Q2 2019 Earnings Call
At this time I would like to welcome everyone to the Arwen RCM second quarter 2019 earnings call.
All lines have been placed on mute to prevent any background noise.
After the speakers remarks, there will be a question and answer session.
If you would like to ask a question during this time.
Please press Star then the number one on your telephone keypad.
If you would like to withdraw your question press the pound key thank you.
I kept feraheme head of industrial relations you may begin your conference.
Good morning, everyone and welcome to the call with me on today's call are Joe Flanagan, President and CEO , Chris Ricciardi, CFO and treasurer certain statements made during this call may be considered forward looking statements pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 in particular any statements about our future growth plans and performance, including statements about our forecast for 2019, and 2020 or ability to successfully implement new technologies and platforms expected uses of cash expected timing of new business deployment and expected new business our forward looking statements.
These statements are often identified by the use of words, such as anticipates believes estimates expects intend designed may plan project would and similar expressions or variations investors are cautioned not to place undue reliance on such forward looking statements. All forward looking statements made on today's call involve risks and uncertainties.
While we may elect to update these forward looking statements at some point in the future. We have no current intention of doing so except to the extent required by applicable law or actual results and outcomes could differ materially from those included in these forward looking statements as a result of various factors, including but not limited to the factors discussed under the heading risk factors in our annual report or latest Form 10-K .
No I'd like to turn the call over to Joel.
Thanks, a lot too good morning, everyone and thank you for joining us I'm pleased to report another strong quarter driven by continued execution across our customer base.
Revenue for the second quarter was $295 million up 42% year over year and adjusted EBITDA was 40.6 million.
Up from $9.2 million in the second quarter of last year.
I'm very proud of the team in addition to announcing the core blend last quarter. We're now in a position to update our full year adjusted EBITDA guidance.
As you will recall at the beginning of this year, we provided 2019, adjusted EBITDA guidance of $145 million to $155 million inclusive of the upfront investments for $3 billion in new NPR from end to end contract wins.
We are raising adjusted EBITDA guidance for this scenario to 155.
To $165 million, we continue to see a healthy progression of deals in our pipeline and anticipate closing out 2019 with at least 3 billion in new NPR inclusive of a quorum.
Our messaging and value proposition are resonating well in the industry and feedback from prospective customers is very encouraging.
We are seeing increased marketable mine them, which has manifested in an increase of new enterprise opportunities. We're being invited to participate in addition to our existing pipeline of qualified pursuits.
This coupled with the increasing number of large and strategic module engagements, we're working on instills confidence in our approach.
Differentiated value proposition and ability to deliver on our growth targets.
I'd like to take a moment to reflect on the progress we are making with our updated view, we expect to grow adjusted EBITDA by about $100 million year over year. This trajectory provides us increased visibility into the study state margin profile on our contracted book of business. We believe our contract pricing is very competitive and delivers a sustainable advantage for our customers.
Looking forward, we feel good about our value proposition and ability to grow the business. As a reminder, our 2020 guidance does not assume we're at optimize contract profitability.
Embedded within our profitability projections are structural investments designed to position the company for continued growth.
Some of these investments are as follows a rebuild commercial organization with a complete marketing capability and full sales coverage for offerings.
Fully resourced, a dedicated deployment function to ensure the successful onboarding of new customers.
Hi, structural investment in human capital and technology to digitized and systematically automate our transactional environment.
Significant advancements in our technology suite.
And the completion and formal launch of our physician group offering.
These investments are expected to drive growth and create a long term competitive advantage for us and more more importantly tribe results for our customers not only from a financial standpoint, but also from a patient and physician satisfaction standpoint.
Without the next thing I'd like to do is provide some color on our physician groups solution.
Which is one of the most significant new capabilities that we'll be looking to commercialize this year.
Over the past year, we have invested significant time and resources developing a solution that combines the best capabilities from our acquisition of inner Maddox along with our ones historical capabilities health systems have been expanding their employed physician footprint for several years now.
Broadly speaking acquire physicians and their respective groups have not been integrated into the health systems acute work flow for centralized infrastructure.
This creates a market that is ripe for an organization like ours to drive value.
We can standardize processes rationalize work by leveraging our global infrastructure and leverage our technology to improve integration across the position and acute environments.
