Q1 2025 Claritev Corp Earnings Call
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Sammy: Hello from, and thank you for joining the Claritev Report Corporation first quarter, 2025 Learning School. My name is Sammy and I'll be coordinating your call today.
Sammy: During the presentation, you can rest your question by pressing star floor one on your telephone keypad. If you change your mind, please press star floor by two.
Speaker Change: I would now like to hand over the conference over to Shawna Gasik, AVP of Investor Relations. Thank you and please go ahead.
Shawna Gasik: Thank you, Sammy. Good morning, and welcome to Clared at First Porter 2025 Learning's call.
Speaker Change: Joining me today are Travis Dalton, Dalton, Sherman, and Chief Executive Officer and President.
Don't get it!
Speaker Change: Executive Vice President and Chief Financial Officer, and Will Mint, Senior Vice President of Cooperative Fairs and Strategy. This calls being well cast into the access through the Investor Relations section of our website at plurative.com.
Speaker Change: During our call, we will refer to the supplemental side deck that is available in the investor's portion of our website, along with the first quarter of 2025 earnings press release issued earlier this morning.
Before we begin, a couple reminders.
Speaker Change: Our remarks and responses to questions today may include forward-looking statements. These forward-looking statements represent management relief and expectations only as of the date of this call. Actual results may differ materially from these forward-looking statements due to a number of risks.
Speaker Change: A summary of these risks can be found on the second page of the Subliminal Slide Deck in a more complete description and are in the report and form 10K and other documents we file with the SEC.
Speaker Change: We will also be referring to several non-GAAP measures , which we believe provide investors with a more complete understanding of declarative, underlining operating results.
Speaker Change: An explanation of these non-GAAP measures and reconciliation to their comparable gap measure can be found in the earnings press release and in the subliminal slide deck. With that, I would now like to turn the call over to Travis, Travis.
Travis Dalton: Thank you, Shawna. Thank you. Good morning to everyone on the call. It's a pleasure to welcome you into 2025 and what we've turned here clear as the year of the turn.
Travis Dalton: We chose an aperture for our new logo because we believe the transparency and insights are critical parts.
Travis Dalton: of improving healthcare economics going forward. We will deliver those by focusing on affordability, transparency, and health plan optimization across the continuum. We have been busy and working to improve our speed of value across our breadth of scalable products and services.
Travis Dalton: We continue to make and keep our commitments improving our say-do ratio, including reaffirming our full-year guidance.
Speaker Change: As said since joining in March of 2024, we've focused on an operating mechanism built upon clarity of purpose, alignment of talent, focus on results.
Fitness for Growth, and opening new horizons for growth.
Speaker Change: This will allow us to transform into a health technology company that delivers not only continuous improvement but breakthrough solutions over time. Our refreshed and revitalized management team and associates are fully committed.
Speaker Change: clarity stems from our strategic vision to utilize technology, data, and insights.
Speaker Change: to deliver affordability, transparency, and quality. I am very pleased with our new corporate branding and the feedback we have received from clients, partners, and stakeholders.
Speaker Change: It's a new day here at Clarative, as I've told the team many times, the brand has earned and it will be in both embodied by all of us based on how we serve our clients.
Speaker Change: Alignment of talent and resources is critical and continues to be focused for us.
Speaker Change: We're building a company with accountable leaders focused on a common goal, with the autonomy to quickly make decisions.
Speaker Change: This will allow us to move a speed and go faster, not because we simply try harder, which we are and will, but because we have discerned the critical few priorities from the many inputs that hit the windshield daily.
Furthermore, we are attracting the real-class talent.
Speaker Change: For example, our new chief AI officer is already delivering strategic thinking to our digital transformation and product development.
Speaker Change: Our chief medical officer will collaborate across our product, sales, and technology teams. So enhance and guide our core data and analytics network solutions to serve across the healthcare continuum.
Speaker Change: This includes interfacing with executives from hospital and health systems, payer networks, and other medical organizations to align declarative products and services with their evolving needs.
Speaker Change: The CMO role is one of several key positions. We fired recently to help accelerate our business transformation strategy and I'm looking forward to the impact he and others will have on making the turn we need for sustainable growth.
in terms of our focus on objectives.
Speaker Change: We launched a new performance management and goal setting initiative. Every one of our associates knows the five key pillars of focus for our company and how each of their roles fits and the goals that are expected of them.
Speaker Change: We track progress and publish a regular scorecard. Some examples include total net revenue retention is at 98.6% within our full-year revenue guidance range.
Pipeline is expansion, is top 127% quarter of recorder.
Speaker Change: Average deal size is increasing. The average annual contract value growth of 35% quarter over quarter. Our competitive win rate climbed 32%, nearly doubling our prior year's percentage.
Speaker Change: Creating more opportunities, managing larger deal sizes, and improving win rates will be the leading indicators of our growth over time.
