Inovalon Holdings, Inc.

Good day, ladies and gentlemen, and welcome to the Anovalon First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you would like to ask a question, please press star, then 1 now. As a reminder, this conference is being recorded. And now, I'll turn the conference over to your host, Kim Collins. Please begin.

Good evening. This is Kim Collins, Senior Vice President of Communications at Anovalon. I'm here today with Dr. Keith Donlevy, a Novoland's Chief Executive Officer and Chairman of the Board, and Jonathan Bolt, a Novoland's Chief Financial Officer. I'd like to welcome you to our first quarter 2021 earnings call. The press release announcing our financial results was distributed this afternoon, and a replay of today's call will be available shortly, posted on the Investor Relations page on a Novoland's website. For those of you listening to the rebroadcast of this call, we remind you that the remarks made herein are as of today, April 28, 2021, and will not be updated subsequent to this initial earnings call. I'll remind you that certain statements made during this call may be characterized as forward-looking under the Private Securities Litigation Reform Act of 1995, including statements related to future results of operations and financial position, our business strategy and plans, market growth, and our objectives for future operations. Those statements involve a number of factors that could cause actual results to differ materially. Additional information concerning these factors is contained in the company's earnings release and filings with the SEC. In an effort to provide additional information to investors, this conference call and webcast is accompanied by a presentation, which is available in the IR section of our website. You're encouraged to download a copy of this presentation to follow along with our prepared remarks. Our presentation also includes certain non-GAAP financial measures. You'll find definitions of these non-GAAP measures and reconciliation charts at the end of the company's earnings release and on the company's website. Now, it is my pleasure to turn the call over to Dr. Keith Dunleavy.

