R1 RCM Inc. (RCM) Q1 2021 Earnings Call Transcript


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R1 RCM Inc. (NASDAQ:RCM)
Q1 2021 Earnings Name
Could four, 2021, eight:00 a.m. ET

Contents:

  • Ready Remarks
  • Questions and Solutions
  • Name Individuals

Ready Remarks:

Operator

Women and gents, thanks for standing by, and welcome to the R1 RCM Q1 2021 Earnings Convention Name. [Operator Instructions]

I’d now like to show the convention over to your speaker at the moment, Mr. Rahim, Head of Investor Relations. Please go forward, sir.

Atif RahimSenior Vice President, Investor Relations & Enterprise Improvement

Good morning, everybody, and welcome to the decision. Sure statements made throughout this name could also be thought of forward-looking statements pursuant to the protected harbor provisions of the Personal Securities Litigation Reform Act of 1995. Specifically, any statements about our future progress, plans and efficiency, together with statements about our strategic and cost-saving initiatives, our liquidity place, our progress alternatives and our future monetary efficiency are forward-looking statements. These statements are sometimes recognized by way of phrases equivalent to anticipate, imagine, estimate, anticipate, intend, designed, could, plan, mission, would and comparable expressions or variations. Traders are cautioned to not place undue reliance on such forward-looking statements.

All forward-looking statements made on at the moment’s name contain dangers and uncertainties. Whereas we could elect to replace these forward-looking statements sooner or later sooner or later, we have now no present intention of doing so, besides to the extent required by relevant regulation. Our precise outcomes and outcomes might differ materially from these included in these forward-looking statements on account of varied elements, together with, however not restricted to the potential impacts of the COVID-19 pandemic and the elements mentioned beneath the heading Danger Elements in our annual report on our newest Type 10-Okay and in our newest report on Type 10-Q.

We can even be referencing non-GAAP metrics on this name. For a reconciliation of the non-GAAP quantities talked about to their equal GAAP quantities, please seek advice from our press launch.

Now, I might like to show the decision over to Joe.

Joseph FlanaganPresident & Chief Government Officer

Thanks, Atif. Good morning, everybody and thanks for becoming a member of us. We issued three bulletins this morning, which would be the foundation for a considerable portion of the agenda on at the moment’s name. Along with Q1 earnings, we introduced an settlement to amass VisitPay, a frontrunner in healthcare and client cost options that simplify and modernize the cost expertise for sufferers whereas driving improved monetary outcomes for suppliers. The transaction gives a tax profit valued at roughly $40 million equating to an efficient buy worth of roughly $260 million.

We additionally introduced the strategic growth of our settlement with Ascension alongside three broad classes, deployment of our PX resolution structure throughout ambulatory and acute settings of care, growth of providers carried out out within the international shared service facilities and growth of automation use instances throughout key capabilities. The brand new settlement additionally extends our grasp providers settlement via 2031 successfully a 10-year time period.

Let me begin with a quick recap of Q1 earnings. I am happy to report that 2021 is off to a powerful begin. Our staff continues to execute exceptionally nicely and we’re seeing this present itself within the outcomes we’re delivering for our clients. First quarter income of $342.6 million and adjusted EBITDA of $80.four million had been each forward of the expectations we communicated on our final earnings name. The upside was pushed by increased incentive charges and decrease working prices. Whereas affected person volumes in combination stay beneath pre-COVID ranges, we have now efficiently navigated the atmosphere over the previous yr and imagine we’re very nicely positioned to serve our clients and the broader finish market within the post-COVID atmosphere.

The tone and high quality of discussions with potential clients in our pipeline may be very encouraging. It offers us a excessive diploma of confidence in our objective of signing $four billion in new end-to-end NPR in 2021. Expertise is more and more turning into the differentiating think about many decision-making processes. Our affected person expertise or PX platform is gaining prominence as suppliers are more and more incline to make income cycle sourcing selections based mostly on what’s greatest for his or her sufferers over and above different standards.

Moreover, automation presents a chance to essentially remodel the character of our business and cut back the heavy reliance on labor that exist at the moment. Our operational management throughout the complete income cycle course of gives a singular lens and vital aggressive benefit to drive this disruption. These two elements are the driving drive behind our continued heavy funding in know-how and the strategic rationale for the VisitPay acquisition.

