 I look forward to the work. We have ahead of US and continue building on this momentum and I'm excited about the financial outlook, particularly.
Speaker Change: Particularly the return to growth.
Speaker Change: Thank you all again for joining us today and we'll now open the line for question Saatchi. Please open the line for questions.
Speaker Change: Thank you.
Speaker Change: We will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Please poll for questions.
Speaker Change: The first question is from Sarah James from Cantor Fitzgerald. Please go ahead.
Speaker Change: Hi, guys. This is gaby on for Sarah can you speak to the visibility you have on closing the remaining deals that were expected to close in 2024, I know you mentioned, one and they've already confirmed for the first quarter of 2025, but just there are meetings there meaning other visibility.
Speaker Change: Yeah, Hey, Gary how are you. Thanks for joining so again, we've given ourselves a little bit of runway here and said first half of the year because there is a it's not about whether or not the customers made the decision to go forward.
Speaker Change: With the opportunity, there's a bit of uncontrollable aspect to it from their side that were just kind of waiting to see what happens.
Speaker Change: Instance, there is an acquisition of hospitals, making another acquisition that based on some administration changes in their state government.
Speaker Change: Government that it's delayed the situation. So we've got just a couple of things like that happening that again were outside of our control outside of the customer's control, but still feel very positive that we expect them to close in the first half of this year.
And obviously as we sit here almost through the through the first quarter, we wanted to give ourselves a little bit more room from that respect.
Speaker Change: Okay Awesome. That's very helpful. Thank you and then on the sales and marketing initiatives have you mentioned anything to call out there, particularly or do you expect those to increase in tandem with revenue increases So where you were at in 2024 for that sales and marketing ratio look similar in 'twenty five.
Yeah. So obviously, we're making a substantial investment in the sales and marketing fronts and probably more on the marketing that on the sales side and again thats to increase exposure.
Speaker Change: With the brand.
Speaker Change: Obviously in our installed customer base. So if you look at it from where we are trying to grow the cross sell opportunities obviously, our customers already have a great. We have a great relationship and they they know what it is that we're doing they know who we are what we're really trying to make sure that we're doing is getting our name out in front of that.
Speaker Change: 100 to 400 bed hospitals that don't run our EHR or some of our technology. So that when there is opportunities we're top of mind.
Speaker Change: Obviously that'll be a leading indicator to the success of that initiative will be an indicator and future revenue probably into 2026 to be quite honest. If we're thinking about lead generation starting in the first half of the year, leading to sales in the second half of the year, which would lead to revenue expansion into 2026.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thanks, so much Kevin.
Speaker Change: The next question is from Sean Dodge from RBC capital markets. Please go ahead.
Sean Dodge: Yes, thanks, good afternoon, and congratulations on a great strong finish to the year.
Speaker Change: Going back to the guidance and the bookings Chris you mentioned some of the deal that slipped out of Q4.
Speaker Change: We just set those aside if we look at what you've signed in the pipeline you've established thus far.
Speaker Change: And the proportion of recurring revenue you. All now have is there any way to.
Speaker Change: From that kind of frame or quantify the visibility you have at this point in the 225 revenue guidance and then.
Speaker Change: Now having been in the seat for a full rotation.
Speaker Change: You have established those targets.
Speaker Change: Have you made any kind of change in the way those have been constructed versus.
Speaker Change: Years' past.
Speaker Change: Well I'll say, a couple of things and I'll, let <unk> chime in on the back side of that obviously, the the slippage of those deals in Q4 is already baked into our guidance for 2025 right. Because if we decided in Q4, we would have gotten a little more goodness from them in this year, but obviously, that's going to push out and so you know the true value of those deals will.
Speaker Change: Probably see in the back half of the year and into 2026 with that said I think this proved out through the year of 2024, our continued focus on just visibility and understanding of the puts and takes into the business understanding that bookings don't have a direct line to revenue as far as there is not a <unk>.
Speaker Change: 90 day assumption that we can always make there's a lot of exceptions to the rule. So I think that there is a very close marriage internally between our operations and our sales team and finance to be able to have.
