Healthstream Inc Q1 FY2020 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the HealthStream First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mollie Condra, Vice President, Investor Relations and Corporate Communications. Thank you. Please go ahead, ma'am.

Thank you, and good morning. Thank you for joining us today to discuss our first quarter 2020 results. Also in the conference call with me are Robert A. Frist, Jr., CEO and Chairman of HealthStream, and Scott A. Roberts, CFO and Senior Vice President. I would also like to remind you that this conference call may contain forward-looking statements regarding future events and the future performance of HealthStream that involve risks and uncertainties that could cause the actual results to differ materially from those projected in the forward-looking statements. Information concerning these risks and other factors that could cause the results to differ materially from those forward-looking statements are contained in the company’s filings with the SEC, including Forms 10-K and 10-Q and our earnings release. So with that, I’ll turn the call over to Bobby Frist.

Thank you, Mollie. Good morning, and welcome to our first quarter 2020 earnings conference call. Normally the team and I will be speaking to you from a conference room in our headquarters. Instead, we're out and about in our homes and calling you from remote locations. I hope that the call facilitates well. The COVID pandemic has changed a great deal since our last earnings call, which was only 10 weeks ago. Since that time, over 56,000 people in the US have died due to COVID-19, and the number continues to grow. If this trend holds, the US will soon reach over 1 million documented cases of COVID-19, many of whom are healthcare workers. As of April 14th, the CDC said that between 10% and 20% of all US coronavirus cases are among healthcare professionals. At HealthStream, we've never been more resolute in our mission to support the US healthcare workforce, the heroes who are literally putting their lives at risk to provide care to others. I want to start this call by sincerely thanking healthcare workers around the world for their attention to our needs and their selfless dedication to taking care of us all. Thank you. The impact of COVID-19 has been widespread, rapidly evolving, and generally characterized by uncertainty. In an attempt to contain the spread of COVID-19, authorities have implemented measures that have resulted in quarantines, travel bans, shelter in place orders, the promotion of social distancing, and limitations on business activity, among other actions. These measures and the pandemic have caused a significant economic downturn in the US and globally. Directly relevant to our business is the adverse impact the pandemic is having and will likely continue to have on the healthcare industry. Our business focuses on providing workforce solutions to healthcare organizations along the continuum of care, such that an adverse impact on healthcare organizations is likely to result in an adverse impact on our company. Though COVID-19 did not have a significant impact on our first quarter financial results, based on what we are now seeing, the COVID-19 pandemic will begin to negatively impact our financial results in the second quarter of 2020. The extent, timing, and duration of such impacts on our business remain uncertain and will depend on a number of factors, including the length and severity of the COVID-19 pandemic, especially regarding its impact on healthcare organizations. Anyone watching the news knows that health organizations are being adversely affected on several levels: clinically, financially, and operationally. A significant source of revenue from services such as elective surgeries has ground to a near halt due to restrictive measures, including quarantine and shelter-in-place orders. At the same time, the cost of providing emergency care to COVID-19 patients has sharply increased. Unfortunately, it is unknown how long these conditions will persist or whether they will deteriorate. A week ago today, on April 21st, Becker's Healthcare reported that 39 hospitals had recently received negative S&P ratings, noting that they each had about 100 days of cash on hand or less. No healthcare provider seems exempt, as evidenced by challenges reported by some of our larger customers. For example, Quorum Health, a HealthStream customer that operates 23 hospitals in 13 states, announced on April 7th that it has filed for Chapter 11 bankruptcy protection. Its quarterly earnings release on April 21st cited the uncertainties associated with COVID-19. HCA, another HealthStream customer, announced that it will suspend its quarterly dividend program and withdrew its previously issued guidance for 2020. On the same day, Beaumont Health, another HealthStream customer based in Michigan, which had 380,000 employees, announced that it would temporarily lay off 2,400 employees and permanently eliminate about 450 positions and cut executive pay due to financial effects from the Coronavirus. Similar stories have been reported across many of our customers. From all of these adverse developments experienced by these organizations, we are continuing to monitor the ability and willingness of our customers to pay for our solutions in a timely manner, implement solutions they have purchased from us, and renew existing or purchase new products or services from us. We monitor our cash position and credit exposure primarily by measuring weekly cash receipts, customer requests to modify payment or contract terms, and bankruptcy notices. Since March, each of these areas has begun to show signs of slowing or deferral that we are unable to quantify the future impacts of such negative indicators, or