Earlier than I focus on VisitPay intimately, let me present some background on our PX platform. Once we launched into our PX beginning in 2016, we had two necessary concepts in thoughts, one, ease the burden on sufferers once they entry healthcare, and two, present a seamless intuitive journey throughout all care facilities. On the time the strategic potential of an answer topic this was clear, sufferers are usually extremely dissatisfied with their scheduling, billing, and cost expertise and any transformation of the affected person expertise might doubtlessly be a significant aggressive differentiator for us in addition to for our clients.

Quick ahead to at the moment. I am happy to say we imagine we have now probably the most superior complete know-how resolution to rework the affected person expertise. Our PX platform is built-in throughout care settings starting from main care to outpatient settings equivalent to imaging, labs, similar day surgical procedure, all over to in-patient surgical procedure. With the acquisitions of SCI Options and Tonic final yr, we considerably enhanced our in-house means to digitize order consumption, scheduling, registration and the authorization course of, thereby delivering a strong price efficient digital front-door functionality to our clients.

As we deployed our PX resolution to clients, we have seen a number of transformative outcomes, greater than 50% of affected person registration encounters are carried out on a self-service foundation, NPS scores are above 75 and we have now minimize time spent on administrative duties in half. We have additionally seen an enchancment in assortment charges and a decline within the share of affected person counts that progressed to late-stage assortment actions, which might be a nicely publicized dissatisfier for sufferers. These outcomes have fueled our conviction to proceed to take a position closely in PX. The following logical functionality to convey it in-house is the know-how to modernize the buyer cost ecosystem in healthcare.

VisitPay is a number one client funds platform with a confirmed observe report of driving improved cost expertise and improved monetary outcomes for suppliers. VisitPay makes the healthcare monetary expertise easy and environment friendly for each sufferers and suppliers in a number of methods. Let me present just a few examples.

First, sufferers can digitally view easy, fashionable and unified statements on the guarantor or household degree throughout care settings. This can be a critically unmet want available in the market at the moment. Second, sufferers obtain coordinated tailor communications all through their healthcare journey. These communications, that are pushed by machine studying and tailored for affected person choice hold the affected person knowledgeable and accountable for the monetary spends [Phonetic]. Third, deep integrations with each well being plans and HSA directors provide a uniquely clear and align 360 diploma view for sufferers. Fourth, sufferers obtain financing choices and anticipate their want for cost flexibility. Superior machine studying creates customized cost suggestions that work for every affected person’s distinctive wants, whereas bettering supplier income yield. And eventually, with 10 years of curated information, from 300 million visits, we imagine VisitPay has probably the most AI prepared dataset for affected person cost conduct, an important differentiator as we take into consideration our broader investments in digitization.

The affected person satisfaction, loyalty, and retention, pushed by VisitPay’s platform are vital. Two of a very powerful outcomes are, a 40 level enchancment in internet promoter rating, and a 35% enchancment in affected person treatment, which is more and more necessary, given the rise in affected person cost combine over the previous a number of years. By combining VisitPay’s capabilities with R1, we anticipate to have the richest cost associated performance healthcare suppliers can provide their sufferers from pre-service via last invoice decision. We’re enthusiastic about these capabilities, which is able to spherical out our PX providing to cowl all affected person entry parts, together with built-in order and referral administration, and real-time scheduling with reserving and appointment, complete pre-registration, pre-authorization and worth estimation earlier than sufferers arrive for his or her appointment, contactless check-in and digital pre-service varieties once they arrive for the appointment, and seamless digitized invoice visibility, and cost choices pre-visit on the level of care, and post-visit, with visibility throughout care settings, and into their cost decisions.

We anticipate to formally launch this complete resolution mid-year, and can showcase it on the HIMSS Convention in August, however we can even maintain an investor occasion to focus on this, and different know-how initiatives beneath approach at R1. Along with rounding out our PX platform, VisitPay permits us to ascertain a number one place within the client funds space. Healthcare client debt is arguably the most important and most inefficiently managed legal responsibility in our providers cart. As we search to unravel high-value issues to create a aggressive benefit for suppliers, we won’t consider a greater area for disruptive innovation. And we imagine we might be rewarded nicely for our investments on this space. VisitPay can even advance our know-how platform, with each entry to a strong dataset to reinforce our AI-based automation roadmap, and affected person contact capabilities, which is able to allow us to cut back friction within the affected person entry and denials administration domains. R1 can even acquire substantial technical engineering expertise as a part of this acquisition, which accelerates our know-how roadmap.

