Health Catalyst (HCAT) 8 Aug 232023 Q2 Earnings call transcript

Welcome to the Health Catalyst Second Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Adam Brown, Senior Vice President of FP&A and Investor Relations. Sir?

Good afternoon, and welcome to Health Catalyst's earnings conference call for the second quarter of 2023, which ended on June 30, 2023. My name is Adam Brown. President Health Relations Catalyst. Vice and Financial Senior for Analysis the of and Investor Planning I'm our And Dan Executive Hunt, Burton, me our Financial with on Chief Officer; the and call is Chief Officer. Bryan release furnished of our on of the are in be our well disclosure complete our SEC, ir.healthcatalyst.com. issued Form both results as X-K A today related available section website the found at Investor can in Relations press to our which as of

and reminder, a call. will today's following call conclusion a recorded, the being As available replay is be of the

in with XX, for factors XX-Q risk with XXXX to rates, SEC. XXXX During safe Securities will and today's our materially filed on subsequent views upon XXXX impact high call, make conversion our we interest any or as and Act as performance as the Please forward-looking macroeconomic Reform provisions our labor the inflation outlook. of are forward-looking forward-looking anticipated XXXX, general regarding may that Form Form Private statements the quarter views to and the pursuant should rate the filed strategies, the including of the differ. our the on QX the second the for of and representing pipeline our business. of These Actual expectations obligation based trends, of harbor May statements refer SEC any statements We challenges, disclaim XX-Q results date. Litigation levels relied will of not high today market, update to any be tight current and management's of be

certain to in A of additional comparable measures their to these release. refer non-GAAP provided financial non-GAAP also provide investors. measures measures reconciliation press is information most GAAP financial our to will to We

to With Dan. will over call that, Dan? turn the I

and Adam, to this you us you, afternoon. joined who thank everyone has Thank

some quarter I share our summary We begin today's our are along outlook. results with quarter. and the second call will additional second highlights quarter XXXX from performance, to commentary financial excited with on

total with We million, $XX.X our midpoint are million and pleased second with including each EBITDA of beating our $X.X on XXXX adjusted these results the financial revenue of results, guidance quarterly metric. quarter of

are we half do raising revenue retention expectations, adjusted full adjusted we rate. XXXX bookings And EBITDA revenue but as subscription and we guidance. EBITDA of our our of result, XXXX year slightly previous client a bookings performance. Additionally, our our dollar-based are with we year full net guidance. ahead first strong tracking and are new are reiterating and pleased inclusive additions Likewise,

additional Now items let from highlight some quarter. the me

recall and that X company's You And previous our you calls in of will from earnings we scale. improvement, categories the objective these quarterly our growth results with discuss our performance each of we'll measure categories. strategic in

our while on category engagement. realize improvement clients measurable maintaining enable ability improvement team massive, first industry-leading is to also our The satisfaction client and and evaluating focused to member

understood support Let sharing the an end leading our with team that manage their costs, this recently a in and implemented client that published they performance their better analytics example of revenue study. to improvement a from increasing to their technology achieve and Hospital our view them provide in To Women's by effectiveness. financial of enable power part strategic broader Women's me as based costs. enhancements improvement consistent to in market, their detailed goal, decision-making Hospital solution application, case comprehensive a the costing with system suite decision-making technology strategic them Louisiana begin of health needed of would leadership cost their care, empowerment our

from result for our while look cost improving market-based member of for be related team registered detailed at Department their their contract their our to Our the powered labor receive Health labor important in additional utilization of to awarded decreasing the $X $XX retention cost questions. staff. million application program. team engagement. cost the the contribution OB/GYN power data have category, fortunate of for allowed of providing funding hospital women's in margin power costing leadership qualified residency we million salary additional been strategic Likewise, team adjustments answer women's costs missing data services, external hospital Also team nurses opportunities, from the women's ultimately, savings analyze improvement application the of costing to each identified and and and to recognition the enabling detailed highly in to

