HMS (HMSY) 3 Aug 182018 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the HMS Q2 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Dennis Oakes.

begin. may You

Good conference Gigi. welcome the to Thank for morning, the earnings call XXXX. second HMS you, and quarter of

posted are supplemental Jeff webcast perspective Today's as get question Investor ask and section We and of our on second one Chairman Bill and earnings the quarter open XXXX our will be accessed Jeff through release Financial outlook and Bill will we of company information website. Investor Executive presentation list on can This full one questions. financial for slide me that a Relations the as follow-up, so well Officer. being you and our Chief Sherman, an callers our the website first and is well provide call our line are in as by we Officer; IR then containing kindly their our results Joining limit timely Chief Lucia, can updated for at to as fashion. hms.com. inquiries

get started, I we of that statements business view the are and actual Such cause future results today. XXXX see we uncertainties to subject are make those we materially. business our plans expectations remind it to as objectives today current of based may financial will some forward-looking our you the on to want our differ Before performance full-year including statements related outlook and future and and to that risks

XX-K. XXXX in release SEC results filings are earnings until As company's recent in and our not described conjunction is quarter preliminary the Form Form risk the second a with cautionary statements result, they filed. release, reflect The in today's today's be our should which in results XX-Q considered most final earnings financial including factors

non-GAAP begin. We're included the morning. ready certain earnings to those to of measures both this a we Bill? in now and Investor GAAP measures to presentation. is And reconciliation refer our may Finally, release

thanks to and our Dennis, this you, morning. for joining call everyone Thank listening

adjusted particularly year. have improve the ongoing based Our second line top several the achievable a last to we quarter EBITDA revenue, year-ago growth XX% quarter Based quarter second exciting year-to-date focus strong believe the XX% for of as received are board to Medicare of to months first up the in of reflection commercial revenue, quarter, have grows a XX% total what model, a revenue includes quarters. year. sequential compared the of excluding leverage performance in Integrity quarterly to are more we with the success at past efforts core both many progress $XXX raising we a we the guidance full-year halfway business in of plan over guidance pleased accomplished up this over mark year-to-date intense $XXX Record revenue quarter the with the are for reserve benefit first XXXX. EBITDA, Both revenue, $XXX $XXX into Combined XXXX. financial year-to-date six XX% million second and quarter numbers, to the a first realize our in Medicare on solid and release. and positive up the of to Adjusted on compared the increase year, our first-half quarter the to include highlights health our revenue these we RAC visibility RAC remainder Underlying second from Payment million million. range reserve and of performance. our will quarter. the the the bottom the XXXX is higher to but the we million first on the range aspects execution go We nearly of Jeff our targets performance and impact compared XX% release further than and and the to across in our our is of sequentially

implementation Over increase made improve XX and yields our efficiency continued revamped the products. investments months, Coordination significant in Benefits and process past Payment in improvements to technology, product we of both have our Integrity and

customer and new is several addition of their In products intelligence the on through medical base, of population small of to consumer, over the heritage the acquisition especially the our improving focused to This which added product. increasingly of launch we capabilities vertical developed available the now internally risk majority costs. our is percentage significant members large Elli, past have also quarters, new management and Essette Eliza our the generate who

care and but quarter, total of quarter. to solutions compared second revenue in for accounted engagement grew the consumer management prior Our about XX% the nearly XX%

expect more could the includes first the of and over sales. new higher year dozen We health which continue are balance of the the to and considerably discussions, with will The we plans which percentage few through currently XXXX next of growth than beyond, strong that advanced expanded lead push Eliza whom pipeline to has since total revenue two year-over-year having years.

Eliza can XX to as often days. days as be and Importantly, XX producing solutions implemented and revenue little

of in year. As quarter the this a customers, quarter expansion benefits already the result, existing year we're are Eliza first customers fourth of HMS cross from in which and and seeing sales last to sales the to made

asked handling we a campaigns, behalf a approximately of for Eliza This evident in of large targeted chain which our special As a on is Eliza hurricanes, can quick pharmacy quickly as turnaround impending national recall, generated was million. quarter, essence. revenue members drug capability response of path for when the the outreach $X.X fall, of customers when again time last of some organize project, in second a completed outreach to demonstrated the in short their

management. As platform, integrated said, our modular utilization care traffic controller provides care and technology

