Richard Close

Richard Close inquired about chronic care enrollment trends, the success of cross-selling efforts, and the traction and demand interest for new product offerings during the most recent selling season.

Answer

Chuck Divita, CEO, emphasized the success in bundling products and crossing populations. He highlighted the company's unique position with its clinical model and AI capabilities to address population health, drive stronger ROI for clients, and target high-risk and rising-risk populations, which will fuel longer-term growth.

Richard Close inquired about chronic care enrollment trends, the success of cross-selling efforts, and the level of demand and interest in new product offerings during the most recent selling season.

Answer

CEO Chuck Divita noted strong success in bundling products and managing multiple conditions, particularly with weight programs. He emphasized the company's unique position to leverage its clinical model, data, and AI capabilities to address population health, drive ROI for clients, and target high-risk populations for long-term growth.

Richard Close from Canaccord Genuity Group asked about the BetterHelp insurance initiative, specifically questioning the long-term margin difference between cash-pay and insurance models and the strategy for the state-by-state rollout.

Answer

CFO Mala Murthy stated that while it's too early to pinpoint the long-term equilibrium, insurance gross margins will be lower than the legacy cash-pay business. The strategy relies on converting more of the 4 million consumers at the top of the funnel. CEO Charles Divita added that the rollout is methodical, focusing on building therapist supply behind the scenes to enable activating multiple markets at once, rather than a simple state-by-state progression.

Richard Close of Canaccord Genuity asked about the health plan channel's performance and whether it was related to Teladoc's product set. He also requested the international revenue contribution for BetterHelp in the prior year.

Answer

CEO Chuck Divita attributed headwinds in the health plan channel to macro factors affecting payers, such as inflation and regulatory changes, rather than issues with Teladoc's product set. CFO Mala Murthy stated that international revenue was 20% of the BetterHelp segment in 2024, an increase from mid-teens in 2023.

Richard Close asked for specific details on product improvements needed to enhance client retention and secure new business, particularly in response to evolving market demands.

Answer

CEO Chuck Divita explained the focus is on improving performance from the existing book of business by better activating visits and retaining chronic care members. He highlighted plans to build capabilities that make virtual visits more impactful for both patients and clients by providing more information at the point of care, with benefits expected to materialize in 2025.

Richard Close asked for more specific details on the product improvements and investments being made to address evolving market demands. He sought to understand what tangible changes are being implemented to improve client retention and win new business.

Answer

Chief Executive Officer Chuck Divita highlighted a focus on driving better performance from the existing book of business, such as improving activation of visits and enrollment in chronic care programs. He also mentioned building new capabilities to make virtual visits more valuable and impactful for both patients and clients, including putting more information at the point of care to align with health plan strategies. These investments are aimed at driving more consistent performance and unlocking value from the current member base.

Richard Close asked for an update on the company's differentiation and optimization phase, specifically the progress in specialty services expansion and strategies for becoming the referral partner of choice among payer relationships and provider organizations.

Answer

CEO Dave Bourdon reported that specialty services are targeting $70 million in revenue for 2026, a 40% increase, primarily driven by SPRAVATO and TMS, leveraging existing centers with low capital intensity. He detailed investments in medical provider referral resources, including technology interfaces and a new local operating model with additional talent, to drive increased referrals. He also cited the Calm relationship as an example of a new type of national digital player partnership, appealing due to LifeStance's scale, patient experience focus, and hybrid model.

Richard Close asked for an update on the differentiation and optimization phase, specifically the progress of specialty services expansion and efforts to become the referral partner of choice, including details on payer and provider relationships.

Answer

CEO Dave Bourdon reported that specialty services are targeting $70 million in revenue for 2026, a 40% increase, primarily from SPRAVATO and TMS, leveraging existing centers with low capital intensity. He highlighted continued investment in medical provider referral resources, including technology and local talent, and mentioned the Calm relationship as an example of a new type of referral partner, though still in early stages.

Richard Close of Canaccord Genuity Group Inc. asked for perspective on managed care's reaction to rising mental health costs and its impact on reimbursement rates, and also sought clarification on new productivity and patient engagement initiatives.

Answer

CEO David Bourdon acknowledged payer cost pressures but noted they are balanced by the need for member access, and he sees a welcome industry shift towards quality. He reaffirmed the outlook for rate increases. He also clarified that the new patient engagement platform is a marketing CRM, separate from the administrative check-in tool, and that an enhanced care matching initiative is being rolled out to improve productivity and retention.

