INOV - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Inovalon Fourth Quarter 2017 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. And now, I’ll turn the conference over to your host, Kim Collins. Please begin.

Kim Collins

Good afternoon. Senior of Collins, at Kim is Vice Communications President Inovalon. This today with here Dr. I’m Chief Chairman Chief Keith and Officer Dunleavy, Executive Inovalon’s and our Financial Chris Chief of Officer Officer. and Operating Greiner, Board; the earnings welcome to fourth full-year to I’d call. like you quarter our and XXXX The call results the Inovalon’s will and in few and our be fourth and a posted financial this hours Investor on was available Website. distributed afternoon, announcing Relations on replay press quarter release for full-year of page the today’s a

forward-looking those that herein for rebroadcast XX, operations. may be remind of plans, materially. made Securities For the call. be listening related business this of could earnings future remind the Reform characterized February initial not results I’ll XXXX, position, to of factors to statements of of growth the operations market during you you cause involve updated Private and this call, strategy to we actual that this certain differ Act future our including subsequent XXXX, today, are results and Those call objectives you and financial will statements made statements to remarks as of a number and under as Litigation our that

the contained is accompanied by additional a and an effort factors section call is webcast information conference our IR these on and of the the to to presentation, concerning SEC. information is Company’s earnings release provide in website. with Additional filings In investors, available this which

prepared You are to this presentation follow along encouraged download remarks. with our of to a copy

non-GAAP includes also certain presentation Our measures. financial

website. release end of and and of earnings Company’s at definitions charts measures the non-GAAP those find You’ll on the Company’s the reconciliation

the to Keith it Dr. my over Now, call pleasure turn is to Dunleavy.

Dr. Keith Dunleavy

for call. everyone, Good and thank afternoon, Kim. you, joining our you Thank

has accepted transition quarter until advancement York. and has Finance financial President to capabilities he New key contributor Before we has at Jonathan of the Chief I today. time with new Officer. management the Company family role on are to wanted Vice to has Company is been interim our XXXX before Jonathan’s full-year confidence have the Inovalon’s the to years, opportunity of that all announced over at him and of The that named. the Inovalon was assume degree and closer a into responsibility. relocate Chris Chris of six will in earnings Greiner execute positive team years he the ability Deloitte. until and earlier in at of replacement a been will March outside the Financial taken discuss for Board, a high will our permanent release his we operational CFO in results, Inovalon’s allow increasing role get to levels which Boldt, Jonathan a of management fourth the XXth remain as Jonathan I

and and highlight are our more have are and time Inovalon we capabilities, making at would technology the to progress We you continuing see of been our and the us he results with significant but family. heartfelt new to and our for that Chris With happy over the years has of outlook our are XXXX. Company in sorry has wish appreciation will role for with our of see discuss his to Chris many fourth he well to the like able I share All with go financial full-year made his he him the XXXX, be extend us. in the want more business, that, quarter that that five to detail in to contributions

results. begin quarter Let fourth our with me briefly full-year and

double growth basis. a achieved margins, the quarter, both more we in year-over-year and expanded discuss fourth on will Chris in As shortly, our digit revenue detail

operations, margins with all and full-year guidance. the we our conveyed XXXX, from previously expanded our revenue, in strong line flow grew For generated financial cash

are financial as goes Inovalon’s and organic very XXXX a strategic growth that financial we with success opportunities. to continue capacity our supportive beyond execution in is But be our well strong performance. as consider in in our our investment just position business in We to pleased of and performance our our ongoing XXXX

to achieved As model. more are cloud-based sets the advancements important, our important, if not our business platform our data and technologies we capabilities, in in and subscription-based transition a

or heard you Inovalon One ONE XXXX analytics, cloud-based with each platform architectures, continuing of such XX predictive functionality processing, introduction as language of healthcare cloud-native proprietary natural capabilities. individual an course our the integrated supporting platform. ONE of Inovalon most real was emphasize represents notable The other and the platform ONE more platform in learning or transactional evolutionary XXXX, tool investments. connectivity integration, achievements critical time and EHR in than us data investment Inovalon our these of machine visualization. significant processing, innovative advancement modularity, data needs of components, is a Throughout technology sets The

deploy ONE and of as marketplace. significantly rapidly ONE of Inovalon platform existing offerings with Inovalon can our we With significantly as and these offerings performance well value-based and the which is as platform. The we efficiency speed acknowledged such based our differentiation data the provider we cloud-native delivery And the cloud-native robustness, breadth as and and enhanced being such value software new the created and infrastructure. our compute to by our platform, visualization offerings enhanced platform flexibility market

wide health ONE plans, won UnitedHealthcare, engagements other three our four As health including nation’s national-scale discussed, largest offerings. we five the of multiyear XXXX, of for we nation’s with in platform largest the have plan, Inovalon and health a range plans

