Earnings Transcript for TRHC - Q4 Fiscal Year 2021

Operator: Good day, and thank you for standing by, and welcome to the Q4 2021 Tabula Rasa HealthCare, Inc. Earnings Conference Call. I would now like to hand the conference over to your host today, Kevin Dill, General Counsel. Please go ahead.

Kevin Dill: Thank you, and good morning. I'm Kevin Dill, Corporate Counsel for Tabula Rasa HealthCare. The company intends to avail itself of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain statements made during this call will be forward-looking statements within the meaning of that law. These forward-looking statements are subject to risks uncertainties and other factors that could cause Tabula Rasa HealthCare's actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include the developing nature of the market for technology-enabled healthcare products and services and potential changes to laws and regulations that may impact our clients. For additional information on the risks facing Tabula Rasa HealthCare please refer to our filings with the SEC including the risk factor section of our 10-K filed today. A recording of this call is accessible through a link on the Investor Relations page of our website and it will be available for 90 days. I'll turn the call over to Dr. Calvin Knowlton, CEO, Chairman, and Founder of Tabula Rasa HealthCare.

Calvin Knowlton: Thank you, Kevin. Good morning, everyone. This morning, we're going to outline three salient points to maximize long-term value for our shareholders. And with COVID behind us, the first point is that we're going to demonstrate today that we have a very solid foundation for continued strong growth in our CareVention HealthCare business. Second, we also will reveal how we are taking a different approach in our MedWise Healthcare business to accelerate growth. And third, we will discuss initiatives that are underway to improve profitability, strengthen the balance sheet and become cash flow positive by third quarter and thereafter. So for the next 15 minutes, we will discuss how we are executing on these strive to thrive initiatives. Before we delve into these three areas, I did want to provide a short summary on our fourth-quarter results. First, fourth-quarter revenue increased organically 11% year-over-year to $85.7 million, and that's at the high end of our guidance. The first half of 2021 saw a 6% growth in revenue, while the second half saw 16% growth. Second, we generated fourth quarter adjusted EBITDA of $4.3 million within our guidance range and also $1.5 million of positive free cash flow. This is one of the several important steps as we begin executing on our focus to materially strengthen our balance sheet. Last November, we mentioned three tactics toward maximizing long-term value for our shareholders. And while we have further work ahead of us, we have made significant progress in the short time since our last earnings call. I'm moving over to those three tactics. Number one, we said that we're going to have organizational leadership changes to better align strategy, product and sales. And what did we do? We promoted Brian Adams, the Co-President of TRHC and I am delighted to announce that we hired Tom Cancro, as Chief Financial Officer. This will allow Brian to focus 100% of his time on his new role, which he'll explain shortly. Tom is with us today in Moorestown participating in his first earnings call with Tabula Rasa. We also restructured our senior leadership team resulting in $3 million in annual savings. The second tactic we mentioned was we were evaluating options to unlock the value of noncore assets. On February 9, we announced a letter of intent from a well-qualified buyer to purchase our DoseMe Rx business. This decision will help us strengthen our focus on our three key markets

