Q4 2024 Veradigm Inc Earnings Call

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Operator: Greetings, and welcome to the Veradigm Investor Update Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad.

Greetings and welcome to the first time Investor update call at this time, all participants are in a listen only mode.

If anyone should require operator assistance. Please press star zero on your telephone keypad.

Operator: A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded.

A question and answer session will follow the formal presentation. You can may be places the question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded.

Jenny Gelinas: It's now my pleasure to turn the call over to Jenny Gelinas, Vice President, Investor Relations. Jenny, please go ahead. Thank you very much.

It's now my pleasure to turn the call over to Jenny Gelling as Vice President of Investor Relations. Jenny. Please go ahead.

Thank you very much good morning, and welcome to the Vera update conference call. Our speakers today are Tom Langan paradigms interim Chief Executive Officer, and Lee Westerfield, our interim Chief Financial Officer, who will be making a number of forward looking statements during the presentation and the Q&A part of the call. These statements are based on current expectations and from a number.

Tom Langen: Good morning and welcome to the Veradigm update conference call.

Tom Langen: Our speakers today are Tom Langen, Veradigm's Interim Chief Executive Officer, and Lee Westerfield, our Interim Chief Financial Officer. We'll be making a number of forward-looking statements during the presentation and the Q&A part of the call. These statements are based on current expectations and involve a number of risks and uncertainties that could cause our actual results to vary materially from those reflected in the forward-looking statements. We undertake no obligation to revise these forward-looking statements in light of new information or future events. Please refer to our releases and the SEC filings for more information regarding the risk factors that may affect our results.

Risks and uncertainties that could cause our actual results to vary materially from those reflected in the forward looking statements. We undertake no obligation to revise these forward looking statements in light of new information or future events. Please.

Please refer to our releases and the SEC filings for more information regarding the risk factors that may affect our results in English and will be referring to certain non-GAAP financial measures. Please refer to the information regarding these non-GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable.

Tom Langen: In addition, we will be referring to certain non-GAAP financial measures. Please refer to the information regarding these non-GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures in our press releases that are available on our investor relations website.

With GAAP measures in our press releases that are available on our Investor Relations website.

Tom Langen: Today's meeting will start with an introduction from Tom, followed by a financial update from Lee, and then lastly, Tom will provide closing remarks.

Speaker Change: Today's meeting will start with an introduction from time, followed by a financial update for me and then lastly, Tom will provide closing remarks, and with that I'm going to hand, the call over to Tom.

Tom Langen: And with that, I'm going to hand the call over to Tom. Thank you, Jenny, and welcome to everyone joining the call today. The focus of the call today is to review our audited financial results from 2022 and unaudited revenue, adjusted EBITDA, and cash positions from 2023 and 2024, provide a current view of Veradigm's business, summarize key business highlights, and characterize our path forward to leverage our strong market position. including our outlook on revenue and cash for 2025. update you on the progress of the audit, accounting remediation, and becoming current with our filing obligations. We remain confident in the Veradigm business model and our value proposition.

Tom Langan: Thank you Jenny and welcome to everyone joining the call today the focus of the call today is to review our audited financial results from 2022, and unaudited revenue adjusted EBITDA and cash positions from 2023 and 2024 <unk>.

Tom Langan: Provide a current view of <unk> business summarize key business highlights and characterize them a path forward to leverage our strong market position.

Tom Langan: Our outlook on revenue and cash for 2025.

Tom Langan: Update you on the progress of the audit accounting remediation and becoming current with our filing obligations. We remain confident in the maritime business model and our value proposition the fundamentals of our core business are sound.

Tom Langen: The fundamentals of our core business are sound. We've completed our 2022 restatement and are on the path to becoming current in our filing obligation. We have a refreshed board to provide oversight as we execute our go-forward strategy. Starting with board refreshments, since the beginning of this year, we added four new independent directors.

Tom Langan: We've completed our 2022 restatement and are on the path to becoming current in our filing obligations. We have a refreshed board to provide oversight as we execute our go forward strategy.

Tom Langan: Starting with board refreshment since the beginning of this year, we added four new independent directors are new chairman of the board lose Silverman is a seasoned healthcare executive with over 30 years of leadership experience in health care information technology, and technology enabled health care services, including eight years as CEO of quality.

Tom Langen: Our new chairman of the board, Lou Silverman, is a seasoned healthcare executive with over 30 years of leadership experience in healthcare information technology and technology-enabled healthcare services, including eight years as CEO of Quality Systems, now known as NextGen Healthcare. Our new Audit Committee Chair, Bruce Felt, has served as Chief Financial Officer at several public companies in the technology space, including most recently at a cloud software company. The Audit Committee Chair, Bruce Felt, has served as Chief Financial Officer at several and he has served as Audit Committee Chair at both Cambium Networks and Evelyn Health. Our new Dominating and Governance Committee Chair, Vinit Asar, brings to the board 30 years of diversified global healthcare leadership experience in medical devices and non-acute healthcare services, as well as experience as a public company CEO at a company that went through a restatement and relisting of its common stock.

Tom Langan: <unk> now known as Hot Nextgen healthcare.

Tom Langan: Our new Audit Committee Chair Bruce felt has served as chief financial officer at several public companies in the technology space.

Tom Langan: Including most recently at a cloud software company and he has served as audit Committee chair at both Cambium networks and Evelyn Health.

Tom Langan: Our new nominating and governance Committee chair of and it also brings the board 30 years of diversified global healthcare leadership experience in medical devices, and non acute health care services as well as experienced as a public company CEO at a company. They went through a restatement and re listing of its common stock.

Tom Langen: Additionally, Jonathan Sachs, a partner at Stonehill Capital Management, which is Veradigm's largest shareholder, brings over 20 years of investment management experience across many industries, including healthcare, as well as experience with companies undergoing complex accounting challenges, delisting, and capital structure change. Yesterday, we reached an important milestone by filing our Form 10-K, which includes restatements of certain 2020, 2021, and 2022 financials and details the findings of our Audit Committee's investigations and our other reviews. as well as our remediation plan to address identified control deficiencies and enhance our overall internal control environment. This marks a crucial step in becoming current in our financial reporting.

Tom Langan: Additionally, Jonathan sacks apartments, Stonehill capital management, which is <unk> largest shareholder brings over 20 years of investment management experience across many industries, including health care as well as experience with companies undergoing complex accounting challenges D listings and capital structure changes.

Tom Langan: Yesterday, we reached an important milestone by filing our Form 10-K, which includes restatements of certain 'twenty 'twenty 2021, and 2022 financials and details the findings of our audit Committee investigations and our other years as.

Tom Langan: As well as our remediation plan to address identified control deficiencies and enhance our overall internal control environment.

Tom Langan: This marks a crucial step in becoming current in our financial reporting.

Tom Langen: Last night we released updated preliminary unaudited 2023 estimated revenue and adjusted EBITDA in ranges that are both at the higher end of the previously disclosed estimates from January of 2024 and reaffirmed in March of 2024. We also released updated preliminary unaudited 2024 estimated revenue and adjusted EBITDA ranges that are below prior guidance issued in March of 2024 and reaffirmed in May of 2024. There are a number of market and execution factors that impacted the 2024 estimated revenue and adjusted EBITDA results, which we will detail later in this call. As you will see, we incurred significant external audit fees, accounting advisory fees, and legal fees in 2023 and 2024.

Tom Langan: Last night, we released updated preliminary unaudited 2023 estimated revenue and adjusted EBITDA in ranges that are both at the higher end of the previously disclosed estimates from January of 2024 and reaffirmed in March of 2024.

Tom Langan: We also released updated preliminary unaudited 2020 for estimated revenue and adjusted EBITDA ranges that are below prior guidance issued in March of 'twenty 'twenty, four and reaffirmed in may of 2024.

Tom Langan: There are a number of markets and the execution factors that impacted the 'twenty 'twenty four estimated revenue and adjusted EBITDA results, which we will detail later in this call.

Tom Langan: As you will see we incurred significant external.

Tom Langan: Audit fees accounting advisory fees and legal fees in 2023 and 2024.

Tom Langen: These fees related to the preparation of the financial statements contained in the 2022 Form 10-K, the Audit Committee investigation, as well as the restatement and internal reviews described in the 2022 10-K. We also incurred additional expenses to supplement our internal accounting operation. There were many reasons that it took so much time and expense to prepare the 2022 10-K. For example, there were several material weaknesses described in the 2022 10-K. These internal control deficiencies resulted in more extensive audit procedures. This extended our timelines and significantly increased our external professional services spend. In addition, the materiality threshold for the 2022 audit was significantly lower than it had been prior to the sale of our HLPP business in May 2022 due to the reduced size of the company.

Tom Langan: These fees related to the preparation of the financial statements contained in the 2022 Form 10-K, the audit Committee investigation as well as the restatement and internal reviews described in the 2022 10-K.

Tom Langan: We also incurred additional expenses to supplement our internal accounting operations.

Tom Langan: There are many reasons that it took so much time and expense to prepare the 2022 10-K. For example, there were several material weakness as described in the 2022 10-K.

Tom Langan: These internal control deficiencies resulted in more extensive audit procedures. This extended our timelines and significantly increased our external professional services spend in addition, the materiality threshold for the 2022 audit was significantly lower than it had been prior to the sale of our H L. P. P. H L. P P.

Tom Langan: Business in May 2022, due to the reduced size of the company.

Tom Langen: This also resulted in a lower materiality threshold being applied to 2020 and 2021 during the restatement. It is worth noting that the external professional services fees we have already incurred have benefited our remediation efforts and should continue to do so as we move forward with our remediation plan. We've described that remediation plan in the 2022 10-K. It should also help us with the preparation of our 2023, 2024, and 2025 financial statement filing. Given the work already completed, we expect that external professional services fee relating to audit procedures will decline from 2024 levels for the remainder of 2025.

Tom Langan: This also resulted in a lower materiality threshold being applied to 'twenty, 'twenty and 2021 during the restatement.

It is worth noting that the external professional services fees, we have already incurred have benefited our remediation efforts and should continue to do so as we move forward with our remediation plan we.

Tom Langan: We've described that remediation plan and the 2022 10-K. It should also help us with the preparation of our 2023 'twenty 'twenty, four and 'twenty 25 financial statement filings.

Tom Langan: Given the work already completed we expect that external professional services fee relating to audit procedures will decline from 2024 levels for the remainder of 2025.

