CareCloud Inc (CCLD) 2017 Q3 法說會逐字稿

Good morning, and welcome to the MTBC Third Quarter 2017 Earnings Conference Call. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Shruti Patel, General Counsel. Please go ahead.

Thank you. Good morning, everyone. Welcome to the MTBC 2017 Third Quarter Conference Call. On today's call are Mahmud Haq, our Chairman and Chief Executive Officer; Steven Snyder, our President and a Director; and Bill Korn, our Chief Financial Officer.

Before we begin, I would like to remind you that certain statements made during this conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended.

All statements other than statements of historical fact made during this conference call are forward-looking statements, including, without limitation, statements regarding our expectations and guidance for future financial and operational performance, expected growth and business outlook.

Forward-looking statements may sometimes be identified with words such as will, may, except -- expect, plan, anticipate, upcoming, believe, estimate or similar terminology and the negative of these terms.

Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements.

These statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise these forward-looking statements in light of new information or future events.

Please refer to our press release and our reports filed with the Securities and Exchange Commission, where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward-looking statements.

Finally, on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our third quarter 2017 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results.

With that said, I'll now turn the call over to the Chairman and CEO of MTBC, Mr. Mahmud Haq. Mahmud?

Thank you, Shruti. Thank you for joining us on our third quarter 2017 call. We are pleased to report revenue of $7.5 million for the third quarter. This represents growth of 50% over the first 9 months of 2016. We have achieved this growth through successful integration of our MediGain acquisition and the ramp-up of our new sales organization.

Our year-to-date organic sales bookings have already exceeded our full year booking from any prior year, and we expect a strong finish during the balance of 2017.

As we have grown our revenue, we have also expanded our margin. We are reporting adjusted EBITDA of $609,000 for the third quarter, the highest in our company's history, and an increase of 368% over the same quarter in 2016.

Also, our non-GAAP adjusted operating income was $356,000 during the third quarter, representing our second consecutive quarter of positive non-GAAP adjusted operating income. Our non-GAAP adjusted operating margin was 4.7%, a record since we've been a public company.

In addition to significant revenue growth and profit improvement, we are pleased to report that our balance sheet has never been stronger. Since our last earning call, we have fully repaid our $10 million credit facility with Opus Bank, 2 years earlier than the original maturity date.

We also have paid Prudential the entire remaining balance of $5 million plus interest that was owed for our MediGain acquisition. This debt repayment, combined with our strong financial performance, enabled us to secure a $5 million line -- revolving line of credit with Silicon Valley Bank to support our future growth.

I would like to turn the call over to our President, Steve Snyder, who'll take you through the details of our third quarter performance. Steve?

Thank you, Mahmud. Good morning, everyone, and thank you again for joining today's call.

Throughout this year, we've discussed our commitment to certain key objectives, including ramping up our business development team and enhancing our industry-leading platform to support continued growth. We've made great progress in both areas and I look forward to addressing both in turn.

First, with regard to business development, while we have spent less than 4% of our revenue on sales and marketing so far this year, we are generating more than $3 of annualized revenue for every $1 spent.

Our strategy of building lead-generating relationships with other industry stakeholders and increasing our visibility at industry trade events has enabled us to sign much larger groups and achieve a record year of new sales bookings.

In view of the strong return on our investment, we intend to further increase our sales and marketing activities during the year ahead.

Second, as to platform enhancements, we are very pleased by the early success of the newest components of our solution. For example, during the first 60 days of our talkEHR rollout, more than 250 providers practicing across 44 states in more than 4 unique specialties and subspecialties signed up for talkEHR.

While talkEHR is offered free of charge to U.S. health care providers, we also offer a premium billing upgrade at a very competitive price point. We've already seen a few of our early EHR adopters select our premium billing solution.

Throughout the fourth quarter and beyond, our team will remain focused on driving additional sign-ups for talkEHR, promoting comprehensive use of this innovative platform and upselling talkEHR users to our premium billing solution.

Separately, our newly launched EnrollmentPLus SaaS solution achieved an exciting key milestone with the recent signing of an important new customer, one of the nation's top 10 insurance carriers.

EnrollmentPLus, which is an outgrowth of our successful clearinghouse solution is designed to automate the processing and validation of group insurance enrollments.