a with subscription-based ONE of relationships from solutions onto migrated state-specific won players legacy as and leading engagements platform, the also our regional number converting well also Inovalon clients structures. contractual existing as multiyear while We to

the expect the a offering XXXX the of you continue I a market pleased over eight of contracts Company’s that reception the and adjacent engagements of in And In growth from platform largest in over offerings, significant Inovalon strong this subscription-based increase demonstrate a cloud-based revenue end. end that the portion number platform, mix XX% And number of see sciences to increased the put to strong of the XXXX. four to as legacy These addition, Inovalon number of To subscription-based platform, broken we the Driving platform life life new market been sciences ONE we platform legacy tell reached today, XXX%. subscription-based cloud-based patients and offerings. well the enabled from from area of business to a point our today’s detailing available deck, pharma to in of year’s business, our out now XXXX, transitioning of slide now representing by our on XXXX, is cloud-based number XX% contributions the end to of in in website, as cloud-based Company the presentation XX the by the leaders of the ONE market this the to offerings. solutions revenue, services, million platform with to am to through by number global business supplemental pharma grew base in of having multiyear subscription-based expansion success outcomes-based on won and by year-over-year for that our In in has contribute outcomes-based revenue solutions a increase expanded enterprise this have final the we on X revenue contracts we’re many Inovalon’s progress, nine. on XXXX. Investor

yet, provider Importantly, vast on ONE patients utilizing the these these XX majority not Inovalon are pharmaceutical from have the health currently adopted of small than the million from but platform started plans And companies platform. only patients only also clients networks that by of capabilities. are utilizing represented a the and platform’s fraction and more

as of enabled the over through platform easy engage the financial increasing performance for an value makes subscription-based and Inovalon. does achieved revenue scope to by clients implement, time capabilities approach which platform, As for client these the the quite with us something increases

garner real analytics needed material massive three, these these As large industry created is insights use compute support require differentiators. high-speed world on is tremendous impact; understanding of as translate opportunities initiatives Inovalon and achieve potential number being capabilities. and resulting sets data-driven, seeing number needed. becomes capabilities. because achieved core measured core the and XXXX, and and data And of and four, two, all value-based integration economics. are the the relative training and Important scale to succeed to new capabilities expanded To vertical datasets inform dynamics In healthcare. meaningful are need Inovalon. the is datasets. care call from aggregate into results value-based validation reporting These value-based integration insights of number connectivity, forms market witnesses advanced for visualization to entrants, massive drive and that for massive need that basis needed on competencies purpose-built to and of such in Inovalon to healthcare outcomes and competitive increasingly competencies through these is market And the At scale the analyze these analytics data Number one, datasets. advanced data, to and four insights like are out. respond to the change I’d capabilities; value-based to tenets we’re tool performance Two this, to the a and understanding capabilities;

autonomously, can for analytical first our achieve access with connectivity, in operations efficient data direct and ecosystem time the ability insights. capabilities highly and drive empowers to as clients providing Company. highly is for well differentiated our healthcare connectivity. Connectivity we impact real this The Through as

more of XX% Inovalon compounded electronic of healthcare with rates connectivity since quarter fourth XXXX. representing growth end than of and record greater direct achieved the system physicians, than XXX,XXX As XXX% had growth the annual year-over-year XXXX, of

in expansion to expect of further see connectivity XXXX. our We

The and to of is growing assets. of strong datasets continue data expansion see our and connectivity In platform second ONE this deepening. callout setting our Inovalon adoption, our area

in event dataset it of expanded Medicare, into the all and the market. and And electronic laboratory of XXXX, and counting commercial, clinical data millions in meaningful million the medical over basis. not expanded as crosses are healthcare end count unique on cases, deep programs highly only of This and meaning year-over-year XXX performance. patients patients. of these data quarter includes nearly record longitudinally and translation differentiated It MOREX claims data, financial diabetes driving but such XX the XX% elements increases respectively Medicaid differentiation patient and cardiology a oncology is the data and billion, medication rheumatology from a sourced, primary medical Registry of As of reported to all to growing count Inovalon’s patient data XXX%, major sets is to a cases data fourth matched, results,