Richard Close asked for an update on the strategy for rolling out specialty services, including potential hurdles and the expected contribution from these programs going forward.

Answer

CEO Dave Bourdon stated that the company is focused on expanding services like neuropsych testing, Spravato, and TMS, which currently generate about $50 million in revenue. He expects these services to grow at a much higher rate than the core business over the next 2-3 years and eventually yield higher margins.

Richard Close asked about the rationale behind expecting exchange membership to return to growth over time, and for CFO Mario Ramos's initial thoughts and planned changes after 90 days in his role.

Answer

CEO Seth Blackley cited historical consumer interest in exchange products and potential future legislative changes as reasons for expected long-term growth. CFO Mario Ramos expressed excitement for his role, emphasizing a commitment to greater clarity and transparency in financial communication, particularly regarding MER.

Richard Close asked for the rationale behind the comment that the exchange market is expected to return to growth over time, and for CFO Mario Ramos's initial thoughts and potential future changes after his first 90 days with the company.

Answer

CEO Seth Blackley explained that the exchange product has historically shown general consumer interest and growth beyond subsidy fluctuations, and potential legislative changes could also drive future membership. CFO Mario Ramos expressed excitement about his role, emphasizing a commitment to increased clarity and transparency in financial communication, particularly regarding the Medical Expense Ratio (MER).

Richard Close asked about the potential impact of adverse Medicaid policy changes and requested more detail on the adjustments made in the Centene contract extension.

Answer

CEO Seth Blackley noted that while Medicaid funding pressure could negatively impact membership, it also drives sales momentum for their affordability solutions. Regarding Centene, he explained the adjustments involve Evolent investing more in 2025 in automation initiatives that create mutual value, which is balanced by an additional year on the contract term, making the partnership more efficient for both parties.

Richard Close of Canaccord Genuity Corp. inquired about the process of converting risk contracts to a services model and asked if Evolent is slowing its pursuit of new risk-based deals.

Answer

CEO Seth Blackley explained that converting a risk contract to a services model is a contractual process that typically takes 30 to 150 days. He affirmed the company's belief in the risk-based model but emphasized a balanced approach, noting that while market demand is high, all new deals face heightened scrutiny. He pointed to the quarter's five new service-based deals as evidence of this prudence.

Richard Close asked for clarification on the acquisition contribution for Q4 2025 and the 2026 guidance. He also sought examples of GenAI and agentic AI integration into HealthStream's offerings and insights into client conversations regarding separate AI budgets versus integrating AI into existing systems of record, and whether clients are distracted by AI.

Answer

Scotty Roberts, CFO and Senior Vice President of Finance and Accounting, clarified that acquisition contribution was $1.6 million in Q4 2025 and is projected to be $13 million for 2026. Robert A. Frist Jr., CEO and Chairman, stated that specific AI roadmap details would be revealed throughout the year, but confirmed every product has an AI roadmap and AI is a core element of the hStream platform. He noted that CIOs are seeking to consolidate point solutions into platforms, and HealthStream focuses on solving core business problems like nursing shortages and efficient onboarding, where AI can facilitate workflows, rather than solely discussing AI budgets. Frist believes leading health systems remain focused on fundamental business improvements.

Richard Close first asked Scotty Roberts for the acquisition contribution to revenue in Q4 2025 and the full-year 2026 guidance. He then asked Bobby Frist for specific examples of how HealthStream is integrating Generative AI and agentic AI into its offerings. Finally, he inquired about conversations with health system executives regarding separate AI budgets versus integrating AI into existing systems of record, and whether clients are distracted by AI or remain focused on core business improvements.

Answer

Scotty Roberts, CFO and Senior Vice President of Finance and Accounting, stated that the combined acquisition impact was $1.6 million in Q4 2025 and is projected to be $13 million for the full year 2026. Robert A. Frist Jr., CEO and Chairman of HealthStream, explained that AI roadmaps are in place for every product, with interesting projects underway to automate workflows and develop agentic frameworks around learning capabilities. He noted that AI is a core element of the hStream Platform and that developers are actively using AI tools. He added that health system CIOs are focused on consolidating numerous point solutions into fewer platforms and solving critical business problems like nursing shortages, where HealthStream's platform and career networks offer value, suggesting that smart clients prioritize fundamental business improvements over being solely distracted by AI.

