Earnings Transcript for UPH - Q2 Fiscal Year 2021

Operator: Good afternoon. And welcome to the UpHealth Second Quarter Earnings Conference Call. At this time all participants are in a listen only mode. A question-and-answer session will follow the formal remarks. As a reminder, this conference is being recorded. On the call today from the company are Ramesh Balakrishnan, Chief Executive Officer and Martin Beck, Chief Financial Officer. By now everyone should have access to the company's second quarter earnings press release filed today after market close. This is available on Investor Relations section of the UpHealth’s website www.investors.uphealthlink.com. Before we begin, please note that all the financial information presented on today's call is unaudited. And during the course of this call, management may make forward looking statements within the meaning of the Federal insecurities all. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur except as required by law. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risk that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Throughout today's press release and on our call today, we will refer to adjusted EBITDA. This metric is not determined in accordance with Generally Accepted Accounting Principles and therefore is susceptible to varying calculation. A definition calculation and reconciliation. So the financial statements of adjusted EBITDA can be found in the tables included in our press release. We believe this non-GAAP measure of the UpHealth’s financial results provide useful information regarding certain financial and business trends and results of our operations. And now I would like to turn a column over to Ramesh Balakrishnan, Chief Executive Officer of UpHealth.

Ramesh Balakrishnan : Thank you very much. Welcome and thank you all, everyone for joining us on the call today. It's been an exciting quarter for us. As you know, our first as a public company, we completed the mergers and business combination needed to launch UpHealth. And now we are positioned with a unique and comprehensive suite of technology platforms, digital health infrastructure, and services to reshape how we deliver care and manage health globally for individuals and populations. And we are on track to implement our vision for this One UpHealth platform. Before we get into additional detail on our technologies and services, and the industry needs and trends that drive our growth, I'd like to provide a high level summary of our second quarter results. We are very pleased with our results for the second quarter of 2021. We exceeded revenue estimates with pro forma revenues of $39.2 million, which represents 28% increase in revenues from the last quarter. And we expect continued acceleration of revenue growth in the second half of the year, as we deploy additional working capital and launch the full scope of our integrated solutions. We also met our targets for profitability with $2.3 million in adjusted EBITDA. So we remain one of the few profitable public digital health companies in the market today. And we have about $100 million in cash and cash equivalents on our balance sheet. So the second quarter is a beginning in our journey to create a global digital health leader. We created UpHealth to help healthcare providers' health plan, counties and governments, our customers and the organizations that are the heart of health care, to help these organizations implement initiatives to digitally transform their operation. There is a general consensus that the industry cannot survive as it is and digital transformation will radically alter healthcare, as it has in many other industries. And our customers must change and adapt to survive or they will have to give way to a new generation of organizations that are able to succeed in what is really an emerging new world. So we deliver an integrated, comprehensive suite of technology platform, infrastructure and services that help these customers implement initiatives and strategy and adapt, as the industry drives these new models for the kinds of healthcare infrastructure we build, how and where we deliver care, and what kind of care we deliver, how we manage health, and also how we fund and pay for health care services? And these new models are being driven at the national, state, local and county level. So if you come to our solutions, briefly, our integrated care platform functions as the backbone for One UpHealth. And it is designed to create digitally enabled and connected care communities. There are substantial technology innovations that are embedded in this platform. We've invested over $100 million to create this platform, that's absolutely state-of-the-art. And we've only begun to exploited full capabilities. And what this platform does is it rethinks how healthcare information systems would be designed and built. If we began with different starting points and assumptions with connected community, rather than individual enterprises, with coordinated and distributed care teams, rather than individual providers with a virtual model for encounter locations and care setting with a whole person rather than medical view of health, and a view of patients as active participants, rather than just the object of care. So what the platform provides is the ability to create the 360 degree views of individuals across a wide range of data sources and system, the ability to apply advanced analytics and embedded intelligence to understand health status to stratify population, to evaluate risk, predict adverse events, and guide intervention and care protocols. And along with this a wide range of configurable application for local and remote, clinical and community-based teams to coordinate care and implement programs to manage them. And the platform is also radically open. So we avoid the vendor lock in that is built into many legacy platform. And ultimately, we designed this platform to support an ecosystem of partners that can expand and add to its capabilities. At the end of the second quarter, we had 6.8 million lives on the platform and 132 organizations participating in these connected digitally enabled care communities. And we expect to double the lives on the platform annually over the next 3 years. We provide this platform to the largest publicly operated health plan in the country, LA Care to manage health for its members across multiple lines of business. And so it's a real honor for us to have LA Care as a customer because of their very deep expertise in managing health for individuals with complex needs. And now in the