Assure (IONM) 15 Nov 222022 Q3 Earnings call transcript

Good day, everyone, and welcome to the Assure Holdings Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note this call may be recorded. It is now my pleasure to turn today's program over to Scott Kozak, Director of Investor Relations. Please go ahead.

everyone. Hello, participating for call XXXX. the for Holdings' discuss today's results financial third in you to conference Assure Thank quarter of

the website. third After are Investors Executive and are press investor release the call presentation CEO, results a XXXX. On Farlinger; for section The its John and the company Chairman issued the CFO, of closed of available market and Price. on announcing our this quarter afternoon, John today release

would our I forward-looking like remind we the to which fourth you under the of begin may more with financial management provide certain today's remarks, Before call, report from projected statements the measures, quarter detailed non-GAAP filings that Act be recent prepared will for future some useful reference Assure's Also believe SEC, differ that on results risks will the Reform those variety the discussion company's could factors. year results investors. or and including and XX-K to We of on the for operating XXXX. Litigation the you made a financial Actual implied Form refer of for information materially a we Private due of condition. quarterly made Securities full are to and impact

which filing website. XXXX, For the XX, earnings the of X non-GAAP filed please measures, ended of for September X-K a release on these reconciliation associated available consult the with the months recently the is most SEC

download quarter earnings for Investor found company's to replay into available want slides and in the join telephone, at may see Assure's would recorded made like to third Relations today. the website. who call to XXXX or call webcast ir.assureneuromonitoring.com and I This remind will link by on referenced via site order dialed on be Finally, everyone the presentation our you our

like Chairman Assure John Executive to and call over turn Holdings, Now Farlinger. I of CEO John? would the to the

key talk cover and corporate call. front will for On today's see we'll the topics thanks Slide developments our Price, everyone, Scott. you, with quarter of through recent will trends. discuss up cash joining accounts begin X review then today. XXXX and in John discussion fourth environment on earnings financial interoperative before you'll about neuromonitoring I And on will of transitioning CFO, results you, a agenda of around go receipts. a Hello, Thank to and industry expectations. a receivable us with discussion I the wrap

improved Assure's third results quarter operationally.

related Assure results by these be basis is However, charges. and quarter fourth effect for we what accounting masked in laying Overall, were the further XXXX. of challenges foundation of will the diminishing the improvement believe

market underscoring our utilized volume inform results, case. our case decision support business. margin the growing and our to maintained underlying exit company revenue during data strength not collections possess warehousing analytics, the accelerated and the [indiscernible] continued we did were down managed per dragging the average these markets cash that Assure’s and To quarter, previously of intelligence slower to

compared But volume managed to improving full management reduced a and growth case focus volume on and segment on forecast, chose was in health to insurance our to the XX,XXX XX,XXX strategy and XX,XXX And to XXXX. even To while forego benefit achieving combined order be utilization, between cases obtained. the of of geographies expected to commercial from cases a reimbursement XXXX track is XX% in to in Assure to by our the go-forward to scale Our year clear, at with perform expected XXXX. lower underpinned same on profitability. above-average margin These in increase managed time margins. anchored XX,XXX are the actions profitable improving the range of is XXXX company's XX%

reducing steps on in of the Assure will portions and providing be addition, cost neurology delivery our remote key services, of for In technologist on average focus the both quarter XXXX the the a to company's to this fourth for of than first more a annualized also and million reduction year. We've savings business. become profitable, $X our of leaner the effort taken of quarter will that compared continuing strategic yield more cost

Assure further quarter our becoming the the reduce reflects flow of from focus XXXX. expects This to in near on cash term. burn self-sustaining in cash a fourth perspective

$X.X accounts receivable a the progress half substantial XX.X% reported this in combined quarter Assure the in on after of million its reserve, reporting reporting year. first third

to million. as position stocks, underwritten and $X.X on this financing closing a challenging financial by most its completed of company to an pleased headwinds our was equity straight-up of a I'm to strengthened growth Assure environment the and runway sale opportunities without offering net Despite promising proceeds capitalize macroeconomic addition, report micro-cap warrants. In approximately public create with for that

Finally, profile. to also extend in pleased we're state which a our strong reimbursement New footprint also very -- of the demonstrates Jersey.

