HMS (HMSY) 2 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Robert Borchert	SVP, IR
Bill Lucia	Chairman & CEO
Jeff Sherman	CFO
Jailendra Singh	Credit Suisse
Vikram Kesavabhotla	Guggenheim Securities
Donald Hooker	KeyBanc
Ryan Daniels	William Blair
Mohan Naidu	Oppenheimer
Jamie Stockton	Wells Fargo
Richard Close	Canaccord Genuity
Stephanie Demko	Citi
Matthew Gillmor	Baird
Frank Sparacino	First Analysis
David Windley	Jefferies

Call transcript

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Operator

Good day, ladies and gentlemen. And welcome to the HMS Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time [Operator Instructions].

As a reminder, this call is being recorded.

pleasure SVP my Robert Investor now Borchert. is to of introduce Relations, It

Robert Borchert

and morning you, good Thank Andrew, everyone.

Financial is are and accessed company and Chief website Chief me via Executive This Joining Bill section Officer Jeff Lucia, the Investor at Sherman, of could hms.com. webcast and being our Relations Chairman Officer. be call our our

on we operating Jeff posted website for as timely IR and press then a highlighting will provide and Today's first our release to financial questions. our on ask that through follow-up, will and so financial get in our their question queue fashion. outlook business yourself perspective limit We the Bill results open the results full can we and recent line you one is one please well.

you XX, is I’d and are release the XX-Q for quarter like morning's reported the until Form financial preliminary this in today the XXXX remind second that filed. June to and press are final not results ended

statements business based our on Some of expectations including nature in it Such of current view statements, we forward-looking are the today. our those and we our their see as today make will and updated and uncertainties our to actual that future and operating risks financial year plans XXXX future cause business related differ objectives performance to materially. guidance, to subject results are full and may

in cautionary this As described in most today's company's in statements the release SEC be press Form a the filings, with XX-K. should factors the result conjunction including recent and risk considered our

included press posted we morning. measures to measures comparable Reconciliations our this may of release non-GAAP are measures refer website. the financial our Finally, these GAAP to certain to in

to hand now I'll Bill. that, the call over With

Bill Lucia

to costs and we everyone. long improve quarter performance reduce health Robert, to clients solid help continue another HMS and you, delivered on morning strategy term our outcomes. as our good execute Thank

of flow $XX.X revenue Medicare up continue same operating and reported the experience X.X% million flow up a release second financial exclude EBITDA RAC cash the ago when model. the you reserve than we the as our XX% XX.X to operating expect cash record this Adjusted period quarter. to release more from compared we and was excluding and reserve dynamics Our quarter we generated increased year leverage with we

performance than coordination benefits and more X% our was excluding release. led in revenue reserve XX% integrity Our growth by in service of increased almost payment the lines

by innovate both business in to as as lines. year-to-date COB X.X% well yield insurance verification improving like continue PI we real-time product quarter. the new We noted driven last In our and enhanced our revenue solution, growth COB analytics, was introductions

expertise pace We add new continue and for to talent strategies to that our opportunities savings clients. the are driving of accelerate

abrasion use processing an our in machine lowering provider costs. and for effort learning, advanced our technologies, while savings clients, advancing of also reduce to operating other our all national faster drive We’re language

newest solution Management renamed align Health We’ve set Population to our better nomenclature. with market

had in year comp X.X% quarter basis challenging special in to year. PHM up PHM This due ago. sizeable a from year-to-date a QX we last however, was a On revenue a project

on growth this and value We deliver and and introduce and solutions currently to as new continue by ROI. of business clients share enhanced momentum significant revenue our strong annual an to line in valuable see basis continuing expect we expand

before outreach health other recall and product launched crucial program we prescription information disaster, or a a crisis customers events. share safety health and formally our enduring efficiently From perspective, management public consumers helps innovation communicate natural that our with

health messaging, care. with through during efficiently, This of public response retail our coverage such agents text benefit live is even SMS other pharmacies and and now Payers email fast as possible about and emergencies millions can active access and accomplished compassionately and thousands effectively as managers entities and their and pharmacy and voice consumers as communicate to events.

organizations government their from wellbeing. short, one In and health, active population’s we in is spent an where safety a move on take role crisis that managing they to reactive help and proactive can healthcare

our also to we’re the We enable and analytics solutions expand [indiscernible] our determinants to health offering person. of treat continue prescriptive to whole include predictive clients capabilities to ensure to

announced a a major the in initiative initiative and recently analyze. significant of between toughest projects is some claims universities center cooperative digital tackle lead HMS solutions. healthcare’s health data to will identified The we and to a undertake Separately, international partner research to to researchers that this to partnership volume significant Australian corporate government, health in digital ensure we’re lead of the is research helping the access advances businesses challenges. and have

in with major U.S. in the and Australia universities working We’re

on work Our crisis. which opioid focused healthcare abuse is an factors for risk potential misuse international with identifying Stanford University is and

also healthcare system. on These two readmission, with of challenge on Southern reduce University the We rate benefits to and analytics our development significant predictive providers model the a drives our to partnered Methodist could costs patients. that hospital in payers, provide initiatives