Place Work First, been named for by to a care modern health has the XXth health year row, Health in the care. Catalyst in Best

year's has region. Catalyst Intergage. recognition care Health to industry time, first certified Likewise, Additionally, we to of in health the a for the team pleased this top been are by Place this in included India, in be, workplaces high Great Work member in engagement our list

for excited Newsweek. Lastly, in are America's job we workplaces Catalyst been by to named Health of XXXX share greatest has as starters one that

category relationships which is expanding objective and existing strategic next beginning client growth, relationships. client new Our includes

with expectations. that line also was anticipated second during our environment translated To improvement consistent strong have XXXX, previously with shared with operating bookings half performance our pipeline half in first in our to the to are prior slight summarize, a our quarters, in second months. we shared recent align with continues what expectations. grow, continues some our of half And to and This has bookings

are inclusive such, double the subscription digits. in between As DOS XXX% reiterating net additions and we year and of XXXX XXX% full dollar-based a low client new rate our expectation, retention bookings

to that couple last with As relates have the to we environment, selling it over described quarters. and headwinds consistent of we continue tailwinds what current our experience are similar

are be longer-term in see slightly relative system encouraged to margins margins operating challenged improving to to their historical continue months. health levels, recent While operating we

anticipate be health technology typical professional to by we continue anticipate to growth, Given growth our than the full expectations, as systems our tech-enabled reminder bookings that year bookings bookings bookings midterm driven managed of this services of to tailwind a budgeting most cycles sales services our cycles, will length the offering. a XXXX we translate and related higher

and into multiyear July X nearly of with, managed with larger Xx represents entered Catalyst. the ARR relationship our have to clients tech-enabled DOS of through include tech-enabled total XX, on more of subscription services than our average XX% per DOS services partnerships contracts is subscription From our $X ARR than To million clients. average, more XX% which XXXX, roughly XXXX about a long-term Services ARR. Health XX% These grew Managed date, ARR client, total June professional than for by

recent excited two I'm tech-enabled Next, managed to contract. announce services

client decade. million additional This into for Access catalyst system all and health a X-year health a the First, with an relationship we who success nearly to an are $XX have profitability. regional with Health quintupled expanded entered client's than been Catalyst contract services technology pleased more a the on has includes for of an and opportunity improved client based bonus shared size relationship of

in approximately At system long-term level depth success client's annual Health revenue any before of X% largest net this approximately shared clients. become annual million patient has also This of one $XX this partnership. bonus, of recurring revenue, the spend this represents health Catalyst's XX highlighting

our health offering analytics meaningful ambulatory annual in engine growth a are of for nonclinical in managed current across majority We will system's in to extraction. tech technical Importantly, services this in ambulatory and the managed which addition new with managing services tech-enabled us, this managed new the clinics. anticipate vast service this operations another we staff relationship chart provide represents area us

on This Additionally, $XX X-year for another a at I tech-enabled as relative significant annual expansion signed an new tech-enabled well roughly inclusive nearly Health last recently a am of managed decade. as who revenue, at another health of represents managed was equity. technology subscription with million within churn contract quality clinical and $XX recurring domain been pleased improvement an to doubling with traction a client has year. this in it Catalyst expansion and that an to and services expansion The system approximately is share services all-access the of the health sized analytics size of approximately of relationship is to client million emphasis

demonstrates it bookings of we strong this services tech-enabled meaningful and summarize are are the excited deepen first half proposition that value a We to offering. encouraged another perspective, our growth a partnership, example strong long-standing represents from performance. that had we To managed

grow, excited evidence of further to be expectations. our performance half prior we traction bookings in with expansion will and meaningful to our anticipate have are announced continues clients. as pipeline services Our second our multiple Likewise, line we with tech-enabling sizable

and we confident we of adjusted percent Lastly, continue you'll growth revenue remarks, year, margin feel as hear for target from later EBITDA adjusted our are in XX-plus prepared our to pleased raise long-term XX-plus full our the of and long-term target EBITDA revenue percent. our in guidance Bryan to and

cash XX% flow XXXX. well Additionally, towards we our and XXXX EBITDA adjusted in free track including meaningful margin positive continue targets, adjusted to midterm in

services We operating significant more see inclusive beginning complete operating as data continue expansions little we that material financial in seeing investments platform. to expenses. leverage incremental require certain anticipate operating work material our managed in XXXX, to model, of Likewise, and R&D in streamline leverage our we technical

Bryan. that, the to call With over Bryan? turn me let

Thank you, Dan.

on of what our now performance. our into category I shared objective quarterly scale. diving quarter want Before that comment our pleased strategic and I'm will financial results, I Dan echo to say with second

million, second year-over-year. For for guidance, of the growth X% representing an relative XXXX quarter outperformance total year-over-year. quarter This and the our was of represents revenue. generated second it midpoint X% in XXXX, $XX.X $XX.X of million an of revenue we to represents the increase Technology