know whether and to what extent they may increase over time. Any further deterioration in the flexibility of our accounts receivable or the timing of payments from customers will adversely impact our financial results. In fact, customers are currently making requests for extensions of time to pay their bills without incurring penalties, and we are working with each of these customers to assess their needs and provide them with as much flexibility as we reasonably can. The timing of implementation is also relevant to our business, because our software solutions do not result in revenue recognition or billings until they are implemented. To the extent our customers delay or fail to implement products they have previously purchased, our financial results will be adversely affected. While customer implementation projects are continuing, several customers have delayed starts or have put implementation projects on hold that were already in progress, making it difficult to project the number of implementation delays that we will ultimately experience. For example, two large implementations of the Red Cross Resuscitation Suite program have been impacted. One has been put on hold, and the second has been partially delayed. In terms of sales and renewals, both continue but at a slower pace and with uncertainty as to when customers and prospects will broadly return to pre-COVID-19 levels of buying decisions. This should come as no surprise, given what our customers are dealing with during this time. In fact, many customers are not allowing sales representatives on-site until COVID-19 can be better controlled. Our sales representatives and account managers remain active in dialogue with our customers, but their primary focus over the past several weeks has shifted more towards maintaining relationships and providing support where we can. While we've been able to close deals across our solution sales teams, we are experiencing purchasing decisions being put on hold temporarily or deferred to later in the year. Given the uncertainty surrounding the adverse impact that COVID-19 is having on the healthcare industry and our business, we have taken certain expense management measures. These include indefinitely postponing and potentially foregoing increases to base salaries, including executive base salaries, limiting hiring to critical positions, limiting the company's 401(k) match, and negotiating with key vendors to allow payment term extensions without penalty. We're continuing to monitor developments regarding the COVID-19 pandemic and may undertake further expense management initiatives if deemed necessary. Despite COVID-19, business does continue. So, I want to provide updates regarding the three business transitions that we introduced and discussed in previous calls. All three transitions are designed to move us toward being a higher-margin, more profitable company in the coming years, even though the impact of the pandemic is likely to extend these transitions longer than we had previously anticipated. First, we have transitioned our sales and marketing efforts from the legacy of resuscitation products to our new resuscitation offering. As a reminder, the new Red Cross Resuscitation Suite program is comprised of BLS, ALS, and PALS competency-development curricula, which we launched in January 2019. It brings an updated, highly adaptive competency-based development solution to healthcare professionals. It offers certification to healthcare professionals successfully demonstrating proficiency in lifesaving resuscitation knowledge and skills. In our last conference call for the full year 2019, we signed over $38.8 million in contract order value for HealthStream’s new resuscitation offerings. These new contracts are from a mix of over 3,000 hospitals and healthcare facilities and are from across the continuum of care, including new and transitioning customers. While our customers' focus has necessarily shifted in the last several weeks to responding to developments related to COVID-19 and treating COVID-19 patients, we have continued to see some new sales. Given some customers' preference to proceed with training implementation, our team created an innovative studio where virtual instruction could be provided. Customers' feedback on our ability to accommodate their preference to stay on schedule using virtual training as a component of their implementation has been positive. In February, we announced the expansion of resuscitation offerings with the Stable program, a leading neonatal education solution. This highly respected program is now available online exclusively through HealthStream. We're encouraged to see buying activities surrounding it. In fact, we hosted a webinar on April 7, and over 813 attendees showed up, with 3,384 follow-up requests for information. We've already closed a handful of contracts shortly after the webinar. The addition of the Stable program further diversifies our product portfolio of simulation offerings. The second transition involves the adoption and migration of our new VerityStream platform. In the first quarter of 2018, we announced the launch of VerityStream, our new platform for managing credentialing and privileging in healthcare organizations. During the first quarter of 2020, over 20 new customer accounts were contracted for the VerityStream platform, bringing our cumulative total to over 220. These 220 customers represent a mix of new customers and existing customers who chose to migrate from our legacy credentialing and privileging platforms to the new VerityStream platform. Sales of the VerityStream platform were exceptionally strong during the second half of 2019, but below our expectations for the first quarter. Additionally, the sales success realized in the