Good day ladies and gentlemen, and welcome to the HealthStream Incorporated Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I’d now like to introduce your host for today's conference Ms. Mollie Condra, Vice President of Investor Relations and Communications. Ma'am, you may begin.

Thank you and good morning. Thank you for joining us today to discuss our second quarter 2016 results. Also in the conference call with me are Robert A. Frist, Jr., CEO and Chairman of HealthStream; and Gerry Hayden, Senior Vice President and CFO. I’d also like to remind you that this conference call may contain forward-looking statements regarding future events and the future performance of HealthStream that involve risks and uncertainties that could cause the actual results to differ materially from those projected in the forward-looking statements. Information concerning these risks and other factors that could cause the results to differ materially from those forward-looking statements are contained in the Company's filings with the SEC, including Forms 10-K and 10-Q. So with that start, I’ll turn the call over to Bobby Frist.

Thank you, Mollie. Good morning, and welcome everyone to our second quarter 2016 earnings conference call. We've a lot to discuss today and we will start with kind of an opening characterization to several challenges in the quarter, as well as a lot of a reasons for optimism and I want to elaborate on both dimensions of that. We are going to turn our attention first to kind of the revenue side, and kind of open-up with a few highlights. So, the first highlight was that the top line revenues increased 5% to $54.8 million. And the second highlight, its important because there is going to be some [indiscernible] discussions today, it is that we’re maintaining our guidance of consolidated revenue growth of 8% to 12% for the full-year. We are going to end up being a little more back-end loaded on revenue growth model this year than maybe someone thought we were leading into this report. And one of the things that gives us a lot of confidence as we lead into the second half is that we delivered record sales in our 26 year history, records sales, orders, in the first half of the year, but no good goes unpunished. Many of those sales were not converted into revenue in the second quarter, because the timing of those sales was heavily weighted to the end of the second quarter. So again, this first half record sales in our entire history is one of the things that gives us confidence as we push into the second quarter. But a lot of those sales occurred in the last two months in the second quarter. And so they didn't quite come in exactly as we’ve [indiscernible] as we kicked off the year, but again the record sales gives us a lot…

Thank you, Bobby and good morning, everyone. I'll provide some color to our financial results including certain items that impacted the quarter. For the quarter, consolidated revenues were up 5% to $5.8 million. Operating income [technical difficulty]. Operating income was down 10% to $2.3 million. Net income was down 5% to $1.4 million and earnings per share was $0.04 compared to $0.05 in the second quarter of 2016. Adjusted EBITDA was down 10% to $7.9 million from $8.8 million from last year second-quarter. Now let's look at the four areas of our income statement, revenues, gross margin, operating expenses, and operating income. And as we review our results, we'll place the financial context on the impact of the ICD-10 revenue declines. Revenues, as Bobby mentioned, consolidated revenues were up 5% in the second quarter versus the same period last year. We achieved this 5% revenue growth while overcoming the $4.6 million decline in ICD-10 readiness revenues from last year's second-quarter. When we exclude the ICD-10 readiness revenues from the second quarters of both 2015 and 2016, our consolidated pro forma growth rate to 16%. However, when we account for the change in the HealthLine Systems deferred revenue write-down, [indiscernible] second-quarter last year's, the pro forma growth rate adjust to 11%. The Workforce segment is comprised of applications and content solutions, which are primarily subscription based and are targeted at improving the healthcare workforce. This is also the segment in which ICD-10 revenues are reported. Revenues from our Workforce Solutions segment increased by $400,000 or 1% which increased [indiscernible] $4.6 million year-over-year decline in ICD-10 revenues. The second quarter pro forma growth rate for Workforce, excluding the ICD-10 readiness from both periods is 15% which is Bobby also just mentioned. The second quarter of 2016 HealthStream's workforce ARIS was $35.70 compared…

