Veradigm Inc.

Greetings and welcome to Allscript's fourth quarter full year 2021 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would like to turn the conference over to your host, Jenny Gelinas. Thank you. You may begin.

Thank you very much. Good afternoon, and welcome to the Allscript's fourth quarter 2021 earnings conference call. Our speakers today are All Black, Allscript's chief executive officer, and Rick Poulton, our president and chief financial officer. We'll be making a number of forward-looking statements during the presentation and the Q&A part of the call. These statements are based on current expectations and involve a number of risks and uncertainties that could cause our actual results to vary materially. We undertake no obligation to revise these forward-looking statements in light of new information or future events. Please refer to our earnings release and SEC filings for more information regarding the risk factors that may affect our results. Please reference the GAAP and non-GAAP financial statements as well as the non-GAAP tables in our earnings release and the supplemental workbook that are both available on our investor relations website. And with that, I'm going to hand over the call to Paul Black.

Thanks, Jenny. Good afternoon and thank you all for joining us today. I'd like to start by recognizing my colleagues at Allscripts for delivering such strong results. I want to thank our associates who've continued to demonstrate what it means to be All In. This spirit has driven us forward to success despite all the bizarre, unprecedented, and certainly unplanned events that have occurred over the past two years. Looking back over the past 24 months, globally we have experienced what we hope to be a once-in-a-lifetime event. We began 2020 like everyone, blindsided by the global pandemic, but needing to quickly respond to our clients' and our associates' needs. We had a massive pivot during the course of February through June of 2020. There was a substantial amount of work performed, a great focus on unique programs and new ways of running the business. The outcomes we discussed today were created by all the dedicated Allscripts associates. Nowhere, however, where the changes to the daily life fell more directly than with clients who serve on the front lines of pandemic. And in the research labs where the scientists were studying clinical trial results in an effort to safely but rapidly create a vaccine that would cure the pandemic. Working from home became the norm for most of the functions inside of our business. Supporting, selling, collecting, installing, running, operating, and upgrading our solutions across all clients across the globe. They all moved to remote virtual environment in most cases, except for the people that were onsite at client that are part of the managed services organizations. Those were two difficult years. I'm very proud of this executive management team and our ability to see through the fog, making the decisions to position Allscripts for the success we are now all collectively realizing. We invested in the core. focused on creating value and on unlocking value. One year ago, we discussed the prior year of reset at Allscripts, where we reset our client priorities, reset our cost base, reset our portfolio, and reset our balance sheet and capital structure. We also highlighted our 2021 priorities, focusing on delivering. And this team has delivered consistent results. Executing the plan on the Allscripts financial flywheel, our performance delivered as advertised. Highly recurring revenue, significant improved adjusted EBITDA margins, improved free cash flow conversion, and a continuous focus on returning capital while investing for growth in the existing business. I'm pleased with the solid 2021 full-year results, which continue the forward momentum at Allscripts into 2022. We've made multiple investments over the years to create strategic platforms to distinguish all scripts and make us relevant in today's marketplaces. These EMR agnostic platforms expand the breadth and the depth of our solution portfolio. Rick will highlight how these investments in payer, data analytics, life sciences, and research marketplaces reflect the relevance that we have established around the globe. These investments were supported by our board and remain strategically important