Accretive Health (AH) Q2 2012 Earnings Call August 08, 2012 8:30 am ET Executives Gary Rubin Mary A. Tolan - Founder, Chief Executive Officer, President and Director John T. Staton - Chief Financial Officer and Treasurer Analysts Atif A Rahim - JP Morgan Chase & Co, Research Division Glen J. Santangelo - Crédit Suisse AG, Research Division Ryan Daniels - William Blair & Company L.L.C., Research Division Charles Rhyee - Cowen and Company, LLC, Research Division Bret D. Jones - Oppenheimer & Co. Inc., Research Division Jamie Stockton - Wells Fargo Securities, LLC, Research Division Stephen B. Shankman - UBS Investment Bank, Research Division Sean W. Wieland - Piper Jaffray Companies, Research Division Eric W. Coldwell - Robert W. Baird & Co. Incorporated, Research Division Presentation Operator
Please note that today's discussion will include references to certain non-GAAP financial measures. Please refer to today's earnings release for more information on these non-GAAP measures and the reconciliations to the appropriate GAAP measures. After the conclusion of Mary's and John's prepared remarks, they will be available to answer your questions.At this time, I'd like to turn the call over to Mary Tolan, Accretive Health's CEO. Mary, please go ahead. Mary A. Tolan Thank you, Gary. Good morning, everyone, and thank you for joining today's call. Despite a challenging quarter, we have a number of promising updates to share with you. We recently signed our 5-year renewal with Ascension Health with a total contract value of $1.6 billion to $1.7 billion. As you know, Ascension Health is the nation's largest Catholic and non-profit healthcare system. We're proud of the strong working partnership that we've formed with Ascension, and we believe that this is a leading indicator of the sound and growing relationships we establish with our clients. We look forward to the next productive chapter of our partnership, and with this contract, we'll be providing expanding value. Our intra-stay quality program continues to move forward, and we are now in final contracting with a multi-hospital roll out. This is a great opportunity to establish the value of intra-stay with one of our largest clients and to promote this offering to other hospital systems. Regarding Quality and Total Cost of Care, we are now in final contracting with a leading national cancer physician network. This organization's identified Accretive as the right partner to help their practice group members provide and monitor care through a coordinated and integrated approach that delivers better outcomes for patients while controlling costs. As far as the pipeline. We're very pleased that our pipeline in final contracting remains a robust $100 million to $120 million in annual PCARR, and we see an even greater book of business beyond the final contracting stage. To give you some more insight in how we view our pipeline, we're going to explain the stage right before final contracting, which we call "solution." In the solution portion of our pipeline, these prospects have already gained executive sponsorship behind the decision to engage Accretive as a partner. We've completed the long vetting process, and the top decision makers have decided to move forward, but we have not yet started the actual legal contracting. When we estimate the potential PCARR in the solution stage, it's another $100 million to $120 million in addition to the $100 million to $120 million in final contracting. So this gives us a line of sight to $200 million to $240 million in PCARR growth.
Our dedication to process excellence requires us to carefully examine our own practices to ensure that we're setting very high standards for our own performance in achieving the best possible outcomes for hospitals, patients and communities. To that end, we're committed to achieving the highest standards in confidentiality of patient health information through actively pursuing the high trust certification of our data security practices and procedures. We are targeting the end of October for being able to achieve this high-trust certification.Read the rest of this transcript for free on seekingalpha.com