Calvin Knowlton: Thanks, Cal. Very exciting indeed. I'll speak to the growth of PACE in our CareVention Healthcare division. First, broadly, COVID-19 has been the kindling for restarting PACE organization expansion and new program launches across the U.S. PACE as an alternative to nursing home placement is now very attractive to non-for-profit and for-profit entities and being a PACE participant has immense value. Studies show that PACE enrollees were less likely to contract COVID-19 than those over 65 in nursing home settings. PACE enrollees are less likely to be hospitalized with a 24% lower hospitalization rate. To be rehospitalized with a 16% lower rehospitalization rate and less likely to go to the ER with one less ER visit per year per person compared to their over 65 duals residing in nursing homes. There are now 144 active programs, 272 centers in 30 states, servicing more than 55,000 duals plus about 10,000 participants with Medicaid only. According to the National PACE Association, there are 116 communities that have the potential for over 1,500 participants that currently do not have access to PACE, which represents 174,000 participants. PACE is growing to meet the needs of our expanding elderly population. The NPA also reports that 11 new PACE organizations opened in '21, and they are currently estimating 32 new PACE organizations to start in 2022 and '23. A key part of this growth is the entry of for-profit PACE organization such as Welby Health, a longtime partner of Tabula Rasa. We are supporting their aggressive expansion across the U.S. In addition, we recently started onboarding Concerto PACE on the East Coast. With regard to CareVention health care growth, during '21, we implemented 28 new solutions with 9 of those coming in the fourth quarter across a number of new PACE organizations and CareVention Health Care service lines. Entering 2022, we are on track to implement 62 solutions across all of our service lines, equating to an annual revenue of $45 million when at full capacity. How are we managing this? We have reorganized our business development activities into an account management structure, allowing us to better support clients while leveraging the increase in cross-selling opportunities driven by the sheer number of our new clients. The new structure includes 14 team members with only two open positions, who will manage all service lines in pace and other similar value-based care settings in six regions across the U.S. Once again, our net revenue retention in CareVention Healthcare exceeded 100% in 2021, and I believe that this is a reflection of our unique MedWise technology and superior service that we are providing our clients and a testament to our long-standing relationships. Lastly, I want to highlight another piece of legislation. The Right Drug Dose Now Act, which would foster a national effort to expand the incorporation of pharmacogenomic testing into clinical practice to improve patient outcomes. Since we are already doing this, we are pleased to see the diffusion of innovation. MedWise is the only software platform that digitally incorporates the entire science behind the appropriate application of pharmacogenomics. Our PACE programs with our pharmacogenomic clinical services, covered by Part D and have started to make this precision pharmacotherapy option available to the appropriate participants on their census. This is a clear humanistic value proposition only offered by Tabula Rasa, and we have the published results to demonstrate the positive impact it makes. With that, I will turn it over to Brian Adams. Brian?

Brian Adams: Thank you, Orsula. First of all, I want to say how excited I am about my new role and working more closely with our dedicated Tabula Rasa members to tightly align our strategy, sales, product, and operations team. We made a lot of progress over the past few months to position Tabula Rasa for growth in 2022 and beyond, and I look forward to sharing with you some of these initiatives that we have underway that we believe will materially impact our business outlook and balance sheet over the coming months. In addition to a short recap of our financial results, I want to focus on a few areas, including some of the primary drivers of our growth in CareVention and MedWise segments, Sales, MedWise commercialization, and guidance. For the fourth quarter and full year, we grew total revenue 11% and 7%, respectively, on an organic basis. Once again, our revenue growth was driven by CareVention Healthcare, which accounted for 75% of total revenue and increased 20% on a reported basis and 14% on an organic basis. We expect CareVention Healthcare to remain the key revenue driver in 2022, and I'll expand on this further in my guidance commentary. So turning to CareVention Healthcare and Slide number 4, which shows the monthly sequential net census growth in our CareKinesis service line. As a reminder, CareKinesis delivers medication management, and pharmacy distribution services, leveraging our MedWise science, and continues to represent a major growth driver for Tabula Rasa. The main takeaway from this slide is our census growth was materially consistent with the last 10 months of the year, averaging near our targeted rate of 1% monthly sequential growth. With respect to the first two months of 2022, we experienced positive monthly sequential growth in both January and February, albeit it was below the 1% monthly sequential growth rate that we target, but it was in line with internal expectations and what we've seen in past beginnings of each year. We witnessed strong improvement in sequential growth rate in February 2022 versus January 2022 and expect this trend to continue into March. It's important to note that we have seen - we have not seen any material change in the death rate among our PACE participants. Lastly, we continue to grow faster than the PACE figures reported on a monthly basis by CMS year-over-year, - in February 2022 at 12% or 2x the CMS rate. We know that investors follow CMS' monthly reports on PACE census, one caveat as those numbers only reflect the number of Medicare participants that have elected pace. The other cohort, which is growing rapidly, at least in our PACE clients is Medicaid-only participants who are not yet eligible for Medicare. This number is becoming more significant and has recently grown to be as high as 10% plus of the PACE organizations enrollees. For those new to Tabula Rasa, health plans with Medicare coverage are required to offer Medication Therapy Management or MTM services, which includes a comprehensive medication review or CMR to beneficiaries that meet certain requirements. A significant portion of our medication safety services revenue is derived from CMRs, which is down this year due to the loss of the CVS contract that we previously announced. We are encouraged by the strength in our top 10 MedWise payer division revenue accounts, which, in aggregate, increased 23% in 2021 and are helping to counter headwinds this year from the CVS loss and declining revenue from our CMS Enhanced Medication Therapy Management program in its final year. Our newer offering, addressing a Medicare Part C Star measure for care of older adults represents an important growth opportunity for Tabula Rasa. Launched at the end of 2020, this new offering generated over $2 million in revenue during 2021 and is expected to materially - be materially higher in 2022 based on contracts in place and large-scale opportunities in the pipeline. Moving on to sales activity and excluding sales related to COVID testing, our overall 2021 bookings of $37.9 million increased modestly compared to 2020 and - but our MedWise payer division finished 2021 on a very strong note with the highest quarterly sales in company history, winning business in new and existing accounts. Slides 5 and 6 highlights some of the important output from a recent report titled - the Prescription of Trust. This report explores the role of pharmacists in the U.S. health care system. Important takeaways from this report, which are key long-term growth drivers for MedWise include