to us and clearly have allowed us to reposition the company to where we are today. We've also continued to make deliberate investments in our core EMR platforms. This has driven cross-sell opportunities in hosting, cloud, telemed, cyber, interoperability, white space, outsourcing, and revenue cycle. A few highlights for the fourth quarter. In the United Kingdom, Medway NHS Foundation Trust agreed to expand its Allscripts patient administration system footprint by deploying Sunrise Clinicals. Its aim was to deploy the solution faster than any other UK client with a phase one to be live before the end of 2021. Our collective teams met that challenge in a COVID altered virtual deployment that was completed in just under five months. Medway NHS Foundation Trust is now live with Sunrise version 21.1. They documented more than 1500 clinical notes in the first 24 hours of deployment. Also in the United Kingdom, the premier cardiac trust, Liverpool Heart and Chest, has achieved HIMSS Level 6 designation. As our first HIMSS Stage 6 client in the United Kingdom, this is a major milestone for our company and a significant achievement for the teams who have supported this Liverpool trust throughout the journey through patient safety and full digitization. Our longtime client, Northwell Health, expanded its partnership with Allscripts by selecting Sunrise perioperative solution for their 20 hospitals. Our solution will be replacing SIS, a third-party point solution. All of these wins are important examples of investment in the core that create a white space opportunities for Allscripts and deliver a single unified patient record for our clients. Investments that expand our addressable market and simplify business for the client. SUNY Downstate in Brooklyn signed a migrate to Azure Cloud and Sunrise Platform of Health. Moving to the cloud allows SUNY to participate in lower cost of ownership while also improving EHR experience for their clinicians and patients. A long-term client, Ginny Stewart Health, a community hospital in Kentucky, signed to move to the Sunrise Community Care Platform from their existing Paragon instance. In Iowa, Ringgold Hospital similarly selected Sunrise Community Care to replace their Paragon instance. Hospital leadership in both instances cite the comprehensiveness of the solution and their ability to maintain local control of clinical and financial deployment decisions as key factors in their SunComm decisions. We're proud to also partner with Next Level Urgent Care, who has selected Allscript's TouchWorks on the Azure platform to improve connectivity, better provide better EHR workflows, and greatly advanced analytics in all of its locations. Now on to our communities. A distinctive part of Allscripts is our caring culture of giving back to the communities where we live. When communities are in need, people show up, Allscripts shows up. I refer to this as the soul of our company. In December, Allscripts Associates participated in disaster relief fundraising for the Southern and Midwest Red Cross in support of those affected by the tornadoes that devastated these communities across eight United States. I'm extremely proud of our response. We raised thousands of dollars for relief and recovery efforts. Over the past few months, we've been successful at introducing three new enrichment programs inside of Allscripts. Allscripts Black Alliance, Veterans and Allies, and the Hispanic Outreach for Latinos at Allscripts. This is in addition to two long-standing enrichment groups, Allscript's Women's Engagement and Generation Next. These enrichment groups, open to all associates, help build a sense of community and foster an environment in which every voice is heard and valued. In closing, we remain optimistic about our market and our company. With the investments that we have made in expanded and new solution platforms, we believe Allscript is distinctly positioned continue to deliver mission-critical outcomes for providers, payers, pharma, and research organizations. New client prospects are recognizing our distinct offerings. Selection decisions are increasingly driven by appreciation for our agility, our methodology, and our solution-driven capabilities. These attributes should position us well for 2022 and beyond. Now I'd like to turn the call over to Rick Poulton, Paul Scripps, President and CFO.