Tom Langen: Despite the shortfall in revenue and adjusted EBITDA for 2024, we remain confident in Veradigm's business model and market position. Veradigm is a leading healthcare data and intelligence organization uniquely positioned at the intersection of the three pillars of healthcare, payer, provider, and life sciences, with a broad-based national footprint. Veradigm's data assets, encompassing both proprietary and external sources, serve each of our three pillars. We believe that the application of our in-house generative AI capabilities will drive deeper insights and greater value for our clients. Key business highlights across our Provider Business Center on signing new customers to our Veradigm suite of solutions, with a focus on high-growth specialty EHR models.

Tom Langan: Despite the shortfall in revenue and adjusted EBITDA for 2024, we remain confident in <unk> business model and market positioning.

Tom Langan: Paradigm as a leading health care data and intelligence organization uniquely positioned at the intersection of three pillars of healthcare payer provider and life Sciences with a broad based national footprint.

Tom Langan: Paradigms data assets and company compensate both proprietary and external sources serve each of our three pillars. We believe that the application of our in house generative AI capabilities will drive deeper insights and greater value for our customer our clients.

Tom Langan: Key business highlights across our provider business center on signing new customers to our <unk> suite of solutions with a focus on high growth specialty EHR markets.

Tom Langen: Just in 2025, we signed the largest Mooncare organization in the United States to a Veradigm practice management and Veradigm revenue cycle analytics deal. We continued our growth in specialty markets, for example, signing another multimillion-dollar, five-year contract with a large urology practice, one of the largest provider deals we have signed in recent years. We have seen recent successes in our payer business as well, signing seven new clients over the past three months within our care gap alerting solution. Paradigm Payer Insights continues to grow rapidly with nearly 400 new sites onboarded so far in 2025. The product currently provides gaps in care alerts to over 3,500 healthcare practices across the United States.

Tom Langan: Just in 2025, we signed the largest wound care organization in the United States to a verity and practice management and paradigm revenue cycle analytics deal.

Tom Langan: We continued our growth in specialty markets. For example, signing another multimillion dollar five year contract with a large urology practice one of the largest provider deals we have signed in recent years.

Tom Langan: We've seen recent successes in our payer business as well signing seven new clients over the past three months within our our core our care gap alerting solution paradigm payer insights continues to grow rapidly with nearer nearly 400, new sites on boarded so far in 2025 the product currently provides.

Tom Langan: Gaps in care alerts to over 3500 health care practices across the United States.

Tom Langen: We recently signed a number of contracts in our life sciences business, signing a multi-million dollar Veradigm digital health media deal and a top 10 biopharma company committing to a multi-year multi-million dollar enterprise data deal for both Veradigm Network EHR and remit data. Veradigm has a strong foundation for sustained growth, anchored by high recurring revenue and the distinctive value we provide our customers. At the same time, we recognize the need for operational improvement.

Tom Langan: We recently signed a number of contracts in our life Sciences business, signing a multimillion dollar paradigm digital health media deal and a top 10 Biopharma company committing to a multi year multi million dollar enterprise data deal for both paradigm network EHR and remit data.

Tom Langan: Fair enough as a strong foundation for sustained growth anchored by high recurring revenue and the distinctive value we provide our customers at the same time, we recognize the need for operational improvements.

Tom Langen: The Veradigm leadership team, with a review of an independent strategic advisory firm, conducted a thorough operational assessment and developed a comprehensive go-forward plan to rationalize our cost structure to ensure profitable growth. This plan supports our priorities, which include remediating our material weaknesses and other internal control deficiencies. Becoming current in financial reporting, executing against our growth strategy to deliver end-to-end solutions that empower our clients, and relisting our common stock. Looking forward, Veradigm's growth strategy focuses on expanding our core provider base while enhancing the value of our offerings, including advancing AI-enabled clinical and financial workflows. By integrating high-value specialty practices into our EHR network and broadening our reach and revenue cycle management solutions, Veradigm is strengthening its foundation in the healthcare ecosystem, which is the anchor for expanding our payer and life sciences.

Speaker Change: <unk> leadership team with the review of an independent strategic advisory firm conducted a thorough operational assessment and developed a comprehensive go forward plan to rationalize our cost structure to ensure profitable growth.

Speaker Change: This plan supports our priorities, which include Remediated, our material weaknesses and other internal control deficiencies, becoming current in financial reporting executing against our growth strategy to deliver end to end solutions that empower our clients and re listing our common stock.

Speaker Change: Looking forward <unk> times growth strategy focuses on expanding our core provider base, while enhancing the value of our offerings, including advancing AI enabled clinical and financial workflows.

Speaker Change: By integrating high value specialty practices into our EHR network and broadening our reach and revenue cycle management solutions <unk> is strengthening its foundations in the health care ecosystem, which is the anchor for expanding our payer and life Sciences solutions. We believe the continued expansion of the maritime network through increased provider participation.

Tom Langen: We believe the continued expansion of the Veradigm network through increased provider participation, enhanced data access, and improved connectivity will drive growth across all of our market segments. Let me provide you with some details in these initiatives across our three pillars. In our provider business, we have implemented streamlined provider workflows utilizing AI to reduce administrative burden and improve data capture while enhancing the customer experience. In the payer business, we are working to expand the Veradigm network through payer-provider collaborations and deliver solutions that empower multiple healthcare stakeholders to work together more effectively. And in life sciences, we've scaled our data products and analytics.

Speaker Change: Enhanced data access and improve connectivity will drive growth across all of our market segments.

Speaker Change: We provide you with some details on these initiatives across our three pillars and our provider business, we have implemented streamline provider workflows utilizing AI to reduce administrative burden and improved data capture while enhancing the customer experience.

Speaker Change: And the payer business, we are working to expand the Barrett on network through payer provider collaborations and deliver solutions that empower multiple health care stakeholders to work together more effectively.

Speaker Change: And in life Sciences, we've scaled our data products and analytics, they utilized natural language processing to unlock new market opportunities and new revenue streams and <unk>.

Tom Langen: They utilize natural language processing to unlock new market opportunities and new revenue streams. In parallel with our investments for growth and innovation, we are transforming our internal technology infrastructure and process.

Speaker Change: Parallel with our investments for growth and innovation, we are transforming our internal technology infrastructure and processes. This initiative will create a modern 360 degree view of the costume, but by upgrading and consolidating our CRM and ERP systems.

Tom Langen: This initiative will create a modern 360-degree view of the customer by upgrading and consolidating our CRM and ERP systems. Before we get to the financial results, I want to express my sincere gratitude to all of our employees. Our customers trust us to help them solve their challenges, and that trust is earned through the hard work and dedication of our incredible Veradigm team. It is their commitment to customers. and their resilience through 2024 that have been a true highlight for me and our leadership.

Speaker Change: Before we get to the financial results I want to express my sincere gratitude to all of our employees our customers Trust us to help them solve their challenges and that trust is earned through the hard work and dedication of our incredible Verathon team is their commitment to customers.

Speaker Change: And they're resilient through 2024 that had been a true highlight for me and our leadership team.

Lee Westerfield: Let me turn it over to Lee, who will walk you through the Form 10-K, 2023 and 2024 Unaudited Revenue, Adjusted EBITDA and Cash Positions, and 2025 Outlook, as well as our Cash Position and Progress on Remediation.

Speaker Change: Let me turn it over to Lee, who will walk you through the Form 10-K, 2023 and 'twenty 'twenty four unaudited revenue adjusted EBITDA and cash positions and 2025 outlook as well as our cash position and progress on our remediation then I'll come back to provide some final comments. Thank.

Lee Westerfield: Then I'll come back to provide some final.

Lee Westerfield: Thank you, Tom.

Lee Westerfield: Thank you Tom.

Lee Westerfield: Today, my comments will focus on three areas. First, our historical financials. Second, our forward outlook.

Lee Westerfield: Today, My comments will focus on three areas first our historical financials second our forward outlook finally, I'll address our accounting remediation plans.

Lee Westerfield: Finally, I'll address our accounting remediation plan. Now, turning to our historical financials, there are five years to review with you. First, I'll briefly touch on the restated audited periods 2020 to 2022. Then I will address more fully the recent unaudited years 23 to 2024. As Tom mentioned, the company filed its 2022 Form 10-K yesterday. For the years 2020 to 2022, I'll focus on the restated revenue and assets. Revenue from continuing operations and total assets from both continuing operations plus divested businesses. Restated revenue from Paradigm's continuing operations changed minimally in the years 2020 and 2021 from prior filings by less than 1% in each year.

Lee Westerfield: Now turning to our historical financials. There are five years to review with you first I'll briefly touch on the restated audited periods 'twenty 'twenty to 2022 then.

Lee Westerfield: Then I will address more fully the recent unaudited years 'twenty three to 'twenty 'twenty four.

Lee Westerfield: As Tom mentioned the company filed its 20 twenty-two Form 10-K yesterday.

Lee Westerfield: For the years 'twenty 'twenty to 2020 two.

Lee Westerfield: I'll focus on the restated revenue and assets.

Lee Westerfield: Revenue from continuing operations of total assets from both continuing operations plus divested businesses.

Lee Westerfield: Restated revenue from paradigms, continuing operations changed minimally in the years 'twenty 2020 'twenty, one from prior filings by less than 1% in each year.

Lee Westerfield: In 2022, for the first nine months of that year, restated revenue from continuing operations was reduced by approximately 4%. restated assets in total, combining both Veradigm's continued operations and divested businesses. were reduced through impairments and write-offs in the restated balance sheet. The impact of the internal control failures on the company's assets was a reduction of $63 million for the year ended 2020 and a reduction of $119 million for the year ended 2021. For the nine months ended September 2022, restated assets were reduced by $57 million. Deferred Revenue and Contract Assets, Goodwill. and accounts receivable were the primary accounts affected on the restatement balance sheet.

Lee Westerfield: And 2022 for the first nine months of that year restated revenue from continuing operations was reduced by approximately 4%.

Lee Westerfield: Restated assets in total combining both Vera Dimes continued operations and <unk>.

Lee Westerfield: Invested businesses.

Lee Westerfield: Were reduced through impairments and write offs in the restated balance sheet.

Lee Westerfield: The impact of the internal control failures on.

Lee Westerfield: The company's assets was a reduction of $63 million for the year ended 2020, and a reduction of $119 million for the year ended 2021.