for the helping people to not key haul only our enhancing business. and potential about is purpose research because our real development vital its of this the product pipeline innovation real to Adding health because issues. our expertise fuel to and committed is work long is with core HMS of talent

experience analytics analytics, science. In executive and will intelligence, learning Fortune and artificial at data more now VP design major and Population new health our engineering our analytics has several at artificial leadership and across data XX with plus drive analytics years companies. XXX all of companies roles chief machine of of and intelligence Health clinical strategies And has engagement He analytics lead lines and experience business. Management, and in new than leadership XX our of technology healthcare years with informatics officer roles

on new our leaders innovation immediate improve furthering to to have drive and impact teams performance. operating an their and abilities these expect We

our Jeff will second detail quarter additional on Jeff? provide now performance.

Jeff Sherman

for company in revenue, Thank another EPS you, flow. was cash adjusted Bill and total QX good and morning. solid quarter EBITDA, of terms adjusted HMS

was of XX.X% integrity and driven in mentioned, the by This coordination revenue in XXXX. total Medicare reserve X.X% revenue was release. RAC X.X% payment growth again QX As second quarter in increase in release a excluding up revenue, of the Bill reserve the excluding benefits

remaining recognition in the of the have which contract The million resulted net original from quarter. in amounts sheet revenue Medicare this $XX.X now balance released RAC been

said in the business and releases for a to we’ve the COB was ago, period PHM variability revenue was year-to-date X.X% up X.X% and has As the our revenue same PI model some excluding compared reserve year the revenue quarter-to-quarter during up potential the X% period. increased same past,

consumer of term oriented traction transaction our term agreement with same of cross-selling In recurring we revenue. to At continued sales longer sales driving to the the initiatives and our PHM, our time capabilities. signing for we’re see balance services revenue pipeline working between the engagement efforts benefit the near with

the year technology Medicare increasingly Adjusted the our RAC well model margins operating basis continued investments and overall release EBITDA yield and stream management impact XX.X% reserve continued the as quarter overall. strong XX.X% of business drive compared was show Our revenue to both benefit. points efficiency expenses to excluding of of revenue This by XXX diversified last the that operating driven continuing second increased as up with leverage. to operating

Second operating quarter driven release reserve by XXXX diluted and noted adjusted EPS I per excluding the $X.XX earlier. share benefit leverage the was was

in with million the in flow than strong remains $XX.X $XX operating million compared of in flow $X of cash to QX year’s flow free XXXX cash second million more and this second cash quarter of quarter. Our

XX, balance a $XXX million at and liquidity of and and cash we of total strong very XXXX, million $XXX equivalents June to debt With continued have profile. sheet cash

enhancing we and remain towards business level, our our at high infrastructure capital principally in IT product continues on to strategy on geared focused existing allocation As executing investing a capabilities. our strategy our be

complement At payment time our Health our remain to efforts Management integrity in acquisitions and Population the Solution same suites. identify we potential active to

We criteria. disciplined will transaction our it move our financial remain and the strategic if and to forward approach in meets we'll M&A with

as our effective release. XXXX the full rate income and our RAC million company in $XXX this to take into including quarter financial We revenue release total announced reserve expect revenue updated as from we year year-to-date adjusted EBITDA, Today, million now XXXX net to of reserve $XXX the $XX.X tax performance. million Medicare guidance account well

was On with This excluding basis, XX% X% both a our our growth of guidance consistent is original years X.X%. to growth. releases the range reserve revenue year-to-date from

of over XX% growth which We $XXX are million represents projecting to XX% of full-year adjusted EBITDA now to XXXX. $XXX million

reserve As years. both including the we releases with in are revenues,

technology We new analytics to capitalize the expertise on made further and have we over continue investments talent to add years. two last the

expense yield We benefits currently them continue. and to both management revenue seeing and are expect

primarily Moving to the rate. net and higher year-over-year we expansion income, $XX due effective growth, for to guidance. approximately through is full-year projected $XX million onto are leverage million which revenue now benefit, the slightly is operating This a lower tax than margin release reserve previous projecting XX% year

address help release press were Additional more in on our our questions. IR outlook the modeling morning's details which on year website will provided revised now posted detailed for this

our remainder of quarter raised the we well consistent overall, positions anticipate the second throughout HMS achieve full-year So and objectives will revenue performance guidance. believe our full-year step to our up with XXXX

Bill will ready remarks some Bill? be we'll now and for have questions. then concluding

Bill Lucia

entire HMS assets unnecessary broad appreciate technology we patient down of Thank employees commitment impacts employ with data come and the system. that truly costs market healthcare hard months continues suite the and to a future for and Jeff. future and our and all of to you customers, positively work of access benefit Directors. to the sharing long-term look in well We as to our Board leading our success accomplishments be the with you, activities support outcomes. shareholders drives analytics to and forward our positioned data, solution to and continue We

the We question. are now ready for first

Operator

Jailendra first Thank Singh Our comes you. of the [Operator Instructions] Suisse. from line Credit with question

