Earnings Transcript for PME.AX - Q2 Fiscal Year 2021

Operator: Thank you for standing by, and welcome to the Pro Medicus PME Half-Year Results Briefing Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] We ask that you limit your questions to two per participant. [Operator Instructions]. I would now like to hand the conference over to Dr. Sam Hupert, CEO. Please go ahead.

Sam Hupert: Thank you and good morning, everybody, and thanks for joining us. The -- Pro Medicus, we have three jurisdictions we work in; our corporate headquarters in Melbourne, Australia; our largest office, Berlin, where we do the R&D for the Visage 7 product; and our quarters in San Diego in the U.S., with most of our staff working from home at the moment. Globally, we are 100% working from home. And the important thing for us is we have over 40 software engineers, very much an R&D focused technology company. In terms of our product sets, for those not familiar, we have two products

Operator: Thank you. [Operator Instructions] Your first phone question comes from Chris Cooper with Goldman Sachs. Please go ahead.

Chris Cooper: Hi, morning. Thanks very much. So look, firstly, really good to see transaction volumes back to pre-COVID levels. Can I just ask, specifically just on the facilities, where you think you're seeing some backlog play out? So I sense from your tone that there's some, but perhaps not a hugely material at this stage. Firstly, I guess, is that right? But if so, do you expect that level of backlog revenues to increase if conditions continue to normalize? Or do you think that what we're seeing right now is the majority of what we're going to get?

Sam Hupert: Look, it's hard to tell, because some people delayed things and then they were going to go and have tests done. And then with COVID increasing again in certain jurisdictions, it's sort of started and stopped. But I think in most jurisdictions, we are more than 100% of what the similar numbers were in December 2019. So clearly, that would be a mixture of backlog and maybe some organic growth starting to come back. The only jurisdiction that's yet to fully recover as we see it, it's much, much better than it was, but it's not quite fully recovered, is West Coast, US, in particular, California. So we are anticipating that numbers will grow from here without like-for-like as a mixture of backlog and organic.

Chris Cooper: Okay. Thank you. Just on the pipeline, just secondly, obviously you’ve had a very strong run of contract wins. But we noticed you had dropped that wording you've made in recent statements around the pipeline being the largest or the best it's ever been. I just wanted to confirm that, that statement doesn't currently apply. I mean, we noticed you have dropped that previously before – before legacy is sort of reconfirming it. So I just wanted to double check that was intentional. And I guess, just to push you again for any additional commentary you could provide on the pipeline both on so near-term and mid-term opportunities that would be helpful. Thank you.

Sam Hupert: Yes. No. First of all, the changing the terminology wasn't intentional. And it's not to suggest that the pipeline has decreased. It hasn't quite the opposite. Now that – clearly, that is – as of now, with the University of California campuses coming from pipeline, which has been – coming from pipeline to contract. So we do have a lot of – we've had an increasing number. And we've said this over that maybe the last six to 10 months, maybe a year, increasing number of opportunities at the front end of the pipeline. And we see that for a few reasons. That one is because of the large data sets forcing people, I think -- COVID showed a lot of people that if they weren't able to read remotely, that was a huge problem, as I had to pivot to at home reading and that's our strong suit. And I think we're seeing more and more of this network effect because with each high-profile sale, it resonates throughout the industry. So we are seeing a very good inbound opportunity across a range of things, not just academics, not just big, small cloud, non-cloud. So we're very happy with that. And then, as is always the case, when we make commentary that there are opportunities that have been in the pipeline for a while, these things, particularly the big ones, often take years. And they've all progressed. We haven't lost any. So no, we're very happy with the pipeline and we think it's about as strong as we've ever had it, if not more so.

Chris Cooper: Okay. Thanks. I have got a couple more, so I will get back in the queue.

Operator: Your next question comes from Josh Kannourakis with UBS. Please go ahead.

Josh Kannourakis: Hi, Sam and Clayton. Just a couple of questions for me. Firstly, just following on for your comment on the cloud, have you seen any other of the major players or any other of the key specialty players in the market make large-scale public cloud deployments yet? Just interested to hear what you've heard in terms of the industry feedback on that front?

