Jeffrey Garro

Jeff Garro from Stephens Inc. asked about the leading indicators for maintaining consistent bookings, sought more detail on client retention trends by segment, and requested an assessment of the Vugal acquisition and the offshore strategy.

Answer

President and CEO Chris Fowler expressed confidence in bookings, citing a healthy balance across business lines and a strategy of expanding relationships from smaller initial deals. On retention, Mr. Fowler noted strong performance in Patient Care, while acknowledging a journey to improve the CBO business in Financial Health through operational enhancements. He affirmed he is still 'very pleased' with the Vugal acquisition for providing a captive offshore capability but noted key learnings around the need for a physical training presence in India and process standardization. CFO Vinay Bassi added that Patient Care retention is in the high nineties, while Financial Health retention is in the low nineties.

Jeff Garro from Stephens Inc. asked about the leading indicators for maintaining consistent bookings above $20 million, sought more detail on retention trends by business segment, and requested an assessment of the Vugal acquisition's performance relative to initial expectations.

Answer

President and CEO Chris Fowler expressed confidence in maintaining booking levels, citing a healthy balance between Patient Care and Financial Health, though he noted fewer net-new opportunities in the EHR space. Regarding retention, Fowler and CFO Vinay Bassi highlighted strong, high-90s retention in Patient Care while acknowledging the ongoing effort to stabilize and improve Financial Health retention, which is in the low 90s. Fowler assessed the Vugal acquisition as a positive strategic move, but conceded that the fully remote model was insufficient for their desired pace, necessitating a physical presence in India to better handle acute billing nuances and standardize processes.

Jeff Garro of Stephens Inc. asked about the leading indicators for maintaining consistent bookings above $20 million, sought more detail on client retention trends by segment, and requested an assessment of the Vugal acquisition's performance relative to initial expectations.

Answer

President and CEO Chris Fowler expressed confidence in bookings, citing a good balance between Patient Care and Financial Health, though he noted fewer 'at bats' in the net new patient care market. On retention, he highlighted strong performance in Patient Care and detailed the ongoing operational improvements in the Financial Health CBO business. Regarding the acquisition, Fowler stated he is still pleased but acknowledged a key learning was that a remote-only offshore model was insufficient for their desired pace, necessitating a physical presence in India and process standardization. CFO Vinay Bassi added that Patient Care retention is in the high nineties, while Financial Health is in the low nineties.

Jeff Garro asked about AI's influence on customer business models and outsourcing appetite, and how IQVIA leverages AI internally for efficiency and potential gross margin improvements.

Answer

Ari Bousbib, Chairman and Chief Executive Officer, detailed IQVIA's 90 AI agents in development, aiming for 500 by early 2027, which will reduce manual labor and improve long-term margins. He cited AI's use in commercial operations for patient insights and faster cycle times. For clients, AI supports discovery, marketing campaigns, and real-world evidence, leveraging IQVIA's data assets. He expects AI to mitigate margin headwinds and improve profitability.

Jeff Garro asked how AI is influencing customer business models and their outsourcing decisions, as well as IQVIA's internal use of AI for efficiency and potential gross margin improvements.

Answer

Chairman and CEO Ari Bousbib detailed IQVIA's development of 90 AI agents across 25 use cases, with plans for 500 by early 2027, aimed at automating tasks and improving long-term margins. He explained clients are leveraging AI for discovery, marketing campaigns, patient insights, and real-world evidence. Internally, AI deployment is expected to mitigate margin headwinds and enhance efficiency.

Jeff Garro from Stephens Inc. asked for an update on IQVIA's AI initiatives, including development progress, customer demand, and how AI is being used internally to drive efficiencies.

Answer

CEO & Chairman Ari Bousbib detailed significant progress, stating IQVIA is 'all in' on AI, developing specialized agents with NVIDIA. He mentioned over 20 agents are in production with 50 more planned for Q3, covering use cases like literature review and patient journeys. He noted strong client interest and highlighted that AI is expected to drive long-term internal efficiencies, which will help mitigate pricing pressures and support margin expansion.