Lee Westerfield: For the nine months ended September 2022.

Lee Westerfield: Restated assets were reduced by $57 million.

Lee Westerfield: Deferred revenue and contract assets goodwill.

Lee Westerfield: And accounts receivable were the primary accounts affected on the restatement balance sheet.

Lee Westerfield: You will find a description of identified material weaknesses in the 2022 Form 10-K filing in Item 9a, which also summarizes the company's remediation plans.

You will find a description of identified material weaknesses in the 2022 Form 10-K filing and item nine a which also summarizes the companys remediation plans.

Lee Westerfield: Regarding 2020 to 2022 historicals, I'll now comment on growth and profitability. Revenue increased modestly from 2020 to 2022, up by 4% in 2021, lifted by both transaction-related revenue and recurring revenue. then up by 2% in 2022 when our emerging payer and life sciences operations gained market traction. and regarding adjusted EBITDA in those historical periods, Veradigm's EBITDA margin for 2020 was 22%. 2021 was 29%. and for 2022 was 24%. That's what, that was Eva.Margie.

Lee Westerfield: Regarding 2022 2022 historically I'll now comment on growth and profitability.

Lee Westerfield: Revenue increased modestly from 'twenty 'twenty to 2022 up by 4% in 2021 lifted by both transaction related revenue and recurring revenue.

Lee Westerfield: That up by 2% in 2022, when our emerging payer and life Sciences operations gained market traction.

Lee Westerfield: And regarding adjusted EBITDA and those historical periods very times EBITDA margin for 2020 was 22%.

Lee Westerfield: For 2021.

Lee Westerfield: It was 29%.

Lee Westerfield: And for 2022 was 24%.

Lee Westerfield: That's what that was EBITDA margins.

Lee Westerfield: Now, let me address more recent years. In 2023 and 2024, both years are unaudited periods. I will share preliminary estimated financials in ranges based on information currently available. In 2023, our updated preliminary estimated revenue and adjusted EBITDA ranges show that we performed at the higher end of prior guidance ranges that we issued last year in January and reaffirmed in March. The 2024 Preliminary Estimated Revenue and Adjusted EBITDA ranges show that we fell short of the prior guidance ranges that we issued last year in March and reaffirmed in May. I'll speak first about 2023. GAAP revenue is estimated to be in a range between $620 and $625 million.

Lee Westerfield: Now, let me address more recent years.

Lee Westerfield: And 2023 and 'twenty 'twenty four.

Lee Westerfield: Both years.

Lee Westerfield: Our unaudited periods.

Lee Westerfield: I will share preliminary estimated financials in ranges based on information currently available.

Lee Westerfield: 2023 our updated preliminary estimated revenue and adjusted EBITDA ranges show that we performed at the higher end.

Lee Westerfield: Our prior guidance ranges that we issued last year in January and reaffirmed in March.

Lee Westerfield: The 'twenty 'twenty four preliminary estimated revenue and adjusted EBITDA ranges show that we fell short.

Lee Westerfield: Of the prior guidance ranges that we issued last year in March and reaffirmed in May.

Lee Westerfield: I'll speak first about 2020 three.

Lee Westerfield: GAAP revenue is estimated to be in a range between 620 and $625 million.

Lee Westerfield: That range includes favorable customer settlements of approximately 19 million. Revenue excluding customer settlements grew modestly by approximately 3% at the midpoint year-over-year from 2022. Recurring revenue in 2023 was approximately 80% of total revenue. consistent with prior years. in 2023.

That range includes favorable customer settlements of approximately $19 million.

Lee Westerfield: Revenue, excluding customer settlements grew modestly by approximately 3% at the midpoint year over year from 2022.

Lee Westerfield: Recurring revenue in 2023 with approximately 80% of total revenue.

Lee Westerfield: Consistent with prior years.

Lee Westerfield: And 2023.

Lee Westerfield: Business unit performance. showed top line increases in both businesses. Up 1% in provider and up 7% in payer in life science. each bit point. Our adjusted EBITDA in 2023 is estimated to be between $139 and $144 million higher than our previously estimated range.

Lee Westerfield: Business unit performance showed.

Lee Westerfield: Showed topline increases in both businesses.

Up, 1% and provider and up 7% and payer and life Sciences.

Lee Westerfield: Each had midpoint.

Lee Westerfield: Our adjusted EBITDA in 2023 is estimated to be between 139 and $144 million higher than our previously estimated range.

Lee Westerfield: about cash and debt. Net cash was $239 million at year-end 2023. Cash and equivalents were $447 million. and debt, which year in 2023 consisted of convertible notes and an undrawn credit facility. was $208 million of funded debt. Change in cash in 2023 was approximately net zero. In other words, cash remained flat year-on-year during 2023.

Lee Westerfield: The cash and debt.

Net cash was $239 million at year end 2023.

Lee Westerfield: Cash and equivalents were $447 million.

Lee Westerfield: And that which year end 2023 consisted of convertible notes and an undrawn credit facility.

Lee Westerfield: What is $208 million.

Lee Westerfield: Dollars of funded debt.

Lee Westerfield: Change in cash in 2023 was approximately net zero.

Lee Westerfield: In other words cash remained flat year on year during 2023.

Lee Westerfield: I'll walk you through the major sources and uses of cash in 2023. First, outflows for transaction and other expenses totaled approximately $46 million, the bulk of which went towards audit, accounting, and legal professional fees for the restatement of 2022. as well as legal fees for certain other matters. Net Outflows for Equity Investing Activity was $59 million, mainly towards the strategic investment in Holmhusk. There were no acquisitions or divestitures in 2023. Four. CapEx outflows totaled approximately $30 million, mainly for software development and also for hardware. 5. And finally, Approximately negative $5 million impact on cash.

Lee Westerfield: I'll walk you through the major sources and uses of cash in 2023.

Lee Westerfield: First outflows for transaction and other expenses totaled approximately $46 million.

Lee Westerfield: Bulk of which went towards audit accounting and legal professional fees for the restatement of 2022.

Lee Westerfield: As well as legal fees for certain other matters.

Lee Westerfield: Two.

Lee Westerfield: Net outflows for equity investing activity.

Lee Westerfield: Was $59 million, mainly towards the strategic investment in whole musk.

Lee Westerfield: Three.

Lee Westerfield: There were no acquisitions or divestitures in 2023.

Lee Westerfield: Four.

Lee Westerfield: Capex outflows totaled approximately $30 million, mainly for software development and also for hardware.

Lee Westerfield: Five and finally.

Lee Westerfield: Approximately negative $5 million impact on cash.

Lee Westerfield: from the sum of net interest income, working capital changes, and tax Now turning to 2024 unaudited results. Revenue fell short of the prior range first issued in March of 2024 and reaffirmed in May of 2024. Unexpected revenue shortfalls took shape late in the third quarter and more significantly in the fourth quarter of 2024. Revenue shortfalls occurred across all business units, especially in payer and life sciences. Full year 2024 GAAP revenue is estimated to have been between $500,000 and $83,000. and $588 million. That range includes favorable customer settlements of approximately 1 million. Recurring revenue in 2024 was approximately 80% of total revenue, again consistent with prior years.

Lee Westerfield: From the sum of net interest income working capital changes in taxes.

Lee Westerfield: Now turning to 'twenty 'twenty four unaudited results.

Lee Westerfield: Revenue fell short of the prior range.

Lee Westerfield: First issued in March of 'twenty, 'twenty, four and reaffirmed in May of 'twenty 'twenty four.

Lee Westerfield: Unexpected revenue shortfalls took shaped late in the third quarter.

Lee Westerfield: And more significantly in the fourth quarter of 2024.

Lee Westerfield: Revenue shortfalls occurred across all business units, especially in payer and life science.

Lee Westerfield: Full year 'twenty 'twenty four GAAP revenue is estimated to have been between 583.

Lee Westerfield: And $588 million.

Lee Westerfield: That range includes favorable customer settlements of approximately $1 million.

Lee Westerfield: Recurring revenue in 2024 was approximately 80% of total revenue again consistent with prior years.

Lee Westerfield: As compared to our prior guidance ranges, today's updated estimated revenue fell short by approximately $42 million at the mid. or break down the components of the revenue shortfall.

Lee Westerfield: As compared to our prior guidance ranges today's updated estimated revenue fell short.

Lee Westerfield: By approximately $42 million at the midpoint.

Lee Westerfield: I'll break down the components of the revenue shortfall.

Lee Westerfield: drilling into each business unit. Provider revenue dip. 1% year over year from the midpoint of the range in 2023. We had anticipated roughly 2% growth in our prior guidance. payer and life science revenue declined by 10% from the midpoint of the range in 2023. We had anticipated growth. of roughly 10% in our prior guidance. Of the total shortfall in revenue, the provider accounted for roughly one-third while payer and life science accounted for roughly two-thirds of the $42 million estimated shortfall. Several factors contributed to the top line shortfall. In provider, the shortfall stemmed from higher than expected customer net attrition across multiple solutions, especially affecting revenue cycle management.

Lee Westerfield: Drilling into each business unit.

Lee Westerfield: Provider revenue get.

Lee Westerfield: 1% year over year from the midpoint of the range in 2023.

Lee Westerfield: We had anticipated roughly 2% growth in our prior guidance.

Lee Westerfield: Payer and life science revenue declined by 10% from the midpoint of the range in 2020 three.

Lee Westerfield: We had anticipated growth.

Lee Westerfield: Roughly 10% and our prior guidance.

Lee Westerfield: Of the total shortfall in revenue provider accounted for roughly one third.

Lee Westerfield: While payer and life science.

Lee Westerfield: Accounted for roughly two thirds of the $42 million.

Lee Westerfield: Estimated shortfall.

Lee Westerfield: Several factors contributed to the top line shortfall and provider is the shortfall stemmed from higher than expected customer net attrition across multiple solutions, especially affecting revenue cycle management.

Lee Westerfield: While in pair in life sciences, top line declined rather than grew. At the root of it, multiple internal and external factors affected that performance. In payer, we experienced implementation delays in clinical data exchange and rollout delays in gap care closure services. and in life science. Biopharma sector-wide softness led to lower real-world data sales closings and media bookings versus 2023.

Lee Westerfield: While in payer and life Sciences topline declined rather than group.