Thank you, Gerry. As I mentioned on past calls, we’ve multiple strategies for growth. Many of those were organic strategies, launching new products, and also pursuing an active M&A pipeline. In fact, just yesterday we announced our second acquisition in the past 30 days, so I’m going to take a moment and talk a little bit about both acquisitions. On June 30, we acquired Performance Management Services, Inc., and this is a company focused on competency-based performance development of nurses. We're excited to add to our Workforce Development Solutions their industry-leading clinical assessment tool, the performance-based development system. Its widely known to customers across industry as PBDS. And PBDS is particularly well-respected among healthcare organizations for its insightful and predictive clinical assessments regarding the judgment of clinicians. And we're excited about this because we think we can add a lot of value to that core technology and it’s a kind of asset that’s leverageable across our network and so really excited to have acquired that well-established, although small organization against a type of organization where we think it will serve our customer base really well. Yesterday, we also acquired another clinical assessment company and the company known as Nurse Competency is the leader in subscription-based clinical assessment and testing. It focuses on knowledge testing and so one focuses on judgment testing, and the other focuses on knowledge testing. And so, we like the way these two complement each other. In fact, we're combining those two to build out an assessment of product and service line inside of HealthStream. And so we're excited about how those two elements we believe will come together under the leadership of one of our clinical leaders and we will round out and invest in and build out an assessment business initially targeted towards a nursing.…

Thank you. [Operator Instructions] And our first question comes from the line of Nicholas Jansen of Raymond James. Your line is now open. Please go ahead.

Hi, guys. I just want to dig a little bit deeper into the robust selling activity you talked about in the second quarter, and kind of how much visibility you have in the back half of the year growth acceleration? Because based on, I guess my math, you talked about kind of a true organic growth number of about 10% or so when you correct for deferred revenue in ICD-10,but on my math that has to go back to in mid-teens in the back half of the year to kind of even get to the lower end of your full-year guidance. So just wanted to get your thoughts on the visibility of that ramp and how successful selling activity needed to be in the second half in order to achieve those metrics? Thanks.

Yes, great question. Fair observations. I think that we're encouraged in the second half because its largely now an execution and implementation game. The sales were really, really strong as we mentioned in the back half of the second quarter, in the last two months of this quarter in fact -- I’m sorry, the second quarter. And that gives us the implementation backlog to achieve the growth rates that we projected. So not a whole lot of new selling act to occur to deliver the numbers. We have a whole lot of implementation to do, execution and get the revenue recognition. We entered with the backlog. If we work through that backlog and then the new sales backlog created by the new sales, we still -- that gave us the confidence to maintain our revenue growth ranges. And so, it really is an execution game and we had a few bumps in the road and second quarter, but we think that we're up to it and we’re going to deliver that revenue recognition. And it really isn't as tied to our expectations for sales. Although we do have strong pipelines and great expectations for sales. As you get to the middle of the year on a SaaS business, the sales that occur from [indiscernible] really are more about the future, about the next year. And we plan to work hard, work with these implementation backlog to get the revenue rec we need to deliver the range that we have guided to.

That’s very helpful Bobby. And my second question which is the on gross margins the strength, obviously some of that tied to ICD-10 readiness going away, but how sustainable is that 58.7% level? Just how would we think about what you're assuming in the back half of the year on gross margins? Thank you.

Yes, some of the margins that we expect a recovery on are like operating margins and a good example is this NetSuite implementation we talked about. That took us a little longer, little hard, [indiscernible] 15 years ago, you swap out a major infrastructure piece of our your business. And it just so happened in the first two quarters of this year work with that moment in time. We ended up taking longer and investing more than we had planned, but it was the right call and Gerry mentioned about 300,000 more investments to finish that project. And so there's some one-time things we’re confident that won't be recurring, and in fact, we’re also confident that getting through that chain will deliver operational synergies. And again, Gerry mentioned some delayed billing and some cash flow challenges, but now the cash flow systems were delivery invoices [indiscernible] platform. So it's just one of those things where you got to kind of look through the quarter for the future, and we had some one-time investments like that one that, that are behind us now. And the accounting team is exhausted, but excited because they can already see the operational benefits and then [indiscernible] excited, because of the increased visibility we’re going to get in the product line contribution margins, and Product Management is excited, because they’re going to get more financial detail that are reported on their business. So there was a one-time things in the quarter that we're confident will recur. On the gross margins, it's kind of a product mix question and based on the selling in the first half and the implementation schedules we think that gross margins will continue to maintain the fall off in ICD-10 revenues which has a lower gross margin than the one we just reported about 50% gross margin that tends to have a boosting effect. As we look forward, we think about ’17, the record HeartCode sales which has a lower gross margin may put some pressure on gross margins in ’17, but we’ll get to that in February. But for the remaining balance of the year, we feel pretty good about gross margins and then certain onetime operating costs that are behind us.