Your line is open. now

Jailendra Singh

to QX, QX? actually certain Maybe business by thanks turning of growth segment about I coming projects strong lot, taking about want back you in QX. floating this service much off how in QX for on did a last Thanks payment in mean, talked quarter. driven the second to up payers in was you I performance questions. integrity there see follow talk the from quarter those

Jeff Sherman

some as Yes. get last we thought. we said that was, had we not improved we quickly did as approvals that had to What to added customers submitted our quarter

grower quarter-to-quarter, see reason be good year-to-date give of does with expected don't the our results. a in so and particularly revenue for payment come I still the for I And think lumpier the payment growth with as think to based we X% QX guidance as we quarter that year. in contend upon integrity it integrity, we QX it to back from

our year-to-date growth still So performance the in overall, half a we expected I year. back basis of payment integrity the is what in close to think and see on

Jailendra Singh

Management small the five business trends quarters, have look talking that over But we opportunity. Population guys about a business, segment. you know at as if that market on still in you Health haven't this potential or sequential uplift today, Then seen four a largest but been is I past part of much

should how gives should in think around wondering color half and going you forward that in about confidence the business we progress and growth there Just some year? can seeing next what you if give some that second we be

Jeff Sherman

see but sales recurring to transaction PHM said the change the and market pipeline. a say did expect with of revenue as basis to strong no near-term we last oriented services foreseeable sizable the and this continue year, been with revenue our will solutions opportunity of in working to our my benefit project There's efforts are in balance Yes. prepared outlook sales challenging driving cross-selling we QX of had We in our longer-term growth the remarks. and we our And I PHM initiatives off comp agreements quarter, on annual due an for see future. year-over-year currently for a are special X.X% between signing traction we

So to opportunity. continue I big think a see we

transactional as that noted think for a of two be have focus when longer we longer-term longer will but takes achieve is We subscription those into sticky balancing approach work so dynamics the period revenue sales we more with and the model I we do. move those revenue more recurring sales it that the revenue

Jailendra Singh

Thanks a lot.

Operator

our Guggenheim you. And line the next Kesavabhotla comes Thank Securities. of with question from Vikram

now Your line is open.

Vikram Kesavabhotla

there's so Obviously if expect the give you'd strong driving question. color you and to Thanks on expansion curious some to want been can quarter profitability quarter. this margins and versus have on for what specific a more normalized basis? that's Thanks. leverage been on I us if the taking what this follow year operating a anything of sources main see the accelerated up

Jeff Sherman

leverage say quite inherent is an Yes. and the higher than dollar quarter incremental the in believe model. COB operating of first bit comes set a business revenue would payment margins blended really integrity our in company's demonstrates averaging. and we for I this the We've what in half overall a

making also well. the said and margin are with drive in of growth So positive that technology both we've having revenue on having revenue impact impact that's those operating that a strong a margins investments in both as segments we're yield And continuing on performance. positive increase efficiencies our to

continue set to So path to early we're still of in in the innings investments. on we've believe those capitalizing our

a ramp our to potential continuing the and technology spend are up lot in We future. still of value see

As noted, on business our we're and Bill of side help artificial bring to with people intelligence analytics machine learning. continuing to and the both with

So still see those we're really learning here, capitalizing as of to benefits I go and ability the in innings but expect would their foreseeable think time over margins on we as say the to characterized it expand future. for early

Vikram Kesavabhotla

thinking you quarterly low of then on how Thanks. of first on X% be that a for basis the expectation the digit mid to quarter the and second you year? I'm that guys is another revenue And on full can growth it. and this color us some great obviously should had business and Got impact single a about COB half curious we the the factors side year if still the quarter. give then

Jeff Sherman

Yes.

So for revenue guidance year. guidance. our a We've into given balance of that overall we've that can the revenue products portfolio

going the quarter. COB timing update the for guidance I'm on but do as well to to not items with for year to revenue predict call, variability try specific we from see sometimes. So line this quarter It's hard to

our information almost we're to information double-digit customers, still to need the contribute the get from year. expect with get year for to in I growth and COB ability say that would Our going certainly for growth or it's we pleased that but

Vikram Kesavabhotla

you. Thank

Operator

question line of the comes Hooker next from Donald you. our KeyBanc. And with Thank

is line now open. Your

Donald Hooker

Good morning.

the wanted to COB looks business, basis I business well. the for up So quarter was it COB about about X% which legacy ask doing rolling like and very

guys rate you your there. mid I for talked there? of we past and the seems should that guys above about been maybe a growth have thinking you there, if but What a have lower kind while is in was growth think like about a I start wondering trending it single-digit higher commentary

Jeff Sherman

Yes.

we think big we that the in have investments investments talked I making technology about our are data.

the data enormous. basis, complexity of Just that and daily, size manage amount to it and monthly a is get sheer of on weekly, we

And seeing think benefit and from a that I yield to implying and so technologies advanced analytics we're been data a that positive that's certainly advanced driver. so