Jeff Garro questioned the positioning of the Voice AI product between call center/answering services and nurse triage, and its potential to handle more clinical questions over time.

Answer

CEO Chaim Indig confirmed that Voice AI is already providing significant value to doctors, assisting with call center functions, prescription refills, and appointment booking. He expressed confidence it will handle more clinical questions in the future.

Jeff Garro asked about the positioning of Phreesia's Voice AI product between a call center service and a nurse triage line, and its potential to handle more clinical questions over time.

Answer

Chaim Indig (CEO & Board Member) affirmed that Voice AI provides significant value to doctors, assisting with call center functions, prescription refills, and appointment booking, with expectations for it to handle more clinical questions in the future.

Jeff Garro asked about the seasonality of the Network Solutions business, particularly the Q4-to-Q1 trend, and whether the revenue cadence for the rest of the year is expected to differ from historical patterns.

Answer

CFO Balaji Gandhi explained that quarter-to-quarter fluctuations are driven more by the specific pacing of large client campaigns rather than true seasonality. He stated that visibility for the year is consistent with prior years and that this pacing effect can cause variability, especially as the revenue base grows.

Jeffrey Garro asked about the penetration rate of Network Solutions content across the 170 million annual visits and how the company is improving monetization. He also sought an update on the pharma selling season and visibility for the Network Solutions segment.

Answer

Executive Balaji Gandhi explained that not all 170 million visits are monetized through all revenue streams. He noted that Network Solutions revenue per visit continues to increase, a trend incorporated into the fiscal 2026 outlook, and confirmed their positive view on the pharma selling season remains unchanged.

Jeffrey Garro asked for clarification on the drivers of the strong fiscal 2026 incremental EBITDA margin, questioning if it stemmed from gross margin expansion or operating expense efficiencies.

Answer

Executive Balaji Gandhi attributed the strong outlook primarily to operating leverage on expenses below the gross margin line. He explained that with gross margins now stable after prior investments, revenue growth is the biggest driver of EBITDA expansion against disciplined operating expenses.

Jeff Garro asked about any anticipated impact from the U.S. election year on the business and requested an update on the adoption and value of its life sciences engagement tools.

Answer

Executive Balaji Gandhi stated that the company does not anticipate any notable impact from the election season, as it was manageable in past cycles. He also noted that the life sciences assets acquired about a year ago have sparked valuable conversations and are expected to be a key driver of future growth in Network Solutions and total revenue per client.

Jeff Garro from Stephens Inc. asked about Veeva's AI strategy for the R&D product set, specifically how the company plans to work with partners as it rolls out its agents and where it sees differentiated opportunities for automation.

Answer

CEO Peter Gassner responded that while the rollout is measured, the goals are aggressive, such as aiming to reduce outsourced labor around the Trial Master File (TMF) by 50%. He sees a significant role for partners to develop agents that interoperate with Veeva's, and for customers to build their own custom agents on the Veeva AI platform for specific needs.

Jeff Garro of Stephens Inc. asked about the mix of customers' commercial focus between digital and in-person spending and how Veeva's offerings, particularly Crossix, are differentiated in enabling and measuring the effectiveness of both channels.

Answer

CEO Peter Gassner responded that he hasn't sensed a broad change in the spending mix, but noted strong customer interest in using technology like Crossix to double the impact of their existing digital spend. For in-person field teams, he highlighted the excitement around using AI to enhance productivity without necessarily changing the size of the field force.

Jeff Garro asked about the differentiation of the new CRM Pulse product, particularly its global scope, and the potential impact of adding more Asian countries.

Answer

CEO Peter Gassner described Veeva Pulse as a 'revolutionary' product that generates privacy-safe industry benchmark data from CRM activity for segmentation and targeting. He noted plans to add more countries in Southeast Asia and Japan. He highlighted its strong start, with the first deal being a 7-figure contract with a top-20 pharma company.