Lee Westerfield: At the root of it multiple internal and external factors affected that performance and payer we experienced implementation delays in clinical data exchange and rollout delays in gap care closure services.

Lee Westerfield: And in life Science.

Lee Westerfield: Pharma sector wide softness led to lower real world data sales closings and media bookings versus 2023.

Lee Westerfield: Full Year Adjusted EBITDA for 2024. is estimated to have been between 85 and 90 million dollars. This estimated range is below the previously disclosed guidance range. The adjusted EBITDA decline year-on-year was primarily driven by the shortfall in revenue.

Lee Westerfield: Full year adjusted EBITDA for 'twenty 'twenty four.

Lee Westerfield: Is estimated to have been between 85 and $90 million.

Lee Westerfield: This estimated range is below the previously disclosed guidance range.

Lee Westerfield: The adjusted EBITDA decline year on year was primarily driven by the shortfall in revenue.

Lee Westerfield: about cash in 2024. Our net cash was $87 million at year-end 2024. consisting of cash in equivalence of $295 million, less funded debt of $208 million. During 2024, cash declined by $152 million. versus 2023.

Lee Westerfield: About cash in 2024.

Our net cash.

Lee Westerfield: It was $87 million at year end 'twenty 'twenty four.

Lee Westerfield: Consisting of cash and equivalents of $295 million less funded debt of $208 million.

Lee Westerfield: During 'twenty 'twenty four cash declined by $152 million.

Lee Westerfield: Versus 2023.

Lee Westerfield: I will walk through the major sources and uses of cash in 2024. First, approximately $103 million of outflows for transaction and other expenses, the bulk of which went towards audit and accounting professional fees for the restatement of 2022. and the remainder for the strategic review process and for legal fees for certain other matters. net inflow of $13 million from our equity investing activities, including inflows from distributions, less outflows for contractually committed equity investors. 3. Approximately $110 million of outflow for the acquisitions of Science.io and CoaHealth. 4. Approximately $35 million of outflow for CAPEX, mainly for software development and hardware, and also for the implementation of our new ERP system.

Lee Westerfield: I will walk through the major sources and uses of cash in 2024.

Lee Westerfield: First approximately $103 million of outflows for transaction and other expenses, the bulk of which went towards audit and accounting professional fees for the restatement of 2022.

Lee Westerfield: And the remainder for the strategic review process and for legal fees for certain other matters.

Lee Westerfield: Two.

Net inflow of.

Lee Westerfield: Of $13 million from our equity investing activities, including inflows from distributions less outflows for contractually committed equity investments.

Lee Westerfield: Three approximately $110 million of outflow for the acquisitions of science I O.

Lee Westerfield: And Koa health.

Lee Westerfield: For approximately $35 million of outflow for Capex, mainly for software development and hardware and also for the implementation of our new ERP system.

Lee Westerfield: 5. And finally... approximately $5 million net negative impact on cash from net interest income, working capital changes, and taxes.

Lee Westerfield: Five and finally.

Lee Westerfield: Approximately $5 million net negative impact on cash.

Lee Westerfield: From net interest income working capital changes and taxes.

Lee Westerfield: Yeah.

Lee Westerfield: Turning to our outlook for 2025, the framework for our financial outlook is Revenue is expected to be approximately flat versus the 2024 range. We're expecting top-line growth from new customers and contracts and price increase. offset by customer attrition if consistent with historical level. Regarding our cash outlook, we are currently net cash positive and anticipating remaining net cash positive throughout 2025. and we are pursuing additional debt finance.

Lee Westerfield: Turning to our outlook for 2025, the framework for our financial outlook.

Lee Westerfield: Is.

Lee Westerfield: Revenue is expected to be approximately flat versus the 'twenty 'twenty four range.

Lee Westerfield: We're expecting top line growth from new customers and contracts and price increases.

Lee Westerfield: Set by customer attrition, if consistent with historical levels.

Lee Westerfield: Regarding our cash outlook.

Lee Westerfield: We are currently net cash positive and anticipating remaining net cash positive throughout 2025.

Lee Westerfield: And we are pursuing additional debt financing.

Lee Westerfield: Now, the next steps towards remediation. to regain current SEC filing status. The necessary steps are to complete the annual audits for 2023 and 2024 and thereafter the audit of 2025. and all quarterly filings up to the current period. We do not anticipate becoming current in our financial reporting until sometime in 2026.

Lee Westerfield: Now the next steps towards remediation.

Lee Westerfield: To regain current SEC filing status.

Lee Westerfield: The necessary steps are to complete the annual audits for 2023 and 'twenty 'twenty four and thereafter, the audit of 2025.

Lee Westerfield: And all quarterly filings up to the current period.

Lee Westerfield: We do not anticipate becoming current in our financial reporting until sometime in 2020 six.

Lee Westerfield: For remediation, we have several 7. Material Weakness cited in the 2022 Form 10-K. The majority of our remediation plans are expected to be completed during 2026 in conjunction with the implementation of our new ERP designed to enhance controls. The ERP system implementations and accounting remediations will affect the timing of our audits and filings.

Lee Westerfield: For remediation we have several <unk>.

Speaker Change: Kevin material weaknesses cited in the 2022 Form 10-K.

Speaker Change: The majority of our remediation plans are expected to be completed during 'twenty twenty-six in conjunction with the implementation of our new ERP designed to enhance controls.

Speaker Change: The ERP system implementations and accounting remediation will affect the timing of our audits and filings.

Lee Westerfield: To wrap up, what can you expect going forward? Tom and I plan to provide periodic business updates until we're current with our financial reporting obligations.

Speaker Change: To wrap up what can you expect going forward.

Tom Langan: Tom and I plan to provide periodic business updates until we're current with our financial reporting obligations.

Tom Langen: I will now pass the call back to Tom. Thanks, Lee.

Speaker Change: I will now pass the call back to Tom.

Tom Langan: Thanks, Lee now I'll make a few closing remarks looking forward. We believe <unk> is well positioned to capitalize on today's and Tomorrow's health care market trends I remain confident in our business model and value proposition. Our revitalization plan is straightforward, we will focus on remediated all material weaknesses in other internal control deficiencies.

Tom Langen: Now I will make a few closing remarks. Looking forward, we believe Veradigm is well-positioned to capitalize on today's and tomorrow's healthcare market trends. I remain confident in our business model and value proposition.

Tom Langen: Our revitalization plan is straightforward, we will focus on remediating our material weaknesses and other internal control deficiencies, becoming current in financial reporting, executing against our growth strategy to deliver end-to-end solutions that empower our clients, and relisting our common stock. I am proud of our Veradigm employees who work each and every day to earn our customers' business and am grateful for their dedication.

Tom Langan: CS becoming current in financial reporting executing against our growth strategy to deliver antenna solutions that empower our clients and re listing our common stock.

Speaker Change: I'm proud of our maritime employees, who work each and every day to earn our customers' business and I'm grateful for their dedication. Thanks.

Tom Langen: Thank you for your patience over the past 24 months. We still have much work to do, but we are resilient, determined, and motivated, and we believe Veradigm is on a path that positions us for success.

Speaker Change: Thank you for your patience over the past 24 months, we still have much work to do but we are resilient determined and motivated and we believe paradigm is on a path that positions us for success.

Operator: Operator, we will take questions. Thank you.

Speaker Change: Operator, we will take questions now.

Operator: We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. One moment please while we poll for questions.

Speaker Change: Thank you I will now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad.

Speaker Change: A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the Q1 moment. Please poll for questions.

Lee Westerfield: Our first question is coming from Charles Rye from TD Calendar. Your line is now live. Yeah, thanks for taking the question. I guess, Lee, just to clarify, did I hear you correctly that the remediation efforts need to be completed first before we can become current on the filings? No, that's not quite right, Charles. In fact, we can regain currency on filings while continuing to work on the remediations. Okay, so then I guess the question is, your statement about 26, that's related to remediation, but in terms of getting current, What was the timeline to expect for getting current on filings?

Speaker Change: Our first question is coming from Charles Ryan from TD calendar line as allies.

Charles Ryan: Yeah. Thanks, Thanks for taking the question.

Speaker Change: Yeah.

Speaker Change: I guess Lee just to clarify did I hear you correctly that the remediation efforts need to be completed first before he can become current on the filings.

Speaker Change: No that's not quite right Charles infection.

Speaker Change: Regain currency on filings, while continuing to work on the remediation.

Speaker Change: Okay. So then I guess the question is your statement about 26, that's related to remediation, but in terms of getting current.

Speaker Change: What was the timeline to expect for getting current on filings is that also still in 'twenty six and if so why why is that expected to be so long I guess.

Lee Westerfield: Is that also still in 26? And if so, why is that expected to be so long, I guess? Each is expected to occur during 2026, the remediations and the current filings based upon what we currently foresee in our pathways along both of those tracks. Why so long or so short the the elements are to perform a 2023 and a 2024 annual audit with 10k filing then of course 2025 ensues and the quarterlies that would also need to be filed ensuing the 25th annual. Okay, I guess just to follow up there. I was under impression, I think once we spoke a while back, maybe last year, it sounded, or maybe it was with Jenny, it sounded that I was under the impression that the process for the 2022 restatement was kind of running separately from the 2023 and 2024, and the impression being that that process was ongoing separately, but it sounds like now that, was there any work done on 23 or 24 up until now?

Speaker Change: Hum each is expected to occur during 2026 are the remediation and the current filings based upon what we currently foresee and our pathways along both of those tracks.

Speaker Change: One so long are so short.

Speaker Change: The elements are to perform a 2023 and 2024 annual audit with the 10-K filing.

Speaker Change: And of course 2025 and soon.

Speaker Change: And the quarter lease.

Speaker Change: That would also need to be filed.

Speaker Change: I think assuming the 25 annual filings.

Speaker Change: Okay, I guess, just a follow up there I was under impression I you know I think once we spoke a while back maybe last year it sounded or maybe it was with Jenny it sounded that.

Speaker Change: It seemed like I was in the impression that the process for the 2022 restatement.

Speaker Change: <unk> kind of running separately from the 2023, and 'twenty 'twenty, four and the impression being that.

Speaker Change: That process was ongoing separately, but it sounds like now that was there any work done on 23 or 24 up until now or is that would that just get started now I guess.

