HMS Holdings Corp. (NASDAQ:HMSY) Q1 2019 Results Conference Call May 3, 2019 8:30 AM ET
Robert Borchert - Senior Vice President, Investor Relations
Bill Lucia - Chairman & Chief Executive Officer
Jeff Sherman - Chief Financial Officer
Conference Call Participants
Matthew Gillmor - Robert W Baird
Ryan Daniels - William Blair
Anagha Gupte - SVB Leerink
Richard Close - Canaccord Genuity
Stephanie Demko - Citi
Mohan Naidu - Oppenheimer
Jamie Stockton - Wells Fargo
Frank Sparacino - First Analysis
Good day, ladies and gentlemen. And welcome to the HMS Q1 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will host a question-and-answer session and our instructions will be given at that time [Operator Instructions]. As a reminder, this conference call is being recorded for replay purposes.
It is now my pleasure to hand the conference over to Mr. Robert Borchert, SVP, Investor Relations. You may begin, sir.
Thank you, Brian, and good morning everyone. Joining me are Bill Lucia, Chairman's and Executive Officer and Jeff Sherman, our Chief Financial Officer. This call is being webcast and could be accessed via the Investor Relations section of our company website at hms.com.
Today's press release highlighting our financial results, as well as an investor slide presentation containing supplemental information are posted on our IR website. Bill and Jeff will first provide their perspective on our recent financial operating results and business outlook and then we will open the line for questions. We ask that you please limit yourself to one question and one follow-up, so we can get through the full queue in a timely fashion.
[Audio Gap] that the financial results reported today and in this morning's press release are preliminary and are not final until our Form 10-Q for the first quarter ended March 31, 2019 is filed. Some of the statements we will make today are forward-looking in nature based on our current expectations and our view of our business as we see it today. Such statements, including those related to our future financial operating performance and future business plans, and objectives are subject to risks and uncertainties that may cause actual results to differ materially. As a result that should be considered in conjunction with the cautionary statements in today's press release and the risk factors described in the company's most recent SEC filings, including our Form 10-K.
Finally, we may refer to certain non-GAAP financial measures this morning. Reconciliations of these measures to comparable GAAP measures are included in our press release and the accompanying investor presentation posted on our website.
With that, I'll now turn the call over to Bill.
Thank you, Robert, and good morning everyone. We had a solid start to 2019 and are encouraged by the multiple growth opportunities that we are executing on. Our first quarter revenue increased 11% compared to the same period a year ago. Excluding the Medicare RAC reserve release, we recorded in the first quarter last year. Adjusted EBITDA was up 17% once again demonstrating the inherent financial leverage of our operating model.
Our operating cash flow increased more than 50% year-over-year. Our revenue performance was led by 15% growth in coordination of benefits and 30% growth in our total population management service line. Product innovation and leveraging our core data assets and analytics expertise continues to squarely contribute to our growth. In the first quarter for example, we added approximately $3.5 million of revenue and coordination of benefits from our new internally developed platform that provides real-time insurance coverage verification.
The initial application of this technology-based platform on behalf of a federal government entity was to validate prior coverage termination in order to confirm eligibility for new coverage. It relies on our sophisticated branching logic and depth of data and can be utilized in other settings.
We are beginning work soon for example with one state-based insurance exchange and presenting this solution to other states as well. Our total population management service continues to gain momentum. We believe that our ability to identify members with rising health risks enable's care management, engagement and intervention well before members become higher costs. And our unique behavioral science approach to member engagement is best in class, effectively changing members behavior to take action on their own health. As a result demand is growing and we are beginning to gain greater traction across the HMS customer base.
During the first year, we signed our second Medicaid managed care plan to leverage our population risk intelligence solution. Both clients are now using this solution, our affiliates of large national health plans and these agreements emanated from our successful pilot with the Louisiana Department of Health. These managed Medicaid plans are utilizing our solution to identify members with emerging health risks that require priority attention for care management and member engagement.