last half of 2019 created an implementation backlog, resulting in longer implementation cycles for our customers, and time to revenue for VerityStream. To address the backlog and accelerate the implementation cycle, we have hired additional staff. These two factors—lower new sales and slower implementation—even without factoring in the impact of COVID-19—will likely result in lower revenues and operating income than we anticipated for the Provider Solutions segment for this year. The third transition involves our customers upgrading to the HealthStream platform, which is the essential technology working behind the scenes that powers all activity in our ecosystem. In the first quarter, we added approximately 240,000 HealthStream subscriptions, bringing our cumulative total to approximately 3.4 million subscriptions, which is up from 3.15 million contracted subscriptions at the end of the fourth quarter of 2019, and up 85% since the first quarter of 2019. I want to remind everyone that these three business transitions all represent multi-year journeys; in fact, from my perspective last quarter, I said that we were about 12 months into a 36-month journey. Given the unknowns associated with COVID-19, especially its duration, it’s hard to predict with certainty how much time will be added to the journey. But at 15 months in, I can say we continue to make real progress on all three transitions. At the end of these journeys, we still expect to have a higher margin, more profitable company. We are fortunate to have entered the pandemic with a solid balance sheet, no debt, and a $50 million credit facility that remains fully available to us. Rather than being in a liquidity crisis, we believe we are well-positioned to continue allocating capital to invest in the future of the company. For the time being, that means keeping our share repurchase authorization in place and maintaining capital investment in new and existing product development. Should circumstances deteriorate, we are prepared to curtail or discontinue one or both of these initiatives, but do not believe it is in the best interest of shareholders or the company to do so at this time. At this point, Scott Roberts will provide a more detailed discussion of the financial metrics for the first quarter results, along with further comments on how we view our financial outlook for 2020 given the COVID-19 pandemic. Scott?

Thank you, Bobby, and good morning. Today I plan to cover our financial results for the first quarter and provide some additional thoughts about how the COVID-19 pandemic is impacting our business and financial outlook. Consistent with past quarters, the discussion of our results today will be for continuing operations only, and our comparisons will be against the prior year first quarter unless otherwise stated. Let's begin with an overview of our first quarter highlights. Revenues were down 6% or $3.6 million to $61.6 million. Operating income was up 35% to $7.2 million, which was positively impacted by a $3.4 million favorable contractual adjustment to cost of revenues. Income from continuing operations was up 48%, or $7.1 million, which was also positively impacted by a $2.6 million favorable adjustment to cost of revenues. EPS from continuing operations was $0.22 per diluted share, compared to $0.15 per diluted share in the prior year. EPS was positively impacted by $0.08 per share from the favorable adjustment to cost of revenues. Adjusted EBITDA from continuing operations was down 6% to $11.8 million. In the quarter, we completed the acquisition of NurseGrid on March 9th, and on March 13th, we announced the approval of a $30 million share repurchase authorization. Revenues from the Workforce Solutions segment totaled $49.8 million for the first quarter and are down 8% compared to the prior year. This decline was primarily influenced by the expected reduction in the legacy of resuscitation products, which decreased by 35% or $6.1 million, totaling $11.2 million this year compared to $17.3 million in the prior year. Revenues from all other Workforce products experienced modest growth of 4.5% over the prior year. Revenues from the Provider Solutions segment were $11.7 million and grew by 8%. This growth came from professional services for client implementations and new VerityStream subscriptions. Revenues from the recent acquisition of CredentialMyDoc, which was completed in December of 2019, were approximately $400,000 in the quarter. Gross margins improved to 66.9% compared to 58.8% in the prior year. Gross margins were positively impacted by a $3.4 million favorable contractual adjustment to royalty expense resulting from the resolution of a mutual disagreement over various elements of the past partner contract. Excluding the impact of this favorable adjustment, gross margins would be 61.3% for the first quarter, an increase of 250 basis points over last year. This improvement is primarily a result of the reduced revenues from the low-margin legacy resuscitation products and revenue contributions from other higher-margin products. Operating expenses excluding cost of revenues were up 3% or $1 million over the prior year and includes approximately $650,000 of expenses from the CredentialMyDoc and NurseGrid acquisitions. Our investments over the past year in product development, capitalized software, and our corporate office relocation, which occurred during the second quarter of last year, contributed to the increase in product development and depreciation and amortization compared to the prior year. Operating income improved by 35% to $7.2 million, and was positively impacted by the $3.4 million favorable adjustment to cost of revenues, while adjusted EBITDA declined by 6% to $11.8 million. Now as a point of clarification, the $3.4 million favorable adjustment to cost of revenues is excluded from the calculation of adjusted EBITDA. While revenues and adjusted EBITDA experienced declines versus last year's first quarter, we were able to mostly overcome the lost revenue and margin associated with the $6.1 million decline in the legacy resuscitation products. Now, let’s turn to the balance sheet and cash flows. Our cash and investment balances ended the quarter at approximately $142 million, and working capital was approximately $98 million. During the quarter, we completed the acquisition of NurseGrid utilizing $21.4 million of cash to acquire the remaining equity in NurseGrid. We previously acquired a 10% minority interest in NurseGrid during the first quarter of 2019. As part of the accounting for the acquisition, we also recorded a $1.2 million gain due to a change in the fair value of this minority investment. Cash flows from operations were $6.1 million compared to $16.1 million in the prior year. Lower cash collections and higher payments of royalties contributed to this reduction. Q1 was our strongest quarter of collections last year. Cash collections were also strong in Q1 of this year, actually exceeding recite levels during the third and fourth quarters of 2019, but were lower than the bar we set in last year's first quarter. Our day sales outstanding for the first quarter were 44 days, which is favorable compared to 52 days in the prior year first quarter, but unfavorable compared to the 39 days from the fourth quarter of 2019. Capital expenditures incurred during the quarter were approximately $4 million and were primarily comprised of software development and content. On March 13, we announced the authorization of a share repurchase program up to $30 million of our outstanding common stock. Between the announcement date on March 13 through the present, we've acquired shares valued at approximately $10 million pursuant to the program. The repurchase program will terminate on the earlier of March 12, 2021, or when the maximum dollar amount under the program has been extended. We may suspend or discontinue making purchases under the program at any time and we plan to closely monitor factors such as market conditions, our liquidity, working capital, and cash flow projections when making decisions regarding the program. Now I’ll discuss our forward-looking expectations, including the financial impact of COVID-19 on our business and how we are responding. As announced in our earnings release yesterday, we have decided to withdraw our previously issued financial guidance for 2020 due to the uncertainty and inability to reasonably quantify how the COVID-19 pandemic will impact our operations and financial results. We entered 2020 with optimism regarding our plans and delivered a solid first quarter. We completed an acquisition, initiated a share repurchase program, began executing against our product development roadmaps, and started filling open positions to support our growth initiatives. Over the past six weeks, we have seen several emerging indicators affecting our operations, which could have an adverse impact on our business. Although our financial performance during the first quarter was strong with minimal impact from COVID-19, we anticipate several headwinds for the remainder of the year, which will be strongly influenced by the impact the pandemic has on our customers. As Bobby mentioned earlier, our customers, who are all healthcare organizations, are not only focused on serving their communities faced with COVID-19 infections, but they are also being faced with financial challenges resulting from lost revenues and higher operating costs. Many healthcare providers have been unable to provide their full range of services and are losing revenue. For example, they are performing fewer elective medical procedures as a result of quarantines and shelter-in-place mandates and are incurring higher operating costs on medical supplies such as PPE. Many are faced with decisions to reduce their operating expenses, reduce their workforce, or even close their facilities. Because our revenues and cash flows are directly impacted by the strength of our customers, to the extent they continue to experience these disruptions, it is likely to negatively impact our business. Because of these factors, we anticipate slower sales, especially in the second quarter, and we expect longer or delayed customer implementation cycles. Several customers have already elected to defer or hold their implementations, which will result in delays in our revenue recognition and billings. Failure to achieve our sales goals or continuation or acceleration of implementation delays will have a negative impact on our revenues for the remainder of the year. We may also experience slow cash collections, higher credit losses, and fewer renewals. We've already begun to see slower customer payment patterns, and at least one multi-facility hospital system recently filed for bankruptcy. We anticipate that some customers will receive Federal aid under the CARES Act, but we don't know if they will deploy those funds towards our solutions. These factors, among others, make it difficult to estimate the impact that COVID-19 will ultimately have on our operations, financial performance, and financial condition. On March 16, we required all of our employees to begin working from home, and we've restricted all business travel. We don't anticipate incurring any significant incremental costs to facilitate these work-from-home arrangements, as nearly all of our employees already have the necessary equipment and resources to make this transition. We had already virtualized the systems that we use to run our business. In anticipation of revenues and cash flows being