Good evening, ladies and gentlemen, and welcome to the Phreesia Fiscal Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will provide instructions for the question-and-answer session to follow. First, I would like to introduce Balaji Gandhi, Senior Vice President, Investor Relations for Phreesia. Mr. Gandhi, you may begin.

Thank you, operator. Good evening, and welcome to Phreesia's earnings conference call for the fiscal third quarter of 2023, which ended on October 31, 2022. Joining me on today's call are Chaim Indig, our Chief Executive Officer and Co-Founder; and Randy Rasmussen, our Chief Financial Officer. A complete discussion of our results can be found in our earnings press release and in our related Form 8-K submission to the SEC, including our quarterly stakeholder letter, both issued after the markets closed today. These documents are available on the Investor Relations section of our website at ir.phreesia.com. As a reminder, today's call is being recorded, and a replay will be available on our Investor Relations website at ir.phreesia.com following the conclusion of the call. During today's call, we may make forward-looking statements, including statements regarding trends, our anticipated growth, our strategies, predictions about our industry and the anticipated performance of our business, including our outlook regarding future financial results. Forward-looking statements are subject to various risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those described in our forward-looking statements. Such risks are described more fully in our earnings press release, the stakeholder letter and our risk factors included in our SEC filings, included in our quarterly report on Form 10-Q that will be filed with the SEC tomorrow. The forward-looking statements made on this call will be based on our current views and expectations and speak only as of the date on which the statements are made. We undertake no obligation to update and expressly disclaim the obligation to update these forward-looking statements to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events. We may also refer to certain financial measures not in accordance with Generally Accepted Accounting Principles in order to provide additional information to investors. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release and stakeholder letter, which were furnished with our Form 8-K filed after the market closed today with the SEC and may also be found on our Investor Relations website at ir.phreesia.com. One final note, as discussed in our stakeholder letter, we are updating the nomenclature of one of our revenue categories in our consolidated statement of operations, beginning with this reporting period. The revenue line previously named Life Sciences will be named Network Solutions going forward. This change in nomenclature had no effect on prior revenue amounts. We have provided background on why we chose to make this change in our stakeholder letter. I'll now turn the call over to our CEO, Chaim Indig.

Thank you, Balaji. Good evening, everyone. Thank you for participating in our third quarter earnings call. Our stakeholder letter and earnings release hit the wires just after 4:00 p.m. Eastern. So let me share some key highlights for those of you who haven't had a chance to go through all the materials yet. Revenue in the third quarter was $73 million, up 31% year-over-year. That's our seventh consecutive quarter of over 30% revenue growth. I want to congratulate and thank the entire Phreesia team for making this happen. In this quarter, our average number of healthcare services clients was 2,982. We added 206 average healthcare services clients from the second quarter to the third quarter. Healthcare services revenue, which is the combination of subscription and related services and payment processing revenue, was up 30% year-over-year in the third quarter. On a per-average healthcare services client basis, subscription related services revenue remained in the $11,000 range in the third quarter, reflecting both our land and expand go-to-market motion and another quarter of growth in average healthcare services clients. Payment processing revenue grew 22% year-over-year in the third quarter. Network solutions revenue, the new name for our revenue category previously known as Life Sciences, was up 33% year-over-year. Moving on to our outlook for the rest of the fiscal year. We expect revenue for fiscal year 2023 to be at least $278 million, up from a range of $273 million to $275 million. We expect average healthcare services clients to increase by approximately 150 in the fourth quarter. We expect fourth quarter subscription and related services revenue on a per-average healthcare services client basis to remain roughly in line with our second and third quarter results. We continue to see solid operating leverage and we expect to return to adjusted EBITDA profitability in fiscal year 2025. Based on our strong year-to-date performance, we've taken up adjusted EBITDA outlook for the fiscal year to approximately negative $95 million from a previous range of negative $109 million to negative $106 million. We remain comfortable with our ability to finance our fiscal year 2025 targets and expect to end fiscal 2023 with approximately $170 million in cash and cash equivalents. We believe our capital allocation strategy sets us up to deliver on our financial targets for fiscal 2025 and beyond. Everyone here at Phreesia is focused on driving value for all of our stakeholders, including our shareholders. Operator, we think we can now open it up for Q&A.

Thank you. Your first question comes from the line of Anne Samuel with JPMorgan. Your line is now open.

Hey, guys. Congrats on the terrific results.

Thank you.