As always, thanks for all the color. Thanks.

Thank you.

Thank you. And our next question comes from the line of Matt Hewitt of Craig-Hallum Capital Group. Your line is now open. Please go ahead.

Good morning. Thanks for taking our questions.

Thank you.

First one, on product development. It sounds like you’ve got a heavy cadence of launches coming here in the second half of the year. That segment, 13% of revenue is now for several quarters in a row. As you start to get through some of these launches and introductions of new products, will that trend back down? I mean, I think your historical range was closer to high single digits. Will that taper off a little bit as we get through the second half of this year and into next year? Or do you anticipate that the thing elevated for a lot longer?

Yes, I think that it's right to say we have, in all segments the Eco segment, if you look at it since the acquisition and particularly the last 12 months, we’ve added meaningfully to the technology development teams at Eco. But the rate of product introductions for them is really outstanding. They’re already got several ancillary and add-on products in the market with those teams and the rate of launching new products are going to continue. And they’re kind of add-on an extension products during new revenue stream. So in some of -- in that segment in particular you see a really -- an early increased rate through the fourth quarter last year and probably the second quarter of this year in investments and technology. And we do expect that to level a little bit as the second half of the year and some of those products into the market. In a similar vein, in the workforce segment, as we fall through this ICD-10 decline which has been -- a major impact particularly in this quarter and in the next quarter on a year-over-year basis even greater negative impact, but it absolute impacts the declining. We project about $1.1 million of revenue from ICD-10 readiness products next quarter. And remember that peeked at over $7.4 million over a year ago. And so that’s a material change in outlook. But along the way we haven’t stopped investing, and you will see a string of investments in fact about a month ago we saw soft launched on our website, you can read about our new nurse residency program which is in our workforce segment. It's a soft launch because we have it in our press release and in that part we already have paid pilots and one new contracted full customer for…

It does. Maybe one just follow-up real quick and this kind of gets back to the gross margin. Obviously very strong quarter, it goes back to I think -- ICD-10 was the last time you had leveled this almost 59% this quarter. As we look out, not just even the second half, I think more like 2017 and beyond. And I know you’re typically not comfortable looking out that far in advance, but just generally speaking you’ve added new content. So were you owning; you’re not sharing with royalties or anything. You continue to ramp in those areas where you own the content. Is it -- can we start to think that maybe you’re generating 60% or even maybe a little bit higher gross margins than the not too distant future just given your mix?

Well, I appreciate the question. You’re right. We don’t comment on ’17 and the future until we get to our strategic retreat in our budget process, and our three year planning cycle that occur every year. The only reason I gave a little hint was that, I want to remind people that the HeartCode products have three partners involved, and it's been a top performing product for us in the last two quarters. And it has a lower gross margin than even the ICD-10 product. So I did want to just kind of remind people of the structure of that product as you think forward and that's really the only commentary I’ll give going forward. That said, you’re correct; products like checklist management that's wholly owned and probably supports gross margin over 90%, performed really well in the quarter adding 10s of 1000s of subscribers. And we also saw our post-acute section perform well. We made some net big wins, and the really nice thing about that win is they bought products across our multiple segments, and so we felt encouraged by that. And so there are many challenges that manifest in the quarter, but back to gross margins I think we’ll stick with what we said for the remaining year and stick to our guidance and work hard to deliver that for the remaining two quarters of the year.

All right. Thank you.

Thank you. And our next question comes from the line of Richard Close of Canaccord Genuity. Your line is now open. Please go ahead.

Yes, this is ...

I’m sorry. Can you speak up? We have little bit difficulty hearing.

This is Richard -- Richard Close.

Hi, Richard.

Good morning. I was wondering if you could put any details -- more details around the record first half sales, in terms of what maybe the year-over-year growth was on your bookings?

No, we don’t guide the bookings. But we wanted to just explain why, and we don’t talk about bookings. But we found it’s necessary to explain why we had confidence in our guidance this time, and it is based on the fact that we had a heavily weighted backend sales cycle. And in that part of the challenge and the opportunity right, because we had expected more of those sales to come in January, February, March and April, and instead they came in June -- May and June. And so that's really all the commentary we’ll provide on bookings and sales. But we want you know with some confidence that we did set records and it created an implementation backlog. So if we can just get through the execution of implementing we can deliver the growth rates that we projected.