Our new EnrollmentPLus solution will represent approximately 1% of our revenues during the fourth quarter of 2017, and we believe that it has the potential to be a much larger revenue driver in 2018, as we continue to demonstrate proof-of-concept, increase the revenue from our newest customer and sign additional large customers to this unique SaaS platform.

I'll now turn the call over to a Bill Korn, our Chief Financial Officer, to provide you with a detailed review of our third quarter and year-to-date financial results. Bill?

Thank you, Steve. We are pleased to report that revenues for the third quarter of 2017 were $7.5 million, an increase of 41% compared to $5.3 million in the same period last year.

The increase was primarily due to the MediGain acquisition. The 50% growth number that Mahmud mentioned, was the growth in year-to-date revenue, both are great numbers and we're proud of the results of our efforts.

Our third quarter 2017 GAAP net loss was $980,000 or 13% of revenue, an improvement of $714,000, compared to a net loss of $1.7 million in the second quarter of 2017.

The GAAP net loss in the third quarter was largely a result of noncash amortization and depreciation expenses of $664,000 as well as $463,000 of noncash financing costs, which were written off as a result of the early termination of our Opus credit agreement.

The $714,000 improvement in our GAAP net loss from last quarter was primarily due to a $780,000 reduction in amortization expense.

When we acquire businesses, the tangible assets are typically small, so most of the value is assigned to customer relationship intangible assets, which we amortize over 3 years.

We purchased Omni Medical Billing Services, Practicare Medical Management and CastleRock Solutions in July of 2014 at the time of our IPO, and the intangible assets from these acquisitions were fully amortized by the end of June.

Our amortization expense was reduced by 61% during third quarter and will reduce even further in future quarters, with small reductions each time we completely amortize additional intangibles from other acquisitions.

The GAAP net loss for the third quarter 2017 was $0.14 per share, calculated using the net loss attributable to common shareholders divided by the weighted average number of common shares outstanding.

Non-GAAP adjusted net income for third quarter of 2017 was negative $319,000 or negative $0.03 per share compared to the adjusted net income of negative $208,000 in the same period last year. The decrease was primarily due to the $463,000 of noncash financing costs. Non-GAAP adjusted net income per share is calculated using the end of period common shares outstanding.

Our third quarter 2017 GAAP operating loss was $275,000 or 4% of revenues, which represents an improvement of $1.1 million or 80% from the $1.4 million operating loss in our prior quarter. The GAAP operating loss also benefited from the $780,000 reduction in our amortization. GAAP operating loss excludes the provision for income taxes, net interest expense and other income and expenses, which are included in the GAAP net loss.

Non-GAAP adjusted operating income for the third quarter was positive $356,000 or 5% of revenue. The third quarter 2017 adjusted operating income represents an improvement of $207,000 from the $149,000 adjusted operating income in our prior quarter.

This is our second consecutive quarter of positive non-GAAP adjusted operating income, which excludes noncash expenses, such as $419,000 of amortization of purchased intangible assets and $126,000 of stock-based compensation expense, as well as $85,000 of integration and transaction costs associated with recent acquisitions. This reflects the fact that our businesses is now at a scale where our revenues exceed our cash operating expenses.

Adjusted EBITDA for the third quarter 2017 was $609,000 or 8% of revenue compared to adjusted EBITDA of $130,000 or 2.4% of revenue in the same period last year. The third quarter 2017 adjusted EBITDA represents an improvement of $141,000 from the $468,000 of adjusted EBITDA in our prior quarter, reflecting the significant cost savings we have achieved.

Third quarter adjusted EBITDA increased by $479,000 or 368% from third quarter 2016, and represents the highest quarterly adjusted EBITDA MTBC has achieved in our 15-year history.

Since our business now has a higher scale, we were able to spread our fixed expenses over a larger revenue base and generate larger adjusted EBITDA than we ever have before.

The difference of $1.6 million between adjusted EBITDA and the GAAP net loss in the third quarter of 2017 reflects $664,000 of noncash amortization and depreciation expense; $673,000 of net interest expense, of which $463,000 was noncash financing costs, which were written off as a result of the termination of our Opus credit agreement; $126,000 of stock-based compensation; $85,000 of integration and transaction costs related to recent acquisitions; and $65,000 of provision for taxes.

As Mahmud mentioned, our revenues for the first 9 months of 2017 were $23 million -- $23.5 million, an increase of 50% compared to $15.7 million in the same period last year. The increase was primarily due to the MediGain acquisition.