Some examples of conditions they are addressing include opioid abuse, at-risk pregnancies and chosen non-ADHD medications for who were not receiving behavioral therapy. Because of our large database of Medicaid claims data and our partnership with the state of Louisiana. HMS is bringing a unique historical perspective on newly enrolled members that our customers have just not seen in the past. This means they can identify at the point of enrollment, the highest risk members to engage for care management. It's clearly a unique value proposition that we're bringing to the market.
Driving member engagement and care decisions enable our clients to proactively close gaps in care for their members in order to help them improve clinical outcomes and HEDIS scores and Star ratings. For example, in one year we rapidly deployed a comprehensive set of engagement programs to reach 1 million medicaid members of an HMS customer, with the aim of reducing costs and improving health outcomes. 10 different HEDIS scores and state pay for performance measures increased between 2% to 5% for this plan. These increases may sound small, but they represent significant progress with meaningful implications in terms of clinical outcomes.
Member retention alone improved by 9%, resulting in $15 million in preserved revenue for the plan comparative previous turnover rates. Payers and providers are continuing to place greater emphasis on actively addressing social determinants of health such as housing, food and transportation, as well as addiction treatment. As key components of value based care strategies and in recognition of the fact that we do need to treat the whole person to improve the clinical outcomes. Through our actionable analytics and services HMS is helping to address social determinants and power individuals by removing barriers to care.
Separately, we recently kicked off a research project with a digital health research organization based on Australia that will leverage leading U.S. and Australian Universities to research issues of critical importance to our healthcare system, and that of other nations. The first track includes research on opioid dependency and an effort to build a predictive model to address the crisis. HMS is the lead corporate partner in this initiative, and we expect the research results to be commercialized as part of our TPM business line in the future.
On a broader topic, the persistent political dialog regarding increased access to affordable healthcare, including Medicare for all and the ongoing legal challenges to the ACA are expected to continue through the 2020 election cycle and likely beyond. As a leadership team, we remain nimble and continue to keep our focus on the things we can control in order to maintain our strong market position and to address the many growth opportunities in front of us.
In fact, we believe our ability to deliver cost containment and clinical outcome improvements will be highly relevant under any contemplated scenario to expand insurance access, if anywhere to materialize in the market. Of course, we are in a prime position as a trusted partner to both federal and state governments to gain from expanded opportunities around fraud detection, utilization review, consumer engagement and care management as well as wide ranging advisory services. Our 360 degree view of the healthcare system can help to significantly bend the cost curve and improve population health. And our recent financial performance is indicative of this broad perspective and the impact of our data and analytics capabilities.
Jeff will now provide additional detail on our first quarter financial performance. Jeff?
Thank you, Bill, and good morning. We started 2019 with a solid first quarter in terms of the total company revenue, adjusted EBITDA, adjusted EPS and cash flow. The 15% increase in coordination of benefits revenue was largely the result of yield improvements from the deployment of advanced technology applications. As Bill referenced, a portion of this year-over-year growth can also be attributed to revenue generated from our insurance coverage eligibility work. Due to enrollment patterns however, this was revenue we anticipated in the first quarter, but is not expected to recur during the remainder of 2019.
Our total population management revenue grew 31% in Q1 versus the prior year's first quarter as we are seeing the ongoing benefits of our cross-selling initiatives driving demand for our consumer engagement capabilities. Payment integrity revenue excluding Medicare RAC decreased about $3.5 million from the first quarter of 2018, due in part to the timing of the client approvals of new and/or programs that was slower than expected. It's also important to point out that PR revenue in the first quarter a year agofrom some revenue timing delays from the fourth quarter of 2017, so we had a tougher comp this quarterly period.