Speaker Change: We now have these metrics and others so we can actively measure and manage the company with Rager and Discipline.
Speaker Change: You are what your record says you are, and we are keeping score to ensure accountability.
We're also shaping up to be fit for growth.
The strategic roadmap for our growth organization is now set.
Speaker Change: I was at our energizing sales kickoff session in early April , where we communicated our new growth organization structure, targets, and priorities for 2025, and resources to better monitor success and opportunities with our go-to-market process.
Speaker Change: Additionally, Doug will provide commentary on the progress of our digital transformation, which enables us to grow faster with agile products for new markets.
Speaker Change: Finally, we're advancing our horizons for growth. We have gone from essentially one market segment to a total of seven now, across payer, provider, broker-slash consultant, employer, government, partner, and international.
Speaker Change: With an accountable leader over each, we have dramatically increased our dressable market and targets, which is starting to show up in our pipeline growth as a positive leading indicator.
Speaker Change: I'm thrilled with our progress and the results to start the year. Some other key highlights to share since the start of 2025 include.
Speaker Change: As I announced our last call, we successfully completed a three-year renewal with our largest client at the end of last year.
Speaker Change: I'm also pleased to announce that we renewed a top 20 client at 13 million annual contract value for five years at current value and are progressing well with other early renewal conversations with significant clients.
Speaker Change: These renewals that current values are becoming proof points for the value we bring to our clients.
Not only with our core products,
for expanding with our growth solutions as well.
Speaker Change: We have identified white space opportunities that will deliver value to existing clients. These opportunities represent a strong 42% of our 2025 active pipeline.
We announced another key partnership yesterday with Lantern.
Speaker Change: especially care platform that helps employers reduce costs and improve health care outcomes for surgery, cancer, and infusion care patients.
Speaker Change: We will be using Ben Insights to unify clinical and financial data to identify healthcare spending patterns and benefit plan design.
Speaker Change: We have an opportunity to deploy ben insights from employer groups.
Speaker Change: Comprising, over 1.7 million covered lives, we have already expressed an interest in obtaining savings validation studies.
Speaker Change: with unprecedented visibility and surgical cost variation and concrete opportunities for optimized care pathways and savings. These are the types of innovations that we are advancing in healthcare together.
We are gaining traction in our data and decision sciences.
and continue to receive industry recognition for our products.
Speaker Change: Our Serious Solution, which empowers supplemental carriers and benefits brokers with the ability to deliver unbiased, customized recommendations, won the 2025 Data Breakthrough Award as the data solution of the year for insurance.
Speaker Change: We continue to make strides with provider health systems and our friends at the National World Health Association.
Penetrating the market with complete view and other provider analytic solutions.
Speaker Change: Last week, Carlinville Hospital presented with us at Becker's Health Care Conference, demonstrating competitive insights in the revenue maximization potential of our solutions.
Resolving in over 100 new leads.
Speaker Change: We closed on 179 opportunities in the first quarter and signed five new logos, new and or reactivated logos and employer groups are a major focus for us and represent 53 percent of our 2025 active pipeline.
Speaker Change: We launched six new product enhancements in Q1, quickening our pace of enhancement and innovation across our product set.
Speaker Change: With the growth organization launched, our sales kickoff behind us in a renewed market segment focus.
Speaker Change: We will continue our quick and pace by building out the pipeline and realizing faster conversion of bookings and revenue.
Speaker Change: One example for growth for growth product is our value-driven health plan. This product set continues to distinguish itself as a flagship initiative, now representing the largest segment of our 2025 Active Pipeline.
Speaker Change: Earlier this year, we enhanced the VDHP offering by integrating our pre-pay payment integrity solution, ACE, further strengthening its value proposition and are continuing to add new features to enhance the member experience.
Speaker Change: Later this year, we will introduce a new broker sales model designed to more clearly communicate our value and accelerate revenue.
Another example is complete view.
Speaker Change: We continue to develop enhancements that bring additional clarity to providers facing increased market pressures to optimize their operations.
Speaker Change: The enhancements powered by Claret's Advancing Digital Infrastructure will not only bring greater transparency to market data, but do so in an easily searchable and digestible way to make such competitive pricing insights actionable and valuable for our clients.
Speaker Change: Finally, we recently announced our international business unit and partnership with Virgil Holdings in Abu Dhabi. I had the pleasure of working with Virgil directly while running a global business in my prior role before joining ClareTips.
Speaker Change: I came to clarity with a thesis that our solutions could serve a broader mission than global healthcare. Much of the world uses similar US-based coding standards.
Speaker Change: and our tools are tailor-made to improve efficiency and optimize revenue cycle and key markets around the globe. We have a perfect world-class partner in Virgil to test and build these capabilities to drive material value. This is only the beginning.
Speaker Change: With that, let me take a moment to comment on the on the macro environment and the state of health care.
and changing times in uncertain environments.