Speaker Change: Great visibility and understanding as to when the bookings come in how they actually translate into revenue and what the impact is on this year.
Speaker Change: In the past, we probably hung has got ourselves hung up a little too much on that bookings just having a blind conversion of X days to revenue, where that's just not the case and so <unk> and Ann team.
Speaker Change: <unk>, meaning into the business units have done a tremendous amount of work over the last year to really have a tighter interlock there.
Speaker Change: Have good visibility so I think our guidance reflects both the learnings of 2024 and also the execution of the end of the year.
Speaker Change: John That's a great question that was lot of work that we put in last year and as I've updated you guys on the.
Speaker Change: On the forecasting.
Speaker Change: Just as a data point I'll give you.
Speaker Change: So all contracted revenue contracted revenue obviously as you know is although we have a contract these are driven bit volume based.
Speaker Change: Is in the low nineties.
Speaker Change: So low <unk> percent of revenue at the beginning of the year I have a contract then hopefully that will play out.
Speaker Change: So it's the balance spot that we have to go after through bookings and some short term Vince because like we get so far.
Speaker Change: Phil.
Speaker Change: The range that we have given we have tried our best to capture because.
Speaker Change: Now it is no longer just a finance input we have tied up with the business to give that because that visibility helps us too and at the same as if I look at from a total recurring revenues also in the in the I would say in the mid Ninety's. So for us I feel tying up with what Chris said there is a.
Speaker Change: <unk> aspect on a non controllable aspect of controllable aspect is where we are laser focused to get to the maximum which is.
Speaker Change: Every customer delight is important every client has to be that's why we identified six key CBO clients over the next 24 months and retaining them. So far it has been great almost almost almost 100% in the first.
Sean Dodge: Few months that we have that so we just want controllable to be done that peak and obviously with the scenario that Chris maintain bookings translate into revenue will happen, but to the best of our ability I feel we have tried to capture it in our guidance, yes, and one last thing there Sean and by the way. Thank you for the nice comments about.
Speaker Change: The year in the quarter.
Sean Dodge: But also I think.
Sean Dodge: As we are continuing to provide guidance a quarter at front I think that thats, giving.
Sean Dodge: As we understand the translation of those bookings that gives us a little more comfort in how we're seeing that lay out and I think that'll be something that we definitely plan to continue so that we're still there is still like I said, just some volatility and when we sign something and when we're able to turn it on in.
Sean Dodge: If it's an EHR customer.
Sean Dodge: Obviously, they are already in a system. That's got a contract end date on it that it's going to we're a little bit held captive by that and on the flip side on the on the RCM business there could be some there could be something that's not quite as cut and dry as it just being 90 days from when we signed the contract. So I think for us to continue.
Sean Dodge: To provide that 90 day look I think as the best practice right now for us to keep you guys on the front page of how we're seeing the year unfold.
Sean Dodge: Okay. That's great. Thanks for all the detail there.
Sean Dodge: So on the on the 25 targets and if we think about the revenue growth. That's implied there is there anything you can share on how we should be thinking about kind of growth among the two states.
Sean Dodge: Excuse me the two segments.
Sean Dodge: Its financial health, we expect it to be the primary contributor and then.
Sean Dodge: We think about the patient care side is that kind of maybe flat up low single digits is that kind of directionally. The way you see things playing out for the year.
Sean Dodge: Yes, I'll try I know Sean you would have asked this question. So I'll try my best to answer that.
Sean Dodge: So this is you are absolutely right.
Sean Dodge: So we expect to have higher growth than the than the average.
Sean Dodge: The average that we have presented on book, but we do expect to see a low single digit growth in patient care to primarily from some of the new.
Sean Dodge: New products that we introduced last year like the multi view that we mentioned we are seeing some good traction on that.
Sean Dodge: And then the analytics one so if you take the average of it.
Sean Dodge: <unk>.
Sean Dodge: Mental health would be higher and.
Sean Dodge: Patient care will have low single digits lower than that average.
Sean Dodge: Okay.
Speaker Change: Sounds good thanks, and congratulations again.
Sean Dodge: Thank you Sean.