Richard Close of Canaccord Genuity Group asked for clarification on the drag from legacy products on ShiftWizard's growth, potential reputational impact from CredentialStream's Q1 scaling issues, and the effect of hospital employment cuts on subscriptions.

Answer

CEO Robert Frist explained that the negative revenue impact from legacy products (about $1.8M in Q2) is diminishing and will become less material in the coming quarters. He acknowledged customer frustration with CredentialStream but stated the issues are resolved without long-term impact to the outlook. Regarding employment, Frist sees long-term growth in healthcare jobs, noting the primary macro impact is a lengthening of customer purchasing decision timelines.

Richard Close of Canaccord Genuity Group Inc. asked for clarification on the status of HealthStream's legacy products, the expected timeline for their runoff, and how the uncertainty around them impacts overall business visibility.

Answer

Robert Frist, CEO and Chairman, detailed that legacy products like ANSOS are still supported but not actively sold to new customers. He outlined three potential outcomes for these customers: migrate to a new SaaS application, remain on the legacy product, or leave for a competitor. Frist stated that because the company has not yet designated these products for 'sunset,' a definitive runoff timeline is difficult to provide. He acknowledged this creates some ambiguity but argued it's the correct business decision for now, emphasizing that the legacy portfolio is a finite and shrinking issue relative to the growth of core products.

Richard Close asked if large renewal expansions will become more common, sought more detail on the consumption-based contract that impacted revenue guidance, and inquired about the timeline for legacy product declines to subside.

Answer

CEO Robert Frist expressed his goal for large expansions to become more prevalent, driven by a 60-person account management team focused on blending new products into renewals. CFO Scotty Roberts explained the consumption contract customer's usage returned to normal but did not accelerate enough to recoup the Q2 deficit. Frist added that legacy products are not yet officially 'sunsetting' and managing their attrition remains a key challenge, with more clarity on their lifecycle expected next year.

Richard Close inquired about the pipeline of capitated agreements, seeking an update on existing opportunities following the strong start of the large contract and continued execution with Humana.

Answer

CEO Suzanne Foster discussed ongoing conversations with potential partners, noting market interest in aligned incentive models and the time-intensive nature of securing new capitated arrangements. CFO Jason Clemens added that guidance does not assume any impact from the capitated pipeline until deals are closed. Richard Close also asked about the diabetes segment, specifically when new starts are expected to show growth and the long-term growth outlook, acknowledging the success in patient retention.

Richard Close asked for an update on the pipeline of capitated agreements, given the strong start to the new large contract and continued execution on the Humana arrangement. He also sought long-term thoughts on the growth of the Diabetes Health segment, specifically regarding new starts.

Answer

Suzanne Foster (CEO, AdaptHealth) discussed ongoing market interest and conversations for capitated arrangements, noting they require significant time and infrastructure. Jason Clemens (CFO, AdaptHealth) clarified that guidance does not assume any impact from new capitated deals until they are closed. Suzanne Foster (CEO, AdaptHealth) highlighted improved diabetes patient retention due to resupply operations and efforts to rebuild the sales force, with plans to grow the diabetes sales force for CGM new starts in 2026, while maintaining flat expectations for now. Jason Clemens (CFO, AdaptHealth) also noted strong pump growth.

Richard Close of Canaccord Genuity Group Inc. asked for details on the operational changes driving the Diabetes turnaround, including the resupply outreach program, and inquired about the implementation and reception of new sales quotas.

Answer

CEO Suzanne Foster detailed the Diabetes turnaround, crediting new leadership, moving resupply operations to leverage the successful sleep resupply model, and stopping excessive patient outreach, which quickly reduced attrition. She also described the new sales quota system, rolled out January 1, as a major success that was well-received by the sales force and is expected to improve forecast predictability.

Richard Close of Canaccord Genuity Group Inc. asked for more detail on the recent leadership and organizational changes within the diabetes division and inquired about the status of potential divestitures of other non-core assets.

Answer

CEO Suzanne Foster detailed a significant leadership overhaul in the diabetes unit, including appointing a new General Manager and a new sales leader, and integrating the diabetes resupply operations into the high-performing sleep resupply center of excellence. CFO Jason Clemens explained that potential divestitures would focus on non-strategic product lines within the "wellness at home" segment, such as home infusion, that don't provide ancillary benefits to the core businesses.