Speaker Change: We feel that we are well positioned as costs continue to rise and the constituents of health care seek innovative ways to manage those costs with transparent insights.
Speaker Change: Employers will be looking for solutions that predict risks and improve benefits while managing costs.
Speaker Change: We believe our solutions are uniquely positioned to do just that. Healthcare remains a highly competitive environment with rising costs and demand for critical services.
Those challenges have not changed.
Speaker Change: At the same time, developing data-driven insights around affordability, transparency, and quality, the areas where clarity of excels are more important than ever to lawmakers, clients, and patients across the nation.
Speaker Change: We have a depth of talent here at Clarative and Wilments, our Chief Strategy Officer, joined us last year to work on hardening our corporate affairs and drive strategic planning and partnerships.
Speaker Change: Will has not only been instrumental in our partnership and digital transformation with Oracle, but also with our international expansion into the Middle East and North Africa.
Speaker Change: We'll just came back from the Mina region, and a group of us are going next week.
Speaker Change: I asked Will to come on and describe why we are so excited about this expansion potential.
Speaker Change: Thanks, Travis, and hello to our earnings call audience. I want to share some of the insights into our international market strategy in light of the announced memorandum of understanding with Virgil Holden's that Travis just mentioned.
Speaker Change: This MOU covers expansion into the region where our expertise is highly applicable.
Namely, the GCC markets of the UAE, Oman and Qatar.
Speaker Change: Why this region? In these markets, we see an existing private insurance marketplace with increasing complexity.
$21 billion of aggregate claims growth in high single digits.
Prominent use of U.S. coding standards for billing and green investments.
Pressures from rising healthcare costs and evolving regulatory reforms.
Speaker Change: Why Virgil? Our executive team has had a strong relationship with Virgil from prior experiences.
Speaker Change: and Virgil's focus on elevating healthcare delivery in the Middle East, North Auerk region is a perfect gateway to integrate our highly scalable technology products and services in the region.
Speaker Change: with our payment and revenue integrity solutions and business process outsourcing services.
Speaker Change: We are positioned to support clients facing rapidly increasing structural problems, such as variant variations in insurance schema, inefficiencies that increase costs, and provider competitiveness for specialized skills.
Speaker Change: We are currently mapping out a joint go-to-market strategy with Virgil. It doesn't stop there. We see similarly formally single-payer markets evolving towards multi-payer systems to combat rising costs, inefficiencies, and ultimately to create a sustainable healthcare system.
Speaker Change: and we are building roadmaps to open the apertures in such markets.
Speaker Change: With that, I'll turn the call over to Doug to review our financial results, progress on digital transformation, and financial guidance for the year.
Speaker Change: If you recall, this program was launched earlier this year, the multi-year initiative to modernize operations drives significant cost efficiencies in the best position-clarative for future growth as part of the Vision 2030 plan.
Speaker Change: We communicated three key areas of focus for this program. One, digital transformation and technology enablement, two business realignment, and three business process optimization.
Speaker Change: Regarding our digital transformation work as part of our year-long lift and shift to Oracle Cloud infrastructure or OCI, we have already started development tasks directly on OCI's cloud with our engineer actively building code related to certain products.
Speaker Change: In the development environment, we are already seeing 4-7 times performance gains in OCI's high-contuned infrastructure. We expect all of our on-premise systems to be moved to OCI before the end of the year.
Speaker Change: Next, we have two great examples related to our business realignment mentioned earlier by Travis. In early April , we had our first annual sales kickoff session for our new growth organization.
Speaker Change: This was an important step to drive clarity alignment and focus to the markets we serve as we had to celebrate and intensify our good market strategy.
Speaker Change: Additionally, our rebrand declarative has helped drive an understanding of our focus on improving informability, transparency and quality in healthcare, and where our visions 2030 journey will lead.
Speaker Change: Finally, we achieved a significant milestone enable related to business process optimization with the go-live of a modern cloud-based enterprise resource planning or ERP system.
Speaker Change: This was a successful outcome of over a year of detailed preparation, analysis, numerous iterations of testing and multi-functional training.
Speaker Change: We expect the new operating system to allow us to scale internal operations in any geography much faster with a slightly significantly lower total cost of ownership or TCO.
Speaker Change: Now that we have a modern cloud-based operating system, we expect to achieve significant improvements to our revenue management, pricing and packaging, general accounting, business governance, financial planning, and business insights and analytics.
Speaker Change: As you can see, we have a lot going on as we complete the turn this year and I want to take a moment to personally thank all the team members involved for their devotion to deliver this project on time within the budget a lot of.
Speaker Change: We are still targeting a net 10 to 15% reduction to our cost face over the next few years, and I look forward to providing updates on our transformation program as we progress.