Calvin Knowlton: Thank you, Brian. First thing we mentioned was we were going to demonstrate that we have a solid foundation for continued strong growth in our CareVention Healthcare business. On the CareVention side, we are looking at a steep trajectory of new PACE participants and associated revenue from current client expansions from conversions of nonclients to TRHC already with 3,000 additional participants contracted for CareKinesis this year. and thirdly, numerous pay startups under contract, as Orsula mentioned. Second salient point was reviewing how we are taking a different approach in our MedWise HealthCare business to accelerate growth. On the MedWise side, as mentioned, we have completely revamped our structure, processes and strategies. These changes launched this quarter. And third, discussing initiatives underway to improve profitability, strengthen the balance sheet and become cash flow positive by Q3 and thereafter. Our successful ongoing focus of divesting of noncore assets, coupled with our very strong CareVention growth and our pivot in MedWise, all bode well for a banner year in 2022. Our team is very excited. We are very pleased that two years of COVID stagnation is behind us. While it cost us our bottom line, we believe that we made the right choice by focusing on employee retention during COVID, especially with our current tailwinds. By doing so, we are fully equipped operationally to absorb the 2022 growth. We are very bullish on a sustained successful future for TRHC and also for a meaningful return for our stakeholders and for our spectacular TRHC team. Operator, we are now ready to answer questions.

Operator: And our first question comes from Sean Dodge from RBC Capital Markets. Your line is now open.

Sean Dodge: In MedWise, Brian, you mentioned pivoting a bit there now focusing on developing these new clinical solutions. Is there anything you shared around the incremental costs or investments required to support that? And I guess MedWise is an area where you've already made some significant investments or efforts over the last 18 months. Can you talk maybe about kind of the broader organizational structure, cost structure there? Any areas you're looking at where you think you can generate some savings to help offset that?

Brian Adams: Yes, Sean, that's a great question. And the beauty of the strategy at this point is that we're going to be leveraging our capabilities. So there's no incremental investment. And in fact, we've shifted some of the existing resources to focus more around these new clinical solutions that we're going to be launching. So in fact, we do anticipate there's going to be overall savings versus incremental cost to launch these programs. Under Ferah's leadership, and I'm really excited about having her in this position. She's been charged with leveraging the existing capabilities versus creating something new that requires further investment. So it's really about repositioning some of the tools that we have in place today to focus on some of the really interesting parts of the market that are getting a lot of attention right now.

Calvin Knowlton: And Sean, I would just add to Brian's remarks, which are right on its target that three of our strategic partnerships that we're working on right now are in the MedWise division. And so you'll see that once we can solidify it and announce it. But we were using - as Brian said, we're not - it's not going to be an expense, it's going to be a revenue enhancement.

Sean Dodge: Okay. And then Cal, at the outset, you talked about asset sales, you mentioned the DoseMe divestiture. Is there - I know these things are sensitive to talk about it, but is there anything you can kind of provide with the high level about where you're at thinking is around other maybe more significant potential asset sales? When can we expect to hear more about that? And maybe how significant are we talking?

Calvin Knowlton: We have been advised that we can't really talk about that. But we will - I would say by the second quarter, you'll hear what's going on. Is that fair?

Operator: And our next question comes from Glen Santangelo from Jefferies. Your line is now open.