Richard Close asked for more details on the strong momentum observed in early 2026 and inquired about Talkspace's perspective on rising behavioral healthcare costs, potential utilization management, or reimbursement changes, and whether their outcome data differentiates them for payers looking to narrow provider networks.

Answer

CEO Dr. Jon Cohen attributed early 2026 momentum to renewed engagement post-holidays and continued session growth, with CFO Ian Harris adding that January marketing campaigns contribute to checkouts. Dr. Cohen stated that mental health engagement saves medical costs, most rising behavioral health costs are inpatient, and Talkspace's outpatient services are a small part of national spend. He confirmed their outcome data and curated network are strong differentiators for value-based contracts, leading to payers indirectly narrowing networks through directory integrations.

Richard Close asked for more details on the 'strong momentum' observed in early 2026, the impact of rising behavioral healthcare costs on Talkspace's payer conversations, and whether Talkspace's ability to demonstrate outcomes is a differentiator for payers.

Answer

CEO Dr. Jon Cohen attributed early 2026 momentum to continued member re-engagement and new sign-ups, supported by January marketing campaigns. He stated that mental health engagement saves overall medical costs, and most rising healthcare costs are from inpatient care, not outpatient. Dr. Cohen affirmed that Talkspace's outcome-based contracts and curated network are key differentiators, with CFO Ian Harris adding that directory integrations are a reward for providing data and clinical oversight.

Richard Close of Canaccord Genuity inquired about the factors determining the low versus high end of the full-year EBITDA guidance and requested an update on the Medicare rollout, including outreach progress and registration trends.

Answer

CFO Ian Harris explained the EBITDA range reflects a balance between near-term profitability and long-term growth investments, particularly in marketing, where efficiency has improved. CEO Jon Cohen added that the Medicare rollout is showing positive momentum with month-over-month registration growth and increasing interest from Medicare Advantage plans.

Richard Close of Canaccord Genuity asked for details on the drivers of the low versus high end of the EBITDA guidance range and for an update on the Medicare rollout, including outreach efforts and registration trends.

Answer

CFO Ian Harris explained the EBITDA range reflects a balance between near-term profitability and long-term growth investments, particularly in marketing where CAC is improving. CEO Jon Cohen added that the Medicare business continues to grow month-over-month as more Medicare Advantage plans come in-network and marketing strategies are refined.

Richard Close asked about the possibility of clients using multiple AI vendors (not a zero-sum game) and Waystar's perspective on the 'haves and have-nots' in the healthcare system landscape regarding AI adoption.

Answer

Matthew Hawkins, CEO of Waystar, acknowledged that heterogeneous technology deployment is common in healthcare and it's not necessarily a zero-sum game. He stressed that solving mission-critical RCM problems requires a deeply deployed, multi-sided network, rich real-time data, cybersecurity, and subject matter expertise, which LLMs alone cannot provide. He added that most hospitals lack the resources to deploy and sustain AI themselves, and Waystar brings modern AI capabilities to a broad range of clients, including smaller ambulatory practices.

Richard Close asked about the possibility of clients using multiple AI vendors (not a zero-sum game), and Waystar's perspective on the healthcare system landscape, particularly how larger AI companies fit with 'haves and have-nots' among customers.

Answer

Matthew Hawkins, Waystar's Chief Executive Officer, stated that heterogeneous technology deployment is common in healthcare and it's not a zero-sum game. He emphasized that solving mission-critical RCM problems requires a deeply deployed network, rich real-time data, and subject matter expertise, which few hospitals can build themselves. Waystar brings modern AI to a broad range of clients, including those with fewer resources.

Richard Close asked about the primary drivers of volume growth, questioning whether it was due to a higher utilization environment or increased adoption of digital payments, and also inquired about the current penetration of digital patient payment solutions.

Answer

CEO Matt Hawkins confirmed a strong utilization environment was a key factor and noted a significant runway for market share gains in digital payments. CFO Steve Oreskovich added that the volume growth was well-balanced, with approximately 60% of the year-over-year increase coming from patient payment solutions and 40% from provider solutions.

Richard Close inquired about how Waystar views the AI opportunity—as a driver for new client wins or same-store growth—and asked about the pricing model for these new capabilities, such as whether they are add-ons or part of a contract repricing.