In your letter, you talked about an incremental $1 billion opportunity from the payer space as you add to network solutions. I was wondering if maybe you could just discuss a little bit how you get paid in this new area and how we should think about the pace of growth for that segment relative to your traditional Life Sciences business?

Let me take that one.

Sure.

Yeah. So it's similar to how we get paid for life sciences based on digital engagement. So based on the volume of digital engagement, we receive payment and cash for that. So it's very similar to the billing for the life sciences.

And Anne, on the second part of your question, I mean, we've been in the life sciences space for our entire history. This is brand new. So growth is sort of a different animal altogether. We're starting from zero pretty recently.

Great. No, it sounds like a very interesting opportunity. Maybe just my next question is, you've seen a couple of quarters here now that because you're growing your new logos at such a rapid pace, your revenue per client has just lagged a little bit. And it seems like maybe that will improve a little bit in the fourth quarter just from adding larger new clients. I was wondering if you could talk about, is this a newer trend we should expect to continue or maybe just a one-quarter dynamic? Thanks.

I think quarter-to-quarter, some quarters we have big expands or will land larger clients. So I don't know if I’d call it a trend, but I think it's going to stay in the range that it has been in the past couple of quarters. We're excited about some of the new larger wins and expansions that we've sold recently.

Well, Anne, we're doing really well. The team's been performing excellently across the board, with both large and small expansions. I can't thank everyone at Phreesia enough for their hard work this past quarter; it's truly been a pleasure and an exciting time.

Yeah. The 42% new logo growth was impressive and looking forward to seeing those clients expand over time and really waterfall into the growth, so great job. Terrific results this quarter.

They are. So I’m sure you'll see it soon.

Your next question comes from the line of Ryan Daniels with William Blair. Your line is now open.

Hey, guys. Congrats on the quarter. Thanks for taking the question. Maybe another one on MemberConnect. I'm curious if you can leverage the client base in Insignia health. I think they had a pretty significant number of installed clients across the MA book of business in particular. So is that something that you're leveraging to kind of launch this and drive market growth in that area?

Thank you for your question, Ryan. Insignia was a relatively small business with a limited client base. The most significant client they had, which we have been closely working with, is PMS. The KCC program has been rolling out successfully, and we appreciate its positive impact on kidney patients, and we are proud to contribute to that effort. Insignia's patient activation measure has a well-established reputation, and we are using it as a key component of our payer strategy. Understanding and promoting patient activation is crucial for influencing health outcomes, which is a priority for everyone at Phreesia. We intend to continue utilizing the work that Dr. Hibbard did with the PAM. If I had to describe our progress, I would say we are just getting started, and we are very excited about the potential impact ahead.

Okay. I appreciate that and congrats to Mike and his team on the expanded market opportunity. I guess a follow-up there for Randy. Initially coming into the year, the EBITDA guidance at the midpoint was above negative $150 million. So you improved it again today. But more importantly, from where we started the year, it's a very dramatic improvement. So I'm hoping you can walk through maybe some of the details there, what's driving that. And then certainly, I want to get your take on Deion Sanders at your alma mater. Thanks.

Yeah, prime time. There's a lot of excitement. My son actually goes to the University of Colorado, so he's following that. As far as the march towards profitability, our leadership team is very focused on our fiscal '25 goal of being $500 million run rate in '25 and returning back to profitability. I’d just say that every leader is thinking very carefully about their resourcing and what is needed to get to that top-line goal. And we also feel very strongly that we have enough cash in the bank to execute on our '25 plan. So I would say that it's a joint effort of the leadership team, just really focused on where we're going and what we need to do to get there. The team has been incredible this year thinking about this and driving towards it.

Okay. Perfect. Congrats again to Mike. Thanks.

Your next question comes from the line of Richard Close with Canaccord. Your line is now open.

Yes. Thank you. Congratulations on the great results. You called out winning larger deals in the payment processing and talked about price in that description. Can you provide a little bit more context in terms of that?

Yeah. What we realized is that a lot of large customers, really when we started working with them and we built that trust, we were very surprised at how a lot of them were being price-gouged almost by some of the large payment processors. So just by offering, frankly, competitive prices, we're able to significantly help them. And so I think the surprise has been our ability to understand how we're able to offer them a fairly competitive price while at the same time allowing them to use those dollars to run their businesses, the health systems and the hospitals. Those dollars are instant flowing to a payment processor, they're coming to us and/or back to the hospital. It's been really advantageous to all the stakeholders. And the team has done a great job of working with larger clients and winning some of that business. It's just, all around, wonderful.

