HMS Holdings Corp
Q3 2016 Earnings Call Transcript

Published: 9 Nov 2016

[Operator:]

Good day, ladies and gentlemen, and welcome to the HMS Third Quarter 2016 Earnings Conference Call. At this time, all participant lines are in a listen-only mode to reduce background noise, but later we will be holding a question-and-answer session after the prepared remarks, and instructions will follow at that time. As a reminder, today's conference call is being recorded. I would now like to introduce your first speaker for today, Dennis Oakes. You have the floor, sir.

[Dennis Oakes:]

Thank you, Andrew, and thank you, everyone, for joining the HMS third quarter 2016 earnings conference call. With me this morning are Bill Lucia, our Chairman and Chief Executive Officer; and Jeff Sherman, our Chief Financial Officer. Earlier today, we distributed our quarterly earnings release through our website, hms.com, under the Investor Relations tab. We also posted an investor presentation containing supplemental information, and we will not make specific reference to that presentation in our prepared remarks. This call is being webcast and can be accessed via the Events and Presentations tab on our website, and a replay will be available of the call later this morning. Some of the information we discuss today, including the company's future expectations, plans and prospects, is considered forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the company's current expectations and actual events may differ materially from those expectations. We refer you to the company's filings with the SEC including our Annual Report on Form 10-K, and our quarterly reports on Form 10-Q. Those filings identify important risk factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements. All information discussed on this call is based on the information available to us as of today, November 9, 2016, and the company disclaims any intent or obligation to update any forward-looking statements as a result of developments occurring after today's call, except as required by law. Finally, we may refer to certain non-GAAP measures during the call, and our earnings release and investor presentation include a reconciliation of those measures to GAAP. For the Q&A session, we ask that you limit your inquiries to one question and one follow-up so we can get through the full list in a timely fashion. We're now ready to begin. Bill?

[William C. Lucia:]