Glen Santangelo: Thanks for taking the questions. I also want to follow up on MedWise. I think what a lot of us are having trouble is trying to understand maybe a little bit longer term, what the growth algorithm may look like in MedWise. Obviously, last year was impacted by CVS. This year, it will be impacted by EMTM. And you're talking about new clients that are going to add 5%, I think, just to the specific division, and you're also talking about new business in '22 that will add 2% to 4% of total revenues. And I guess what I'm really struggling with is just trying to understand what the growth algorithm should look like for both software subscriptions and Medication Safety Services. So could you maybe talk us through that a little bit and how we should think about things maybe even beyond 2022?

Brian Adams: Yes. Glenn, that's a great question. This is Brian. Thanks for that. What I would point you to is, first, as I mentioned in my comments, the top 10 payer clients that we have today grew 23% this year. So that's an indicator of the type of growth that we would expect on the MedWise side of the house. We do believe that based on all of the investments that we've made to date that this can be a real growth engine for our business going forward. And as we kind of reposition a bit our go-to-market strategy, we feel like there's no reason that, that business should not grow north of 20%, so in the longer term. But I do think that outside of those two events, right, as you pointed out, CBS and the end of EMTM, I think that, that is a good indicator of where we would expect to see the growth levels.

Calvin Knowlton: And this is Cal. I think that as I mentioned just a couple of minutes ago, the three strategic partnerships that we're working on right now or are on the MedWise side and they're all with large companies that you would know. So I think once we can get those can deal and we can make an announcement, you'll get a lot more direction on that. We just are a little bit early saying anything substantial about it yet.

Glen Santangelo: Cal, maybe if I can just follow up with two quick one's for you. I think the other thing that's sort of on a lot of people's minds is the margin. And I was just curious to get, from your perspective, what do you think are the biggest levers to bring that margin back into double digits? I mean you talked about the BPO deal. You mentioned in the press release a new PBM deal. So I think we'd love to understand a little bit more about the levers on the margin side. And then secondly, on the balance sheet, a considerable amount of debt. And I think through these asset sales is your goal to get that debt down in a meaningful way? Or are you kind of not overly concerned with the level of debt on the balance sheet at this time? Thanks.

Calvin Knowlton: Well, I'll let Brian hit that, but I'll tell you the answer is what you said. It's a very meaningful way of what we are doing.

Brian Adams: Yes. So on the margin side, Glenn, obviously, we've been investing over the past couple of years, and as Carl mentioned in his remarks, we feel like we're well-positioned to absorb a lot of the growth that we're expecting this year without having to incrementally add workforce in order to support that business. So that's going to be a big lever for us this year. Some of those initiatives that were mentioned in the earnings release and in Cal's remarks are going to contribute meaningfully to margin expansion, not just this year, but in the go forward. So we anticipate significant efficiencies and cost savings related to those activities. And there are a number of other things without being too specific that are underway right now, and we'll be able to communicate in the coming months. But our goal is to have meaningful margin expansion and increased cash flow and profitability. So maybe segue into the debt question. Right now, I will tell you that we have ample liquidity. There are no concerns there. We're not in danger of tripping any covenants. We've got a great relationship with our senior lenders, and there's no debt that's coming due anytime soon. So I feel very comfortable about the liquidity of the business and our charge to become cash-flow positive by the third quarter, we feel really confident about that.

Operator: And our next question comes from Ryan Daniels from William Blaire. Your line is now open.

Jared Haase: This is Jared Haase for Ryan. I appreciate all the disclosures here. I wanted to kind of ask one around a similar theme with MedWise growth and specifically the disclosure that you grew 23% with the top 10 clients in that segment. I'm curious just, I guess, maybe more of a blocking and tackling question. But the drivers of that growth, should we think about it as largely coming from an increase in the number of medication reviews with that cohort? Or is that a reflection of sort of increasing your level of contract penetration by adding more of the sort of technology services and kind of expanding the scope of those engagements beyond just a basic medication review?

Calvin Knowlton: Yes. It's not the former. It's the latter. It's not really an expansion of CMRs at all. It's an expansion of the use of MedWise per se, the software in a SaaS model. So all three of the strategic partnerships we're working on right now to address that issue of using MedWise, the way it is now in new places and new ways.

Brian Adams: And Jared, one of the pieces that I talked about in my commentary was kind of expanding some of the services to address different Star measures. And that's been - and we consider a real growth driver and opportunity for the business going forward. So it's going deeper into our existing customers with new offerings, as Cal was just describing.