Sam Hupert: Not that we've heard of, no. We think these will be 3 of the biggest, and Intermountain will be the biggest yet. So we don't know of anyone that's been able to do a full cloud deployment like we are going to do.

Josh Kannourakis: Got it. And within the RFP for that, was cloud a requirement or a sort of added extra in terms of the you know the staying on was intend?

Sam Hupert: In two of the opportunities cloud was their preference in the RFP. And the third one, that question was left open, but in technical discussions it was deemed to be the way they wanted to go. And they were comfortable that we would be able to do it, whereas, I think they had reservations about others. So two pretty clear upfront, cloud is what they want. One looked at both on premise, which we call private cloud or public infrastructure and then in the end chose public infrastructure.

Josh Kannourakis: Got it. And then just rolling that into, I guess, the mid-market or the sort of more regional hospitals, which has been, I guess, a big focus for investors over the last while. When we look at Intermountain or deal of that that size I mean, have you seen – do you think you need to implement that contract? Or are you already seeing an uptick in activity levels from some of those like-minded or similar sort of hospital networks in America outside of the top tier?

Sam Hupert: No. I think, look, we already have clients in the cloud, 100% in the cloud. I think the delta here is the size of the opportunity going into cloud. So no, I think people -- first of all, they can try it. We have our test system in the cloud, right? You just give them an account, send them a link and they can try it. So no, I don't think -- I think people are -- no one here has any hesitation that our cloud offering works. But I think anybody accepts that it does.

Josh Kannourakis: And sorry, Sam, I was just sort of meaning there as well in terms of the regional -- outside of the top-tier hospitals, just the inbounds on the interest level in that side of the market post, obviously winning -- Intermountain and who's obviously a large player in that market. I'm just interested to understand the sort of pipeline mix between the top-tier and whether you think there's a larger opportunity now in terms of that mid-market or more regional hospital networks outside of the top-tier?

Sam Hupert: Yes, absolutely. I think there is. And as I said, for certain groups, cloud makes a whole lot of sense, because they don't have their own data centers, and they don't have the depth of IT departments that may be a massively large academic would. And so, they're looking at it. And then, even in the corporate sector, a lot of people are saying, we're health providers. We're not IT people. And their CIOs are going, we must transition to cloud. So, look, it is a momentum that's occurring in all industries. Ours was maybe a little later than most because people were worried about security, but I think there's an argument to be made. Public cloud is more secure than your own private cloud. So, yes, it is opening opportunities, no question for us in that mid-market.

Josh Kannourakis: Okay. Got it. Thanks very much.

Operator: Your next question comes from Julian Mulcahy with E&P. Please go ahead.

Julian Mulcahy: Hi, Sam. Just a couple of questions. Firstly, the professional services line, quite a big jump. What kind of drove that? Was Intermountain included in that half? Or is it something else?

Clayton Hatch: Hi, Julian, it's Clayton here. Part of that was actually MedStar being deployed in the cloud. So some of the data migration with archive sales, data migration occurs pre go-live, and part of that data migration was included in the December figures.

Julian Mulcahy: Right. Okay. And second question, with the archive opportunity, can you have a sort of feel for just the existing customer base, how many have archive contracts that are about to expire? And therefore, you can pitch your service to them?

Sam Hupert: Yes. Look, when you say expire, we're talking about in the next short period, two years, for instance. And I think, that's a material number. Now, some of them develop their own archives, like Mayo. So whether they're looking to go off their own is a separate question. But those that had third-party archives, I would say, there would be at least half, could be more, whose contracts will end -- who will expire in the next two to three-year window. So they are a good source of opportunity for us.

Julian Mulcahy: You've started to pitch to them?

Sam Hupert: Absolutely. Absolutely. These decisions for archives are often made over a year or two. So, absolutely, we have, and we're in conversations with as many of our clients as possible regarding it, because we think a far better solution than the third-party archive they currently have. And we have proof in large-scale, like Mercy and soon MedStar, Intermountain, et cetera.

Julian Mulcahy: Cool. Thanks, Sam.