I just like to put aside the national election results and any associated sleep deprivation just for a moment to talk about our quarter. We now have three quarters of 2016 behind us and are essentially where we expected to be in terms of our overall financial performance. We also have clarity on two issues that created many months of uncertainty; our third-party liability contracts with the state of New Jersey and our work for CMS under the Federal Medicare Recovery Audit, or RAC program. Additionally, new business opportunities are coming our way as a result of two occurrences we could not foresee when the year began. The acquisition we completed in the third quarter of the Essette care management platform and the award we received in the second quarter as one of seven Unified Program Integrity Contractors, or UPICs, as they are known, to work with CMS over the next 10 years to combat healthcare fraud in Medicare and Medicaid. With that year-to-date overview as a backdrop, I'll focus my time this morning on the fundamental strength of our business, while also highlighting some of the strategic steps we're taking to leverage our assets – our data assets, our customer base and our scalable business model. Our coordination of benefits and payment integrity work on behalf of over 250 health plans and our Medicaid third-party liability and related work with 45 states gives us unparalleled access to claims and eligibility data. As of the latest CMS reporting period, which closed on August 31, our customer database includes approximately 91% of the newly enrolled Medicaid lives that have joined the program since the beginning of the October 2013 Medicaid expansion resulting from the Affordable Care Act. As the agent for State Medicaid programs, we also receive eligibility data from hundreds of health plans nationally who are not customers of ours. They provide us data in order for HMS to complete our COB work for our state and Medicaid MCO clients. Together with data we received directly from our customers, we have made our health plan database to include eligibility data for roughly 90% of the covered population in the entire nation in both private insurance plans and Medicaid programs. As our state government and commercial health plan businesses grow, either adding brand new lives or selling incremental products to existing customers, we continuously add to the valuable collection of data we have built over the last 30 years. Through the first nine months of 2016, we added 17.2 million new lives through our commercial health plan customer base, which in total lives over 100 million for the first time earlier this year. We also sold additional products to almost one quarter of that population, 24.4 million lives, including 10.8 million in the third quarter alone. Roughly 60% of new health plan sales this year based on projected revenue are core payment integrity products where we are relatively underpenetrated compared to our COB business. The following comments provide a sense of the momentum our commercial health plan sales team has generated so far this year. Total sales year-to-date for contracts that are typically three years in line are substantially ahead of where they were in comparable period last year. Total value of individual contracts is running significantly higher than the average contract size in the first nine month of last year, so we are making bigger sales. And, finally, the large national plan continue to buy relatively more of our products compared to the balance of our health plan customer base which is a significant driver of overall sales growth. Though incremental sales are less robust than the state government business, because it is such a mature market for HMS, they continue to be a stable and predictable source of revenue and earnings, particularly now that the New Jersey contract is fully executed. That new six-year contract which was signed in mid-September includes a four-year base and two one-year renewals to continue the TPL and subrogation work we have done for the state for 30 years. We have spoken previously about the Massachusetts TPL contract, which was scheduled for re-bid this year. We do still expect the RFP to be issued before year-end, but it now seems unlikely that the bid process could be completed by December 31, so we currently expect our contract to be extended. Some of our largest and higher profile state customers have been the focus of attention over the last two years. It's important to remember that we have a very broad base of state accounts with whom we do a variety of work all across the nation. Government work is almost always competitively bid. So, our state proposal teams are in constant motion. Occasionally, we are able to add services under existing contracts as we have done in recent months with the state of Florida. And in addition to New Jersey, the third quarter included notice of the TPL contract awarded in Missouri and Medicaid RAC contract in Wisconsin, an award for the subrogation work we do with the North Carolina State Employee Health Plan, a new three-year contract with the state of Maine for credit balance and long-term care audits, and a new RAC contract in Colorado. In some states, all of our services are bundled into a single contract. While in others, we have multiple contracts. In both cases, contract extensions either formally agreed to with initial contract term or at the convenience of the state are a very regular occurrence. In the third quarter alone, 10 of our state customers extended contracts for a range of services, including utilization review, RAC auditing, pharmacy COB, child support and TPL services. So, our base case continues to be low-single digit growth in our state business for 2017 and beyond. We do have innovative programs in the early development stages that should bolster that growth profile. We also believe our newly acquired care management and coordination solutions are applicable to the state market. And finally, and further Medicaid expansion is – will be a plus for HMS. But our real growth engine presently is the commercial health plan business which now includes other risk-bearing entities with our acquisition of Essette. Health plan revenue in the third quarter of $59.2 million was a quarterly record, and year-over-year growth through the first nine months of 2016 was just shy of 18%. Reaching our full year health plan growth target of 18% and 20% is challenging since we had a particularly strong fourth quarter last year. But we do expect another record high for health plan revenue in the fourth quarter to create a path to achieving our objective. Our year-to-date experience with our commercial health plan customers is overwhelmingly positive with a single frustration being delays we have experienced in the implementation of new or expanded payment integrity business. As we've explained previously, payment integrity sales present some implementation challenges, which can stretch out the timeframe of initial revenue generation. We continue to do everything possible to avoid or reduce implementation delays, but still must contend with customer actions beyond our control. A good example this year is, one large national customer who initially indicated their intent to resume short-stay auditing at the beginning of the year, but delayed doing so for six months. So, the first dollars (11

[Jeffrey S. Sherman:]