reputation industry, XX, from sought between position the update million has at new help payers commercial AR of and IOMN the on shifted the Our the neuromonitoring which, and of will have the the secured significantly. have in resolution neuromonitoring begun stack reflects nonpayment technical agreements really in associated ahead On that a to interoperative the We've payment has surprise even ramping industry the processes even [indiscernible] for XXXX, up I strong perspective, dispute leverage providers of reminder, federal have level the payers the stature in on including hardball business the of surgeon dropped no which levels interoperative clinical Levin, or XX business, industry. interoperative amount is accept before built of with delayed and interoperative for This the insurance play neuromonitoring of reimbursement the the environment Dr. services. an XXXX. providing technical relay implementation reimbursement the The to on over focused outstanding the neuromonitoring December particularly force operating $X.X of we pandemic contraction the as or past to the XX, arbitrations. their payer -- Mark X, From to AR care. a was COVID take Slide intend to to the technical began. to related of builds seen built tactical is see payers try And technologists, playing as months, claims room. network providing unfavorable our to claims. pushed for compensation at felt September because value payer, tactical we down of million portion services field in dropped Assure's $XX.X the The

We're the by for result, our a aggressively bill. As more professional remote compensation to maximize collections services on provided specifically shares Assure. moved neurology

moving the master or professional keep bill. can agreement way collections from services that so MSA all model also We the are we the from

been already in We the the our of during XXXX. accelerating this with remote this second business services neurology direction initiative are launch fourth trend, Assure quarter. of Anticipating quarter in the moving had the

leveraging sophisticated for with management they are degree sure to perspective to a costs services cycle a make revenue provide margin. steps is providers are services clear. will receive ensure Our The heading are and high dedicated focus with platform is from to neurology know able going next is of provided. we for fix Assure neuromonitoring interoperative that to industry a Where this certainty what

are favorable scale aligning expectations. We're our in updated markets. case adding We managed costs revenue with

see cash programs has quarters. trailing of Slide improve X months. functions in network ultimately XX that agreements and increase X, rates. in near-term leveraging and months up signing XXX% industry want X, rates are appears and supporting likely assures first M&A opportunistic that a to entities, will federal we first management substantial of generated And and the In and with of in arbitration approximately the cycle and environment. in cash take its augmenting of substantial XX% over lead company speed to XX% the period. On XX-month we flow see and lastly, cash to recent record in the state revenue collections net to advantage these to is We leverage participation maintain those Assure figures the an data-driven an XX Both collecting a total company consolidation.

are the collecting accruing Importantly, we we what end. front on are

management are reserves function cycles The rates better earnings. we cash In billing contrast, data-driven has Accelerating they'll a on revenue depend receipts company The driving in-house, of and is also sophisticated far space, Assure previously. had supports visibility neuromonitoring rates, need to collecting reimbursement the we supports capital our rapidly. collected minimize collections. than working the Cash accrual point and on is third-party in cash and cycle I for also that built in us most serves better last reduces on flow our participation and providers. cash competitors higher data Assure and add our our shortened future. will

entering. work Further, now payers and collect be reimbursement begins and adding where prioritizing identifying the should rates during ourselves of -- at as are achieve best And interoperative XXXX. what surprises like new legislation process see that we with New the year identifying have Jersey, no expect reimbursement to to associated and this impact also [indiscernible] that with as the fourth we leveraging the future. [discrete] with an we We ranking can educate expand friction. neuromonitoring year which the on least are quarter we margin, and best improvement federal we the focused on information scaling, states in we're and them scale states inform markets into in will to and resolution this

quarterly the will Price walk John financials. Next, through John? us

today. On I thank results Slide and quarter John, Thanks, from everyone, us will color X, financial joining third on XXXX. for you, provide our

period, generate Assure markets despite cases Assure prior X,XXX year low period. growth, exiting the procedure an managed certain performing during performing QX over during the continued to increase

in impacted revenue reserve EBITDA results of of $X.X in revenue a $X.X The and net million The $X.X and of netted aged was we receivables did expenses much of reduced negatively quarter. degree Assure quarter fourth million $X.X first it the of than the by to current be company's financial lesser the third reported adjusted although this net revenue of against gross $X.X expect and half loss in million, million, further cost operating loss our quarter, million. year.