Lee Westerfield: Or will that just get started now, I guess? Preparation work for 2023 and for 2024 for some testing work has been performed. I'd like to start off by saying that logically, to really commence on 2023 and 2024 from trial balances, the completion of 2022 to be able to roll forward into those ensuing years, 2023 and 2024, and when we do arrive at this point, 2025, the annual audit current sequence. So the... ... bulk of the work for each of the annual audits that remain on our plate 23, 24, and 25. will occur in this. Okay.

Speaker Change: Prep.

Speaker Change: Preparation work for 2023 and for 2024 for for some testing work has been performed.

Speaker Change: Logically to really commence on 2023 and 2024 from trial balances. The completion of 2022 to be able to roll forward into those ensuing years 'twenty three and 'twenty four.

Speaker Change: And when we do arrive at this point in 2020 fives annual audit.

Speaker Change: Current sequence so the.

Speaker Change:

Speaker Change: The bulk of the work for each of the annual audits that remain on her plate 'twenty three 'twenty four 'twenty five.

Speaker Change: Occur and are in the sequence.

Okay, and then maybe one last question for me.

Tom Langen: And maybe one last question for me. The net attrition that you talked about, particularly in provider, which you're also assuming in 2025 as well, can you give us a little bit more color, maybe Tom, what's occurring here and what's kind of driving that attrition? Is it through consolidation or share loss to competitors? If you can give us a sense of what the competitive environment is currently looking like and how are you looking to remediate that yourself? Hey, Charles. Thanks for the question. I appreciate it. Yeah, we're not seeing – it's not market consolidation driven. So we're seeing, obviously, as we stated, higher net attrition within our core provider business, both our EHR, primarily revenue cycle.

Speaker Change: The net attrition that you talked about particularly in provider, which are also assuming.

Speaker Change: In 2025 as well.

Speaker Change: Can you give us a little bit more color, maybe Tom you know what's occurring here Ed.

Speaker Change: And you know what what what's kind of driving that attrition is it through consolidation or or share loss to competitors. If you can give us a sense of what the competitive the <unk>.

Speaker Change: Environment is currently looking like and where you know how are you looking to remediate that yourself.

Charles Ryan: Hey, Charles Thanks for the question I appreciate it.

Speaker Change: Yeah, we're not seeing it's not market consolidation driven so we're seeing.

Speaker Change: Obviously, as we stated and editors higher net attrition within within our core provider business, both our EHR primarily.

Speaker Change: Primarily revenue cycle, we had higher attrition in a part in our revenue cycle business.

Tom Langen: We had higher attrition in our revenue cycle business. We're still seeing market opportunities in the small to mid-segment of the market, but we had lower net new sales in 2024 in addition to the higher net attrition impact. Any kind of details on what might be driving that, is that a situation of functionality in the products that you need to enhance or just maybe decisions to move, you know, why are people moving away I guess is the main question. We're seeing higher attrition in the large physician practice segment, where there tends to be a little bit more consolidation, you know, affiliations with hospitals, but more stability in the kind of mid to small market segment.

Speaker Change: We're still seeing market opportunities in the small to mid segment of the market, but we had lower net new sales in <unk> and 'twenty 'twenty four.

Speaker Change: In addition to the higher net attrition are impacting the business.

Speaker Change: Any any kind of details on what might be driving that is at.

Speaker Change: The situation of functionality in the products that you need to enhance or just.

Speaker Change: Just maybe decisions to move up you know what why are why are people moving away I guess if that is the main question.

Speaker Change: We're seeing we're seeing higher attrition in the large physician practice segment or this it tends to be a little bit more consolidation.

Speaker Change: You know the affiliations with hospitals.

Speaker Change: But a more stability in the kind of mid to small market segment.

Tom Langen: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you.

Jeff Farmer: Thank you next question is coming from Jeff Farmer from Stephens. Your line is now live.

Jeff Garro: Next question is coming from Jeff Garro from Stephen's. Your line is now live. Yeah, good morning. Thanks for taking the question. Maybe a follow up on some of Charles questions on the timing of the path forward. And, you know, first, I guess you talked about the different years and moving through sequence.

Jeff Farmer: Yeah. Good morning, Thanks for taking the question, maybe a follow up on South Charles questions on the timing of the path forward and yeah.

Jeff Farmer: First I guess he talked about the different years and moving through sequence. So wanted to ask if you could kind of break that timeline into more discrete pieces. So we can think about when to expect updates N and we'd appreciate it if you could you know kind.

Lee Westerfield: So want to ask if you could, you know, kind of break that timeline into more discrete pieces, so we can think about when to expect updates. And, and we'd appreciate if you could, you know, kind of affirm the commitment to updating us on on where the the 25 outlook is, is trending as you progress through all the audit work. The audits and the remediation is our top priority for Tom and Brian, for our company. With regard to timing and the amount of work ahead, I can lay out the sequence in an end state, which is regaining current filing status.

Jeff Farmer: Affirm the commitment to updating us on where the twenty-five outlook is is trending as you progressed through all the audit work.

Jeff Farmer: But the audits and the remediation is our top priority for Tom and frame for our company.

Jeff Farmer: With regards to timing.

Jeff Farmer: Before going ahead.

Jeff Farmer: But I can lay out the sequence and end state, which is regaining current filing status I don't want to lay out the specific date for expectations for the specifics of 23 or 'twenty, four or 'twenty fives filings except to say.

Lee Westerfield: I do not want to lay out the specific date for expectations for the specifics of 23 or 24 or 25. findings except to say over the next several quarters and rolling into 2026. With regard to the amount of work involved in those, significant preparation because of the amount of work that got done before 2022 is already laid. before us for the work for the other outstanding years.

Jeff Farmer: Over the next.

Jeff Farmer: Several quarters enrolling into 2026.

Jeff Farmer: With regard to the amount of work involved in those a significant preparation because of the amount of work that got done for 2022.

Jeff Farmer: As already laid.

Jeff Farmer: For us for that work for the other outstanding years.

Lee Westerfield: with regard to, sorry, what was the other portion of the question? The other question you asked, Jeff, was around the timing of frequent or periodic updates on the business and the status of the business, so you have our commitment to provide periodic updates as needed. Obviously, there hasn't been a lot of communication recently, but we're going to continue as we go forward to be as transparent and open with periodic updates. Great. I appreciate that.

Jeff Farmer: With regard to sorry, what was the other portion of the question. The other question you asked.

Jeff Farmer: Jeff was around the timing of frequent periodic updates on the business and the status of the business. So you have our commitment.

Jeff Farmer: To provide periodic updates as needed.

Jeff Farmer: There hasn't been a lot of communication recently, but we're going to continue as we go forward to be as transparent and open with periodic updates.

Speaker Change: Great I appreciate that and then maybe turning to the fundamentals.

Tom Langen: And then maybe turn to the fundamentals. You know, over the last few years, even before the accounting restatement was needed, there was lots of work being done creating this network business, building up the data assets, building up data partnerships. So we would love it if you could give us an update on the size and scale of the network in terms of relevant data points like number of providers, number of patients being accessed by the network, and any way you can frame up the size and scale of claims and related data flowing through the network. Sure, let me comment on that Jeff.

Speaker Change: Over the last few years, even before the the.

Speaker Change: Accounting restatement was needed there was lots of work being done creating this this network business building up the the data assets building up data partnerships. So would love. It if you could give us an update on the size and scale of the network in terms of relevant data points like the number of provider.

Speaker Change: There is not a number of patients being accessed by the networking and any way you can frame up the size and scale of of claims and related data flowing through the network.

Speaker Change: Sure, let me comment on that Jeff So you're absolutely right. We spent the last couple of years building out the maritime network, which is our proprietary data assets that we have as well as access to other data sources. So as we stated in the 10.

Tom Langen: So you're absolutely right. We spent the last couple of years building out the Veradigm network, which is our proprietary data assets that we have as well as access to other data sources. So as we stated in the 10-K, we have over 400,000 providers, both from our proprietary sources, as well as other sources, that we're monetizing different use cases across both our payer and life science. In addition, we have over 200 million patients that we're gaining access to that we're using for various use cases across both parents. Building out the network and continuing to find additional data sources through partnerships and growth in our business is a key priority for us.

Speaker Change: 10-K, we have over 400000 providers, both from our proprietary sources as well as the other sources that we're monetizing different use cases across both our payer and life Sciences business.

Speaker Change: In addition, we have over 200 million patients they were gaining access to that we're using for various use cases across both payer and life Sciences.

Speaker Change: Building out the network and continuing to find additional data sources through partnerships and growth in our business is a key priority for us.

Tom Langen: And as I stated, the specialty markets are a key area of focus for us. I'm excited with the new wins we had recently in neurology and other specialty markets that continues to add to the data platform that we have. In addition to our structured data, there's significant unstructured data in the platform and we're accessing using NLP and our AI capabilities to build out premium data sets across different specialties to then monetize with our life sciences clients. We continue to build out on the payer side of our business, our clinical data exchange platform. And in addition to the data that we have, we've launched our gap closure solution that's gaining traction in the market as I stated in my opening remarks.

Speaker Change: And as I stated the specialty markets are a key area of focus for us I'm excited with the new wins, we had recently in neurology and other other specialty markets that continues to add to the data platform that we have in addition to our structured data. There's there's significant unstructured data in the platform.

Speaker Change: And were accessing using NLP and our AI capabilities to build out premium datasets across the different specialties and monetize.

Speaker Change: With our life Sciences clients, we continue to build out on the payer side of our business our clinical data exchange platform and in addition to the data data that we have we're also we've launched our gap there.

Speaker Change: Closure solution, that's gaining traction in the market as I stated in my opening our opening comments.

Tom Langen: Great, I appreciate that update.

Speaker Change: Great I appreciate that update and and I'm on the turn to the outlook for 2020 five in it.

Lee Westerfield: And then I want to turn to the outlook for 2025. And, you know, appreciate the update on the top line and the expectations around the cash balance. But notice there's no profitability outlook for 2025. So I was hoping maybe you could frame up where you see the exit margin rate leaving the fourth quarter of 2024. And, you know, there might be some seasonality impact we should consider there. And then also comment on expenses that occurred in 2024 and fall off as you get more current on the financials or, you know, just kind of work through that.

Speaker Change: Yeah I appreciate the update on the top line and the expectations are around the cash benefit, but those there's no profitability outlook for 2025. So I was hoping maybe you could could frame up where where do you see the the exit margin rate, leaving the fourth quarter of 'twenty, four and yeah, there might be some season.