Along with VisitPay’s spectacular stand-alone progress trajectory, we’re additionally anticipating significant prices synergies from the acquisition by deploying VisitPay’s deep performance throughout the 40 billion of NPR we have now beneath administration. Over time, we additionally see vital income synergies. I am going to observe our gross sales staff is worked up to speak our enhanced end-to-end worth proposition, since a lot of VisitPay’s set up base lies with Barge well being techniques similars our constitution base of end-to-end clients.

In abstract, the rationale for bringing collectively R1 and VisitPay’s capabilities was very compelling, additional fueling our conviction with the outcomes at a few of our frequent clients, the place we have been in a position to generate worth past what both firm on a stand-alone foundation would have been in a position to do. We imagine these proof factors are replicable throughout our buyer base and a broad set of healthcare suppliers. Subsequent, let me present a buyer replace with a spotlight of the Ascension settlement and ongoing deployment actions, I wish to level.

I am happy to announce the strategic growth of our income cycle providers settlement with Ascension. This growth could be broadly categorized into the next three areas. One, complete deployment of our PX know-how resolution throughout the acute and ambulatory environments. Two, growth of our schedule set up, and sure affected person going through providers via our international supply facilities. And third, approval round a broader software of know-how and use instances for automating key capabilities inside our operations.

As famous in my first level, Ascension, might be standardizing its know-how footprint for digital engagement, and can now make the most of R1’s full PX know-how resolution for each the acute and ambulatory settings of care. Essential to notice, this know-how growth additionally consists of the total suite of affected person cost capabilities. Along with the strategic growth, we have now prolonged our grasp providers settlement with Ascension via April of 2031. We anticipate this growth to be internet favorable over the time period of the settlement relative to our prior contract. As well as, the weighted common contract life for our end-to-end contracts is now 9 years. This offers us a excessive diploma of visibility, as we take into consideration making long-term investments to assist future progress.

Turning now to LifePoint. Onboarding continues to progress on schedule. We initiated Section 1 onboarding in January, and from that Section 2 allow. To-date, we have now welcomed over 700 staff from LifePoint to R1, and know-how integration for Section 1 hospitals is at present beneath approach. We anticipate to begin Section three in July, with the objective of finishing all deployment actions in mid-2022. On a associated observe, we’re happy to have welcome David Dill, LifePoint CEO and President to R1’s Board, deepening our strategic partnership. This depth of healthcare experience and broad vantage level might be invaluable to the corporate.

Subsequent, I might like to show to our automation effort. We’re extremely dedicated to this effort, because it presents a chance to essentially remodel the business by decreasing the latency and inefficiency that exists within the income cycle administration infrastructure at the moment. The 15 million duties we automated by early 2020 delivered roughly $20 million in EBITDA profit final yr. We now have 40 million duties in manufacturing, up from 30 million, as we exited 2020. These 10 million incremental duties cowl eight new routines and exhibit an accelerated growth tempo. The modular nature of our growth method permits us to develop new routines at a quicker tempo by reusing and including to an present automation.

Moreover, the investments we have now made in further core capabilities, past simply RPA, together with optical character recognition, pure language processing, professional guidelines and machine studying, workflow integration and analytics have expanded our automation protection of any given workflow. In closing, we stay very enthusiastic about our enterprise prospects going ahead.

To recap the important thing messages from at the moment’s name. Our staff continues to carry out exceptionally nicely, and that is translating on to our monetary efficiency. With our Q1 outcomes, we’re off to a powerful begin for the yr, and stay up for continued robust execution going ahead. And market dynamics stay very favorable and we have now a excessive diploma of confidence in including $four billion NPR from new end-to-end offers in 2020. VisitPay rounds out our PX platform to be a market main client cost platform, and establishes a number one place within the broader client funds ecosystem. Our growth of the Ascension settlement is a significant validation of our PX know-how resolution, and the growth is internet favorable vis-a-vis our precedence. We proceed to take a position closely in automation, and the modular nature of our growth method permits us to develop new routines at a quicker tempo.