negatively impacted from COVID-19, we have already taken several actions to manage our expenditures; our executive salary increases, which were approved by our Board of Directors in early March and would be effective May 1, have been placed on hold, and annual merit increases to all other employees have been paused as well. We are reviewing all budgeted new positions and have deferred hiring most of them until we have more clarity on the future. We have rescheduled several customer conferences until 2021 and are cutting back on other non-essential business expenses. We believe the precautionary measures taken to date are prudent. We are prepared to take additional cost-saving measures should the circumstances deteriorate further. We believe we have adequate access to capital which will provide sufficient liquidity to manage our business through this crisis over at least the next 12 months. We entered these challenging times with a strong balance sheet, including $142 million of cash and investments and full access to a $50 million line of credit facility, which remains untapped. As Bobby discussed earlier, based on the relative strength of our balance sheet and what we believe to be an iterative plan to responsibly manage expenses, we have several projects relating to the development of new products underway that we intend to continue. Additionally, we have decided not to suspend our share repurchase program at this time. We believe these initiatives remain in the long-term, best interest of shareholders and the company. So we will continue to evaluate them in connection with the COVID-19 related developments and adjust them if necessary. Thank you for your attention this morning. Now, I’ll turn the call back over to you, Bobby.

Thank you, Scotty. I'd like to make a few closing remarks. First, I'd like everyone to know that we're focused on the safety and well-being of our 900 employees. We required our entire workforce across the country to begin working remotely from home as of March 16, 2020, and we continue to work remotely to date. We were particularly focused— we're particularly well-positioned to have all employees work from home, as approximately 30% of our employees worked remotely prior to COVID-19, and the approximately 400 employees that work in our headquarters in Nashville worked remotely for almost a month last year when we were making the transition to our new corporate office. So we've had some practice in remote work, and I've seen amazing productivity and camaraderie; our online workforce has been truly impressive in the last several weeks. We've been able to operate seamlessly through this period, serving customers and providing applications as needed. To support healthcare organizations and their employees on the frontline, we have made available a curated library of courses relevant to COVID-19 free of charge to all of our existing customers and all caregivers, in support of their preparation to provide safe and effective care to COVID-19 patients. The courses in this bundle include a wide range of relevant content topics like hand hygiene, ventilator safety, protecting yourself with personal protective equipment, contact, and droplet transmission-based precautions, among other things. Our platform has seen record utilization on some of the days during the pandemic while performing consistently without disruptions. Also announced earlier this month HealthStream, in partnership with the State of Tennessee, Office of the Governor, is providing its COVID-19 Rapid Response Program, which includes training bundles and its Workforce platform alongside other workforce resources to support the state's efforts to rapidly train new, returning, and current caregivers who are all volunteering to work in alternative healthcare facilities being set up across the state. This program has been very exciting and received great receptivity from Governor Lee and was made available within days to the organizations as needed. We've become a key communication channel for lots of current information and news across our broad network of about 5 million subscribers. One of the most consumed pieces of content is a rapidly updated set of documents from the CDC that we post into our network along with the curated libraries we have provisioned. To date, our customers have assigned over 1.1 million courses with coronavirus or COVID-19 in the title. Taken together with the approximately 300,000 enrollments of the three curated courses we provided, our customers have assigned over 1.4 million courses to more than 760,000 unique learners across our network. It's gratifying to see our network spring into action. In March, we expanded our ecosystem of healthcare professionals through the acquisition of NurseGrid, a Portland, Oregon-based technology company known for the NurseGrid Mobile app. This app has a growing community of over 260,000 nurses as monthly active users, and it’s the number one rated app for nurses in the Apple App Store, with a 4.9 star rating and over 44,000 reviews. We believe that NurseGrid provides us an opportunity to further engage, support, and connect the community of nurses across the US. In fact, just about 48 hours ago, we announced the results of an in-app survey for over 15,000 nurses who use NurseGrid regarding providing care during the pandemic. I personally think it's one of the most authoritative and current surveys of nurse opinions and concerns during the pandemic that exists. You can see it on our website. Go to nursegrid.com, and you can see the just-published results of that survey. What was amazing to me was that 15,000 nurses responded to those 10 questions in about three days. In the survey, 79% of nurses reported that one of their top three concerns was infecting family