This catch-up a higher than anticipated a deferred than go-lives quarterly technology revenue forecasted. that was to few environment in our occurring earlier generated due guidance performance slightly quarterly revenue

million, period Professional year. same XXXX services representing to last revenue relative was QX $XX.X X% for the growth

of points of margin quarter gross second basis approximately total XX%, the a For XXX representing XXXX, adjusted decrease year-over-year. was

with base on-premise clients our third-party a environment, subset partially costs enabled Microsoft basis increase client segment, driven the of a technology headwinds cost costs. subset previously continued client last built-in platform transitioning points This expectations. our year to as and was hosting associated paying from from in with line with of a for our Azure, by escalators cloud-hosted from QX in as base due centers fees adjusted by approximately to year-over-year associated higher contractual migrating XXX margin existing mainly commensurate our Snowflake data Databricks small performance XX%, technology was and the of a In to the gross decrease without in shared period relative offset XXXX well access same multi-tenant Technology data

services the Services XXXX professional of basis In of and relative XXXX. our to adjusted decrease points XX%, approximately of the a Professional representing points XXX margin was roughly quarter decrease basis a segment, first XXX year-over-year gross QX

earnings This over quarterly became gross primarily our with on expectations last performance time. was margin generally a and call at driven relationships the in we but by expand low out start services line new shared and

operating were million. adjusted expenses total XXXX, $XX.X QX In

to Adjusted EBITDA of $X.X which As QX driven pushed compares relative an guidance out revenue, a the the to percentage of exceeding This the XXXX the we the adjusted same QX year. be increase timing in half quarterly anticipate of expenses the last XXXX. was in expenses performance with operating XX%, this by revenue $X.X previously, midpoint were result was represents non-headcount XXXX will adjusted along QX mainly outperformance EBITDA some of with million mentioned favorably year. that which XX% million, of our to second and period total

share share million Our basic income approximately in per basic income -- XX used per in $X.XX. of in QX And adjusted number average was XXXX calculating the was adjusted shares weighted QX shares. net net

to settlement previously million in anticipated disclosed quarter balance at range of cash, we cash ended amount our short-term and QX which XXXX our cash with litigation in year-end with $XXX.X million, million Turning $XXX.X PASCAL disclosed regards outcomes QX Related compared of sheet. investments settlement within equivalents was to The balance, in metrics. XXXX. XXXX, we last to $XX.X came total We to our the XX-Q. a to was the

$XXX of XXXX. In in note face is our of principal million amount outstanding of terms value the convertible a due liabilities,

the and $XX.X it to we million. third between for our for quarter financial of and $X relates of between the midpoints, between expect $XX.X this full $XXX.X And guidance, $X.X now year million total respective million revenue XXXX, million revenue As and EBITDA an provided we At increase and expect quarter. full $X.X guidance total the represents year million million million. compared to revenue last XXXX, $XXX.X we their adjusted

the last between We midpoints, $XX million. also $X year compared their EBITDA At to of represents full increase million XXXX provided an respective we guidance expect EBITDA adjusted adjusted $XX and quarter. full million this year

provide Now, additional our guidance. details to related few let a me XXXX

the revenue timing revenue mentioned a bookings XXXX be deferred that as revenue as First, that well it quarter-over-quarter, anticipate slightly to from QX and our our down relates half. of the generation primarily as catch-up expectations, first onetime by driven generated net revenue the we first our half items will in go-lives previously revenue

Professional be continue terms gross margin, QX services high Next, margin revenue, gross technology the few adjusted segment, XXs points gross before will the services our low be down managed that time. QX third we the adjusted we new our in will at of margin adjusted our of that compared tech-enabled expanding quarter. professional Services to a over The anticipate result gross in in XXXX. margin which In a to of begins anticipate

QX Lastly, we anticipate operating slightly up the XXXX, some anticipate XXXX. that to expenses opposed will we be our QX as will result QX relative occur expenses of now in to mainly non-headcount

