Tabula Rasa HealthCare, Inc. (TRHC) Q4 2022 Earnings Call Transcript

Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) Q4 2022 Earnings Conference Call March 7, 2023 8:30 AM ET

Company Participants

Frank Sparacino - Senior Vice President, Investor Relations and Corporate Development

Brian Adams - President and Interim Chief Executive Officer

Tom Cancro - Chief Financial Officer

Conference Call Participants

Stephanie David - SVB Securities

Craig Jones - Stifel

Jessica Tassan - Piper Sandler

Operator

Good time and convey you for opinionated by. Welcome to nan Tabula Rasa HealthCare’s Fourth Quarter and Full-Year 2022 Earnings Conference Call. At this time, each participants are successful a listen-only mode. [Operator Instructions] Please beryllium advised that today's convention is being recorded.

I would now for illustration to manus nan convention complete to your speaker today, Frank Sparacino, Senior Vice President of Investor Relations and Corporate Development. Please spell ahead.

Frank Sparacino

Good morning. This is Frank Sparacino, SVP of Investor Relations and Corporate Development for Tabula Rasa HealthCare. The institution intends to avail itself of nan safe harbor provisions of nan Private Securities Litigation Reform Act of 1995. Certain statements made during this telephone will beryllium forward-looking statements wrong nan meaning of that law. These forward-looking statements are taxable to risks, uncertainties, and different factors that could origin Tabula Rasa HealthCare's existent results to disagree materially from those expressed aliases implied by nan forward-looking statements.

These risks and uncertainties see our expectations regarding manufacture and marketplace inclination including nan expected maturation and continued structural alteration and consolidation successful nan marketplace for healthcare successful nan United States. Our expectations astir nan maturation of programs of all-inclusive attraction for nan aged PACE organizations.

Our plans to further penetrate existing markets and participate caller markets, plans, strategies, and objectives of guidance for early operations, early superior expenditures, early economical conditions, aliases capacity and our estimates regarding superior requirements and needs for further financing.

For further accusation connected nan risks facing Tabula Rasa, Healthcare. Please mention to our filings pinch nan SEC, including nan Risk Factors conception of our 2021 10-K revenge connected February 25, 2022 and our 2022 10-K to beryllium revenge shortly. When we discussed our results connected this call, unless indicated otherwise, we are referring to results from continuing operations.

For further accusation connected our results from discontinued operations, please mention to nan financial statements contained successful nan net merchandise issued connected March 06, 2023 and nan notes to nan financial statements to beryllium included successful our 10-K for 2022. A signaling of this telephone is accessible done a nexus connected nan Investor Relations page of our website.

I will now move nan telephone complete to Brian Adams, President and Interim CEO of Tabula Rasa HealthCare.

Brian Adams

Thanks, Frank. Good greeting and convey you each for joining us. I'm proud of nan Tabula Rasa squad and what we accomplished during 2022, particularly successful nan 2nd half of nan year. The numbers speak for themselves. For nan full-year, gross grew astatine a complaint of astir 15%, and successful nan 4th quarter, however, gross maturation accelerated to 20%. As galore of you know, it's been rather a transformational twelvemonth connected galore levels for us.

We sold our PrescribeWellness business portion successful August, announced an important activity and Board changes successful September. Named April Gill arsenic our first Chief Commercial Officer successful November and precocious completed nan waste of SinfoníaRx and DoseMeRx 2 non-strategic assets. This is successful summation to being recognized arsenic a 2022 Champion of Board Diversity by The Forum of Executive Women and named 1 of America's top workplaces for diverseness by Newsweek.

I'm highly proud of our astir 700 squad members for really they person helped position america arsenic we participate 2023 pinch beardown momentum. These important events and nan continued improvement of our business complete nan past twelvemonth person brought a number of caller individuals to these calls. So, I thought it mightiness beryllium adjuvant to supply a short overview of what we do. Tabula Rasa has been astir since 2009 and has developed an expertise for managing nan astir analyzable patients successful our healthcare system.

We supply individualized attraction done nan curation of personalized medicine regimen to trim consequence and optimize nan efficacy. And thief organizations responsible for those patients run much effectively. Over nan years, we person developed our proprietary MedWise platform, which is our unsocial multi-drug relationship solution that helps foretell medicine related risk.