second quarter, we began working with them to support two very important initiatives, the enhanced care management and new services initiatives that are part of a very ambitious program in California called CalAIM to better manage health for individuals with complex medical, behavioral health and social needs. And this is a massive program. And CalAIM will set the trend across the country for how we manage health for now, the almost 90 million Medicaid and dual eligible beneficiaries under a resource, whole person model of care. And so our goal going forward is to provide the most comprehensive and compelling platform for health plans and health care providers that are contracted with these health plans for CalAIM and similar initiatives that are proliferating across the country. And we are extremely well positioned to do this and innovate and lead in this area. The platform also supports Alameda County's whole person care, and other initiatives to manage health. And here in Alameda County, we've created probably the largest social health information exchange in the country. The care community across the county that we've enabled, includes hospital clinic, health plan, behavioral health providers, emergency transportation providers, housing and social services, public health and also the county jail. So what we’re building in California, is a model to address the critical gap in how we deliver care and manage health in the United States. Essentially, the provider networks that are contracted by health plan, and the provider networks that are contracted that counties and public health departments do not collaborate or coordinate. And especially for individual that have complex medical, behavioral and social needs, it is critical that we create integrated systems where these provider networks can share information and coordinate services, and collaborate around shared care plan. So this huge company, there's huge opportunities for companies that can create these integrated systems. And with our work in California, our goal is to lead innovation in this area. And it's a big area for growth as we go forward into the second half of this year and next year. The platform is also today enabling a unique model for value-based management of Pharmacy Benefits. And we're implementing this model with the customer to manage Pharmacy Benefits for over 70 self-insured employers. And an important elements of this new model is the ability to use integrated information including pharmacogenetic data, and coordinate care teams with embedded intelligence as a system. And partnering with companies to manage Pharmacy Benefits for us is a first step in becoming a partner to managed care organization and provider groups to manage outcomes quality and cost as they move into delegated and value-based contracts. So we're putting together the building blocks to become such a partner to managed care. We're also integrating and the work is well underway in the second quarter. Our telehealth platform and digital health infrastructure, which we deploy now across the U.S. and internationally with the integrated care management platform to deliver what we believe is the most advanced and comprehensive solution in the market today to manage population health, improve access to care, and onboard provider networks and resources and make them available as the point of care to augment care team. And I'd like to say a little bit about the digital health infrastructure we're pioneering in the international market, because it really represents what a digital first healthcare infrastructure looks like. And it's quite revolutionary. There are many parts of the world where healthcare infrastructure is still underdeveloped. And these countries today spend a very low percentage of GDP comparatively on health care, but they're ramping up these investments. And as these countries launch national initiatives to improve access to care, they are very keen to leapfrog to new ways to build and deploy infrastructure and deliver care. This is a lot like what happened with telecommunications and even financial services, where old legacy gave way to a more flexible, distributed and nimble infrastructure. So in these countries that are building up healthcare infrastructure, we deliver digital clinics that provide much more than simple virtual consultations. We provide a complete diagnostic care encounter with a virtual exam room that's connected to remote devices and IoT with the ability to do automated lab tests and imaging on side, prescribe and also dispense medications. And so we partner with organizations in these countries to staff, the clinics, with community workers and nurses, and we connect these clinics, and these community workers and nurses remotely through networks of primary care physicians and specialists. So this is really bringing in these digital clinics a new model for how we can rapidly build healthcare infrastructure, and serve communities that otherwise have very little access to care. And demand for the digital clinics is nothing less than explosive. And our potential for growth is limited only by the amount of working capital we can deploy. At the end of the second quarter of 2020 last year, the population we served with the digital clinics was about 4.5 million. By the end of this year, we expect these clinics will be serving a population nearing 20 million, a substantial growth in the population we serve. Now, in the United States, we've been deploying the telehealth platforms, which are now being integrated with the integrated care platform to bring specialized resources, language interpreters, physician specialists, remotely to the point of care. And this is a very different model for telehealth than companies that are in the market that function more or less as a technology-enabled medical group. And so at first driver for our telehealth platform was a need for medically certified language interpreters to support patients in various facility settings. Somewhat unknown -- less known fact is that more than 20% of individuals admitted to hospitals nationwide do not speak English and suffer very poor outcomes as a result. And this percentage increases dramatically in communities that are more diverse. And what we do with the telehealth platform is we provide very robust capability to onboard resources of various skills and make them available remotely at the point of care where they can collaborate with and augment the care teams that are there with the patient. So we initially just support this need for language interpretation. We onboarded