Atif Rahim - Head, IR Joe Flanagan - President and CEO Chris Ricaurte - CFO and Treasurer Gary Long - EVP and Chief Commercial Officer.

Charles Rhyee - Cowen Matthew Gillmor - Baird Steven Wardell - Chardan Capital Markets.

Good morning, my name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to the R1 RCM Q3 2018 Earnings Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Atif Rahim, Head of Investor Relations, you may begin your conference..

Thank you. Good morning, everyone and welcome to the call. We'll start with prepared remarks by Joe Flanagan, President and CEO; and Chris Ricaurte, CFO and Treasurer. We will then turn it over to Q&A.

Today's conference call is being recorded and as a reminder, certain statements made during this conference call may be considered forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

In particular, any statements about our future growth plans and performance including statements about our forecast for 2018 and 2020, our ability to successfully implement new technologies, expected uses of cash, expected benefits from the Intermedix acquisition, expected timing of new business deployment, and expected new business are forward-looking statements.

These statements are often identified by the use of words such as anticipate, believe, estimate, expect, intend, designed, may, plan, project, would and similar expressions or variations.

The forward-looking statements made on today's call are based on R1's current expectations and projections of our future events as of today only and should not be relied upon as representing the company's views as of any subsequent date.

Subsequent events and developments including actual results or changes in our assumptions may cause our reviews to change. While we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law.

Investors are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements made on today's call involve risks and uncertainties.

Our actual results and outcomes could differ materially from those included in these forward-looking statements as a result of various factors, including but not limited to the factors discussed under the heading Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017. Now, I'd like to turn the call over to Joe..

Thanks, Atif. Good morning, everyone and thank you for joining us. We are pleased to report another strong quarter driven by continued underlying momentum in our business. Revenue of $250.4 million was up $127.2 million over the last year and adjusted EBITDA of $20.4 million was up $17.3 million.

These strong results were driven by continued execution of our customer onboarding process and growth in our contracted book of business.

From a commercial and operational execution standpoint, I'm pleased to say our team has done an excellent job staying focused on performance at existing customers while signing and onboarding a substantial amount of new business this year and at the same time, integrating the Intermedix acquisition.

We now expect adjusted EBITDA for the full year to be at the higher end of our $50 million to $55 million guidance range. The momentum we see in the business, both from execution of our current contracted book of business as well as the pipeline of opportunities is very encouraging. Let me take a moment to explain.

First, our current contracted book of business will not be fully mature in 2020. The customers we are onboarding now, in particular Ascension Medical Group and Presence/AMITA, which represents $6.5 billion in NPR will just be entering the 12 month deployment mark as we enter 2020.

This is relatively early in terms of profitability progression for our operating partner model, which projects steady-state or mature margin contribution at or near the three-year mark. So, we fully expect continued margin expansion and EBITDA growth beyond 2020.

Second, despite favorable end market dynamics, our guidance does not include any new operating partner wins. In line with my comments on the last call, we are in active discussions with large health systems and our pipeline of opportunities is robust. As such, we would expect this activity to translate into a new operating partner win in 2019.

Third, as a result of our Intermedix acquisition combined with the scale we are establishing via the Ascension, Intermountain, and AMITA physician wins in 2018, we are seeing increased traction with our value proposition in the physician market in particular with hospital affiliated physician groups and large independent physician groups.

Our ongoing conversations with customers and prospects give us increased confidence that our operating model is well suited to address the increasing complexity and financial pressures facing healthcare providers.

We see growing inclination by large complex health systems and physician groups to select an infrastructure partner to holistically manage their revenue cycle operations.

In addition to the opportunity for winning new business and gaining market share, we view this favorable backdrop as an opportunity to drive continued innovation and further differentiate our offering. On our last call, we talked about the broad-based opportunity to automate the revenue cycle.

Despite significant effort and investment by point solution vendors and core EMR financial system vendors to automate revenue cycle processes, we estimate that 80% of revenue cycle costs continue to be labor-related.