Okay. And then, I’ve been following the company here for a decent amount of time. And I was just curious; I don’t remember really this happening ever in the past. Was there something that changed or anything that maybe caused that, the bookings to come later in the quarter?

No, it's just kind of the cycle. I think -- and since we don’t ever talk about it and we’ve had those before, we just never had where we needed to explain the revenue side in so much detail, such a heavily weighted second half. And more so than we had planned and certainly more but given our annual guidance then you guys had all modeled. And so, we felt it's necessary to talk about it. But we’ve had cycles. I mean Q2 and Q4 are usually stronger periods in general. It's just that relative to maybe our plan and therefore the way use that modeling things, it was a little more heavily weighted in the last two months. So there’s really not much more I can say about that. We had modeled a little earlier in Q1 and so, a little bit of a miss on our part and it all came at the end of Q2.

Okay. And then ...

There’s no particular reason that we can identify. We had some things slip from Q1 to Q2 and our team is down the way to reel them all in close them all at the end of Q2.

Okay. And then, with respect to the DSOs, can Gerry just go over that again? Was that anything specific or was it just the bookings coming in late in the quarter. What exactly, I didn’t quite catch that.

Yes, sure, I’ll try to explain a little bit. During our implementation of the NetSuite financial platform, the April to May billing cycles in which the customers [indiscernible] later than normal, and so that resulted in a slowdown in cash receipts. And so that's what I’m trying to explain in my comments. We’re now back on schedule, but need to work hard to get those cash collections back and caught up and reduced, and it comes to zero balances.

Okay. And then my final question, and I may have asked this in the last couple of quarters. But the advisory board has restructured their sales force to move away from selling individual products to more a solutions sale. And Bobby, you talked about this post-acute win where they are buying patient experience as well as the core workforce I guess as well. Are you guys selling more on a product-by-product basis or a more a solution sale yourself? And how do you think about that going forward?

Right, I’ll just remind you of how our sales organization is structured in general. This is kind of [indiscernible] we understand its structured around the buyers. We’ve identified about six or seven core buyers across our three segments and we found ways to structure the sales team. About half of the sales team are account managers that carry quota, and they build account level plans and so they are expected to bring in specialists from these seven or so areas. And then we target the VP of HR, the Head of Revenue Cycle or VP of Finance, the CNO, the CMO, the Head of Risk, the Head of Quality, those are all and -- experienced officer are all targets for the sales organization. Now we go in, in solution sale [ph] by specialist area. So you can kind of over simplify to think of about six or seven -- seven teams of 12 to 15 that focus on that buyer. And they do indeed go in and show all of the relevant products across our stream to that buyer, and so there are kind of groups of products and solutions that are taken in by these specialists to the specific buyer. And then the account manager’s job is to orchestrate how those six or seven specialists come in into the account plan for our existing account structure. And so, that -- hopefully that gives you a little indication how we’re structured. We’re doing a little better job now through the account planning process of bringing in two or three specialists for the time and kind of bundling up what we call a big H sale, which is kind of a HealthStream sale that includes solutions from multiple groups targeting multiple buyers. And so, we are getting a little better at that, at least in this one big system level and that was exciting to see all that cross selling occur in that one account. And also have the post-acute account which is exciting because we’ve told everyone that expanding the post-acute space is important to us.

Okay. Thank you.

Thank you. And our next question comes from the line of Scott Berg of Needham & Company. Your line is now open. Please go ahead.

Hi, Gerry and Bobby, thanks for taking my questions. Just a couple of quick ones here. Gerry, could you help us reconcile the deferred revenues that were down more than expected in the quarter, kind of given the strong bookings that you guys have talked about in Q2. I guess I’d expect for them to be a little bit stronger and maybe try to understand what all the puts and takes are in involved with that line item in the quarter?

Scott, can you say it again? Did you say deferred revenues or did you say ICD-10 revenues, what did you say?

Sure, deferred revenues.

Okay. The best way to describe that is, last year the impact on the first quarter of 2015 -- second quarter of 2015 was a reduction in revenues above $2.7 million all the way to the HealthLine acquisition. In this year’s second quarter that numbers will hit $439,000. So what I was referring to was, the increase in revenue is basically that change in that level of deferred revenue write down in a different period, so it's roughly $2.2 million swing. Does that help answer your question Scott, maybe I’m ...