Operator: Your next question comes from Adam Jossek [ph] online from Jossek Invest [ph], who says, it is good to see Pro Medicus expand in its technology footprint, including into breast screening. I have a question regarding competition. Do you see your entry into breast screening, filling a market niche not currently occupied by Volpara? Or is it your intention to make market share from them? Secondly, how does the Pro Medicus technology in this area compared to that of Volpara?

Sam Hupert: Yes. A good question. Look, Volpara, and I only know what I see in the public space -- one of the cornerstone offerings was breast density analysis. But they do have other product suite designed for breast imaging around that. So it's not a one-for-one comparison. The other thing is ours is on-premise and it's on demand. So effectively, the technologist will push a button and in under two seconds, usually under one, we will be able to provide that readout. So they're not exactly like-for-like. Will it mean that clients that have ours may or may not buy Volpara? I think that's likely. But it's a bit early for that. We -- as we mentioned, we've just received FDA approval. We will be putting it into a large site and the one that helps us develop it. So there's no secret there. Looking at how it works in the ROI and then looking to commercialize it, and then we'll have better idea. But look, it's not a one-for-one overlap. But in some instances, it will compete.

Operator: Thank you. Your next question is from Gary Sherriff with RBC, who asks about EBIT margins. How should we think about them in FY 2022, 2023, given contribution from large contracts coming online?

Clayton Hatch: I was just going to say we spoke about margins growing to above 50%. And then from their, it wouldn't grow too much. Clearly, in the last half, they have by virtue of the RSNA moving towards a virtual conference and some of our travel, which Sam spoke about earlier. Clearly, we think those -- we're hopeful of those things into the future do occur. So there might be added costs there. We're also looking to increase our base in both North America and in Europe. But yes, obviously, new sales coming on board will increase the EBIT margins. To what extent, we think they've grown quite considerably in this half because of those -- the expense reasons. But they may come back a little bit in terms of future periods.

Operator: Your next question comes from Claude Walker from Rich Life, who asks, at the moment, Pro Medicus is focused on large health networks and large teaching hospitals in the U.S.A. Looking forward up to a decade, is there any plan to figure out a way to sell more into public health systems or smaller enterprises, or with expanding customers by type like this simply be considered a distraction from the main game?

Sam Hupert: Look, I think we are looking at all aspects of the market. I know we're most known or well-known for the large Tier 1 academics, large health systems because they're the ones we announced. And most people know the names like UCLA or Mayo Clinic, but that doesn't mean we don't do work in the mid-market. Quite the opposite, a number of our clients are in that medium space like Alleghany, Welspun, Karl [ph]. Great clients. You may not have heard of them because they're not as prominent as some of the others. And we do have private clients. Like Zwanger, we have private clients here in Australia, and we do have some in the corporate space like Nines and teleradiology. So look, I think all the market is fair game. Clearly, there's a point where the cost of sale doesn't make it worth it or groups will -- just won't pay our premium price. But I think that's becoming a smaller, smaller section of the pie. I think more people are realizing the value. And yes, we have plans for all sections of the market. And not just the U.S., clearly, we're based here in Australia, and we would love to see growth of our products in Australia. And when you talk about government market, LMU Klinikum is government. And the other contract we had in Europe was government. So we are looking to expand that where possible.

Operator: Your next question comes from Stephen Willey with Partners PTY Ltd [ph], who says, congratulations on another great result. How is the pipeline looking and what are you doing in terms of the sales team scaling up?

Sam Hupert: Well, as I just mentioned, one of the answers before, we think the pipeline is very healthy, and we're very, very pleased with our conversion rate and our inbound rate. Clearly, we have a small, very focused sales team, and it's – I think it's outdone the rest of the industry put together, as witnessed by the last six sales. We're six out of six. I think – look, we are looking for some salespeople, but they will be in increments. We currently have three in the US, three in a bit, if you include me. So we've been going from three to four, not three to 30. And I still think we will still continue to gain great share of the market.

Operator: Your next question comes from Ian Lee with Allianz Global Investors, who says, can you share with us how many of the clients are now going over the fixed number reading? And how is the client charged when they go over?