Thank you, Bill, and thank you to everyone who's listening to our call this morning. I want to begin by echoing Bill's view that our 2016 year-to-date financial results are encouraging, both in terms of the fundamentals of our business and the key strategic objectives we established as the year began. With the RAC contract awards announced last week, all of the issues which have been a distraction for many observers of HMS over the past two years are now behind us. We have seen a shift of focus in recent months among those who follow our company to the fundamentals of our business, its growth trajectory, scalability, cash generation and potential for expansion through acquisition and we heartedly welcome that change. Before getting into the details of our quarterly performance, I do want to explain the tax benefit we identified in the quarter, which will reduce our effective annual tax rate by about 300 basis points to approximately 37%. This is obviously a very positive development which will impact both cash flow and net income. Recognizing that 40% was high, we engaged an outside consultant to help us identify strategies to optimize our tax rate. The result of our work, which was concluded in the third quarter, was the identification of certain research and development tax credits and domestic manufacturing deductions to which HMS is entitled. We will utilize those benefits in 2016 and going forward, but have also applied for refunds in connection with the previous four open tax years of 2012 through 2015. We ordinarily do not provide revenue estimates by customer group on a quarterly basis as the year progresses, but given the number of moving parts we have had, I think it is prudent to provide a framework for expectations about our fourth quarter performance. On our second quarter call in August, we projected an average quarterly run rate of approximately $55 million for state government revenue over the second half of the year. Third quarter came in slightly below that level at $53 million. But we expect the fourth quarter will be $3 million to $5 million higher, primarily due to year-end work done annually for some of our state customers. As Bill mentioned, our third quarter commercial health plan revenue was a record $59.2 million, but the previous record was set in the fourth quarter of last year at $58.5 million, so we will need sequential growth of approximately $10 million to reach our full year growth target. We have good visibility on revenue expected from a number of implementations scheduled throughout the fourth quarter, which will generate incremental revenue compared to the third quarter. In addition, it is very reasonable to expect the usual year-end push from our commercial customers for additional savings, though the magnitude of that work is difficult to estimate with certainty. Last year, we had approximately $5 million of one-time commercial health plan projects in the fourth quarter, and our current forecast assumes a similar level this year. With our customers' interest in maximizing their savings fully aligned with our goal to finish the year strongly, we continue to believe we can reach our year-over-year health plan growth objective. We are still completing the budgeting and planning process for next year, so we'll not provide formal 2017 guidance until our fourth quarter call in February. Considering, however, the strong year-to-date sales, sustained demand for our products among the nation's largest health plans and the added tailwind of macro healthcare environment where enrollment expenditures are expected to grow exponentially over the next decade, we continue to see the commercial health plan business as a high-teens grower next year and beyond. Medicare RAC revenue was higher than expected in the third quarter, but almost all of that related to reconciliation and continued invoicing activity and certain recruitments as the contract was winding down. We do not anticipate any meaningful level of auditing in the fourth quarter under the new contract announced last week even if it is finalized before year-end, but do expect to have a better sense of the RAC revenue opportunity when we give 2017 guidance in February. Two items of note on the expense side last quarter include fees related to the tax project, M&A and other consulting fees, which together totaled approximately $2.1 million. Both are included on the SG&A line of the third quarter income statement. Operating cash flow in the quarter was consistent with our expectations. Principal uses of cash in the quarter included approximately $21 million for the Essette acquisition and a stepped up level of capital spending compared to the first half of the year, totaling approximately $9 million. We expect a similar level of CapEx in the fourth quarter as we continue to invest in IT infrastructure and expand IT capabilities. The September 30 balance sheet reflects the Essette acquisition with approximately $17 million added to goodwill and approximately $4 million related to intellectual property, customer lists, et cetera, which will be amortized over various time frames. Even with the Essette expenditure, we ended the quarter with a healthy cash balance of $171.5 million. Our primary capital allocation focus continues to be acquisitions that complement our core business, expand our data analytics capabilities, particularly in connection with the newly added care management platform or add to our capacity to detect fraud. Our pipeline of acquisition opportunities remains quite full and we are meeting regularly with potential strategic partners and target companies. We intend to maintain our discipline, but also aggressively pursue the deployment of capital to acquire assets which will help us better serve our customers and incrementally grow our business. We continue to see our balance sheet as a good source of inorganic growth and, based on a diligence we have conducted over the last 18 months, we remain confident we can prudently deploy capital in a manner similar to what we achieved with the Essette acquisition. Bill will now have concluding remarks, and then we'll be ready for questions. Bill?