As we've said in the past, our business model does have the potential for some quarter-to-quarter revenue variability. We continue to expect payment integrity to be a positive contributor to the double-digit growth expected from our analytical services overall for the full year 2019, when you exclude the Medicare RAC reserve release in Q1 of '18. Given the small size of the Medicare RAC program we have decided to included in the quarterly PR revenue number. While we do expect Medicare RAC revenue to grow this year, it is not large enough to break out separately. Our business model continues to show strong operating leverage as adjusted EBITDA increased more than 17% compared to the first quarter of last year with margin up 300 basis points to 27.7%.
This was driven by higher than average contribution margin from the COB revenue growth, improving leverage from the TPM revenue growth and the continuing impact of our technology investments that offer both revenue yield and cost benefits. Our total operating costs continue to be well managed and only increased about 2% year-over-year when you exclude the benefit of lower acquisition related amortization expense. As a reminder, Q1 of '18 was the lower suggested EBITDA margin quarter last year and our full year 2018 margin ended at 27.1%. So there may be some quarter-to-quarter variability depending on revenue source and expense trends through the year.
For many of the reasons I noted earlier, first quarter 2019 adjusted EPS increased 65% from Q1 last year to $0.28 per diluted share excluding the discrete tax benefits in this year's first quarter and the Medicare RAC reserve release benefit in Q1 of '18. The $0.07 tax benefit this quarter was due primarily to the exercise of employee stock options as we receive an incremental tax deduction as a result of option exercises.
Our cash flow remains strong with operating cash flow up 57% compared to the first quarter of 2018 and free cash flow more than doubling to $19 million. With cash and cash equivalents of $214 million at March 31, 2019 and total net debt of under 0.2 times trailing 12 month adjusted EBITDA. We continue to have a very strong balance sheet and liquidity profile. Our capital allocation strategy continues to invest in our IT infrastructure and enhance our product capability, as we execute our existing business strategy to attain our full-year goals.
We are also working to identify potential strategic acquisitions to complement our payment integrity and total population management solution suites. There is one note to add about cash balances on the balance sheet, we are reviewing the technical requirements for presentation of client fund, lockbox account balances and our financial statements or notes.
We expect to decide, by the time we file our Form 10-Q. It is possible that certain historical balances or disclosures could be revised or some or all of the balances could be added to the balance sheet with an offsetting liability. As such, it would not impact operating cash flow or results of operations. We continue to believe HMS is well positioned to achieve our full year objectives and anticipate revenue will step up throughout the remainder of 2019 consistent with our full year guidance.
Bill will now offer some concluding remarks and then we'll be ready for questions. Bill?
Thank you, Jeff. As we move through 2019, we remain laser focused on achieving our financial performance goals by executing on our strategies to increase sales, expand margins and profitability, continue to innovate, and add new capabilities as we push further into adjacent markets and actively engaged with and support our entire workforce. I also want to personally thank all of our employees for their efforts in helping us achieve this strong quarterly performance. We look forward to continuing to employ our data, technology and analytics to drive down unnecessary costs and improve clinical outcomes for our customers, their members and the entire healthcare system.
Operator, we are now ready for the first question.
Thank you [Operator Instructions]. And our first question will come from line of Matthew Gillmor with Robert W. Baird. Your line is now open.
Maybe starting with COB strength, I think Jeff mentioned that was driven by yield improvements. And I know you had $3.5 million and you also talked about and yield improvement is something that I know it was always something you're working on, but can you give any more details with respect to what drove the stronger growth this quarter?
Yes, this is Jeff and I'll start and Bill wants to add anything. So our overall revenue growth in the quarter did play out as we anticipated as we noted on the call, COB revenue increased more than 15%, that did come in a little bit higher than we were expecting and really driven by our cost avoidance, post pay recovery service lines. I mean, we're continuing to deploy advanced technologies in our analytics and as we continue to move more data into our data lake and improve our analytics, we're just continuing to see better yield results.
And so I think the investments we have made and continue to make and capital deployment. And as we said, as we started this year, we expect our CapEx to ramp up that we're going to continue to see the benefits of that. Again, we don't give quarterly guidance because it's sometimes it's hard to predict quarter-to-quarter when revenue is going to come in from those deployments, but we saw a particularly strong Q1 and still expect to see COB growth throughout the remainder of the year.