The next question is from Jeff Garro from Stephens, Inc. Please go ahead.
Jeff Garro: Yeah. Good afternoon, thanks for taking the questions maybe start a little bit more on the.
Jeff Garro: Bookings number in the demand environment was hoping you could tell us a little bit more about some of the secondary metrics like pipeline length of sales cycle and win rate to to put some more context on the current demand environment and I. Appreciate all the transparency on the timing related issues that you saw in Q4.
Jeff Garro: Yes.
Jeff Garro: Hey, Jeff how are you doing.
Jeff Garro: So what I would say from a pipeline standpoint, yes, we see I would say, maybe about 40% of our bookings in a quarter or opportunities that actually open and close in that quarter.
Jeff Garro: So looking at it from.
Jeff Garro: The historical size of the pipeline there is always an influx that comes in that we're seeing.
Jeff Garro: Really kind of continue to play out that's something that we've been tracking over the last several quarters and that continues to be something that.
Jeff Garro: As an as an aspect to it.
Jeff Garro: Going back to the prepared comments when we talk about the no decision.
Jeff Garro: I think that Thats something that were going to continue to focus on from a obviously there is interest.
Jeff Garro: If we're getting to something where we call. It a qualified lead that we have put into our pipeline and then we close it as a loss, but we closes loss to no decision.
Jeff Garro: I think that just goes to the sentiment of people or depth and I would say the vast majority of those opportunities are and that Cvs space. The full central business outsourcing opportunities and it's just an opportunity for us to continue to push on the value that we're selling and making sure that we're doing.
Jeff Garro: Our level best to get the customer comfortable with giving this piece of the business away and at once they get comfortable with that that we are the ones that they give it to so I think it's consistent with what we've continued to see is that.
Jeff Garro: Regardless of what what Paul you look at the.
Jeff Garro: The business office remains to be one of the top priorities for hospital leadership and providers.
Jeff Garro: Still something that.
Jeff Garro: We have this additional hurdle that we've just got to keep pushing to get them over keep working with our sales team to really drive the value. So that we see more of those no decisions turn into wins.
Jeff Garro: Appreciate it and just to follow up there you know when you speak to the the.
Jeff Garro: The win rate and the no decision being the kind.
Jeff Garro: Kind of most frequent.
Jeff Garro: Unfavorable decision, but maybe you could speak to win rates. When there is a decision made.
Jeff Garro: With others involved.
Jeff Garro: Yes, so that number is north of 50%.
Jeff Garro: When we remove that when we remove the no decision so when were.
Jeff Garro: And again, that's that's either they've made the decision to keep it in house or that and Thats in a firm decision versus just no decision and pushing it down the road or that there was a loss to a competitor. So I still feel like we've got a really good batting average we'd always like to see that go up but I also.
Jeff Garro: That it's as much about the at bat right and so that's why we talk about the investment that we're making on the marketing front.
Jeff Garro: To continue to get our name out there and to be very pointed at the marketing efforts that we're making more account based marketing approach. So that we're getting our team more of that and so.
Jeff Garro: That 5% to 600% winning percentage that we'd like to see that play out over 200 of that versus a 100 at bats, and that way we have two opportunities to win.
Speaker Change: Makes sense I appreciate that detail.
Speaker Change: I'll ask one more about the renewals lumen here in 2025, how does that number of 60 compared to a typical year.
Speaker Change: And then any kind of outsized larger clients in that 60, and and just the pacing of those decisions anything you can tell us about kind of seasonality back half versus first half of the year as we think about potential for those decisions to impact your financial performance here in 2025.
Speaker Change: Yeah, So I'll start and just as a reminder, I think we said this the 60 that.
Speaker Change: We put kind of a box around is actually going to play out over the next 24 months, so not they're all not making a decision in this year, but we landed on that number based on either there was a renewal date this year or they are a strategic customer that we wanted to make sure that was in that first wave of global transition.
Speaker Change: We're making sure that we're focused on client delight for that that level of customer.
Speaker Change: What was the second part of the question.
Speaker Change: John or Jeff I got lost there.
Speaker Change: All good.