[William C. Lucia:]

Thank you, Jeff. I think it is fair to say that projecting the impact of the election on our business with any certainty is not possible at this very early stage. But we do not currently anticipate any negative consequence. At this time, we believe that it's unlikely there will be major changes to Medicaid or Medicare programs which would impact enrollment levels, at least in the short term. And we have almost no exposure to the healthcare exchanges, which have been one of the areas of greatest focus. Essentially, our business is about saving money for the healthcare system, which is a notion that should have wide support throughout the political spectrum. In fact, we take great pride in our work at HMS, on behalf of our customers and their members, preventing healthcare dollars from being misspent in our cost containment business, so money saved can either reduce the overall cost of care or reallocated to those who benefit from government programs such as Medicaid. We look forward to expanding our contribution to the healthcare system as we further build out our data analytics capacity for care management and care coordination. I want to conclude today by thanking all of my co-workers for both their hard work throughout 2016, which produce three quarters of solid financial performance and, in advance, for their extra effort during our final push to close out the year by meeting our full year objectives and setting the stage for 2017. I also want to take this opportunity to thank our customers for their business and our shareholders for their support and confidence in our strategic direction. We are now ready for the first question.

[Operator:]

Our first question comes from the line of Mohan Naidu from Oppenheimer. Your line is open.

[Mohan Naidu:]

Thank you so much for taking my questions. Bill, on asset acquisition, it sounds like you're getting into solutions that could help the care delivery organizations and providers, which is kind of a different set of customers compared to what you do right now. Can you help us understand what you guys are trying to do there, especially trying to go after a different set of customer base?

[William C. Lucia:]

Thanks, Mohan. So, it's not that we're directly serving providers unless they are at risk. So, as everyone knows, significant number of providers have assumed risk, there's companies that serve helping providers assume risk. But they have the same challenges as the health plan without the same infrastructure at times. So, our goal would be really to serve any risk-bearing entity, could be a provider taking risk or building a health plan. It could be a health plan. It could even be a self-insured employer better understanding the risk that exist within their population and then better managing the care around that risk. We do believe that and the numbers say it themselves that is a smaller population that generates the highest amount of cost in our nation, and better understanding those members, understanding the co-morbidities between medical and behavioral health and better managing them so they don't fall through the cracks will have better outcome and it should impact system overall. So that's really our focus, but it's really any entity of scale that's taking risk and would meet our systems.

[Mohan Naidu:]

Okay, got it. Maybe one quick question around Medicare RAC. So, while we don't know when the revenues are going to kick in, how should we think about the expenses as you ramp up to service those new contracts?

[Jeffrey S. Sherman:]

So, Mohan, this is Jeff. The core cost infrastructure for the RAC contract is already in place, our IT systems, et cetera. So, really, the incremental cost that will be added, primarily, would just be medical records coders and nurse auditors that will scale up with increased volume. So, I think we can scale that up appropriately. As we have grown in the Medicare Advantage side and the Medicare RAC revenue was declining, we shifted some of those resources over to the Medicare Advantage side, but we'll be able to utilize those resources for both, the CMS population, traditional Medicaid patients, as well as our Medicare Advantage population.

[Mohan Naidu:]

Okay. That's great. Bill, maybe one clarification there on the new contract; is this considered the final contract or are any protests expected out of – on this awards?

[William C. Lucia:]

We can't really – I don't think we can guess about the protest. I do know that CMS's policy is to provide a debrief for bidders that request one, and then protest has to be filed timely. So that's all we know at this point. If there are no protest, we would hope that CMS would quickly go into implementation and would start approving recovery audit scenarios so that we can get back to the work that's so important to the Medicare Trust Fund.

[Jeffrey S. Sherman:]

And certainly, from the standpoint of the current states that we're already operating in, we have all the technology, infrastructure, interfaces in place, including with the MACs. So, once we get to green light, particularly for the states we're already in the vast majority of the region, we should be able to ramp up fairly quickly.