Thank you, Kim. Good evening, everyone, and thank you for joining our call. First, I want to start by saying how much of a privilege it is to work with the team that I have today. Across the company, the associates of Inova are executing. energized, resilient, mission-focused. And I couldn't be more proud of what they're achieving and the impact and value that we are bringing to the clients and the marketplace we serve. The first quarter of 2021 witnessed strength across the board. Market demand was strong, new sales were strong, implementations progressed well and on schedule. The company's many engineering projects associated with new product innovation and development, cloud and data technology advancements, progressed well, and the many departments and projects of the company that are key to maintaining a strong foundation and enabling strong growth moved their respective initiatives forward with impressive efficiency and reliability. Simply put, it was a quarter of great teamwork and execution, and the results speak for themselves. The first quarter's revenue exceeded the high end of guidance that we provided earlier this year, increasing 15% year-over-year to $177.2 million. New sales annual contract value, or ACV, was $82.1 million, up 81% year-over-year. Excluding services, platform new sales ACV totaled $63.8 million, up 120% year-over-year. Strong sales performance in the quarter reflected hundreds of engagements, including both substantive expansions of existing relationships as well as additions to the company's new client logo list. Strength was seen across all business units. Of note, even after successive quarters of strong sales, I'm pleased to report that our current sales pipeline is very healthy, suggesting strong continued new sales ahead. Reflecting on new logo additions during the quarter, Anovalon was proud to secure an eight-year SaaS cloud platform engagement with the AIDS Healthcare Foundation, one of the ten largest specialty pharmacies in the United States and the world's largest provider of HIV-AIDS medical care. For Novalon to be selected by such a mission-driven organization as AHF and for an initial engagement of such duration was really a proud moment for us at Novalon, where the impact of our platform is so important to us. Additionally, during the quarter, Novalon added several industry-leading organizations to its client list, proudly achieving the mark of now counting all 25 of the top 25 global biopharmaceutical companies, which is up from the previously reported 22 of 25. We also expanded our top provider client ranks, now counting 24 of the top 25 as clients, which is up from the previously reported 19 of 25. And we increased the number of leading specialty pharmacies we support, now counting seven of the top 10 as up from the previously reported 5 of 10. Reflecting on the expansion of existing logos, the value impact driven by the Innova on One platform already in place with clients supported the expansion of an extensive number of existing contract relationships during the quarter. One such example of these growing relationships within our installed client base was announced on March 22nd with Humana. Humana, a leading national consumer-focused technology-driven health plan known for its commitment to innovation, has undertaken its fifth expansion of business with Inovlon since 2019 with the inclusion of Inovlon's vaccine adherence program. We are seeing this dynamic with many of our clients. As Inovlon's platform demonstrates strong value, our clients are expanding their use of the platform, contracting for additional capabilities and expanding the populations for which they are using the platform. As successful platform sales continue to grow, so too does the pipeline of implementations underway. During the quarter, such implementations progressed well, adding further to the compounding subscription-based platform revenue that we are achieving. Additionally, we continue to focus on further automating platform implementations processes with the goal of shortening implementation timelines. thereby expanding the company's capacity to accelerate implementations of new platform engagements. Also noteworthy during the quarter is the increasing network effect of the Anovalon One platform. With the broadening adoption of Anovalon's cloud-based SaaS solutions, Anovalon is increasingly empowering a network of industry-leading clients across multiple segments of the marketplace. As the number of clients with platform engagements in place and operating increases, Inovalon is able to increasingly bring to the market solutions which both require and thrive from the unique interconnectivity across different parts of the healthcare ecosystem. Examples include announced offerings such as Inovalon's Consumer Health Gateway, DataStream API Marketplace, and the Vaccine Adherence Platform, as well as custom-configured implementations for large-scale multi-party applications, each of which drive value and benefit from the growing matrix of engaged and connected clients. Another dynamic that is growing in significance is the market's increasing appreciation of different types of data, completeness of data, and the degree to which data is current. While many organizations convey that they possess significant amounts of data, most data advertised by organizations within the market is secondhand data, purchased and received in de-identified fashion and glued together through probabilistic matching techniques. This is useful for doing cohort studies, commercialization initiatives, and trend analyses, but unable to inform the highest of value applications, such as data as a service, patient-specific clinical decision support, patient-specific care protocols, and consumerism applications where it is critical to have the identified, reliably, longitudinally linked primary source data that is both deep and current when needed. InovaLend's real-world data assets are unique within the marketplace, and they enable a tremendous value for our clients and their downstream customers, members, and patients. Our data allows for us to inform, test, and validate highly advanced algorithmic design, machine learning, and artificial intelligence capabilities, and inform individual patient-specific calls for data. from any authorized platform or mobile application in real time. You are seeing the advanced nature of our data inform industry-leading analytical research, as we announced on March 31, spanning multiple high-impact healthcare industry challenges, which are being conducted in partnership with clients across all major healthcare coverage populations. And you are seeing the patient-specific application of our real-time data stream API capabilities, delivering data as a service for our client uses. The leadership Inovalon is demonstrating through our data and purpose-built analytical capabilities is driving increasingly significant differentiation, impact, and value achievement, and the best is yet to come. Lastly, before I turn the call over to Jonathan, I would also like to encourage you to visit our website and download our inaugural 2020 Corporate Sustainability Report. which includes the company's environmental, social, and governance ESG priorities. Company-wide, we, all of us at Inovalon, are proud of this work and our progress as a company, as a community, and as a member of society on these important topics. The report is a complement to our 2020 annual report and highlights the company's mission to enable a more efficient healthcare ecosystem that benefits individuals, society as a whole, and the environment. And with that, please allow me to hand the call over to Jonathan Bolt, our CFO, to walk through the financials and guidance in more detail. Jonathan?