Bill also I we say, market looked marketplace his new products also mentioned remarks. at as in would have addressable introducing we prepared we're COB and as total

been a where time. So in we've it's for an area the business long

are we data to continuing in more existing it drive innovating from as think the as of well value I population claims that we have.

see combination a certainly both and of it's think I of continue So those things to capacity to there. the more expand we

Donald Hooker

Super and space. maybe the just integrity a follow-up question payment on

the and not after I of yourselves think into us initiatives ambulatory areas? initiatives some settings. into extend if trying about you or on have kind any any guys past going those too like employers you to Can areas talked maybe that's but extending newer in fine of maybe update new

Bill Lucia

This Yes. Bill. is

employers, find the ways employers most you retrospective as of bag offer. administrators their through that employers organizations consulting the audits larger of for that but benefit distribute clinical employers also things always and a know, probably So who certain though many part to audits are work kinds the we in them, primarily we'll not do financially, pre-pay holding amount do we for

So that growing market opportunity. as a we see

opportunity the implementing several, The TPA more implementations or complex a large with because is but administrator a on we're sometimes little are significant.

contract we that rolled in implementation So couple we that are just or phase. have the employers out, a implemented under either

products that also are We attractive to believe our them. other

line, of will particularly started tools of be introduce engagement consumer has and employers. segment PHM to our product we So our to allies a

consider terms audit set. I payment what would expanding the In of integrity,

this and more year this expanding have bit heavily year but little focused broadly. last on year, We

aggressively were service that places types claim the past. pursued that and/or we've of as not pursuing in So

of And so that's of all development part a bring strategies our lot to ongoing innovation to clients. our

Jeff Sherman

as errors an make claims also advanced deploy to select area probability that both And and our higher have continuing as some we're improve more work process of ability efficient. by technologies whole technology a well to efficiencies our how PIs using claim, we where operating claims to create to

Donald Hooker

very Super, thank much. you

Operator

Blair. Ryan the with of Thank question you. William Daniels line our from next comes And

Your line is now open.

Ryan Daniels

just morning M&A good one the for any continues transaction. question. taking to guys. haven't your build the Obviously, Yes, done Bill, on you environment. balance quite nicely up for maybe cash but Thanks

the that So, you're pricing the I'm your or driving just it seeing if objectives that’s it's curious the parameters? if not in assets your meet finding strategic of outside you're marketplace financial today

Bill Lucia

we active. always for our of portfolio at. aligning Thank with candidates looking We you, We're clients. that the are we're Ryan. very fact M&A our objectives active, a In strategic objectives in for reality along have

of as it's integrity advancement whether they're So payment Population one each benefits, product well of or the the solutions Health as Management. lines of our coordination seeking

specific technology fit. we're a of terms in perspective and fit and But from very financial product the right the right

you're that the always we properties at some in believe don't So they're of finding that are valuation course command we right, company. we're and asking process looking again,

as will our I said So of capital. continue use a think primary we to say, it's and

Jeff Sherman

Yes Jeff. Ryan, is this

a has I and continue said, adding haven’t fit for variety think lot approach we've right reasons disciplined a just take very to HMS. for a of what they companies added of to the up at we looked to Bill

and properties we our us. to for economics we're do way, there maintain strategic that think but can so we to an make capital that so, disciplined price get is work sense And as at make if in approach them the deploying we'll the committed efficient for right

Ryan Daniels

a Okay, that different for thank then, as you topic my color. maybe follow-up. And

of of in curious promote investments facing about outside leadership enhanced organization customer making kind new across help that I'm and solutions a of can you're products. talked the the the lot some what You businesses and

curious still the any organization but could buyers the sales if of thanks. group smaller a be there, in investments can of forward there it be team know is I

Bill Lucia

Yes.

team in help but can subject the continuing matter sales additional who to experts are the sales invest also We in both process.

rather actually business a have some had our it. problems We some of complex complex clients and with

teams more adding markets. our upgrading constantly we're and all So, sales account management of our in

SMEs this definitely these is that, then better last to year and advisory services, a clients of us facing contributing revenue services brining help products and the them. them -- to and way of grow. our we the component bigger is MedeSphere say in the problems client understand are launched the to to more use we're in. which actually and an to expect business And help year, I help we And that continue kind deliver we complex a

then this year that are of continue we'll and investment and being do doing all So, is some we invested to so.

Jeff Sherman

think and customer look overall XX our work selling then, starting I the or very into and And XX we footprint more plans do a and at CMS if broad customers the Veterans Administration, to be you continues is ours. in those of over customer focus is states being point footprint the in largest existing XX health critical a so

the process be sales interest past, the to on when the then on our are traction and side, businesses And at the a with in was front are more see more we lot the acquired we had sold beginning entirely we in a PHN set that longer in is that in market, dialogue those states historically having going to PHN we the on solutions into lines state said said marketplace we throughout. state but also market commercial

Ryan Daniels

Okay, great. congrats. Thanks guys,

Jeff Sherman

Thanks.