[Mohan Naidu:]

That's great. Thank you so much for taking my questions.

[Operator:]

Thank you. Our next question comes from the line of Dave Windley from Jefferies. Your line is open.

[David Howard Windley:]

Hi. Good morning. Thanks for taking the questions. I wonder, Bill, if you could maybe talk a little bit about in the Medicare RAC bidding how you or what your strategy was to kind of accommodate the lower claim volumes and the long AR cycle in your bid, i.e., sounds like more resources to go after a smaller opportunity, and how do you make that economic for yourselves?

[William C. Lucia:]

I'll start and Jeff may add some color to this. I don't think it was necessarily more resources. We do have resources that we have been moving back and forth based on opportunities between Medicare RAC and very similar work we do for our health plan business. So, there's minimal new investment. Ours was really based on – the fee we did was based on the volumes that were outlined both in CMS's memo about the ADR limits, as well as the contract and the longer payment terms. And we opted to develop a fee that we felt, as we modeled it, would provide an acceptable level of margin for our company. Jeff, do you have?

[Jeffrey S. Sherman:]

Yeah, I think that covers it. Really, it was for us based upon the ADR limits and trying to project the volumes of audits that we could do, how could we achieve a reasonable margin, and based upon the costs we had and the volume of work, we bid to get to that reasonable margin, including cost to capital for the elongated payment terms.

[David Howard Windley:]

Okay. And I gather from your answer, you're not willing to put a percentage on that.

[Jeffrey S. Sherman:]

In terms of the margin, we don't provide...

[David Howard Windley:]

Well, in terms of the contingency fee is what I was – like what your – I think we saw 9.5% on the old contract. I'm curious what it would be on the news.

[Jeffrey S. Sherman:]

Well, the contingency fee is public. It's a blended rate that was over 17% for HMS. So, it's a blended rate of four components including CMS referrals, complex and automated reviews as two individual category and extrapolation.

[David Howard Windley:]

Okay. All right. Fine.

[Jeffrey S. Sherman:]

So the fee is published on the CMS website.

[David Howard Windley:]

And that reflects an accurate blend of what you think your volumes would be across the various sub-components?

[Jeffrey S. Sherman:]

That's correct based upon what we know today.

[David Howard Windley:]

Okay. All right. And then second question on the tax impact. Your press release outlines kind of two different items, the $1.1 million and the $6.2 million and then as you're, later in the release, discussing kind of the impact to the adjusted number in the quarter, the text highlights the $6.2 million. I guess I'm wondering what the difference is between the two amounts that they're not both kind of call-outs relative to the GAAP versus adjusted?

[Jeffrey S. Sherman:]

One was just related to the prior work and one was related to the current year tax impact, Dave. So that was the primary reason. We're really trying to isolate the prior year favorable impact and just called out the current year impact separately.

[David Howard Windley:]

Okay. And the 37% is that your sustainable tax rate into the future beyond 2016?

[Jeffrey S. Sherman:]

That is correct. That's our estimate right now based upon on the work that's been done.

[David Howard Windley:]

All right, great. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Ryan Daniels from William Blair. Your line is open.

[Ryan S. Daniels:]

Yeah, I'll start with a quick follow-up, thanks for taking the question, on the Medicare RAC. Given that we do know kind of the audit limitation, the payment terms, your contingency fee, do you have any view – and I'm not asking for 2017 contributions, maybe the timing is uncertain, but a view of, when it ramps up, what the quarterly run rate sales might look like for the organization.