That's good to hear. Balaji, maybe you could go a little bit deeper on the $1 billion payer TAM in terms of how, what's the buildup there? And is that just for the current products like as you're thinking MemberConnect and activation or any thoughts there?

As noted in the letter, we described MemberConnect and its current version in relation to health plan enrollment and patient activation, or rather member activation. Richard, we will be somewhat cautious about pricing here. However, at a high level, as Randy mentioned, it's quite similar to how we generate revenue from our life sciences sector and its engagement model. Essentially, we receive payments from various payers, including government payers primarily in Medicare Advantage. For some of the activation initiatives, payments may come from commercial plans or value-based care plans with payers. These payments are made on a per engagement basis, and there is a range of expectations regarding what we can receive. Although it's still early, the two key factors are the number of people we can engage and the payment we receive for each engagement. I'm not trying to provide a precise estimate, but...

Can I add one more point regarding that?

Sure. Thankfully. Yes.

Yeah. So are you essentially getting paid for lead flow? And if they activate or sign up for the plan, is there any type of residual revenue associated with that or...

No. And hence, again, the description, we renamed the revenue line with revenue category, and it's engagement based, non-recurring.

Yeah. There's no residual today.

Excellent. Thank you.

Your next question comes from the line of Jessica Tassan with Piper Sandler. Your line is now open.

Thank you, and congrats on the good quarter. I was just curious to know, so when you sign a new provider client to the network solutions that you've contracted more broadly automatically extend to that provider's patients assuming he's a network or how does that work?

Yeah. Assuming so when we set a new provider, if they give us permission, then they would be part of the network and we could deliver digital engagement for either life science or MemberConnect.

Got it. And then I'm sorry.

Go ahead.

Just as you guys diversify the revenue streams, is there any thought to potentially offsetting some of the subscription burden incumbent upon the provider with some of these alternative sources of revenue or should we still expect that the kind of total addressable opportunity per subscriptions on a per provider basis is the same as it always was? And that's it for me. Thank you.

No. We expect subscription to stay where it was. This isn't an alternative. This is in lieu of.

Got it. Thank you.

Thanks, Jess.

Your next question comes from the line of Stephanie Davis with SVB. Your line is now open.

Hey, guys. Congrats on a great quarter. I was hoping to prod a little on that transaction you commented on because you said that upmarket, you were seeing a lot of price gouging from the other merchant acquirers. At 3%, like you guys are solidly 50 bps above market. Is there anything else in your transaction yield beyond just the route merchant acquiring that we should know about or is pricing really that bad in the market?

I would say pricing is really that bad, right? Just it is unbelievable. People are taking advantage of our hospitals in America, it is very upsetting, Stephanie.

That's insane. So with that in mind, would you go to something more in line with a traditional merchant acquiring? And does that mean you're not bumping into the traditional merchant acquirers like the Bank of America Merchant Services and Chase FinTechs of the world or are they just kind of taking advantage of it? And they're still doing that with the 3% pricing.

Yeah. And they have all these hidden fees and stuff. It's crazy. It's crazy times.

Got it. So does that mean we're going to see more of this payment mix change over time as you get more traction in that hospital side of the world?

I mean, Stephanie, I would say the reason we pointed this out is, if you remember, historically, we've talked about that percentage going down. In fact, it's holding in and was slightly up, Randy, right?

Yeah. It's been fairly constant. Yeah, it is slightly up.

And we did think it would just go down as we enter the enterprise.

All right. I'll look for more of that hospital mix going forward. Thanks, guys. Wait, quick comment. Do you have anything on the EBITDA raised by less than the beat? Anything to read through there, just conservatism?

One thing to consider is that our fiscal year-end extends into January. As a result, one of the factors that increases our expenses is the employer taxes we need to pay. This leads to a notable rise in our quarter-over-quarter expenses as we move into a new calendar month within our fiscal year. Specifically, this pertains to social security taxes and resets.

Understood. Thank you.

Taxes are important.

Your next question comes from the line of Glen Santangelo with Jefferies. Your line is now open.