Speaker Change: Moving on to first quarter results, as shown on page 5 of the supplemental deck, Q1 25 revenue is 231.3 million, down 1.4% from last year and down 0.4% sequentially.
Speaker Change: While revenue is slightly down-to-prenchly, revenue came in above our internal expectations for the quarter, the stronger charges and savings in our core business offset by a known decline at one client.
Speaker Change: Excluding a one-client revenue was up 3.2% in the first quarter versus last year, which is largely aligned with the charges and savings we show on subsequent flights.
Speaker Change: Turning to first quarter, revenue by service line is shown on page 6 of the supplemental deck. Analytics space revenue declined 4.2% from last year and was down 2.3% sequentially.
Speaker Change: I don't know if you saw strong performance in our reference-based pricing and surprise bill NSA products against our internal assumption.
Speaker Change: Network-based revenue increased 1.6% from last year but was down 28% sequentially and was in line with our internal assumptions. Our payment and revenue integrity revenue increased 9.7% from last year and was up 11.5% sequentially.
Speaker Change: Park Payment and Revenue Integrity Business was a highlight this quarter.
Closing at highest quarterly revenues in Q2 of 202
Speaker Change: The revenue increase was primarily due to increases in prepayment clinical revealed in post-payment accuracy product lines as we delivered more savings to our clients despite slightly lower charges processed.
Speaker Change: and I'm during the first quarter I've shown on page 7 of the supplemental DAC. Total first quarter bill charges decreased 7% sequentially to 42.9 billion. Identified compensations decreased 2% sequentially to 6.2 billion.
Speaker Change: And our core commercial health plan second and bill charges decreased 3% sequentially, but we're up 14% versus last year and identify potential savings decreased 3% sequentially, but increased 8% versus last year at a 5.8 billion.
Speaker Change: As shown on page 8 in our core percentage of savings revenue model, identified potential savings decrease approximately 2% sequentially, and we're roughly flat year over year at 4.3 billion.
Speaker Change: In our core percentage of savings revenue model, our revenue yield was down 5.5 basis points to quench late, and down to 18 basis points versus last year, which had a resulting impact on our revenue about 5.8 million respectively.
Speaker Change: On our previous call we shared that we're working on meaningful new metrics to analyze a performance of the business.
Speaker Change: These center around the rate volume mix relationships and fluctuations of our significant product categories and for select larger clients.
Speaker Change: We will utilize 25 to continue to set these base benchmarks so that we can articulate the progression of our core business on a revenue retention in a whole dollar revenue basis and provide new and compelling bookings and recurring revenue metrics as our growth businesses ramp up.
Speaker Change: We had an in New Exhibit on page 9 of the Supplemental Jack that highlights the sequential performance of our PSA business on a whole dollar basis.
Speaker Change: As a reminder, our PSA revenue is approximately 90% of our total revenue.
Speaker Change: and Q-125 P-save revenue to climb 10 million due to the seasonality of claims and declines at one client and was all set by approximately 5 million of favorable rate mix due to higher savings and revenue per claim.
Speaker Change: What claims volumes have steadily declined over the last few years, we have seen substantial improvements to savings per claim, about 32% from 676.
Speaker Change: to Q-123 to $894 and Q-125, and corresponding revenue per claim of 20% from $35 and Q-123 to $41 and Q-125. Those have increased double digits over the last eight quarters.
Speaker Change: Notably, none of the decline in our PSA revenue yield in the quarter was related to contract changes with clients.
Speaker Change: Turning to expenses, first quarter-adjusted EBITDA expenses were $89.3 million, increasing $1.5 million from last year but decreasing $1.3 million to financial.
Speaker Change: The increased versus last year was primarily due to increases in professional fees and access and bill review fees, partially offset by lower personnel and facilities expenses.
Speaker Change: For the sequential comparison, the 1.3 million decrease in the adjusted EBITI expenses is primarily due to lower access in billboard fees and expenses related to digital transformation, partially offset by higher personnel costs as we reset our annual incentive compensation.
Speaker Change: Adjusted EBITDA was $142.1 million in Q1'25, down 3.2% from $146.8 million last year and down 0.4% from $141.6 million in Q4'24.
Speaker Change: Adjusted even on margin with 61.4% in Q on 25, up 40 basis points sequentially, down approximately 120 basis points from 62.6% last year.
Speaker Change: RQ-125 Adjusted Evidout dollars in margin were both in line to slightly better than our expectations to begin the year.
Speaker Change: Based on Q1 momentum and notably improved visibility into our sales funnel, we can reaffirm our four-year guidance for all the metrics shared from our last readout as shown on page 10 of the deck. We expect it to continue to deliver improvements to both Revenue and Adjustity that I quarterly and expect a return to year-over-year growth starting in Q3.
Speaker Change: Revenue retention in the core business remains strong and conversations with key clients are positive and helps us reaffirm the year in the fundamentals in our underlying business. We continue to emphasize measurable value creation with an elevated intensity around our go-to-market channels and partners.