Answer

CEO Matt Hawkins outlined a multi-faceted strategy. He stated that AI will be infused into existing software to enhance value and retention, priced to the value it creates (potentially through modest annual increases), and offered as new, sellable software modules (SKUs) to both new and existing clients. He also noted that Waystar is using GenAI internally to drive efficiency. While not disclosing specific pricing terms, the approach combines enhancing current offerings and creating new revenue streams.

Richard Close asked how Waystar is positioned for potential policy and funding changes from Washington D.C., such as those affecting Medicaid or the ACA, and the potential impact on client purchasing decisions.

Answer

CEO Matt Hawkins asserted that Waystar's model transcends political environments, as the core mission to reduce administrative waste aligns with the government's focus on efficiency. He noted that providers are increasingly focused on smart IT spending to improve operations, with 75% expecting to increase their IT budgets, which he views as a tailwind and opportunity for Waystar.

Richard Close sought clarification on the $12 million revenue benefit from rapid onboarding, asking about the contribution from existing clients and if this amount represents a peak. He also asked about the significance of the 50% increase in conference attendance.

Answer

CFO Steven Oreskovich clarified that the $12 million benefit included both new clients and existing clients switching more business to Waystar, and he expects a new, higher revenue baseline going forward. CEO Matthew Hawkins added that the increased conference attendance is valuable for fostering peer-to-peer learning and gathering client feedback, which drives momentum.

Richard Close requested more detailed background on the study Doximity referenced regarding doctors using its AI, and its impact on gaining additional utilization among providers.

Answer

Jeff Tangney, CEO and Co-Founder, explained that Doximity conducted a study with 1,300 high-prescribing physicians who compared Doximity's AI with competitors on real clinical questions. Doximity's AI performed at twice the rate of its competition, attributed to its superior drug reference, full access to 2,000 medical journals, better formatting, and speed. He noted that while the study was recent (mostly January), word-of-mouth likely contributed to the rapid adoption, though it wasn't a primary driver for the 300,000 user count yet.

Richard Close asked for more detail on the study Doximity referenced, involving doctors using AI, and the impact it may have had on gaining additional utilization with other providers.

Answer

Jeff Tangney, Co-founder and CEO, explained that the study involved 1,300 high-prescribing physicians who compared Doximity's AI against competitors, with Doximity performing at twice the rate. This was attributed to its better drug reference, full access to 2,000 journals, formatting, and speed. He noted the study was recent (mostly January) and likely contributed to word-of-mouth spread, but wasn't a 'meaningful part' of the 300,000 user number yet.

Richard Close inquired about the functionality of the client portal, asking if clients are now able to execute purchases directly through it and how this impacts the visibility and certainty of year-end upsells.

Answer

CEO Jeff Tangney clarified that while the portal presents recommendations and pricing to make upsells 'friction free,' the final contract process is still handled separately, though they are working to integrate it. He emphasized that the new integrated programs are the primary driver of increased visibility, as they secure larger, longer-term contracts with predictable launch dates that are not dependent on client-side medical/legal reviews.

Richard Close inquired about Doximity's future product roadmap and asked how the company is using AI internally to drive margin improvement.

Answer

CEO Jeff Tangney identified AI as the key focus for the product roadmap, highlighting its significant, unmonetized potential to save doctors time. CFO Anna Bryson added that AI has already facilitated margin expansion by improving efficiency in G&A functions like sales forecasting and R&D processes like programming, contributing to the 54% annual margin.

Richard Close sought more details on AccessOne's funded and unfunded models, the demand for these various offerings, and any expected seasonality in the business, particularly regarding selling new customers.

Answer

Balaji Gandhi (CFO, Phreesia) highlighted AccessOne's flexibility and advanced technology in offering diverse solutions to meet client needs, whether through full, partial, or unfunded models, which helps providers improve cash flow. Chaim Indig (CEO, Phreesia) noted that the go-to-market motion would likely be similar to Phreesia's provider approach, but revenue might exhibit more 'chunkiness' as new clients are landed.

Richard Close asked for more details on AccessOne's funded and unfunded models, the demand for these offerings, and any expected seasonality in the business regarding selling new customers.

Answer

CEO Chaim Indig highlighted AccessOne's flexibility and advanced technology in meeting diverse client needs to improve cash flow and reduce days outstanding. CFO Balaji Gandhi added that the go-to-market motion for providers will likely be similar to Phreesia's existing approach, but revenue might be chunkier when new clients are landed or expanded.