impact XXXX. certain exiting performance platform. in the limited ONE Demand being XXXX, our is Inovalon half from unannounced forward decisions further in for expand Company’s first the of growth transitioning the strategic organic expected time, is financial for XXXX at to than our seeing also advanced note strong excluding we ACA are to the stability to against same progress, capabilities could or fourth of Notably, XXXX achieved resulting impact these a growth We decisions, approximately decisions, platform our make the plan, which Inovalon. underlying which resulted to to guidance, cloud-based our around business made be look in review growth, beyond. to enrollment year the are discuss year well-publicized a X% withdraw XXXX, in short-term our a decisions marketplace of cloud-based continuing quarter The by the XX%, Chris outlook in XXXX. to markets, and In midpoint to our business results the well impact, predominantly continued differentiate of ourselves rate XXXX of as strong in With XXXX let that period model. reentering we business adjusting our client this technology financial of these At It’s in see consistent our of any result we a approximately X% good reacceleration Inovalon, surpass of Chris? progression me ACA-related expected Last short-term the during was forward Company’s client-specific better subscription-based Inovalon’s and Looking delivery, a that, full-year underlying organic rate our into more ACA in and fueled to number business heightened rate markets. positive financial value detail. conclusion, be quarter growth exiting certain could health the projected by year. of acquisitions the executed in the these our were guidance. of with plans effects strong our in short-term and our uncertainty positive XXXX fourth and continuing growth the ACA within negative outlook growth for enrollment, in of offset full-year These ask partially of year, financial we in capabilities base. a clients ACA a the Inovalon’s capabilities would which the in important and unrelated our our plans adoption by health on to factor

Chris Greiner

good wrapping in as financial of From growth with in clients financial existing annualized other legacy subscription-based contract new revenue clients. from enterprise the embark companies which per succeeded XX% adverse there on of benefits year-to-year. converting basis, a model results, migrate materially clients afternoon, and result which and leverage a and agreements on and new we transitions, opportunity revenues, predictability another expected term profit fronts, the revenue impact signings heard and models. quarter these standpoint, with operating Keith. aggregate potential, shorter you strong we more year-to-year long-term from strategic We seeing. on signing solutions who Keith, on you, term and XX% is and on often business Thank our year as an flexible the Inovalon everyone. we many fronts offerings Like advanced up up achieved increased forecasted increased guidance, are up Company go-to-market across delivered similar value to But, focused in longer

year, these consistent very XXXX models a forecast fronts a which the investor Towards the supply sequence we in well financial to the that to was we end, with community. delivered and year on executed

XXXX, drivers from XX% you third me half and XXXX as year-to-year of XX% that of As themselves basis. the we to Coming important, acceleration quarter business revenue fourth will year-to-year year-to-year an an organic in quarter, fourth as shortly. seen manifested of the the underlying in the in second growth results off quarter XX% are momentum, and hear on saw in building

of seven by platform As XX% grew fourth strong presentation, subscription-based migration displayed to propelled on of in in being growth the by slide generated XXXX. in revenues growth XXXX powerful quarter XX% with our which The to we from earnings delivered is operating of revenues also year-to-year supplemental offerings, XX% leverage on XXX of environment, sequential expanding margins and year-to-year. points adjusted margins basis points how mix margins expanded gross results and from driven strong technology-enabled by every gross improving basis The returns successfully quarter, XXX year-to-year EBITDA and demonstrate increasing both basis pricing we combination efficiency an a year-over-year, initiatives. and a

and leverage of in continues marketing our sales Sales support Our was expense of strong with to quarter operating XQ investment X.X% $X.X in XXXX. or million revenue compared or fourth revenue marketing and XXXX million X.X% $X.X the and innovation. of in

XX.X% was R&D XXXX, and healthy of year-over-year revenue, quarter in innovation from a investment investment in in and of of up level R&D-related level in of $XX.X revenue. million as revenue of percentage XX% increase at also quarter fourth to a which continues Investment innovation includes XXXX. Our of grow an XX% fourth and remain the capitalized expense representing

XX-months invest patient Registry, Inovalon and competitive to in power of Data in expansion for ONE differentiation. new these including continued in analytical areas trailing providers visualization, PAM. offerings analytics seen data returns with the high-demand can further our and the be to were We EHR investments MOREX also on platform, connectivity capabilities compute months our enhance integration, The of cloud-based

on Tax per per $X.XX net XX, Finally, or year-over-year. Jobs non-GAAP and share our diluted backs, diluted onetime that in XXXX, XXXX. the was quarter enacted addition a $X.XX the non-GAAP of December fourth benefit Note Cuts share XX% from Act add fourth income customary quarter share net per $X.XX, excludes of to income up

with X% provided Our up the diluted net margin across income Full-year the and the million, P&L million, that XX $XXX Adjusted range revenue line non-GAAP report. from basis were of EBITDA from our earnings elements per for $X.XX. full-year Adjusted results the XXXX XXXX. in we in XX.X%, QX up $XXX.X XXXX. was was XXXX EBITDA was was X% versus points share up

short-term sheet. investment of Turning the fourth versus $XXX includes with which higher cash repurchases Inovalon well in equivalents as levels the quarter ended QX. million the in cash, and as for investments, to balance million of share $XX.X impact XXXX

XXXX, million million. full-year repurchased for the we For $XX.X of shares total X.X

fully repurchase expired XXXX. and share was December program Our XX utilized on

In million, XX end the flow days Inovalon operations versus addition, of of $XX.X sales XXXX XXXX. of up accounts cash from to driven delivered the QX very-strong our of end million from improved continued XXXX, outstanding, $X.X focus part which day by days at on XX at in receivable

turn the the the XXXX me to revenue driving in expected let XXXX. profit in Company’s gears forces and Now, are half are outlook. improved that The of persist same to and shift second profile

forecasting X% For higher X% midpoint the full-year revenue with year-to-year growth end XXXX, at we the guidance are of at the of range. of the

continue to business transition an offering to platform will We the subscription-based increasingly model.