Thank you, Keith, and good evening, everyone. Now, let me highlight a few key points building on Keith's opening remarks. First, Inovalon's first quarter performance exceeded our expectations with revenue exceeding our quarterly revenue guidance range and growing 15% year over year. Second, there is a strong demand for our platform and our sales teams continue to execute well, driving an increase in new sales ACV of 81% year over year and an increase in new platform sales ACV excluding services of 120% year over year. Third, based on our strong first quarter performance, we are increasing our full year 2021 revenue guidance to 12% to 16% growth year over year. And fourth, we continued to make investments to further accelerate our growth, investing in areas of sales and marketing, innovation and delivery, all of which are driving very positive returns and payback periods. Now, turning to our first quarter results. First quarter 2021 revenue was $177.2 million, an organic increase of $23 million or 15% year over year. This increase was primarily fueled by an increase from new customer wins over the last 12 months and the continued adoption of subscription-based platform offerings. Focusing on our revenue streams, subscription-based platform revenue in the first quarter was $158 million, an organic increase of 15% year-over-year and equating to 89% of first quarter revenue. compared to $137.1 million in the first quarter of 2020. Services revenue in the first quarter was $15.6 million, or an increase of 15% from the year-ago period, and represented 9% of first quarter 2021 revenue. Legacy revenue was $3.6 million and contributed the remaining 2% as expected. Anovalon's new sales ACV during the quarter came in at 82.1 million, an increase of 81% year-over-year. New platform sales ACV excluding services was 63.8 million, or an increase of 120% year-over-year, while the overall sales pipeline continued to expand even after the sales team's success in the quarter. Turning to gross margins, First quarter 2021 gross margin was a strong 74.9%. Gross margin increased 150 basis points compared to 73.4% in the first quarter of 2020. Sales and marketing expense for the first quarter was 19.5 million, an increase of 4.3 million year over year. Sales and marketing as a percentage of revenue was 11% in the first quarter of 2021, as compared to 10% in the year-ago period. As we discussed on our fourth quarter 2020 conference call, Inovalon resumed its investment in further expanding its sales and marketing engine in response to the strong demand we are experiencing for our data-driven technology platforms. At the end of Q1, Inovalon's sales and marketing team expanded to 299 people from 277 at the end of the fourth quarter of 2020. First quarter 2021 adjusted EBITDA was 58.6 million, an increase of 11.1 million or 23% year-over-year. Adjusted EBITDA margin for the first quarter was 33.1%, representing an increase of 230 basis points compared to the year-ago period. Our profitability continues to reflect industry-leading SAS profitability. First quarter 2021 non-GAAP net income per share was 17 cents, an increase of 55 percent compared to Q1 2020. Turning to cash flow, net cash provided by operating activities in Q1 2021 was 32.4 million, which is after interest payments of 10.4 million and after $16.5 million in outflows associated with the company's 2020 annual discretionary incentive payments. Q1 2021 net operating cash flow increased 130% from the year-ago period. In Q1 2021, Inovaland generated $14 million in positive free cash flow or an increase of $16.4 million as compared to the negative $2.4 million in Q1 2020. Moving to the balance sheet, InovaOn's financial position and liquidity continues to be strong. InovaOn's cash and cash equivalent balance as of March 31st, 2021 was $128.6 million. Total outstanding debt was $905.5 million. Reported balance sheet debt was $886 million net of issuance discounts and deferred financing fees, and the net debt position was $776.9 million. Our net debt leverage ratio, as defined within our debt agreement, continued to improve. At the end of Q1 2021, our ratio further reduced to 3.19 to 1. This compares to 3.79 to 1 at the end of Q1 2020 and 3.37 to 1 at the end of Q4 2020. As a result of our improved leverage ratio being below 3.45 to 1, our interest payment rate automatically reduced by 25 basis points, resulting in approximately $2 million in annual cash interest expense savings. At the end of Q1 2021, Inovlon's weighted average interest rate on its debt was 4.94%, of which 77% of the principal is fixed. Now let me conclude by sharing updates to the company's 2021 financial outlook. We are raising our revenue guidance range based on our first quarter's performance strength. For the full year, we now see revenue ranging between 745 to 772 million, representing an organic growth rate of 12 to 16%, with subscription-based platform offerings contributing 88% of our total 2021 revenue. We continue to see strong profitability and strong cash flow generation, and we are reaffirming our adjusted EBITDA range of 265 million to 275 million, representing an adjusted EBITDA margin of 36 percent, non-GAAP net income growth of 18 to 21 percent, and net cash provided by operating activities growth of 23 to 33 percent. For the second quarter of 2021, we are providing guidance of 180 million to 187 million in revenue, reflecting year-over-year organic growth of 11 percent, to 15%, adjusted EBITDA of $60 million to $67 million, and non-GAAP diluted net income per share of $0.17 to $0.19. We encourage you to refer to today's earnings release and our first quarter supplemental deck for more details on our 2021 guidance ranges and quarterly revenue cadence for the rest of the year based on our views today. Before going to Q&A, I'd like to reemphasize Keith's comments. First, InnovaOn's performance was strong, coming in above our expectations for the first quarter. Second, we are seeing strong demand for our platform with significant new sales and a continued robust sales pipeline. Third, implementations of prior sales continue to come online as planned, resulting in a compounding subscription-based growth. Fourth, we are seeing a rising appreciation for the differentiation of our data and our analytic capabilities across the marketplace. And fifth, our investments in further accelerating our growth, increasing our sales and marketing, delivery and innovation are showing strong results. With that, let me turn the call back over to the operator to conduct our Q&A session.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. Again, that's star 1 on your touch-tone telephone to ask a question. To withdraw your question, press the pound key. We ask that you please ask one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Daniel Grosslight of Citi. Your line is open.