that with been or so, The delays expertise months this the benchmark claims and to projects Essette our reflects the of of the of multiyear ink Puerto fee-for-service to population, completed this medical analyze year, MCO the the Elli increased We and sophisticated and the solution is data what our months algorithms. on By revenue first large their Rico. seen of of the engagement also were Shield Medicaid value of Elli, with to Management at health second to pilot work create to scope for objectives. generate new ahead number workforce eligibility, interest our both because and was deep the which been the offerings sales wins more customer project HMS year are year, or together containment has has notable beginning customers began the Most approach member with demonstration ready profile Cross has historically our XX%. capacity. Essette for with can care. overall growing for is plan a will could Population on second for of Medicaid also contributing clinical material claims the appear Payment recent which hold technology as evident quarter, full-year but from number revenue demand six our our Total utilization across of in brings logo The in growth Though, have financial But of with the several Elli confident our this year claims, to process providers. in expect reach a initiatives, The do a to uniquely than increased of and to and our that of quarter. our utilizers for is other of Blue innovation we actionable green improvements, support strong last quite progress pharmacy, than analytics are help identify analytics others this client cost to two reduced engaged feedback continued when and management dramatically in highly largest equally factors who plan signing we payers. in enrollment We Medicaid the new aggregating New implementations first product positive. from well-positioned the offer inking decisions the about the contributing solution the COB of inventory factors. for database, new profiles. have most declined customers through on and however vertical. and Blue risk a There understand rich risk is for rely for coordinating led pending It its upfront solutions need and internal is notion our execution who our are doing internal waiting dedicated utilization implementation combined to and innovative of better members to help not diagnoses, payer progress, network were data the our issues includes plan The which Since members care in biggest modules, members the rather and application, high intelligence data of profile launched Integrity. by contract and we

assets those helped first our year. expectations through original of us outperform half fact, the the In

of on final will full-year XXXX, similar firmly are driving basis. share focused As a the we months Jeff? the on his quarter. we now enter success Jeff, on thoughts

everyone. and good Bill, you, Thank morning,

an million grew EPS with this from again year the of the on EBITDA EBITDA EPS total for release over nearly pleased in over the the the include in and business. XX% $XX of inherent same grown RAC adjusted demonstrating per year, to our Both very XXXX, ongoing share settlement earnings first add-back grew year months period has and Medicare rate quarter a and the in compared $XX of sequential we the leverage sequentially, quarter $X.XX second Adjusted a in XX% adjusted of faster the basis. performance Normalizing quarter. margin six for are the non-recurring adjusted perspective. Through million XXXX. our first We at and reserve significantly revenue adjust in revenue, diluted EBITDA both

business. cost revenue technology Integrity points containment management from of impact quarter in more EBITDA up grew learning and natural approximately quarter. increase margin as last was The this revenue to improvements improvement compared basis process in volumes Our Technology in applications, intelligence, quarter adjusted artificial over XXX remains processing quarter. continue Expense in medical yields basis and and the ongoing points language higher is play evident machine targeted and Payment including at XXX year-ago role and focus. the selection to particularly an PI a better across XX.X% record resulted our

So quarter well. we second as those metrics were pleased with

roughly issuance software in increase equity amortization declined as included that expected, were million, the a decrease Excluding compensation total Stock-based as points prior basis the a the total settlement, including expense $XX modestly, XXX $X approximately of of but about by first the from of quarter, which quarter grants, our and million. operating an offset annual was revenue. million compared non-recurring percentage expenses compensation of down to partially line $X

to quarter June now generation million payment million, in settlement Turning cash despite compared $XX.X year-ago the to $XX.X quarter. at $X prior $X than from higher and XX, million quarter, of the operations the cash strong $XX in million the million million the flow $XX was quarter-end. was of cash prior in

business security we still tax year expect settlement full negative second quarter to continue to data and income. loss million. will invest demands. the book keep in needs pre-tax to in external effective the internal expenditures infrastructure quarter discrete grow tax the $XX were to the compared despite rate benefits the be with X.X%, capital to GAAP $X.X spending and was We the for The changing operating in approximately due technology, our to and pace Capital and million related

settlement the effective approximately quarter tax XX.X%. would in the been Excluding have the rate expense,

continue the results Taking land rate range. the we six at the EBITDA, XX%, the into projections to outlook, including tax XXXX, full-year expect our release, included are our current to mentioned of spends an top the our to through it suggest approximately of end first that year, is we adding our months the first back XX% will results account, effective quarter GAAP second full-year raising For and reserve which as of Bill settlement both in quarter earlier. adjusted but

through and engagement harnessing have quarters well of to positioned significant months the addressing meet the results and will closing in processes, the ready Combined we financial now improving first satisfaction with few XXXX, made remarks the have issues, we yields, questions. internal progress then boosting Bill? our product six higher we'll both believe full-year brief are Bill last enhancing customer for implementation technology. employee be and objectives. of benefits We over

belief do XXXX. customers so of and We combination Jeff. you, with our a executing with an what We innovating healthcare our across outcomes and members. balance to now it to first To sum the in we core our move through for Thank predictability and solid assets, a to costs. every the we reduce of are of to determination our day had their and up, all very and equal year now to of your strong Thank our data, support half and you do continue first confidence for unparalleled associates, we landscape customers clinical service ready with help the importance intend question. customers healthcare consistency and customers improve in mission. and shareholders analytics of the HMS Operator, for the