We person galore peer-reviewed publications that showcase nan profoundly affirmative effect from MedWise connected diligent wellness outcomes and nan simplification of full costs of attraction successful various settings. Our MedWise level has been developed done a collaboration of our R&D and package engineering teams and continued a robust group of proprietary objective algorithms that item multi-drug interactions and thief clinicians to optimize individual medicine regimens for their patients, reducing nan consequence of superior broadside effects, while besides promoting maximum effectiveness.

MedWise tin besides relationship for a person's familial constitution and their individual consequence to definite medications allowing for much precise prescribing. On a individual note, I really bask proceeding nan play updates that our squad stock showcasing nan affirmative effects we are having connected diligent attraction by utilizing nan MedWise platform. These stories are individual and each 1 is worthy celebrating. These are moments that thief to motivate our squad each day.

In nan programme of all-inclusive attraction for nan aged aliases PACE market, which represents nan largest percent of our gross guidelines coming and grew astatine 27% successful nan 4th quarter, we person demonstrated a $5,000 yearly savings per personification erstwhile utilizing our MedWise level coupled pinch our drugstore services, arsenic compared to those not utilizing Tabula Rasa.

For those of you not acquainted pinch PACE, it is simply a programme funded by Medicare and Medicaid and designed to let group to property successful nan organization aliases astatine location alternatively than organization attraction for illustration a nursing home. It is arguably nan astir successful illustration of worth based attraction and person demonstrated worldly reductions successful hospitalization rates and ER utilization, compared to those individuals successful semipermanent attraction settings.

Over nan years, we person added different technology-enabled services and package to our suite of solutions to thief our clients simplify their operations. And allocate much resources towards diligent care. We judge a operation of these solutions is not only applicable to PACE, but besides to adjacent healthcare markets taking connected financial risks and serving akin demographics.

Thanks to our efforts to refocus nan institution astir these solutions, our cross-selling activities are gaining momentum. This is evidenced by nan mean gross we make per PACE individual per month, which accrued to $494 successful nan 4th fourth of 2022, up 16% from $427 a twelvemonth ago. The full monthly gross we could make from each individual if they were to beryllium covered by each 5 of our services is presently much than $1,200.

The astir important opportunity we person to summation nan $494 mean gross per diligent per period is done driving greater take of our drugstore services into our existing PACE customer base, and we're making advancement towards that goal. In 2022, we accrued penetration of our drugstore services to 38% of our wide guidelines versus 34% astatine nan extremity of 2021.

In summation to nan opportunity to supply incremental services to existing customers, nan PACE marketplace continues to grow, frankincense expanding our full addressable market. I want to item a fewer important developments that took spot complete nan past 12 months. During 2022, Maryland, Ohio, and New Jersey committed to expanding their PACE program. According to nan National PACE Association, Ohio has an estimated 66,000 individuals presently eligible for PACE, but without entree to services, making it 1 of nan apical states successful position of opportunities.

Ohio passed a PACE description measure that includes $50 cardinal to support start-up costs and nan authorities is taking a proactive attack connected outreach to thrust enrollment successful their PACE program. This proactive attack includes identifying eligible individuals and notifying them of PACE programs successful nan due work area. This is important because it will summation user awareness. One of nan cardinal argumentation recommendations we highlighted past 4th from nan Bipartisan Policy Center to accelerate PACE take versus individuals domiciled successful a nursing facility.

In summation to these 3 authorities description s, Missouri and Kentucky became nan 2 caller states successful 2022 to commencement enrolling PACE participants, bringing nan full number of states to 30. And according to NPA, Missouri and Kentucky person an estimated 40,000 positive individuals presently eligible. Last quarter, I highlighted NPAs PACE 200,000 project, and each of nan developments I noted are important successful driving an accelerated complaint of marketplace maturation to scope nan 200,000 enrollees by 2028.

Using nan $1,200 mean gross per PACE enrollee per period that would consequence if a customer utilized each of our PACE services and applying that to nan 200,000 targeted PACE enrollees would output an estimated TAM of $2.9 cardinal by 2028. The description successful existing states, positive caller states coming online gives america assurance successful our anticipation for continued beardown maturation complete nan adjacent respective years successful nan PACE marketplace arsenic we activity to summation our marketplace share.

As Tom will talk successful much detail, we're making important investments successful our PACE business to accommodate pinch nan anticipated request and to amended service our customers, while besides building a best-in-class commercialized income statement for profitable, scalable maturation wrong and extracurricular of PACE.

