We bill our customers and recognize revenue over the term of the contract for certain of our products. As a result, near term declines in new or renewed agreements for these products may not be reflected immediately in our operating results and may be difficult to discern. A portion of our revenue in each quarter is derived from agreements entered with our customers during previous quarters. Consequently, a decline in new or renewed agreements in any one quarter may not be fully reflected in our revenue for that quarter. Such declines, however, would negatively affect our revenue in future periods and the effect of significant downturns in sales of and market demand for certain of our solutions, and potential changes in our rate of renewals or renewal terms, may not be fully reflected in our results of operations until future periods. In addition, we may be unable to adjust our cost structure rapidly, or at all, to take account for reduced revenue. Our subscription model for certain of our solutions also makes it difficult for us to increase our total revenue through additional sales in any quarterly period, as revenue from new customers for those products must be recognized over the applicable term of the agreement. Accordingly, the effect of changes in the industry impacting our business or changes we experience in our new sales may not be reflected in our short-term results of operations. Alarge portion of our revenue is derived from a small group of our customers, and the loss of such customers could adversely affect our business. During the year ended December 31, 2021 we derived 22.8% of our revenue through a single channel partner, who contracts with various health plans and other healthcare entities to manage the utilization of specialty health services for their covered members, and another 12.9% of our revenue through a customer of our NaviNet solution. We cannot guarantee that this channel partner and customer will continue to contract for our services or acquire new services. Additionally, the channel partner may not be successful in reselling our products to its covered members, or covered members may reduce their orders for our products for a number of reasons. If the agreements with this channel partner and customer do not renew or our channel partner is unsuccessful in reselling our solutions, our revenue could be greatly reduced, which would materially and adversely affect our business. Three contracts with our largest NaviNet customers expired at the end the fiscal year ending December 31, 2020. Two of these customers renewed for additional terms. For the customer that elected not to renew its agreement, we continued to provide services through June 30, 2021 on a transition basis. This customer represented 14.9% of our consolidated revenue through December 31, 2020. Customer churn is a natural part of our business and, while there is no guarantee that we will be able to offset the loss of this customer in the short term, we continue to develop new product enhancements and offerings to help drive customer acquisition and expansion opportunities to replace this lost revenue in the long term. If our existing customers do not continue or renew their agreements with us, renew at lower fee levels or decline to purchase additional applications and services from us, our business and operating results will suffer. We expect to derive a significant portion of our revenue from renewal of existing customer agreements, and sales of additional applications and services to existing customers. As a result, achieving high customer satisfaction to keep existing customers and sell additional platform offerings is critical to our future operating results. Factors that may affect the renewal rate for our offerings and our ability to sell additional solutions include: • the price, performance and functionality of our offerings; • the availability, price, performance and functionality of competing solutions; • a customer’s desire and ability to develop their own internal solution; • our ability to develop complementary applications and services; • our continued ability to access the pricing and claims data necessary to enable us to deliver reliable data in our cost estimation and price transparency offering to customers; • the stability, performance and security of our SaaS infrastructure and services; • changes in healthcare laws, regulations or trends; and • the business environment of our customers, in particular, headcount reductions by our customers. For our SaaS solutions, we typically enter into master services agreements with our customers. These agreements generally have stated terms of three to five years. Our customers have no obligation to renew their subscriptions for our offering after the term expires. In addition, our customers may negotiate terms less advantageous to us upon renewal, which may reduce our revenue from these customers. Factors that are not within our control may contribute to a reduction in our contract revenue. For instance, our customers may reduce their number of employees, which would result in a corresponding reduction in the number of employee users eligible for our offering and thus a lower aggregate monthly services fee. Our future operating results also depend, in part, on our ability to sell new solutions to our existing customers. If our customers fail to renew their agreements, renew their agreements upon less favorable terms or at lower fee levels, or fail to purchase new solutions from us, our revenue may decline, or our future revenue may be constrained. - 31 -
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