For the first 9 months of 2017, the GAAP net loss was $5.4 million compared to a GAAP net loss of $4.8 million in the same period last year. The GAAP net loss is largely a result of noncash amortization and depreciation expense of $3.6 million, as well as $570,000 of interest plus $673,000 of noncash financing costs, and restructuring charges of $276,000 recorded during the first quarter of 2017, related to closing our offices in Poland and Bangalore, India, and shifting the work to our teams in Pakistan and Sri Lanka to gain operating efficiencies.

Adjusted EBITDA for the first 9 months of 2017 was $763,000 or 3.2% of revenue, a 267% increase compared to adjusted EBITDA of $208,000 or 1.3% of revenue in the same period last year.

As of September 30, 2017, the company had $2.8 million in cash and positive working capital of approximately $913,000, a $5 million improvement from the working capital deficiency of approximately $4.1 million reported at the end of second quarter.

The company raised gross proceeds of $7.9 million from the sale of approximately $315,000 additional shares of our nonconvertible Series A Preferred Stock via 4 small public offerings during the quarter. This was in addition to the approximately $7.4 million raised from the sale of approximately 295,000 shares of series A preferred stock sold in June.

These shares trade on the NASDAQ Capital Market under the ticker MTBCP and pay monthly cash dividends at the rate of 11% per annum.

The cash cost associated with our Series A Preferred Stock is far less than most businesses pay for term debt. Term debt is typically repaid over 3 to 4 years, so the cash used is 25% or 33% annually on top of the interest rate, as compared to a total cost of only 11% per year for our Series A Preferred Stock.

Our Series A Preferred Stock is perpetual, has no mandatory redemption, although the company can choose to redeem shares at $25 per share starting in November 2020. So our cash cost is much lower, and there are no restrictive covenants.

The company used a portion of the net proceeds of these offerings to repay in full our term loans outstanding with Opus Bank, which were approximately $7.3 million as of December 31, 2016. In addition, the company paid Prudential Insurance approximately $5.3 million, which covered the remainder of the purchase price from our acquisition of MediGain plus interest.

In early October, MTBC entered into a new revolving credit facility with Silicon Valley Bank and repaid and terminated our revolving credit facility with Opus Bank. The Silicon Valley Bank credit facility is a $5 million secured revolving line of credit, where borrowings are based on a formula of 200% of repeatable revenue, adjusted by an annualized attrition rate as defined in the agreement.

Under the Silicon Valley agreement, the amount currently available to the company to be borrowed is in excess of $4 million. The SVB credit facility can be used for growth initiatives, including acquisitions with SVB's approval.

Based on MTBC's current financial position, the fact that our operating losses are dramatically reduced, our adjusted operating income and adjusted EBITDA are positive and our cash flow from operations is anticipated to be positive, we are very pleased to no longer be including the going concern disclosure, which we included in our previous 10-Qs. We now have a solid financial foundation, which leaves the company well-positioned for growth.

That concludes my review of MTBC's financial results and I'll now turn the call over to our Chairman and CEO, Mahmud Haq.

Thank you, Bill. We have had a record quarter and we are well-positioned to build on our success as we finish 2017 strong and prepare for an exciting 2018. We look forward to giving you future updates on our progress as we move forward.

We appreciate the support of our shareholders and extend our thanks to all of our team members and their hard work and great results. Finally, we thank our health care provider customers for trusting us to help manage their practices.

We will now open the call to questions. Operator?

(Operator Instructions) The first question comes from Keay Nakae of Chardan.

First question is related to revenue retention. In Q3, we saw about a little less than $300,000 sequential decline from your Q2 revenues. So talk about what the revenue retention is looking like especially at MediGain.

Thanks, Keay. So we're very pleased that our revenue retention and our client retention has been very strong for the MediGain acquisition. We typically estimate that we're going to lose 1% a month of clients. And we found this typically in companies that we thought about buying, we've seen these numbers. When we look at competitors, we see these numbers. And I'm very pleased to say that during third quarter, that was roughly our -- the attrition rate that we saw from clients during Q3. Now remember that revenue during Q3 probably has very little to do with client loss during Q3. Probably more to do with client loss during Q2, since we only recognize revenue after we process claims, submit them to insurance, insurance determines what they're going to pay and then actually remits cash to the doctors. We also saw a little bit of revenue decline that was unrelated to clients. It's hard to know exactly what caused that. I know when Jonathan Bush gave his earnings call at athenahealth a couple of weeks ago, he mentioned the 2 hurricanes, he mentioned uncertainty related to Obamacare. We don't have direct information to tell us exactly what's caused this. But I'd say, our third quarter revenue was a little bit lower than we would have predicted based on clients that we had and our client retention.