As we person discussed successful anterior calls, cardinal adjacent markets see wellness plans and at-risk supplier groups pinch a attraction connected nan much than 12 cardinal dual eligible beneficiaries that beryllium coming and thrust a disproportionate stock of nan country's full healthcare spending.

Before I move nan telephone complete to Tom, I besides wanted to concisely mention nan caller divestitures of SinfoníaRx and DoseMeRx. The determination to waste non-core assets and exit non-strategic markets is portion of our continued strategy to realign nan organizational building and let Tabula Rasa to turn successful a much profitable manner, while making strategical investments for nan future.

This strategy has resulted successful a sharper attraction and this is 1 of nan galore reasons I'm assured successful our expertise to execute connected our early maturation plans and grow our margins successful nan coming years. This process did not travel without its challenges arsenic we were not capable to find continuing roles for immoderate of nan squad members associated pinch nan SinfoníaRx business.

I want to convey each and each personification associated pinch SinfoníaRx and DoseMeRx for nan important activity they did while portion of Tabula Rasa, and I wish you nan champion of luck successful nan future. These plus income on pinch our full-year 2023 guidance correspond our committedness to attraction connected creating semipermanent worth for our shareholders.

2022 was a transformational twelvemonth for Tabula Rasa and coming we person highlighted nan important advancement we person made truthful far. We stay focused connected executing connected our strategy and we look guardant to providing a much fulsome position of what you tin expect from Tabula Rasa passim nan remainder of 2023 and beyond connected a early call.

I will now move nan telephone complete to Tom to reappraisal our financial performance.

Tom Cancro

Thank you, Brian, and bully greeting everyone. I will attraction my comments connected 3 areas: 4th fourth results, cardinal operational metrics, and 2023 guidance.

As you saw successful our net release, nan institution retitled its gross categories from merchandise gross and work gross and medicine gross and technology-enabled solutions gross respectively. The changes had nary effect [on amounts] [ph] antecedently reported. I will beryllium utilizing our updated gross statement titles successful my comments today.

Fourth 4th gross of 82.7 cardinal accrued 20% versus nan twelvemonth agone quarter. And 7% connected a sequential ground versus nan 3rd 4th of 2022. Our beardown gross capacity was chiefly attributable to amended than expected PACE subordinate maturation and nan onboarding of different ample caller PACE customer successful October.

These factors led medicine gross maturation of 27% versus a twelvemonth ago. As Brian mentioned, location are a number of statewide commitments to PACE programme description . This, coupled pinch our already robust maturation successful our existing centers is why we expect census maturation to beryllium a beardown driver of gross maturation successful nan quarters and years to come.

Fourth 4th technology-enabled solutions gross was level versus a twelvemonth ago. Excluding EMTM, 4th fourth technology-enabled solutions gross accrued 14% versus nan twelvemonth agone 4th and 6% connected a sequential ground versus nan 3rd 4th of 2022.

A CMS' EMTM aviator programme ended successful December 2021. That will nary longer beryllium successful our comparisons going forward. Adjusted gross separator arsenic a percent of gross was 24.6% for 4th quarter, down from 28.7% a twelvemonth ago. This was mostly owed to gross mix, arsenic good arsenic nan higher shipping charges, which we are moving to address.

On a sequential ground versus 3rd 4th of 2022, adjusted gross separator percent improved by 130 ground points, driven by improved technology-enabled solutions margin. We are providing further non-GAAP financial measures starting this quarter, and our net merchandise issued yesterday includes descriptions of these.

Few headwinds that negatively impacted medicine gross margins successful 2022 related to gross operation and higher shipping charges. During 2022, shipping charges accrued significantly, and adversely impacted adjusted gross separator by astir 100 ground points. We are moving to amended some of these factors successful 2023 and arsenic noted supra did spot immoderate betterment successful gross margins successful nan 4th quarter.

While connected nan taxable of gross margin, we statement that our drugstore business is experiencing important maturation and successful bid to summation scale, arsenic good arsenic to support early demand. We scheme to put successful automation and description of our drugstore laboratory facilities. While these efforts will return nan amended portion of 2023 to implement, we do expect astir 300 ground points of betterment astatine nan wide gross separator level from 2024 to 2027.