Now, I might like to show the decision over to Rachel.

Rachel WilsonEVP, Chief Monetary Officer & Treasurer

Thanks, Joe, and good morning, everybody. We’re happy to report robust first quarter outcomes, with income of $342.6 million, up 6.9% year-over-year, and adjusted EBITDA of $80.four million, up 30.5% year-over-year. Adjusted EBITDA margin for the quarter was 23.5%, up 430 foundation factors from 19.2% in Q1 2020, pushed largely by vital increased incentive charges.

Reviewing the primary quarter leads to extra element. Internet working charges of $286.1 million elevated 1.9% or $15.2 million year-over-year, primarily pushed by income from new clients, and partially offset by anticipated COVID-related quantity stress. On a sequential quarterly foundation, internet working charges elevated $14.7 million, pushed by continued restoration in affected person volumes. Incentive charges of $29 million had been up $12.2 million over the prior yr, and $1.6 million sequentially, pushed by robust operational execution.

Different income $27.5 million elevated 20.6% or $four.7 million year-over-year, pushed by contributions from SCI, which was considerably offset by decrease income doctor advisory providers resulting from COVID-related quantity decline. The non-GAAP price of providers in Q1 was $242.eight million in comparison with $237.6 million final yr, pushed by prices related to sure new clients, and onboarding LifePoint. Importantly, our automation digitization efforts proceed to drive efficiencies, which helped the price of providers flat sequentially, down 330 foundation factors year-over-year. Non-GAAP SG&A bills of $19.four million had been down nearly 9% year-over-year, primarily resulting from decrease journey and advertising prices in addition to company price management actions. On a sequential foundation, SG&A prices decreased $three.four million as This autumn outcomes included $1.6 million in payroll taxes associated to the vesting of worker inventory awards. Adjusted EBITDA for the quarter was $80.four million, up $18.eight million or 30.5% year-over-year. This improve was largely resulting from increased incentive charges additional magnified by our automation and digitization efforts serving to decrease prices.

Lastly, we incurred $13 million in different prices in Q1 associated to the rationalization of our actual property footprint, ongoing COVID-related bills and prices related to strategic initiatives, together with the VisitPay acquisition and the capital construction simplification transaction, which we accomplished in January.

Turning to the stability sheet. Money and money equivalents on the finish of March had been $103.5 million in comparison with $173.eight million on the finish of December. Use of money within the quarter was largely resulting from $105 million cost for the conversion of most well-liked shares to frequent in addition to capex of $9.6 million. We generated $46 million in money from operations in Q1, pushed by adjusted EBITDA progress within the quarter. We stay targeted on producing robust money circulation from operations. And considered one of our focus areas this yr is to fastidiously handle our AR days, which elevated final yr, primarily resulting from AR related to the RevWorks and SCI acquisitions.

We additionally anticipate our different expense line to reasonable excluding bills associated to M&A actions. Internet debt on the finish of March, inclusive of restricted money was $444.1 million in comparison with $379.eight million on the finish of December. The rise was pushed by use of money for the capital construction transactions. Accessible liquidity on the finish of Q1 was in extra of $130 million per commentary on the This autumn earnings name. We imagine, our liquidity is adequate to put money into and develop the enterprise or navigating in present atmosphere. In an effort to present further flexibility and to fund the VisitPay acquisition, we intend to refinance our present debt services, concurrent with the completion of the acquisition and anticipate improved liquidity and pricing on account of the refinancing.

Turning to our monetary outlook, we proceed to anticipate income of $1.41 billion to $1.46 billion and adjusted EBITDA of $315 million to $330 million for 2021. We proceed to imagine the affected person volumes to stay at 90% to 95% of pre-COVID degree, inline with our expertise year-to-date throughout our buyer base. We anticipate to replace our steerage after completion the VisitPay acquisition. R1 will purchase the enterprise for roughly $300 million in money and transaction that gives the tax profit valued at roughly $40 million, equating to an efficient buy worth of roughly $260 million.