Speaker Change: Turning into Balancing Capital Allocation. A reported net cash provided by operating activities was a use of 30.1 million for Q-125, while the leverage free cash flow was a use of 68.9 million. Unlever free cash flow was 13.1 million for the quarter.
Speaker Change: As a reminder, our normalized quarterly cash flow generation varies based on the timing of our debt interest and tax payments.
Speaker Change: This quarter, we also had additional uses of cash related to our 4.6 billion comprehensive debt refinancing transaction that we closed in late January .
Speaker Change: As shown on page 10 of the supplemental deck, we ended the quarter with 23.1 million of unrestricted cash. We did not buy back any securities this quarter. Then we cash our total debt leverage ratio with 8.1 times, and our outlook for the capital expenditures and the year remains unchanged.
Speaker Change: Our long-term capital priorities are clear. Our highest priority remains investing in a business to drive organic growth to fuel our Vision 2030 plans, followed by using excess cash to reduce net operating leverage. [inaudible]
Speaker Change: That brings me to the end of my prepare remarks, operator, with you kindly open up the call for questions.
Thank you.
Speaker Change: Thank you very much. Joshua Raskin, please press star for the number one on your telephone keypad now. Be changed your mind, please press star for the by two.
Speaker Change: Parents, watch your question, please ensure your device is unmuted locally.
Speaker Change: Our first question comes from Joshua Raskin, Neffron Research, LLC. Your line is open, please
Speaker Change: Hey, good morning. This is actually Marco on for Josh. I appreciate you taking the question.
Speaker Change: I guess my first one would just be if you could provide a little bit more detail around the underlying utilization environment and how that impacted your results in the first quarter.
Speaker Change: and then maybe a bit more specifically if there was any impact from the you know the very active flu season we saw on the first quarter or if you expect that impact the flow into the second quarter and then if you could also just remind us of what year full year guidance assumptions were around volume and utilization. So that's what you're going to see in the next presentation.
Thanks.
Speaker Change: Great. Thanks, Marco, and good morning. I'll take a stab at that one. So I think we talked about in the prepared remarks that over the last few years we've seen.
Speaker Change: It's like contraction of total claims coming through the system, but we've seen a notable improvement to our savings and revenue for claims. We think it is likely a confluence of.
Our largest clients, Senigas.
They're...
More challenging.
and Higher Dollar Value Out-of-Network Claims.
Speaker Change: with respect to the blue season. I don't think we've seen anything of note or out of the ordinary, and we haven't modeled any changes to our assumptions for the year.
Speaker Change: And as you recall in our last guide, and we recently had to invest around table, we had called for a revenue retention on our core business of approximately 98%, which is in line with how Q1 should go. So, excluding one client that we expect.
or volumes to be up roughly mid-single digits.
Speaker Change: And we expect our growth areas to contribute about 7% of our revenue. And if you put those into conjunction with each other, you get to about 98% to 100% total revenue retention on an net basis for the total business.
Speaker Change: Great, thanks, that's very helpful. Then I guess one other one on the Virgil partnership. I guess, specifically, what products do you see as potentially being a good fit?
Speaker Change: for the Middle East market. And then what is the timeline that you see those products being launched? And how do you see or how do you envision the cadence over which you start to see some benefit from that?
Speaker Change: and then also if you could just give a little color on what the competitive landscape in those markets look like.
Travis Dalton: Sure, this is Travis, and I'll turn it to Will for a comment. Look, as I noted in the script, you know, I view what that we had.
Travis Dalton: Products that we can launch into other markets, right? As I mentioned, it's not just international. When I came, we essentially had one market. Now we have seven, including international. It's not international.
You know, the same challenges are global. Quality.
in that investment.
and Tom. Thank you. Thank you. Thank you.
Adequacy Coverage.
Networks,
Speaker Change: So we really view the problem in a very similar way, and they use ICD-10, CPT and other coding standards. Also, many of us have worked in the regions. I personally know the team there very well, did a large agreement with them and executed on it in the past.
And so, we-
Speaker Change: A real opportunity for folks on optimization, particularly with Recycle Management and EMR integration with them, and that they're a perfect operating partner for us because they actually operate hospitals, ambulatory surgery centers, and have a Recycle Management company.
Speaker Change: So we're going to work to drive optimization efficiency with them.
Speaker Change: and we have a number of key objectives with them that are products.
Plug in and fit really nicely.
Speaker Change: I expect us to start to see real, real, real results.
Speaker Change: The second half of the year from them, but we'll do more too.
Speaker Change: I want to find what we think those results are beyond the dress for market, with a clear view on bookings and revenue as we make progress.
Speaker Change: and I'll turn it to Will to talk a little bit more about specific products at it. Thanks for the question. Maybe I'll address the state of the market. It's rapidly evolving over there.