And I would just add that, because of our large client base that utilizes our coordination of benefits product lines, we've always delivered significant value of course returns of 15:1 ROIs, but our advisory services team is starting to put, do more consulting around the edges to make sure that our clients are better using our coordination of benefits product, it is a complex the coordination of benefits begin Medicaid at third parties can be complex depending on the type of patients, the coverage of the third party. And so we're spending a lot more time in a more intimate fashion with a number of our clients making sure they're getting it right, once we give them appropriate data.
So we're seeing a slight benefit from having on-boarded our advisory services into the COB product line. And then as a follow up, I was just curious if the extension of TPL requirements to the chip population and I guess that started last year, but if that had any impact and maybe just update us on where those efforts or states complying at this point?
We've seen some benefit from that, Matt, it's not a benefit we specifically call out. We did, as we went through that a little bit more. There were some states that we're allowing us to do TPL work on those populations historically. So I would characterize it, it was a net positive for us, and we are certainly continuing to focus on driving more of the states that are allowing us to do is to do it. But I think it's a positive, but it wasn't, it's about material positive we wouldn't necessarily discreetly call out.
Thank you. And our next question will come from the line of Ryan Daniels of William Blair. Your line is now open.
Bill, can you talk a little bit more about the new platform you discussed with us the real-time insurance coverage verification. I'm curious, it sounds like you've only got one customer there but it's $3.5 million revenue and you're presenting that to a new state-based exchange, what's the addressable market for that and other competitive sets if there are any or alternative solutions for something like this.
Well so, let me start with the a little bit about the competitive landscape, there are others who can verify coverage. Obviously, this is done at scale for hospitals and other providers when a person actually presents coverage, our solution is more met toward, if a person does not present coverage, or if they present coverage that they believe is or preferred to be terminated, this is of course important exchange. We have the coverage test we have terminated more than 90 days before they are allowed to apply for exchange based coverage. But we do actually the match against our database so consider this very, very large database of insured lives that we get on behalf of all of our clients through these trading partners.
So in the transaction, so during the time the person is applying for coverage, we do that match against the millions of records and we do the verification. So what's return to them is potentially new insurance coverage, they did not know about, excuse me for the patient or member or consumer who is applying for coverage. So the applicability is really against any insurance exchange, but also can be moved upstream to any of our customers at the point of enrollment or potentially in collaboration with our state Medicaid agencies at hospitals for their Medicaid population. So there is a much broader application for this near real-time and near real-time service, then there is in the general market and there is no direct competitor that has the database with all the matching the plug-in to the verification solution.
And then in regards to the total population health solutions obviously seeing great growth and it sounds like increased demand. Can you talk a little bit more about the sales force investments you are putting behind that, whether it's capital or just number of sales force or how you are cross selling that to your health plan customers in particular. Thanks.
So actually this year, we are making a significant investment in our sales force, both at senior levels people, who've had very consultative relationships with large health plans all the way to more junior peoples who understand that product line in a very operational manner, so to speak. As we have expanded our services from COB and all of its flavors depend and integrity and all of its types of products, now to the total population management with three core products, and I say core, because they also have different flavors of those products. But those three products integrated, you really need a sophisticated sales organization to sell that integrated solution in TPM. So this is a year of helping to retool and grow our sales force, and then of course the appropriate training behind it. So that they're ready to sell to people who within health plans particularly legal also state government and other entities, but people who they may not have sold to in the past. We think that will further fuel growth in the TPM space.
Thank you. And our next question will come from Anagha Gupte with SVB Leerink. Your line is now open.
Could I follow-up on the payment integrity, which was a little slower, I hear you about the comps and all of that, but I'm just trying to get a sense for, from a customer standpoint, is there something going on by peer mix and that they're slowing down the adoption or is something happening from a competitive standpoint, it's like 20 logos, if I understand. And with you know one of your competitors being taken private and perhaps more disruption and so on has that not given you an advantage in the marketplace at this point?