Richard Close questioned if new products like Voice AI, AI referrals, and auto-network tags are initially offered on a no-risk, no-cost model, and when they are expected to positively drive revenue per AHSC.

Answer

Chaim Indig (CEO & Board Member) stated that Phreesia believes in product value, allowing clients to use products at no cost initially, expecting a material impact on revenue over time. Balaji Gandhi (CFO) added that this approach is consistent with past product introductions and contributes to AHSC growth.

Richard Close asked if new products like Voice AI, AI referrals, and auto-network tags are on a no-risk, no-cost model initially, and when they will positively drive revenue per AHSC.

Answer

CFO Balaji Gandhi stated that Phreesia allows clients to use products at no cost initially, expecting material revenue impact over time as they benefit clients' financials. CEO Chaim Indig added this is consistent with past product introductions, contributing to total revenue per AHSC growth.

Richard Close inquired about the drivers of operating leverage in sales & marketing and G&A expenses and also asked for an update on the monetization progress of the MediFind acquisition.

Answer

CFO Balaji Gandhi attributed expense leverage to returns on prior investments and projected a relatively flat trend for the year. Regarding MediFind, both Gandhi and CEO Chaim Indig described it as being in the 'first inning,' with early revenue contribution and plans for future investment, confirming it helps patients schedule visits with providers on Phreesia's network.

Richard Close followed up on 'appointment readiness,' asking if providers are charged for it and for examples of life sciences engagement. He also requested an update on the 'patient bill pay' product, including client interest and attachment rates.

Answer

CEO Chaim Indig confirmed 'appointment readiness' is not an extra charge but adds value monetized through Network Solutions. Executive Balaji Gandhi noted excitement for 'patient bill pay,' stating it's being pushed to the client base and drives revenue through increased payment volume, though he did not provide a specific attachment rate.

Richard Close questioned why the midpoint of the fiscal 2025 revenue guidance was lowered slightly, especially given the significant increase in the adjusted EBITDA outlook.

Answer

Executive Balaji Gandhi explained that the adjustment reflects the company's philosophy of updating guidance as it gains more visibility. He stated that the revised range is aligned with market expectations and that there was nothing more to read into the change.

Richard Close asked about the revenue model for the medication adherence offering and whether the focus on shorter payback periods has altered the sales pipeline.

Answer

CEO Chaim Indig explained that revenue from medication adherence is primarily recognized under Network Solutions and is typically part of a broader suite of offerings for life sciences clients, with no patient-identifiable information shared. Executive Balaji Gandhi stated that the pipeline size is consistent with the prior year, but the deal values are larger, which is the intended output of a multi-year strategy.

Richard Close of Canaccord Genuity Group Inc. asked about the magnitude of headcount additions for the growing advisory business and their ramp-up time. He also questioned the current demand environment for the technology side of Performance Services, including SaaS and enterprise licenses.

Answer

CFO Glenn Coleman and David Zito, President of Performance Services, stated that about 10 senior leaders have been hired with plans to add another 20 people, who will be deployed immediately to sold projects with a quick ramp-up. President & CEO Michael Alkire and Mr. Zito noted that demand for technology, especially clinical decision support, remains strong as it enables the performance improvements clients are seeking. They view the current environment as a driver of demand for their tech-enabled solutions.

Richard Close from Canaccord Genuity asked for more detail on the challenges and turnaround plans for consulting services, the nature of the product mix shift in Applied Sciences, and an update on the Contigo Health divestiture.

Answer

CEO Michael Alkire described the consulting changes as a 'refresh' focused on technology-enabling back-office functions and co-management to drive performance improvement. CFO Glenn Coleman confirmed the Applied Sciences product mix shift refers to a move from upfront license deals to subscription models. He also stated that the Contigo network assets were sold for $15 million, with the TPA and COE businesses still in the process of being divested.

Speaking for Richard Close, John Penny asked about the success of cross-selling other services during GPO contract renewals and questioned if the Supply Chain segment's high adjusted EBITDA margin of around 50% is sustainable.

Answer

CEO Michael Alkire confirmed that the renewal process creates significant opportunities to cross-sell technology and advisory services, as health systems are looking for total value. CFO Craig McKasson stated that the Q1 Supply Chain adjusted EBITDA margin of 51% is indicative of the expected range for fiscal 2025, attributing the higher sustainable margin to the divestiture of the low-margin S2S Global business.