Operator

Thank next with of from And Naidu question you. the our Mohan Oppenheimer. comes line

now line Your open. is

Mohan Naidu

What first sounds you've before? in what it's This Bill, talked program and this doing of top the that this crisis is questions. was my on about. management like Eliza new Eliza. offering taking where's for Thanks on built

Bill Lucia

of extensively a really what to and and Well, analytics, to learning modality who reach couple the it's outreach respond natural the we found we all how out and machine strategy behavioral was this to. had leveraging clients about used disasters. same during science and of of they'll But individuals what the all actually

and it roll of crisis plan, they're government. feedback any really state broader to got health can natural and public from excellent their because managing disaster so the or that health a They and for disaster for more use chain this And type members up broadly. we recalls or in outreach this other that doing public broadly PVM we decided health means responsible it's more pharmacy really even

do struggle talk So, constituents to contacts this have reach here of data. opportunity being you government just and able their demographic state we can started with to and about that know as with of they the have see the with they because they that database struggle they all

a type their get could crisis. fact be numbers crisis benefits in cellphone in it exact safe of up ends realize data are, to to enhance whatever might be able to and health give the in them to do same people outreach, already to be during instructions that reach of how have the their what on they We floating all what and advance

So, it's tool. reaching broad a pretty

Mohan Naidu

for and there That real-time couple verification contract were Any could interesting. all on a that I sounds Thanks very year. second update possibility a a half color. thought the of be federal of product, the in this states

Bill Lucia

Yes.

So, the We with and exchange periods get product we're had been using for budgeted. had state federal markets enter as that funding special live markets. other to go that we working all in hoping additional longer are also we funding and another new they have that government with used did on because through we

it's not But be exchange. nation already each talking we live but did state of So, of all we'll with course we another to in if talking exchanges them. go an sized to in there are the or QX of will that a half sell reasonably a only be dozen

Mohan Naidu

the the as enrolment government, enrolment? move do Bill, to into able special get you'll is On open the from federal it expectation that we be

Bill Lucia

We at that love something implement. they if to to, depends on want aim they

a are We but about little --. talking it

Jeff Sherman

but we point, more given for are enrolment we special timing, how period. additional giving they secure working At this discussions. Yes, are to likely this a timing Mohan, that's from, those a funding XXXX in the work just having

Mohan Naidu

my a for taking Thanks Great. lot questions.

Operator

line Jamie question from Thank Fargo. of Stockton comes Wells next with you. And the our

line open. now Your is

Jamie Stockton

think about What a pay follow-up earlier health taking for is Thanks to or should XXXX that of the you said -- morning. I state with maybe question. asking you opportunities, we're it's something maybe thinking about timing working we the XXXX Good something Ryan I imminent. a guess, something platform. was management you my that the on population in not but be on that as know is think

color any great. be would Just there

Bill Lucia

I product being new new in we but into of market that market, sold see initial years. XXXX a started very market, we've in a you had would say us initiative ramp any with up seeing for new like states our but have a discussions revenue new with number been positive. The

in when we sell our the states sometimes Like needle key commercial a realize a same health specific on they plan, with and you are project, small we move sell that market, able we get to proof-of-concept, through we're score, way. a yes the

contract So, long states for contracts it. the of vendor our is state and nice services thing the about allow the the many underneath agree additional with the as on

low, very source limits. have Many

early we for some get data get contract sign projects could be running and there from a depending it's is already need. we we pretty they could time that because deploy as data this the the our really proof-of-concept as the up what that which that may So, year even job client quick to have and on

proof-of-concept to XX the door. get be days Could out the

impact we're revenue then quietening really And there. state so, but a expecting XXXX from and on

Jamie Stockton

And other on Okay, one. maybe that's then, great.

the ones and and you've on in infrastructure referenced You previous call investments well. that as your your guys multiple making you're have times technology this

at like so versus into go make audits, wonders me smaller economical amounts really you where much of could equation take maybe automate part more effective. guess, looking things I trying the ways to to labor process just of out dollar it's it about might the that this is and incorporate data more after of how

to important some the for know it which temptation I you the same delivering if they're great. could going be productivity better incremental, us is give would be And sense but to seems both one just that be

Bill Lucia

So, level solution being and the much that automatically say find to that have able proficiency to of at able I error. would we're find more a better, a

intelligence is them what than to provider most important labor. have actionable more reducing an learning is using recovery to because aberration So, and actual to be likely find artificial more less accurate do us you and actually machine or

our we done That much we've company we those we is areas What some people our expand a have in not haven’t sell mean new flat. headcount as in but in brought have to doesn't of we an have opportunity by be And terms at jobs that give labor. company. take event them as the who the automation people goal impacted to higher is skilled may we

to a excited fact in learning employees more our and some can do in things need the our being do always at analysts data. data lot automate And and of our in company. some process we value-added that able they are Because scientists about looking business they're more roles can

so mean I it's understand promise human only the to do, that I machines that going the much going the are to It's but that they're know need of think still healthcare. future they eyeballs

Jamie Stockton

thank you. Okay,

Operator

the Canaccord And comes from line you. Close Thank of next our Richard question with Genuity.

Your line is now open.