Jared Haase: Okay. Perfect. That's helpful. And then just as a quick follow-up, I'm going to flip to the CareVention side of things. But the disclosure around $427 per member per month with PACE clients in Q4, I appreciate the growth there. Can you maybe remind us how to think about sort of the all-in PMPM potential across your suite of care of engine services and how you sort of expect to continue to penetrate that total PMPM opportunity over time?

Calvin Knowlton: I can give you the total and the Orsula can fill you on how we're going to capture the rest of the PMPM. So just quickly, it's $1,200 PMPM if somebody were to be using all of our CareVention solutions today.

Orsula Knowlton: Yes. And then over time, for instance, this morning, we had a contract come in from a new program in Miami that contracted for all services. So for existing - for new startup PACE organizations, we're selling all of our services at the same time. And typically, we have at least one service in individual PACE programs, about 90% are using at least one. So with our new account management strategy, our goal is to really educate our clients about other services that are integrated that would benefit them and how they would economically, clinically, and gymnastically benefit their participants and their team.

Operator: And our next question comes from Stephanie Davis from SVB Leerink. Stephanie, your line is now open.

Stephanie Davis: Thank you for the value attempt at the company name. I guess this one is best for Cal, but I'd appreciate any of your thoughts. Let's imagine it's two years from now, you are done with striving to thrive. What does Tabula Rasa look like? What's the team look like? Where are you positioned to secure our role in the market? What moves have you made strategically to kind of get to that next level that gives you security that we are done with these initiatives?

Calvin Knowlton: Well, we - thanks, Steph. It was nice talking with you. We're really pumped up, to be honest with you, we've got such a - we've never had this type of a pipeline ever. And we've never converted so much in the first two months of the year that will unfold throughout the year. So we're - and we've got enough horsepower now where we - as I mentioned, we didn't let anyone go or forego anyone. And so everybody's been active. We've added new initiatives to help with adherence. I mean, actually, it's more like velcro to our PACE clients, for example. We're doing very, very well on that side. I'm very excited about what we're doing in MedWise. It's a new initiative, a new pivot we took, and it's exactly where we wanted to be by pushing the software out there to many, many, many places where it's not right now. And these initiatives that we have, the strategic partnerships that were - I wish we could announce them right today, but we're not quite there yet, really are going to advance MedWise, and that's our whole goal. And our research is in great shape. We published a number of papers just to show again, over 100 peer-reviewed papers in the last 36 months to show again that this is not fake news. This is work. We're helping people. We're saving lives and we're keeping them out of the hospital. So it's - we're right on target. Our Atlanta analytics group also has now stepped up a bit a lot actually. And so we're able to show people better dashboards than we ever had before to let them know where they are. The PACE Milliman has allowed us to put pharmacogenomics services into the Part D bid for our PACE programs, which is huge, and that's what we need to do to move from personalized to precision pharmacotherapy, - very excited about that. That's really taking off nicely. So we're just - we're post COVID. We're feeling good. We've got a lot of gas in the tank, and we've got a huge trajectory. So this is - it's a really good feeling right now for us.

Stephanie Davis: And I guess the follow-up on that, it sounds like the CareVention business and the census growth is going really well. Brian mentioned to view that as more of the majority of the business. How do you think about the balance between CareVention versus MedWise given some of your initiatives just to make sure the focus stays lean?

Calvin Knowlton: Yes, MedWise is going to - you're going to see a lot of growth in MedWise, not in the traditional CMR stuff, but in the MedWise software per se this year. The challenge is that the - as far as the percent, the challenge is that the CareVention stuff is growing so darn fast. Also, so it's going to be hard, I think, for us to get to like a 50-50, for example, anytime soon because the CareVention growth, that's huge. Brian or Orsula, what do you -

Brian Adams: Yes, I think that that's a good comment, Cal, in terms of the underlying growth rate in the CareVention business to see a significant shift in the revenue mix today would be challenging because we actually see great opportunities even beyond pace. We've learned a lot in that market for the CareVention product suite that we could leverage into adjacent markets, and that's something we're doing some work around right now. So that business could grow even quicker. But I think that the MedWise side, we've clearly made a lot of investment there. We can leverage a lot of what we've already done, as I was talking about with my comments for Sean, we don't need to invest significant amounts to really capitalize on what we've built. And I think that the goal since I've stepped into this role has been to really refine that focus and go-to-market strategy and thinking. So we've been making some efforts to stay lean, as you said, Stephanie, so that there's a real focus, and we're putting a lot of resources around a few big market opportunities where we think there's the most potential. So we're excited to tell you more about that in the future, but I think that we're acutely focused on just a few areas of the business at this point.