[Jeffrey S. Sherman:]

Yeah, Ryan. This is Jeff. I think that's still going to be dependent upon CMS approval of RAC audit scenarios. So, we're going to still have to continue to submit RAC audit scenarios. So, I think we're going to look to get more clarification on the pace and speed of that, number one, and there is still the potential to do more audits for providers that have a higher error rate and we haven't got a lot of additional guidance on that yet. So, hopefully, we'll get some clarity on how that process would work. Both of those would have an impact on how we view the total volume of claims that we could audit. And there is still an opportunity or a potential for change. Keep in mind the ADR limits being reduced from 2% to 0.5% was an administrative change under CMS, so there is still a potential with the new administration coming in, as they look at potential ways for finding additional savings, particularly that help support the solvency of the Medicare Trust Fund then that ADR limit could be expanded.

[Ryan S. Daniels:]

Okay. That's helpful color. So we'll still stay tuned. And then maybe one for, Bill, just on the strong new product sales, especially to existing lives, can you offer a little bit more detail? There are specific audit types that are in demand, are those prospective or retrospective? Just any additional color on what's driving kind of strength there and if there is any common themes among the client base on what they're requesting?

[William C. Lucia:]

Well, I can tell you that a couple of the areas of focus, clearly, are health plans that have decided that they do need to audit short stays. It was a decision by CMS to no longer audit short stays and, of course, everybody knows the long and royal controversy with the AHA over that. But, in reality, health plans don't get different money and they have to live within a premium band. So, there is a little more acceptance to rollout short stay audits both in Medicaid and Medicare advantage plans. And then, there's other lines of cost that are growing significantly for them, specialty pharmacy, (36

[Jeffrey S. Sherman:]

Yeah. And I would just add, again, as we do our work across our state and health plan customers, we have a unique view on providers and how they're acting and how they're operating as well. So, where we find opportunities, in one plan, it can be applicable to other plans. That's really, with the large view we have, is our unique ability to help provide findings across the system from particularly one plan to another that even the largest health plans still only have a view of their customer database.

[Ryan S. Daniels:]

Got it. All right. Thanks a lot for the color, guys.

[Operator:]

Thank you. Our next question comes from the line of Steven Valiquette from Bank of America. Your line is open.

[Steven J. Valiquette:]

Hi. Thanks. Good morning. Let me first – I can also vouch for the sleep deprivation comment you made at the beginning of the call as well. (38

[William C. Lucia:]

Well, it is still early, right? I mean, there hasn't been any real policy that we can react to at this point. And I'm sure that the President-elect's transition team will start to focus on that. I'm trying to remember, but I don't believe that President-elect Trump has been negative on Medicaid and Medicare. I mean, those are problems (39

[Jeffrey S. Sherman:]

And the only thing I would add is, we have very little actual business from the exchange side of the Affordable Care Act expansion today. So...

[William C. Lucia:]

And that's the most contemptuous (39

[Jeffrey S. Sherman:]

Yeah. So, we expect – there's virtually no impact from the exchange side because we have so little impact in our existing book of business today. And that's what I would add to the commentary.

[Operator:]

Thank you. Our next question comes from the line of Matthew Gillmor from Robert Baird. Your line is open.

[Matthew D. Gillmor:]

Hey, good morning. Thanks for taking the question. I wanted to ask a follow-up on that commercial sales momentum. I think Bill mentioned the deal values are running significantly above last year. Is the improvement that you're seeing in the sales trends – do you think that's driven more by internal factors or are there external factors that are also contributing to the commercial sales momentum, like the MOR regulations or maybe higher pharma spending at the plan level? Just kind of curious to get your perspective.

[William C. Lucia:]

Well, I think it's a little of both. I mean, clearly, if you're – particularly if you're a for-profit and publicly traded health plan, anything that can impact either MOR or administrative costs depending on where the savings hit the plans and we can impact EPS, which for many of the largest plans, I believe, we do based on the volume of savings that we generate. And that's a positive. The other is – and of course, some of it is based on our own internal growth of our sales team, better penetration in our customer base and then also development of new products to better serve our clients. So, the new services that we offer, of course, are innovative, sometimes still in collaboration with the clients' request. So, it's both internal and externally driven, and I think we'll continue to see this. I don't think there's a – as we said before, there's no silver bullet in controlling healthcare cost in the nation, but payers and other at-risk entities have a choice to do something about it. And that's why they hire firms like ourselves. And I think our pivot – our slow pivot to include care management and risk analytics is important because that's the next, what I would say, wave of area that the nation has to focus on.