a worldwide network of language interpreters. But we have expanded the kinds of resources we can bring to the point of care and the kinds of virtual care use cases we support. So combining this with a digital health infrastructure we deployed in the international market, we have the most robust platform in the market today to deliver high levels of care in these virtual care models and support initiatives, like the CMS Hospital At Home program and other initiatives. We really deliver very high levels of care in home and community based settings. The utilization of our telehealth platform in the U.S. increased from 8 million minutes in the first half of 2020 to 11.4 million in the first half of this year, this represents a growth of over 42%. And the platform is now deployed in over 2000 healthcare venues in the United States, performing over 2 million minutes of consultation a month. We actually have the largest footprint -- largest installed base at healthcare providers of any telehealth platform. So if you look at what we have with the integrated care platform, the digital health infrastructure and the telehealth platform, we provide a comprehensive solution to transition to these new models for how we deliver care and manage out and essentially power, the digital transformation of healthcare. And our goal is to support our customers to deliver these higher levels of care and community-based setting and to implement various program where you can manage health with distributed and coordinated care team. So in the second quarter, we continue to execute on our roadmap to unify the integrated care, infrastructure and telehealth our platform into this One UpHealth platform. And we are bringing the full capabilities of One UpHealth opt now to our customers and educating them on the full scope of what we can provide. Now early on, we also recognized another area of critical need, and that is a better way to manage medication, especially medications that require personalization. We have a pharmacy licensed in all 50 states. And without compounding pharmacy, we have the ability to deliver generic and customized medications anywhere in the country. What we are not doing is trying to compete in the commodity delivery of generic medication directly to the consumer. What we're doing with our pharmacy services, is partnering with physician groups to better manage medications for that patient, especially compounded medication. And so we currently have over 14,000 physicians that are part of a network. We continuing to grow this network. And our pharmacy teams collaborate physician to better manage medications and support these physician practices. We're onboarding physicians, and these onboarded physicians also are available resources -- as resources that can be made available at any of these points of care public or private. So as we go forward, our strategic direction with the pharmacy services, is to use our capabilities with technology and the pharmacy team to help employers' health plans and like one of our customers, a new generation of pharmacy benefit managers to better manage the efficacy and cost of medications and better manage programs for improving adherence. And finally, what I want to say is that that in addition to working with our pharmacy teams to manage medication, we also have capabilities to manage behavioral health. And as everybody knows, mental health is emerging as a national priority. The pandemic is obviously exposed a great need to improve access to behavioral health services, and better coordinate the services of medical care. And what we have with our core team of psychiatrists, nurse practitioners and counselors is the ability to manage a wide range of behavioral health needs with virtual in-patient visits -- sorry, in-person visits, and outpatient and residents program. And in the second quarter, what we have started is a process to onboard these behavioral health providers to the integrated care platform and began conversations with behavioral and mental health plans to partner with them to augment and manage their behavioral health network. There's some very large initiatives underway today around better coordinating behavioral health across mild to moderate and serious mental illness, and also better integrate behavioral health with medical care. And we are -- the combination of our platform and our behavioral health network, we are positioning to help in addressing this very critical need. So we've combining technology platform in the behavioral health network to become a partner with these mental health plans, and behavioral health provider networks to improve access quality outcomes for individuals who have they ever have comorbidities. This is a different model from a simple behavioral health consult. And we're managing a much higher acuity of care. So there are many innovations going forward, that we will complete to improve, reshape how we deliver care and manage health, connecting and sharing information, powerful tools to digest and organize this information. We will also continue to evolve our analytics to get deeper insights into data and information, our predictive model to be able to stratify populations, identify risks early and intervene proactively. And we will be on the forefront of applications and information interoperability, and the ability to support distributed cross-sector teams to collaborate and coordinate, so we can really prevent patients from falling through the cracks. We are actively involved and will continue to be in conversations on policy initiatives at the national and global level. These are conversations that recognize the vital importance of healthcare infrastructure on economic prosperity and even national security and of course, the urgency to reduce disparities to these critical health care resources. Resources that are, in our view as important as air and water. So in summary, we are pleased with our performance in the second quarter and how far we've come. We will continue to accelerate growth in the second half of the year. We're on track to meet our 2021 pro forma projections. Of course, what animates us is this desire to reshape healthcare in a better direction. We're very well positioned to do this with a comprehensive set of platforms, infrastructure and services. And we are on our way to creating a leading valuable digital health company that is committed to improving the experience of healthcare globally. So with that, I'd like to ask Martin Beck, our Chief Financial Officer to give us more detail on our financial performance. Martin?