The vast majority of these costs consist of individuals at provider access points, distributed back office locations or within centralized shared services centers. A significant portion of tasks are transactional in nature and performed manually. This is not unique to R1, but pervasive in the industry.

We believe we have a unique opportunity to leverage our scale, operational control and expertise to automate these tasks. With that as a backdrop, I'm pleased to announce that we are launching a digital transformation office or DTO to systematically automate our transactional environment on an end-to-end basis.

This office has been established with strong, dedicated internal talent and best-in-class advisors, which allows us to scale our capability in a relatively short period of time.

As part of the launch of the DTO, we've conducted a detailed assessment of the digitization levers available to us and have determined that there are 3 with a high degree of applicability to our business.

The first is digitization of the patient and physician interface with the revenue cycle; the second is automation of manual tasks using Robotic Process Automation or RPA technology; and third using advanced analytics methods to improve complex revenue cycle processes such as denials via machine learning and predictive modeling.

Let's start with the patient and physician interface. Earlier this year, we launched our Patient Experience Platform, which is effectively a way to digitize patient and physician touch points with the revenue cycle via self-service technology. We've provided details on prior calls about the adoption and receptivity of this platform.

We are currently in early stages of scaling this capability across our customer base. As we do so, we continue to see adoption rates and other key performance indicators ahead of our initial targets.

We're also encouraged by our net promoter scores with this platform where patients typically rate their experience interfacing with our revenue cycle process at a 9 or 10 out of 10 more than 70% of the time.

With this automation effort, we expect to reduce our cost of operations, improve patient and physician satisfaction, and deliver enhanced financial results to our customers. The second pillar of our DTO is based on our view that a significant amount of repetitive manual tasks can and should be automated.

Two years ago, we started an initial effort to automate certain processes utilizing RPA technology. With the 100 plus automation routines or bots we have in production today, we are well beyond the proof-of-concept phase and are confident that RPA presents a significant opportunity for us to streamline our cost structure.

With this confidence in the applicability of RPA technology to our operations, yesterday, we announced a partnership with Automation Anywhere.

After a comprehensive evaluation of the RPA technology platform offerings relative to the specific needs of the revenue cycle, it's clear to us that Automation Anywhere provides the best platform to accelerate the development and deployment of automation at scale.

We intend to automate several hundred transactional processes over the next five quarters.

The first phase of our DTO program, which we expect to complete in early part of Q1 2019, involves a methodical, data-driven assessment of the entirety of our revenue cycle processes, the development of an executable pipeline of opportunities and the creation of dedicated infrastructure to accelerate implementation and innovation in this space.

A good example of our ability to drive further automation of the revenue cycle operations is to look at the interface with external payer systems.

While there are now many solutions in the market that offer automation for these interfaces to external systems through techniques such as screen scraping, rules engines and other methods, and we've explored partnerships with many of them, our observation is that they still leave an unacceptable amount of manual activity post implementation.

For example, take the pre-authorization process where we're exchanging authorization information back and forth with large national payers and technology is used to a varying degree to automate that exchange. Our experience observing a point solution vendor is an automation rate in the mid-40s.

By contrast, we currently exceed 70% automation with that same process and we're continuing to increase from there. In many cases, we believe we're able to double the automation rate we see from other technologies in the market. We're able to do this due to our control of the process as well as our operator-led product development approach.

With our control of the process, we have a full view of both transactions that are fully automated as well as transactions with additional automation opportunity. With our operator-led approach to product development, we have our operators working alongside developers to constantly drive higher and higher automation in a continuous improvement cycle.

Based on our work to date, this comprehensive approach to the digital transformation of our operations increases our confidence in delivering the high-end of our 2020 EBITDA guidance range. Our 2020 guidance has a few dependencies including environmental factors such as wage inflation, the reimbursement and environment, and patient volumes.

In the near term, digitization at a minimum protects us against headwinds that may arise from such environmental factors and increasingly presents an opportunity to exceed our mature profitability model targets.