Okay. Thanks for taking my question. Hey, Chaim, I want to dig in on this average number of client growth. If I look at the year in totality, in the first quarter, you grew 33%, then you grew 40% and now you're growing 42% this quarter. I just wanted to get a sense for you as to what's driving that acceleration. Because it seems like a lot of other companies, not necessarily in your sector, but just more broadly, are starting to feel the effect of a difficult environment. Your numbers are accelerating here. And I'm kind of curious, is there anything going on here with respect to increased promotion activity or is it productivity from the recent hires or maybe anything shifting in the competitive landscape? What do you think is sort of driving that acceleration?

First and foremost, it's essential to note that we have a great product that delivers significant value, and regardless of economic conditions, people seek value. We provide that value, demonstrating excellent return on investment when opting for free drugs. In times of budget constraints, businesses look for solutions that can drive their success. Additionally, our team has executed exceptionally well. It's not just the sales team performing admirably; our SCRs have been outstanding, along with our implementation, customer success, and product organizations. The company is thriving, and I can't emphasize that enough. I was curious if anyone would raise questions regarding our performance since I pay attention to external feedback and read various reports. I inquired with the team about our closing opportunity rates, as we monitor that metric on a monthly basis.

So from opportunity to close, Glen, we looked at two buckets, small and then in the enterprise area. And in the small, we've seen the change maybe tick up by a day or two in terms of opportunity to close. And then more in the enterprise area, it's been about 10 to 15 days pickup, comparing as of October versus last year.

So when you think about it, taking a day longer to close some deals and about 10 to 15 days longer to close other deals than we traditionally see. I guess you could say we've seen it. I don't know if that answers your question.

Yeah. No. That's fine. Maybe if I ask a bigger picture question. Just sort of going back to some comments you made a quarter or two ago about the market in total. I think you said last year, there were about 1 billion physician visits, if I remember correctly. And you said you guys are now at the 100 million mark, so maybe 10% of the market. And maybe at this point, 30% or 40% have done the automated check-in. I wanted to sort of verify those numbers, but also really get a sense for what percentage of the physicians today already have some type of solution. Because I think what investors are really trying to understand is sort of how penetrated we are into the TAM at this point as we are all trying to assess the durability of this revenue growth. Thanks.

Yes. I’m not sure I’ll provide the perfect answer, but I expect Balaji will contribute or clarify if needed. We estimate that we've captured about 10% of the market, which includes both physicians and hospital visits. Overall, when considering ambulatory and hospitals together, we believe our reach is about 1.3. There has been growth in the hospital sector, and we feel we're still at roughly 10% of the available market. We see significant room for growth ahead. We believe we have successfully converted a good number of users, even among those trying other solutions. Our higher success rates stem from our ability to achieve 80% to 90% self-service usage, which we think drives the return on investment as most patients engage with our product. Therefore, we feel there is a lengthy growth trajectory ahead, which is why we made substantial investments over the past few years and are beginning to see returns from those efforts. We are grateful for the confidence our investors have shown in us to make these investments aimed at significantly increasing our market share. I would like to take this opportunity to thank them for their trust.

And Glen, the only thing I'd add to what Chaim said is just that in 2019, we reported about 54 million visits. So that's about 5% then, and closer to 10% now. We are aiming to double the business by looking at our targets for '25. That's the general direction we're headed. But quarter-to-quarter, we're doing pretty well.

All right. Thanks a lot. Appreciate the colors.

Your next question comes from the line of Dale Grosslight with Citi. Your line is now open.

Hi, guys. Thanks for taking the question. I want to piggyback on some of the questions around adding larger clients for the fourth quarter. Are these clients in your, what I would call your core ambulatory channel or are you seeing strength in the acute care health system setting?

I think we're seeing a lot of expansion activity.

Everywhere.

So we're in hospitals. We're in large systems. The opportunity to expand is there, and we're doing well.

And we're selling them and getting them to use, have a phenomenal amount of value from a lot of our new products. So I think it's expand the footprint, but it's also upsell and cross-sell, but I like to think about it as providing way more value.

Yeah. So you're not weighted to the acute care setting for fourth quarter?

No.

What are your competitors in the life sciences advertising space noted last quarter that there was some weakness recently around pharma companies potentially cutting back on digital ad spend amid a pending recession? Obviously, you didn't see that this quarter, but I'm curious what your conversations with the pharma companies have been like. And if you expect to see some cutbacks next fiscal quarter in the advertising spend given a pending recession.