To offer you a way of VisitPay monetary profile, the expansion is robust with larger than 70% compounded in annual income progress over the 2019 to 2021 interval, and comes the very compelling gross margin profile. Past 2021, we anticipate VisitPay to be accretive to progress and margin. In keeping with my feedback on our final name, we anticipate Q2 income within the vary of $335 million to $345 million and adjusted EBITDA of $65 million to $75 million. As beforehand famous, the anticipated sequential decline in adjusted EBITDA is basically a perform of upfront prices related to onboarding the LifePoint contract.

Earlier than I conclude, I need to briefly contact on our ESG initiative. We revealed our inaugural ESG report in March and we’re happy to have obtained numerous optimistic assist and suggestions. We might prefer to enhancing the curiosity of all of our stakeholders via our ESG commitments which might be centered on innovation, integrity and inclusion. Our report could be seen at r1rcm.com/esg and as all the time we welcome your views.

In closing, I am happy with our continued execution that delivered Q1 outcomes forward of our expectations. The basics of our enterprise stay robust and we stay up for sustaining the momentum demonstrated in Q1 because the yr progresses.

Now, I am going to flip the decision over to the operator for Q&A. Operator?

Questions and Solutions:

Operator

[Operator Instructions] Your first query comes from the road of Sean Dodge with RBC Capital Markets.

Sean DodgeRBC Capital Markets — Analyst

Thanks. Good morning and congratulations on the quarter. On the income outlook, Joe, you talked about excessive diploma of confidence in your NPR goal. Perhaps digging into that a bit bit extra, you have mentioned earlier than you have been very energetic on the RFP entrance, together with a handful of a number of massive one. Are you able to give us a way of how these are progressing? Are all of them nonetheless energetic, had some been determined now? After which perhaps anything you may type of share about gross sales pipeline, gross sales outlook? And the way we should always take into consideration you hitting that $four billion over the approaching quarters?

Joseph FlanaganPresident & Chief Government Officer

Yeah, thanks, Sean. Simply a few feedback to offer further colour on development of pipeline. The very first thing is, I’d say, linking to your query, I’d say, sure, the RFP exercise is energetic and we’re progressing that properly via the totally different phases of the pursuit course of — industrial pursuit course of. The second factor I’d say is, our in complete energetic end-to-end pipeline is up 175% because the begin of the yr. So, we’re additionally seeing — we’re seeing energetic alternatives progress to later levels, which underpins a few of our view on the yr. After which in totality on end-to-end foundation, we’re seeing the full pipeline in combination develop properly. So, we proceed to really feel actually good in regards to the end-to-end providing and finish market receptivity and we’re seeing that throughout the board in that general industrial pipeline dimensioning.

Along with that and I feel one other indicator of the flexibleness we have now in our choices, we booked 24 new modular agreements with new clients in Q1 and the general income bookings was 74% forward of our inside goal. So, we proceed to see simply broad-based optimistic exercise on the finish market and that is a number of the dimension that I might present you, Sean.

Sean DodgeRBC Capital Markets — Analyst

Okay, nice. After which perhaps alongside the traces of what you simply introduced right here with Ascension and the entire adoption there now of your PX resolution. If we take into consideration the cross-selling alternative throughout the opposite elements of your present base, are you able to give us an thought of what quantity is at present utilizing all of the parts of your PX platform? Perhaps simply type of how we needs to be excited about the dimensions, the potential round cross-selling into the opposite elements of that type of non-Ascension base?

Joseph FlanaganPresident & Chief Government Officer

Proper. Yeah, the way in which I’d describe that’s with our two in all probability most mature deployments that being Ascension and Intermountain. And Ascension and Intermountain have a bit bit totally different methods because it pertains to their visible consumption, however we’re fairly penetrated with this announcement on Ascension throughout these two buyer foundation. There are some alternatives on the sting, however what I’d actually level to is the ebook of enterprise outdoors of these two anchor clients clearly LifePoint, Quorum, Amida, Rush, Penn State, and so on., and there are vital white area for us to increase into. And as I mentioned, more and more, our objective is seamless integration throughout care settings. In order that’s ambulatory acute and more and more based mostly on our growth roadmaps post-acute setting.