Hey, guys, thanks for taking the question and congrats on the quarter. I wanted to dig into the consumer API product a bit now that the interoperability rules have started to come into effect. Curious what the payer adoption has been there. I think previously CMS noted around 480 or so payers will have to adopt these APIs. It costs around $2 million. How much of that market do you think you can eventually capture?

Hey, Dan, good evening. Thanks for taking the time to join us today. Thanks for the question. That market is really a great market for Novoland for a number of reasons, most significantly because it highlights the connectivity we have with the payer space, the relationships we already have in the payer space, and the API capabilities of our platform. That is playing out nicely. We've captured a number of clients in that space, how many we ultimately capture and what they scale to. we'll obviously have to wait and see as our subscription-based approach, and there's a volume-based approach on those platforms as well that provides for us an interesting upside opportunity as we serve that customer base. So don't want to make any guesses as to what percentage of the total marketplace we'll ultimately capture, but we're pleased with our progress and excited about what the overall API capability is for the company.

Gotcha. And maybe just one follow-up on the legacy revenue. I think that was probably the most impacted by COVID along with services, but it seems like services has come back, whereas legacy remains at depressed levels. Should we be thinking about legacy at the same kind of quantum for the rest of the quarter, or should we be building in sequential increases as we lap COVID?

Great question, Dan. Certainly, you're absolutely right that legacy was most impacted by COVID. And as you might recall, for our 2021 guidance, we maintained the presumption that COVID would persist very much at least in the first half of the year and then make some recovery in the second half of the year, wanting to take a more conservative approach to how that's going to play out. Obviously, a lot of our customers learned that cloud-based platforms are a great solution during the COVID experience, and therefore, ultimately migrating the remaining legacy clients to cloud is a great opportunity for us. But as you think of that portion of the business going forward, we see it roughly where it is now on a percentage basis, with a little bit of a trend up in the second half. John, you want to expand on that?

Yeah. Hi, Daniel. Thanks for the question. We continue to see legacy at 3% of revenue, and as we look through the year, first half still expects some COVID overhang and then continuing to trend back to normal in the second half.

Got it. Thanks, guys.

Thanks, Dan. Thank you. Our next question comes from Donald Hoker of KeyBank. Your question, please.

Great. Good afternoon. So the ACV statistics look fantastic. And I'm trying to sort of, before I get too enthusiastic here, I'm trying to sort of talk myself down. So I'm just sort of thinking through, is there anything that you, before we get over our sneeze here, was there any sort of pent-up demand? You mentioned in your prepared comments there seemed like a broad-based demand, but Was there any kind of pent-up demand? Maybe people held off over the past year and are sort of coming to you en masse now, or how do we think about sort of the cadence of your ACP metric? Looking forward and looking back.

Hey, Don. Thanks for joining us. Thanks for the question. Look, our sales team is really fantastic, and they're fantastic across all the business units. You know, certainly they get a lot of credit for how we're progressing. But so, too, do the engineering folk who are putting fantastic innovations into the marketplace and our operations teams that are doing the implementation of this stuff and our client services and support, which are achieving a total client experience that excites the customer to buy more. And we're in the right spot with the right technologies, and we're building out the capabilities where the puck is going to be, not just where the puck is now. So all that is driving strong sales. And as we mentioned in our prepared remarks, we continue to see that progressing. And certainly Q1's numbers, while they were really nice, we've seen quite a few quarters of pretty nice sales and strength in our opportunity pipeline still here quite nicely. So no, no pent-up demand in what we're seeing. We're just seeing continued strength and building relationships and building appreciation of the capabilities of the company and a team that's executing on delivering for that demand.

Okay, maybe this is my follow-up in terms of, I guess, using that ACV metric as a leading indicator of revenues. Is there any change in terms of the conversion of that or any kind of difference there? And if I went back a year and kind of compared revenue growth off of prior year ACB data, is there any reason to think it might be different now versus a year ago or two years ago?

Well, also a great question, Don. Obviously, as you'll recall, our individual engagements are going to have different characteristics depending on what the underlying offering is that the client has assigned for. And the implementation of those timelines, or the timelines of those implementations, pardon me, vary quite widely. So I wish I could say that every quarter we sold an identical mix of product offerings such that the translation and progression of implementations and the revenue was identical and you all could readily build models off of that. But that's not the case. The case is that It varies quarter to quarter, and the individual product lines have quite a different characteristic. So it wouldn't be, you know, directly it's going to help you out, but it's not something that is mathematically exact quarter to quarter.