and friends with the coronavirus. Approximately 64% of nurses are experiencing a change in their work assignments due to the pandemic, and approximately 84% of nurses still report shortages in N95 masks. When we look at the activities in our ecosystem—from the first course taken on coronavirus on January 9 to our ability to instantly survey 15,000 nurses about their concerns and opinions—this shows the power of our ecosystem and our efforts to support healthcare organizations through this pandemic. As we continue to shelter in place and work remotely, it's important to highlight the efforts of our nearly 950 employees. Their work has been outstanding. Not missing a beat through going fully virtual is commendable. The surge efforts to provide the State of Tennessee and all of our national customers with these supportive resources has been impressive. I think that will eventually result in business growth again and renewed optimism. But for now, the right thing to do is to do the right thing, and that’s what we’re doing at HealthStream. I appreciate everybody listening to the call and look forward to the next update, where hopefully we’ll have a little more clarity than we do today. Thank you all.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Good morning and thank you for taking our questions. The first one, I guess, is related to your customers, and you've talked about some of the disruptions that they're facing, some of them even dealing with bankruptcy. And I'm curious— given that, I guess there are two questions here. Number one: A number of hospitals have been furloughing employees, and I'm curious — are they still on the rolls as far as you look at them from a customer perspective? Are they, if you're furloughed, still counted as being an active user, and therefore the hospital is charged? And then the second piece to the question is, you know, I recall—this goes back probably six or seven years ago—but I recall a situation where a hospital, a customer of yours that was going through bankruptcy, they were still able to acquire your platform. Under the current situation, are those types of events still happening where hospital budgets are definitely impacted, but are they still buying your products? Even if at a lower level, are they still buying?

Thanks, Matt. I think you asked the question correctly because our customer counts do reduce when they do layoffs. I’ve seen a half dozen announcements of actual layoffs, which clearly reduce their customer counts, and a lot of our platforms are based on subscribers. So, we would expect them to want to draw down the payment for those that are gone. The furloughed workers are still in the platform, but I can expect—although this just happened the last few weeks—I imagine the health systems will want to negotiate to avoid billing for furloughed workers who are not accessing the systems. So those are correlations we see, and while our contracts are mostly subscription-based and more fixed, I think it would be wise and provide flexibility in how we bill through these times, and it would be unwise, certainly, to bill for furloughed or laid-off employees. So, you're right to draw this correlation, and it is a concern for us. In the last few weeks, we haven't really seen those negotiations materialize yet. But we're expecting it and want to maintain healthy relationships with our customers. The second question is, we are seeing some buying, which has not completely stopped, although it is lower than expected. We’ve closed several Red Cross solutions in the last month. We've signed up, as mentioned, new contracts, and given some contract orders, I think we might need many, many more working for COVID-19, but it's a really beneficial product, and we're going to have a significant impact on unicare. We've seen other contracts being more creative. For example, a large health system that had partially adopted our platform wanted continued access to our free COVID bundles. We signed a free access agreement to our full platform for 90 days, but at the end of 90 days, they will need to assess whether they want to continue access for their tens of thousands of employees. So there are signs we may get growth in that case, about a third of their workforce—quite a number of their employees are now using our platform under contract. We were able to sign an agreement around that program. So, you know, there are conflicting signs: essential services are being purchased, while non-essential purchases are on hold. Implementations just can't go through right now, and we’re seeing other vendors in the same situation. They're asking for delays. I believe our revenues are tied to successful activation of an account. We don't start billing just because we signed a contract; we start billing when we implement the solution in most cases. Delays in implementation will affect our revenue recognition. So, I think you called out an important correlation between our customers' health and how they treat their employees, along with potential negative impacts on our subscriber count and requests for deferred payments. There are uncertainties around it, but we believe health services will continue to expand. The shift toward homecare will increase overall healthcare needs. Elective surgeries are my personal opinion that they are deferred, but they will come back because people that need those surgeries will return for care. The health system has to survive. The government is providing specific financial support to hospitals and healthcare organizations to ensure viability and service to the population. Ultimately, the nature of care delivery may change, which could lead to accelerated homecare services where we have growth opportunities. Overall this should return to normal over time.