There are increasing pressures on affordability.
and that is causing
Speaker Change: The insurance schema to rapidly evolve, as well as the increasing cost of care, so there's plenty of opportunity for us.
Speaker Change: to bring our solutions around payment and revenue integrity, network optimization, and then just our advanced analytics capabilities to bring insights into the data that is needed to ensure the sustainability of the healthcare infrastructures that they've built.
Speaker Change: especially as you have an increasing mandatory insurance protocol across the region.
Speaker Change: Doug Bland, finally on the economic assumptions where Travis mentioned that a few of us are going over there next week.
Speaker Change: and I think the hope is to have at least, from an internal perspective at least $1 revenue from outside the U.S. by the end of the year, but I think over the next quarter or two we'll be in a much better place to give to you guys a formal update on the state of life.
Thank you.
Great, appreciate all the color.
Speaker Change: On its question comes from Madison Aron and JP Morgan. Your line is open, please go ahead.
Speaker Change: Hi, thanks for taking my questions. First, on the average contract by your bookings, can you just walk us through, you know, where you're seeing those wins? It's mostly within your existing product offerings or it's in the new product offerings and with that on the new pipeline. I know it's an analyzed number, but can you also walk through that makeshift? Is it mostly all ben insights and can you walk us through the onboarding process of that new pipeline or for that new pipeline? Yeah, that's a lot of fun.
Speaker Change: Yeah, great. Thanks, Madison, for the question. I'll take the first part on the map in the orchestration of the pipeline in a Travis. If you have any color on the kind of lead gen process, I think that would be great.
Speaker Change: So we talked about the pipeline increasing about 127% quarter over quarter, and we are measuring a couple of things, one, funnel sufficiency, so we're locking down how much funnel we need to convert to revenue to achieve our long-term growth objectives.
Speaker Change: Strong indication is we're going to continue to communicate the funnel growth and it is a I would say a newer function here with sales operations that exists at most other large technology companies.
Speaker Change: So, on our current and existing funnel, it's really nice because about half of the funnel is white space with existing clients, and we've hired 13 new salespeople to attack and
Speaker Change: and Tensley go after existing clients with new leads, and we reorganize our sales organization into business development, client success, good market and new markets.
against the seven regions that we have.
Speaker Change: And if you look at the orchestration of the total funnel, about 40 percent of that is contained within BDHP, which is an exciting growth area for us.
Speaker Change: and so as we look at our go-to-market and our channel partners,
We're highly optimistic about the prospects of that business.
and then about 15% of the finalists in DNDS.
Speaker Change: And that's where we've made the most progress with respect to complete view of our plan optics and then insights products, which about half of the funnel ND and DS is on then insights.
Speaker Change: But we expect that funnel to continue to grow and one important part of our strategy is engaging with channel partners as well as brokers to help and send them to get those products to market because they are of significant value.
Speaker Change: And then I mentioned in the opening comments the bright spot with payment revenue integrity, that business is on fire, it's up 10% year over year, 11% sequentially, and about one out of every three new opportunities.
Speaker Change: is in the payment revenue integrity space because prepayment payment revenue integrity is become a source of value as just the general inflation of health care cost has made its way into our clients.
Speaker Change: To kind of unpack it half of its white space, we just have to sell better and then about half of its new opportunities.
Speaker Change: with VDHP in our data and division science business, quickly generating dozens and dozens of new leads each quarter. Yeah. I'll do this, Travis. I'll just add a tiny bit of commentary on that.
Travis Dalton: As I mentioned, our pillars that were focused on, so driving value in the core, new markets and logos, operating excellence, meaning using Salesforce, ERP, modern tools.
Travis Dalton: Best talent, so we're hiring sales talent and innovation, so bring in products to want to do.
You know, as Doug mentioned, we see.
Now, do we think that our core is something?
Travis Dalton: We don't believe the core is something to shrink. We think something's going to grow. And now we have a white space report for every single client that we have that is a current client that we didn't have that a year ago. So we know the white space, the opportunity and the targets that every single client we have is a lead. [inaudible]
Travis Dalton: And so we're going to start attacking that with value based on their needs and what they see.
Travis Dalton: BDHP is a big opportunity for us. I mentioned we're going to launch a new broker incentive model. We're going to go and attack that space like we never have before because we think we have the best product and the right to win and we intend to win.
Travis Dalton: Ben Insights, we're seeing a lot of growth. That partnership with Lantern is interesting. We can sell through that channel in a way where we don't have to exert maximum effort to bring maximum value. So key partnerships are going to be really important for us.
Travis Dalton: and then I'll just close by saying on this one, you know, market leads are, how do we generate market leads? One is relationships.
Travis Dalton: We know people, we have relationships and we're just going to hustle.
Travis Dalton: Secondarily, we know our white space, we know what products we have, and we know that we need to sell in.