Clayton Hatch: In terms of our client base and the ones that are fully implemented, all of our clients are above the minimums that are fully implemented, and all of them above their original 100% that they had mentioned to us when we're in contract. So once they're fully implemented, we get 100% of their volumes. So they're all above that rate. In terms of charging for them once they're above their minimums or volumes that they indicated, it's done on a same basis, same exam rate basis. It's not discounted or increased in any way. It's just a linear per exam rate.

Operator: Garry Sherriff with RBC asks, do you believe the contract win rate can be sustained? What is the general good rule of thumb in terms of number of deals and average size in a 12-month period going forward?

Clayton Hatch: There's no – Garry, no fixed rhyme or reason as to when systems come to market. It's not like there's a specific point or they lose a tax deduction if they don't do it by the end of 2021. They all come based on a whole lot of different factors. Look, we are saying that the last six deals, in such a short period of time, I think is unprecedented in the industry. I don't know of any company that has done that before us. So I can't say we'll keep up exactly that rate. They come in their own cadence. We may have one or two and then it stops a little while, and we have three or four. Clearly, it would be much easier for us if we had a large contract drop every month or two, but it doesn't quite work that way. All I can say is the pipeline is good. And their people – in their various stages of the sales cycle. So clearly, some more towards the beginning, but some more middle and importantly, some towards the end. So whilst we can't give you a number, all we can say is track history is – we've won last six our of six, and we're hopeful to continue winning all the ones that come up. We can't guarantee it, but at least, we think we're in a good position to continue to win a majority share of what becomes available.

Operator: Ross Marbles with RNC asks what do you mean by clinical ROI?

Sam Hupert: Yes, thanks for that question. There are 2 things a system must perform technically and then it must give a return on investment. Clearly, financial return means radiologist efficiency, massive consolidation of IT infrastructure and savings for some of our clients save millions a year, literally, in going from 10 different instances of 1 system down to one Visage. But then it's also important for the radiologists that they are able to do things they otherwise couldn't do, which we enable because of all our 3D and everything else. Or if they could do it, it would take them so long that they wouldn't do it. And the example I showed in my presentation was something you could do if you had a workstation. But someone would have to go to that workstation, spend a few minutes and confirm that it was a stone in the urether. On ours, so just click it's on the same workstation that's right there, so they always do it. So that's what we talk about clinical ROI, being able to provide them with capability that either don't have with another system. Or they do have another system. But because it's so cumbersome, they won't use it so effectively, don't have it.

Operator: Oliver Renton with Pendall asked, are the economics for cloud versus non cloud similar in reference to PME?

Sam Hupert: In terms of our charging, yes, it's the same product. The economics in cloud maybe work a little bit better for us because we manage that instance of the cloud. So in an on-premise solution, we deal with a large IT department that has everything from networking people to security people, etcetera. And we're very adept at that, because a lot of our clients, you know of like Mayo and Mass Gen, Brigham and Yale and Duke, that's the infrastructure that they've got. What we see with cloud is that once they're up and running because we manage a lot of that, in the patching of operating systems and everything that you would expect with the cloud, we find that, if anything maybe takes a little less resource than supporting on-premise. But in terms of cost and selling, it's exactly the same, and we let the client decide which way they want to go.

Operator: Andrea Cho with JB Ware says, can you talk more to the network effect? Thanks.

Sam Hupert: Yes, look, as we implement these large systems, they all talk to each other. They all know each other. They all talk to each other, their peers. And when you get some of these large academic hospitals, there's also a trickle-down effect. So more of the, I suppose, middle-sized hospitals, more regional hospitals, they will look at what a Mass Gen, Brigham or a Yale or Mayo or -- does. So I think it works 2 ways

Operator: Oliver Renton with Pendal says the uplift in Zwanger-Pesiri contract value. How much was from volume and how much was from price?

Sam Hupert: It was a mixture. The group is slightly different in its structure now, at least, when we saw them five years ago. And there were some extra considerations around it. I think -- but I think it was, in their case, we had enabled them to grow, and we were the beneficiary of that when the contract renewed. So they're a bigger group now than they were when we first met them five years ago. And I think they've been very vocal that we were a key driver of that. So it's a mixture, but I think volume was an important one here.