Speaker Change: The impact we should consider there and then also comment on expenses that occurred in in 'twenty, four and and fall off as you get more current on the financials are just kind of worked through that the backlog of work, you'll notice that the 103 million and transaction and other expenses called out.

Lee Westerfield: The backlog of work, you know, notice the $103 million in transaction and other expenses called out in 2024. Presumably those are excluded from adjusted EBITDA. But how does that trend in 2025?

Speaker Change: And 24, presumably those are excluded from adjusted EBITDA, but how.

Speaker Change: How does that trend in 'twenty, five and what's the the spend that's not going to fall off that's related to solve this accounting work.

Lee Westerfield: And what's the spend that's not going to fall off that's related to some of this accounting work?

Jeff Farmer: Hey, Jeff.

Lee Westerfield: Jeff, I'm really glad you've asked these questions because I'll clarify for all of the audience and yourself as well what is coming up in 2025. There's a lot there, so if I miss any of the items, please tell me at the end of the First, framing our outlook for 2025, we have set an outlook on revenue for approximately flat, with a midpoint of the range of 2024's estimations, and at the cash bottom line we would remain, we are and will remain, anticipate remaining net cash positive during 2025. In between those numbers, there's a lot, and that's what you're really at.

Jeff Farmer: I'm really glad you asked these questions because I'll clarify for all of the audience and yourself as well what are what is coming up in 2025.

Jeff Farmer: There's a lot there so if I miss any of the items. Please told me at the end of this.

Jeff Farmer: First our outlook for 'twenty and framing our outlook for 2025, we have said you're not look on revenue for approximately flat with the midpoint of the range of 2020 fours.

Jeff Farmer: Estimations and if the cash bottom line, we would remain we are and will remain anticipate remaining net cash positive.

Jeff Farmer: During 2025 in between those numbers, there's a lot and that's what you're really asking.

Jeff Farmer: With regard to our EBITDA margin and with regard to other elements below EBITDA for casualty expense.

Lee Westerfield: With regard to our EBITDA margin and with regard to other elements below EBITDA for cash expense, I'm going to give a qualitative framework here for you, but not a specific kind of guidance, to be sure. We are in the midst of a cost realignment and have executed, as you heard Tom mention his remarks. and that is underway with an impact that will be occurring in favorable impact on our margins during 2025 and a more significant impact on EBITDA margins. when we get a full year of benefit from cost actions in 2026. With regard to Belo Evita, the intensely high level of auditor accounting related legal expenses and also the strategic review process in 2024 was a significant use of cash as you point out.

Jeff Farmer: They give us.

Jeff Farmer:

Jeff Farmer: Qualitative framework here for you.

Jeff Farmer: But but not that specific kind of guidance to be sure.

Jeff Farmer: Hmm.

Jeff Farmer: We are.

Speaker Change: In the midst of a cost realignment and have executed as you heard Tom mentioned in his remarks.

Jeff Farmer: And that is underway with them.

Speaker Change: And impact that will be.

Speaker Change: Occurring in favorable impact on our margins during 2025, and a more significant impact on EBITDA margins when we get a full year of benefit from cost actions in 2026.

Speaker Change: With regard to below EBITDA.

Speaker Change: The intensely high level of auditor accounting related legal expenses and also the strategic review process in 2024 that was a significant use of cash as you pointed out we do anticipate there being continued but at a significantly.

Lee Westerfield: We do anticipate there being continued but at a significantly diminished that cash expense below the EBITDA line while we continue to pursue the finality of our or the completion towards completion of our 2023 4 and 5 audits. So that below EBITDA expense line should be not zero, but significantly lower in 2020.

Speaker Change: Diminished level.

Speaker Change: That cash expense below the EBITDA line, while we continue to.

Speaker Change: I pursue that.

Speaker Change: Finality of our completion towards the completion of our.

Speaker Change: 2023, four and five audits it.

Speaker Change: And so that below EBITDA expense line should be not zero, but significantly lower in 2025.

Lee Westerfield: Got it. That helps.

Speaker Change: Got it that that helps and the.

Lee Westerfield: And last one for me before I hop back in the queue, I want to ask about revenue visibility for FY25. The expectation that it's flat, but certainly there's some moving pieces there. And you mentioned kind of attrition offsetting growth. We'd love for you to unpack that more, and particularly in light of the shortfall in revenue that manifested in the second half of 2024, presumably with that occurring, you'd kind of need some rebound from the exit rate from 24 and on the shortfall, which is reoccurring, which was non-reoccurring revenue that might be a little easier to bounce back from, but would appreciate some more comments on for visibility of revenue.

Speaker Change: Last one for me before I hop back in the queue wanted to ask about revenue visibility for for FY 'twenty five the expectation Thats flat, but that's certainly there's some moving pieces there and you mentioned how about attrition offsetting growth would maybe Buffy.

Speaker Change: The impact that more and in particularly in light of.

Speaker Change: The shortfall in revenue that manifested in the second half of 'twenty 'twenty four.

Speaker Change: You wouldn't believe with it with that occurring you you kind of need some rebound from the exit rate from 24 and you know.

Speaker Change: On the shortfall combo, which is reoccurring, which was what was non reoccurring revenue that might be.

Speaker Change: Although easier to bounce back from a way to appreciate some more comments on forward visibility of revenue.

Speaker Change: I'm going to try to translate the question to be sure. We're saying the same thing and hand, it to Tom I think you were asking.

Tom Langen: I'm going to try to translate the question to be sure we're saying the same thing and hand it to Tom. I think you're asking, we had shortfall in revenue clearly in 2024. What portions were recurring, what portions were transactional, and therefore what the bounce back rate might be? Yes. Correct. Yeah, Jeff, I'd comment. As we stated, we have high recurring revenue, about 80%. There is a percentage of our business that's obviously non-recurring. As we stated, obviously, our parent life science business had a pretty significant shortfall in 2024, anticipated shortfall. As I stated on my comments of some of the new business coming in across the business, I feel good with our first quarter activity and where we are from an overall pipeline conversion with both net new business coming across both payer provider and life sciences.

Speaker Change: We had a shortfall in revenue clearly in 2024.

Speaker Change: What portions were recurring what portions where transactional and therefore, what the bounce back rate might be.

Speaker Change: Yes.

Speaker Change: Correct.

Speaker Change: Yeah, Jeff I'd comment as we stated we have high recurring revenue about 80% there is a percentage of our business. It's obviously nonrecurring.

Speaker Change: As we stated obviously, our payer and life science business had a pretty significant shortfall in 2020 for anticipated shortfall.

Speaker Change: As I stated in my comments of some of the new business coming in across the business I feel good with our first quarter activity and where we are from an overall pipeline conversion.

Speaker Change: With both net new business coming across both payer provider and life sciences. So so far the the start of the year. So far in 'twenty five is looking promising but.

Tom Langen: So far, the start of the year, so far in 25 is looking promising, but we still have some work to do, particularly on the non-recurring type of revenue that comes within our payer and life Great, I'll hop back in the queue. Thank you.

Speaker Change: But we still have some work to do particularly on the nonrecurring type type revenue that comes within our payer and life science business.

Speaker Change: Great I'll hop back in the queue.

Speaker Change: Thanks, Joe.

Speaker Change: Thank you. Your next question is coming from George Hill from Deutsche Bank. Your line is that life.

George Hill: Next question is coming from George Hill from Deutsche Bank. Your line is now live. Yeah, good morning, guys. And thanks for taking the questions. And I think I'm just going to wind up hitting a couple of the themes that Charles and Jeff have already hit. So if we think about the revenue falloff in Q3 and Q4 of 24, it seemed to happen across all the company segments. I guess, is there anything you could talk about, like, what happened with the timing? Like, what was special about Q3 and Q4, or what was special about the back end of 2024 that kind of drove the revenue decline across all the segments?

George Hill: Yeah. Good morning, guys and thanks for taking the question because I think I'm, just going to wind up hitting a couple of things that Charles and Jeff have already.

Speaker Change: So if we think about the revenue falloff in Q3, and Q4 'twenty four it seem to happen across all the company segments. I guess is there anything you could talk about like what happened with the timing.

Speaker Change: I like that.

Speaker Change: What was special about Q3 and Q4, what was special about the back half of 2020 for the kind of drove the revenue decline across all the segments.

Tom Langen: Yeah, sure. Thanks, George. I'll address that. So let me focus on each of the segments, payer and life science first. The timing of implementation in Go Live, as Lee had referenced, particularly in our clinical data exchange, as well as our gap closure rollout in Go Live, definitely had an impact in Q4. So when I say implementation in Go Live, it clearly contracts that are signed. There's contracts in hand, but the actual timing of them did not happen in the fourth quarter. And we had anticipated them happening in the fourth quarter, so that had a pretty dramatic impact.

George Hill: Yeah sure. Thanks, George I'll address that so let me focus on each of the segments payer and life Science first.

Speaker Change: The timing of implementation and go live as Lee referenced, particularly in our clinical data exchange.

Speaker Change: Well as our gap closure.

Speaker Change: Rollout and go live definitely had an impact in Q4. So these are when I say implementation go a lot clearly contracts that are signed but.

Speaker Change: Contracts in hand, but the actual timing of them.

Speaker Change: Did not happen in the fourth quarter.

Speaker Change: And we had anticipated them happening in the fourth quarter, so that had a pretty dramatically.

Tom Langen: That's in the pairs. In the life science segment, you know, we've seen softness in 24 across the pharma services and data segment across the industry. That also had an impact on the life sciences business, you know, and particularly a shortfall in the media revenue in the real world data business. We did see good momentum within our real world evidence business, but that also had an impact on the data business.

Speaker Change: That's in the payer segment in the life Science segment.

Speaker Change: We've seen softness in 'twenty four across the pharma services data segment.

Speaker Change: Across the industry.

Speaker Change: That also had an interconnect in the life Sciences business.

Speaker Change: And particularly a shortfall in the media revenue in the railroad data business.

Speaker Change: We did see good good momentum within our real world evidence business, but that also.

Speaker Change: Yeah.

Speaker Change: Yes.

Tom Langen: And then in the provider, maybe, I'm sorry, go ahead, go ahead. No, you keep going. I couldn't tell if you'd finished that part of the answer. or complete your problems or item you need to interrupt. And the provider business is highly recurring, but when you have a softness in your net new business, that has an impact on the second half of the year. So performance earlier in the year or in the prior year can have an impact on revenues recognized in the third or fourth quarter. So the lower net new sales in our kind of net new business is having an impact in the second half of the year.