Travis Dalton: Thirdly, we're going to be, not we're going to, we are showing up at events that we've never ever been this work.
Travis Dalton: We were at Vi this year. We were at Becker's Health, where a provider client went up and presented on our behalf for an hour on the value that he gets from our products. We had 100 leads out of that are now logged in Salesforce.
Travis Dalton: That's lead generation and so those are the kind of things that we're doing and maximizing our tools and what our growth leader in the growth team have been focused on doing so. So, um...
Travis Dalton: I'm actually very pleased with the work that they're doing and the focus and the use of the tooling and the insights and that's how you focus and target. And we'll be in setting ourselves people on a much more aggressive way as I mentioned on the call. Thanks.
Travis Dalton: Great, and if I could just follow up in the last and the round table that we had a few months ago, you talked about new revenue models that you're evaluating. What do you stand with those new revenue models? And then just specifically, and I know you mentioned this briefly, but with regards to the provider channel, can you just maybe elaborate or further dive into that opportunity and how do you see that playing out through the course of the year? Yeah.
[inaudible]
Speaker Change: Yeah, so I'll take the business model and then Travis can cover the provider.
Speaker Change: Yeah, so we had mentioned on last quarter we signed our largest total contract value deal ever with a subscription booking on a reference based price and product at the CFL. I love that because it's recurring revenue and as a CFL on the other side, it's a recurring cash flow that provides a meaningful subscription value that helps our clients share on the outside.
Speaker Change: So with our core business, we're continuing to evaluate those opportunities with our core business.
Speaker Change: and we have a few dozen opportunities in the pipeline that will look to close.
Speaker Change: on our core business with respect to a recurring revenue model.
Speaker Change: And then for the growth areas within data and decision sciences and BDHP, we mentioned the use of channel partners to help us get the market. So if you think about the forced multiplier of having dozens of not hundreds of other folks incentive to sell your products.
Speaker Change: I think for the VDHP business, it'll continue to be a peon, it'll be a membership-based business.
Speaker Change: But for DNDS, we're actually doing some third-party market research right now.
Speaker Change: to help inform the best go-to-market model. And I think it might depend on the channel, whether we go through a distribution partner or we work directly with large employer groups, but I expect.
to have a combination of professional services.
Speaker Change: License Software and Subscriptions with potentially a percentage of value capture in certain circumstances.
Speaker Change: by the goal is to align that with obviously our cost structure and then also our client's needs. But those are the revenue models that we're working on right now.
Yeah, on the provider side.
Speaker Change: You know, we're, I view it as really a two, three step process. So, you know, we're, we started with zero and no cost.
Speaker Change: And by the end of the year, we had seven clients and we were actively pushed actually selling complete view.
Speaker Change: And so complete view is, you know, our product, our analytic that allows competitive positioning. You can look at your pricing position versus like hospitals, like facilities in similar markets.
Speaker Change: So it's actually really helpful when you can see that competitive position. It also allows for insights as it relates to revenue maximization.
We also, it turns out that...
Speaker Change: In many cases, particularly in rural and mid-market regional health, the hospital is a large employer in the region.
Speaker Change: And so we're we're starting to have discussion to the second conversation out
Speaker Change: Yeah, I think I can improve your revenue by 10 to 15 percent, but also I can take your cost down by 10 to 15 percent.
Speaker Change: and we can do that continuing through Ben Insight's product set.
Speaker Change: by doing the work that we did on ourselves as an employer.
Speaker Change: which is looking at the market, looking at our demographic, looking at our benefits package and evaluating the optimal opportunity for us.
to improve our benefits and reduce our cost.
Speaker Change: We're able to do that last year in a significant way and every one of our clients we're talking to is interested in that and then finally we intend to launch another piece of the solution the second half of the year that we're going to call vitality which is going to be automated quality reporting.
Speaker Change: for providers as we go. So we think that we've got a multi-step process that we can execute with them that's bearing out to be true, not only based on the pilots we have, but also, as I mentioned, on the hundred plus clients that we now have in the pipeline. And we've also...
Speaker Change: I hope to be announcing pretty soon a much larger, a much larger deal size with a provider that will demonstrate that. And so I'm very optimistic about that segment, so you'll forward.
[inaudible]
Thank you.
[inaudible]
Speaker Change: I'll let's question and come from Luis Mario Higuera and City Group. The line is open, please go ahead.
Speaker Change: Hey, this is Luis on for Daniel, and I'm joining for a different call so I apologize if this isn't covered already. I've already noted that your NSA product is pressured by a decline in a large appliance, and you also see there's a 100-day exception here from CMS that also created a headwind for that product. So then you update the NSA product and grab those issues resolved. Thank you.
I had a little bit trouble here on that.
Can you repeat the question, sorry, we didn't catch it?
Yes!