Okay, thank you.

Thank you. Our next question comes from Stephanie Davis of SVV LeRinc. Your line is open.

Hi, this is actually Joy on for Stephanie. Thank you for taking my question. Hi, my first question is on the vaccine adherence program. You mentioned the Humana contract expansion. Can you just expand on what makes your solution work better than what payers can do in-house right now in terms of identifying candidates for vaccinations? And is that differentiation driven more by the quality of your algorithms or is it more on the uniqueness of your data sets?

Thanks for joining. Thanks for the question, Joyce. So the vaccine adherence platform is really quite an exciting demonstration of the network effect benefit of NovoLon. It requires relationships of beyond just one vertical cohort of the healthcare ecosystem. So if you think about it, you have payers involved. You obviously have patients involved. Providers have to administer vaccines, and pharmaceutical companies need to be producing them and involved. So the fact that we have relationship and engagement and data rights and authorizations and data sets that glue all of that together is, to our knowledge, unparalleled in the marketplace. So the ability to have all of those different constituents dealing with the cleanest set of data that exists out there in the marketplace and apply analytics to them that can identify not just who should have a vaccine, but also who doesn't have a counter indication for a vaccine, who might have gotten the first of the vaccines, but not the second or third, depending on the type of vaccine involved, what the timing should be, what's the right place for them to actually receive the vaccine once engaged. All of these questions and making sure that it's in strict compliance with CDC and HHS requirements is no trivial task. So it's a great demonstration of the combined power of data and platforms and contractual relationships across the marketplace.

Got it. Thank you. And on the life sciences market side, Can you talk to one of the potential areas of expansion within that market beyond the sort of outcome-based contracting work that you're doing now? For example, would you want to expand into the real-world evidence solution space for clinical trials? Thanks.

Sure, Joy. We certainly see any area where data makes a difference in healthcare as an opportunity for expansion. So vaccine adherence obviously is key to the life sciences space today. outcomes-based contracting, as you mentioned, drug development, device development, post-market testing, surveillance, tracking, all of these things are quite key. But also key is the consumer level side of the pharmaceutical space as the pharmaceutical and device space tries to better understand for these high-cost medications who the ideal consumer or user of their medication or device might be. And on the consumer side, they're increasingly trying to understand the selection of how they can better get to the right place for them uniquely. So a ton of opportunity for expansion in life sciences throughout what we would call the CRO space. We're pretty excited for that, and we'll see more of that to come going forward.

That's helpful. Thank you.

Thank you. Our next question comes from Ricky Goldwasser of Morgan Stanley. Your line is open.

Hey, thanks. This is Connor Leferchik on for Ricky Goldwasser. Keith, you mentioned in your prepared remarks that Anovalon is automating some of the implementation. Can you expand a bit more? Maybe give us a sense for which functions are being automated and how these initiatives could increase throughput kind of in the near and long term. Thanks.

Sure. Thanks. Thanks, Connor. Sure. Thanks. Thanks, Connor, for the question. So we have a fantastic engineering team led by a fantastic CTO, Jeff Sharon. And there's a lot going on that take the many steps that take to go from a signature to through to full operation in any large platform implementation. So some of the types of things that you need to see happen are the connectivity elements of all the disparate pieces that make up the operation of the customer you just signed with, making sure their laboratory systems are connected and literally even their print systems, their distribution systems, their inventory systems, their revenue cycle management systems, all of these other parts of their ecosystem need to be connected into our platform, for instance. That all is cloud-based connectivity, and it's a lot of individual process steps. Automating more and more of them is quite key. And then also automating the ingestion of all the data sets and automating the process of setting up the administrative claim submission process These organizations that are processing prescriptions on our cloud platform for the specialty pharmacy marketplace, for instance, or providers that are handling all of their encounter activity or decision support activity on our platforms, in order to make their workflow be completely seamless within their work environments, all of those individual connections need to be set up. Automating those and other things like it are key time accelerators in how fast we can get a larger and larger client base up and running. And what it also does, Connor, is allows us to go upstream and downstream in the sizing in these verticals, which allows us to have a much larger reach and customer opportunity at different price points in the markets.