Richard Close

past maybe impressive benefit these margins would how But on the hit continue leverage you Congratulations bit tech it Great, in inning investments investments. thanks. to Obviously you. on guys on from what curious on a seeing making for the little execution. you easy investment. are expect was maybe more, the and Jeff, I characterize the the from

Jeff Sherman

Richard. Yes. I've said early innings,

second the the inning, yield third better. out extracting and I on seen the a follow-up lot if the mean of or getting more we're memorize far so just to it are our think question. at to data want of of kind mean, I benefit set is So, analyzing we've analytics better I existing just you on last because

get about just And results This that. was we I we're how that's effort analytic. doing, think separating there good our we've increase analytics new seen do to better good automating thing is ability what currently initial creating this or have from and

do get more we findings about way. about how deployment, I more to we our in a technology more sophisticated in will think new as be technology actually actually it create automated use

of and we for that and there the well. system do that, a aberration records opportunity we the provider to minimizing is can aberration for And well creates marketplace of think a the needing or is that we is asking lot extent that lot medical think because

well that as runway new us. big represents see margin at that the think expansion. possibilities continuing with on analytic the for lot still think bringing as And we have, I for I a people of we opportunities to look we're

Richard Close

Excellent.

a maybe like picture curious trying Bill, excellent two here, on question horizon. on proposals. your pitfalls policy evaluate So in a have question you just the guys performance had, given the potential for bigger you I'm forward thoughts look in maybe to

First, you the negotiated that the for or reduce, and payers that systems, would opportunities I'm proposed at rule prices health change do HMS impact, between impact, all? would posting think

Bill Lucia

though is give they're it an really -- so. pricing going financing ten-year I example don’t. with to let not Still I complex, even still so -- you be they're still don’t rollout. the like think might way posted, me

don't hard I going comment move would think target to towards. when about kind of what it there to the isn't we're have really that impact it the is So on it's

I premium a we universal more Medicare can HMS towards states. think done Medicaid for buy-in buy-in that likely health what over we because payments and for be do through that's certain coverage is move dozen will insurance for or age positive about

It could lifting be eligibility. buy-in. Medicaid could be a Medicaid again It

the we XX% universal coverage look, error Medicare ways a U.S. there's mean, I for Medicare rate. lot in So sure of all without a And have make system. a to has

of about healthcare out the system. over would be if want significant hand system all flowing the we to talking Medicare So really we that to dollars

it So feasible. sound doesn't

Richard Close

for the Congratulations. perspective. Thanks

Bill Lucia

Thank you.

Operator

from comes you. question Stephanie Citi. of Demko the our next Thank And line with

now open. is line Your

Stephanie Demko

Hey guys thank my taking Congrats and you on the question. quarter

Bill Lucia

you. Thank

Stephanie Demko

I ask that infrastructure, building the about a something bit about through it foray So partnerships, initiative? Is your little you bit or want I initial of to out determinants else? mention could social into approaching need how heard be in just a little members you're health, identifying more

Jeff Sherman

of above. All the

Usually via will shelter? call helpline will questions, focus on is clients risk or the call again have you concerned have in that large now ask feel Do actually helpline issue. Do you and food? you do hunger feel seeing outreach on-boarding us IVR states could it’s the you for access a achieving is it's us we're concern So we're ask but it concern? a a the IVR. for about specialized the of on-boarding ask certain to information, to a be if a about what But this that our or an this we if an actually today do member assessment retention, and health number

different but the safe really if to home and today us and received of is at a connecting and I and capture plans this where may assuring ask taking think them states that feel information they have to it's health then there's those them then service. just they actually to lot Whatever questions went you and that not actually challenges services, connecting people is up that

closed end So potentially build and at out have use of right allow system technology that the has our looking acquisitions clients through helped we received then we're that is that the that there's and services. information to through patient tie loop that's make to so sure together things a through partnerships, types that to

determinants either zip the take factors predictive socio-economic of that is do impute already social other tool. code health are and prescriptive we that is We self-report that or our and in analytics

they having So do it barriers plan a you higher curve as this these this have health better because you have determinants. tell patient outcomes that for or minimizing social cost will to

in our already that's analytics So pool.

Stephanie Demko

the build that you certain think you complexity there inorganically look versus are you issue different organically? do could think those the about areas would be areas Given at to better of where buy when versus

Jeff Sherman

I'll but that that to that think market non-traditional be service big those I the too a of bigger it's mean, becoming we health for may to discussions mean focused manage about social with network it's plans and an something because on connectivity in issue all the I a network. it's states. our been that this but have our track is for just don't having something a everybody may providers soon tell, issue issue give that example. organizations be would that That not I pursue. We network, we then and you having owning

address In care requiring are this. also issue for plans Medicaid fact, It's to advantage. states managed big Medicare a

So think when we're tackle is that the we our nation this has treating whole tackling person. to something

Stephanie Demko

and [pass-out] one the traction put And different for through demand quarter? the quick of follow-up walk you and just Understood. kind some the Could us in business. some three takes of on areas

Jeff Sherman

up have very growing in side Well, stronger project did in said LA we quarter said our management we sales. the ramping is piece a we're year. on Eliza The because the of the little second was nicely. of care it we growing care side with that The a engagement softer did is side year-over-year management and last consumer big product

are sales in that said the we seeing to So be on we side be was going slowly. material up revenue that some wins where XXXX a LA and number to ramping expect

Stephanie Demko

Thank it. you appreciate guys,

Operator

our next you. And Matthew Gillmor with Thank of question comes the from line Baird.