Operator: We have an anonymous question that says, are you familiar with Singular Health's Med VR 3D imaging technology? If so, how is it different? And is it a competitive threat?

Sam Hupert: I'm only familiar with what I've read in the paper. I haven't seen it. I believe it has a different use case to us, rather than a diagnostic use case. So from -- based on what I know, I believe it's an adjacency to our market. And again, based on what I know, it does, I don't see it as a competitive threat at this point.

Operator: Bella Wan [ph], a private investor says, thanks guys for taking the question. Any update on the renewal with Sutter Health? Will it be an opportunity to include open Archive in the renewed package?

Sam Hupert: We are still working with them. With Sutter Health, in particular, where I said certain jurisdictions got really badly hit. With COVID, California, where Sutter is and the UC for that, were hit even harder than their East Coast peers. And so, with that end also, it's a bit like Australia, but in reverse. We had bushfires and COVID. They had COVID and bushfires. It's been tough out there. So we've agreed to extend the contract, but we are in negotiations with them. I think the key thing for us is to extend the existing contract and then look at any add-ons after that.

Operator: Bella also says, just noticing support baseline revenue was down a little from June half year. Could you please help us understand how this recurring line would decline? Thanks.

Clayton Hatch: Yes, sure. Hi, Bella, nice to hear from you again. The -- some of the support revenue that we have are OEM revenues, both in North America and Europe. And although it is recurring in nature, it sometimes can be lumpy and change from period to period. So that is the main driver from the decline from last half. It did go up from second half of -- first half of FY 2020, mainly through the rollout of the I-MED contracts and that OEM revenue can change from period to period.

Operator: John Hester with Bell Potter said, Sam, do you believe the overall market at US$2 billion in the U.S., how much of that market do you believe would consider Visage?

Sam Hupert: Well, I believe that is a good estimation of the market size. But the market is moving, because it's expanding into other ologies. We'd like to think that the lion's share would consider us. I think, we have shown the technology from -- the product from a technology perspective, addresses the broadest range of the market or the biggest percentage of the market. So we have clients in Australia that are two-man radiology partnerships that have been happily using Visage for seven or eight years. And we have clients like Mayo Clinic and Mass General, and it's exactly the same product. We don't have separate products. So we think from a technology point of view, we can address as close to 100% of the market as is possible. I think the thing is what about from a price, cost of sale, cost of support, cost of client perspective. And we see that broadening. Cloud is certainly helping that a lot because some of the smaller groups that didn't want their own hardware, cloud will be an attractive offering. So our view is we must probably address the large percentage of the market of any of the offerings.

Operator: Gilbert Chan with G Chan Pension Pty Ltd., says previous presentations have referred to AI platform potential. Has this progressed as expected? Or has the strategy changed?

Sam Hupert: No, it's all progressing really well. I mean, the strategy, sort of, went through the slides maybe a little quickly at the end, but the strategy is multipronged. To embed it in our own product, to automate it and make it even further ahead of the market is what we're doing as we speak. The second thing is to use our platform because most AI and radiology needs to show or visualize something, and we can integrate that output, whereas, most products can't. And radiologists won't use it if it comes in separate pop-up windows. So we are speaking to third parties, DC-funded groups anywhere from literally Tel Aviv to Sydney, because we do have a big user base that they can address if they come on our platform, plus the technology itself. And then we are doing more and more work with our academic clients. And clearly, with that footprint is growing rapidly with NYU, Northwestern, the UCs, they're all ones that have massive data science labs. They're all doing research in various AI, and they're all interested in our accelerated program. And with NYU, clearly, they've already taken it, and we will be setting up a hub there. So all of that is moving quite quickly in the background. And then finally, we've -- one of the -- there are not that many companies that have FDA-approved AI algorithms, and we're one of them. And so that opens the door for more, so all 4 strategies are all moving. Having said that, a lot of companies are still pre-revenue when it comes to AI. The inflection point for mass usage or mass market usage hasn't quite occurred. We're sure it will. What will be the catalyst, we're not quite sure. And I don't think anyone else is. What we're saying is we're in the slot so when it does occur, we think we're very well-positioned. So in answer to your question, yes, working in background and working well on all fronts.