Speaker Change: And then in the provider.

Speaker Change: I'm sorry.

Speaker Change: Got it.

Speaker Change: You you could go back I couldn't tell you and finish that part of the answer.

Speaker Change: We're completely up I'm, sorry, I didn't mean interrupted.

Speaker Change: No that's okay and the provider business you know its highly recurring but when you have a softness in your net new business that has an impact on the second half of the year. So performance earlier in the year or in the prior year can have an impact on revenue that's recognized in the third and fourth quarter, so the lower than that.

Speaker Change: New sales in our kind of net new business.

Speaker Change: It's having and it had an impact in the second half of the year, we're seeing good momentum.

Tom Langen: We're seeing good momentum. I think that, as I stated, we're signing much larger deals, multi-year deals across both our EHR plan and our E-commerce plan. well as our clearinghouse solutions, so that's encouraging as well as we as we close out Q1.

Speaker Change: I think that as I stated, we're signing much larger deals.

Speaker Change: Multi year deal Cross O.

Speaker Change: Our EHR clients.

Speaker Change: Yes.

Speaker Change: As well as our clearinghouse solutions, so that's encouraging as well as we as we close out Q1.

Tom Langen: Okay, that's helpful.

Speaker Change: Okay. That's helpful. And then just given that you guys havent been very good quarter in a while I thought we could take an opportunity to update us kind of on the lay of the land from the provider business kind of what's the RCM exposure. Each our exposure can you talk about exposure by practice size, just kind of would love kind of a corporate overview I think you guys are using.

Tom Langen: And then, just given that you guys haven't been a regular reporter in a while, I thought, would you take an opportunity, Tom, to update us, kind of, on the lay of the land from the provider business? Kind of, what's the RCM exposure? What's the EHR exposure? Can you talk about exposure by practice size? We just, kind of, would love, kind of, a corporate overview update of where you guys are these days as it relates to the positioning of the business. Yeah, I mean, sure. From a market segment size perspective, we have a really strong presence in the, I would call it the small market and the mid market.

Speaker Change: Relates to the positioning of the business.

Speaker Change: Yeah sure from a market segment size perspective, we have a really strong presence in the I would call. It the small market in the mid market.

Tom Langen: Clearly, our practice fusion platform, which is in the smaller independent physician practices, we have now a full suite of solutions there. Both our core clinical EHR, our billing solution rev cycle, as well as our PM solution to be able to go to the market. So we're seeing good opportunities within that segment of the market. The segment that is kind of, I would say, the mid market, which is our Veradigm suite and Veradigm EHR. We're seeing a lot of market opportunities where clients are asking for support around rev cycle in the end-to-end financial management of their practice.

Speaker Change: Our practice fusion platform, which is in the smaller independent physician practices. We have now a full suite of solutions there.

Speaker Change: Both our core clinical EHR.

Speaker Change: Our billing solution Rev cycle as well as you know our R. P M.

Speaker Change: <unk> to be able to go to the market. So we're seeing good opportunities within that segment of the market.

Speaker Change: The segment that is kind of I would say you know the mid market, which is our Barrett on sweet and Barrett I mean, HR, we're seeing a lot of market opportunities, where our clients are asking for support around Rev cycle in the end to end financial management of their of their practices. So that's where we're seeing from a market opportunity the suite of.

Tom Langen: So that's where we're seeing from a market opportunity. The suite of solutions that we have that includes our clearinghouse, our revenue cycle capabilities, as well as our PM solution, is where a lot of the net new business is coming from, and particularly in specialties. Orthopedics, urology, and other multi-specialties is where we're seeing a lot of the opportunity.

Speaker Change: <unk> that we have that includes our clearinghouse, our revenue cycle capabilities as well as our Pam solution is where a lot of the net new business is coming from.

Speaker Change: And particularly in specialties orthopedics neurology and other multi specialties is where we're seeing a lot of the opportunity.

Lee Westerfield: Okay, and I guess two quick ones for Lee. I guess, Lee, I know we're expecting to be fully current on the filings in 2026.

Speaker Change: Okay.

Jeff Farmer: Two quick ones for me I guess Lee I know, we're expecting to be fully current on the filings in 2026.

Speaker Change: <unk>.

Lee Westerfield: Can you comment on whether the expectation is front half or back half of 26, just trying to get a, like, you know, a slightly narrower sense of timing? I'd be premature to offer that kind of precision.

Speaker Change: Can you comment on whether the expectation is front half back half of 2006, just trying to get it right.

Speaker Change: A slightly narrower Cincinnati.

Speaker Change: I'd be premature this offer that kind of precision.

Lee Westerfield: Okay, and then you talked about the debt refinance, and I guess, is that, I apologize I'm on the load today, are the convertibles coming due that you guys need to refinance, is there a reason, like is there an operating reason why you guys need to capture debt more, considering you're going to stay in a positive net cash position? Sure.

Speaker Change: Okay.

Speaker Change: And then you talked about the debt refinance and I guess is that.

Speaker Change: I apologize I'm annoyed debate or the convertibles coming Judy you guys need to refinance it.

Like is there an operating reasonably good pricing.

Speaker Change: He's going to stay in a positive net cash position.

Speaker Change: Sure.

Lee Westerfield: First, let me offer on the debt financing that I commented on, what our situation is and what we're doing. The situation is simple enough. It is that our convertible note investors hold a put right, and their next put opportunity is July 1st, 2025. We have ample cash, should they choose to exercise the put, to repay the principal in accreted amounts, and then have, I would call it, a significant amount of cash remaining.

Speaker Change: First let me offer on the debt financing that I commented on.

Speaker Change: What our situation is and in what we're dealing with what we're doing situation is is simple enough. It is that our convertible note investors hold the oh, they've put right and their next put opportunity is July 1st 2025.

Speaker Change: We have ample cash should they choose to exercise the put.

Speaker Change: To repay the principal and accreted amounts and then have a.

Speaker Change: I wouldn't call it a significant amount of cash remaining.

Lee Westerfield: That said, a year ago, approximately nine months ago, I let go of our credit facility with our commercial banks, so our cash and liquidity are equal. Meaning, as... public company. their judgment to be prudent. to make sure that we have additional liquidity. and for that reason we're looking for alternative lending. point to assure that we are. supported and liquidity supported in the months and a couple of years ahead.

Speaker Change: That said are we.

We a year ago, approximately nine months ago.

Speaker Change: Uh huh.

Speaker Change: Let go of our credit facility with a commercial bank, so our cash and liquidity are equal meaning that was a.

Speaker Change: Public company so.

Speaker Change: It's our judgment to be prudent.

Speaker Change: To.

Speaker Change: Make sure that we have additional liquidity.

Speaker Change: And for that reason, we're looking for alternative lending at this point to mature.

Speaker Change: For sure that we are.

Speaker Change: Sufficiently cash.

Speaker Change: Supported and liquidity supported in the months and couple of years Ed.

Lee Westerfield: I didn't have the click date in front of me, but I appreciate that call. Thank you.

Speaker Change: Got it I didn't have to put it in front of you, but I appreciate that color. Thank you.

Speaker Change: Thank you next question is gonna be a follow up from Charles <unk> from Cowen. Your line is my life.

Charles Rye: Next question is going to be a follow-up from Charles Wright from TD Coward. Your line is now live. Yeah, thanks for taking the follow-up here. You know, Tom, you know, you mentioned earlier, you know, some weakness in in rep cycle management in particular. If I recall, you guys acquired Koha Health in early 24. Can you give us any kind of sense on, you know, the size of that business, kind of what that brought in for you guys in terms of a customer base or, you know, revenue contribution? And, and, you know, some of the, you know, losses there, was that attrition from maybe the Koha customer base?

Speaker Change: Oh, Yeah, Hey, thanks for taking the follow up here.

Charles Ryan: You know Tom you you know you mentioned earlier some weakness in in Rev cycle management in particular, if I recall you guys acquired a cola health in early 'twenty four.

Can you give us any kind of sense on the size of that business kind of what that brought in for you guys in terms of our customer base or revenue contribution and and you know with some of the losses. There was that attrition from maybe the call Oh.

Charles Ryan: Our customer base, just trying to understand.

Tom Langen: Just trying to understand, you know, if you, if you kind of enhance sort of that, you know, product capabilities, you know, what's going on? Thanks.

Charles Ryan: If you kind of enhanced sort of that.

Charles Ryan: Product capabilities, you know what.

What's going on.

Charles Ryan: Sure sure I'll comment on thanks, Charles Yeah. So the co acquisition was obviously, our additional capabilities within our Rev cycle capability.

Tom Langen: Sure, I'll comment. Thanks, Charles. Yeah, so the Koha acquisition was obviously additional capabilities within our rep cycle capability. So we did see more attrition in the Koha business after the acquisition. It did also bring us capabilities that we didn't have within the business credentialing and others. It gave us a presence in the orthopedic market, which has really helped our pipeline and our new business opportunities. So we're excited about the addition of the Koha business, but some of the attrition in a few of their clients did have a negative impact on 2020. Got it. And then, you know, to George's question earlier, you mentioned that in the the pharma segment, there was sort of weakness in real world evidence.

Charles Ryan: So we did see it more attrition in the coal business.

Charles Ryan: After the acquisition.

Charles Ryan: It did also bring us capabilities that we didn't have within the business Credentialing and others. It gave us a presence in the orthopedic market, which has really helped our pipeline and our new business opportunities.

Charles Ryan: So we're excited about the addition of the core business, but some of the attrition and a few of their clients did have a negative impact on 'twenty 'twenty four.

Charles Ryan: Got it and then you know.

Charles Ryan: To George's question earlier, you mentioned that in the pharma segment. There there was sort of weakness in real world evidence and.

Lee Westerfield: And sorry, the other part, but can you kind of comment on the trends that you're seeing? Because when you look at some of the, you know, the peers in the space, particularly serving the commercial, commercial end of the pharma spend, you know, it does seem like there's been a rebound sort of in the back half of last year. You know, the better going into this year, any any comments on the trends you're seeing in 25? And then my last question would be the favorable customer settlements that you mentioned for 23. You know, what portion came in provider versus maybe payer life science?