Your line check mute your is button. now open. Pardon please me Matthew,

Matthew Gillmor

was buying report program payer a Sorry was that a platform. may integrity that to you be environment. large about about a ask going I that. There competitive

relates COB what from of terms especially get change view? in of sort to an just seeing competitive your a and buying what large PI a standpoint it as things to PI payer So and hoping update a platform in you're

Jeff Sherman

Matthew. Yes,

potential news really result We yield the noticed certain haven't marketplace welcome for competitive the any changes that dynamics a we in we that do deal. think So a meaningful and as there environment of are us. really opportunities could following

think pass side claims run others and fee providers savings, including identify health given that plans that think of to contingency makes third-party I their in operating PI HMS model to the with of most and I we first so, so programs And a take on the number in, the a use are a then sense. service

external we've that billion more really billion do a our value roughly drive we more the how addressed on and for is side market So to $X think continue total $X savings billion we is is $X being and to we customers to the PI said, $X.X addressable providers. our currently by think and focus billion

is space we the considerable PI opportunity think still So on the wide side.

point, and state or throughout to our capitalize continue plans customer we vantage base even side, have continue on the savings our focus do in of think so all I drive is to how health commercial We and from strong both PI. our the side interest

Matthew Gillmor

guidance it that reserve what's did you then, in half, level XX% like assumes quarter the in It revenue terms with an of sustainable this about follow-up margins the one release. on about. of back talking pickup the guidance you basis from think exclude EBITDA if seem on Got I that the and doesn't margin even discussion underlying earlier, implied the you're for

So or maybe and premise half cause extrapolate second just you margin back just the bit you great be maybe sense was maybe to give a to yet? little right, just the that lower don't out assuming quarter what can is want would for my a us

Jeff Sherman

strong strong Matt. really say it six of Well, I first again, months through at was about the would the XX% year we're

end at looked at to end almost So you're and XX%. high guidance ranges, you and the if revenue of revised the XX.X% the revised our low

little say a maybe segregation. secondhand So would I

and investments product. and in continuing to both are We ramp people

going I the in some will development our we incremental of say. is of profile margin second So would I half up overall think the ramp nothing see the technology in significantly else product to move some but in spend year,

Matthew Gillmor

Fair you. enough thank

Operator

Thank you.

line Our Leerink. with [Indiscernible] next question SVB the from comes of

Your line is now open.

Unidentified Analyst

the on and my continued momentum for taking Congrats thanks here question.

one quick how Australian have but you're markets research know a kind project commented forward? you going that and how was attack international you commercialize the to to going Thanks. Just you're I a on on, your ambitions, curious going international of

Bill Lucia

is This Bill. Thanks.

into service IP can baked our do is offerings. first future So the existing building, be we're use build that we're to attempting or analytics actually, really

treatment addicted, predictive a the patient individual, in to after opioids what's done treatment for to who's its pregnancy then identifying the likely So relapse the and trimester of a being that talked likely model what on time that's specific Stanford. of impact most at third prescribing the study the more of is by plan is become a two components we best about for

you But we six have Medicaid data enough currently you committed. have can and imagine agencies after

you number years crisis. building this the impact large database interesting Medicaid of size managed care back history one pretty an five research, that and plan. that's When using that come model then of for could think you consider with of can us I a really

either or can the tools be tools it in get or be payer when be prescriber they it first the that could something could it So of could they a so pharmacy tools claim, of that the a in of would in be the intervene.

at second is that talked able specific making that same about most they which appropriate And being planning. procedure are we of and building of then course, to with the the the identify type to do SMU sure readmit who likely to for discharge thing is admit

outreach. Eliza even So and as analytics to our our our management, both care

Australia. Now these exist issues in also

into the goal and do So business payer any same a problems Australia. We've healthcare bake and them system. private system actually the be ultimately sales not of in both signed their would to into exist have public there, but they products

universities our we to initiatives. anticipate also So and in other able we would be Australian be the that that with on are foot would door working

Unidentified Analyst

the now. going all the the to And the Medicaid noise Can thank to then back us the could, remind have ACA what it, the if exposure and in particular? to right we revenue going policy you through more challenges do is courts Got expansion Thanks. just you. your one ACA I

Jeff Sherman

Jeff. There's that. lot This that a of is into factors go

is again business. impact are challenge, estimate would our total on view So single-digit unlikely low making COB we our precise which best based today on we repeal estimates but what know a have very a as

efforts a single-digit even continued yield we've our believe as lower we improvement total could past revenue on the impact said So and really in offset that.