Martin Beck : Thanks very much, Ramesh. We appreciate everybody joining us this afternoon. Before I begin my review of the second quarter results, I want to first comment on the presentation as it pertains to the absence of results in comparison periods. Recall that we completed the merger with GigCapital2 on June 9, and so it was only from that day forward that we have consolidated results that we can report on a GAAP basis. In addition, due to timing factors related to the various business combination transactions, encompassing multiple entities, as well as the global scope of our operations, it was not possible to provide consolidated results on a GAAP or pro forma basis that was sufficiently complete for the year earlier periods. Accordingly, we are only able to share results for the 3 and 6 months periods ending June 30 2021 with you today. However, I will provide some additional context where possible to help you better understand the company's overall performance. I'll start with a review of our results on a GAAP basis. Revenues for the second quarter of 2021 was $31.9 billion. This includes the Integrated Care Management segments and Behavioral Health segments the entire three month period. However, results from our Global Telehealth segment and Digital Pharmacy segments were only for a portion of the quarter depending on when the related business combinations closed. Looking at the breakdown by segment on a GAAP basis, Integrated Care Management was the largest contributor with $11.3 million of revenue, or 35% of total revenues. Behavioral Health was next at $8.3 million of revenue or 26% of the total. Global Telehealth had GAAP revenue of $7 million or 22% of the total and Digital Pharmacy revenue of $5.3 million represented 17% of total GAAP revenue in the second quarter. On a geographic basis, 63% of second quarter revenues came from the United States 24% from Europe and 12% from Asia. Gross margin on a GAAP basis was 36.4% and margins by segment were as follows