XXXX Lastly, full let our me few additional share guidance. year details a related to

midpoint are we our As increase Dan for in revenue EBITDA. to and both the guidance position of adjusted be range mentioned, pleased to a

our will expect through the our -- we'll anticipate a our for gross strong continue of margin professional those out be that we margin, be of margin, gross We lower technology expanding adjusted teens being relationships growth a services XXXX. for time. and high we year, a in the primarily adjusted in margin as segment over gross result of mix services percentage that our of terms adjusted XXs of starting in the business given services, with the gross to tech-enabled comprised high In managed our that at of professional larger

operating expenses our the efforts anticipate largest basis meaningful down adjusted as restructuring in of operating percentage result our the reduction SG&A. with points will year-over-year year-over-year, we of revenue occurring and more Lastly, XXX than a be largely leverage continued

will remarks. Dan? I prepared conclude my that, With

Thanks, conclusion, Without this of and recognize mission, to thank members. I and to like be In our their team shared possible. contributions consistent and engagement Bryan. would in clients our none would

I'll operator call the that, turn the to questions. And for back with

with our you. Elizabeth Thank come is Anderson Instructions] question Evercore will now The for floor ISI. open [Operator first questions. And from

guidance to you at just into least range, net does color new reiterated this you've outlook Patel higher within Elizabeth wanted customer I that expecting reach retention Anderson. is that that on how retention range to just shared? on are net given some for get that increased Or This is Samir One more into question, rates, revenue like imply improving maybe slightly point read we do wins? the

Great Samir. Yes. question,

primary are the the So drivers year our timing. to revenue guidance range of mainly increase this

have mentioned, for the of as some implementations So it relates we as are and rolled of a and through ahead the to, little go-lives schedule bit client some I year. bookings that

drive the a kind primary but So of you're us that's retention of kind What growth client Samir bit our in back-end rate. into environment year, more around is of this what complete coming bookings be because kind the describing new year driver. we pronounced expected nature the of as less weighted is which we the as of dollar-based little the XXXX, XXXX. that more year and towards kind impactful well for as of will

Our will next Sandler. question with Vishal from Piper come Patel

quarter. for This is the Jeff on Hainan Patel Vishal

recently shaping the further hospitals. to to with and for data conversations the U.S. up systems customers, invest payments From our a lump-sum are about health XXXB to ask tailwind wanted those in proposed perhaps payments be You remediation analytics?

think yes. a helps, I of tailwinds our of That's couple certainly the observing are modest tailwinds. base. It that we're across And one client there

contributing I we to little operating inflationary and are supplies, as believe which pressures think better be terms a for margin relates a there bit it of a all midterm environment, other of some coming tailwinds are to slightly which labor us. tailwind in down will

Grosslight we from Citi. Next, question a with have Daniel

enter normal beyond. I'm and margins how we in services environment into as should gross more the a think we curious about 'XX

you that, are has Or lower gross to you into don't do the it just eventually more even to lot recent bit of than the like you'll contributes to that margin XXs costs, gross of up Given might a And tech-enabled business a though teens, services, little any you to prior you kind get to forward? as lower -- achieved the margins a margin, setup around high though turned the us detail of a that it's even give margins then EBITDA, Because maybe think to quicker going of have low the this add be that product. shift managed EBITDA? bit really downturn. the can the part so have how

Daniel, those said, Well both are points important. think I Yes. of

pipeline Services see are We data. So services our on significant rapidly growing really prepared gather the the last encouraging which And also to these managed July we went X a tech-enabled many are very a Pro challenges opportunity. of us. first there long-standing your years And to as are regards X To year, kind really there It’s through, XX point, typically contracts, to And obviously, of seen, are have this in locked at helpful. be examples June then That mentioned is in within kinds continuing than can year very we that couple with we’re contracts. in, excited through in of of with remarks, point, mentioned there from contracts. further we as those growth to we’ve growth X more large XX%. of our segment. is positives that and in

in how exactly on, do low, some target have of as process the to the mentioned, higher that the still margin over a offer time. have from more this we’re migrating early think terms out do services we we but is like mid-XXs. that of the of up talked that One as then about which in margin other quite sometimes the I gross all margin plays profile when mid-XXs, of pro long-term public in understanding We to went the ProServices low continue starting as over challenges is time early different is X%, around Bryan as in past, what we we’ve gross that shared

all to not professional services expenses. second gross those by that, incremental that margin such, profile services, your sign and operating strong subscriptions lead a of over have the the where incremental as higher operating tech where more EBITDA that much large meaningful in scenarios these includes to getting services risk again a engine maintain And XX-plus We’re long-term meaningful even be of can the scenario mid-XXs that And fact – to a requirement technical point, to margin usually real it as that definitely lack do is which of expenses confidence for we’re encouraged guidance percent. meaningful Access, us an over we’re continues we growth contracts, migrating like to profile. managed require managed tech-enabled they in a even also seeing we