In ample part, owed to these investments successful automation and different initiatives, which will little our costs to fulfill orders successful coming years, we judge our adjusted gross margins tin beryllium successful nan ballpark of 26.5% to 27.5% by 2027. Our GAAP nett nonaccomplishment for nan 4th of 18.4 cardinal compares to a nett nonaccomplishment of 13 cardinal a twelvemonth ago. And includes 4.9 cardinal of non-cash impairment charges related to lease terminations and different costs to consolidate our existent property footprint, arsenic good arsenic 1.4 cardinal of severance costs.

Adjusted EBITDA of 4.1 cardinal from continuing operations for nan 4th was level versus a twelvemonth ago. On a sequential ground versus nan 3rd 4th of 2022, adjusted EBITDA astir doubled, chiefly driven by nan adjusted gross separator betterment noted earlier. With respect to our cardinal operational metrics, we provided a array successful our net merchandise that provides greater transparency into nan capacity of our business. These see PACE medicine census, which astatine nan extremity of 2022, accrued 20% versus a twelvemonth ago, driven chiefly by aforesaid halfway subordinate growth, arsenic good arsenic by caller PACE clients.

In addition, we person provided our PACE mean gross per subordinate per period for medicine and for our technology-enabled solutions, which accrued 7% and 2% respectively successful nan 4th fourth versus nan twelvemonth agone quarter. Our full PACE mean gross per subordinate per period accrued 16% to [494] [ph] during nan 4th fourth of 2022.

Turning to guidance. We are introducing first 4th and full-year 2023 gross and adjusted EBITDA guidance. First 4th gross from continuing operations of 82 cardinal to 84 million, represents maturation of 24% versus nan twelvemonth agone play astatine nan midpoint of nan scope and adjusted EBITDA of 3 cardinal to 4 cardinal for nan 4th compares to 1.1 cardinal a twelvemonth ago. For nan full-year 2023, gross from continuing operations of 343 cardinal to 354 million, represents maturation of 16% astatine nan mid-point, and adjusted EBITDA of 17 cardinal to 20 million, represents maturation of 98% astatine nan midpoint, and an adjusted EBITDA separator of 5.3%.

I want to supply immoderate further colour for 2023 starting pinch revenue. We expect gross maturation comparisons successful nan first half of nan twelvemonth to beryllium higher than nan 2nd half of nan year. That is because we onboarded 2 ample PACE programs successful nan 2nd half of 2022. With respect to adjusted EBITDA, I want to supply immoderate added item pinch respect to 2023.

Similar to 2022, we expect nan 4th fourth of 2023 to beryllium our highest adjusted EBITDA 4th and we task nan 2nd half of nan twelvemonth to relationship for a akin percent of nan full-year adjusted EBITDA arsenic successful 2022. The first 4th whitethorn beryllium flattish to nan 4th fourth of 2022, owed to definite seasonal items, and nan 2nd 4th of 2023 will beryllium negatively impacted by yearly merit increases, which coming a sequential summation to expenses versus nan first quarter.

While we are not providing guidance pinch respect to rate flow, we tin item a fewer items. First, we expect full finance successful spot and instrumentality to beryllium successful nan scope of 7 cardinal to 9 million, including 5 cardinal to 7 cardinal successful 2023 to support nan automation and description initiatives I mentioned earlier. We expect capitalized package for 2023 to beryllium astir 18 million, including non-recurring investments to merge and modernize respective bequest IT platforms.

In total, we expect superior finance successful 2023 to beryllium successful a scope 25 cardinal to 27 million. This is down from a full superior finance of 29 cardinal successful 2022. Excluding nan non-recurring finance successful automation, full capitalized software, and spot and instrumentality successful 2023 is projected astatine 20 million. We judge complete nan adjacent respective years, full finance successful package improvement and spot and instrumentality should mean 15 cardinal to 19 cardinal per year.

I will now move nan telephone backmost to Brian for immoderate concluding remarks.

Brian Adams

Thanks, Tom, for those updates. I'm inspired by nan advancement we person made pinch these transformational steps to reposition Tabula Rasa for semipermanent success. I want to specifically telephone retired our squad members who make a quality successful solutions offered to amended diligent attraction each day. Thank you for nan activity that you do. As we look up to 2023, we are well-positioned to thrust maturation and profitability, while besides investing strategically to present semipermanent value.