Sean Our first question Dodge is Jefferies. from from

Your line is open. now

from for Hi, Good morning. or of with few you're of at in both the Bill, for least big bookends put years. questions. platform for maybe over The clients. coming you the health taking next growth care you quantify year-over-year plans, are what opportunity the couple strong out dozen existing new us expecting management some the years? around expectations Thanks over and that in your Can mentioned, discussions growth now

said we've business. and that segment of growth, double-digit would there's the fastest-growing Well, be continued our

guidance because need We of and to area the manage but double-digit customers top-line given the that's and bottom-line, manage which reaching are investing in, course, we case to of we're so. really in an our us haven't their an multi-year have continued both – do for, opportunity it, on and of this to out both growth,

mean, year. as addressable is range X% showing Sean, market of I to billion those add Jeff. reasonable. I growing would billion $X the total $X some are and just this view estimates in member a And roughly We I think engagement

addressable total expanding. and the growing we as see market So

And think next on we the the significant capitalize to I see several over years. that, so potential it

Okay. us, would came the using like much learning, from machine a And about and beginning the long. how few next of made So, nice we parse like in frame for some could things investments so you to in margin ramp for help Maybe pay of the from runway how That's the are really – then, I that helpful. drive talked then off? investments Can margin technology? progression the that years? for you us here pretty you've imagine quarter. still that AI And is those see steep over out

Bill. is this So,

revenue our to the payback that I of helping costs. comes those without the just think the see provide, increased increased have we investments started from additional those additional fact investments. ramp are margin from us Most generate

percentage it's revenues. line as total and And our stayed you steady saw so, comp pretty lower a as of

also continue we be Jeff. to broadly able revenue, that us more believe to we'll to contain So, these be technologies continue used, with to helping costs, but increase they're

Yeah.

more on process other see investments, us in investments the efficient language and in we an I are made it think accuracy. services to of drive and make And I And we progress yield our our in also our robotic discreetly natural difficult there. like Big Data are how track break things think automation out, it's processing helping some improve incremental certainly cost and deliver side, to the an overall yield. on having but that impact we've continue to ability

do expense side of top an line the from see favorable investment. impacts our both So, technology and we

good. Very Thank Okay. you.

Thank you.

is question next Blair. from Ryan Our from Daniels William

now is line open. Your

the about that Medicaid kind a Thanks approved into adopters questions. something you you the this Hey, allowed detail you number of yet, really, more as Is on bit guys. payers? new aggregate are do early with for Elli. across a then basis, or see revenue state a to two, is organizations? state-by-state the plans I it data I'm interesting Medicaid that's big taking And managed there being know how go more driver curious product but can if prevalent little isn't national?

right claims state fee-for-service the has to claims HMS the are the So at Ryan, and managed the care state really take and the aggregate both them. that encountered level, from because it to the starts plans allow

in of which to do, for will to based state So, be down the I'll to may importance understand their that's is months And of the day state, moves the condition geography, profile road, on health history the clinical in another. or forced talk top the one, the that use clinical the they make member instead as interaction ER. an just a of they of plan new the member. in and have of two system basically need that, now, when different that six through importance same with they'll But case, out with a one plans Medicaid see to now of that really the this about members chronic an in immediately up four very show months a they

believe positives. it a couple their team, them out false engage care we that a course, of really we lot lead and So, months to management gives of

So, most the in adopted Medicaid initially to we be market. think it's going

Now, to which where season, lift now or we're remember, is to health into their XXXX, saying we why this a revenue. plans in we're selling don't runway you've in have for expect budget big got for XXXX selling put a big a

just you never claims on give just We've we've another us said is who this have plans had overlaying had me own us, giving Let to our data health example. before. insight

So, we do this geared an those management is intervention identifying not point. and potentially care you that those members believe from if tool become are chronically now are make have a chronically ill, at members be that going may we to that risk or underserved that intelligence towards ill

market significant value. use and So, does broader just cases the data are just those than sharing sharing Medicaid the data, add

behavior their to manage outcomes. and care to the the to engage continuum and clinical would mean, just the platform with we tools just of Ryan, help this part, better I our we lead is is Population but stratification Eliza And Essette Essette component our to change risk Total use the Management intelligence it, care offering, can view I add, patients the Jeff. risk first actually the the

sense, we're the to said, we their Bill our unique a customers a offering, our to care plan for use as health And so, again, targeting that comprehensive members. state do improve we can actionable analytics have think, in quality actually approach and