So answer. think I really that's the

many since the of exchange number that a result total out anyway reported significant was on have unlikely the point that added lower today there would requirements as CMS income how of signed old of why's What grown think and little even the been appeal. I exposure of estimates under have discreetly side and cannot a just gets members and the chunk We even so the are there expansion lessen is the very thresholds. a that been if ACA really so was have outcome impact covered formal the the income would

have the but major think any said on the we We huge to never our we way yield ability the was do offset up. was that exposure positive impact, again we it said of a to it So a activities.

Unidentified Analyst

it, thanks, Got again congrats guys.

Operator

of from Sparacino with the And Analysis. Thank our Frank comes line next question you. First

Your line is open. now

Jeff Sherman

on you mute? Hello Frank. Are

Bill Lucia

that up for Frank? open line you would Andrew,

Operator

moment line please. is your One Yes. Frank open. now

Frank Sparacino

Am I good?

Bill Lucia

you we Yes now. hear

Frank Sparacino

Yes.

commentary quarter, but aside forward-looking know don't talking RAC if quick. I Medicare outlook XXXX the a in issue Just ramp in ask reserve a put for business activity. up about this the any we reason been change is thoughts the If RAC is any that's and there's the I there few in there? articles real

Jeff Sherman

said, area growth we an expect revenue. our Medicare in RAC see double-digit to It's we've Frank

the release. So million about $XX reserve we excluding did year last

are and opportunity so to more seen the quickly see improved expect being and have for it's an area and year. where edits think We continuing growth see more see to we continue I growth to

Frank Sparacino

you. Thank

Operator

the question our with comes And you. Thank from Windley line Jefferies. of last David

line open. now Your is

David Windley

the my largely Thanks, the of question and at release RAC Bill level. Medicare, of the you one In that's big-picture that like reserve several. they kind taking buttoned that's buttoned will up but to I balance kind cleanup appreciate sounds sheet off of kind it follow-up ongoing, a up

policy the is in things in if -- opportunities specifically view change that of health advantage You get Medicare to change, wanted a the a that comprehensive does I what opportunity Medicare the Thanks. short does where of Medicare exposure grow what Medicare with a some thinking do determinants you social of around or and if about answer plans. to of but policy Medicare direction grows? relevance more mentioned prior in HMS-wise

Bill Lucia

Medicare what selecting XX,XXX going is a than Medicare of think that because the Medicare matter of into two-thirds I people no more them Well, Advantage. grow to with are aging day

only Advantage new Advantage clients clients or Medicare opportunity increases. the to So Medicare serve our

to different administration's on a collaboration discussion good offer all of things HMS need a year being prescription to very food think write going need programs sure at and next their lot actually the for that is that The With with connection of that kinds that that's of thing make entities. and the other to able that's through to today going transaction plans we It's and we points. apply a Medicare. about so focus different goes system the

their care taking Medicare Medicare coordination ratings, determinants are and of their each gaps and raising has appropriate star business and a or opportunity being integrity non-traditional social those payment opportunity. making to primary people Medicare health. opportunity or year providers significant linked getting benefits sure for medication closing a has of has

are areas our those to in population. of addition Medicare all important in think analytics we predictive So tools the very

Medicare So is for good growth us.

David Windley

back Super business the around earlier one you and to deliver or philosophy versus manage you much business structure the have the able philosophy still Do talk you to are can and about as bottom try then investment. time about philosophical kind be Thanks. that making a lumpy? a kind reinvested that then separately you're of just you project-by-project line to and that how incremental certain expansion on gets are of question margin margin, those the generate you kind or there is of that amount margin over leverage the to seeing base as what steady in Is a the of in of investments?

Jeff Sherman

Yes.

an is it's and can well. deploy we're where way the best return in the CapEx I that deploy our lot return we standpoint realizing earn positioned looking is earn a capital from think we think a at strategic not we're have a so of investment mind I endgame and been that to most up liquidity, so necessarily has ramping that's and place to much good capital going what rather

do to resources it. the have We

we more capital maximize opportunities prioritizing I just it's all trying our to It's have lot we focus them biggest do a that and think because how really deploy to about we're the about opportunities we have capital of deployment. managing opportunities. the

David Windley

technology investment If from I that in of the be and actually significant be aggressively anticipate would business? or me than you're the the margin because ask investing in you that into that overwhelm the period want reverse. as that that would business dilute a could the Would would of for margin otherwise structure time would more incremental enough there that you let that make would to natural

Bill Lucia

question, at can a be believe point this margins. expand now. continue strategically we at to key continue we can we need We to question think continue answer we believe margin to understand your level I invest to expansion and competitive to your in I invest

David Windley

looking Perfect. I That's answer very the you much. Thank was for.

Operator

closing Thank Bill remarks. like CEO, to now back the conference to you. turn I for would over Lucia

Bill Lucia

forward We our great speaking want quarter to and again look everyone. our thank to you a HMS call. to weekend everybody for on attending in Have third we call your and do interest

Operator

conclude may a does participating for disconnect. and you thank day. Everyone program gentlemen This wonderful and in today's have all the conference. Ladies you

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