Great. Thanks. That's really helpful. And then maybe switching gears a bit on my follow-up, the Biden administration has opened ACO enrollment through the summer. I think on the last call, you mentioned that you haven't included any benefit from this. And with the process now ongoing, do you have any update with these enrollment trends? Is it embedded in your guidance going forward?

Yeah, that is a positive incremental tailwind in our business going forward. It is obviously still open and still expanding. We support the vast majority of the ACA players in the marketplace on the platform, so that is a positive. It would be still early to give any kind of projections to the impact of it, but it is a positive. We've been watching the numbers and the population roll in, but you certainly don't want to set any expectations before we know what the final numbers are. Great. Thank you.

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

Yeah. Hey, good evening. This is Jared Hossam for Ryan. Thanks for taking the questions. Jonathan, I think this is maybe for you. I think you mentioned some new hires in the sales force. I think you mentioned, if I have the numbers correctly, 299 people now versus 277 at the end of Q4. So I guess number one, I just want to make sure I have those numbers correct. And then two, if you could talk a little bit about just the composition of those hires, any specific end market or channel focus with those. Obviously, Keith, you've mentioned a little bit about the investments you're making from an implementation standpoint. So maybe they're more oriented around that. Just, you know, any more flavor you could give us around those new hires.

Andrea, thanks for the question. First, yes, you have the numbers correct. At the end of Q1 2021, we had 299 sales and marketing team members, and that did compare to 277 at the end of Q4 2020. Your second question was, where is there any concentration within our verticals and Right now, Jared, we are not opportunity constrained. We continue to see very strong demand in all of our end markets for the technology we're providing. Specifically, one of the largest areas we have continue to see strong growth is in our pharmacy, payer, life sciences, and then finally provider. But where there's a specific focus, it's really across all because we continue to see that demand for our technology.

Got it. Yeah, no, that makes sense. And then, you know, I just wanted to ask another one just related to visibility and in the context of the guidance. So, you know, if I look at the updated outlook, you know, it looks like the range from the low end to the high end is the same in absolute terms as the prior guidance. And Keith, I know you've discussed kind of the layering effect of new sales over, you know, future periods. You've talked about that in the last couple of quarters. So the answer may just be that there's kind of uncertainty related to the timing of how that all flows through. But I'm just kind of curious, you know, how you would sort of characterize visibility and maybe why the revenue guidance range at this point wouldn't be a bit narrower, just kind of given where you sit at this point in the fiscal year.

Jared, certainly we had a very consistent range over time. I don't think it's I don't think it's wide for at this point in the year. I mean, we have to let the year roll out. But we have a lot of visibility. We're pleased with it. Our goal is to under-promise and over-deliver. And we think it's prudent to have a little bit of range regardless of where you are in the year.

Okay. Fair enough. I'll leave it there. Thanks.

Thanks, Jared. Thank you. Our next question comes from Jessica Tassan of Piper Sandler. Your line is open.

Hi. Thank you for taking the question, and congratulations on the quarter. I think we were just interested to know, so you mentioned that you signed the 25th of the top 25 pharma clients in the quarter. So just in addition to the consulting and platform sales, with large pharma, are you guys benefiting from some of the shift in pharma advertising from face-to-face to virtual? And if so, do you think that lift is durable? And can you just kind of help us understand how those contracts work?

Hey, Jessica. Thanks for joining the call. I appreciate it. The new changes in marketing for life sciences is not a principal driver of the revenue during the quarter. It continues to be our historical advancement of development and post-market surveillance and commercialization and real-world evidence and value-based contracting and now more increasingly the vaccine adherence programs, but not principally seeing a unique driver out of the virtual marketing side.

Got it. And if I could follow up on that. kind of ask, so when you think about what makes your solutions for pharma sort of more effective or higher ROI than the alternative, does it come down to a data set or like an algorithm or the platform? Can you just kind of help us quantify the competitive advantage?