With that, I will move nan telephone complete to nan usability for Q&A. Operator?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first mobility comes from nan statement of Stephanie David pinch SVB Securities. Your statement is now open.

Stephanie David

Hey both, congrats connected a bully 4th and nan return to getting to profitability. Brian, now that April's 4 months successful nan role, I was hoping to show america a small spot much astir them. Heard [indiscernible] for nan caller Chief Commercial Officer spot and really you're going to measure occurrence for nan caller seat?

Brian Adams

Stephanie, acknowledgment for nan question. It's a awesome one. And I americium truthful gladsome that April is connected our team. She has been an astonishing summation truthful acold and immoderate of nan building that she's putting successful place. And arsenic I mentioned successful my talking point, our extremity present is really to create a best-in-class commercialized income statement and she's doing a batch of that activity today.

And so, nan first 4 months person really been astir evaluating what we person successful place, and 1 of nan things that we've done precocious is create successful a squad that's really focused connected commercialization of our products and solutions. And that's not needfully thing that we had nan model and rigor astir previously. And so, I'm excited that we person that new, I don't cognize if you'd telephone it an agency aliases a squad aliases whatever, but it grew since that's really focused connected driving nan commercialization process.

And so, I deliberation you're going to spot a batch of bully things travel successful nan 2nd half of this year. But successful position of really we're specifically going to measurement that, you're going to spot it successful position of maturation successful nan pipeline, successful position of backlog, successful position of caller sales, some wrong nan PACE marketplace and successful immoderate of those adjacencies that I referenced connected nan call.

Stephanie David

Now, related to that then, Tom, you talked to a comparatively [elongated arc] [ph] to get backmost to your pre-M&A profitability profile. Is it because you're making investments for illustration what Brian conscionable talked astir aliases is location thing that could accelerate this timeline for illustration a macro aliases economies of standard heading faster than expected?

Tom Cancro

Hi, Stephanie, and acknowledgment for nan question. No, I deliberation your first small heart was correct. I deliberation immoderate of these specified arsenic nan investments successful automation return immoderate clip to carnivore fruit. It will return nan amended portion of 2023 to get those successful place. And so, arsenic you saw successful our guidance, we task margins to beryllium accordant pinch 4th fourth of 2022 aliases nan bulk of 2023. And past it's from 2024 connected erstwhile we commencement to get nan use of immoderate of these investments.

Stephanie David

All right. Helpful. Thanks, folks.

Operator

Thank you. Our adjacent mobility comes from nan statement of Craig Jones pinch Stifel. Your statement is now open.

Craig Jones

Hi, convey you. I was wondering, could you locomotion america through, benignant of your options astir personnel maturation and PMPM maturation erstwhile you deliberation astir nan apical extremity and nan bottommost extremity of your 2023 guidance?

Brian Adams

Craig, acknowledgment for nan question. I deliberation possibly first I'll conscionable footwear it disconnected pinch immoderate comments astir what we're seeing hap successful nan marketplace correct now and past I'll fto Tom get into immoderate of nan circumstantial numbers. But I've been interacting much often pinch customers successful this caller role. And I person to show you, I'm really excited astir what I'm hearing. In each cases, they are focused connected growth. And that's really evident successful our backlog numbers.

As you tin see, those are up importantly from nan past clip that we reported. A batch of that is related to description s of existing customers and nan mostly of that is really focused successful nan drugstore space. But it's beautiful breathtaking to spot what's happening successful nan marketplace correct now.

I'll fto Tom talk much specifically astir nan precocious and little ends?

Tom Cancro

Yes. Craig, I deliberation maturation successful nan mean gross per subordinate per period mostly tracks pinch what we've seen complete nan past year. And that's really we've modeled it successful our guidance. So, you've sewage a azygous digit maturation successful each of nan medicine and nan technology-enabled services gross per participant, but nan blend of nan 2 increases because of immoderate of nan cross-selling that Brian has talked about.

Craig Jones

Right. So, you're saying that nan medicine is going to turn faster connected a personnel basis, that's [indiscernible]?

Tom Cancro

The medicine grows faster than nan tech-enabled services. That's correct. And nan blend of nan 2 grows faster than nan individual pieces arsenic nan operation shifts and arsenic nan cross-selling that Brian alluded to pinch April coming connected committee starts to carnivore fruit.

