Veradigm (US:MDRX)2020-08-02 06:50Financial Data and Key Metrics Changes - The company generated $188 million in new bookings during Q2 2020, demonstrating resilience despite the pandemic's impact on the global economy [6][26] - Revenue for the quarter was $406 million, down $11 million from Q1, primarily due to COVID-19's effect on patient volumes [26] - Non-GAAP earnings per share for the quarter were $0.18, exceeding last year's second quarter despite a $39 million year-over-year revenue decline [30] - Consolidated non-GAAP gross margins increased by 150 basis points sequentially, and adjusted EBITDA margins increased by 530 basis points sequentially [28] Business Line Data and Key Metrics Changes - The core clinical and financial solutions segment, which includes EHR software and services, comprises about 77% of total revenue [32] - The data, analytics, and care coordination segment accounts for 21% of total revenue, focusing on higher-margin growth opportunities [32][35] - Recurring revenue remained at 82% of total revenue, consistent with Q1 2020 [27] Market Data and Key Metrics Changes - Patient volumes and elective surgeries rebounded strongly in June and July, reaching 80% to 90% of pre-COVID levels [16] - Claim volumes in the Payerpath ambulatory claims clearinghouse business dropped to 60% of normal in April but recovered to approximately 80% in June [28] Company Strategy and Development Direction - The company is focused on assisting clients during uncertain times, leveraging a diversified portfolio to capture new opportunities [22] - A strategic partnership with Microsoft was extended for five years to enhance cloud-based solutions, aiming to improve cybersecurity and organizational effectiveness [19][20] - The company is actively pursuing international growth opportunities, viewing the core business outside the U.S. as a growth area [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of client operations and the stabilization of financial situations due to government relief programs [17][18] - The company is positioned to benefit from increased investments in solutions that improve clinical outcomes and financial performance as clients recover [18] - Management highlighted the importance of adapting to new sales processes during the pandemic, including virtual demonstrations of products [70] Other Important Information - The company recorded a restructuring charge of $28 million in Q2, primarily related to severance costs as part of a margin improvement plan [29] - The EPSi business unit was sold for $365 million, representing a significant strategic move to strengthen liquidity [33] Q&A Session Summary Question: What changes have occurred regarding cost reductions and margin improvement? - Management noted substantial improvements in EBITDA margins and highlighted ongoing initiatives to enhance cost efficiency across various operational areas [46] Question: How does the company view growth in the new segments post-COVID? - Management indicated that different growth drivers exist in the core clinical and financial solutions segment compared to the data analytics and care coordination segment, with the latter expected to have more significant growth opportunities [50][55] Question: What is the strategic rationale behind the EPSi sale? - The decision to sell EPSi was based on a portfolio review, assessing strategic importance and competitive positioning, alongside capital and liquidity needs [66] Question: How is the company adapting its sales process during COVID? - Management emphasized the shift to virtual sales processes and the effectiveness of remote product demonstrations, which have become a common practice across the industry [70]