Over the long term, we believe this investment coupled with our scaled infrastructure and delivery expertise creates a sustainable advantage versus competing offerings in the market. In the coming months and over the course of 2019, we will update you on the milestones we achieved and the associated benefits we derived.

In addition to our digital transformation initiative, we continue to drive forward with other technology efforts we've discussed in the past. I'm pleased to report that in Q3, we completed the development and launch of our next-generation integrated provider technology solution.

This solution, geared for the provider segment, now includes comprehensive coverage of the physician revenue cycle processes incorporating the best functionality from the historical Intermedix and R1 technology portfolios.

With complete coverage of the ambulatory and acute process flows, we are now in a better position via technology to optimize the revenue cycle infrastructure across an integrated delivery network. This is the solution architecture that we are now deploying at Ascension, Intermountain, and AMITA at their respective medical groups.

In this way, our IDN customers were able to offer a more integrated process and a more seamless patient experience. Lastly, we are pleased with our efforts to improve the customer deployment and technology onboarding process through more modern methods and self-service in our data exchange model.

As we previously shared with you, our new accelerated deployment capability allows us to reduce our customer's outlay of IT development hours by more than 50%. We've now fully transitioned our deployment model for modular clients and are in final stages of migrating end-to-end deployments to this model.

This dramatically improves our speed-to-value in onboarding new business. Switching now to the commercial side of our business, our priorities over the past 3 months have been in the following 3 areas. First, we are translating our increased sales and marketing efforts into the progression of our pipeline.

Our pipeline continues to grow across both end-to-end and modular engagements via proactive discussions with large and complex health systems. We've also seen a healthy amount of uptick in inbound RFP requests.

Second, we want to ensure that as part of the Intermedix integration process, there is a continued focus on growth in their historical end markets. On the last call, we discussed making investments to drive organic growth in Intermedix's core business lines.

We are seeing increased sales momentum across these end markets and we recently shared the signing of 2 large multi-specialty physician groups, CarePoint Health and Holston Medical Group.

We believe a key element in the selection of R1 was our combined technology platform including a data analytics capability designed to improve performance and to enable success in value-based contracting. Third, we are preparing for a broad-based market launch of our integrated acute physician offering.

The platform we are deploying at Ascension Medical Group, Intermountain, Presence, and AMITA Health is a host system agnostic platforms spanning all phases of the revenue cycle and includes provider-facing visualizations along with operating performance monitoring and management.

While we have had early success with the deployments at these health systems, we intend to formally launch our integrated acute physician offering specifically dedicated to the large IDN market in early 2019. Before I turn it over to Chris, let me provide an update on our ongoing customer deployments.

At Intermountain, we're 2 quarters into the deployment and have rationalized more than 35% of the targeted third-party spend and centralized 80% of the billing work relative to our targets. In the third quarter, we completed the consolidation of work from 9 remote locations into a centralized Salt Lake City footprint.

Additionally, we continue to work through the deployment of our physician RCM technology and the implementation of our Patient Experience Platform at Intermountain facilities. System-wide across Intermountain, we have standardized 73% of the functions to our standard operating methods.

Overall, we are ahead of our plan relative to first year targets for on-boarding a new operating partner customer. In early July, we started on-boarding Phase-3 of Ascension and welcomed over 100 associates to R1 during the quarter.

Our deployment plan is on schedule and we are preparing for the go-lives of our technology installs in the fourth quarter. With the completion of Phase-3, we will have completed the deployment of all NPR associated with the original Ascension agreement signed in February of 2016.

Over the course of the past 10 quarters, as part of the onboarding of the Ascension business, we've added 8,000 employees, rationalized more than 570 vendor relationships, and have had more than 600 installs of our core R1 Hub technologies.

This is a testament to the strength of the deployment function as we've delivered this while improving financial results at the onboarded sites. Turning next to Ascension Medical Group, we welcomed approximately 300 associates to R1 in October.