Speaker Change: A multi parter wondering if theres any kind of outsized larger clients and that you just referenced the strategic customers.
Speaker Change: And then kind of the pacing of decisions over the next 24 months any any particular waiting we should be aware of.
Speaker Change: Yes, so on the first answer there is no real.
Speaker Change: We did lose a customer a few years ago that was outsized as it related to the rest of the base.
Speaker Change: The good and bad news is is that we don't really have that high concentration of high volume now obviously as we're pushing into the 100 400 bed deals we may see that start to pop up but right now I would say, they're all kind of equally yes laid out go.
Speaker Change: So there is none.
Speaker Change: Outsized customer like last time, it's a very diversified base that we have and secondly from a timing work these renewals.
Speaker Change: Like reasonably spread out during the year, it's not like.
Speaker Change: Like in one quarter most of them. It's all throughout the year. So that's why we have put this together with the team to make sure we bring the customer delight to where it actually matters.
Speaker Change: We're making sure these renewals up taken care off and then upsize as we go forward.
Speaker Change: Great. Thanks for taking the questions.
Jeff Garro: You bet Thanks, Jeff.
Jeff Garro: The next question is from George Hill from Deutsche Bank. Please go ahead.
George Hill: Hey, Good afternoon, guys. Chris you gave me a lot of things to lead into.
George Hill: I guess, Chris I'm going to say I have I have three if you guys don't give me that much leased to hang myself.
George Hill: Yeah.
Speaker Change: First first is on the bookings slipping out of the quarter do you feel like they were deals that just slipped out of the quarter or my macro question is are you seeing something as it relates to the lengthening of sales cycles do you feel like.
George Hill: It's a good question George and I would say put this in the prepared comments I do think that there is a a bit of uncertainty right now about what's going to happen.
George Hill: You can't turn on the TV right now without seeing.
George Hill: What's going on in Washington.
George Hill: If you just look at it from a number standpoint, you got to think that health care is on the radar.
George Hill: Potential cuts that theyre going to make and so I do think that there is a bit of a bit of a slowdown that's happening I don't think it's causing a stop but I do think it's causing a bit of a slowdown.
George Hill: As it relates to those three deals again, it's up.
George Hill: Theyre very specific reasons why they slip so I don't think theres like.
George Hill: Our global Slash macro environment that we're seeing play out from that respect.
George Hill: It's encouraging for us to continue to as much as I hate to say it that it's encouraging to hear that Theres continued pain, but theres continued paying it at the provider and hospital level from a just reliability and stability from a collection standpoint, and just making sure that those dollars are coming in that they've got staff able to do it.
George Hill: And that they can do it at a cost that they can work with.
George Hill: So I do think that we're still on the REIT topic, we just got to keep drive into what is going to push them over the line. So we're.
George Hill: Be patient. This first year first half of this year is kind of whatever happens in Washington plays out, but that doesn't mean that we won't still be out there pushing on our team to make sure that we're getting in front of the opportunities that are there and making sure that we can.
George Hill: Get to a number that we feel good about to deliver on the 25 guidance.
George Hill: Okay, and then I would go in with one here, which is like if we think about these 60 renewals in 2025.
George Hill: Are we thinking about these first thing or are we thinking about these renewals are kind of positive or negative pricing opportunities and kind of putting the renewals in the context of like the lengthening sales cycles question I'll just ask Chris is like.
George Hill: How do we think about which part of those come due in 'twenty five contribute in 'twenty five and if there is slippage risks to 'twenty five.
George Hill: So we have.
George Hill: Great question George.
George Hill: Let me compliment you because there are some parts of it are which are due during the year and how we normally take has been it's something which is under contract. It has very high probability that we will get the revenue obviously, it's a volume basis can go up or down a little bit but once that Bob.
George Hill: As it comes due and then it's up for renewal.
George Hill: There is a I would say a larger chunk is 426.
George Hill: Smaller part, but dollar value wise VF drive.
George Hill: Assume almost 100%.
George Hill: We'll come in so we have assumed one best guesstimate at this time to just make sure. We can cover some of the slippage of patterns, but to answer your question. After because these contracts gums anytime during the year post that that's where the renewals doesn't.