pro and we Yes. And IPO demand And more long-term we commentary are bit to we targets the more I'll plus. an well, year. we that profile have to encouraged had about than do continue are as of But of that, terms tech-enabled see the just of long-term referring Danny, is learn XX% and rate then feel we studying the related that say EBITDA we'll on year long-term confident target Dan set was on what more that little coming the plus the to our to add progress at into revenue this likely we're services in to more of a the side the in level so growth area side. XX% what long-term that expected EBITDA to,

Larsen David will question BTIG. from with next come Our

Congrats good quarter. the on

one environment of one large described very modest for Yet $XX million. $XX as deals, sort and for X slight improvement improvement. the hospital signed million, you So you

any they’ll would helpful. the the I’m contracts. that I there years, renew those are at as be mean very end assuming as again. even probably significant – tell that’s Just it, can I far X more of very color

very be any Just would helpful. more color

Absolutely. the Thanks question, for David.

managed very meaningful more contracts. definitely X by with over We're large that. we've examples last are tech-enabled to our of the base. expansions we So really And see existing course, of of X months, several seen encouraged services really these client encouraged

the tech-enabled help offers these relief. expansions managed offers services Now financial financial some pressures. It for because of large with is to regards reasons

to And dollar in decades had that part very of as part foreseeable that offer ROI we're to the as at certainly, now, us have be changing that health so level. the helped future for systems they're to margins solution we facing help to pressure. to systems with know, financial significant has a operate able low And operating

will value for same So we like very, nice that for cheaper of the faster it us encouraged time client many years. is engine At as really us condition with also compelling for relationship, any little to technical Services a a be being growth just Tech-Enabled in both forward well. vena continue the time, and and proposition we're feel services very but also areas and end financial our bit markets, improves other keep bit, little moving a to easier expanding better, becomes

see that improvements in nice nice some see operating is to So to and environment. tailwinds their some

hospital quick one just that be one. part to aspects you’re of these all more Did of of of then I as And deals? the managing nearly hear one say going clients of Okay. you your nonclinical one

You in space. the did hear that ambulatory

the relationship the calls including clinics, them couple health really that. the nonclinical employment in We've last ambulatory talked excited primary to staff, are majority a the operations our of annulatory all about Calis. We're system important clients. earnings dual So Health about are now vast with how of employed,

many financial them to a at and this really and provided exciting And enablement these right are direction operational but of that space, this area for strategic us... getting services deeper in performance ambulatory managing improve a many struggling so as into technology physician trenches moves clinics. And practices, we've, a new purchasing a Andover but of staff of is have number made step clinics from really for view of the So we operations, most offering support into the and do the tech perspective.

Thanks, David.

you. Thank

Securities. Guggenheim with Next, have we Wallace Jack

we've X out. types the earlier deals, deals quarters you It client quarter. about signed X expansions year. far pretty spoke X substantial be of Teams on we good pretty about about some the when having year, in this these so this agreements to Congrats thinking when talked might XX into sounds got the like In visibility

do half the shading have selling here incremental of dollar are point? with season And range? back that of retention net that at we're end you the in meta visibility year. What either into of sitting this to the range towards As XXX August kind XXX in we

Thank Jack. the an appreciate one. I you, important Yes. It's question.

have inclusive of deal, second large Karl X services as have the been which we was the Health took several managed months of year. effect So right signed these last end the you this over last deals year, mentioned, beginning at the angle at of of X

be months there's continues often across long-standing the indication contract, when occur. nature, and signature the need forward a reason we good that with for large before of we steps. hard through for noticed we will precisely had emerged. that win And had of it that have X going as that that have decided is will really One, visibility us. in to go of those, predict have signing positive. do that to a we contracts So few of part are number And confirmatory those us patterns a realized What each also to these contracts to that terms case, those exactly the the gotten being actual years likelihood are of a In we move have to additional contract is good often, in couple really the client they're contracts. such

time. them clients things thing, long term, multiple clients get those think, have and and the of members term, for is, interface It's these a take Board me but opportunity I relationship build which to example, with slide, with wonderful to long a with for to know

our we we this And tried half to and that have is back that so of about the showcase think pipeline excited as year, we're share -- growing.