After which in addition to seamless integration throughout the workflow, what I imply by by way of workflow that the order consumption, the referral course of, scheduling indicators, monetary clearance, i.e., the registration or create and so on., that course of, after which lastly the cost course of. In order that general worth prop is resonating. And we see robust receptivity to that in our captive end-to-end clients.

Sean DodgeRBC Capital Markets — Analyst

Okay, that is very useful. Thank, once more.

Joseph FlanaganPresident & Chief Government Officer

Nice. Thanks, Sean.

Operator

Your subsequent query comes from the road of Donald Hooker with KeyBanc.

Donald HookerKeyBanc — Analyst

Nice. Good morning. I perceive the acquisition of VisitPay, however I used to be curious should you all might present any element on VisitPay’s financials itself? Like what precisely are you buying financially? It is the corporate that may type of — what sort of income ought to we begin constructing in? And EBITDA — is there different massive EBITDA losses, are you able to elaborate on a number of the financials of the corporate that you just’re occurring?

Joseph FlanaganPresident & Chief Government Officer

Yeah, what I’d say, Don, is I am going to simply use the total yr foundation. So, we glance to — if we glance to 2022, we might anticipate this enterprise to do about $41 million, $42 million in income, and we’d anticipate it to contribute conservatively $7 million to $eight million in EBITDA. As Rachel talked about in her commentary, this enterprise has been rising at 70% compounded over the trailing three years. So it isn’t a really excessive progress profile, and it is obtained a really compelling gross margin fee, that comes with that progress.

However, perhaps equally necessary, there are vital, what I am going to name, captive operational synergies. And what I imply by that’s, that is the place we’re not depending on the exterior markets for progress. We’re simply to a big diploma accountable for totally deploying the VisitPay platform throughout our contracted ebook of enterprise. And people synergies come within the type of digitizing interface with the sufferers across the cost course of, which permits us to decrease our price construction.

The second factor is, bettering the yield, which contributes to our KPIs. And the third factor is, we predict over time, we can materially shift on to the VisitPay platform digitized statements, or on-line invoice presentation. And at the moment, we have now a major quantity of price that also exists in print assertion operations. Considerably tactical, nevertheless it’s for sure, from our standpoint, a synergy that we have now a excessive diploma of confidence in. The collective each of that’s in all probability are maturity greater than twice within the tempo 2022 contributed with us. So once we roll all that in, not even counting for internet new progress, we predict we are able to go get — we predict on a synergized foundation with solely assuming our working management synergies this can be a very accretive transaction for us.

Donald HookerKeyBanc — Analyst

Received you.

Joseph FlanaganPresident & Chief Government Officer

It is a very strategic know-how functionality within the eyes of the top market.

Donald HookerKeyBanc — Analyst

Received you. I imply, simply to be clear, so there’s the synergies, which make a ton of sense that may in all probability part into your P&L over the subsequent few years. After which if — simply on a stand-alone foundation, you are saying $41 million, $42 million of income subsequent yr, clearly, excessive progress. I imply, simply to be clear from what…

Joseph FlanaganPresident & Chief Government Officer

We’re rising at 70% trailing. That progress will are available in because the enterprise grows. However it’s nonetheless in any state of affairs going to be, from our standpoint, looking previous 2022 off of that foundation a really excessive progress enterprise, and really excessive margin enterprise.

Donald HookerKeyBanc — Analyst

Positive. After which perhaps simply as a follow-up, additionally would love to listen to — I imply, VisitPay has been round for some time. I feel I am simply their — not accustomed to them clearly. However it appears like they’ve some good logos on their web site of various well being techniques they work with, a few of that are RCM’s shoppers, and a few of which aren’t. Are you able to simply speak about type of any perhaps shopper introductions or type of overlap or what their shopper base appears like?

Joseph FlanaganPresident & Chief Government Officer

Yeah. One of many issues that — as we seemed on the totally different targets within the affected person cost ecosystem, one of many issues we actually preferred about VisitPay’s platform, is that they’ve really served a number of the most subtle well being techniques, and you may see that of their logos, as you referenced on. And from our vantage level, that is a very necessary functionality — demonstrated functionality that we like about their profile. We all know how arduous it’s to serve a number of the main well being techniques. And people are well being techniques which might be run very, very nicely. So whenever you see a know-how that is driving incremental enchancment, whether or not that be within the affected person expertise, or within the monetary outcomes that could be a true proof level from our standpoint to the main place that VisitPay has.