Okay. of that helpful those with states individuals. get them And or relationship high solution RFQs That long-term have bit can and managed but color. cost fluidity ROI for opportunity fees, And this super type the in Medicaid, kind like to for your little if to vehicle reduction it's to is perhaps a something it deep this I'm the or an there unique leverage pushed a that, be seems managed really RFPs curious, there's given PMPM of offering. for the because underwriting such of of they Medicaid trends, opportunity a kind business, know of I include towards market lower cost this any is for lower that? of question,

but look we've moving Well, talking mean managed or trying to it going and or either a managed those a been the they're it it, risk. care state this or states there at that's that use are new use have use an is. I population to when expansion what getting them members but not day population to mode in now, care, know go actuarial the definitely plans in plan able plans to taking technology, only if from and will they immediately require one, to that and be to perspective, into enter

even to go heart going If North new Basically to the and there plans enroll diabetes able those went care, find to are they've risks So, actuarial been lives into better if – be be it. on whole or can at XXXX. to perspective. use able from and this they this that in use immediately stage starts managed Virginia's it so. be want Carolina interventions from that think, say, in XXXX, to Medicaid management disease expansion better before, members they will congestive is they'd some I an if in fee-for-service were to be failure to state that the and at the they may use or can eventually appropriate to specific take there's

great Okay. year here. Thanks start on the the and congrats to

you. Thank

Thank you.

is Gupte Leerink Our next Ana question from Partners. from

now is open. Your line

the Good questions. solid a It's quarter morning. you taking and Appreciate thanks. congratulations. Hey,

and your population, The the the existing How the pipeline, states of market or I about talked strategy new about [Technical sourcing much now business clients versus of clients number services is and/or your Difficulty] right base? to a mostly is your first reduce the the you pop market of the the in suite it the existing client (XX:XX) suppliers outside about kind health was for also marketable question growth. plans of and had X%

answer. I'll start I'll ask and Jeff

terms the being tools, management whether care take the of this initially is been the consumers. all broadly providers They be they or So, is approach marketing, tools, marketed the that find we've in specialty space, the space use physician aim even a the organization risk. health of and with to to use independent engaging one services large plan a and that but has to of market to company the to market that can taken taking triple can really – of triple manage action action it'd

HMS Eliza, in Essette funnel, believe sales I'd that about accounts could our about show So, critical which I that we're XX are funnel sales to the and discussing our relationships. it's say accounts, that sales to is in sell Elli very probably in that there's And actively both of through HMS the HMS with, existing generated. acquisition a combination accounts we to

new buying And logos So, to Integrity our HMS the are accounts Payment then the or rest COB is services. company. existing our

Jeff, sales talking want the just our state market solution. much TPM a have you about who that started deliver tools to? funnel strong these we types build really very So, And of continues in arcane services. more it, to have to to we

alone. I billion billion thing, Ana member engagement market add was that $X is side only The I was $X a mentioning from the would perspective, to just

a roughly Population overall error, Management the roughly If in care. the billion include paid billion that addressable expand significantly healthcare in which of we and errors unneeded multiple-billions spending, Total in mean, is moving about Total that traditionally all Population you into our think total a-third foundation to I our the higher. Kaiser payment solutions, market talked system by we we estimates have Management, $XXX think to $XXX of widen it's about dollars

errors $XXX market errors. total to the in from roughly, So, goes $X a in almost billion trillion addressable

think with we that on into we focused So, as that what next opportunity tapping solutions I – prospects again to ability over think, address several the our market comprehensive are like about that that actionable years. analytics,

then in would to about what the it. somewhere as... And PMPM can it's subscription, XX% outlook the this the payment on Got that year be maybe of for talk into model, XX% the the you XXXX

model, we are of revenue we we are our specifically Yes, a over type this as percentage on time. were we where to in them we for work generally of health close too. time. plans opportunity also And as Eliza seeing so good in finished health project into months model – I think the help We walk to through evolve start products, run the expect going six can model we gaps I I back type have seen running that most uptick full recurring our We about that members improve into the customer. XXXX, the model transactions that found outreaching in a year, and both HEDIS Star care and get going settle model, and that We're again, we revenue series quarter more driven, transactions as certainly a moving of see year. What, the basis. particularly transactional subscription have to subscription an think subscription still helping don't half process we is, ratings. year first view that noted a to we're recurring and target do the for subscription multiple was just Eliza It's think as to with transition We of them going the to start we I work every volume nature. it's over new transactional the in to or plans, what a of we're

to that And and traction direction want the think are there model we in approach drive over I comprehensive certainly subscription several that's the next getting we years. so,

be And And we'll subscription consulting market of basis, is may a or on do license managed if then smaller And a SaaS is Essette a sold is There PMPM the client in it type proportionately, than it for and a care implementation. Elli implementation perpetual fees PMPM requires primarily fee, that really model. PMPY. a while fees. that,

it. Got

Okay. That's very helpful.