cash XXXX XXXX $X.X compared collected to Assure In $X.X more approximately in addition, at QX versus million QX XX% million.

the mention Assure's has of understanding to managed considerably, cycle sophisticated improved like I'd function item management data revenue by Another a driven that case increasingly of analytics. value an and is

XXX sales days we see that COVID-impacted dramatically XXXX Assure's Next, look will in this quarter the a days table, of In during to days have at DSOs XXXX. Slide XXX nearly third from on outstanding. we decreased X,

We are cash simply collecting faster.

reduced is As accounts there reserves. future to a receivable result, exposure significantly

in improvement. with While for DSOs, we still there are is room pleased this reduction

from focused are lower significantly levels. driving on We this current

of was time Next, shows we on accounts the much current could of end this at consider earlier accounts a in XX% the are collecting as of this future receivable we quarter, towards receivable as accounts bucket by see the quarter aging will Assure's Comparing was the what Assure XX outstanding compared reduces the end. you less first the XX% XX QX, months by has what quarter. of during bucket periods, or our that of the the or just third for receivable a in we are with receivable comparison, and larger look bucket. current its Slide X, categorized John in on The XXXX, reserves. months In AR XX less. front And susceptibility accounts months earlier, or accruing less to shift to year. mentioned of exposure we What in proportion are trends

in conservative accounts into receivable benefit accounts one, is XXXX earlier the our into are taking process by that that clear receivable. claims write-down clearer and a the process threshold. estimated corner based historical reserve and less visibility accounts and said, reduced this because type residual reserve new better visibility accrual quarter have our and XXXX, of strategy provides collection in of reserving taking I'd reserves of rather here waiting it The a picture XX-month and earlier We two, of With is for expense; AR provides of Assure than risk The substantially again. anticipated experience. collectible on fourth go receivable like these approach in turning new for remind to our occurring holistic formalized the the a exposure investors legacy is, the future there

that our to As led days, DSOs cash in XXXX. it at and is has less of reserves to receipts risk. XXX The fiscal is accelerate higher-than-anticipated there AR we continue to process downside this under new

Farlinger and fourth over the I'll John? to XXXX. Now expectations, call John for back quarter pass

exiting case X,XXX fourth profitability a case forecast proportion Thanks, support provide respect of the XXXX. a volume key relative of half cleaner fourth will in John. expect results managed we with patients. markets profitable cash guidance higher quarter of to as mix the business, programs quarter, Slide we continued On from Through to be of with benefit goals. for with growth including revenue our to beneficial procedures. much insurance geographies seasonality reflects well more XXXX. X,XXX volume a QX approximately XX, reserves third utilizing insurance the to compared the our first certainly and to the at our government Starting This top, see flow of we the quarter and of of as of profitable patients impact less ramp-up proportion the commercial the more total

accounts receivable Our expectations. the in is $X third in was with and million reserve quarter line

first are net than fourth half nearer XXXX, million quarter. the revenue $X We we a revenue to the we've anticipate between of hoping Overall, a fourth far compared what less quarter the in for of experienced reserve gross and XXXX. gap in in of

see the operating a quarter. in On to the reduction fourth will side, continue in cost costs Assure

benefit going we cut to burdened we leaner cuts this be to no administration from fourth run to will expense taken our and have the Further, costs earlier are other make in quarter. business year operational with As leaner. longer continue and associated by the we made, actions severance we

collections collections on strength and new as aged accounts receivable. accelerate see continued we collections in further on Finally, improved we claims

driving reserve. Taken deeper cost the profitable to managed -- also generating focused significantly our case centered going together, of cases forward markets. in We've impetus more and going AR on on our lower. Assure's lowering quality costs an its reducing with cost higher substantially worked volume structure fix those on its

average we progress and cash leaner reducing that on the October, in this September this the State been point, utilized At in state a much reimbursement of has level fourth been Texas through of success the these -- continue running footprint. operational to Texas which has state will arbitration quarter our burn in In our claims to meaningful expect benchmark. experienced factors reimbursement closer decrease XXXX. a to great realigned year. across We arbitration