Paul Scripps Okay, thank you, Paul, and thanks, everybody, for joining us today. Just one more reminder, as Jenny had indicated, additional financial details are available in the supplemental financial data workbook that is posted to our investor relations website. In summary, the fourth quarter was by far our best quarterly performance in years, and it was driven by both our continued discipline in managing our cost structure along with the traditional seasonal strength that we experienced in Q4 for both sales and revenue. This combination of forces resulted in significant operating leverage and very strong sequential and year-over-year growth in margin performance, adjusted EBITDA, earnings per share, and free cash flow. So with that overview, let me highlight a few items, starting with our bookings and revenue performance. We reported $219 million of new bookings in the quarter, which was up 21% year-over-year, and revenue in the fourth quarter was $392 million, which was up 1% year-over-year. Like the fourth quarter of 2020, we had a very good revenue mix during the quarter, with strong contribution from software sales and workflow-linked revenue, both of which are high-margin contributors. As has been the case for several quarters now, our revenue results continue to be a tale of two different stories, with our hospitals and large physician practice segment being down 2% year over year, and while our Veridigm segment grew by 9% year over year. As I've stated many times now on these earnings calls, our goal is to enhance your understanding and bring greater transparency to investors with what we are doing at Veridigm. In addition to the segment reporting that we initiated last quarter, For several quarters now, I've been providing examples of commercial deals that we executed during the quarter that will be part of driving our future reported results. In the fourth quarter of 2021, we signed a deal with Moderna to provide research, consulting, and data analytics services for eight separate real-world database studies focused on gaining a better understanding of the impact of different aspects of Moderna's COVID-19 vaccine in the US population. These studies will be conducted using clinical electronic health record data linked to healthcare claims data, and this project will contribute significantly to the world's deeper understanding of the real-world impact of COVID-19 vaccines. Additionally, we recently signed an agreement with the Social Security Administration, whose objective is to improve the speed and quality of the disability determination process through more efficient and effective health record acquisition. and subsequent data integration processes. Not only do we expect this contract to be a meaningful financial contributor, it will also be a catalyst for us to evolve our capabilities to a point where we will have near real-time chart extraction. Having near real-time chart extraction will benefit both providers and payers as we expedite the ability to close care gaps and manage at-risk contracts. Overall, the Veridigm provider platform continues its growth trajectory, adding approximately 500 new practices and 5,600 prescribing physicians during the quarter. So, now let me turn to the overall margin performance in the quarter. Consolidated non-GAAP gross margins was 45.2 percent, which was up 120 basis points year-over-year and almost 300 basis points sequentially. This was driven largely by the revenue mix benefits that I described earlier. Further down the P&L, we continued to manage our operating expenses tightly, and this helped drive very strong 22% year-over-year adjusted EBITDA growth in the quarter, and it resulted in an adjusted EBITDA margin of 23.9%. We also had an excellent quarter of free cash flow generation, as we generated $66 million of cash flow from continuing operations and $48 million of free cash flow. Alongside our earnings, we had strong working capital performance as well and ended the year with the lowest day's AR outstanding in the company's history. So I really want to thank publicly Chad, Gina, and the rest of our cash team for their tireless work improving this measure. Below the operating line, we recognized the $61 million gain on the disposition of a minority interest that we held in our investment portfolio. And this also resulted in equivalent inflow of cash from investing activities during the period. This cash inflow plus the free cash flow generated from operating activities allowed us to repurchase $108 million of our common stock during the quarter, or 6.5 million shares, with essentially no change in net debt outstanding compared to the end of the third quarter. On a per share basis, we reported non-GAAP EPS of 79 cents per share, which was up 295% year over year, reflecting both our strong income statement performance as well as our lower share count. So now I want to wrap up my prepared remarks by commenting on our outlook for 2022. Our consolidated revenue outlook for 2022 is between 1% and 2% growth year over year. And our consolidated free cash flow outlook for 2022 is a range of 165 million to 175 million. Lastly, I'd like to remind everybody that our board approved a new $250 million repurchase authorization in January, and we would expect to begin to utilize that throughout the year. And so with that, I'd like to open up the call for any questions.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Michael Cherney with Bank of America. Please proceed with your question.