Speaker Change: Sorry, so last word you noted that the NSA product is pressured by the client and a larger client and there's also 120 day exception periods and CMS that also created a headwind. Is there any updates on the NSA product income? There's issues resolved.
Gotcha. Okay, thank you.
Speaker Change: So, for the NSA product, we had mentioned that one of the reasons that we called the year down 2% to flat as we expected of one client in source NSA, that has started to happen. And so we expect that client to fully in source NSA. However, if you look at our NSA and surprise bill across some of our other clients, that's actually been an area for growth.
Speaker Change: and a 120-day exception period. I would say, has it necessarily impacted our business?
Speaker Change: other than we also negotiate and help manage the independent dispute resolution to where we serve as the kind of a conduit there as well and so I would say the surprise bill is.
Speaker Change: A decent business, excluding that one client, but with respect to the 120 day exception period, I don't think we've seen, I don't think we've seen any meaningful or diminishing impacts from the rest of the client base.
Thank you.
Got it. Thank you.
Thanks for listening.
And I'll be right back.
Speaker Change: As a reminder, throughout the question, please press star for about one on your telephone keypad.
Speaker Change: My next question comes from Derrick Gross, and Parker Sadler. The line is open, please go ahead.
[inaudible]
Speaker Change: Hey guys, this is Derek Grossan for Jess Tassan. Thanks for taking a question and congrats on the quarter. I wanted to ask about the new partnership with Landturn. Could you give any additional color on what it is, how it came about, and how the revenue model works? Thank you.
Yes, we'll take that.
Speaker Change: Sure, Derek. Thanks for the question. I think the way to think about the Lantern Partnership is a true channel partner synergy, where the Lantern products, in terms of...
Speaker Change: that care and navigation to high quality lower cost specialty providers is a direct value add to our VDHP product in our Reference Space Network.
Speaker Change: So this product will help employers identify new opportunities to enhance their benefits through our Ben Insights tool.
Speaker Change: as well as driving down lower costs by helping the employees navigate the care delivery system to higher quality lower cost specialty providers.
Speaker Change: Yeah, and I would just say from a business model or revenue perspective, I think a lot of our distribution and channel partner agreements would be some sort of revenue arrangement, but hardcore and underlying business with NDNDS.
Speaker Change: and BDHP would just be our core economic model. And so it's the path to market gives you better scale. So every time we want to address that part of the market, we don't have to hire another 13 people. But it would be a revenue sharing or a sales commission arrangement.
Speaker Change: Yeah, I'll just add, I just have to add this, I've said this before, I can just add.
This is a health text.
Solution, right, this is, so what we're doing here is
Ultimately wait.
Speaker Change: What we care about is not just cost, but quality. And so the reason I love the partnership with Lantern so much is what they do is really important because it gets people to the right pathway.
Speaker Change: You get to the right pathway, your costs are down, but guess what, you have a better chance to live.
Speaker Change: And so those are the kind of partnerships that, when we came, we wanted to do, right?
Speaker Change: And so, we're very excited about it because our tools can help with cost production. They also help.
Speaker Change: with Lantern bringing that to the correct pathway and care navigation, getting the right care to the person that's in a critical need as it relates to cancer or other complex conditions.
Speaker Change: and so we're very proud of the fact that they chose to partner with us because we think what they do is really important and we think it's good for health care and that's the company that we're evolving into in addition to the core that we serve and we're proud to serve that core as well.
[inaudible]
That's great, super helpful. Thank you.
Speaker Change: We currently have no further questions, so I'll hand back to Travis Dalton, some closing remarks.
Travis Dalton: Thank you. So thank you all again for joining us today, as we continue with our year of the return. I'm involved in by the commitment of our people.
Speaker Change: We have great associates and all of us here today are really proud to represent them. We're acting with intent and urgency.
Speaker Change: I'm certain those of you that have followed us can see that.
and while the external environment remains dynamic.
Speaker Change: We are prepared strategically and operationally to respond with agility as we move forward. Since I joined Clarity, I've maintained that I believe in the character integrity of our people, what we do is good for health care.
Speaker Change: Absent the work we do, health care would be more costly, it would be less efficient for employers, employees, and ultimately patients.
Speaker Change: We appreciate the opportunity to do this work that matters and we ultimately are proud to serve our clients.
Speaker Change: We're going to be steadfast in building the company. It's going to be fit for sustainable growth and we're going to build it to last and we're going to have a mission that we care deeply about. And I'm encouraged with our pace and our progress on many on many fronts.
fiddle transformation, AI, product life cycle, go-to-market competitors, our pipeline.
Speaker Change: Insights and Fidelity to the pipeline, increased markets and opportunities and I think things are are looking up declarative and we look forward to the future. And with that I'm going to say thank you for your time today and appreciate your focus and attention with us. Thank you.
Speaker Change: This concludes today's call. Thank you very much for joining. You may now disconnect your loans.