We expect the majority of work that was performed out of Ascension's centralized locations to be optimized by the end of the first half of 2019. The remainder of work related to smaller physician groups where work had not been centralized will be phased-in over the few quarters beyond the second quarter of 2019.

Our next major deployment is at Presence and AMITA. Last week, we finalized and signed the AMITA Health contract. This is a 10-year end-to-end operating partner arrangement where R1 will be the exclusive RCM services provider to AMITA's acute care operations and its employed physician groups. Deployment activities are ongoing at Presence and AMITA.

We expect to transition a small group of leaders later this month and the majority of employee transitions will occur in early January. We proactively adjusted our original timeline to allow for a streamlined transition of employee benefits concurrent with the start of the New Year.

We started ramping up shared services functions to support AMITA's operations in anticipation of transitioning our shared service centers in the coming months.

In closing, we're pleased with the execution to date in 2018, which is reflected in our strong quarterly results, increased confidence in the high-end of our 2020 guidance range as well as expected margin expansion on our contracted book of business beyond 2020.

The key data points we monitor from an operational execution standpoint and commercial activity standpoint are trending in the right direction and we continue to view the end market dynamics as very favorable.

We believe the comprehensive approach that underpins our digital transformation initiative stands to lower our cost structure, further differentiate us in the market, and help us win incremental new business long term. Now I'd like to turn the call over to Chris..

Thank you, Joe and thank you all for joining us. I'd like to remind everyone that we will be referencing non-GAAP metrics on today's call. The adjusted cost of services and adjusted SG&A numbers exclude stock-based compensation and D&A expense.

Adjusted EBITDA excludes stock-based compensation expense, transaction related costs, and certain other costs. A reconciliation of GAAP to non-GAAP financials is available in today's earnings press release. Now turning to Q3 results. Revenue for the quarter was $250.4 million, up $42.5 million sequentially and up $127.2 million year-over-year.

A full quarter of revenue from Intermedix and the onboarding of Intermountain were the primary drivers of sequential revenue growth and on a year-over-year basis, revenue growth was driven by new customers onboarded in the last 12 months as well as the Intermedix acquisition.

On a standalone basis, Intermedix contributed revenue of $46.1 million in the third quarter. The other revenue line grew $10.3 million year-over-year driven by the contribution from practice management services revenue included within the Intermedix business.

From a cost standpoint, adjusted cost of services in Q3 was $206.5 million compared to $181.1 million in Q2 and $106.6 million in Q3 of 2017.

The sequential increase was driven by a full quarter of cost associated with Intermedix and Intermountain as well as upfront costs to support the onboarding of Presence Health, AMITA, and Ascension Medical Group. Adjusted SG&A expenses in Q3 were $23.4 million, up $5.6 million sequentially.

The sequential increase was primarily driven by the addition of Intermedix as we remain disciplined in our SG&A expenses for R1 excluding the Intermedix acquisition. Adjusted EBITDA for the quarter was $20.4 million compared to $9.2 million in the second quarter and up $17.3 million from $3.1 million a year ago.

The sequential and year-over-year increases were driven by increasing profitability from new customers onboarded in 2017 and contribution from Intermedix offset by cost associated with onboarding new customers.

Lastly, we incurred $7.3 million in acquisition-related expenses and other costs in Q3 primarily related to the Intermedix acquisition and employee severance costs. These costs are not reflected in adjusted EBITDA, but are included in the other expenses line on our GAAP income statement.

Turning to the balance sheet, net debt at the end of September, exclusive of restricted cash, was $325.3 million compared to net debt of $337.7 million at the end of June. This change was driven by cash generated from operations of $15.1 million.

Net interest expense in the quarter was $10 million as we continue to elect to pay interest on the subordinated debt in cash. We expect a continued reduction in our net debt position in the fourth quarter and expect to use cash generated from operations to start paying down debt in the mid-2019 time frame.

Lastly, CapEx in the quarter was $4.8 million primarily related to the purchase of software licenses and computer equipment as well as capitalized software.