Operator: Certainly. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Mike Wiederhorn with Oppenheimer. Please proceed.

Mike Wiederhorn: Thank you. Congrats on your first quarter out of the box here. Can you just -- I’ll start with one question on that contract in the Integrated Care Management business. Can you just give us an idea -- some color on that from a size and margin perspective? And how we should think about that going forward. Then I have couple more, I'll follow on.

Ramesh Balakrishnan: You're talking about the contract in Europe, Mike?

Mike Wiederhorn: Yes, exactly. Yes. Exactly.

Ramesh Balakrishnan: Yeah. So what we're doing there is part of a fairly substantial initiative that we are embarking on. It is part of an effort to use the platform to modernize public health infrastructure, particularly in terms of what's required to help manage the pandemic. And the first phase of it focuses on integrating COVID tests, vaccine status, alert, and analytics to support the opening up of travel and business in the EU. And we're working with a partner in the EU to do this. So the scope of the project ultimately, is to provide infrastructure that ties into health information, labs, and also public databases to provide ultimately in the form of a QR code, the ability to support opening up of travel, business events, and other things. But while the initial driver is around the pandemic and COVID, which really is ultimately an attempt to modernize how we create, use, and deploy public health infrastructure.

Mike Wiederhorn: Appreciate that color. Thank you. Another question, on the 2021 guidance, I think you reiterated the 180 to 190 in revenue and a 16 to 20 in EBITDA. If you can give us some kind of further color on the trajectory is simply the back half of the year? So as we think from a modeling perspective. Additionally, as we looked at our models to 2022, I think you guys have revenue and EBITDA targets of $329 million and $66 million. Just want to make sure you kind of -- if you're still comfortable with that, and has the visibility of that going into 2022?

Ramesh Balakrishnan: Can you take that, Martin?

Martin Beck : Yeah, absolutely. Hi, Mike.

Mike Wiederhorn: Hi, how are you?

Martin Beck : I'm good. Thanks. Thanks for the question. Yeah, as we've discussed, and as we've projected, the second half of the year will make up a greater percentage of revenues and EBITDA than the first half. And we seem to be tracking very well on a quarterly basis -- on that basis. So we're still comfortable with the guidance there and wouldn't change that at all. With respect to 2022, we've obviously got more visibility now that we're several months closer to it than when we put out that guidance. And at this point, we're not altering the guidance at all for 2022.

Mike Wiederhorn: Great, one last question and I will jump off here. Obviously, the combination is still early in its early stages here. If you can tell us about how the integration is going? Are there any surprises that you've seen at this point in time? And as you're also beginning dealing with your partners and doing the cross selling, how you seeing the response in the marketplace?

Ramesh Balakrishnan: I'll take the first part of this, and then maybe Martin you can talk about the system. So in terms of the companies coming together and functioning in an integrated manner, there have been no unexpected surprises, and there actually been some very positive discoveries. So just to remind everybody, these are companies that were doing very different things. And we were bringing solutions to the same set of customers, healthcare systems, physician groups, health plans, governments, but coming at it from different angles. So although we shared a set of customers, the solutions that we were bringing were complimentary. And so what we've done a complementary along 2 dimensions, both in terms of technology and the ability to interoperate with the different pieces of technology coming from these companies, but also complimentary in that they combined to form a solution that our customers require. So these are things that our customers needed to bring together. And either we did that already pre-integrated as part of One UpHealth or they would have to do with themselves. So we found tremendous receptivity in the customer base to the broader scope of solutions that we bring. So for example, in the large footprint of healthcare providers where the telehealth platforms are deployed, there is great interest in the ability of the Integrated Care platform to support a number of initiatives from programs to reduce readmissions, providers that have gotten into bundled payments or in delegated contracts, or have launched some form of ACO-type organization, where they need to manage costs and quality and outcomes, a tremendous interest in being able to bring in other parts of the UpHealth platform as well. And that's across the board with all of our customers, even in the international market where we are deploying these digital clinics, each of which becomes this kind of connected point of care. There's a tremendous interest in the Integrated Care platform of the population health solution sitting on top of these points of care, and providing a Ministry of Health or a provincial government the ability to implement various population health and public health initiatives. So very positive reaction from the customer side. Good integration of technology capabilities. And then on the system and process side, I’ll let you comment, Martin.