Orsula Knowlton: And I think there's likely a merger of the client space at some point. We are seeing more and more CareVention Health Care Service lines being requested amongst other types of value-based care organizations and even health plans are opening PACE organization. So I think we'll see an interesting future.

Orsula Knowlton: Good. Well, I'm wishing you guys the best of luck on that and hoping we can hear more next time.

Calvin Knowlton: Thanks, Steph.

Operator: And our next question comes from Jessica Tassan from Piper Sandler. Your line is now open.

Jessica Tassan: Thank you for taking my questions, and thanks for all the detail this morning. And maybe for Ursula, can you kind of help us understand when the role of Tabula Rasa begins as a pay center ramp? Is there a way that Tabula help centers compliantly launch and start enrolling patients? Just interested to know when Tabula Rasa roll really starts? Thanks.

Orsula Knowlton: So really went up when new start-up starts, we start probably six months before that, implementing electronic health record, getting people up to speed on medication, safety, getting our technology and equipment in place and educating the team. Our third-party administration group comes in right around the start date. Our PBM services actually are contracted as part of the Part D application. So that's really the first - could be the first time we hear of a new program because they've contacted our PBM or our technical assistance center who are shared partners with the National PACE Association. And then on the start date, really, all services are a go. Our risk adjustment services when there's data are able to do the look back at assuring appropriate coding of diagnosis for the Medicare side of the payments that they receive.

Calvin Knowlton: And Jessica, just to add on to that, as Orsula was mentioning with our TAC or technical systems consulting team, these folks are involved very early on in many cases, even before an organization decides to start a PACE program in the evaluation, feasibility studies, they're helping with the application process. So these organizations get exposed to us very early in our services. So as Orsula was just describing that one that we signed this morning for all of our services. That's a great pipeline and funnel for us and is a really important part of how we are generating the significant backlog that we have in place today.

Orsula Knowlton: Which is why we integrate our account management systems across the service lines.

Jessica Tassan: That's really helpful. And then just one quick follow-up. When you mentioned the 3,000 additional enrollees, are those individuals kind of ramping over the course of the year and included in that 1% sequential growth incentives? Or are they incremental?

Calvin Knowlton: Yes. They'll be coming in probably mostly second and third quarter. Those signed contracts are signed. So -

Brian Adams: Those are not included in the 1% numbers. So we do anticipate those are back half of the year loaded.

Operator: And our next question comes from Bill Kitchel for Millrace Asset Group. Your line is now open.

Bill Kitchel: Thank you. Cal, you've started your comments by referencing the initiatives to create and recognize shareholder value. And clearly, you've been challenged by execution over the last couple of years. And yet you've got some tremendous assets that don't seem to be recognized and are underperforming their potential. If you look at some of the transactions that have taken place in the health care area, prescribed wellness could be worth potentially on a revenue multiple based on what we've seen in the industry, twice your equity market cap right now. This is before even thinking about the growth vehicle that you have in CareVention that in a year or so could be a $300 million business. So my question is, what is the extent of this? Is the board involved? How involved is the Board in the oversight of seeking and maximizing shareholder value? What is their tolerance for what's transpired so far? And what commitments have they been able to offer to their initiatives to support you in maximizing shareholder value because I think investors have been had a very challenging period and potentially some of these assets should be in other hands.

Calvin Knowlton: Hi Bill, yes, thanks for the comments and the question. The Board is very involved. We call it financial engineering. It is - what we've been working on with the last - for the last probably almost six months with the Board. And we've had numerous meetings other than our quarterly - or standing quarterly meetings with the Board, and we've had a subgroup there that's helping us of the Board, that's helping us with this financial engineering if you will. And we do recognize your evaluation that you mentioned. We are well aware of that. And we just aren't able to reveal anything at this point further than what we have, Bill. But everybody is pushing the sled together, I'm telling you, it's a wonderful board we have, and they're very supportive and taking the lead with us actually on this financial engineering.