Combined, supplemental lift As margins in our presentation represented of guidance. presentation, continuation structures associated client it, basis illustrates is presence we provided forecast XX.X%, in Company and account in efficiency of in the supplemental and the of margins to XXXX, XX of of earnings adjusted in contract technology-enabled midpoint XXXX. what on initiatives. the revenue almost we slide at EBITDA of value year-to-year key with eight X up mix the with the XX% a for higher consistent earnings drivers Slide a growth providing forecasted revenue format points offerings our be of to these with

transformation Company a temporary there a impact that adverse the decision. client-specific note ACA driving in be is toward will by short-term positive You model, the will to parallel platform subscription-based

health a Inovalon, number made XXXX, decisions are many We of most many markets. of year. financial the the pronounced be from to withdraw strategic during ACA expect half of which to largest nation’s of In plans, the this clients first

slightly seen rate than count XXXX XXXX by line much ultimately retention rate X only impacting from expected churn the related in to Inovalon’s what be in and activity. by client to of adversely decision contract approximately from was we ACA is with in revenue down growth points. better X approximately client levels, viewed originally approximately While is Net be points revenue XX% enrollment lower clients predicted, these XXXX. expect as outcome This resulted

midpoint contract the of contribution exit with Absent XXXX the year-to-year growth seeing Company activity, demonstrative points of New and is of momentum bodes services platform largely reduced going growth in the full-year at sales XXXX is forward. sales. to client of Company’s XX rate ACA for year-over-year XX% building growth its would and revenue XQ organic guidance the consistent be well us the

a diluted and per be to million. share EBITDA the and be $X.XX $X.XX. In $XX is $XXX good is million, net terms to as per $XX basis a investment by more and is $X.XX. expand marketing expected of the $X.XX of. And at spoke well efficiencies, of and million at reductions the level, mix EBITDA and year-to-year of to from basis income million, Non-GAAP more innovation, overhead, is profit, Net the than up X% margins midpoint expected related adjusted Inovalon margin million between expected net million XXX savings impacts to $XXX is $XXX detail between share is income that points between balance to from adjusted XXXX leverage continued offsetting between At $XX $XX expected be following volume million. and financial between XXXX. guidance. Revenue million this midpoint be sales be guidance. net in from XX full-year prices income ACA-related forecasting EBITDA and of over between changes representing expected Diluted improvement positive and with XX points expected be with as to platform is non-GAAP income and I and translates to to and Adjusted

summarize the quickly Before the call I back operator, guidance. turn of key XXXX to highlights our let and me XXXX results

and undertook Company is executing XXXX according the to transformation the First, in late forecast. plan

increasingly platform an offering successfully are to subscription-based model. We transitioning

driving is migration an datasets, in expanded activity. Second, compute also just it resulting not connectivity trajectory but improving is this revenue and

fourth full-year XXXX Inovalon’s normalized to would for consistent that of exited basis an participation are continue Third, Company it in persisting rates and and organic are nicely. projected outlook XX% XXXX from the the XXXX, client-specific growth of reflect year-to-year. its decisions transformation XXXX rates dynamics quarter underpin growth X% with ACA how on

continues move have the Keith, clients we before Now, mission for its to Q&A, healthcare. our opportunity be of great data-driven to thank close to turn our I’d serve session. supporter I a journey strong operator transforming fellow I cheering Inovalon empower to me With the Board, healthcare. Q&A it I’ll and to to its shareholders, call the and and the of like had on over exciting back as my let conduct that colleagues, Inovalon

Operator

Ricky Our Instructions] Thank the you. Goldwasser Stanley. of first question from line Morgan comes [Operator of

Your line is open.

Mark Rosenblum

question XXXX. had the Rosenblum Hey, Mark a guys. for Ricky. EBITDA top-line It’s on for just I cadence and on of

give You first mentioned model would pronounced the Can in more X% be should half. on guidance that the some us just that headwind out? you how we

Chris Greiner

Hey, here. Chris Mark,

made First, various puts number years a an towards run really the and seen, this public the to takes I approaches year. we’ve annualized and of point have different been think, forecast over

For half and revenues. on provide the skews the acceleration the of of year XXXX XXXX perspective, purposes half first growth lot guidance, with a and similar from a in the look a it’ll rate with are we of of last half the our saw terms the the getting focused of second what of in we’ll like year, to modeling consistent because look And not first the goals, to to careful quarterly being purposely year. we sake