[Jeffrey S. Sherman:]

And then on the commercial health plan side as well, as we talked about on the second quarter call, getting more into the ASO or the employer self-funded plans, we continue to see an opportunity as well for our services in that component of the market.

[Matthew D. Gillmor:]

Okay. Thanks. And then maybe for Jeff on the care management acquisition of Essette. Can you remind us how much revenue they generate annually and was there anything that was included for this quarter? Were there some deferred revenues that write-downs would offset that (43

[Jeffrey S. Sherman:]

Yeah. Matt, when we announced the acquisition, we said it was sub-$10 million, and there was a minimal amount of revenue, immaterial amount of revenue because we only had it for one month in the quarter, in September. But on an annual basis, we said it was sub-$10 million. So, a relatively small acquisition, but we do think it's an important foundational step for us in building a broad foundation of technology-based analytics that will help our customers better manage quality, cost and compliance. And as Bill said, their current customer base today is currently at-risk providers that are taking risk more in some smaller health plans. But we think the technology which is really built from the ground up from (44

[Matthew D. Gillmor:]

Okay. Great. Thanks for taking the question.

[Operator:]

Thank you. Our next question comes from the line of Frank Sparacino from First Analysis. Your line is open.

[Frank Sparacino:]

Hi, guys. Just two for me. Jeff, first on the expense side of things, this quarter we did see a notable uptick in operating expenses. And just curious, was there anything sort of abnormal this quarter? And then, what is your view sort of going forward presumably as revenue growth continues, will expenses continue at a similar pace?

[Jeffrey S. Sherman:]

So, yeah, we did – I did come of (45

[Frank Sparacino:]

Thank you. And then just lastly, Bill, is there any way you can be a little bit more specific or sort of quantify some of the commentary you made around the new sales momentum that you guys have?

[William C. Lucia:]

Well, I think what we discussed was that the average sales – the average dollar of the sales were significantly higher than last year year-to-date. So, when I say significantly higher, we're talking about, they could be anywhere between 20% to 40% higher on average over our total contract value. So, we could have a contract that's three to five years. That's mostly what's happening in expansion sales on the – on health plan side. We are starting to see the attention in the independent Blue Cross Blue Shield plans, which are starting to present a presence in our sales funnel, which as we've said historically, they were not a big player in Medicaid, which is of course our heritage. And now, those plans are starting to look for other solutions, particularly in their at-risk and ASO commercial businesses. And we're continuing to see a higher volume of sales activity. So, net (48

[Jeffrey S. Sherman:]

And I would only add to that, we are talking about – we continue to see a significant opportunity and are framing it in a high-teens growth for the foreseeable future. So, obviously, sales are a big part of that. We're also continuing to work on yield improvement for our existing customers as well, which is a component of that revenue growth. So, there are puts and takes every quarter, but as we think about the long-term trajectory, those sales growth numbers are – reflected in those are projected future growth rate, which is obviously coming on a higher base each year, so you have to keep climbing over a higher hurdle to maintain that growth rate.

[Frank Sparacino:]

Thank you, guys.

[Operator:]

Thank you. We have no other questions in the queue. So, I'll turn the call back over to Mr. Lucia for closing remarks.

[William C. Lucia:]

Well, I want to thank everyone for your continued commitment and interest in HMS and the meaningful work we do for the U.S. healthcare system. And we look forward to speaking to you again on our fourth quarter call in February. Thank you, everyone.

[Operator:]

Ladies and gentlemen, thank you, again, for your participation in today's conference call. This now concludes the program and you may all disconnect at this time. Everyone, have a great day.