Assure's arbitrations pool in final XX% associated the patient federal of environment. buyers. pool be on This is focused Texas participation highly and want much with reminder, larger with to favorable pool market company arbitrations largest volume. does affect approximately than still of to is One opportunity relates arbitration larger the I and represents M&A It This increasing anticipated state Texas a for not the and is to margin As comment The state right to come. make for claims. is of our improving Texas. rates change

existing our management Assure helps as the seeks with that, will revenue operations footprint, where over with targets expect be call to M&A states Q&A. Assure utilization I we existing cycle I'll have operator in profitable And presence active this us the marketplace. employee competencies. leverage and turn back our in for

your we'll our open. Instructions] Sidoti take [Operator Sidoti. is line first you. from Jim, question Thank Jim from

that. Sorry about

adapt you've -- industry. you've changes -- a lot to a John done in the lot to to done the

revenue cycle improved You have management.

data this the at implemented the You've adopting How analytics. industry rest is point? of

claims, we've a you're year, what rest towards focus at have in this going the this a Where hitting really, to level experiencing is the there really out if earnings really as least the don't of have really on last of the shift a experiencing is federal remote well. be side need the cash professional level. if saw from industry propensity pay back been tactical side flow all in arbitrations technical of is you be to business. X and hundreds year. model predicated a where at being state at data the on is data, don't which you going going a arbitrate neurology probably I And question. is Jim, to lower the on good this really going settlements cases. to on portion A us significant from it's And to and home year, analytics, allowed of think we a stabilizing been our the disadvantage has next reimbursement lot and analytics That's year improving success going into through what

claims one haven't claims. and -- yet. there's And into such backlog just of getting been lost a We now the we're we because federal

at at still part, a keep smaller half looked And that's -- of dozen They're them. And using companies to even back going billing third-party data. at most space. disadvantage have the seeing a be really market, is been most state least significant be for without think going of still analytics. for in companies. to we third-party I billing These at companies. the What don't don't going a level. a They So to the ability the really they're done they're They are the arbitrate. we're targets year. where using very have probably lot competitors still don't the We going it's to have tough into next the winter companies that,

I have the surprises push advance sitting, payments scale of and think the done at and down. to control reimbursement no reimbursement down the in really to attempt environment. arbitration full try payers the thing other to and the that slow attempted of they've

if you very drive So as yield early of we going don't we're optimistic about opportunities we and why for what than part look existing snap think part, plan feeling model potential if looks and like a are. these the it's competitors, have the XXXX. look that's be revenue business you and get settlements, you platform that our if can to will We that pretty why to and onto can't M&A. That's we most David, a M&A. think at companies feel arbitrations difficult have analytics, automate our don't And higher we're you acquisitions through and And be good survive. at more I key

professional and shift to where from margins revenue do the start think in of up So 'XX 'XX. as you to the technical the business, you go scale the as side and side

know queue delays the haven't there getting were probably in out. you -- I some Yes,

were going was revenue you at we a around see surgeons. growth As monetizing really the you revenue that will technical is model migrating you around, significant in set we we that want that want the really professional to rev really, Q, a technical with and at year is Q have on shift get revenue significant at the this a really where and we here amount business you to the had year, revenue almost a our look share. in generated now we're side. we And if that off model look partnerships. That's side you really of And ago, from away the to -- look And inverting We up the share QX, control from. of away the that all will really XX% see which non-rev we to year And middle was professional that want professional from want partnerships. on that the the side. claims last models of those we're of by of the competing where the sharing to

tech to of away will and remote That And margins, there's the XX% professional will that margins obviously, the it old much are that giving the do. global we're a that the shift that actually the still were you we're model be sale you of where away toward upside pretty on and at rapidly and more our And going as a competitors potentially at giving the forward. last as of And lower will I say for now we rev of most by XX%, tied to as piece, model that's Pro forward. the to possible. in attempted remote fall of model revenue revenue, on started neurology meaningful that key got in the all piece, keep that you XX%, potentially we part business share, away a to other and remote more neurology facing right and you've going to of facing are looking drive that do ultimately, thing to keeping the that it's neurology us we shift And are bill professional least revenue. scale off side. revenue So what as model keeping you clear yields. lower think from We've higher get shift professional as

point and side. business cover I We're part now a costs. think of make trying the we're at that profitable tech to time our in on to just

On the still there significant upside margins. pro to higher get side, is

quarter, XXXX? other any expanding in you New Okay. And quarter there into Are expanded in be think the the during regions into Jersey. you fourth you'll

No.