Operator: John Hester with Bell Potter says, in the deal for UCLA and others, as announced yesterday, you described this as a very competitive tender. How does your pricing compare to earlier deals?

Sam Hupert: It's our standard commercial pricing. So when we said competitive, we meant competitive from a other vendor perspective. They did do a lot of, as you would expect, a lot of investigation, research, reference checks. And they did do a group-wide on-site pilot. So it wasn't just at one institution, it was across all five. Wherever there is a group that does pilots and a number of others, like Northwestern and NYU have, we've never lost. So it's a bit like – if you buy off RFP, akin to buying off a brochure or buying off a web page. If you do a pilot, it's the ultimate test drive. So yes, we were very, very pleased to win it. Each of the five campuses had the right to make their own decision. And I think it's the first time in their history, they've all made aid it for the same platform, because previously, different campuses were on different offerings and different vendors.

Operator: William Wong with Moelis Australia, says, congratulations on the string of contract wins. How long was the latest US university contract in the pipeline for? Did COVID prompt a decision which led to the contract coming through? Or was the timing coincidental?

Sam Hupert: On and off. It was maybe three to four, maybe five years. Now again, bear in mind that some of the interaction we had was with just one of the campuses. So it doesn't necessarily mean the others have engaged with us. There was an RFP thinking somewhere around 18 months ago, it was put out by all five. But as I said, they had independent rights to look at it. And if anything, in this particular case because they were so deadly hit with COVID, I think during the process, it actually halted for a while. So if anything, it sort of got held up. But then the realization of, well, what do we do after COVID, sort of the second part of it, went a bit faster. So I think COVID held it up a fraction. But certainly, the ability to seamlessly remote read, I think, worked in our favor.

Operator: Your next question comes from Claude Walker with A Rich Life, who says after a few years of technological progress, you are now looking towards commercializing the AI algorithm work. What will that look like? Could it mean a modest amount of additional revenue from a broad slate of existing customers?

Sam Hupert: Look, again, as we said, we're in the process of commercializing it, and we haven't priced it yet. I think it will – one algorithm in its own right won't create hundreds – I don't think will create tens of hundreds of millions of dollars. It's more having a suite, but you need to start somewhere. We do believe, and we are hopeful that we will get some revenue from it, but the growing base of either third-party or our own algorithms, we think will be material. But is that going to be in 12 months or 18 months or two years? I don't think any one is quite sure. But certainly, this was a fantastic first step, at least from our point of view. And as I said, it paves the way for other algorithms. Not only our own, but also things that we do in collaboration with our growing base of academic clients.

Operator: Alex Anastasiou from Telstra Super says, can you give us a feel for the transaction volume leverage pre-CA 5 hospital GRP deal?

Sam Hupert: Well, what we've done is – there are two things to this that – well, there are two things that are standard in this contract, that is it's five-plus years term. In this case, seven years and that it's based on minimums across the five campuses. The difference between maybe some of the others that there may be a longer, the first year or two. So two campuses will come on board pretty much from the get-go. Then another two and then one a little later on, simply because they're rolling off. So there's the difference between that and maybe an NYU or Northwestern will be the phase-in time, because we need to fit in with the campuses. The other thing is the campuses are growing, so we will get organic growth. And as I said, they're minimums, and they always are above their minimums because they don't commit to 100% of their volume. The other unknown here that we think it could be positive is there are a lot of affiliates, some partially owned, some fully owned, that can partake in the contract. And some of them are, reasonably, they do good volumes. And so if they do, that will be on top of the minimums of $31 million that we announced. We just don't know the extent of it other than there's a significant possibility. So a little like what happens with partners where we did Mass Gen and Brigham and then bought on their others. These -- again, they're smaller and more often. So we're not quite sure how that will pan out other than if anyone comes on board, which we hope they will, it will all be positive.

Operator: Angus Robertson with Incorp Consulting Group PL, says thank you for your incredible stewardship of PME over many years now. Could you please discuss who are your major competitors and in what product areas?

Sam Hupert: Look, the market really has 3 groups

Operator: Edward Zal with Selector says you've talked about implementations becoming more efficient. Do you see this team remaining stable despite contract increases?