Craig Jones

Got it. And then, I deliberation Brian, you mentioned nan backlog, it looks for illustration [44% is] [ph] conscionable beautiful unthinkable from 2Q to 4Q. Can you conscionable locomotion america done nan mathematics and benignant of really we sewage there?

Brian Adams

Sure. So, I'm conscionable – I'm happy to supply a small spot of colour connected nan apical and past Tom could astir apt jump successful connected immoderate of nan specifics. But nan measurement that we look astatine this and measurement backlog coming is based connected nan maturity of each of those contracts that we person successful place. And truthful conscionable to usage an example, if we've signed a drugstore services contract, we're assuming astatine 250 members aliases participants aliases individuals astatine maturity of that halfway aliases location that you're utilizing our mean PMPM of astir $1000 connected nan drugstore broadside multiplying that by nan [250] [ph] and past by 12 months.

So, you get to a small complete a 3 cardinal contract. So, that's connected an individual aliases portion ground if you're reasoning astir it and past we conscionable build from there. So, it's really related to specific, which contracts we person successful nan pipeline, what services they aligned around, and we person seen important description complete nan past fewer months coming successful from existing customers. Tom, I don't cognize if you person thing to adhd to that?

Tom Cancro

Just that nan ample summation successful backlog was owed to a ample nationalist supplier that we – PACE supplier that we signed pinch aggregate centers who is taking some nan medicine services, but besides immoderate of nan tech-enabled services.

Craig Jones

Okay, great. Thanks. That’s each from me.

Operator

Thank you. [Operator Instructions] Our adjacent mobility comes from nan statement of Ryan Daniels from William Blair. Your statement is now open.

Unidentified Analyst

Hey, bully morning. This is [Jack Malek] [ph] connected for Ryan. Regarding nan spot of EBITDA description you guys are modeling retired for 2023, could you supply immoderate further colour connected which costs levers you expect to get you that other 200, 250 ground points of betterment complete nan year? I cognize you mentioned immoderate gains successful gross separator arsenic those 2022 headwinds ease, but immoderate further remark connected costs optimization efforts would beryllium great? Thank you.

Brian Adams

Jack, acknowledgment for nan question. This is Brian. I'll commencement and past move it to Tom to talk much specifics. But, you know, successful 2022, we referenced that we had a mates of headwinds that we do expect to abate successful 2023. The first was really related to higher shipping costs. And we've renegotiated aliases successful nan process of renegotiating much favorable position pinch immoderate of our largest shipping vendors.

We've besides identified immoderate little costs transportation methods and scheme to usage them. And past we've yet started to spot nan surcharges that we knowledgeable successful 2022 commencement to abate. All these are going to person a affirmative effect connected our shipping costs successful 2023. And past nan 2nd area that we mentioned connected nan telephone is really related to gross mix. And this operation was impacted by our Medication acquisition costs successful immoderate cases.

And arsenic Tom mentioned, we're investing successful automation and process enhancement that will yet springiness america greater elasticity successful really we root medications astatine little cost. Tom, thing you want to adhd arsenic it relates to either of those?

Tom Cancro

Yes. So, astir $9 cardinal summation successful EBITDA, and really do we get there, is your question. Well, astatine nan midpoint of gross guidance, you're doing astir 49 cardinal much than nan anterior year. As we said earlier, we expect margins, gross margins, adjusted gross margins to beryllium level to nan 4th fourth of 2022. That yields astir 12 cardinal successful gross profit. And 9 of that falls to EBITDA.

So, what that tells you is, we're getting overmuch much operating leverage. We've been capable to clasp SG&A costs comparatively flat, not wholly level because we do person 20% gross growth. We're going to person immoderate incremental cost, but mostly level because of immoderate of nan savings we talked astir antecedently arsenic a consequence of sharpening our attraction to our remaining business.

Unidentified Analyst

Thanks. Appreciate nan item there. With respect to apical statement visibility, I guess, one, really overmuch of this incremental income guide, adjacent to 50 cardinal year-over-year astatine nan midpoint is based connected contracted gross versus is assumed [in yourself] [ph]? And two, immoderate further colour connected what mightiness thrust nan target either to nan low-end aliases high-end of nan guidance range? Thank you.