I in focused the of costs we're to reduce reducing couple middle tax. of highest X. expanding a continuing and in Colorado, think is on -- side most because business areas which reimbursement it want the top on existing get one utilization to add in and We Jersey, a United things, -- States, higher the really of QX, the of in yield want that's we're to we're is improving a expanding technical cost, under New markets in business we states in Texas, the the our

costs, continue you're than more I quarter? in Okay. number mean the to already XX% mean I with at least does down that regard quarter, first G&A. to in trend from the fourth down

still costs. But we we continue And in into forward. to a can There the leader we going run be in quarter we of money. fourth in shift be a reallocation -- will I trend could -- spend -- to in and run QX. QX going leaner down going there think yes, But it QX QX. and where will we're will a

Bill Benchmark Our next question from comes Sutherland from Company.

here? on the wondering up issue was like there DSO of just half I Is the from trend. it's a moved timing It first John, year. seems the

to to Do speak want you John? that,

just of Bill, it's the Yes, a reflection -- mix.

the in year. of get half a betterment you mix So the of back the

we end AR aging. receivable our And a XX-month more see on percentage to well that And in the of it half. collections, and benefit QX where to in push first we'll cash expect that's in be. cash acceleration as that really as accounts to of as continue bucket really And start the QX, we continue as see you of as through second where receipts, that's so in roll the you the to QX

of even is reserves, should on part next ongoing as just kind is model? we of of And into that year -- go think AR an the that we Okay.

Yes.

we're starting to a receivable accounts in estimation As eighth age we the to quarter, the previously adopted is what XX months. fifth the take receivable quarter the this past would whereas bad wait really out new debt of process, we doing through for portion

And overall to so that the relative accounts we the reserve build of to I receivable are think over reflection better a that collecting period it's time.

collect have the tail this coming end that our that the But estimation less want the you faster, to of us of that we're a bit that's out. more it a -- through is there's expense the see is year. to But to bad adopted So change to accelerate this debt year large and in of collect forced why a is months XX tail what It's in we what you analysis didn't obvious. we money as found later. do the

the last And X, really QX a so QX the last up down versus, started reserving QX, being quarter payments. this or say, cash take an look less and we year QX, in you that the AR writing was on But X. And to was at QX, as the of much of and there collected shift acceleration speeding that result of X flow with earlier.

conclusion we out should led it XX that be months. that it and so us letting accelerating And out age faster to after the we're

and reserving accelerated receivable. model. that conservative the it We to accounts -- of we the it's more accounts a a cash but led collect some later, of reserving faster And may of so

now right model revenue I of Yes. year. is, going know right of guess, I have things, we you've were word doing got this yes, forward? window. this I to And gross be a the kind understand to that What that or size in what -- combination kind XX- net XX-month and you the is what still going don't

I these gross become think spread. be a lot is trying not But so we normalized, market there's we're going frankly, to see really expected narrow arbitrations the that going to negotiation. a for as where while, of to net

year do to got focus to next us. insurance lead getting across in we're to amounts QX pay part with a You're table, us accelerated think I changing what around money I were going to on discussion we work now going year. state to now And arbitration what yet. want and going money. to because offered numbers you -- get of companies they're get we us. go are it the to and the what to And because of what to And to go going Conversations large I of escalate think what metrics I And lost year that's it's going it we collect for that know low the least -- arbitration we're of going early that we in where going Texas to simply reduced to the of didn't starting a highlighted, discussions And We know we're think they in-network QX just paid network, agree couple at get. get. I we're an in know network we amount ultimately, of dictate this is haven't and number to to and simple to think paid. this work know case those we've get a payers in

Well, Yes, that. you great. would luck I be that wish

now It will no Farlinger for this we have appears to turn time. call at the or further John I any closing questions back additional remarks.

On team, today’s to we’d for of thank to you. call. behalf like the listening everyone Thank Assure

during We is that, cash quarter you a you for few going I’m margin, net all conclude. seeing flow. to much. fourth company growth, on actions to comments. call. accelerate add cash designed Assure participation our to your Thank concluding, to today of focused collections. profitability profitable company’s taken The and expand improving you and With thank forward again costs and very I’d look reduce final the are like The Before has

ladies you, conference. Thank concludes gentlemen. This today's and

may now disconnect. You