Charles Ryan: Sorry, I forgot the other part but.

Charles Ryan: Can you kind of comment on the trends that you're seeing because when you look at some of the.

Charles Ryan: The peers in the space, particularly serving the commercial commercial end of the pharma spend.

Charles Ryan: It does seem like there's been a rebound sorted in the back half of last year.

Charles Ryan: It looks appear to be a little bit better going into this year any any comments on the trends youre seeing in 'twenty five and then my last question would be the favorable customer settlements that you've mentioned for 23.

Charles Ryan: You know what what person came in provider versus maybe per life science.

Tom Langen: Sure, I'll talk about the life science business first. We didn't have softness in the real evidence business. That segment of life science business was strong in the fourth quarter. We did have softness in our media business and in our data business. However, we are seeing good momentum, as I commented on some of the larger deals that our life science commercial team is focused on. So we are starting to see in Q1 more spend flowing into the market, particularly around the data assets and some of the differentiation that we're selling in the market. We are starting to see some acceleration in the programmatic buying in our core digital health media business in the first quarter, but we did see softness in the fourth quarter.

Charles Ryan: Sure I'll talk about the life science business first.

Charles Ryan: We didn't have softness in the real world evidence business.

Charles Ryan: That segment of life Science business was strong in the fourth quarter, we did have softness in our media business and our in our data business.

Charles Ryan: However, we are seeing good momentum as I commented on some of the larger deals that are life science commercial team is focused on so we are starting to see in Q1.

Charles Ryan: More more spend flowing into the market, particularly around the data assets.

Charles Ryan: And some of the differentiation that we're there where we're selling in the market. We are starting to see some acceleration in the programmatic buying in our core meat digital health media business in the first quarter, but.

Charles Ryan: But we did see softness in the fourth quarter of last year.

Lee Westerfield: So your comment about the trends and, you know, your hearing across the industry, we're starting to hear that a little bit in Q1, that there's a there's a pickup and spend and more more dollars coming in. Got it. And the breakout in the customer settlements? Leigh, I'll let you comment on that. Oh, the customer settlements in 2023 and in 2024 are in the provider business. Okay, so it was all in provider then. All provider. Correct. All provider. Not payer lifeline.

Charles Ryan: So your comment about the trends and you're hearing across the industry, we're starting to hear that a little bit in Q1 that there's a there's a pick up in spend and more more dollars coming into the market.

Speaker Change: Got it and the breakout in the customer settlements.

Speaker Change: Yeah Ali comment I'm not to break out and the customer settlements in 2020.

Speaker Change: The customer settlements in 2023, and 2024 or in the provider business. If that's the question.

Speaker Change: Okay. So it was all of them provided that.

Speaker Change: Software Roderick craft, operator, not payer life Sciences.

Jeff Garro: Great, thank you. Thank you.

Speaker Change: Great. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you. The next question is a follow up from Jeff Garro from Stephens. Your line is now live.

Jeff Garro: Next question is a follow-up from Jeff Carl from Stephen's, your line is now live. Yeah, thanks for taking another question. Similar to Charles, I want to ask on one of the acquisitions that we haven't had much of a chance to discuss, so I want to hit on Science.io and have a few questions there.

Speaker Change: Yeah. Thanks for taking another question similar to Charles wanted to ask on one of the acquisitions that we haven't had much of a chance to discuss so want to hit on science I O and have a few questions there but.

Tom Langen: I would like if you could explain the impact on the financials, and more pointedly, is there any revenue coming directly from that business, and what's the magnitude of the likely drag on profitability? And then more broadly, what's the strategic vision for that technology, and to what extent has that changed since the CEO change? Thanks. Sure, thanks Jeff. It's Tom. I'll address the question.

Speaker Change: Wood.

Speaker Change: I would like if if you could explain the impact on the financials in more pointedly is there any revenue coming directly from that business and what's the magnitude of the likely drag on profitability and then more broadly what's the strategic vision for for that technology and to what extent has that changed since the.

Speaker Change: C O change thanks.

Speaker Change: Sure. Thanks, Jeff It's Tom I'll direct the questions. So there's there's no revenue in 'twenty four for science Io. However, I'll, let let me comment on just in general on our AI strategy and our general strategy we.

Tom Langen: So, there's no revenue in 24 for ScienceIO. However, let me comment on just in general on our AI strategy and our Gen-AI strategy. We see significant opportunities across all segments of our business. The ScienceIO team, which is our center of excellence around AI, is working collaboratively across our payer-provider and life sciences business. As I commented in my opening statements, we're seeing really, really strong opportunities around clinical workflows within the provider segment, where AI is improving the administrative burden for physicians, and we're seeing significant operational improvement there. Also in the provider segment, we're seeing opportunities to leverage AI to make us more operationally efficient, particularly in our reps cycle.

Speaker Change: We see significant opportunities across all segments of our business. The science Io team, which is our center of excellence around AI is working collaboratively across our payer provider and life Sciences business.

Speaker Change: As I commented in my opening statements, we're seeing really really strong opportunities around clinical workflows within the provider segment, where AI is improving the administrative burden for physicians and we're seeing significant operational improvement. There also in the provider segment, we're seeing opportunities to leverage AI to make us more operationally.

Speaker Change: Fishing, particularly in our rep cycle business.

Tom Langen: In the payer segment of our business, getting access to discrete data by leveraging our AI capabilities is going to continue to help us differentiate in the payer market. And then finally, in the life sciences business, which historically we've talked a lot about the use of AI around our data assets. We still have a very strong investment thesis as well as strategic view that generative AI and that technology will help us unlock value around the data assets that we have and create unique data sets for our life sciences companies. Not just data but also the insights that we can provide back to the life sciences organizations.

Speaker Change: And the payer segment of our business getting access to discrete data by leveraging our AI capabilities is going to continue to help us differentiate in the payer market and then finally in the life Sciences business, which historically, we've talked a lot about the use of AI around our data assets, we still have a very strong <unk>.

Speaker Change: <unk> thesis as well as strategic view that generative AI and the technology will help us unlock value around the data assets that we have and create unique datasets for our life Sciences companies not just data, but also the insights that we can provide back to the life sciences organs.

Speaker Change: So overall, we're still very very very positive about the acquisition as well as the opportunities that we're seeing in the market. The market is moving fast we'll continue to look for ways to both improve our revenue increase our revenue as well as our operational efficiency and AI as a.

Lee Westerfield: So overall we're still very positive about the acquisition as well as the opportunities that we're seeing in the market. The market is moving fast. We'll continue to look for ways to both improve our revenue, increase our revenue as well as our operational efficiency and AI is a clear key strategic priority for us across the entire organization. Great. I appreciate that.

Clear key.

Speaker Change: A key strategic priority for us across the entire organization.

Speaker Change: Great I appreciate that and then maybe the one thing that you didn't touch on is the the the drag on profitability cash burn related to to that business. I think it's a helpful piece knowing that that wasn't there in 'twenty three that you know now we have a little more clarity on twenty-three versus seeing where the.

Lee Westerfield: Maybe the one thing that you didn't touch on is the drag on profitability, cash burn related to that business. I think it's a helpful piece knowing that that wasn't there in 23, that now we have a little more clarity on 23 versus seeing where the margins are likely to land for 24. Sure, I'll let Lee Bridget what the costs are for the ScienceIO acquisition. Sure. ScienceIO and COA impacted EBITDA margins in 2024 because each brought new costs that were not in 2023s. measurably, I guess I would say. combining the two. We are in the mid-teens in overall expenses.

Speaker Change: The margins are likely to land for 24.

Speaker Change: Sure I'll, let Lee Bridget and what the what the costs are for prototypes Io acquisition sure Science I O N E.

Speaker Change: Margins in 2024, because each brought new costs that were not in 2020 threes.

Speaker Change: Operating expense base.

Speaker Change: Measurably, Oh, I guess I would say.

Speaker Change: Combining the two.

Speaker Change: We are in the mid teens overall.

Speaker Change: Overall expenses Cogs and Opex hitting EBITDA in 2024.

Operator: COGS and OPEX hitting EBITDA in 2024. for those two. in regard to future outlays of each approximately $15 million. The mid-teens expense, that's accrual basis and that's millions of dollars, not percentage of revenue. Sorry, thank you, yes, mid-teens, millions in 2020. Got it. Thanks for taking the follow-up. Thank you. We reached the end of our question and answer session.

Speaker Change: For those two combined.

Speaker Change: In regard to future outlays.

Speaker Change: Or.

Speaker Change: Oh It was previously that there are right.

Speaker Change: Shoot.

Speaker Change: Two future installment payments to complete the acquisition purchase price for science I O. One in January 2026, one January 2027.

Speaker Change: Each of approximately $15 million.

Speaker Change: That would be.

Speaker Change: Acquisition cash.

Speaker Change: In the mid teens expense that's accrual.

Speaker Change: Accrual basis, and that's millions of dollars not percentage of of revenue Oh, yes, sorry.

Speaker Change: Alright, thank you.

Speaker Change: Mid teens millions in 2024.

Speaker Change: Got it thanks for taking the follow up.

Speaker Change: Thank you we've reached end of our question and answer session I would like to turn the floor back over for any further or closing comments.

Tom Langen: I'd like to turn the floor back over for any further closing comments. I'd like to thank everyone for the call today. Appreciate your patience over the last 24 months. We're excited about the opportunities going into 2025. Just also make the final comment that the management team has done a thorough business review and operational review. We stated that we work with a third party to look at both our product rationalization, our costs and our go-to-market, and how we're going to look for ways to be more efficient as well as to drive top-line revenue growth. So we're very focused on kind of a go-forward for the business as we move into 2025.

Speaker Change: Yeah.

Speaker Change: I'd like to thank everyone for the call today I appreciate your patience over the last 24 months. We're excited about the opportunities going into 2025, just to also make the final comment that the management team has done a thorough business review an operational review.

Speaker Change: Stated that we've worked with a third party to look at both our product rationalization, our costs and our go to market and how we're going to look for ways to be more efficient as well as to drive topline revenue growth. So we're we're very focused on kind of the go forward for the business as we move into 2025, and we look forward to having follow.

Operator: And we look forward to having follow-up calls, periodic calls to inform you of our progress through the rest of the year. Thank you.

Speaker Change: Up calls a periodic calls to inform you of our progress through the rest of the year.

Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.

Operator: That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker Change: Yeah.