Good afternoon and congratulations on a really strong end to the year. I guess, Rick, maybe just a guidance question to start. You guided on revenue growth and free cash flow generation. It seems like the free cash number is roughly in line or slightly above where consensus is for the year. Is it safe to say that when thinking about some of the other moving down the P&L metrics that a sustainable level of EBITDA expansion is likely to continue based on what you've generated over the last couple of years?

Yeah, first of all, thanks, Mike, for the comments. Yeah, you know, look, I mean, the range 165 to 175 is, you know, midpoint of that is right on top of where we came in in 2021. We think we'll continue to see very similar trends. And, you know, we'll continue to have a little bit of, I think, cost improvement that will make up for some of the little bit of one-time good guys that we thought we had in 2021. on the cash flow side. So all in all, I think the free cash flow is a good proxy for what we're expecting on an EBITDA basis.

Got it. Certainly helpful. And then maybe a big picture question, probably for Paul and Rick. 2020 was the year of getting things started and a lot of the portfolio cleanup and capital realization with the divestitures. 2021 was about cost base and driving significant margin expansion. As you think about kicking off this year, what is the theme or the story for 2022 relative to that next pathway of value creation?

Yeah, I'll start and see if Paul wants to add anything. I think, Mike, first off, I wouldn't say we're done thinking about the portfolio and making sure we continue to optimize the portfolio. nor are we done continuing to wring out efficiencies from our cost base. So I agree those were headline themes, but those are not in the past by any means for us. I think, you know, what we're really continuing to emphasize and what you hear through some of our increased cadence around discussing Veridigm is, you know, that's a very real adjacency. It's a very real market opportunity. We think it's a large TAM that we are expanding into. And, you know, we're not just talking about it. We're actually building on what is years of investment and years of progress in creating the scale that we have. And so I think, you know, value creation off of adjacencies, continuing to win wallet share with the clients we have are how we'll continue to grow.

Yeah, I don't have a lot to add to that. Very good summary. Awesome. Thanks so much. Thanks, Mike. Thanks, Mike.

Our next question is from Sean Dodge with RBC Capital Markets. Please proceed with your question.

Hey, good afternoon. This is Thomas Keller. I'm for Sean. Thanks for taking the questions. So starting off on bookings, it was a good quarter. Can you give us a little more visibility on maybe the composition, what share was Veridigm related and the core business, maybe the relative proportion that are coming from competitive ones?

Well, first of all, hi, Tom. Thanks for joining the call. Yeah, we haven't ever broken out bookings at a segment level or product level, and we're not going to start now. It was a good quarter. We liked the year-over-year growth. It was our fourth quarter in a row where we had some year-over-year growth there. So I think that's a nice sign of recovery off of what was the low point of 2020. But, you know, it's a mix across the business. There's no one place that's driving it entirely. You know, we are getting business across a lot of our, you know, we still skew heavy towards provider-centric revenue. We're getting a lot of revenue and bookings off of providers. But our adjacent markets in the Paralife Science space are, you know, becoming nice contributors as well.

Yeah, fair enough. Thank you. And then on Veridigm, it's very impressive EBITDA margins in the quarter. Is there any way of getting more detail on that 33%, maybe the drivers, and how we should think about that versus any sort of longer-term target for the segment?

Well, you know, I guess I want to start by answering that by just reminding you. I mean... Fourth quarter is a nice mixed quarter. It's always the best mix of the year. You know, you tend to have some year-end spending by some clients, and that really gives you significant leverage. So, you know, you'd see pattern recognition of Q4 tends to be the best quarter, and, you know, you try to build off of, you know, so you have to start looking back at a year-over-year basis as opposed to just always sequentially. But, you know, it's a nice, it's a good business. I mean, we're very excited about our opportunities there. It's a little lower capital intensity and a nice margin profile, and we really think we'll get good operating leverage as we continue to grow there.

Okay, great. Thanks, and congrats on a good year.

Thank you, Tom.

Thank you. Our next question comes from Charles Rye with Cowan. Please proceed with your question.

Yeah, thanks for taking the questions and congrats on the end of the year here. You know, Rick, just looking at the hospital business here and, you know, obviously you've had to work through the challenges of, you know, some customer attrition, particularly in the academic centers. Is it fair to think, and sort of the attendant runoff in revenues from those losses, You know, at this point, you know, what do we have left or have we, is it right to think given the revenue guide for the year, we've kind of turned a corner here and we've kind of run off most of revenues that we would expect to kind of go away and maybe a sense for what the underlying growth for the remaining business has looked like in this segment?