So first, I would say, we did have three new PI logos, close sales in Q1 of this year. So, I think we are seeing some traction there. Then, I just want to point out so Q4 of 2018 was particularly strong, with PI, revenue was up 40% of our Q4 of '17 when you include Medicare RAC. So as I said in my prepared remarks, Q1 of '18 benefited from delays in revenue from Q4 of '17. So just from an optics perspective, we had a difficult comp in the first quarter of this year and we know PI revenue can be lumpier from quarter-to-quarter just due to the nature of the work we do, and the ability of our customers, the impact of the type of audits and the number of audits we perform.
So we were anticipating some approval specific gadgets [ph], did not occur as soon as we expected in the quarter. But I think, as Bill said, we're continuing to invest in our people, our processes and technology to help drive TR revenue growth and expect that will contribute to the overall growth and analytical services in 2019.
And in terms of it sounds like it's more about the timing of onboarding the applications even within an existing customer, because you're saying you did get three new logos, which is impressive. Is it also when you say the work you do the lumpiness is it because of recognition of savings, which is perhaps limiting your ability to recognize the revenue, or is that also that your throughput, because you have the AI and machine learning and that's driving capacity improvements. So, is it more of an internal issue? Or is it something that's happening on the customer side, it doesn't sound like it's a competitive issue from what you are saying?
I don't think it's a competitive issue, I would say two things, number one, it oftentimes just takes a long time to get it and it's approved, but once we get them approved, we can go back in time and run the analytics on those edits. So, I think that's one thing, and I think just converting the sales into revenue. We have continued to work on that, but PI still tends to have the longest time period, because it is customized again when we do the COB, new logo for COB implementation our customers don't ask us or tell us how to do the work.
We sign up new customers and we do the work based upon our analytics and infrastructure with payment integrity, as we've said in the past, every customer is different and once we customize differently. So I don't think we're seeing any competitive dynamics, I do think we're seeing a lot of opportunity. As we look at our new expansion sales both for 2018 and the first quarter of 2019, a good percentage 40% to 50% of our contract value is occurring in PI and so obviously our focus continues to shift now and converting that into revenue as quickly as possible.
And, Doug, how much of your business now it's moving from retrospective to perspective or you know, are they doing both. And what's the split of the mix right now that you are having, what's your target you think?
We're doing both, still the vast majority is on a retrospective basis. As we are continuing to invest in technology, we will expect that to move more on a prepaid basis over time, it is still very complex, our customers are very interested in it, but as we've said in the past have been slower to move to it just because of the complexity of their clients payment systems and how we integrate into their system. So I would expect we'd see that shifting over time, but as I look at 2019, the vast majority is still going to be coming from reviews on a retrospective basis.
Thank you. And our next question will come from line of Richard Close with Canaccord Genuity. Your line is now open.
Congratulations on a strong start to the year. Just on the population management the 30% plus growth there, any additional details you can provide, was there anything one time in that and then how should we think about that growth throughout the rest of the year?
So I would say, Q1 of last year and TPM what was our lowest revenue quarter, Richard, our revenue starts stepping up throughout the year. So in TPM unlike PI we certainly had an easier comp in Q1 of this year. So again we expect that TPM is going to be a strong contributor to analytical services growth throughout the year. And it's really primarily driven by our engagement product and our consumer engagement product and we have a recurring revenue stream as we move more to subscription revenue now in that products suite from our lives of products suite that continues to increase and we are continuing to add new logos selling transactional revenue as well. So I think we are seeing good traction there.
Our risk intelligence product as Bill mentioned, we have our second commercial customer with a large national carrier in the State of Louisiana. We will continue to get good intelligence from that as they help us drive product capabilities that they need and what they're looking for. So, risk intelligence our intelligence product we expect we'll see continued growth. Again, we said when -- we weren't expecting a huge number from a materiality perspective, but we are gaining traction in the marketplace in that as well.