Asked about the expected gross margin progression for the rest of 2025 and how to think about new member additions in the second half of the year, especially with the influence of the GLP-1 program.

Answer

The company expects gross margin to follow its historical seasonal pattern of improving after Q1's enrollment-related costs, but did not provide specific guidance for Q3/Q4. New member progression in the back half will be influenced by ongoing outreach optimization and the dynamic, growing nature of the GLP-1 market, which may alter historical enrollment patterns.

Richard Close inquired about the updated guidance, which seems to contemplate a second-half step-down, and asked about the utilization trends factored into the outlook.

Answer

CEO Parth Mehrotra explained that the company has not historically seen a second-half slowdown and that raising guidance to above the high end reflects confidence. He stated they are being prudent given the timing of shared savings true-ups in Q3. He suggested doubling the first-half results is a good starting point and confirmed they see no negative trends that would cause a slowdown.

Asked for more details on the strong ambulatory utilization mentioned, specifically how it compared to initial guidance and what the expectations are for the remainder of the year.

Answer

The executive confirmed that utilization trends have been strong, influenced by factors like the flu season, and are expected to continue at this elevated level. This positive trend is beneficial for both their fee-for-service and value-based care businesses and is fully reflected in the updated guidance.

Richard Close of Canaccord Genuity asked about the potential impact on Privia's business from a rising number of uninsured patients if subsidies expire, and from potential changes to Medicaid.

Answer

CEO Parth Mehrotra explained that Privia's exposure to Medicaid and the uninsured is not significant, as its book is diversified and reflects the demographics of its 14 states. He referenced the recent Medicaid redetermination period, noting the company's ability to capture shifting patient lives into other programs like commercial or exchange plans, suggesting a limited overall impact.

Richard Close of Canaccord Genuity asked about the key topics and concerns raised by physicians in discussions to join Privia, whether these have changed over time, and for more detail on the mix of record year-to-date signings between new and existing markets.

Answer

CEO Parth Mehrotra stated that the core value proposition hasn't changed, but Privia's validated public track record and strong physician performance are creating a 'flywheel' effect, with many new leads coming from referrals. He noted the unique, diversified model is attractive in a disruptive environment. Regarding signings, he said they are broad-based across all 14 states, reflecting the strategy to build density everywhere.

Richard Close asked about improving win rates, questioning if competitors' expansion into other areas like mental health creates an opportunity. He also asked about the potential for yield progression and any differences between self-insured, MA, and fully insured books.

Answer

President Jim Pursley stated that win rates are strong and increasing, and he views the biggest competition as a 'no decision' from a client, suggesting competitors may be distracted. Co-Founder & CEO Daniel Perez emphasized that focus on the complex MSK market is a key advantage. Regarding yields, Daniel Perez noted the goal is to grow from the current 3.4% yield toward the 9% rate of in-person physical therapy and beyond. He mentioned that while the product is consistent across populations, MA members show some of the highest engagement on a per-member basis.

Richard Close of Canaccord Genuity questioned if the Ignite pipeline is robust enough to achieve the 40 net new platform client target without the delayed health exchange deals and asked about the timing for Ignite's higher margins to impact overall tech gross margin.

Answer

CEO Dan Burton affirmed confidence in hitting the 40-client target, stating that health information exchange opportunities are a small part of a large and growing pipeline, which is primarily driven by cross-sell opportunities to traditional health systems. Regarding margins, he projected an uplift in adjusted technology gross margin starting in the second half of 2025, with further improvements into 2026 as the client migration to Ignite progresses.

Representing Richard Close of Canaccord Genuity, John Pinney asked for clarification on elevated costs in Tech-Enabled Managed Services (TEMS), questioning if they were one-time and how gross margin is expanding in the installed TEMS base.

Answer

CEO Dan Burton explained that while mature TEMS areas like chart abstraction are seeing meaningful margin improvement, a newer, smaller TEMS offering in ambulatory operations is still on a learning curve, causing some near-term cost pressure. He affirmed that the company is focused on providing client value first before fully optimizing the cost structure in this new area.

Richard Close asked for a breakdown of the building blocks for projected accelerated growth, beyond the known tailwinds from the rate notice and 4-star rating. He also questioned the growth runway in New Jersey versus expansion to new markets and requested more detail on the newly established CA-enabled affiliate entity.