Yeah. Hi, Charles. Thanks for joining us. Yeah, I guess here's how I'll try to steer you towards thinking about that answer. You know, look, if you can see by the segment presentations that we've given you that, you know, the hospital business was down 3% year-over-year in Q3 and, you know, more like 2% in Q4. But, you know, you saw that kind of pattern there. The way I like to think about attrition or talk about attrition, particularly when you're talking about larger health systems or large practices which don't transition on any kind of knife edge, it's a long process, is I use a metaphor of like a funnel, how much is going in the top of the funnel, and then it takes a while to kind of come through and ultimately comes out the bottom. And you see it in the P&L when it's coming out the bottom. You know, in 2021, had very little go back into the top of the funnel. So in that regard, I feel pretty good about that. But we still had some trickling through the bottom, and we'll still have some trickling through the bottom in 2022 as well. So you can see by our revenue guidance on a consolidated basis, and, you know, you can see some trends that we've had at Veridigm, some trends we've had at the hospital segment. you know, when you think about the weighted average, I think, you know, you can see that, you know, we're not 100% done with that runoff.

That's fair, but do you think this coming year we should get through the bulk of it then? And, you know, obviously, I don't want to say too much about even beyond 22, but this kind of growth, would you expect to see maybe some continued acceleration as we think further into the future?

Yeah, I mean, I think what we feel comfortable saying, Charles, is that the kind of the image, if you will, or the sort of profile of the customers that we've lost, a lot of academics, as you mentioned, you know, we've kind of run most of our course there. And so we don't anticipate a lot of new going again, staying with the metaphor of going into the top of the funnel. And so most, you know, we'll have a lot run out in 2022. There may be a little bit of residual left at the end of the year. But, you know, that's our best outlook right now. What we can't really predict, of course, is what could happen in terms of continued consolidation or mergers in the industry. and what that effect would have. But looking at the profile of what we have today, I think it's fair to say we're on the back half or the back swing. We're almost done with the march through our client base of attrition.

That's helpful. And just to follow up on something, one of Mike's questions, which is you mentioned the about the 22 free cash flow as kind of a good proxy for EBITDA. You made some mention of some good guys in 21. Anything that you'd want to really call out to make sure as we're modeling to take into account?

Well, I think It wasn't big numbers, Charles, but you may recall we talked, I think it was Q3, that we had a recovery of some funds from one of our insurance companies. That would have been an unusual, but this is single-digit million dollars that I'm talking about. 2021 had a little bit of gyration, but not much. Again, midpoint of our range for 2022 is really on top of what we saw in 2021. And so, you know, I think you can think of it as the little bit of impact of the one-time goodness we had in 2021 is offset by business improvement in 2022 to get to kind of the same place.

That's helpful. I appreciate it. Thanks, and congrats, Ken.

Thank you, Charles.

Thank you. Our next question comes from Jeff Garrell with Piper Sandler. Please proceed with your question.

Yeah, good afternoon. Congrats on the quarter and thanks for taking the question. Maybe to ask one more about business mix from a different angle. I was hoping you could discuss the recent international trends and go forward expectations for OUS geographies.

Sure. We've had some good wins there. Those are all, if you will, preceded by some good deployments, which is great. meaning the referenceability of the clients outside the United States, as inside the United States, but specifically outside the United States is quite high. And as those people, other people, other trusts in the United Kingdom, folks in Canada, other people in the Asia-Pacific Rim are looking for a partner, it helps a lot that we have good, solid references outside the United States. As we've talked about in the past, there's some larger opportunities that are out there that we have been participating in and working on for a long period of time. Those come in, however, at lumpy and somewhat unpredictable phases. So we want to be in so that we can win them, but it's very difficult for us to forecast and or predict them, especially given what's going on with the pandemic and now some other things that are happening throughout the rest of the world. So at a global basis, outside the United States, decisions are made at the Ministry of Health level and typically at the government level That's typically a longer sell cycle. But there's business there. So we've had other expansions. So inside of some of our organizations, as we said, in the United States, they'll buy more solutions from us as we make them available, like the perioperative suites and many other adjacent clinical arenas that they're interested in, as well as we'll be announcing some additional trusts that have... that have you know as they assimilate in certain geographies uh they will go if you will geography wide with certain solutions and we expect to participate in that as well excellent great great to hear that's helpful and one more for me you know maybe you could just help us reconcile some of the the different moving pieces and the

revenue guidance for next year and just really thinking about the strong bookings growth this year. You know, not quite the same level of revenue growth expected next year, as well as the sequential drop off in backlog. So just how the different contributors factor into the revenue growth and the timing of different contributions.