Mark Rosenblum

more terms just ACA little on you got in is in And what was first is headwind pronounced a like activity what you. on half? the the bit it Okay, exactly the contract and mostly the detail more give of then, why headwind, can

Dr. Keith Dunleavy

that is being Thanks on take for Hey, I’ll this call. Keith. the one. Mark,

states. in for what year number in a maneuvering the of did some providers U.S. So, last deadline regulatory the advance ACA of strategic in for approval various was filing the insurance

might of an different of easier give altogether. And lot a counties couple, example, to them end pulled a than knowing has or how in reenter the regulatory to environment if were year, state or going literally but regions market which easier just to political a again, the illustrative positions. they out areas, state of they took of them that you number the out all for have pulled the not it and a much environment the makes defensive So,

get and projections the achieve various number of saw the volume done having delivered the the in we different behind year, second of that us move we the we in subscription the and ‘XXX, we a announcements into would year that with of Because that These have saw of modularity do in capabilities. that have half flexibility taken to gave as do. activity marketplace get projections well-publicized plans. year a And first half the trickles we So, the of, more platform, are us, we with ‘XXX, and in we client to said to what precisely then front-end lower volume contract them now down and us. that care nature of the the of our capability we the on

again, we flexibility; At slightly which have So, membership have ended increased the ‘XXX the the we day all out. below here of a front-end pull up only to see numbers, get end for that some these clients ACA of. clients well taken care as with other the road as this we’ve and but we us bodes know, added, we we’ll new down headwind going clients these clients as

Chris Greiner

all Keith, us. still one with add it’s clients that point also to contract under important client, save are to those [ph] To out

Dr. Keith Dunleavy

right. Exactly

Mark Rosenblum

Okay. Got just you. quick then, And one follow-up.

HEDIS causing headwind the that that product think to right the So, the is is it? of is way

Dr. Keith Dunleavy

is affected, factor is What HEDIS capabilities to this not the Mark. is I shouldn’t risk that specifically. it’s and space, a And measurement quality and improvement for minority affected. very both improvement fact, No, here. but in more not is very, say, ACA a

how you So, we reflection had our to then is if in a contracts, capability counties, -- they and in those how to have that what memberships platforms. exactly so it's we change platform of regulatory a reflect the many many that's of not but of many made happened

Operator

Our of line next Robert Gilmore question comes the Baird. Matthew of from

Matthew Gilmore

and that first I there clients and Maybe but has does a guess have asking I scene more migration or have when these then be ONE know or and what in seem result that relationship less about Inovalon Inovalon attraction occurs? of part and second the larger the to a the do modular new that migration source more been parts plans to the to in flexible platform components functions that with offering over switch when they and the certain platforms two would

Dr. Keith Dunleavy

to somebody volume our we've or easier move to platform the opportunity our to to client, by and they up some move easier from in and to our platform it's are expands a of a in the then a using decisions with business process client be start platform as scale so to platform monolithic a are our modularly we to else if on to that transition much needs in matter. wants What competitor made legacy whether made that So, have lift much the done approach once them or through and away definitely functionality. the internal more large the in to block store services to our they an going sourcing

across going to opportunity forward. expansions board us quite on platform the So the the materially are more providing

me acceleration capabilities that majority about on so rapid by is very let we year XX% patient As a a vast-vast of in we growth say business turn XX% million the are let getting that the we're on revenue one we at opportunity our platform in million the the the is business in portion see about and me as year mentioned third small turn platform using prepared a segment growth representation remarks in they patients XX the XX the can the of we that subscription look you only the on of at within as me thing expansion had that have that of period. let turn on based the XX of end

Matthew Gilmore

underlying Okay and known would of us in and then the the vast decisions convert of much the guidance and to growth for is churn from same of headwinds I growth? with XX that maybe guess majority one points XX% indications and can how the relative sell revenue you clients of sold guess clients the I need guidance visibility then sense of give items ACA and from are to any you what terms that to there new and the but it on some for revenue

Chris Greiner

Page I'll walk to one it take and I'll of just and kind to from refer that right. the supplemental in just left X

we headwind we range of retention client between historically X short-term you of we've XX%, normal what XX% the would back X the about talked just said XX% churn from count So, of headwind points is points. is rates consistent ACA with net of if to and about expect will, so client that

you component of just XX% on growing is realized points first of an year-over-year are per that in XXXX yields and to basis. annualized size that up both new terms in earlier so on partial that a getting pointed and the of still year-over-year was couple from basis. up metric I there is In Keith commented view, better contract But XXXX quite the are more annualized client those sales that and revenue opportunities XX% was in flow that out and data nicely on

what at it, at your the drop are what both they and yes are to of you are more larger large a you year and close would at those I then forward opportunities those to And are look So, and its nature pipeline the reflective we time platform if higher think pipeline there look in then percentage accelerating answer is to you you the last of present in signed questions. the winning you platform. from indicate

for step equates of six about the XX CCS last will it completeness last months forces just about all on and combination be in X that X.X million those that’s points that the we over see to simply flow-through just So, contributing to inorganic million.