Thereby increasing patient and physician satisfaction, while extending scale leverage to the health system.
The solution is already being deployed at our major health system partners Ascension Inner mountain in a meta health and we're encouraged by the results were seeing.
In the first nine months out essential medical group, we've seen a meaningful improvement in net cash collections at a double digit decline in a are these are meaningful proof points because am GE as a relatively large group one of the top five in the country based on the number of providers with close to 9000 providers at locations spread across 16 states driving improved results. In this complex environment is a terrific accomplishment by our team on a broader basis across our whole system footprint, which is less than a year into deployment, we've reduced aer by close to 10% and each day our by 15%.
In addition, the health system affiliated groups. We also view physician Aggregators and physician groups are more than 25 positions as attractive target markets.
As we stand today, we have an extensive non acute footprint that spans over 27000 providers across more than 80 specialties.
7 billion in NPR under management and more than 30 million patient encounters annually.
Even with this market presence our share on these three submarkets is less than 3%.
We believe we can grow our business and market share here for a number of reasons.
One the vendor be serving these providers, it's highly fragmented with limited scale leverage and tends to be specialty focused.
Two providers in this space generally have a higher propensity to use external vendors for revenue cycle services.
And third these markets are growing faster number of employed physicians grew by 50% to 80% between 2012 and 2018 based on industry data well above the low single digit annual growth rate for total positions.
As a result of the fragmented vendor supporting this market providers lack solutions with scale or a robust solution architecture that can reduce nonclinical tasks for physicians and streamline the patient's experience. We have an extensive set of capabilities to address these challenges.
First our technology architecture for the physician environment Leverages, the same architecture as our Q technology.
With enhanced proprietary algorithms and rules engines to address the unique needs of the physician side of it.
On a standalone basis this enhances value in the physician setting and when deployed in conjunction with our acute offering provides incremental value to both settings deploying to both settings with a common technology platform enables us to smartly integrate workflows processes and information exchange across care settings.
As a result, we can improve the patient experience be a single point of contact for customer service collect payments across the acute and physician settings and mitigate redundant requests for information.
Additionally, this advances our ability to apply our scale and automation techniques to drive further efficiency across both care settings.
Second we have created a dedicated physician team within our deployment function focused on transitioning work to the optimal location and deploying our operating system.
This allows us to drive higher collection yields for our customers by better managing revenue integrity denials and underpayments.
Third our analytics capabilities are far more sophisticated compared to those generally available to physician groups today.
We have leveraged these capabilities to create a dedicated to physician performance management team.
Lastly, our risk based contracting structure, where a portion of our fees are tied to the attainment of certain key performance metrics makes our offering, especially attractive and align to the customer success compared to the current market dynamic where the incumbent vendors pricing is not fully aligned with customer performance.
Collectively we believe these factors position us to deliver a differentiated solution to the market with pricing aligned strategically to our customers' performance and steady state EBITDA contribution margins at levels in line with or better that our operating partner model economics. We're pleased to launch this solution to the broader market over the coming months and we'll be showcasing it at the backers health care conference in October .
Next I'd like to discuss our digital transformation efforts, we continue to advance our automation effort and brought four automations into production in Q2.
As a reminder, and automation is our taxonomy to characterize the digitization of a complex process and includes 10 to 15 digital workers and hundreds of bots. These four automations are expected to remove more than 500000 manual touches from our operations.
As we've previously launched Automations early results from these are inline with our initial performance expectations and we continue to be encouraged by our ability to meet or exceed our internal goals on these projects. Additionally, 10 automations are in various phases of development with three due to launch into our production environment in the coming weeks.
Collectively we now have the equivalent capacity of 700 to 1000 full time employees encapsulated in our digital workforce automating 10 million tasks on an annual basis as we deploy these we continue to run the manual processes in parallel to ensure the reliability of the technical infrastructure.
Creating capacity you'd be our digital workforce is a very strategic value proposition.
Given the constraints in the labor markets for these tasks, we believe were well positioned to lead intelligent automation in the revenue cycle in Q2, we formally achieved CPI interoperability across our RCM technology stack.
For the purpose of system integration and seamless automation.
This means that our automations. Unlike the majority of automation is on the market are able to operate directly at a database and rules engine level processing and completing work completely independent of an unencumbered by user interfaces web pages and other traditional human workforce out attributes of digital work.