George Hill: It will carry a risk and to the best of our ability we have captured that in our guidance.
Speaker Change: Okay. That's helpful I have more long winded question.
Speaker Change: I guess are not as smart as that last one so I'll circle back with you guys. Thank you.
George Hill: Thanks George.
Gene Manheimer: The next question is from gene Manheimer from Freedom capital markets. Please go ahead.
Gene Manheimer: Oh thanks.
Gene Manheimer: Congrats on the quarter of the year gentlemen.
Gene Manheimer: I had just two.
Gene Manheimer: When you think about your EBITDA guidance.
Gene Manheimer: Pretty strong above consensus while your guide your revenue guidance bracketed consensus where would you say the bulk of that over attainment is coming from if you could rank it say in the top three you have improved revenue you have do you go you have your cost initiatives, how would you characterize it.
Gene Manheimer: So.
Gene Manheimer: The two parts.
Gene Manheimer: Jim So nice to hear from you too.
Speaker Change: So the two big box is for US is the same one that be guided last time.
Gene Manheimer: We will pause.
Gene Manheimer: Rationalization initiatives, obviously kick in here.
Gene Manheimer: B.
Gene Manheimer: <unk>.
Gene Manheimer: Global offshore will contribute.
Gene Manheimer: Patient care.
Gene Manheimer: Slide growth will contribute and then.
Gene Manheimer: The overall piece that you would look at from a financial health. So it's a mix of all that for the exit of 24 also the momentum helps us to Kathy Kathy that through.
Gene Manheimer: <unk>.
What we tried to capture in the guidance you are absolutely right that the analyst consensus was reasonable on the revenue, but I think they were on the wrong, but it was also at a time, where we had not over performed so the over performance of <unk>.
Gene Manheimer: Q4 gives us the momentum to carry us through so that is some of it plus we have tried our best to build enough.
Gene Manheimer: Maniacal focus on vendor and people that <unk> like to get maximum out of it. So that's why the strange reflect higher than the consensus.
Gene Manheimer: That's great nice job on that.
Gene Manheimer: And just on the revenue.
Gene Manheimer: Patient care as you I think you've mentioned that you're focusing on converting the balance of your clients to SaaS over time and I'm wondering if that would create a meaningful drag on revenue growth as you convert from those license maintenance too.
Gene Manheimer: Pro rata.
Gene Manheimer: Revenue recognition.
Gene Manheimer: Not too much because today, we get support revenue from them.
Gene Manheimer: Which is not lumpy.
Gene Manheimer: And tomorrow, we will get a SaaS revenue from them.
Gene Manheimer: So.
Gene Manheimer: The only piece, we just have to make sure the pricing and all because pricing is a lever is being trying we are trying to bring it into our DNA. So so I don't feel it would be a drag but also it won't be a significant boost to revenue, but what we expect is it gives longer term and more predictability that's what.
Gene Manheimer: We are looking for yes, and again I think it's about it is just that an example is last year. We had some products that were released on the patient care side that had some one time benefits and.
Speaker Change: While that's great for the year it obviously creates.
Speaker Change: It's a step for us in 2025 to see growth off of that and so I think as we're continuing to rollout new offerings. The idea of driving the customers to a SaaS model creates that.
Speaker Change: Ari smooth revenue recognition and visibility into the future versus.
Speaker Change: We get some nice onetime Pops that then we've got to go figure out how to recreate that in the next year. So we're excited about the investments that we've made in some of these new offerings and using that as kind of the leverage to keep pushing our customers to that SaaS model or even ideally having them go in the entrust model, where we're bringing in.
Speaker Change: The financial health of the RCM solutions as well.
Speaker Change: That's great that makes sense. Thanks a lot.
Speaker Change: You bet. Thanks, so much Jamie.
Operator: There are no further questions at this time I would like to turn the floor back over to Chris Fowler for closing comments.
Operator: Thanks, and as always thanks to all of you for your continued interest in <unk>, we look forward to sharing our progress and success with you throughout this year, thanks and have a wonderful week.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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Operator: Okay.
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Okay.
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