same Integrity, strong think and a demand growth with market get from throughput as do and grown of AI and pretty any throughput in your on one investing the competitors? changes savings play growth. your claims you've the nicely, customer profile rate the about been Just revenue even more this How kind you machine business, learning, XX% of Payment is competitive pricing you've so as How you growth does and intensity could the that in any profile. of maybe well against in

Yeah.

actual the public for private met. what we billion to think in competitors, and others currently roughly the total is we've we think from have and think billion realization know, billion I Ana, that's both $X.X for marketplace Integrity stand said, said the to about addressable of range, $X Payment market revenue $X billion $X.X being we and as

technology mentioned benefits how of And starting Integrity we and earlier, some a getting the to we on landscape. still of Payment see significant investments our at opportunity better see from really Payment Bill do Integrity. So whitespace amount the we're as just

business I more And customers. performance-wise, you do so from we think to tend the our the better get

think I So a that's good trend.

We put Integrity this business, demand well. continuing, still really RAC to we and growing and Payment that under expected our Integrity no expect on Payment change as and our for Integrity for be to see state opportunity certainly year. be We of a from lot which double-digit side we customers see Payment a as the

drivers states care on from to and the of one the to would I state going push and to the managed plans is Medicaid in Yeah, the CMS the down see on Medicaid down program general, to be help the grow side. integrity,

Thanks for the helpful. questions. Very

you. Thank

from Our Oppenheimer. Mohan next Naidu question is from

now is open. line Your

already here. once one implementation Thanks And questions. this think the is new Bill, on for we offering, how targeted Congratulations you cycles with selling get for more this sales the another taking (XX:XX)? and a force my great quarter about on Elli, is should season? it since

of is new didn't targeted all, to that some team, first what's And gone sales we services team. at that it that impact instead tool tool is, could very side, need felt now. so of on narrow or because specific very sales not. very a of really have well, our health it out data be to part know an Well, is whether at. we started analytics found opioid chose interesting they for We themselves with on or members tool the we of want aggregating regardless a looking it's for really about the we've and as they the But with this Medicaid Elli identifying markets. we Either the market plans about analytics aggregated just that

So really supporting and tool, state all at into just or a be Once which lift. implement to of our are level, the easy a have That's the conversion from we it encounters. is entire implementation it's enough the already to and lake, heavy state data complete MCOs it's (XX:XX) us repository for lift. from it MCOs is, the we not Elli a the our through very the the states of data will

for this or we a product lenses their this little trying singular to keep customization, of population. call of additional a will but them and bit we're then clients into instance not pay us there's Now, much, because modules

that. you're Got And it. on the you here? much on that very model color Thank any revenue targeting

Yeah.

It's end PMPM PMPY. managed more and solutions So definitely up of because states to plans. fee just for care states how going being it typically or fixed buy, – the PMPY, the may be

a commercial, understanding one comments you. Jeff, you Are consumer you're double-digit without for looking your right? the I Am still quick one and engagement care management saying that there? at Okay.

that's Mohan. to the think I way think about it, Yeah,

Okay. Thanks, Bill. Jeff. Thanks a lot,

Okay.

you. Thank

Genuity. Close Richard Our from next Canaccord is from question

Your now is line open.

for to Mohan's think to here. and XX%. out Essette to start the follow-up respect from in the like Thanks if With question, Eliza questions. Congratulations the down the think quarter, was X.X% just around the good Yeah. little taking growth second which it I from a first year a bit you last revenue, that's quarter I and commercial pull was

commercial for and So the said you year. sequentially was that be growth, double-digit growth the quarter muted you're anything obviously the in there expecting now may

second there the quarter on in curious, just commercial? So was what happening

think Eliza Eliza done work mean, growth. I lot to have position and Well, I we of a

for double-digit Richard terms said commercial. so I we nothing specifically commercial, as And of the happened has growth so for mean year, in

we and that. think very implementing still integrating active we're I pipeline sales and a successful and have still

see opportunities expect overall, that trend the in we in of the saw we good and So continue growth first-half I commercial to think that year.