This makes our digital workforce, including the automation projects, just referenced more repeatable scalable extensible reliable and faster.
Our digital transformation effort also encompasses digitization of the scheduling and patient registration process through our PX platform.
Following the successful deployment of our PX platform in the acute setting we're expanding our PX platform into other settings of care such as the EDI and walk in environments automated registration in these environments can greatly enhance the patient experience by allowing patients to complete our registration information on their own timeline.
Looking beyond our detail effort, we remain focused on advancing our technology product suite.
In June we open our technology Innovation Center in Salt Lake City. This state of the Art 30000 square foot facility is designed to evaluate test and design new revenue cycle technologies.
As well as service the client experience center will be working closely with our customers to help foster innovation and develop solutions that improve the patient experience and drive financial results for health care providers.
Before I turn it over to Chris Let me touch on the status of our ongoing deployment efforts.
Deployment activities at Corium are progressing in line with our expectations as discussed on our last call. We expect to begin employee transitions in the fourth quarter and also expect key elements of our technology to be up and running in the fourth quarter.
In addition, we currently have a team devoted to aid our follow up which is starting to generate early positive results.
Looking beyond core them, we continue to be very encouraged by execution across our customer base.
Our disciplined deployment approach continues to deliver successful outcomes for us as well as our customers.
Let me provide a quick update on where we stand at our customers, excluding korlym relative to our three core value drivers.
First in moving work to centralize relocations, we transition 90% of the work that can be performed out of centralized locations and we are at our targeted levels for customers on boarded more than 18 months ago.
Second we've rationalized, 78% of targeted third party vendor side, and we continue to apply learnings from our earlier deployments to make this process more effective and shorten the timeframe to deploy our proprietary technology.
Third we've implemented our our one technology stack at 85% of customer sites, which is highly important and performance management and calculating our incentive fees for key performance indicators, we are measured on.
The results from these efforts drive sustained benefits to us and our customers as we look across our operating partner customer base. We see significant runway ahead to achieve our steady state EBITDA contribution margin target of 26%.
In closing we continue to be very optimistic about the business we're off to a strong start in the first half and continue to invest in the business to further differentiate our value proposition and to position the company for continued growth.
While simultaneously, providing our customers with a sustained improvement in their financials and a better experience for the patients they serve.
Now I'd like to turn the call over to Chris to review, our financial results in more detail.
Thank you Joe and thank you all for joining us I'd like to remind everyone that we will be referencing non-GAAP metrics on today's call. The adjusted cost of services and adjusted EPS Gionee numbers exclude stock based compensation and DNA expense.
Adjusted EBITDA excludes stock based compensation expense debt extinguishment charges and acquisition related costs, a portion of BTL related expenses severance and certain other costs. A reconciliation of GAAP to non-GAAP financials is available in todays earnings press release.
Now turning to Q2 results.
Revenue for the quarter was $295 million up 87.1 million or 42% year over year, driven by new business Onboarded over the course of 2018 and contribution from informatics.
Relative to Q1 2019 revenue was up 19.1 million driven primarily by continued onboarding of presence and the meta health as well as essential medical group.
From a cost standpoint.
Adjusted cost of services in Q2 was $232.5 million compared to $223.5 million last quarter and $181.1 million a year ago. The sequential increase was primarily driven by costs associated with the onboarding of presence and the meta health.
Relative to Q2 of 2018 cost of services increased due to cost associated with Onboarding, new customers, along with a full quarter of cost from Intermedics.
Adjusted EPS DNA expenses in Q2 were $21.9 million up 2.9 million sequentially, primarily due to investments in corporate IP and human resources infrastructure to support our growing footprint.
On a year over year basis, SGN expenses increased $4.1 million, primarily due to intermedics SDMA and investments in corporate IP and HR infrastructure as well as expansion of our commercial effort.
Adjusted EBITDA for the second quarter was $40.6 million compared to $33.4 million in the first quarter and up $31.4 million from 9.2 million a year ago.
The sequential and year over year increases were driven by increased profitability from new customers Onboarded over the past couple of years and the contribution from Intermedics offset by costs associated with Onboarding new customers.
Lastly, we incurred $10.7 million in acquisition related and other costs in Q2, primarily related to strategic initiatives and our digital transformation office, we also incurred $18.8 million in charges for extinguishment of debt related to our announced refinancing which were primarily non cash.