Jeff Garro of Stephens Inc. requested a deeper dive into the Performance Suite pipeline from net new clients, asking about the mix by specialty, line of business, and the type of health plans showing interest.

Answer

CEO Seth Blackley responded that the pipeline is heavily weighted towards oncology due to market demand and includes a mix of national, regional, and Blue plans. He highlighted a higher-than-usual mix of new logos, driven by payers seeking new solutions and the anticipated difficulty for plans to insource specialty management under new CMS requirements.

Jeffrey Garro from Stephens asked about potential variations in Performance Suite gross margins by payer mix or geography and also sought confirmation that no risk-sharing corridors had been triggered.

Answer

Executive John Johnson confirmed that no risk corridors have been hit this early in the year. He explained that while minor variations exist at a granular contract level, there are no predictable, macro-level margin differences by state or line of business. He noted the percentage-based savings opportunity is consistent across populations.

Jeffrey Garro asked for details on the timing and mix of the $25 million organic growth contribution in 2025 and requested an update on a previously announced large national plan win.

Answer

CFO John Johnson explained that the EBITDA from organic growth is front-half loaded, driven by deals already live. He noted that while new Performance Suite contracts won't contribute much EBITDA in 2025, their ramp to mature margins is now expected to be faster at 18 months. CEO Seth Blackley added that the large national plan win is expected to go live around mid-year 2025.

Jeffrey Garro of Stephens Inc. asked about the margin performance of mature Performance Suite contracts and the sustainable long-term margin target for that business segment.

Answer

John Johnson explained that the recent spike in medical costs has impacted all contract cohorts, not just new ones. While reaffirming the mid-teens long-term margin target, he noted that the company is evaluating symmetric risk corridors with partners, which could trade a slightly lower margin for greater downside protection.

Jeff Garro of Stephens Inc. asked if current macro uncertainty was causing a pull-forward of customer spending into the first half of the year and how these trends are influencing the outlook for the upcoming selling season.

Answer

CEO Steve Silvestro responded that the company is not seeing any revenue pull-forward, although clients are engaging in planning conversations earlier than usual. SVP of Corporate Finance Andrew D'Silva added that rather than pulling spend forward, regulatory and macro uncertainty is prompting pharma companies to lean more heavily into efficient, high-ROI digital channels, which is a positive trend for OptimizeRx.

Jeffrey Garro followed up on the revenue visibility topic, asking what is needed to land the remaining 20% of revenue to meet the annual guidance. He also asked for help reconciling the gross margin benefits from data subscriptions with the dilutive impact from an increase in lower-margin managed services.

Answer

CEO Stephen Silvestro and CFO Edward Stelmakh explained that the remaining revenue would come from converting the existing healthy pipeline. Regarding margins, Stelmakh noted the diversified portfolio sometimes includes lower-margin business to meet client needs, but the strategic focus is on building the high-margin data business. Silvestro added this creates a 'flywheel effect,' where data ownership unlocks more profitable network transactions.

Jeffrey Garro asked about the margin outlook embedded in the 2025 guidance, including product mix and OpEx investments, and questioned the competitive environment, especially regarding rivals adding DTC capabilities.

Answer

CFO Edward Stelmakh stated that while not formally guided, gross margin is expected in the low to mid-60% range, improving through the year with more DAAP deals, and that the leverageable model will drive EBITDA growth in the second half. CEO Stephen Silvestro asserted that OptimizeRx maintains a strong competitive moat as the only company combining HCP and DTC at scale with a proprietary network, which is driving revenue synergies and subscription growth.

Jeff Garro asked about business development trends, specifically the focus on new markets versus existing market density, and if there has been a change in seller expectations.