Turning to our outlook for the remainder of 2018, with the majority of AMITA and Presence employees now scheduled to be onboarded in early January, a portion of the revenue we expected in late 2018 will now start flowing through early in 2019.

The impact of this change will be to shift approximate $15 million from the fourth quarter to the first quarter. Worth noting this revenue has almost no margin associated with it given it's in the early stages of deployment. Our deployment activities at Presence and AMITA are ongoing and we continue to incur these upfront costs in 2018.

Recall that AMITA was not included in our 2018 guidance that we provided in February of this year. Even with the upfront costs associated with AMITA, we now expect 2018 adjusted EBITDA to be at the higher-end of our $50 million to $55 million guidance range.

This is largely driven by continued execution and higher than expected profitability at customers onboarded in 2017. In closing, I'm pleased with our team's ability to consistently deliver on our financial plans and we look forward to closing out the year with revenue and adjusted EBITDA in line with the ranges I just discussed.

Looking out to 2019, we anticipate providing guidance for the year in early 2019. Now I'll turn the call over to the operator for Q&A.

Operator?.

[Operator Instructions] Your first question comes from Charles Rhyee of Cowen. Your line is open..

Hey, thanks for taking the question guys. Maybe first start Joe just talking about you sort of at time talking about the digitization and these kind of efforts of machine learning, automation et cetera.

Can you go back and talk about the physician side again and maybe help us understand where a physician really needs personally to touch the rev cycle themselves versus or are you talking more about office staff in the physician office.

What can a physician do or what should they be doing at the time of delivering care that they would need to really be involved?.

Well, I think I'll make sure I understand your question, Charles.

Are you referencing the physician as an interface in the process, correct?.

Yes, I mean I understand the patient side, right, maybe I pay my copay upfront when I register et cetera, but I'm just curious about how the physician fits in and what their role would be?.

Yes, the thing I would say is that our strong view is that the revenue cycle starts with the consummation of the order and the scheduling process and I mention that because often you'll hear the revenue cycle referenced as starting with the pre-registration process.

So when you take that view, Charles, which is the view we take and I would reference in most of our situations, we do have control of that upfront process.

There is a fair amount of interface as well as downstream complexity that gets injected based on the quality and standard with which that order is captured and with which that schedule is arranged.

And I would highlight that, which is directly correlated to why we put so much effort in this PX platform, how do we reduce administrative complexity for two key stakeholders, one, the physician and the second, the patient.

Now once you have comprehensive capture at the physician interface of that order, of that schedule, of those patient demographics, you're then able to enable a number of processes that further reduce administrative complexity for that physician or for the staff that's supporting that physician.

So pre-authorization, all of those types of things and then there are some additional roadmap type items where you start to look at care management and some of the protocols around supporting that patient through the process that we feel we're well-positioned to continue to innovate on based on how we're looking at this and based on the fact that in our commercial contracts we have intentionally sought to ensure that process flow is in our scope of work and we have control of it because we have control of it, we're able to drive on behalf of our customers, the injection of technology and the transformation of that process and so we're very excited about that.

In most of our commercial engagements, of course, as you would expect us to do, we talk about financial results, but increasingly the value put on reducing administrative complexities for those 2 stakeholders is an important factor in a decision-making process and something we feel very well positioned to differentiate on..

If I can follow-up, my understanding was that I always thought that the complexity part of it was that payer rules were all very unique to the payer themselves and a single provider will be dealing with multiple payers.

And so that a lot of the work in the rev cycle was managing denials and understanding when -- everyone might have different prior authorizations.

So do you feel like is the technology there that you can sort of do that in an automated fashion versus still having to have a human presence there?.

one, we control the process, we have domain expertise; two, while we don't sell standalone technology, we build technology and we have all the internal capabilities to design, develop, deploy, support our technology; and third, we've got the ability to drive change and the ability from a commercial approach to proactively go after this -- the formation of a DTO, the establishing of strategic partnerships with the right external vendors.

That's something that the in-house operations within our customers typically either don't have the resources to do or they don't necessarily have the human capital capacity to do that. So we think we're well-positioned to really translate this opportunity into value for our customers and in turn into strong financial returns for the company..