Martin Beck : Sure. Thank you. Yeah. Mike, as you know the combination is not about the wholesale integration of the entities. All the businesses were very well run on a standalone basis. And so what we've been doing to generate both revenue synergies and cost synergies, is really focusing on the sales, marketing and finance and accounting functions. So on the sell side, Ramesh touched on that. We hired a Chief Revenue Officer who's coordinating the efforts of the different sales teams in the business units. We've made a tremendous amount of progress on the marketing front. And then finally, in terms of finance and accounting, we've hired a Chief Accounting Officer. We've built out that team to be able to, to report and monitor compliance aggressively. We've rolled out workday first at the UpHealth corporate level, and then taking that into the business units. And we'll be using it on both finance and an HR basis going forward. So we're happy with the pace of the integration that we've outlined so far.

Mike Wiederhorn: Thanks a lot. I'm going to jump off now. Thanks for the color. Appreciate it.

Martin Beck : Thanks, Mike.

Operator: Thank you, Mr. Wiederhorn. The next question is from Mike Latimore with Northland Capital Markets. Please proceed.

Mike Latimore: Great, thanks a lot and congratulations on the first call here and in strong growth in the quarter. As you look to the second half of the year, I guess, should we assume that you got sequential growth sort of every quarter, meaning fourth quarter is by higher than third? And then what would be the say, biggest drivers of that growth in the second half of the year?

Martin Beck : Hi, Mike.

Ramesh Balakrishnan: Go ahead, Martin.

Martin Beck : Yeah, happy to take that, Ramesh. Yeah, you're right, Mike. You should think about it as sort of sequential quarter-over-quarter growth. You can see that growth from the first quarter to second quarter. We would expect that to continue and results in our -- meeting our guidance. I would say the drivers of that growth continue to be the Integrated Care Management segments and the Global Telehealth segment, where as you know, our margins are higher. That helps to contribute to the pickup in EBITDA. We also expect strong growth in the Digital Pharmacy space, as well as we invest more sales and marketing and business development professionals there. Ramesh, happy to have you comment on that as well.

Ramesh Balakrishnan: I think that captures that, Mike. And there are some much larger kind of combined bundled deals we're going after that we've not factored into anything right now yet. But we are, as I mentioned, approaching these large initiatives in California around CalAIM as well as the integration of Behavioral Health and medical care that will contribute to driving growth. But the Digital Health infrastructure, Integrated Care Management, Pharmacy, through the introduction of some new product lines are where the growth is coming from.

Mike Latimore: Got it. And Ramesh, you mentioned these large bundled deals that are not factored in. But, how long has the sales cycle been going on those? Did they kick off prior to the deal closing? Just a sense of how long you've been working on this?

Ramesh Balakrishnan: Yeah. The sale cycles are underway. And of course, these are initiatives that have sort of deadlines for launched. So they won't go on indefinitely because they have to be launched. Many of them in the first half of next year. So that's the nature of these initiatives we're going after. But for some of the others, such as the introduction of the Integrated Care platforms into the health systems where the telehealth platforms are already there, that cycle of sale cycle, that's a few months sales cycle. And we've launched both as well.

Mike Latimore: That makes sense. And then on the just the revenue mix in the second quarter. Integrated Care on a pro forma basis was just a little bit below the Telehealth segment. I guess how should we think about that mix over the next year? The integrate care is a little higher than it was last year let’s say.

Martin Beck : Yeah. I think using for models, Mike, we'd expect the Global Telehealth business to grow a little quicker than the Integrated Care Management business. But both of those businesses are growing rapidly. And [Technical Difficulty] is the higher margin --

Mike Latimore: Yeah, okay. Great. Thanks a lot. Good luck.