These costs are not reflected in the adjusted EBITDA up but are reflected in our GAAP income statement turning to the balance sheet net debt at the end of June inclusive of restricted cash was $304.4 million compared to net debt of $260.2 million at the end of March.
This change was driven by cash used for operations of $27.1 million and capex of $17.5 million related the purchases of software licenses and computer equipment as well as capitalized software as a reminder, our cash balance was higher than normal in Q1 due to the timing of reimbursable payments to customers and the timing of incentive compensation payments, both of which were paid in Q2.
We expect to use cash to pay down debt in the second half of 2019, including making mandatory amortization payments under the credit agreement.
Net interest expense for the second quarter was 9.9 million down slightly from the first quarter due to favorability from lower LIBOR rates.
At the end of June we refinanced all of our term loan b and subordinated debt into a term loan a and a revolver with $385 million and gross debt outstanding at the end of June as a result of the refinancing we expect our quarterly interest expense to decline approximately $5 million.
Before any debt pay down which is our quarterly savings of approximately $5 million.
Turning to our outlook for the remainder of 2019, we are reaffirming our guidance of 1.15 to 1.25 billion and we are raising the low end of our adjusted EBITDA guidance to $155 million as you may recall, our prior guidance was $145 million to $165 million and guidance under the growth scenario, which factored the upfront costs associated with the Onboarding 3 billion and new NPR in 2019 was $145 million to $155 million, our updated guidance of $155 million to $165 million continues to incorporate upfront cost as well as.
Our expectation of continued strong underlying performance and business contracted prior to 2019.
In effect, we expect business contracted prior 2019 to now generate $165 million to $175 million and adjusted EBITDA without taking into account upfront cost associated with new growth.
In closing I'm proud of our team's ability to consistently execute on operational commitments and deliver strong customer result, with a strong start to the first half of 2019, we remain confident in our ability to deliver on our performance and growth goals now I'll turn the call over to the operator for Q any operator.
If you would like to ask a question guar one on your telephone keypad.
Your first question comes from the line of Chao stray from Cowen.
Your line is open.
Yes, thanks, guys and congratulation on the quarter.
Hey, a quick question here, though.
Obviously youve up the guidance in the end the core guidance, excluding the upfront cost for new business. This year.
Meaningfully higher than when we started the year.
Obviously, it implies a much higher adjusted EBITDA margin as well.
Are you prepared here yet to talk about sort of you talked a bit about digital transformation, but.
Where do you think the steady state margins down the road are.
Obviously, we're heading to that kind of run rate a little bit faster than we would have anticipated.
Any comments, where do you think.
As our sealing getting a little bit higher here I guess his questions. Thanks.
Yes, Thanks Charles.
I'll take the start of this question I think.
Well, we're not we're not yet ready to talk in specific details on the digital transformations. The efforts the investments we've been making there how that translates into a longer term guidance or margin model so to speak.
I do expect that we would that we have been pretty consistent on this we do expect to be in a position to provide additional color on that.
As we head into the back half of the year and on some of our upcoming calls and really whats.
What's driving that timing is.
We as I said as I said in my prepared comments.
We're being very careful to make sure we understand.
The translation of these efforts into our larger and so.
We're we're testing that as we speak with the automation that we brought online already and were Operationalizing and that we're in the midst of bringing online and that involves.
Making sure that we're confident that those automations are reliable resilient can handle all of the different permutations of our operating environment.
And as we progress through that there will be a point in time, we're actually able to start structurally modeling the implications of that and we're we're entering that phase as we speak.
So so I think that's.
That's how we're thinking about it from a timing standpoint now.
Generally or Directionally, what I would say is we are very encouraged.
With what we're seeing so far relative to the applicability and the.
Financial return.
On this and so we would expect.
To see that in our longer range view of the business from a financial performance standpoint.
Most of our most of our there was a little bit of detail that we're seeing.
In our financials, but but in our.
On a year to date numbers, but I would characterize it as a very very small the majority of what we're seeing driving our current underlying financial performance is just strong execution on our core operating system, whether that be giving our technology, which allows us to take advantage of our central infrastructure normalizing those workflows.
Getting the work that has to remain locally to the right productivity standards.