Thanks and I have just one for Chris, you talked about paying down debt in next year, are you looking to pay down the subordinated debt and is that, is it sort of next year, middle of next year where the rate kind of starts jumping up or are you kind of talking about the term loan when we think about our model?.

The rate doesn't start jumping up on the subordinated debt until 3 years out, so it maintains that -- at that 14% rate, which we'll begin to pay down the debt next year, probably starting in the second half, but that rate does not kick up until 2021..

And your next question comes from Matthew Gillmor of Baird. Matthew, your line is open..

I wanted to ask about the RPA initiatives and also the partnership with Automate Anywhere. The first, can you talk about how these processes will get rolled out of your operations.

I know you are in the planning stages right now, but do they get rolled out sort of for each process or is it more region-by-region and then if you could talk a little bit about the Automate Anywhere partnership, I know you are developing some of these processes internally, so what do they bring to the table that's going to help in this perspective?.

one, the major processes that we categorize as high cost and have the attributes such that there is an impact -- big impact that can be put into the automation and then the other output from that is within those major process categories is all of these sub tasks and we need the specificity on those sub tasks within the process category to write a bot or a routine around and so we expect that work to be complete as we enter the first quarter, I would say the earlier part of the first quarter from our current projections.

That will then set in motion an executable list of projects for us to go after and we've got 2 other components of the DTO office, one is the development side of it, so this is our technology development team developing scripts on the Automation Anywhere platform and then we also have a fully resourced deployment.

Now this is not deployment to deploy our commercial contracts that we reference on our calls, this is the deployment of those routines into our operation and so I think we've -- not think, I'm pretty confident that we've taken a very systematic approach to this and we thought through not only how do we identify the opportunity, but how do we ensure that identification is in executable components of work and how do we ensure that we're as efficient as possible translating that opportunity into our operation.

A good way to think about this, right now is from a bot standpoint, so for us to produce 1 bot, which is a task, that investment is about $20,000 over a 5-year period.

The return on that, based on where work is done, onshore, offshore, how many people can that bot automate is anywhere from 125,000 to 500,000 against that $20,000 investment over a comparable time period. So we're encouraged with the opportunity here and we're with that, we're very confident in investing proactively into it.

Specific to Automation Anywhere, we've got a number of different things that come with that platform, but at the heart of it is we ran a pretty comprehensive assessment supported by an external advisor to make sure that the platform was right for us today, but also had the extendibility we needed to have as we think about downstream, some of the more complex processes that will require more iterative RPA scripts, machine learning, and a configuration that has a bit more complexity and kind of unequivocally, we know we've got the right partner based on that assessment, but in addition to that with the relationship we've consummated with -- there's prioritization on the technical roadmap, there is access into the -- the ability to produce the results and communicate the results through the various channels.

There's access to certain capacity that is important for us to ensure we have dedicated to us as industry-wide this becomes a bigger priority for a larger number of companies. So we definitely would characterize the relationship as strategic and much different than just a buy-sell relationship with a vendor per se..

Got it. That's helpful. Thanks, Joe and then also wanted to ask on the pipeline, you talked about continued progression and progress and the expectation I think you said the sign a client during 2019. I think in the past you've maybe talked about the potential to onboard a client in the first half of '19.

So just wanted to see if that was any change or if it's just a different way to say the same thing and then as a follow-up, if you could sort of characterize activity levels between the larger complex systems versus all our systems on the end-to-end side?.

Yes. no change in perspective on 2019, Matt. So we would still expect to be using our deployment capacity in the first half and as we enter the second half. So, really no change there from prior commentary. If anything, as I said, we're very encouraged with the amount of activity that's ongoing right now. I've got Gary with me as well.