Sam Hupert: Look, I think we're always looking for additional people. But we're talking in terms of increments. So we're always hiring. But we're not turning around and saying, right, we need 10 new heads because we're doing 5 academic campuses. So we are hiring. But if you look at our cost base, it only goes up in small increments, whereas our revenue goes up much more than that. So we are looking. We are building out the team, particularly in the U.S. and in Europe, but more in ones and twos rather than wholesale, 20% or 30% or 40% increases. And we'll keep it that way because we're able to -- we believe we have -- we're refining our methodology and between on site, off-site and making it as efficient as possible.

Operator: Your next question is back on the phones from Chris Cooper with Goldman Sachs. Please, go ahead.

Chris Cooper: Thanks for taking the follow up. So just your comment about winning six out of the six major contracts in the key markets. So there was a number of other contracts awarded during the period. But I presume you didn't call this out, because you didn't participate? I just wanted to clarify if that was the case. And if you didn't participate, why didn't they make sense?

Sam Hupert: Yes. Look, there's always -- there are always some, less and less, but there are always some where we won't get on a starting line or one of our competitors may not. Now some are just rollovers. And they're just extensions of existing contracts. So they're announced as a new contract, but they're an extension of. So we, for instance, got archives at nursing, we -- whilst we competed against others, it wasn't like a whole RFP process. I think when we talk about six out of six, they're the ones that were completed by most players in the market and because of their size. So we would have on some others that we don't include in that, because they're smaller or because they weren't as openly competitive. So that's how we do it. Where we've been in the mix, we haven't lost in the last -- in that period.

Chris Cooper: Thank you. And just one final one. Just on the University California network. So you mentioned two campuses are basically going to be onboard near enough from the get-go. Can you just confirm are they two of the larger ones or two of the smaller ones?

Sam Hupert: They're more towards the larger end. And I think the reason is their current vendor is -- they want to get off the current platforms. And that was one of the things that drove the decision at the moment. But because all five wanted to make the same decision and be under the same contract, that's why the phase-in time can be stretched out a little. But having said that, the one that's currently scheduled to go last, may turn around and say, right, we want to go a little earlier and bring that 18 to 24 months in, that just remains to be played out.

Chris Cooper: That’s helpful. Thanks, Sam.

Operator: Your next question comes from Peter Meichelboeck with Select Equities.

Peter Meichelboeck: Hi, guys. Just quickly on the renewals. You mentioned earlier around Sutter, with -- that you're working with them and given the slowdown in the West Coast, et cetera. I just check, are they already in the extension period as we speak?

Sam Hupert: Yes.

Peter Meichelboeck: Yes. And is it a case -- are they testing the market at all? Or are they tendering? Or is this just as far as you're aware, just a discussion for renewal with yourself?

Sam Hupert: No, they're not tendering, and it's just a discussion of renewal. One of the other things is, because of COVID in everything, they furloughed a lot of people, or particularly people in purchasing and contracting are only in a day or -- a week or two a month. So they're on and off. So that's made a little bit more complicated than would normally be the case. But no, they're not -- they haven't gone out to tender. It's purely discussions between the two parties. And we're just giving them a bit of breathing space, because of what's happened in that region.

Peter Meichelboeck: And the other question I just had on renewals. Who else are you currently talking to in terms of the renewals that are coming up, that you have sort of started the discussions with? Can I ask?

Clayton Hatch: The other one would be Allegheny Health. That and Sutter Health are the only ones. Langone was one from last period, which obviously, we've renewed. And so Sutter and Allegheny are the ones at the moment.

Sam Hupert: Yes. And Vision 23, which was one of our earlier five-year contracts with the Department of Veterans Affairs that renewed, I think, about 18 months ago for another five years. So that one is behind us.

Peter Meichelboec: Yeah. Okay, great. Thanks a lot.

Operator: There are no further questions at this time. I'll now hand the conference back to Dr. Hupert.

Sam Hupert: Well, thank you very much, and thanks all for participating in your questions. Very much appreciated them. And thanks for your time.

Clayton Hatch: Thank you.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.