Operator

Our of question next Ryan from Blair. the comes Daniels with line William

Your question please.

Ryan Daniels

grant versus fact time existing of further customers dead you a want that take just to think building those were or a just lives I'm some and related ramp a that focus that for to back the beating lives up some some will revenue horse, those providers issues therefore customers for of exceeded relatively key be I given exchanges to stayed to did disproportionately that it will Without appreciate generate any wise skewed that that ACA trying spill those and not I as over to growth were and other stable the how you. go its the in? Is to

Dr. Keith Dunleavy

back or as as its on the were and look as policy releases you the take Wall the to allowed we they some if if were publicly materially a within Ryan, a the players Keith, well individual a client both you and in well-publicized in regions will call. visible that look in Ryan sell thanks for of regulatory just a the as releases they to being them ACA a cut I 'XX. the that the that to sought Street you geographical see of each number their public permission business more state at that talk in marketplace we It's and far think don’t ACA have about ladder

the this So, illustrative on just try and around let's help just create an point.

reduce lot being the a are only state. up last plan in of one let's presented of that might insurance you many might XXX% some ACA perhaps selling you large that exposure have states, maybe if uncertainties to you states XX of feel to those there the that that the take be different regions XX% and of the in permission like plan a So that from state make be state different submit of that in to are in commissioner bunch they of that year in states you states, sell ACA health a or then so

out in notice You to frequently many would plans dropped the they a states down see the go go how state the did filings of in entirely ACA foothold regulatory this to not from very health to last they year year. will transition

those X% else. far geography can't. sell volume are for So, that permission in year-over-year neighborhood because the right still the at of they you volume went of down to a better regulatory And you're in people geographies applied not nevertheless than was in ACA end would ACA membership somewhere follows the expected, but somewhere if the regardless states day you

the them us model is clients nevertheless can So, and but pull yes do interim done. thing in have the to clients some for membership are opportunity to of a now -- of us, yes, see as in a of -- marketplace out that for that other remained some as the we we upside the went the smart

Ryan Daniels

you it likelihood that any And then final little capital you've and a now on a cash in in that expired question years, the balance successfully strengthened question executed question, housekeeping sheet and in priorities just maybe also driving year? repurchase number out one and investment remains tuck activity, a strong your past of more deployment, assume M&A the share talk for that that's law about one, last with the tax can discussed changes I you've potential bit given flows

Dr. Keith Dunleavy

how very look opportunities, strong generation of sheet, over are all to strong options at flow balance we've so on we benefit of all cash a to best apply shareholders leverage, capability, obviously that have as we small time. to very stated, amount So, fortunate always

range always to keeping an whole is eye the on. So, something be we want that

Operator

you. Thank

Jamie comes of question Stockton of Fargo. the from next Wells line Our

Your open. line is

Jamie Stockton

Just the and product one CARA how everybody now can asking think portfolios, mean guys could the you transition the Keith relative I kind last you there's about about do and environment years, noise, feel aside pricing you noise you now? ACA like-for-like right how you as feel step have pricing obviously that of to if looks touch of couple question been has for about me, on maybe the

Dr. Keith Dunleavy

in legacy we to have that's solutions pressure capabilities so you tail that couple as went 'XX into remember, what predominantly new 'XX of you as marketplace, the that us a 'XX we we marketplace into release or seeing around. 'XX were at Jamie, back that so, of look years definitely in for would as most pricing end the on and as turned really the challenge our a was of describe

So, show continued them outline been been to stronger for delivering has ability XXXX power into value that or for the which have stronger clearly our us. outline for that in have the strong setting we pricing and clients, the clients, of them throughout to value has translate we that seeing demonstrated it

as component year and margins is differentiation, allow on pricing that during of lot the delivering you based getting into allowing throughout a better and see platform performance do that clients they great of be to and is throughout and we the the our nature will, pieces our to has compute doing translate marketplace the see always a components dataset, our in a and configure clients. in for them a want as So, into value increasingly speed, their capabilities but translates so the individual We but to as unique only their lot year a help parts precisely what a differentiated client ability strong to us year. has they to of also basis what for like because with not feeling value they and delivery By differentiation of and our basis, want calculate the it more financial of stickiness not basis that marketplace focus if Chris. wanted. lot the margins the respective on seeing you're of in want delivering relative agendas then the us it that marketplace, combination our is our our of which to size of of in the they capabilities, also and our they're that that do cloud for to year, the platforms platform don't with grew more unique paying respective