Okay. So for the full year 2017, your previous guidance was $31 million to $32 million. Is that still a good guidance? Or are you changing that?

Yes. We are -- we've decided we're not going to explicitly confirm or reaffirm guidance. But right now, I'd say, there's nothing that would cause us to change the expectation for revenue for the year.

Change the expectation from what you previously stated?

Right. No reason to change the expectation from what we previously stated.

Okay, very good. In terms of operating expense, continue to see nice reductions, especially on the G&A side. So as we move into Q4, are we -- based on the Q3 results, are we -- have we pretty much wrung out the cost? Or is there anything additional we might see in Q4?

I guess, I'd say that we tend to look at ways to reduce cost without hurting service every single day. So clearly, the lion's share of costs have been reduced and consolidating our offshore operations in 2 locations has certainly helped. But there are both opportunities to reduce the expense. And also, there's the upside of additional revenue comes on board from clients that -- new organic clients that we've signed during the first 9 months, where you don't see that revenue fully reflected in Q3. You'll see some of that revenue coming on in Q4 without any appreciable increase in expenses.

Okay. And then just a final question on what we should be thinking about for interest expense going forward. What's the total amount of borrowing under the revolver? And so, what should -- given the rate on that, what should we be thinking about interest expense going forward in the near term?

So interest expense will be down from -- for several reasons. Right now, the amount of borrowing -- again, it's a revolver, so it tends to go up and down near the beginning of the month. It's a few hundred thousand dollars as we pay payrolls that are due at the first week of the month. And as we start sending out invoices, as we start collecting from clients, you may see that revolver completely repaid for a portion of the month. But the amount borrowed will be measured in hundreds of thousands of dollars. As opposed to the first 9 months of the year, we're typically -- we were fully borrowed on our $2 million revolver. We started the year with $7 million dollars of term debt, and in addition, we had $5 million of debt from Prudential. So all the term debt's gone, all Prudential debt is gone. The accounting for the interest expense also included -- with Opus capitalizing a fair amount of loan origination cost that were amortized over the full year life of the loan. And again, because we were able to pay that off after 2 years, we had to essentially write off that $463,000 during Q3. So that's all gone. So I think you should be looking at much, much reduced interest expenses going forward.

And what's the rate on the SVB LOC?

So the rate right now is prime plus 1.75%.

The next question comes from Kevin Dede of H.C. Wainwright.

Bill, just to go back on some of the questions that Keay had on third quarter revenue, and appreciate the color that you offered on athena. I was just wondering if maybe there -- that you've seen any seasonality? Or is it still kind of tough to tell given MediGain hasn't been in the full year?

The seasonality impact that we typically see, which, again, I think others in the industry see as well, tends to relate to -- more to first quarter. What we see in first quarter is that a lot of people have deductibles and more and more people have high deductible plans. So when you go to the doctor, we submit the claim to insurance as it's fully covered. Instead of the insurance company remitting a check, they send an explanation of benefit saying that you, the patient, need to write a check for the remaining money. And unfortunately, the average patient doesn't write their check instantly the day the EOB arrives in the mail, and we only recognize revenue when the actual payment is made. So that tends to be a phenomena that hits Q1. And it hits, to a small extent, throughout the year. But of course, with deductibles, they're all on calendar-year basis. There's a little bit of seasonality. For example, the number of days that people are seeing doctors goes down with July 4 or Labor Day or whatever other holiday. And the number of days that insurance is actually processing claims, again, changes by 1 or 2. And again, I was amused to hear athena relate to the fact that there was 1 less day in third quarter of 2017 than there was in the third quarter of 2016 and used that as a rationale. I'd say, for us, that's sort of in the noise. So it's kind of hard to look at external factors like that and say that explains the revenue.

Right. Yes, fair enough. So athena also mentioned the hurricanes. And I was wondering, if you could see sort of specific changes based on geography, specifically Southern Texas and Southern Florida.