likelihood well have sense the those are will really terms case the contracts. -- in of the shared we've considered. all as in these And been meaningful win an RFP opportunities, the past, the that a we process. almost we've We past There's source sole that opportunities. not tracking being we we vendor we're seen has that's And have of like as in

in-house contracts us partnering managing but the difficult last so really signed to that exactly exactly from in when to going continued the And these services we've predict client these deciding of with to is see, began. to and of timing we've Catalyst, the when for move precisely revenue matter like it's the Health it we're signs seen contract X we've a

wide alone about the That Carl big, swung shared reasons why are dollar-based our points. because dollar-based X is deal as year, the one example, range by lumpy deals. a we’ve last these of retention of an Health And retention

so level, significant impact in versus signing And or January a deal February. pretty that can see one at you of perspective, December from timing

on exists. benefits, strategic we updated haven’t long-term these where in so good same And at they’re place, yet about side. that technical as because that they’re so side excited X-year time, dynamic on the of range still really in contracts the we’re we relationship And the locked the a benefits both signing services technology contracts keep and the services

time. over a uncertainty, we manage which near-term little can worth bit so it's of And

you. helpful. That’s Got

question KeyBanc. Our with Schoenhaus Scott comes from next

end to the that on very the want we color nice I thought talked for where focus very on Thanks XX that markets. encouraging. all days ago, updated color was and hospital in margin. I from

then quarter related half. services… you to that marketing. the marketing just you So continue headwind that and see their team third the non-headcount about back that internal think operating are your sales in item, we strong within do annually? should And meaning is won’t services, marketing non-headcount-related event forward? that you guys you’re seeing a built leverage of lot outside in talked the about to of Is that to clients for a that demand expanding that sales going robust if as and continue we Should need see expansion How we leverage,

if and you address question. want you, to then the Bryan, second the Thank address question, I'll Scott. maybe first

that are there it data us to question, second we've leverage. gathered services that a it to contracts bit as operating are examples the more relates technical So as a encouraging to few now managed on relates quite

had marketing that one of you and one We dedicated case, and executive, expanded executive account meaningful to pointed one effectively. client can from deep the even still million Carl $X very they're have shared first and to there's was Health. a that multifaceted the account leverage in the where sales for like we existing The really million waterfront certainly is relationship relationship. cover out past, able really account We today. have executive And that before they example, $XX manage with effective

that is expanding. we through that there other client meaningful that sales marketing leverage, existing we've and So are signed contracts and relationships these really see continuing and operating

the ROI That generally that on relationships. foundation expanding is of it's having focused just strategy be kind is and And term. a term, high a marketing of leverage sales motion. of really long existing growth the there. There's very our one lot benefits our And of leverage, long client high of

So that. by encouraged we're

that As remarks, in some operating these mentioned place operating we can We've for as XXXX, needing G&A G&A only on anticipate -- as a we lot we the we see already prepared starting infrastructure of in we mentioned leverage. contracts seen leverage, the to take isn't well, in also where the leverage also where meaningful some prepared meaningful and add large without remarks. really R&D

we forward. facets growth engine there's feel So a moving us as what as Tims to multiple encouraging to see

And your and Yes. question, on just first then fuse Scott.

EBITDA our kind for trends related So of margin to the year.

bit operating spend. progress for target continue position been is on, spend. to margin a non-headcount seasonality some year There efficiency the as have our mentioned, We expense little to and are in non-headcount to EBITDA encouraged leverage. Dan a raise slightly make had and in our We of

event. on that the the than half slipped we to like advertising rather year event to first of the spend, think point, large has related R&D your some contractor side in like the has year, things spend, back so to So but less the got things of the marketing work half just

Thanks, Scott.

Close Richard next Our question come Canaccord from with Genuity. will

on This for on Congrats quarter. is Close. the John Penny Richard

the going I'm Tech-enabled managed to again, question, a services. Just back

Just for long how for Like get to exactly like exactly your from margins will like you XX% the in terms the it ramp? is to of expectation data... what timing take do single-digit think the low to