And then, I would just add to that in the first quarter, we rolled out on our incentive platform. So a number of health plans used incentive platforms to get people to do things, to get their annual physicals, to get their feed test. We built an entirely new incentive platform that overcomes two of the biggest challenges typically faced by our plans today. One is getting people to go and do things. The other is getting the right people to go and do things, we don't to incentives given to everybody particularly people who historically do get their amount of ground their physical, whatever they're provided for treatments. So, our platform brings all the incentive activity.
So the consumer versus requiring and the self-serve, and also our platforms clinical propensities scoring derives our market to member segmentation. So customers that we serve can prioritize their marketing and their incentive spends to those individuals who really need that truly need that incentive as a push to seek healthcare. So, we've rolled this out in Q1 and that gave us some benefit in the quarter as well.
And so just a follow-up on the second national player in the Louisiana market. I was wondering if you could just like, help us understand in terms of like what the size of a contract is maybe for something like that. I know it's just in Louisiana. But then, you know the size of that and then how are your customers thinking, if this is the second national player. Are they looking at taking this and rolling it out to other states?
So first on pricing. Just we won't talk specifically about pricing, but this price on a per member per year basis which is very consistent with analytics and the payer space. The Louisiana market and the players in that market, who participated in the pilot, have got a early adopter pricing, there are also the plans that will help us from a product roadmap perspective what needs to be done to make this even more compelling. Our goal is that after the plans have use this for a specified period of time and we'll report back to us, our clinical cost savings they have achieved, the better outcomes, the better compliance with state policy or Medicaid policy that will be able to both to use that in our marketing materials go forward to open up new markets, but we believe that these plans will look to expand within their large marketplaces across other states.
Thank you. And our next question will come from the line of Stephanie Demko with Citi. Your line is now open.
So, I'd like to touch on your social term as the health strategy that you mentioned, just given the need for established infrastructure and the human capital necessary to shift some of these determinant. Do you think you'll be a fully outsourced player or we own playing certain areas this trend like tech?
Well, that's a good question. So we do believe that all of the large plans, particularly those serving government are extremely focused on, first, is understanding the social determinant. So that's one of the initiatives that around the products that we have both through our interactive voice response discussions with members, we have questions related to social determinants our on-boarding calls we do for members and its data that we gather for these health plans.
I can tell you that sometimes the health plans, don't have the capacity in their systems to retain that data. So part of our job is retain that data about that number in our population risk intelligence tool. Population risk intelligence tool then when we run a state of health analysis across the population, we're able to say that these are members, we will incorporate those social determinants lack of housing or lack of food, safety at home, no transportation and multitude of others into the algorithms. So that when they see the predictive analytics, we are able to see we've said this person is the higher or rising risks and they have these barriers to care.
The next step in our product maturity is really to integrate with those entities that provide those closed those gaps in care, whether it's a transportation provider, it could be making sure that the member knows the closest food bank, a transportation provider they can use us potentially scheduling a transport for them getting them into a shelter if homelessness is an issue. And then having the technology either HMS built or through partners that will close that loop. The challenge in the industry today is that many of the payers, may have databases that are publicly available that tell them within an 8 mile radius of that patient. How many food banks there are and where they are? But they don't know is -- how we them there? And they also don't know if they actually went there and picked up healthy food. So that's the problem that ultimately we are seeking to solve, with social determinants to help both our data and then data we buy about individuals and populations.
And how would you charge for something like this, given you're having you're providing the data portion of it, but the services component. It's a little bit more of a moving target?
I believe though, we will most likely there some spread it across per member, per month, per member three year basis. We could get into some licensing situations, if it's a platform, as a service that we sell and there may be transactional pricing. If we're playing the part of a care enabler, where we're actually selling the transaction and the person to the food bank and getting back to transaction, I think of a claim, but a pseudo-claim because today, there's no claim for food or homelessness for us to be able to perform that function, it could be a transactional as well.