Sure. The competitive advantages are a few different pieces of the machinery, Jessica. Most importantly is the primary source data capability of the platform. Very much adjacent to and obviously interlaced with that is the connectivity. But then what they're increasingly seeing is the true differentiation of that data versus other alternatives they have in the marketplace. I can't stress enough. how important it is to have longitudinally linked, identified primary source data in the marketplace. I think it's highly underappreciated in some corners of the market. Certainly our client base is increasingly appreciating it. The highest value you can deliver to a life science company that has, let's say, a $60,000, $80,000, $100,000 treatment or device is is unique identification of the specific patient or specific provider and the actual clinical profile that's going on there. And then the analysis you can do from that real-world data is quite differentiated as well. That is key. And then additional to that is the fact that we have relationships with the other parts of the ecosystem. We can talk to a life sciences company, and then we can go sit down with 10 major payers or 100 different providers and stitch together a solution that nobody else in the marketplace really has the ability to bring together. So it's that combination. And then if you look at slide 12 in our supplemental deck, it's the unique depth of specific high-value areas in healthcare, like oncology, like heart failure, like rheumatoid arthritis and other autoimmunes. Those areas are data sets that are deeper than other people have in the marketplace by far. I hope that helps.

Thank you.

Thank you. Our next question comes from David Larson of BTIG. Your line is open.

Yeah, good quarter. Can you provide some color around your relationship with Walgreens, Walmart, and Cardinal? Maybe just if you could talk about the nature of those deals, what the potential in-sell opportunity might be, and then obviously if you don't want to get too specific around each client, maybe just sort of your views on the retail pharmacy space and the solutions that are selling most well in that channel. Thank you.

Thanks, David. We are obviously required to stick to the four corners of what we've publicly announced with each one of those partners, and we're super excited about each one that you named. All of them fantastic, and all of them not only great individual engagements, but now multiple engagements and expanding engagements, and most importantly, really positive relationships. As they build their strategies and their expansion approaches, we're very fortunate and honored to be at the table on a lot of that work. The expansion, one of the parts of your question was into retail. The line between specialty and retail is boring fast. And the reason it existed in the first place was it was a concept between low cost, low margin, low impact on one side and high cost, high complexity, high impact, high margin on the other side. And the reason those were differentiated, of course, was because there was a high cost of achieving the things necessary on the specialty side until came an Oblon, right? So because of our platform is able to deliver so many of the value differentiators that you ordinarily could only afford in a specialty cost environment or revenue environment market, we're now able to bring that further and further down to a unique experience at the retail side of things. So if you're a, especially knowledgeable about who the patient is, especially knowledgeable about their clinical care, especially knowledgeable about the provider that prescribed it, how their kidney function is going, their liver function is going, and so forth, you can deliver as a retail organization a client or customer experience with that consumer, with that patient, that you could only hope to have at a much higher price point offering. So we're really changing the marketplace there. We're excited about where that's going to go. And obviously that is a massive, massive opportunity.

Okay. And then just one more, if I can, please. Like the growth in the ACV, am I reading that correctly? Does that say up 81% year over year? And then if your long-term sort of revenue guide is maybe mid-teens growth, just any sort of, thoughts around what you would expect the ACV to grow at, I guess, on a normalized basis. Thank you.

Well, one of the things we have coming up, David, and I'll mention it at the end of the call again, and there's going to be a press release out on it tomorrow morning, is we're going to host an investor day on May 18th. And we'll provide some additional detail into what you're driving at. But what we're seeing is continued increase in the performance of our sales teams and obviously we're going to keep on investing in them and investing in the products we bring to marketplace and the delivery of that because with every dollar we're actually getting higher returns as the sales team becomes increasingly sophisticated, increasingly seasoned and has greater and greater products to sell. So we're far from calling a, quote, normalized sales environment. We're excited that we're still seeing, you know, an up and to the right scenario with our progress. So some year down the road, maybe I can tell you what normalized sales will be, but we certainly aren't ready to call that now as we're pleased with what we're seeing.

Great. Thanks a lot. Congrats on a good quarter.

Thank you.

Thank you. Our next question comes from Glenn Santangelo of Guggenheim. Your line is open.

Thanks for taking my question. Hey, Keith, I just wanted to follow up on this, on the questions around the recent ACV momentum. You know, if we kind of go back to last year, you know, we saw a little bit more volatility, particularly in the third quarter. Now we've had a couple quarters in a row where we've seen that contract value momentum. But listening to the prepared remarks, it seems pretty clear that there's a lot of things that are kind of coming together right at the same time to contribute to that result. But if you think back a few quarters, I think we maybe saw some churn that maybe undermined some of that contracting momentum. And so I'd be kind of curious to see what you're seeing in that regard and maybe is there less churn within your existing customer base that might actually be augmenting the revenue growth in a way that we don't fully appreciate. Any thoughts around that?