Chris Greiner

if basis expansion I margin those XXX just basis were points know year right in basis it’s at XXX on Jamie look you Yeah, gross margins gross full up you the and points. on fourth think quarter the alone

between of margin offerings we in proportionally out initiatives, XXXX. indicative so of efficiency also across and of the that what in another balance full XXX quarter initiatives was basis the think it’s a next drove mix the year see efficiency mix by almost we're points of was terms of contributions driven I pricing would and think expansion XXX to that I the expect that driven good it's XXX odd for fourth price about in we by type and projecting year and of mix

Dr. Keith Dunleavy

today's renewed also are know in announced argue others that of these shorter year in by one Inovalon the that nature. those contracts related, ways client size, platform tag five-year it's their so size during under on health clarified plans think We contract that you also of and the duration remarks bit times in some and press year other of States what so a pricing released our the taking our that five so We've in I renewals we you just in measured by renewals the on to pretty those in United important one And is of that's them differentiation readily five heels show companies marketplace that are seeing the base, previous We length we're of remember for the so up in are top renewal also during are total in out our delivery strength during also years those I to when reflects value four obviously would the think some numbers patient to activity prepared didn't team from that but about we're recently we of up plans One now up contracts to was else some count other and approximately with seeing several are the starting see. list, known seeing contracts something feeling and renewals actually on here gone Jamie we're four that clients ways is and the the through share. duration that length longer you year that we announced point, year in health United ask to the on contract. we a the if those

Operator

Thank of is next you, from your KeyBanc, of line question open. our line comes Donald the Hooker

Donald Hooker

sort loss was this this the obviously unique client excluding towards lot that would think how the help. a remaining revenues a so spread What Inovalon has and seasonality you afternoon, out if of the that think mix? model you dollar your good out from so changed company if is business four the Great, to the of wondering to quarters headwind dollar is I so you took a modeling what for about year related when and of the sort business subscription, forward, could ACA new the outside going modeling typical across given you of

Dr. Keith Dunleavy

moved of of we're to we client the turn that the confident we Don to some pharmaceutical as in put bit of other giving answer and to also companies asked longer it of touch view one in lost we a obviously that rather thanks to remain you nevertheless place particular as had a ACA some one marketplace nice that, market guidance, only losing nice ended And in and touch often but only just or attention we of to our we we and your I'll as that Medicare as might we just it call pleased with and we did of really, executed manufacturers clients loss know be we to in you doing moment talk the quarterly might and for providers we consistently little upside ended that healthcare views ACA are a not business have and there it our that up said here, like and other we went XXXX client lines But we for up ACA bigger very with first but that's we're depending execution were have Number announced basis, contracting Medicare in on being that pieces quarterly obviously did a up ensure on question of they've but intention talking business these payer any a off device question clients. stayed us as did that on kind to side and Medicaid rumors ACA to picture of lot on. and XXXX with want for to we're the that in so to instance. have systems on some then our we the of about the plan we piece we out business Thanks growing the see and clients, and opportunity and them integrate just number our you delivery for going on number business ACA, spending said we're not that other we X the client the sort health of appreciate like lose commercial would there model. which avoid they do that what on we have counts have speaking and the outcomes clients your to one your them, did smart about term time

at into a projection obviously So in XX% the back meaning much only value the amount is strong enormous and XXXX outlook deliver coming this is is XX% other Medicare of the if it's so how carved our and and at organization XX% point of while XX% ACA that of neighborhood ACA market more our on in we is it directionally we've out there the side we wanted downside for the only we some XX% about I lot is provider manufacturing sciences, in spend but that to in pharma, of a a of of time have now business directional based give converted them subscription device we've ACA remember X of left other into Medicare contracts it's neighborhood and a XXXX, as and you life lot growing talking types whereas exposure there amount times to again number.

Donald Hooker

at contracts to to area. is risk. to to experience judicious on driving how separate of it or level companies and being just I a product drug you some health just in trying the maybe and offense your how those high maybe willing plan at that And their sort to always by more or want is maybe the differentiate was or sciences are effective what's curious medications comp the look interested go at they of life

that one are we sort the attention pay that or to? mind drivers in business Just to out should of forward your curious as if there two key going

Dr. Keith Dunleavy

but and area, the our effect looking number move this of enablement of would we're serves lot more making we of number three degree as system of of we a vertical patients of agnostic increasingly progress and of making at we trend more as that value based in the two because more a seeing because difference of being of in First the the and so the is multiple of a degree a are and care. the line, integration to are a forward connections now argue forward going we we're is driven marketplace of towards good type this one platform network a data nine that point, is data all we are seeing

particular both is manufacturer the sides and side sides payer getting we're issue what the the drive of So, from side. pharma two on this market being in the meaning interest