That is the primary level. The second level is, proper after this name, we have in all probability 20 calls with prospects, that means not present clients. We’re actually excited to introduce this acquisition, discuss with these potential internet new clients in regards to the enhanced worth prop we’re bringing to the market. And that is a sign, Don, of a number of the progress synergies that in my prior feedback, I did not even embrace. However we do assume there’s potential over time for these to be vital, and doubtlessly outweigh the captive operational synergies that we utilized in our underwriting case.

Donald HookerKeyBanc — Analyst

Nice. Properly, sounds fascinating. Good luck, and thanks for taking my query.

Joseph FlanaganPresident & Chief Government Officer

Thanks, Don.

Operator

Your subsequent query comes from the road of Stephanie Davis with SVB Leerink.

Stephanie DavisSV8 Leerink — Analyst

Hey, guys. I echo my congrats on a really busy quarter.

Joseph FlanaganPresident & Chief Government Officer

Thanks, Stephanie.

Stephanie DavisSV8 Leerink — Analyst

Following on the final query, I hoped to listen to about the way you selected VisitPay among the many many cost suppliers within the Well being tech universe. And simply, given a few of your prior investments on the affected person expertise platform, what nudged you nearer to purchase over construct?

Joseph FlanaganPresident & Chief Government Officer

Sure. One of many issues — as I discussed, one of many elements for us selecting VisitPay was, they’ve demonstrated worth prop into our goal clients. So once more, that was for sure an element by way of our calculus. The second factor is, we have now had a chance over the previous couple of years to have an element buy-sell partnership with VisitPay. Now, what I am going to say is, we have now not taken full benefit of that, simply due to all of the priorities that we have had ongoing round deploying then progress and absorbing these issues, however we all know through that partnership, we noticed a firsthand the outcomes that we might generate.

The third factor is, as we obtained into deeper discussions with VisitPay, we had been actually, actually impressed with the human capital, or the expertise they’ve within the firm. And I’d significantly emphasize alongside the next three traces. Their progress, their gross sales staff, and their channel for progress. The second factor is their advertising and a number of the commercialization and productization abilities that they’ve. After which lastly, and most significantly, with the know-how growth profile. And so, expertise was a giant issue for us.

After which the third and last factor is, actually simply on the superior analytics and algorithms they’ve round serving the affected person with very tailor-made financing choices, and we predict that is a key differentiator above and past only a invoice presentation platform, which clearly may be very, essential. However on the finish of the day, these deep insights and the analytics that they’ve constructed over the previous 10 years, we predict are compelling and differentiated to their friends.

Stephanie DavisSV8 Leerink — Analyst

Understood. So, type of provides to your PX growth capabilities going ahead as nicely.

Joseph FlanaganPresident & Chief Government Officer

Yeah. I do not assume — I feel we’re in actually fine condition from depth of functionality in each one of many workflow steps, the place our name it natural investments have been, and are going to proceed to be are across the deep integration throughout the method flows. So, throughout that workflow continuum and deep growth work to make sure we seamlessly combine throughout care settings. So, I discussed ambulatory and acute. That was a giant strategic driver in our discussions with the Ascension.

After which, I’d say, trying ahead, we anticipate making vital investments organically through our know-how groups round extending that workflow continuum into the post-acute setting of care, which we predict there’s a vital alternative. After which the ultimate factor is, from our standpoint off of the PX platform, we predict there’s a very logical extension of a few of these providers to higher serve the clinician or the supplier. So, these are some areas on our inside growth roadmap trying ahead that we’re very targeted on.

Stephanie DavisSV8 Leerink — Analyst

Only one final follow-up for me. Simply given this acquisition and the prolonged extension contract, how does it change your relationship with Phreesia, if in any respect? And you already know that Ascension remains to be inquisitive about increasing the hardware part, given type of the altering views on that with COVID?