Glenn, so there's a lot in there. So let me hit a few different pieces of it, and hopefully I knock down what you're speaking to. So first of all, our churn, we have not seen any variance off of what our typical churn range has been, which is, I'm sure you'll recall, historically going for many, many years, we typically have a client churn rate or a retention rate 87% to 93%. So if you want to use easy math, you have to figure 10% on the churn on a client count basis. On a dollar retention basis, it's a nicer number. It's a higher number because your clients continue to expand and buy additional things for sure. But we have not seen last year or for quite some time now abnormal churn rates. So these ACV sales are layering. Obviously, we have to implement all those sales. We have to get those all into place, and that can take a long time for some of them. Others can implement quite quickly. But we have to get that work done. That's all scheduled work, meaning there's a known timeline for how it happens. It's not something like you work through and you hope it ends on time. It's contractually obligated as to when we have to get those implementations done. And as we mentioned in our prepared remarks, those are all progressing as scheduled and progressing well. Look, this is a team sport here. We've got a great team, and as I mentioned earlier, it's a lot of different parts of the machinery that are executing in great synchrony together. There's product innovation, there's product maturation, there's obviously sales, there's the implementation, there's the client support. What you're seeing is a lot of those pieces really coming together and coming together well, and we're obviously enjoying ourselves as we do that. Succeeding for our customers and succeeding for each other in the marketplace feels great, and we are continuing to see that progress and stay strong. So even after the quarters you just referenced of strong numbers, with which I agree, we We also wanted to message that we've got a great-looking pipeline as well, and we have to do our job to convert that pipeline into ACV sales, but that's what we're doing. We're doing our job.

That's great. Thanks. Maybe if I could just ask you one quick follow-up. You know, the Moore Registry now contains 336 million patients, so you saw sizable growth again this year, but I think that's now greater than the U.S. population, and so should we see that sort of start to flatten out, or... Are you starting to get international patients into that database? I just want to try to reconcile that in terms of where we are and then any update relative to the consumer opportunity being able to leverage that registry into that opportunity you talked about in 2020. Thanks.

Sure. Well, there's a lot in there for a follow-up question, Glenn.

Sorry about that.

No, no, no, good question. All good questions. So the more squared registry, because it's longitudinally linked going back quite some time, it does have some patients obviously who have died, right? So the pharmaceutical industry, the device industry, all of that real world data of frankly why did that patient die, you know, what were the circumstances is very valuable, right? So we have patients obviously that may have died in 2012, 13, 14, 15, they stay in the more squared registry and is, frankly, very valuable data to have extremely deep and linked total set on those patients. So that's why the number can climb above what is the current population of the U.S., This data set today is a United States data set. Obviously, there are some non-U.S. citizens in that data as they reside here in the United States, but it is from U.S. locations of data source. Also, during our investor day, we'll talk more to your question of international elements of that going forward, one of our areas of excitement. And then lastly, you talked about what's the rate that we should see expand. You see a flattening, as you would rightfully expect, as you approach near the whole population. Certainly that's not going to continue to grow at the same rate. And you've seen that, I think, in our data where the better proxy becomes the number of medical events in there, which interestingly reflects, if you look at the climb year over year this quarter, you're seeing the medical event impact of COVID, right, as people were less able to go to the hospital, go to the doctor. But yes, the medical event count will be a greater reflection of the continued data flows and growth of the More Squared Registry. As you correctly point out, the membership will have a slower curve to it at this point.

Okay, thanks for all the comments.

Absolutely, Glenn. And with that, I'd really like to thank everybody for joining us this evening. Before I wrap up, I'd like to touch and reiterate on a few points. First of all, we're seeing, as I hope you see, really strong demand for our platform with significant new sales and continued robust sales pipeline. Second, implementations continue to come in and online as planned, resulting in a deepening layering of the compounding subscription-based growth that we've been speaking of now for some time. Third, we're seeing a rising appreciation for the differentiation of our data and the analytical capabilities across the marketplaces. They can better understand the value impact that it delivers. Fourth, our investments in further accelerating our growth, the increasing in our sales and marketing and delivery and innovation, they are showing really nice, strong results. So simply put, we're executing well, and we see a strong year ahead and strong years ahead. With that, I'll close by, as I mentioned earlier, inviting all of you to our 2021 Investor Day, which will be on May 18th. You'll see an announcement tomorrow morning out on this. And with that, thank you all for taking time this evening to join us, and thanks for your interest in InnovaOne. Good night.

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