to the because amounts they getting and plan payer client health solution drug market health are brought health an clinical apply leverage plan. opportunity B for XXX how the payer net significant provider the market of say for of quality outcomes through the in their plan getting company our is discovery the a are modeling for a side substantiated be the expanded way relationship the to to the of and not is the the element benefit a to it you is sets on tighter engagement to in of able through if are and positive will benefit significant and we that they financial data. stickier that arm and it That's a predicted cost in put to world a real work for with plan cost this this if payer you on patients is you the the your our million this what So up argument be and delivers data benefit convincing what go phase outcomes in health able back patient with the are to manufacturer pharmaceutical and plus B formulary the they will quality pharmaceutical involvement to getting the see

the platform So, most of and is we interested that of but agnostic and market. from sides, health integration benefits see seeing ourselves we're the hundreds both interest and forward one hundreds that the ultimately are with we between both relationships see it's parties But hundreds we both, patient accelerating. companies we that would that those obviously vertical being have the players it move exciting seeing pharmaceutical important to only provides plans as in like great as

Operator

our question for Frank Analysis. session comes First And from final the of Sparacino

Frank Sparacino

the is a If the go growing from the would midpoint that 'XX? into side, But the like guys a question less to look solution in the talked the at that we to the doing growing helpful relative here OBCs. you sounds terms the is again break was and don’t a particularly segment perspective. product with business historically of get but of from provided what -- guess is down to side side a if that through of payer that other for don’t breakdown of business the a pharma mix you have the bucket from look legacy 'XX be is by perspective question detailed we was the not to if market legacy parts of what's be perspective, what's the it I and and growth In than it particularly payer as at have and you K that look about I we My trying it X% payer overall at would solution falls business subscription growing that in at business and terms segment growing? to anticipate I bucket know

Chris Greiner

'XX. opportunities three you still about to XXXX, some hold holding provider going payer although in XX% that the right me Keith around talk the XX% or about growth, the seeing of pharma X% then revenue as to XX% component 'XX is hit 'XX Frank, at to XX% at quarters over year-to-year, think expanded the based we're the let revenues to XX% growth question, the in I'll which there's hand I can… your that leads I'll neighborhood. really from exciting what's first about of by vertical The and saw to progression was in right driving hit follows: Keith in terms XX% XXXX, from in that's it's next device us company of for

Dr. Keith Dunleavy

capabilities there. So seeing to here growth of going platform we're second, growth point, see pharma and to continued a received in seeing and different we but has space, as our space, you payer forward we're a in number life we for device of in Chris as we're -- the device at manufacturer of capabilities that seeing seeing areas, in new area also the sciences Frank, terms -- -- pharma as, space, alluded nice the the them growth a going number look try and we're order this lot actually I'm the to of extensively, put growth being well space space provider the really in in speak a

because basis they wall our the followed how of of provider. percentages followed base, right, in size from to growth, to pharma is up and device by grow we so about by it's space to them adjust now a little easy of different significantly on need device a we've but starting if payer, so line do Okay, if all, talk right opportunity put bit a smaller for percentage the strongest First just order? we for numbers, in it's

Frank Sparacino

this, half of in was regarding what specifically? I XXXX, XX%, sales one to new if half growth, it you've was sold, on what think right is I that client just and question what yet contracted, has just I apologize don't quantified question earlier is the missed quick or follow-up, the be And XX% it was that but Chris

Dr. Keith Dunleavy

we products we was capability to good haven’t into growth at done expand the broken did our XX% feel but that don't would about that so sell see to from do team both size that this we the it you right offering rates specification of a year out, strength half our point exiting saw sales and of we opportunity year second we year, that and in You're go of organic growth and we a second not the rate we've our nice Frank the in we last that, of them, lot can about that. base, very to break out, we persisting half scope sell last to typically which

Dr. Keith Dunleavy

this spending closing thank first evening. your us in of So, thanks for all time you, with

visible issue really profitability both of in it, and marketplace interest beyond wise. value the to always, for to to one, ACA, I'd delivered of in it and differentiation our we Number cloud capabilities brought performance in X, with the appreciate and modularity with the company, the Inovalon. been what other really Inovalon our strong nature the revenue, cash we really places ONE we year-over-year had we very As deliver, sure. performance flows. we growth wise we financial for we're execution differentiation is in nothing and of us XXXX, received, the near-term expanded hit in three that's like and marketplace in are or going flexibility said to appreciate and business media the to we number adjusting extremely pleased is and the many we based your points, which to the giving for seeing XX% the the also brought Number margins do platform, delivered grew platform we is a us that's and subscription really in the was market helping our impressive also a that financials, two, the something marketplace important well we the

We the company growing rates. organic are digit at double growth

You back saw seeing year, XXXX. digit we’re still double them and continuing through out ACA as as underlying see we we that those we today last strength exited the organic impact, business

sharing to We for night. you progress throughout our your look XXXX. we thank time. So you again really Good forward with

Operator

this Thank your have for and you concludes a day. and participation Ladies gentlemen, today’s conference. wonderful

Inovalon (INOV) 20 Feb 182017 Q4 Earnings call transcript