of Okay. the average health those with size what to and respect potential of think along are two And contracts? discussions in when terms these size with you're and the commentary, contracts then what appreciate the on we lines, that, Eliza, you dozen plans, Bill pipeline I the are in something seeing of

social assuring Remember, for medication now there's to that how gathering, to be engagement, management gets from us – all when it care mammograms to are programs. disease typically whether scores our HEDIS anything ratings. to programs, a or to drive very adherence, new and it's starts out programs figure Star it for brand small, Well, way say two They'll the or use one whether them Eliza. the I their typically or and give clients health determinants it's out to a of both small, population management it's engagement Eliza certain a specific helping drive specific

usually see some be grows six going work. there's transactional success. low we figures could startup then to as So, and it It be

sales they're care, that a ratings. in and scores through typically year gaps lot looking So, part be happens improve could the Star at in scores closing the second or when looking revenue will of impact HEDIS XXXX the improved, the that at activity XXXXs, of

sales season that's balance through very the now the a there's of So, active year.

to of curious that? on you With implementations exact And Elli, the you'll do just timing. have first when think Okay. respect

to front Well, – plans. give budgeted because proposals of have we at year the But, contingency five for fee, around exact brains health typically, in versus the procurement the can't anything additional be people the health I this in of, cost the time have plans. you I analytic Again, timing, that's year. think gets I different next of

incremental the entire presented for an we're at multiple anything other having – is solution opioid cautious have XXXX across our may to first It bid So, until states not other in states actuarial population being impact view their crisis. a account. than this to other or state that's being why from on levels them this

maybe and respect Payment with higher I Integrity final be, a how my claims, question to know, would And are margin that to, the you lower any with guess dollar initiatives about front? Okay. respect thinking that along claims, you

So, claims we across the the on inpatient as well board strongest that of institutional in strongest have the historically claims. been probably and clinical side as net

building X.X, dollar doing However, where we're be we are we PI more to on lower process prepay of what claims. in of call going kind the

not be products. those our do that mining have prepay typically now do we next we our version on we're that services pharmacy as that moving outpatient data done we of to into physician, going – claims, but much and So

Okay. Thank you.

Good.

Thank you.

Our is from question Stockton Jamie next Wells from Fargo.

Your is now open. line

maybe going. for we Thanks topped back margin guys on think, questions of and how kind a adjusted know back go margin I you on are congratulations the taking good guess, earlier. an bought the step my Hey, this profile before of if alludes morning. basis. look I just some I And out to business, way and you HDI, question Sean's take the of if at operating around XX% things

obviously very quarter, good quarter. This

period investment now If somewhat you going give go margin kind we that to XX%. How some just a about down I great? virtuous margin the we're cycle? be going we around put mean, would the could from to have investment your approach the us versus an through standpoint? on foot that basically around crested You're of think expansion thoughts driving continuing to should pedal forward and

managed of a that driving at plans Firstly, color bit sales That we in period. rapid you into peak a give back let was care that we were primarily and on when COB-only, me the little were look zero years Medicaid we in retro back. care comes went with plans years. year nation three in managed basis. Care of to from Remember, XX% six That the to plans Managed five implementation the margin

So, you on get you see repeat claims cost avoidance activity of that itself. don't pile a and activity

with the was of in that in increases So increases revenue the same level. not corresponding huge cost

will start a regain more year-to-date, to through what technology that Jeff seen I to we've by consider that make. that a efficiency we putting still ultimate and we'll company, be driven the to? and completed model. technology. you shift we're a be investments based that believe we would more that to we're diversified that like driven we've Now have would of the not in would by But believe Part margin grower, SaaS of part

Yeah.

think come company technology Payment further. drive think investments excluding COB about any lines I in as business, the fundamentally, to the at incremental we from and in our that overall both significantly Integrity, than new higher dollars average, that the margins come in product

we So the core think dollars business, and Integrity on. about we COB to and have our as think, get both revenue incremental drive place leverage in I infrastructure Payment can we

I more investments expanding incremental further are the are with become revenue to we think making in as that about earlier. drive now I both technology efficient, we and talked

I think basis for XX I you a we a we incremental Management see points, are margin guidance income point improve Total to basis things that think points haven't that XX with We we're in our on increased revenue. we're add margins. moving doing multi-year on on Population extracting if the We but quarter from actually all from focused year. originally driving XX revenue, subscription to margin operating focused model, business time, given all over the equally those we margins guidance helping more so this drivers the improvement basis gave

we've we've really technology we're capturing benefit. investments the the that early in think, I So, are said of – in made innings

growth margin significantly time. benefits see runway of revenue growth given the margin long to reach a guidance, from investments, margins see our we'll multi-year and improve that. that not Again, – revenue think we expansion as I we'll expansion in we drive technology see the So, as leverage and continue organic to still we having over

like that that step we has maybe and Can over think it I next chain, a boost how you you because the revenue in having about the an be nice with should term with of lumpy the a been about comment the Okay. modeling then just national engagement got little and Eliza kind just during short That's where a kind sounded one. Essette and them catch with you it of little us help to it? couple there. maybe recall great. did quarters, And give a paid a There up just quarter pharmacy of business was drug help a

Yeah.