I can't comment on other companies. However, I can highlight the exceptional efforts of our team in working with life sciences clients. The feedback indicates they are working diligently. While we are in the selling season, I believe we face significant competition for inventory. Our life sciences team has been outstanding in collaborating with clients and showcasing impressive returns on investment, enabling our continued growth. It's not about macroeconomic factors; it's about whether we are delivering exceptional value to our clients. Our life sciences organization has excelled in this regard, demonstrating the effectiveness and value of our platform. Overall, we are doing well.

Okay. Congrats on the quarter. Thank you.

Your next question comes from the line of John Ransom with Raymond James. Your line is now open.

Hi there. Reflecting on your decision to accelerate investments last year to drive growth, now that we are about a year into this, what has surprised you, both positively and negatively? And what aspects have met your expectations?

I don't think we have enough time on this call, Mr. Ransom, for all the things that have surprised me and...

You need to do better than that. That's all I have for now.

I think it has been very interesting to observe that our execution has generally aligned with our plans. However, I have been very pleasantly surprised by the volume of feedback and the level of trust we've received from our investors and employees. As we continue to execute, the relief we often feel from the support we get from the investor community is something I truly appreciate, as well as from all of you on this call. I would not necessarily label this as a surprise, but it has certainly been a significant investment we've made. We are still in the midst of that journey and beginning to show notable improvements and success along the way, but the support we received has genuinely surprised me.

All right. To dive deeper into that, which do you think has had a greater impact, the increase in R&D or the boost in sales? What insights have you gained from rapidly increasing your sales team? Did this lead to higher churn rates on the back end, or have you demonstrated that you can successfully scale your sales team without experiencing diminishing returns from the additional hires?

I think that with hiring, sometimes you bring in a lot of people regardless of the category, and they may not always be the right fit for the organization. It’s important to recognize this quickly for everyone's benefit. We don’t see ourselves as different from other companies in this regard, apart from the internal recognition that not everyone is the right fit for Phreesia. Phreesia is a unique place. I would say that our sales team has performed exceptionally well. Regarding your earlier question about R&D, we continue to invest in R&D because, ultimately, the product is central to our identity as a company. The product needs to consistently deliver tremendous value to our clients. We don't treat patients; that's their role. Our aim is to enhance their experience within the healthcare system and assist patients in becoming more engaged and improving their journeys. We feel fortunate to be involved in these efforts.

And do you have everybody over for dinner again tonight? Did you make dinner?

We're having dinner together at the table, and we've received feedback about the audio, which seems to be struggling since the mic is placed on a pillow in the center. Hopefully, it’s clear for everyone.

And your kids are somewhere where they're not making a lot of noise.

The kids have left the building.

All right. Thank you.

Great.

Your next question comes from the line from Scott Schoenhaus with KeyBanc. Your line is now open.

Hey. How are you doing, team? Congrats on the results. Most of my questions have been asked. Just wanted to kind of drive on this last point that you just kind of mentioned about your team. But really, your sales and marketing expense as a percent of revenue reached the lowest levels we've seen since 2020. And you just posted record new client wins with healthy adds expected in the fourth quarter. How are you getting so much efficiency with your sales and marketing team now?

Well, I think it's the fact that our whole organization understands what we have to do. Randy mentioned the leadership organization, but I would say it's the whole organization, right? It's winning opportunities, making phone calls, the SCRs, creating the demand of our pipeline, but also being able to demonstrate that value and keep that client alive and work cohesively. A lot of that also, frankly, depends on our product organization, building great products, which we do. Our product is great. It's great because we have a great product organization. When you have a great product, you are able to demonstrate value quickly. It does the things that you say you're going to do, and it does them quickly. The reason we're able to do what we do is because of the investments we made over years. We made a lot of investments, and we're now starting to see the fruit of those investments pay off. And we will continue to see that for some period of time. We’re going to keep investing in this amazing thing that we get to do, which is called Phreesia. But the reason we're seeing improvement is the team. The team just executes on their targets, beats them, and wakes up the next day and does it again. I can't thank them enough.

Thanks. That’s all from me. Great results.

Your next question comes from the line of Joe Vruwink with Baird. Your line is now open.

Great. Hi, everyone. This may be overly simplistic, but over the last four quarters now, you've invested $30 million to $34 million, let's say, a quarter in sales and marketing. And over that time, you've also added clients at a clip typically over 200 a quarter. So just leaving the composition of a client ad aside, is the productivity associated with the current team and the current expense base something that you think supports the same level of client growth going forward?

Yes, we believe our current headcount is sufficient to achieve our goal of reaching $500 million by 2025. We have confidence in our team’s productivity and their capability to deliver on this plan.