And then really looking at rationalizing our third party spend some comments. So we're very very encouraged by the execution on those fronts and I do think separate from ditto.
As we look to 2020 that bodes well for our visibility.
In the upcoming year and that I do think we should be driving our teams to get some additional scale leverage just out of core execution and so the combination of those two major levers.
We will contribute to us.
Having a more specific discussion on margin models long range. The other thing I would emphasize and we try to comment on the call. Charles This is against the backdrop of very competitively priced contracts and what I mean by that is.
We do not feel like.
We're sitting on contracts.
That are not serving our customers well and giving them a competitive advantage. So in a way, we're earning our way into steady state margin models by driving the efficiencies, we should be driving and that's driving real value to our customers and we continue to get.
Good feedback.
On our value prop and the and the ability.
As we sit today.
To extend that.
Advantage, both from a financial performance standpoint, but also just from a patient satisfaction standpoint pretty quickly to the current customers or our target customers in the in the pipeline.
Thanks, and if I have one follow up but just when you look at the market out there and then some of the work at least we've done suggests you have a lot of hospitals really looking to make decisions over the next lets say a couple of years.
But when you look at sort of brand awareness I think our one still kind of false or the middle of the table. Obviously, some obvious names like an optimum or something kind of rise to the top just because of their.
I would think maybe just name awareness can you talk a little bit and I'll give you a pipeline though.
Your your comments it sounds very positive.
But if we think back to sort of how you talked about the core on deal kind of coming in sort of mid mid way through it.
Can you talk a little bit more about what we.
Well it can be doing to sort of improve the awareness in the market of the our one offering.
And as you know you talked about some direct investments in some of that into more of a larger direct field force or what other avenues are you pursuing here to increased awareness of the companies offering. Thanks.
Yes, no I think you I think you make a really important point.
Charles We do think this is an opportunity for us to improve and so.
Yes, some things that I would comment along those lines one.
Yes, as I said in my comments and opportunity an event for US is the launch of our physician offering.
Which will which will occur formally over the next couple of months that is a marketing driven event, we've got external advisors working with our internal marketing team and and their mapping out.
That holistic launch plan and I would I would draw on that.
As a as a key event.
The second thing is we're hosting a CFO executive forum in the fall that will be hosted at our new innovation Center out in Salt Lake I'm very excited about that Gary long I and his marketing team have been have been driving that we've got.
Good uptake on that event again, another opportunity as you say Charles for us to raise the awareness of our brand vis-a-vis the general marketplace and then I would say the final thing is.
Yeah, we're we're starting the process to just refresh.
The brand.
And the messaging behind that.
Following up on our initial rebranding efforts in Q1 of 2017, we think the timing is right. We have we think.
The business has a lot to talk about.
And and so we think thats, that's money well spend so I would highlight though and I would expect to see that as we make the churn at the end of the year are headed into.
2020, when we're talking about.
Guidance and some of those things that that typically happen from a calendar standpoint at the start of the year.
And so.
I would emphasize we see this as an opportunity.
I think I think you make a very good point.
We think there is a lot of substantive things for us to talk about both technology as well as solution architecture and value.
And inside of our updated guidance, we actually raised the marketing investment.
From our original budget.
So do justice to this is to.
Put some energy into this in the second half of this year and so I think we've got the right team working on it again.
Both our internal but also.
Subject matter expertise.
From the from the advisory side, helping us on those events.
Great. Thank you guys.
Your next question comes from the line of Matthew Gilmore.
Baird Your line is open.
Hey, Thanks, good morning.
Joe I was hoping you could give us a little bit more color on the on the pipeline commentary at the commentary from the press release and the slide deck seem pretty positive.
So just update us in terms of the the composition.
Other deals you are saying.
The average deal size and you also made a commentary I made a comment about getting invited into more.
Enterprise opportunities and I was kind of curious what was behind what was behind that comment.
Yes.
Thanks, Matt I just on the on the pipeline I guess, what I would say on the enterprise side, it's not lost on us on us that these and we talk about this a lot. These the timing of these deals are so hard for us to predict.
And in a way you do your best to model all the statistics on it but to some degree thats a binary.
Decision.
That typically you don't know, which way it's going to go into until you've got if you got the deal done so to speak so so with that being said what what drives our continued.
The focus.