So, even to do Eliza. those we they in do, are we if $X.X from still would've This a million, sequential XX% was larger back predict. year-over-year growth that hard one, over time-to-time, out one projects we in but had

look year. QX, ramping that first-half received the fourth second that the and higher Eliza trend third the in higher the the QX – gaps to for here seen in the normally to quarter, and same higher. growth So, we might based of HMS being and Eliza expect would year really type historically revenue the be we in then expect we've flattish up to stepping first-half. from plans be in going lower see half up we half upon Eliza of one-time we'll project versus expect In we're in model of do they second close with to And as as follow

Okay. That's great. Thank you.

you. Thank

Our next question is from Matthew Gillmor from Robert Baird.

Your is line open. now

of question. topics had Hey, about. ask I the to sort I wanted two bigger Thanks for taking good morning. picture

of one first a is follow-up. The a bit little

coming like needle specific that'll the little than for and has new anything waste HHS move Is the been With out like efforts? rhetoric as license predecessor. state secretary, all that up the healthcare requirements stronger was rhetoric I D.C. seem sales you helps additional it environment the around combating there a terms step of just at payers their of the additional also to level? in curious, if giving

talk what are. of So, some CMS little let opportunities me the and then hear think a we we bit about from what

we more that Wagner months. three-pronged the program over On is put side, And the has on they'll several Medicaid. next and to approach RAC that There Payment Semone Payment clearly, both Medicaid Integrity color believe around announced the Medicare the Integrity.

programs. revivify their their recommendations that states RAC was of One

that in check and box past, said As RAC the very just contract are we states have the some others a assertive.

from we on business product innovations new federal internally those side a development should of from as state that Integrity government with the of we're our the RAC bringing. of Medicaid the push positions, as well down both both believe the all grow Payment So,

doubt I and Though of with is ground, we'll we unfortunately, you as a resolved, time with the within is AHA lawsuit support Medicare RAC On amount And HHS. much sort guess, the see prepaid a movement spent there RAC with until fair of side, would for Congress probably both there. Congress. the

us combat partnership a have private healthcare public mean the trusted to think experts we're Medicaid does I the we're on we HHS as fraud, CMS. with view advisor, that, trusted contracts third-party I on several

contain really or continue in we to comment time on abrasive not to amount I'll CMS most CHIP with score kind the them think programs very is have Eliza for they're providers, Medicaid because And monitor. focus we states them, of are they're by we And cards around finding the not those the better say They scores, factors, scores, So, programs you your reimbursement XX but are is, from entrée the your and plans report the ways of today or lower on the just quality They a a your about to what quality. interested dollars it but stands could direction moving recently the scores, that cards, costs. state. that Star think spent paying different environment which they're have going are to HEDIS into really the last either, report fair scores this. it's FMAP issued in factors, all I of do for an rating did a There as that. cards of that a impacts report health as and type with reimbursement, diverge way the in an where imagine as to lower your to where higher federal

we'll continue there federal government. think a push a we from think push. see We is So to the

at much program it's solving the AHA point. Medicare as seen believe this is and RAC a I lawsuit to from not Jeff? the of think related that we've push I

population an the incremental with CHIP opportunity say, I and and for would definitively regarding CHIP represents And specifically, into then move do COB well passed the to half into that for recent as ability the that legislation was XXXX. back we just XXXX us as our of work

be are of year had your before that helpful. in don't little just heard it think a I probably speak earlier HIMSS. think this about was all bit business? I That's wanted was it's your ask I curious, coming blockchain. But terms what out just And to other applied it or to of one you how a of and I'd buzz relevant around Okay. I could whether more thoughts

a this everybody So there'll infancy mean about healthcare, last be where talks – by period phase. its is phase think XXXX, projects will might investment. probably I so be larger that's but really – in through in we the in industry five-year Gartner blockchain, still experimental a followed the focused