Joseph FlanaganPresident & Chief Government Officer

Sure. I actually do not need to get into — it would not be — what’s been my perspective to get into Ascension methods from an IT standpoint of hardware. However I’d — what I’d say is, we’re very targeted on fixing a really sophisticated drawback, which is and I am going to hold referencing this the combination — the seamless integration within the eyes of the sufferers throughout care settings, and throughout workflow. And for us to unravel that drawback, we have now to go very deep on the combination of know-how, and that underpins type of all of our bias and our actions.

Now, there might be totally different personas of shoppers, and there might be clients that do not essentially need to embark, or they don’t seem to be ready at this cut-off date to embark on that journey, they usually simply want a really compartmentalized resolution set. So I feel our focus — and what I’d draw your consideration to is, our focus is alongside these traces, and we really feel, and we’re listening to from our present clients in addition to goal clients, who by our personal ambition are of the bigger type of built-in well being techniques that they actually would really like us to convey that worth prop to the market. In order that’s the place our inside efforts lie, which is simply perhaps not the identical finish market as a number of the consumption firms.

Stephanie DavisSV8 Leerink — Analyst

That could be a tremendous useful clarification. Thanks, and congrats once more.

Joseph FlanaganPresident & Chief Government Officer

Thanks, Stephanie.

Operator

There are not any additional questions at the moment. I’d now like to show the convention again to Joe Flanagan. We do have a query, I am sorry.

Joseph FlanaganPresident & Chief Government Officer

Go forward, please.

Gene MannheimerColliers Securities — Analyst

Thanks, Joe. Good morning all people, and congrats on this quarter. Did you discuss in regards to the shopper overlap with VisitPay, particularly, perhaps quantifying the market alternative of cross promoting into your base and vice versa, perhaps RCM into their base? And up thus far, do you’ve got any of your individual sufferers performance that perhaps goes to get replaced, both self developed along with your script library, or are your clients usually utilizing third get together functions for this perform now? Thanks.

Joseph FlanaganPresident & Chief Government Officer

Yeah. So, let me first cowl — simply give a bit bit extra colour on shopper overlap, VisitPay serves Intermountain. So we work with them in that setting. And as I discussed earlier than, they’re partially deployed at Ascension. We’ll totally deploy the platform at Ascension. After which, in our captive ebook of enterprise, outdoors of these two anchor shoppers, there’s vital white area for us to deploy. Now, as a part of that deployment, we might be displacing third get together affected person cost platforms that exist in that third get together spend that — with our contractual frameworks and transition to our management. And that is very a lot consistent with feedback that I had prior to now, the place we have now an inside know-how platform, and we have now very broad protection of the method with our captive know-how. We displace and insource, combine and simplify for our clients their know-how ecosystem, and that may happen with VisitPay.

If you happen to take a look at this outdoors of primarily Intermountain, and you may see a few of their logos on their web site, whether or not that be a Innova, Carilion Clinic, Geisinger, Henry Ford you begin to get a way that, from our standpoint, they’ve executed the arduous work of attempting to penetrate the main built-in supply techniques, and that is squarely in our strategic focus from a progress standpoint. It is early innings, we’re simply beginning a course of. However I am usually optimistic that these discussions will obtain nicely, and we’ll have numerous focus from our industrial groups to curate these relationships, and look to convey the worth on a broader foundation that we are able to ship through partnership. In order that’s how I’d characterize Gene type of the spectrum, I am going to name it set up base, and shopper potential synergy.

Gene MannheimerColliers Securities — Analyst

Fairly useful. Thanks.

Joseph FlanaganPresident & Chief Government Officer

Thanks, Gene. Heggie, if we have no extra questions, simply thanks on your assist at the moment in moderating the decision, and thanks all people for becoming a member of us at the moment. We’re very excited in regards to the developments that we’re saying, and stay up for updating you on progress on an ongoing foundation in future calls. Thanks once more for all of your participation.

Operator

[Operator Closing Remarks]

Period: 43 minutes

Name individuals:

Atif RahimSenior Vice President, Investor Relations & Enterprise Improvement

Joseph FlanaganPresident & Chief Government Officer

Rachel WilsonEVP, Chief Monetary Officer & Treasurer

Sean DodgeRBC Capital Markets — Analyst

Donald HookerKeyBanc — Analyst

Stephanie DavisSV8 Leerink — Analyst

Gene MannheimerColliers Securities — Analyst

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