We actually saw lower revenue in Texas and Florida. I would say Florida, in particular, was a bigger decrease than we would have expected. And again, it could be the hurricane, but we don't really know. So it is certainly possible. Again, I would say, if you were seriously in need of medical attention, you probably figured out what you were going to do with or without the hurricane. I'd say, it's too hard for us to really blame something at this point.

Right, right, right. But I guess if -- right, if something was sort of just subjective or not critical, you might have not chosen, right? I guess, that's one way -- another way to look at it.

Absolutely. Right. There certainly could've been people who didn't see the doctor in Florida. And again, we saw a little decline in Texas -- both Florida and Texas. The quarter-over-quarter decline was bigger than it was in the rest of the country. So it's certainly possible that, that accounted for some amount. But again, it's going to be hard for me to give you a number because it's probably not statistically significant.

Okay, fair enough. So just back to the $31 million to $32 million. You're saying that it's okay, but you don't you really feel comfortable officially affirming your guidance. I guess, I -- if you could offer just a little more clarity on your stance just so I have an understanding of your thinking.

Yes. I think one thing we want to be conscious of is that there's -- when I look at revenue in Q3 and I look at Q4 so far, Q4 looks very strong. But not being able to say exactly why Q3 did what it did, I'd say, in particular when I think about the revenue, the revenue to me seems to be pretty clear that it's going to at least hit the bottom of the range. The EBITDA has a range and, while we feel really good about it, I would say, it's a little bit closer call. And we concluded that it was hard to be affirming one and being silent on the other. And so we decided the right official stance here is to say we're not really going sort of get into quarter-by-quarter affirming things. But again, when you look at the -- where we are year-to-date, I don't really see jeopardy on the $31 million number.

Okay. Just for a little bit more background on how you're looking at it and what you think you might speak to -- on this to investors going forward, I'm wondering when it comes time to report the fourth quarter, do you think you'll look at full year '18 and feel that you'll have had sufficient time to figure out what happened in the third quarter to offer guidance for the full year? Or how do you think we should think about that?

I don't think we fully made up our mind yet. Again, I think we've had people say to us that if we were 10x or 100x the size, giving this kind of guidance makes sense. But that we are really small for a company to be providing guidance. But being small doesn't necessarily stop us from doing these things anyway.

Wait, wait, wait. I mean, I think part of the message you might want to think about communicating is just the recurrence in revenue and the confidence that you have in that.

Yes.

All right. So since you're still handling a bunch of questions, so could you just help me understand the $2 million that's on the balance sheet as of the end of September? Is that Silicon Valley or I -- caused I just lost track of the timing?

Yes. Yes, so end of September, we had repaid all the term loans from Opus Bank during September. We had an agreement. We got a term sheet signed with Silicon Valley. But we knew that we were a week or 2 away from completely closing Silicon Valley, so we left the revolver. Remember Opus had a $2 million revolver and $8 million of term debt, so we left that revolver sitting there with Opus on September 30, knowing that a week or 2 later we would close on Silicon Valley. And as part of the closing, there would be a payoff to Opus. And so we thought that was a simpler mechanism to just let that happen. And while it would've been great to have closed SVB in September, so much happened with other financing that we were sitting there down to the end of the quarter and it didn't really make a difference that it waited until October 13. So that 2 that was outstanding on September 30 with Opus, that was all repaid in full on -- actually, some of it was repaid in the first week of October and the remainder was repaid in full at the time that we moved over to Silicon Valley on October 13.

Okay, fair enough. So if you were to look at the balance...

Recognize there'a a lot of ins and outs, a lot of moving pieces.

Right, right, right. So I apologize for not keeping the time line straight. But I do remember seeing the press now that you've mentioned it. So thanks for that, thanks for the review. Just curious if you can speak to the...

No apologies.

Yes. But just curious if you could speak to the -- if you were to look at the balance sheet now, is SVB holding any debt?

So today, there's about $700,000 outstanding. And again, on the first of the month, we're typically sending wires overseas because our non-U.S. payroll happens on the 5th of each month. So we are typically drawing near the end of the month, so that we've got the cash to send overseas. And then as we get to the first and the second of the month, we're sending out the invoices for the prior month, and it takes some number of days for those invoices to hit clients. So typically, we start seeing the cash coming in roughly a week or so later. So therefore, the first week of each month, we're typically drawing on the revolver.