Well, I mean, Jeff, there's, you know, you can't have a very direct line between backlog bookings and, you know, in-year revenue. As you recall, you know, bookings is, what we count in bookings, at least what we count, is new business. And it's, you know, it's an aggregation of the contract value of a new deal. So, If you have longer-term deals, you're averaging multiple years there, or you're adding multiple years there, I should say, and it begins to come to revenue when a solution actually goes live. And so you can have gaps in time between a contract and when you go live. So there's always a little bit of gap on bookings relative to revenue. Backlog, though, on the other hand, includes everything that's just renewal business as well. So when we renew a large, let's say, managed services contract or something like that, it will have zero effect on bookings, but will go into backlog for its full contract value. And then in that instance, backlog can move around depending on where you are in renewal cycles for large contracts. You have to just recognize that, you know, maybe over a long term there's a good connection, but in near-term periods it's hard to draw a straight line between those couple measures. So, you know, our outlook for revenue for next year takes into account, you know, what we've done in terms of bookings back half of 2021, as well as what we expect to sell early in 2022. Those will be the areas that have the most direct impact on the 2022 revenue. So we factored that in and we factored it in across both segments of our business to come up with our consolidated guidance.

Got it. That's helpful. And just to clarify the backlog, the sequential downtick, is that attributable to the renewal activity you discussed or anything one-off there that we should be considering?

Yeah, I would say it's just a point in time relative to contract renewals. So, yeah. If you trace back, we had a very large uptick in backlog when we renewed our large managed services agreement with Northwell. And obviously, you put it all in, and then you start to chisel it away as time goes on. So that's just one example. But you should think of backlog rundown as a function of renewal cycle on these contracts.

Understood. Thank you.

Thanks, Joe. You're welcome. Our next question is from George Hill with Deutsche Bank. Please proceed with your question.

Hi, it's Maxine for George. Thanks for taking the questions. So we started seeing a lot of the headlines in the healthcare technology trade press around renewing EMR systems given the last purchasing cycle ended in 2015 and 2016. So a lot of these deployments are already six or seven years old. Are you seeing increasing demand in the market right now, and specifically, what functionalities are drawing most of the interest? Thanks.

I mean, we understood your question right. You're asking about trends on perhaps the replacement market, given people have been using these systems for several years now. Yeah, I mean, there's certainly a replacement market opportunity out there. It's one we participate aggressively in. Paul referred to some momentum and some wins in his comments earlier. Those would be largely coming out of the replacement market. Certainly here in the U.S., that would be coming out of the replacement market. International wins are not always replacement. A lot of those times, that's first-time adoption. Yeah, I mean, there's definitely a demand market out there. I wouldn't say we've seen a significant change in the profile or volume of demand right now in the large health system space. Ambulatory market has its share of churn. I would say the same thing. That's not a significant change relative to what we've seen in the last year to two years.

Okay, great. Thanks.

Thanks for the question. Thank you.

Our next question is from Stephanie Davis with SVB LeRinc. Please proceed with your question.

Thank you for taking my question, guys, and congrats on not just a good quarter, but a clean good quarter, which has been a while coming.

Thank you, Stephanie.

I like it. You had a few big wins on the Veridigm side that you called out in the quarter, so I thought it might be helpful just to refresh us on the Veridigm business model. How should we think about the recurring risks of these revenues? And I guess in a follow-on to that one, if you think about this as a mostly recurring revenue stream, is improving the top-line growth rate going to be a question of improving their dime growth, getting down to the low double digits, or is this going to be more like stopping the hospital bleed? Or does Rick have something completely else up his sleeve that I haven't thought of yet?