Yes, I think our pricing that strategy will evolve over time as the value proposition, it gets validated by our customers.
Understood, reimbursement is important. One quick one just on the model just given the yield improvement and the CHIP program this year. Should we think is COB is more of a double-digit grower?
Yes, we didn't give individual line item growth starting by product line, we gave ranges. So we're not updating guidance. I mean COB grew 8% in 2017, it grew 4% in 2018, we're obviously off to very strong start this year. We think it's going to be important contributor to the growth of the company and the guidance range that we provided.
Thank you. And our next question will come from the line of Mohan Naidu with Oppenheimer. Your line is now open.
Bill, a few more questions on your machine learning and NLP [ph] effort. Can you trace back to these efforts. I guess can you trace back some of the yield improvements you're getting indirectly to these efforts number one. And number two, can you frame to us in terms of the opportunity, you have to leverage these technologies to expand your yield where you are right now versus where do you think it will be in the next few years?
So that's a great question. So I would say that we can trace back to our costs, our good job of cost control as Jeff mentioned, very, very low operating expense costs in fact headcount is probably been flat and with our 11% revenue increase and having headcount flat, relatively flat, a lot of it is well automation of functions that humans doing. So that we can free up our people to do higher level, higher skilled banks. The other is, obviously we've talked about in the past, more throughput in the PI space. So as we have the volume and then as these sales that we close pickup that are implemented, we're able to do more with less through these natural language processing and AI.
And then I would say in the Coordination of Benefits space and in TPM when it comes to the AI machine learning embedded in our consumer engagement tool, we'll continue to see improvements and there is yield in every product right there in COB, we're using machine learning now in our matching logic. So that it's learning how to find better good matches and actually exclude bad matches, we talked about how we use this in PI and then of course and the consumer engagement space the AI and machine learning that's built into the particularly the voice response system that basically gets better at understanding individuals' responses and then taking the next right action in our communication with them. So I would say that this will continue to be a key contributor to our ability to manage our operating expense line as well as increased yield.
If you're maybe on the data that you have in your data lake. Do you have exclusive rights on the data, and is there an opportunity to expand the data-set through partnerships or acquisitions?
So, all of the data, I'd say, 90% of the data we use today, we get our work done, it's our clients data, they entrust us with that. There are times that they allow us to use it for other purposes. So, I mentioned our research initiative. We have about half a dozen and growing customers who will allow us to use that we identified minimum data-set for research. There is data that we acquire as well, particularly in our TPM environment to better understand more about populations, and consumers and extract from that or derived from that behaviors about consumers. We are very active in discussions with HHS and other parties about access to data in general, and how that can improve across the healthcare landscape and I say access I say access with appropriate rights. And with the appropriate users, then using that data to improve health outcomes, which is of course one of our ranger goals.
And as we do individual customer deep dives Mohan, and figure out individual unique year contributors by customer, we can certainly use those lines across our customer base. So we have seen this continued yield improvements we do, individual customer reviews, but our customers even in a COB space, sometimes have certain things, they don't want to do our exclusions. And if we can modify those or improve those, we can drive incremental yield as well. So we have dedicated teams looking at that in Company.
Thank you. And our next question will come from Jamie Stockton with Wells Fargo. Your line is now open.
Just a couple here, I guess maybe the first one on the $3.5 million that you got from the real-time eligibility interns verification solution and should we think about that as I think, I caught your comment that you don't expect it to recur in Q2, let's say, should we think about that as a seasonal type of revenue? Was it, I assume it wasn't license revenue, but I guess that's the question, if we could start there.
So it was eligibility as Bill said, an eligibility type verification, Jamie. And so with government programs typically you have approved funding amounts for the work that we do. And so I think as I said, it did come in a little bit stronger than we expected we were expecting most of the work to occur in Q1. As I would, you should expect it would be more enrollment driven, but as we look to expand utilization of the product, it could be applicable year round as individuals are looking to sign up and exchanges.