Okay, okay. Got you. Steve, if you wouldn't mind, could you just help me get my arms around the 254 that you had on talkEHR and maybe relate that to the overall total client base that you have? And what sort of feedback you're getting and then maybe some insight on how you see the balance of your base looking at it and maybe adopting it?

Sure, we'd be happy to. Thanks for the question, Kevin. So with regard to talkEHR, when we look at the practices who have signed up. Again, more than 250 in the first couple of months of the launch, so we're real excited by that. Roughly 2/3 of those practices are in primary care. They tend to be smaller groups, which is really our target market for the EHR. And one of the interesting phenomena we've seen is, as we've seen other players in the industry that have business models that are more reliant upon the sale of standalone software solutions, we've seen them, especially during this quarter, begin to really struggle from a growth perspective; while a lot of the meaningful use, incentives, those dollars are -- have since passed for the most part. So the stimulus from the government that supported the growth of -- or the purchase of more expensive systems is really, for all intents and purposes, done. So what we've seen is really, I think, the same thing that our competitors have seen, which is a growing reluctance to invest large amounts in EHR. And instead, a focus on finding a solution that's intuitive, that's easy to use, that's interoperable and connected to a larger practice management suite of the practice. So we really think that this solution has come at exactly the right time. And again, our strategy involves being able to upsell a certain segment of that user base as we continue to grow that user base to our billing solution, our integrated billing solution. We're real excited to see some success in that. I would say just kind of even separate and apart from that, if we think about this quarter even more broadly from a growth perspective, we've also seen some pretty exciting things happening on 2 different fronts. One would be the EnrollmentPLus, which is our newest Software-as-a-Service, SaaS, solution. And that EnrollmentPLus, we had 1 of the 10 largest insurance carriers in the country sign up as a client, as a user of that solution, which we really think is a validation that we're on the right path, that we've really identified a need in the market and we've found and developed a solution over the last 5 quarters that is a great fit for addressing that need in the market. That first client -- the first large client has signed up, again, represents -- will represent roughly 1% of revenue for the fourth quarter. As we look at 2018, what -- we believe that that client actually represent perhaps two- or three-fold that as a percentage of the overall revenue mix. And as we continue to have additional proof-of-concept and continue to move forward with other opportunities that we have in our sales pipeline relative to the solution, we really think that they could play a very important part of our revenue story going forward into next year. And I think a third key thing would be the real success of our business development efforts. As you know, Kevin, really prior to the last year, our focus from a growth perspective was almost exclusively on acquisitions. And while we continue to see opportunities and we look forward in 2018 to pursue additional acquisitions, we've really been building out an organic road team that has really helped us grow during this last year. And for every $1 invested in that sales and marketing team, we've seen $3 of annualized revenue signed in new relationships. They've done some exciting things so far this year. There's larger accounts. Unlike the smaller accounts, larger accounts take longer to ramp up. So that revenue for many of those accounts has really -- has been ramping up towards the end of the third quarter. And we'll see the ramp-up, we believe, in the fourth quarter for some of those larger groups. But frankly, we still think we have a potentially exciting end of the year from an organic growth perspective as we look at our opportunities. So really, we see those as the 3 of the exciting things that are happening from a growth perspective. And to your question before, as we talked about, our fourth quarter results, our full year results, we look forward to really providing guidance in terms of continued growth and margin expansion throughout 2018.

Okay. Fair enough, Steve. But back to your third point on the organic growth initiatives, I'm wondering if you could just offer a little more color on talkEHR and maybe how your customers are viewing it, and maybe a little more insight on their road to acceptance. And then maybe any insight that you can offer on a competitive -- and how it stands as a competitive differentiator, especially against some of the, well, I guess, right, many of your client competitors are really sort of doing things and how. So I'm just kind of wondering if you can talk to how that sales and marketing effort might be making the talkEHR capability that you developed more broadly known.