Come on, Steph. I can't tell you all my tricks. Yeah, well, so I guess maybe I'll take some of that in reverse order. The Veridigm business opportunity doesn't feed very heavily off of our hospital base or even large physician practice base. There's a little bit of link to some of our larger physician clients, but very little to hospitals. So whatever trend lines are happening in hospital business doesn't really have a bearing on what we're doing in Veridigm. The profile of the deals, you know, yeah, I mean, I've continued to, you know, provide a few different anecdotes or illustrations of some of the business we're doing there. The projects that I've mentioned, you know, are kind of, the way I would think about it, Stephanie, is they're recurring customer relationships, but frequently in the case of like the Moderna example I gave you, Recurring customer relationships with solving a little different study. So these are different studies that are kind of top of mind or very topical to them that we'd be working on. And they're not necessarily long-term recurring. The example with Social Security Administration, I would expect to think of that, you should think of that as recurring business. That'll be a long-term type of activity we're doing every quarter for them. So that's what I would describe the current profile as it pertains to our payer and life science clients. It's a good mix of both recurring and sometimes non-recurring business. The Veridigm business is, as we've shared a little bit in the past, is a mix today of about 80% revenue that comes from providers and 20% coming from payer and life science entities and markets. And the growth on the payer and life science side is significantly higher than the growth on the provider side. But the provider side is growing, and that's a foundation that really gives us the assets that are interesting to the payer and life science end markets. So we keep a strong foundation on the provider side, and that allows the growth opportunity on the other side. So it's very much a three-legged stool and very self-reinforcing. So that's why we're talking about it more. And that's why we're continuing to invest there. And we think, again, these are very large end markets. So our opportunity to continue to grow in them has a lot of runway to it from where we sit.

Continuing on that thought then, if you have a lot of opportunity in Veridigm and it tends to be more recurring revenues, which I'm assuming comes on at a healthy incremental margin, is there any reason to believe that the margin expansion pace should slow down meaningfully?

No, I think we're going to get nice operating leverage, Stephanie. And so I think when we talk about EBITDA margins, those should continue to expand as we grow in particular. You know, gross margins is probably some room, but I'm not sure that that will be changing as much, but we'll definitely get the operating leverage down at the bottom line.

Awesome. Glad to hear. Congrats again.

Thank you.

Our next question is from Donald Hooker with KeyBank. Please proceed with your question.

Great, good afternoon. Hey, quick detailed question. Given the sizable share repurchases, what is your current share count, maybe, you know, today? I guess I'm trying to get at sort of the timing of the share repurchases through the fourth quarter. What's our sort of baseline going into this year as you're going to be repurchasing more shares?

It's, you know, so if you look at it on a fully diluted basis, Donna, it's not... You know, if you look at our P&L and look at the Q4 EPS calcs, you're in that zip code. I mean, that's pretty close to where we are. So we got a lot of repurchase activity done early in the quarter. So we didn't get the full weighting of it in the quarter, but we got a decent weighting to it. So you're not far off when you use those numbers.

Gotcha. And the bookings obviously were very strong. You referenced that social security contract. Was that a big piece of that? Was there like a big lump sum in that large bookings?

No, we had a couple of sunrise wins as well. We had a few things. I mean, the bookings came across the whole company.

Gotcha. And last one for me, I was a little bit Just want to make sure I'm not confused here. The free cash flow guidance for 22, I guess you're saying, is going to be flat versus 21. Are you saying that EBITDA margins are also kind of flattish as well? Is that kind of what we're supposed to imply from that? Just to be clear, I think you mentioned that in a couple questions, but I just want to be clear.

I think you can infer that from what I've given you so far, yes.

Super. Have a wonderful evening. Thank you.

Thanks, Tom. We have reached the end of the question and answer session. I would like to turn the call back over to Paul Black for closing comments.

Thank you very much, Rob.

And I want to thank all the associates who are listening, all the clients who are listening, and importantly, all the prospective clients who are listening today. We appreciate your time. We also appreciate everybody who's been on the call who's asked great questions today. We appreciate that as well because we think it's important for us to be able to communicate this. But importantly, for us to be able to tell the story in this environment. So thank you all. Have a good evening, and we look forward to sharing with you our results as soon as we can in 90 days. Thank you.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.