Tabula Rasa HealthCare, Inc.

First quarter 2023 revenue from continuing operations was $88.3 million, up 32% year over year. Medication revenue grew 35% and technology-enabled solutions revenue grew 21%. Adjusted gross margin was 24.1%, up from 23.8% a year ago; medication adjusted gross margin was 23.0% versus 22.8%, and technology-enabled solutions gross margin was 27.9% versus 26.7%. GAAP net loss was $7.1 million versus a net loss of $20.4 million last year. Adjusted EBITDA was $4.7 million, up from $1.1 million, and adjusted EBITDA margin was 5.4% versus a nearly 380 basis-point improvement year over year. Operationally, PACE medication census increased 18%, PACE medication PMPM rose 14% to $1,110, PACE technology-enabled solutions census rose 8%, and PACE technology-enabled solutions PMPM rose 10% to $98. Aggregate PACE average revenue per participant per month increased 22% to $523. Backlog increased by more than $6 million sequentially to $84 million. For Q2 2023, management guided to revenue of $88 million-$90 million and adjusted EBITDA of $3.5 million-$4.5 million. For full-year 2023, management raised guidance to revenue of $355 million-$365 million and adjusted EBITDA of $19 million-$22 million, implying an adjusted EBITDA margin of 5.7% versus 3.1% in 2022.

Brian Adams framed the quarter as a strong start to 2023 and said the company is moving past the divestitures of DoseMe and SinfoniaRx to focus on longer-term profitable growth and better cash flow. He emphasized three priorities: the PACE market, a stronger commercial sales organization, and new sales wins both inside and outside PACE. His tone was constructive and confident, especially around the market opportunity from PACE expansion, rural health policy support, and customer feedback efforts.

Tom Cancro highlighted revenue of $88.3 million, adjusted gross margin of 24.1%, GAAP net loss of $7.1 million, and adjusted EBITDA of $4.7 million. He said the revenue beat was driven mainly by higher-than-expected drug price inflation and increased pharmacy capacity from staffing and automation, and that adjusted EBITDA margin improved to 5.4%. On guidance, he pointed to Q2 revenue of $88 million-$90 million and full-year revenue of $355 million-$365 million, with adjusted EBITDA of $19 million-$22 million. He also quantified the temporary client roll-off as a $1.5 million-$2.5 million Q2 headwind and said drug price inflation is likely a mid-single-digit impact to revenue and PMPM for the year.

Analysts focused on the voice-of-customer program, the temporary client off-boarding, services gross margin, PACE census trends, and the impact of pricing inflation. Management said the voice-of-customer program has been well received and is helping identify common client themes, including demand for an agnostic EMR API. On the temporary client, Brian Adams called it a unique, temporary situation tied to a health system with an in-house pharmacy, and Tom Cancro sized the Q2 impact at $1.5 million-$2.5 million. On margins, Tom said services gross margin is being held down by integration-related external costs, but should improve as the platform is optimized; he also said drug price inflation and contract repricing are helping revenue and are likely to persist.