Answer

CEO Parth Mehrotra stated that Privia is aggressively pursuing both existing market density and new market entry without any trade-offs. He noted that due to market shakeouts and more cautious private equity buyers, seller expectations have become more reasonable. Privia's stability and balance sheet strength make it a 'natural consolidator,' and they are seeing strong momentum in their M&A pipeline while remaining disciplined as EBITDA and free cash flow buyers.

Jeffrey Garro of Stephens Inc. requested an update on the Care Partners program, asking about provider interest in the model and Privia's stance on not requiring providers to switch their EHR systems.

Answer

CEO Parth Mehrotra reported that the program, exemplified by the Community Medical Group in Connecticut, is progressing well and as expected. He stated that while the long-term goal is to migrate providers to Privia's integrated tech stack, the flexible model allows the company to expand attribution and perform in value-based care without an immediate EHR switch, with performance embedded in core results.

Jeff Garro from Stephens requested updated thoughts on markets anchored by health system partners, noting varied experiences in Florida, Ohio, and North Carolina, and asked about the outlook for this type of anchor partner.

Answer

CEO Parth Mehrotra explained that the strategy with each of the three health system partners is specific and that the model offers a flexible, unique value proposition for them. He acknowledged that not every partnership may pan out as planned but views it as another valuable, strategic angle for market entry, complementing Privia's diversified approach. He confirmed all states are currently doing well.

Jeff Garro of Stephens Inc. asked for details on the new AI MIDD platform, including the customer adoption path and economics, and questioned if new product launches alone are sufficient to accelerate organic growth without a better macro environment.

Answer

CEO William Feehery described the new platform as a major initiative to unite various software solutions, which will be layered on top of existing offerings. He asserted that the company's growth is not dependent on a macroeconomic recovery, citing the convergence of technology maturity, industry understanding, and regulatory acceptance as key drivers.

Jeffrey Garro asked about the pipeline development for the Non-animal Navigator product, a potential timeline for its financial impact, and whether the company's investments in AI are being recognized as a market differentiator.

Answer

CFO John Gallagher indicated it was too early to provide a timeline or quantify the financial impact of Non-animal Navigator, suggesting it would be a post-Q2 development. CEO William Feehery discussed AI initiatives like the Co-author product, noting they have meaningful revenue and attract significant customer attention. He clarified Certara's strategy is to enhance its core biosimulation offerings with AI, not to become a general AI company.

Jeffrey Garro asked about the factors determining the high and low ends of the 2025 revenue guidance, the contrast between strong Q4 bookings and a cautious outlook, and details on incremental R&D investments, particularly for Chemaxon.

Answer

CFO John Gallagher explained that the guidance range is contingent on end-market conditions, specifically the spending patterns of Tier 1 and Tier 3 customers, which remain challenging despite strong Q4 execution by the commercial team. He added that the 2025 adjusted EBITDA margin guidance of 30-32% reflects continued R&D investments in software and AI, as well as the initial margin impact of integrating the newly acquired Chemaxon.

Jeffrey Garro inquired about the current demand environment for biosimulation, the potential for a year-end budget flush, and how Certara's go-to-market strategies, including Certara Cloud, are influencing customer interactions and budget accessibility.

Answer

Executive William Feehery stated that while some year-end budget flush is possible, it is not factored into guidance. He attributed strong performance to investments in the commercial team and inherent demand for biosimulation. Feehery explained that Certara Cloud is acting as a platform 'glue,' lowering customer IT costs, simplifying security audits, and making it easier to cross-sell products, thereby fostering overall software growth.

Jeff Garro from Stephens Inc. asked about the pacing of AI product releases, potential gross margin implications, and updated financial expectations for the Proficiency business.

Answer

CEO Shawn O’Connor stated that major software releases will likely remain annual to suit client needs, though the new structure allows for faster updates. He confirmed the Proficiency revenue contribution is now guided to $9M-$12M for FY25 and that a previously mentioned large engagement has initiated, albeit with some delays. He does not see a shift to a transactional model in the near-term.