Answer

CFO Peter Kuipers detailed growth drivers including improving cohort economics, SG&A leverage, and the impact of the Clover Assistant technology roadmap. CEO Andrew Toy added that the move to a 4-star payment year provides a competitive advantage. Regarding New Jersey, Toy stated there is 'plenty of room to run' despite their current market share. Kuipers clarified the affiliate entity aims to improve care quality via care coordination and management, which impacts the BER comparison.

Richard Close asked for the specific migrant revenue figures for Q4 and the full year 2024 to verify if the core business met its target. He also questioned the recurring nature of unexpected insurance costs and asked about the necessity of ongoing investments, wondering if future contract wins would require similar upfront spending. Finally, he inquired about the long-term growth outlook for the transportation business.

Answer

CEO Lee Bienstock stated Q4 migrant revenue was approximately $55 million and full-year was about $370 million, confirming the base business hit its $240-$260 million target range. CFO Norman Rosenberg addressed the insurance costs, stating that as the captive insurance program matures, reserving becomes more conservative. Lee Bienstock explained the company is shifting its pipeline focus to "evergreen" opportunities, like veteran care, which require less "start and stop" investment. He also targeted 15% growth for the transportation business.

Richard Close inquired about the financial impact of a terminated disposable supply contract, the remaining headwinds from capitated contract shifts, and the expected timeline for achieving margin improvements, including the 25% adjusted EBITDA margin target.

Answer

CEO Gregory Crawford clarified the terminated contract represents a ~$2.5 million headwind for calendar 2025. CFO Hardik Mehta detailed that the remaining impact from capitated contracts would be weighted towards the first half of the year, but confirmed most major headwinds are now in the past. Regarding margins, Hardik Mehta stated the immediate goal is stabilization with potential for increases tied to revenue growth, positioning the 25% adjusted EBITDA margin as an achievable long-term target, though not expected in the next three quarters.

Richard Close of Canaccord Genuity inquired about the outlook for Q4 sequential growth, the discrepancy between flat revenue and rising patient metrics, and the timeline for returning to the 8-10% organic growth target. He also asked about historical precedents for gaining market share from competitor M&A and the future trajectory of bad debt expense.

Answer

CEO Gregory Crawford and CFO Hardik Mehta addressed the questions. Mehta explained that flat revenue despite higher volumes was primarily due to the Medicare 75-25 rate cut, meaning the same services were delivered at a lower price. Crawford confirmed that lapping the 75-25 impact and a lost Med Advantage contract are key to returning to the 8-10% organic growth target. He also noted that Quipt has historically seen market share opportunities arise from competitor M&A dislocation. Regarding bad debt, Mehta attributed the temporary rise to 5% to the Change Healthcare incident and expects it to normalize in subsequent quarters.

Richard Close of Canaccord Genuity asked if there were any commonalities among the few client losses this year and whether members from new health plan partnerships exhibit different utilization patterns.

Answer

CEO Pete Anevski stated there were no commonalities among the 5 client losses, with reasons varying and including events like parent company M&A. He and President Michael Sturmer clarified that health plans act as go-to-market partners and there are no structural differences or observed changes in utilization for members onboarded through a partner versus a direct employer sale.

Asked for more detail on the three reasons for the lowered revenue guidance, their ranking by impact, and whether the company is seeing pricing pressure in the advocacy business.

Answer

The guidance change was a strategic choice to de-risk profitability goals by reducing less efficient marketing spend. The primary impacts, in order, are: 1) slowing growth expectations for the direct-to-consumer PlushCare business, 2) reducing spend to drive usage-based platform-connected revenues (like EMO and virtual primary care), and 3) maintaining pricing discipline and not chasing large deals with aggressive, low-margin pricing profiles. Overall market pricing is described as relatively steady.

Asked for details on the 16% to 21% revenue guidance, specifically what factors contribute to the low end of the range and whether Trusted Partner Ecosystem (TPE) revenue is recurring.

Answer

The guidance range reflects the company's strong growth drivers (ARR, D2C, platform-connected revenues) while accounting for variability in usage-based and D2C revenues. The company also raised its profitability guidance, signaling a commitment to making smart trade-offs between top-line growth and bottom-line results to ensure they achieve their goal of being a profitable business.