Bill Kitchel: So their commitment is beyond asset sales of particular segments. I mean the question is really, it could be that some of these divisions are worth more separately to others than they are operating as a combined entity. That's correct. So the Board is committed to pursuing shareholder value in recognized -

Calvin Knowlton: That's number one. That's why I mentioned it right out of the gate. That's our number one focus right now -

Operator: And our next question comes from David Grossman from Stifel. Your line is now open.

David Grossman: That's a tough question to follow. But let me just - I had a couple of quick follow-ups to some of the questions that were asked earlier. So the first question is about the guidance itself. I just want to make sure I understand the mechanics. So is 10% of the 13% growth that you've guided to in backlog currently? I just want to confirm that that's what you're communicating.

Brian Adams: David, Sorry, it's Brian. We've got 2% to 4% that we need to go get to sell into wins this year, which is $6 million to $13 million. We closed and recognized $13 million of in-period revenue in 2021. So we feel like that is a very reasonable target for our GoGet this year.

David Grossman: Right. And did you include - I don't think it's that material, but as DoseMe in your guidance? Or have you pulled it out of your guidance for 2022?

Brian Adams: DoseMe is currently in the guidance, but it's pretty immaterial, as you note.

David Grossman: Right. Got it. And did you give - I think you talked about hitting free cash flow positive in the third quarter. Any thoughts on what the cash flows we should think about free cash flow for the year?

Calvin Knowlton: So right now, I would assume kind of a neutral basis for the year. I think that that's the right place to start. We do anticipate that we're going to be able to materially throw off some cash in 2023, but 2022, we anticipate growing, as you said, cash flow positive in the third quarter.

David Grossman: Right. And then I'm sorry if I missed this, but we talked about and you announced some of the cost initiatives that you were able to execute. And you talked about, I think, in your prepared remarks, $2 million of cost savings from restructuring the management team. Can you give us any better sense even if you don't want to talk about specifics by initiative, just frame the cost savings and the timing from what you've already executed?

Brian Adams: Without getting into too many of the specifics, we have - the goal here is to ultimately have a better go-to-market strategy around the MedWise division. We feel like we're very well positioned as Cal shared on the CareVention side of the house and that - from a sales perspective, the leadership is going fantastically well. Where we needed to do some more work is around our MedWise and our commercialization strategy. So that's really where we've spent a lot of time and effort and some of the restructuring efforts have taken place in terms of the leadership is from a strategy, from a product standpoint, there's some work that needed to be done to better align with sales. So that's what I'd tell you today.

David Grossman: Yes Brian, I think the question was really more about the deal with Accenture or with the PBM right way really, So just in terms of - you've executed those changes the cost savings fully recognized in the 2022 guide? Or is there something coming here that we can start expecting in terms of incremental cost savings that gets to one of the margin questions, I think -

Brian Adams: Yes. Sorry, I missed that one. So yes, there are incremental savings that we would expect to generate. It's not fully baked into our 2022 guide. We start to see some of the savings in the second half of the year. And then they become much more material in 2023 and beyond. So that's where we are going to really see the savings. But as Carl mentioned in his talking points, especially with the BPO of the TPA, it's multimillion dollars on an annual basis of savings that we expect to generate. And as these businesses grow, we're on a much more efficient cost structure than if we were to keep that in-house today.

David Grossman: Okay. But you can't be any more specific about just what you would expect when it's kind of exiting the year in terms of cost savings on one of these initiatives.

Brian Adams: So I would say from the three combined efforts, it's north of $5 million on an annual basis.

David Grossman: And then you talked about the top 10 Medwise clients growing 23%. Just is there any way you can frame that just going, let's say, in 2022, would you expect similar growth from that cohort? Or is it really - do you stabilize after that first year? Or is that kind of what you're seeing now and then new logos are going to drive the vast majority of growth? Just trying to get a sense for how much of it is same-store growth versus new logos as you sign these new clients?

Calvin Knowlton: Yes. I don't see that growth rate slowing with our top clients. We've got a lot of interest on some of the newer programs that I was mentioning earlier on the call. So I don't see that slowing down. In fact, I think that we've got a number of new customers as well that are really going to help the growth rate going forward. So it's a combination between getting deeper within our existing customers as well as some of these new logos that we're bringing on.

David Grossman: So are you getting double-digit growth in the same-store base on some of these newer clients that you're signing in MedWise?

Calvin Knowlton: Yes, correct.

Operator: Thank you. And I am showing no further questions. This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you, speakers.