Jeffrey Garro from Stephens Inc. asked for details on the PBPK partnership with the Enabling Technologies Consortium, including its timeline and potential. He also questioned the seasonality of the Pro-ficiency business, noting the sequential decline in its software revenue, and asked how the new $5 million services contract would be allocated.

Answer

Executive Shawn O'Connor explained the PBPK partnership is a 12+ month project that was in the works for about six months. He described it as a key method for developing technology that will be integrated into their GastroPlus product. O'Connor reiterated that the ALI (Pro-ficiency software) revenue is lumpy and tied to clinical trial starts, which were slow in Q2. He noted that the differing business cadences of the legacy and acquired units are smoothing the company's overall seasonality across the second, third, and fourth quarters.

Jeffrey Garro asked about the seasonality and potential catalysts for the ALI and MC businesses, noting that annualizing Q1 results would place them at the low end of the guidance range. He also asked if there were any patterns in client activity levels by customer size, therapeutic area, or other factors, given the wide variance mentioned.

Answer

Executive Shawn O'Connor explained that the seasonality of the acquired businesses is not evenly distributed, with the calendar year-end (SLP's Q1) being a slower period. He expects activity to peak in SLP's Q2-Q4. Regarding client activity, he stated it's 'all over the map' with no single clear pattern, though he noted obvious trends such as financially strong companies and active therapeutic areas like oncology and obesity showing more robust activity.

Jeffrey Garro asked for a breakdown of the fiscal 2026 revenue drivers between net revenue retention (NRR) from existing customers and contributions from new customers. He also inquired about the potential impact of the velocity of new drug approvals on the revenue outlook.

Answer

CFO Anna Bryson stated that while larger customers will continue to lead growth, the company is seeing exciting traction with SMB and new customers through its agency partner program, viewing it as a long-term growth vector. CSO Dr. Nate Gross added that while policy uncertainty exists, the science behind new therapies is strong, and Doximity's high ROI makes it a resilient, 'well-insulated platform' even if budgets tighten.

Jeff Garro asked if the increase in faster January program launches indicates that medical/legal reviews are becoming less of a bottleneck, or if it's due to strong execution and the flexibility of integrated solutions.

Answer

CFO Anna Bryson credited the faster launches to the new integrated programs, which she called a 'game changer.' This model allows clients to go live immediately with any module that has pre-approved content. She also noted this flexibility pulls revenue forward, contributing to FY25 growth but potentially creating tougher comps for FY26.

Jeff Garro of Stephens Inc. asked about the benefits and market overlap of the new Ignite Spark product for the mid-market and the strategy of selling applications on the Microsoft Azure marketplace.

Answer

CEO Dan Burton explained that Ignite Spark effectively targets the mid-market, which includes a large portion of Health Catalyst's existing 900+ app-layer clients, creating a strong overlap and leveraging established relationships. He described the Azure marketplace as a promising new sales channel that is part of an expanded go-to-market partnership with Microsoft, which also includes joint sales activities. He also mentioned a similar beneficial partnership with Databricks.

Jeffrey Garro sought more details about the new strategic master data management (MDM) partnership, asking about its development timeline, the pipeline for similar partnerships, and the general economic structure of such deals.

Answer

CEO Kevin Coop estimated the deal took approximately 90 days to develop and aligns with the strategy of accelerating the product road map through partnerships. He explained that the Definitive Healthcare ID is a key strategic asset for these deals, enabling data mapping. Coop indicated this was the first such deal and that the company is intentionally pursuing more strategic partnerships.

Asked for the amount of utilization-based revenue in the quarter and inquired about customer retention, specifically the portion of the book up for renewal and whether to expect more culling of misaligned partners.

Answer

Steve Barnes stated that usage-based revenue was about 32% of the total. Rajeev Singh added that roughly one-third of contracts are up for renewal annually, with expected gross dollar retention around 90% or higher. He clarified that the phase of removing unprofitable contracts is largely complete and the focus is now on sustainable growth.