Our underlying assumption that we will get.
An additional 1.4 billion.
It's just activity and so and so breaking that down a little bit.
Yes, we've got volume up on our end to end pipeline double digit.
On a dollar basis.
The the the pipeline is very healthy meeting.
Well, what we've progressed is we've we've increased the number of opportunities that we have in what we call impact assessment I, 100%. So in effect, we've doubled that in the in the second quarter that means that we're.
Deploying our resources the customer is allocating their resources.
We have all the legal frameworks in place to be able to do analysis of the customer's data to produce say a very.
Committed pricing construct and value creation view that that as I said is up a 100% in just the second quarter over the first quarter.
And so that's really what what drives our continued view that we should be operating under the basis that we're going to convert.
Another 1.4 billion of opportunity.
The other thing I would say is from a sizing standpoint, we continue to see very consistent with our prior comments most of the activity in the one to 5 billion dollar target market.
On the NPR basis.
That that seems to be a market that's.
Very active a fair amount of interest that I would say is increasing.
Every quarter based based on what we've seen.
The other thing I would highlight is our modular pipeline.
Is up quite a bit and this is strategic because in many ways. This is an opportunity for us to.
Evolve those into more enterprise type deals and so if you look at.
Our total.
Modular pipeline vis-a-vis the second quarter, it's up 20%.
We're up higher than that in our physician offering.
And.
If you look at that modular pipeline against our target markets, whether that be position or modular services into the IDN roughly a 78% of that pipeline is where we want it to be and so that bodes well.
For us getting a foot in the door, but but more importantly, allocating our internal capacity to opportunities that.
Have the ability to evolve into something more more broad so in general.
We've got a lot of activity on all of our offerings.
Which which is encouraging.
Got it that's helpful.
As a follow up but I wanted to ask about the strategic initiatives and investments.
It seemed like those were maybe indicate a little bit higher.
And I know you add those back to EBITDA, but enough and the reconciliation I think it was $30 million to $35 million.
And the current outlook versus previously been at 15 to 20 and I was curious if that just reflects higher spending in the confidence around that or if there's other investments to call out better within within those numbers.
Yes, Matt This is Chris is.
It's really a couple things one is.
It is now in the higher spending Theres also higher some higher severance costs that we're incurring.
Just related to restructuring and wanted to point out and just as we take on quorum.
That well as we bring on people that are higher severance costs relating to there and then it is strategic initiatives, which is primarily M&A type activities inorganic activities.
One thing I would say is on the restructuring front.
And we don't take this lightly.
But but what I would say is.
I'm generally very encouraged.
By the execution of our operators.
Driving our footprint.
To the optimized footprint and so as we think about restructuring.
On an ongoing basis.
There was a fairly high return that we see on those.
On those events are on those activities and so a lot of times.
Yes, we obviously watch head count very closely it's 80% of the cost structure Thats really in a way a big part of the value prop.
That saw.
That we can drive as we think about scale leverage.
Etc, and most of those restructuring activities are effectively moving things into our shared service center, whether its in the us for.
And India.
Got it thanks very much.
Again, if you would like to ask a question scholar one.
Your telephone keypad.
Your next question comes from the line of Stephanie Gamco.
City.
Your line is open.
Hi, guys. Thank you for taking my questions.
The last time, we connected to you guys.
And the pipeline could you give us an update on any progress.
If there is any change to the active pipeline just kind of where they are.
Yes, as I said Stephanie.
The overall pipeline is up double digits for our enterprise opportunities.
And weve doubled the opportunities.
That are in full impact assessment or financial assessment as I commented before and Thats just commenting on the.
End to end pipeline.
As you think about the modular pipeline again, depending on whether that's the physician offering or some of our modular offerings into the acute care setting.
Depending on which one it's anywhere from.
18% to 22% up on a quarter over quarter basis, So and as I said, it's it's.
Almost 80%.
At our at our target market. So we're very just encouraged by the health and progress from Q1 to Q2 on on the growth dimension.
Thanks.
Compared to the patient experience.
How much of that.
Andrew.
How much business stand alone.
Kind of word of mouth.
All I would say I would say on the modular side I would draw the PX platform and that solution architecture as a module.
That has high interest right now based on what we're seeing in in market discussions and then the other thing I would highlight on the modular side as you know, we continue and we spend a bit of time updating.