Okay. Thank you. And then just so I understand the comments that in the fourth quarter, do you expect to see a greater mix of larger clients added and expansion activity? How does that kind of flow into the average subscription per client metric one quarter relative to a big installed base? I appreciate it doesn't move the needle immediately, but is this sort of a function of time where eventually the activity you're seeing or, I should say, many quarters now of activity, eventually, that will be more reflective of just what's happening in the broader installed base, and that's where you start to get per client growth?

Yes, you're correct. I think one quarter isn't going to have a significant impact. Looking at the past six quarters, the number has been between 11.2 and 11.6. We mentioned it would moderate, meaning it could increase slightly. However, the quarter-to-quarter results also depend on the mix. We've gained many new clients, and then there's a cycle where you begin to expand and cross-sell to the new clients that were added in the previous quarter. Overall, while it would moderate, it tends to fluctuate each quarter based on the final mix.

Okay. I’ll leave it there. Thank you.

Your next question comes from the line of Ryan MacDonald with Needham. Your line is now open.

Hi. Thanks for taking my questions and congrats on a great quarter. Chaim, you already mentioned in the shareholder letter that you're working with some health plans during the Medicare open enrollment period. I'm just curious, one, with those clients, how are you measuring ROI? And two, to the extent that you've sort of seen it thus far, what sort of ROI are you delivering for those clients relative to sort of the benchmark?

I don't know if we're going to disclose some of it right now just because we're in the middle of a lot of these things, but the early indications and anecdotal feedback have been very, very positive. I'm sure Michael and the payer team will start releasing some of that information over the next 12, 18 months, and I'm sure we'll make it easily digestible for the investment community. But we are very excited, and we do think that we will have broad-based value impacts for the payer and pay buyer communities. The early indications have been very, very positive.

That’s super helpful. I appreciate it.

If it wasn't clear from the earlier question, I mean, the value proposition is member acquisition, member activation, that's sort of how to think about it.

And member retention.

Got it. Okay. That's helpful. And then in terms of as you look to continue to build out these new businesses or these new offerings, what sort of incremental investments need to be made, if any, on sort of go-to-market motion there? And then as you contemplate sort of the $500 million target, what potential do you believe there is for these new offerings to accelerate your path to that $500 million?

Let's just take what we like our commitment. We feel really good about it. One point, in front of the other for now. Look, I think one of the reasons why we also wanted to be very clear to talk about this opportunity to our investors is we have made a lot of investments in it, and we think it's our responsibility to articulate where some of those investments have gone. I think that's the compact we have with our shareholders. Once it got to a certain size and we started talking about it, we thought it was just the right thing to do, and we're pretty excited about it. We're in market talking to a lot of early clients about it, and they're pretty happy. We thought this was the right platform and forum to properly articulate this. We'll be talking about it more over the coming years as it grows.

We do think it's going to be a big part of us getting to where we have committed to being in the coming years.

Understood. Thanks for the color and congrats again.

Well, thanks, Ryan.

Your next question comes from the line of Jack Wallace with Guggenheim. Your line is now open.

Hi. This is actually Sandy on for Jack. Obviously, a lot of the questions have been asked and answered. But maybe just one, and I think I know the answer because you're enthusiastic across all the business lines. But when I look at the lift in revenue guidance and how you've been bringing that up through the year against my model at least or Jack's model, the network solutions, new innings has been the one that's really outperformed this quarter. Is there any certain area you'd call out or do you just generally feel more positive across all three of the segments?

We have a positive outlook on all three segments. While payments fell slightly short of our expectations at the start of the year, we anticipated fluctuations throughout the year based on factors like flu season and visitation rates. The team recognizes this variability and approaches the year with caution, planning for challenges while hoping for success. Our focus is on maximizing positive outcomes and mitigating negative ones. For 18 years, we've worked hard on the business, paying attention to details, surrounding ourselves with exceptional people, and empowering them to make a real impact. If we continue this approach, as we have for nearly two decades, we are on track to build a significant presence in healthcare, and we feel confident about that.

Great. That's really helpful. And then just a quick housekeeping. The number of FCRs in the quarter or at the end of the quarter?

The number is 175, including FCRs.

Great. Okay. Thanks so much.

Thank you and give Jack our best if you talk to him.

Well, the baby was delivered last night. So everybody is healthy and happy and family's expanded.

That's awesome.

This concludes today's conference call. Thank you for attending. You may now disconnect.