Brian Adams

I'll commencement Jack and conscionable supply a small spot of color. As I was mentioning before, nan backlog is highly patient correct now and continues to grow. And I deliberation that each that we are watching done conversations pinch customers. What we're proceeding done nan National PACE Association is that we would expect to spot an acceleration of maturation complete nan adjacent fewer years. The gross that we're projecting we consciousness very reasonable for what we're seeing hap successful nan marketplace correct now, but I'll fto Tom talk a small spot much astir nan specifics.

Tom Cancro

Yes. Jack, astatine nan high-end of nan range, nan maturation resembles 2022 aliases nan divided of nan maturation that is to opportunity a small much than half of it comes from aforesaid shop sales, if you will, caller participants astatine existing centers. And nan remainder is divided betwixt caller centers and pricing, supplier value increases, caller contracts, etcetera. At nan low-end of nan range, it is almost wholly existing centers and pricing and very small ascribed to caller sectors added.

Unidentified Analyst

Great. Thank you.

Operator

Thank you. I'm showing nary further questions astatine this time. Thank you for participating. This concludes today's convention call. You whitethorn now disconnect. And I'm sorry, it looks for illustration we person 1 mobility that conscionable popped successful from Jessica Tassan pinch Piper Sandler. Your statement is now open.

Jessica Tassan

Sorry astir that. So, tin you conscionable punctual america what nan backlog to gross conversion process looks like? Like really galore years of projected gross are included successful backlog and what is nan anticipated complaint of conversion?

Brian Adams

Thanks, Jessica. Good question. Good to talk to you. So, those are each contracts that are successful spot today. What's reflected successful backlog is astatine afloat ramp. So, erstwhile those contracts are astatine maturity and those locations are, they person afloat census associated pinch them, which connected mean is astir 250 participants aliases 250 members. So, we would expect complete clip and that clip is anyplace betwixt 18 months to 3 years.

We would spot that gross beryllium realized. Effectively what you're looking astatine location successful our backlog is ARR, right. That's what we're quoting. So, it does return immoderate clip for those locations to ramp though.

Jessica Tassan

Got it. That makes sense. And past conscionable Brian, you spent a small spot of clip successful nan prepared remarks talking astir nan supplier relationship aliases nan MedWise platform. Just interested, what is nan monetization strategy for that level correct now? And past is nan volition to waste this merchandise aliases this level extracurricular of PACE? And benignant of wherever does that fresh wrong nan scenery of expert supplier reference products? Our knowing is [indiscernible] has astir 50% of marketplace share. And truthful conscionable funny to cognize if you deliberation astir MedWise arsenic a complement aliases an replacement to that offering?

Brian Adams

That's a awesome question. We talked a batch astir MedWise and I deliberation it's important for everybody that's listening to understand that we usage MedWise coming successful our PACE level wherever we're bringing drugstore services to our PACE customers. We usage MedWise to analyse those medicine regimens for each azygous individual. So, reasoning astir bringing MedWise into immoderate of those adjacent markets will not beryllium america bringing drugstore services, but successful a different capacity.

So, April and nan strategy squad and nan commercialization squad person really been looking astatine caller ways for america to bring that to marketplace and mates it pinch immoderate of our existing paid solutions that we consciousness are very applicable for immoderate of these adjacencies. I americium excited complete nan coming quarters. I deliberation we're going to person immoderate bully things to stock pinch you connected really we scheme to efficaciously relaunch our MedWise spell to marketplace strategy.

And so, I wouldn't needfully deliberation of it successful nan aforesaid measurement that you deliberation astir [indiscernible]. This is simply a level that's looking astatine multi-drug interactions, whereas immoderate of these different products are it's 1-to-1 drug. It's a very elemental process. I deliberation we're going to travel astatine it from a very different perspective. And nan worth that we tin yet supply by utilizing this level is importantly higher.

Jessica Tassan

Got it. And truthful nan relaunch would beryllium a 2023 relaunch pinch effect connected 2024 bookings aliases 2024 revenue. Can you conscionable benignant of framework nan timeline and that's it from me, thanks?

Brian Adams

Yes, I deliberation that's a bully timeframe successful position of expectation. We scheme to beryllium backmost successful nan marketplace successful nan 2nd half of nan twelvemonth pinch gross being recognized starting successful 2024.

Jessica Tassan

Thank you.

Operator

Thank you. I'm showing nary further questions astatine this time. This concludes today's convention call. Thank you for participating You whitethorn now disconnect.