On this call on on the underlying capability.
Just a physician.
Modular activity I would also highlight us something.
Net were particularly seeing some encouraging signs on.
Got it and just one quick follow up from that.
Could you help us quantify.
Uplift.
You are getting from.
On the PX platform.
And well in terms of growth what I would say right now is were.
In the midst of fully deploying that.
Across to sanction.
We are.
Yes, I don't know technically exactly how far we are in deployment, but.
Getting close to half way through maybe.
Of that footprint and its its primarily right now on scheduled.
Visits Okay. ASM commented on we're looking to expand that into the EDI setting and then to the walk in setting. So right now what we're deploying is is that on scheduled visits we have a system on the west coast, we're deploying it out.
We have a system on the east coast that our new systems that were deploying that.
Which we don't generally talk about in terms of in terms of.
Kind of headline press releases or not but those are activities that have converted.
And then we're in the process of launching it at the acute care setting in inner mountain as we speak and so and we'll be we'll be transitioning thats a core miss well in the second half of the year. So.
The reason I comment on that is pretty quickly.
We should have.
Not only are the most comprehensive offering but the broadest installed base of actually running that solution at scale.
That will that will only help us as we think about going forward.
Value proposition.
That's helpful. Thank you guys.
We have a follow up question from the line of Matthew Gilmore Baird.
Your line is open.
Matt are you there.
Hey, sorry about that.
Hey on the Dts that I had a follow up so you you mentioned in the last several calls that this will obviously enhance margins and he'll provide some visibility over the next couple of quarters in terms of what that means.
And Joe You've also said that you have your price point right now is very competitive and you are delivering a lot of value to clients.
So understanding all that up I was curious does that make you think about your pricing model and whether it makes sense to.
Drop pricing to catalyze growth or or do you think you know the pricing is competitive enough where it makes more sense for you guys just stick to capture the the margin at that value are delivering to clients is that still so strong. So just if you had any thoughts I would be curious.
Yes, no. Thanks, Matt.
We feel really good if you think about our pricing and the value we're able to create for compliance.
Vis-a-vis alternatives to us.
So think about it from a competitive landscape, we feel really good about our position along those lines.
As we think about DTC all that as we think about Catalyzing growth you have to take into consideration that more often than not.
The discussion, we're having with the potential customer is is not necessarily.
A competitive discussion, but it's it's a discussion of of what does that customer think their organization can do on its own compared to what we can do and.
The tie goes to doing nothing right because it's a less risky decision. So if we come in with the value prop that says listen inclusive of our margins. We can generate this much financial value and that customer.
Has an internal plan that says no we can get this much value on our own.
There's some other factor is that we can work on.
Human capital technology execution risk what are we guaranteeing et cetera that that allow us to compete in that dynamic.
But it's not a no brainer for that customer so as we think about ditto.
As we think about scale leverage.
And we think about not necessarily having to do anything to compete with with our peers.
But having to catalyze that decision by the CFO or the CEO of the health system, we do think that.
Anything we can do that increases the value, we can give to them.
Sustainably.
Makes it harder and harder to keep these operations in internal captive environment.
And I don't know what that calculus is but what I do know is having the ability when needed.
To go there.
And Dts definitely plays into this only bodes well as we think about a market that is very large as we said before its captive in a distributed.
Hospital footprint.
Generally run by non for profit healthcare systems and so.
Our belief is that.
Just staying very very focused on bringing to that customer base scale leverage and real value.
We'll only.
I'll end up in a in a rationalization of the infrastructure to manage revenue and so so thats why strategically obviously, there's a there's the potential to rewrite margins no doubt about it but I think much more strategically as we think about growth being a primary driver over the long run.
Tito.
Really is extremely.
Strategic for us along those lines.
Got it thank you.
There are no further questions I will turn the call back to Joe Flanagan for closing remarks.
Thanks, operator, and I'd like to thank everybody for joining us today as we said in our comments were very pleased with the strong first half performance.
And we feel good about the market and our competitors competitive positioning as we head into the second half of the year.
As I mentioned in my comments, we remain optimistic we continue to invest in the business for the long term, we look forward to updating everybody on future calls operator as always thanks for all your help and we can close the call.
This concludes today's conference call.
Thank you for joining us today.
You may now disconnect.