Sure. I'd be very happy to do that. First, with regard to our existing client base. As of today, the overwhelming majority of our existing client base continues to be leveraging our legacy platform, the web EHR application. So the majority of our existing billing user base continues to be leveraging that platform today, and that's really by design. At this point, that's -- that application has been -- it was first launched about a decade ago, was one of the top-ranked applications for our target market of 1 to 10 providers. And many of those practices are really built their workflow around that particular application. So that's with regards to the existing client base. Over time, they'll migrate to talkEHR as we go into 2018. But the majority of those practices are continuing to use the application that they've become accustomed to over years of usage. With regard to the new clients who are using talkEHR, really from a differentiation perspective and how it compares to the competition, we've really designed it with usability as really being the key component of it. And being able to leverage voice and converting voice-to-text both for populating the fields within the EHR and also for navigating the EHR. That's something that consistently we see in a recent broad-based study of a -- survey of EHR users throughout the country. One of the consistent themes that interestingly enough came across, was that providers are looking for a solution that's easy to use, that's nimble, and that's really what we've developed. From a cost perspective, absolutely, of course, really can't beat the cost. The overwhelming majority of our competition is charging for their EHR, and it's our belief, and I think even the competition has acknowledged this in their quarterly earnings calls to one extent or another, that the industry has -- that the user-base providers have become fatigued with this notion of making heavy investments in the health care IT infrastructure and instead looking for a solution that melds together the clinical components of the practice with the collections of the practice since the 2 are -- as we move forward, are more and more intertwined in terms of levels of reimbursement. Our application does that and our business model, again, ties our revenue to a percentage of the practices collections once they're using billing. So that further aligns our interests.

Last question for me is just on the EnrollmentPLus that you mentioned. Could you offer a little insight on how -- I guess, how the insurance companies view it? What's -- I guess, what's the incentive for them and maybe a little bit on how you're marketing that? So I guess, the sales, the link to sales process and how long it took that one big provider to come over.

If we think about the clearinghouse more broadly within the health care industry, and if we go back 2 decades, the overwhelming majority of the claims were submitted to insurance carriers on paper. The claims were received by paper, were processed manually. And then the checks were cut manually. And the adjudication of the communications back and forth between health care providers and insurance companies were done by paper. It was a labor-intensive, expensive undertaking for both the health care provider or the billing company on one end of the transaction and the insurance company on the other end of the transaction. Over the last 20 years, the clearinghouse industry has been built up and now it's -- for the overwhelming majority of transactions, there's a clearinghouse between the health care provider or billing company on one end of the transaction and insurance company on the other end of the transaction. What that clearinghouse does is it significantly reduces the cost of both participants of the transaction by trading a standardized format and approach, by automating that and it also increases the speed and reduces the error rate. We see a similar opportunity in the group insurance enrollment process, which is really the -- primarily the enrollment group insurance plans between employers and between insurance companies, a whole variety of different types of insurance enrollments. Today, that's done manually. To the best of our knowledge, there is not another similar application in the industry that's doing something similar to what we're doing. There are players who are trying to do components of this. But we believe we built something pretty unique that bridges that gap and acts as the conduit between the employers on one end, the insurance companies on the other. And we think we have the opportunity to do the same thing for both the insurance companies on the one end of the transaction and employers on the other, which is to significantly reduce the expense to speed up the overall process and to create a streamlined approach that allows a carrier to move away from paper manual processing to an automated one-to-many connection. So I think that as the insurance companies are looking at the solution, they look at it and understand, like our insurance company client that we spoke about before, that there's a significant opportunity to reduce cost, to speed up the overall process and to reduce significantly the error rate in the enrollment process. So I think that's the key driver from the insurance company's perspective in terms of looking for a solution like ours. The sales process is a longer sales process. This first client has been in the pipeline for probably about 4 or 5 months. What our team has done in terms of building the connections within the industry and also helping to develop our product is our EnrollmentPLus team built a group that has met on an ad hoc basis, and it's comprised of representatives from some of the top insurance companies in the country, from employers and from others who have reviewed our product over the last year or so when it's been in development, they provided their input. So we've really built a solution largely around the feedback and the wish list of many of these potential customers. So those conversations with those potential customers who are involved in that process are ongoing. And we look forward to really continuing to develop additional proof-of-concept, continue those conversations that are ongoing with those potential clients, and really to grow the existing relationship as well.

Well, great, Steve. Thanks so much for the background there, very helpful. That color certainly adds a lot more depth to the win. So congratulations on that and congrats to all of you on the improved financials.

Thank you.

Thanks, Kevin. Thanks, Keay. We appreciate the great questions. And with that, I think we'll declare that our earnings call is over. We appreciate everybody taking the time this morning to listen to us. So thank you.

Thank you, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.