Now, we advantage at might take are exploring how blockchain HMS. we of

that, based CTO We been Jacob IT who development. experience technology and in product new has Sims, healthcare have a leading he's change large scale

which So we blockchain. We blockchain. HMS use a decided believe individual there's will we just position for in component is that in haven't the landscape there within healthcare

blockchain technology a But, not really a could supporting solution to providers all landed on offering of point. talking design them. sprints have are that think and technology companies been have product this we you largest the with have at of from been of We doing

Got Thanks much. it. very

you. Thank

question Our Demko from Citi. from is next Stephanie

line is now. Your

thank for second my Hi, Bill. and Hi, Jeff. Congrats on you questions. taking the quarter

Thank you.

business, your Just impact your thinking cost, in core about install the to TPM how revenue and ramp the And client we ramp for this timing? think about your compared revenue should lumpiness initial as model? new the margin maybe could the how margin and

Stephanie, was it...

TPM.

TPM, you said?

TPM, yes, TPM.

it coming Eliza we've said the legacy with have think comparable Yeah. I again viewed to we as mean margins. I it are on overall company's margins their said and

Eliza things significant that think ramp we about there and I quickly operating and that's technology convert made in in the that are suite. mean, we've in Eliza the encouraged product the one our investments so ability is of sales the cloud. to I

second think, saw sales less national convert or XX did we revenue XX to the recall quarter I chain. in XX can large so we pharmacy we days to quickly fairly And the days even drug as for days a or in with

and put a investments production staff some just So other staff resources made we've I see customers already, than don't needed lot new we implementation production. the into incremental incremental of think, to

the a lot Elli additional would and the So product new flow side. in side, see think on over margin on product, Management there's expect revenue I improvement of Eliza but Population A the to a and this time it's little Total big I more don't upfront costs bit spikes. since for no suite

you. to of tech to you've these TPM, (XX:XX) about you All going a these investments, shift a for speaking Then had forward. healthier all model right. just PMPM Thank doing this kind are and point things margin

in that XX bps with XX to in your expansion? mind, to guidance limiting So is margin what bps

in to said when a and measured look, think, were measured a continuing I take we're Well, we measured I – guidance approach approach. think gave February took we we

year. want so second think we're well targets. positioned the to first maintain achieve approach but a we're half to to had our We very I guidance, believe well achieve again, year; solid the of we we of positioned in our half measured the the

right. for Thank you All taking my Understood. question.

Thank you. the Frank question from from last First Sparacino comes And Analysis.

line Your is now open.

private quick keep side on Hi, guys. aggressive have sizeable company. more that one. terms in more the Cotiviti it you with merging terms of on being feel respect curious, in macro maybe Obviously, I'll what And been that's to and of Payment of M&A sort impact things HMS Bill or just Integrity competitor your just with whether another not pressure in comment of the you is on aggressive to very stances a perhaps level, large just one side. M&A? potential

be of and Payment to we that's now not terms very entities in for find test which think are not smaller will in at I merged on be mean we're sure of as point Integrity we're I not suite, overpaying in to Verscend can still will a have. aggressive solutions line we a company. Cotiviti our as an that lot then. acquirable focused Well, And making some TPM this particular There product and advanced about we're

we opportunity priced now. that's lower believe I see we're think there mean facts. we market right I the some by supported today is an in

know, So, and more two to all be going they're don't our those how clients able the for I companies us quickly to still to integrate services come time.

better for line. So, product on that delivering And shrunk. get we're at has PI not continuing the demand to

I risk than opportunity at that as see that. really So, don't this see more point. I

transformational the we're still could be on depending that opportunistic to acquisitions at course, small looking right Of about deal.

I on And continuing just overall to we are overall we're on also a be Yeah. PI improving focused believe, big suite. focused we results, think driver, future expansion a I And because think our our our in PI that's going to product enhance business.

maintain of that position must Population So, we Management. a now of Integrity and Coordination vendor being Total Payment Benefits, have provide can a

think As a value side, the consolidation and we comprehensive suite on continues our on solutions offering provider that customer adding the we're side to customers. of are real

and business on So And our our as acquisition back supplement driving we can that. still look said, Bill both on looking Essette and that we're performance opportunities as focused core at prospects. and a for growth months over Eliza products, that to we've has acquisitions ourselves we years last vertical our two think with created the good really very coupled new Elli XX

you Best Thank quarter. guys.

Thank you.

this the to Mr. no Thank to time, over I'm for closing you. showing like At back I remarks. questions. turn further call would Lucia

and we support continued speaking your to for thank third our call. day quarter at to good forward HMS, everybody to everyone. I look Have a on want you

for thank conference. today's program. gentlemen, and you participation in the concludes Ladies your This

may You now disconnect.