Ramesh Balakrishnan: Thank you, Mike.

Martin Beck : Thanks, Mike. Thank you, Mr. Latimore. The next question is from Bill Sutherland with Benchmark Company. Please proceed.

Bill Sutherland: Thank you. Nice start to your public life guys. Wanted to drill in a little bit more on kind of what's happening in the telehealth business in particular, vis-à-vis the Delta area? And whether have there been an issues in the U.S. business with selling cycle implementations? And then of course wondering about, UpHealth’s focus in India and where that stands? Jamie is on the call, is he available?

Ramesh Balakrishnan: No, but we can address those. So the impact of the Delta variant on the U.S. business is at least what we've seen so far, there's been no downside impact to that. The use cases around which the telehealth platform is deployed continue to grow, and the minutes of consults continue to grow. And we don't anticipate any slowdown or negative impact if any at all. There is further demand for the additional use cases that we've launched where virtual care, remote monitoring of individuals that may be quarantined or whatever else are in greater demand. In the international deployment of the digital clinics, the Delta variant has actually accelerated tremendously demand. In fact, our India operations have some of probably the leading expertise in the world and managing the Delta variant. Because they dealt with it early on in India, in March of this year well ahead of arriving anywhere else. And, in fact, one of the innovations that has fostered which we didn't talk a lot about is, we have expanded the model of the digital clinic into what we call a digital hospital, that actually has the ability to provide in a virtual remote model, acute care. And that was developed really partly in response to the need for ICU care to manage the Delta variant. And the first of these hospitals is being deployed right now, and will be live this year. But there's tremendous demand for this expanded version of the digital clinic as well, at a much higher price point, which is just increasing the demand for this digital first infrastructure, now to not only manage primary care, but also specialty and acute care. So we don't see the Delta variant right now as a -- if at all it's an accelerator of demand for us.

Bill Sutherland: So the big the big rollout in magic products isn't getting held up?

Ramesh Balakrishnan: Not at all --

Bill Sutherland: Scheduled.

Martin Beck : No, well in fact that --

Ramesh Balakrishnan: Okay. What I was going to say is it's actually accelerating not only the demand to roll these out. But there's a whole new product line that has been rolled out to address higher level of care in this digital model.

Bill Sutherland: Okay. And so yeah, I just looking at the somewhat -- at least versus my model the sequential trend 2Q over 1Q for Global Telehealth was not quite, where I thought it would do. So I guess just there's a lot of bookings that fall into the back half for this --

Ramesh Balakrishnan: Yeah. There was -- there is kind of working capital ahead of some of that. So that's identical to what your model was, but we see --

Martin Beck : One --

Bill Sutherland: Yeah, certainly you can --

Martin Beck : Yeah. So just one comment on the back off. So in MT in particular, they've, deployed 300 digital health nodes that they're ramped up right now. So the full number of healthcare points of -- so very much back half oriented, but on track.

Bill Sutherland: Right. And then Ramesh, in your group where should we think about gross margin without the distortion of 2Q? I mean, 80% to 41% is quite a delta.

Ramesh Balakrishnan: No, I think we're talking about gross margins for the Integrated Care is still being in the 50%- 60% range.

Bill Sutherland: Okay. And given how strong the Integrated care quarter was, was there a pull forward of some sort? I mean, do you expect that kind of sequential momentum?

Ramesh Balakrishnan: It may not be the same level of momentum or build of what some move forward. Because we accelerated some of the -- in Q2 some of the building out of the foundation for doing what we're looking to do to support the European projects. So there's a very, very substantial opportunity with this modernization of public health to support economies and business. And we're monitoring that, because that growth on that could be quite substantial. But we're monitoring that at the moment.

Bill Sutherland: Great. Okay. That's it for me. Thank you, both.

Martin Beck : Thanks, Bill.

Operator: Thank you, Mr. Sutherland. This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation. And have a great day.