Is that something that, obviously it's not a big dollar amount right now, but as we think about, let's say 2020 with that same customer, would you expect that same contract to occur again next year?
It would be our hope, given our performance that award and that we might be able to see to expand as well, as I said, not just to a special enrollment periods, but for for enrollment throughout the year.
And then my other question is just on G&A or SG&A. On a non-GAAP basis, it was a really tight number during the quarter. Just curious if there was anything unusual that kept that down and how we should think about that number as the rest of the year trends.
Nothing unusual in the quarter other than to say our stock comp is a little bit higher in Q1. So a portion of that as we have said with equity grants issued in Q1 that our stock comp was going to be higher in Q1 and then trail down throughout the year nothing else that I would point out, I mean, pretty consistent with the coming off for Q3 to Q4 range in terms of our SG&A, we did have obviously some other one-time items in the second quarter of 2018 that impacted SG&A.
Thank you. And our last question will come from the line of Frank Sparacino with First Analysis. Your line is now open.
Maybe just one for me from a macro policy perspective Bill and Jeff. While, I think mostly to feel like Medicare for all will ever become reality, that clearly there is momentum for an expanded role in Medicare, in a variety of different ways and just trying to figure out from your perspective, how much to the extent Medicare expands, is that a positive for you. And just maybe broadly speaking from a policy perspective what concerns you or expect?
Yes, so I guess in general and philosophically we agreed underneath to expand access to affordable quality health insurance coverage. And we know that this issue will always be or certainly for the foreseeable future be a key part of the national political debate, obviously through the current election cycle, and it will stay in the news for quite some time, or even beyond 2020. I think it's interesting, what happened this week with CBO report. So CBO did not actually priced Medicare for all, but what it did was it highlighted, I believe for anyone who has a opinion on this what the massive complexity is to implement what would be a single-payer solution under Medicare for all and the challenges of doing that, the magnitude of getting that done in any period of time, let alone a reasonably short period of time.
The problem today is the freight Medicare for all sounds simple, but really the details are really complex. And the one extreme of the single payer was low private insurance market and most people believe that's an unlikely outcome as do we. So there are numerous other legislative proposals to expand access that are out and/or will be coming out for consideration. There are other areas that might be attractive like a voluntary Medicare volume at the age of 55 or even a Medicaid volume. But through this process our team will continue to monitor various proposals and of course our government relations team will work closely with those in Congress and clearly goes in States, where they are very concerned about possibility of modifications to the Medicaid program.
And I would just add the public commentary about the Medicare Trust Fund and just overall funding levels and pressures on State Medicaid budgets as well. Overall, we still view as a very good macro trading for us I mean is the cost pressures continue to build even coverage expanding it's got to be paid for and is going to be cost pressures that exist in the system, both at the governmental level and the commercial health plan level and the employer level for that, for that matter that all point to meeting our services, even more. So I think the overall macro picture for us, we believe, continues to be very good, with that cost continuing to increase at a faster level than inflation and our customers, government, commercial and employers looking for solutions to help in that cost curve. So we like where we sit in the channel to help them do that.
I think the only thing I would add is. Today about 70% of the Medicaid members are in a health plan, we are happy with that for the most part, one and three of every seniors have signed up for Medicare Advantage, they're happy with that, with the added benefits they get from that health plan. And then employer sponsored covers just about 160 million Americans. So it's really pretty hard for us to imagine the scenario where these arrangements are probably abended without solution that really makes sense, politically and financially.
Thank you. And I'm showing no further questions at this time. So now I will hand the conference back over to Mr. Lucia for any closing comments or remarks.
Well, thank you all for your continued interest in HMS and our performance. We look forward to speaking with you again on our second quarter call. Have a wonderful day. Thank you.
Ladies and gentlemen, thank you for your participation on today's conference. This does conclude our program and we may all disconnect. Everybody have a wonderful day.