So I'll have him provide some additional color, but what I would say in terms of size of activity in the pipeline, it continues to be in that call it north of $1 billion NPR range and there's a number of opportunities and things that we are in discussions on that, are north of that and I think that's an indication that we don't necessarily feel the need to go below 1 million because where we tend to have the strongest value prop and have the strongest return on the investments we make in those customer deployments is in that range and I'm encouraged that, that portion of the market seems to be very active right now, but I'll turn it over to Gary just for some additional color..

Just following on from what Joe said, the number of complex systems that we're engaged with is at its highest level since we kind of we brought out the commercial part of our business.

So, in addition, we're also working in a modular fashion as an on-ramp with many organizations to maybe evaluate our capabilities in the operating partnership and well over 80% of those engagements are in this targeted segment that Joe referenced, which is over $1 billion of net patient revenue.

So we're very encouraged by the activity and the engagement that we're having in the market..

[Operator Instructions] Your next question comes from Steven Wardell from Chardan Capital Markets. Steven, your line is open..

Thank you and thanks for taking my question.

I'm just hoping that you can give us some insights into what you're hearing from clients and prospects through sales and directly about their changing buyer preferences in 2018, looking for 2019, so what kinds of solutions? How is the solutions they are looking for changing? What market segments are you seeing stronger or weaker demand in? What kind of trends are you seeing in terms of what buyers are looking for revenue cycle management services?.

Great, Steven, thanks for the question and maybe Gary and I will iterate back and forth a little bit on the response.

The thing I would say is if you look at our primary end market that we've been focused on, which is the large providers or IDNs, the feedback we're getting from those discussions is really along the lines of increasing complexity, a lot of priorities on the plate of the internal teams combined with -- despite a lot of effort, despite a fair amount of investment in technology along the rev cycle, continued frustration with just outcomes and I would say part and parcel with the frustration is just fatigue setting in a bit and so we see an increasing willingness, and to our comments on the formal remarks, I think that's evidenced by increased RFP activity to seriously explore a different approach and I think it's driven by that.

And so we feel that our ability to look at this process holistically, to bring technology to the table, but technology that's integrated across the workflow and additive to the host system, combined with ready-built global infrastructure that customers can get scale advantage of.

And then finally, and it may be the most important thing that our customers are asking about is, how can we show performance on an end-to- end basis and we feel we're very well-positioned with our performance management technology as well as the infrastructure or human capital that we wrap around that.

So I think the solution set from our standpoint is being received well. There's a fair amount of questions, discussions, how do we ensure they get the results from some of the EMR investments they've made over the past 5 years and we definitely play an important role in that regard.

If you combine that with the fact that we really have an aligned commercial model. We have the ability to reduce their cost while still generating a return that we need to generate and we have confidence in our execution, so we're able to underwrite putting a certain portion of fees against performance.

I think those -- that commercial model is resonating well also and so that's really I think an important pattern or important theme that I would emphasize, Steven and then the other thing I would say is, and this is right in line with the strategic rationale on us acquiring Intermedix, us ensuring Ascension, Intermountain, AMITA and Presence, we were able to win the physician footprints.

That portion of the market we also see as increasingly open and seeking alternative approaches and alternative approaches I mean compared to the host EMR provider wrapping some rudimentary billing and follow-up services and doing that on a percent of cash or a third-party standalone building company doing that.

Increasingly, the large independent physician groups as well as the physician groups owned by our large customers are saying, we have to apply a different solution set there.

So I think again, Holston and CarePoint you would put in that category and we're excited as we referenced to get the launch done in early 2019 because we think it's well received based on what we're hearing..

There are no further questions at this time. I will now return the call to Joe Flanagan..

Great and to close the call, I'd like to thank everybody for joining us today. As I mentioned in my comments, I do feel we're tracking very well relative to the goals we've set and are very, very optimistic about our future given the ongoing initiatives.

With the launch of our DTO, we're at the start of a methodical process to automate the revenue cycle and deliver a solution that is very differentiated in the market. We expect this to serve us and our customers well and we look forward to updating everybody on progress against these future goals. Thank you very much, operator.

Thanks for all your help, we can close the call..

This concludes today's conference call. You may now disconnect..