John. Yes. you, Thank

X-year and X-year So that the in of we contract, with margin, we we as services then contract margin that gross the And And from target end of It’s is that of where part start XX% and also in low migrated services see And there’s year somewhere around part discussed note prepared we different. often that we’ve in early contract prior client also important of towards that a long-term months, that first involves each margin, bit improvement also that typical margin. to benefit gross that that from relationships past tech-enablement a subscription modular over at each cases from discussed the course as gross in that’s all-access technology our little that relationship. to typically, grows relationship type plus begin remarks X% these contract of some But a we’ve more tech take, often implemented clients bit and X% gross give term. the in expansion X% relationship. shared in meaningful X a fact to quarters, tech high more the a a of we’ve a range. quite that have or the over little the

level really that to we XX-plus And contributes a services relationships, combination our tech margin. EBITDA produce also kinds confidence so of the and with those of percent is still can what Techno-managed the

Yes. toward And points of we with have managed the level. that who add longer Managed been that have or to margin migrated of to gross of data have tech-enabled a that, standing us in to couple that Technical relationship Services clients do terms services just

So that’s been encouraging.

newer us years for X strategic of more has model. long-term, visibility month-to-month been more Dan of present in into recent in as of a kind does been that very deals, moving it’s seen, that which XXXX. great shared, these and bit more to a for these we’ve While us deep a half model second of focus the a locked some the to relationships headwind are But of with traditional as on compared that provides

[ph] will from Wells Our Berenson Stan next with Fargo Securities. come question

next has year's shifted It how way, does shift looks questions conference into the like a of in timing bookings? one, to guess, should then XQ. any from your the on I associated that, expenses that. terms here? of think typical X about we couple your A visibility And in

Stan, Analytics question. a of Thank winter you, Yes, September Summit for to timing the to the the did Yes. decide shift time. Healthcare in we from the make

that for So we as for a group of we and for existing – do ways will which experience to user about our that hold clients that event us And view relationships. to opportunity come February care those deepen we catalysts and as about up expand year an an clients event learn love to together analytics. it next can and in health open industry it also and helped who aren’t to others talk when be opportunity an we more

important anticipate we pipeline early the a that But and to that is continue conversion to be we will help to an factor continue momentum rather ability enabling nice bookings. will XXXX regards our to that, forward tailwind that in us see. that keep in So with moving

regards mentioned remarks, growing. have pipeline existing the to in retention dollar-based expectations, bookings clients that we that As clients. we prepared coverage confidence by by year with full with our fact fact perspective we the to our net the have subscription and encouraged a DOS the We feel in we reiterated that need feel rate from our both encouraged is

expense, streamlining marketing. terms But in again, the summit continue leverage time timing most QX so expense us be occur some of sales this for quarterly expense, for get some one that will you summit, for in prepared year areas of There in change Yes. be the and kind to expense the cadence. we very the the work different that be on the of focused to as frame. half, to back And Dan, of There that And particular leads that of terms just and in the of terms kind the QX. that. most is will of operating continue will in up of of some, in in will

Stephens. will Jeff with next [ph] come from Our question

lump follow questions the up to I try the few a question ambulatory wanted on win. on TEMs earlier together. to related I'll

focus rebadging, And the Just categories mind, possibility. the nonclinical color get hear be of also stuff to success shared to for curious ambulatory kind that then or curious be some from come intake that but you'll you more to management, what core on cycle there. revenue looking reporting quality will data like

to the or and a leverage efficiencies about. dollar detail success on just any can color KPI hard you to Just how lead on earning could that ROI type lastly, better shared of bonus? create the any add technology KPIs the talked that And you Rebeca could

Jeff. you, Thank Excellent.

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All right.

Cantor James Instructions] our Sarah next Fitzgerald. [Operator question And will with from come

strategy to what those? providers what the if give of congrats talk of that sort interesting conditions their was clients the uptick Board on quarter. margin expansion reference saw mentioned for It to And longevity of of went lag able setting. members they're to any you you contract really expansion? And could some us the a was in trends glean Were budget appetite changing earlier opportunity the cycle provider last market of looking around you for an you between market through, the that conditions from having

those for Sara. Thank you Yes. questions,

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Our will come RBC Sean next Capital question from Dodge Markets. with

Sean. Danielle [ph] is for This

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are At the right. there All in queue. further questions no time, this

closing the turn like Dan floor to back over So to for would remarks. I or additional any Burton Mr.

time Health Thank in for forward in Catalyst. appreciate your your you it, we to interest and all for look touch. staying We and

have Health wonderful Second does XXXX your and thank and today's Ladies this gentlemen, you, a Catalyst Please lines Earnings time, Quarter this at and disconnect Call. day. Conference conclude