Yeah. Good morning. This is Jerod Haase in for Ryan. Thanks for the questions. I wanted to ask another question on the implementation process, actually. It sounds like you've seen maybe a few pockets here and there of customers that have relied on some of the virtual training services or virtual implementation services. Is there anything unique in those instances, or is that something like that could conceivably apply across all types of implementations or all customers? And then maybe as a quick follow-up, I’m curious if there’s anything you’ve seen that suggests maybe once things normalize beyond COVID-19, is this something that could persist as a more efficient way to conduct implementations at lower costs or speed up the time to revenue, something like that?

Great question and good insights. Some services are blended, like the Red Cross Solution, which has a blended nature where it includes the physical component of manikin technology on the Apple app that uploads to our cloud systems. Historically, we've had a hands-on sales effort to demonstrate the product and implementation process to physically show components of that solution, which again has a tangible and software dimension. The virtual implementation has been fascinating, and I think it could lead to a new set of options that favor these virtual support mechanisms over time. While some implementations require in-person demonstrations, customers may favor these virtual models eventually. For elective implementations, the VerityStream platform, if a customer has selected ours because it's superior, they may not have the time to undertake the switch, as what they currently have may still function. We’re refining our implementation methodologies on systems that offer software deployments. I think you're correct that a shift to more virtual implementations could happen across lots of our product sets. Our entire company has transitioned to a virtual model seamlessly, so operational support is there. We're prepared for delays in implementations for selected products that customers already favor. I hope this gives enough color to illustrate directionality.

Yes. Thanks. I hope everyone is safe and healthy. With respect to COVID-19, obviously, you’ve been running this company for a long time and have navigated through some ups and downs. If you just take us back in terms of some of the downs, what have you guys seen in terms of customer attrition in the past? Maybe if you can provide some perspectives on that, whether it's from the 2008-2009 timeframe or the early 2000s. Just some insights?

A couple of things I’d highlight, Richard. We fought through a couple of challenges in our 29-year history. Long ago, we upgraded our core platforms and hit some capacity issues when we were much smaller. We had to ask customers for favors like would they agree to pause usage—some of our larger customers really helped us—while we stabilized things. We built strong relationships through those periods and eventually stabilized our software. We grew from that experience and didn't lose many customers. In the 2008 financial crisis, we saw shifts in usage patterns and delays in purchasing. But ultimately, there were benefits to moving to our platforms and managing costs downwards provided a competitive advantage. If they were doing classroom training, they needed to shift to online solutions; we were able to grow during that period. I think we will see similarities now. The material part of the resuscitation market is still done in classrooms, which may push an inflection point toward more online training. It could shift the focus toward online training and we've noticed a 1.4 million assignments of online courses. It’s important now to focus on customer needs and relationships to build goodwill during these times. Healthy relationships will lead to overall growth which we've experienced in crisis mode. We also need to keep an eye on our expenses and capital deployments. We have a few new products launching that relate to social well-being, which is especially relevant now. I hope that helps illustrate our perspective on past experiences and learning lessons.

Yeah. Bobby, I was wondering if you could give us some insights on how April has trended versus March, maybe the year-ago period?

Yes, Vince. Let me think about that. Some of the things we're seeing and I’ve mentioned the shift in usage patterns on our platform. The first part of April clearly had more accounts calling us to renegotiate implementation schedules, with some asking for and receiving our ability to defer their payments, faster than earlier in March. Those developments in the last three weeks signify shifts that we've noted since April 5th.