Yes, no it was more of total -- the deferred revenues in the quarter were down. Given the record bookings in the quarter or at least that you ...

Balance sheet.

Yes, in the balance sheet. Yes, not the -- not really related to the acquisition.

Yes, sure. The biggest driver there is last year we saw quite a bit of ICD-10 contracts in the balances of deferred revenues as it all have been amortized into revenue and so that's why that balance is found in the balance sheet.

All right. I guess, as a follow-up to that is, Bobby you had a good quarter on the post-acute side, you at least called out a large transaction that bought kind of a full suite of products. Can you maybe talk about sales pipeline there, and any increased traction that you’re seeing in post-acute care now that it seems like you’ve got some for content and technologies that are certainly more ready to sell into that segment than what we’ve seen over the last maybe 12 to 18 months?

It's just been a steady contributor as part of our subscriber count every quarter and this quarter we highlighted one particular count that adds over 20,000 subscribers. So that was great to see. I would just characterize it has a nice steady pipeline, and we’re learning to target the middle and upper and lower, the whole spectrum of that market which has a lower, smaller organizations in it, you’ll learn to sell those and then obviously deliver one system level client this quarter. And so, I would say we’re just getting better at taking our suite in and finding what parts of our suite that we’ve sold for over a decade to the acute care market is applicable to the post-acute settings and we’re just getting a little better at that.

Great. That's all I have. Thanks for taking my questions.

Thank you.

Thank you. And our next question comes from the line of Matthew Gillmor of Robert Baird. Your line is now open. Please go ahead.

Hi. Thanks for taking the question. I wanted to ask another one on the sales activity. I know you don’t give the bookings numbers themselves. But can you maybe give us a sense for how you define bookings or sales. Is this an annualized revenue contribution or is it more of a growth value of the contract which could be spread over multiple years?

Yes, it's spread over multiple years. So when we think of our internal measures, it's the total contract order value. And so that's correct to say that if we sign a two or three year contract, we have multiple ways to look at it, but the one we’re referring to was the total value of orders -- the total contracted value of orders in this first half of the year was greater than ever before.

Got it. As a follow-up to that, is it safe to say that the terms of the contract in terms of the duration are no different this quarter than in previous years?

I think on average that's a fair statement. Yes.

Okay, that's helpful. And then on the patient experience side, you mentioned a large contract loss and then also this nice win on the post-acute side and you’ve given some information I think in terms of what contributed to the win on the post-acute side and being able to leverage multiple aspects of the business. Can you maybe characterize what the loss was? Was that on the acute hospital side and then what factors contributed to the loss, just so we understand that better?

[Indiscernible] because it actually was post-acute, and we’re not naming names as of competitive situation and we lost the competition on the renewal. So as an existing account and we’ll work hard in a few years try to bring it back in, and they remain a customer for some of our other product service sets. So it wasn’t a loss for the customer, there’s a lot for the customer and for the patient experience business. And we’ll fight hard to try to win them back, but it was just a head-to-head competition and we lost.

Got it. Thanks for taking the questions.

Thank you.

Thank you. And our next question comes from the line of Vincent Colicchio of Barrington. Your line is now open. Please go ahead.

Hi, Bobby, this is Vince here. Curious, were you able to cross sell other products to any ICD-10 subscribers in the quarter? And how conservative do you think your ICD-10 revenue forecast is for the year?

Well, we’re always cross selling, but at this point the rate that they’re dropping off is probably faster than our ability to predict how many we’ll save by cross selling. So we kind of model them effectively all coming out by the end of Q1 next year. And so, we have a lot of, if it gets smaller and smaller we get more confident in its scale. And what we’re seeing now is the next two quarters being the one we’re in our third quarter and fourth quarter, we expect about $1.1 million in this quarter and a little under $1 million in the next quarter. And the reason it’s kinds of flat is that, a lot of the extensions we’ve signed carried people through to January and February of next year, and then we expected to go ahead and drop off in this particular product category we call ICD-10 readiness probably close to zero through Q1, a rapid drop off after that. So we’re pretty confident in this run out, and what we’re working on is the offsetting revenue from the new product called DNA and we continue to sell that as an offsetting product as well. But we are fairly confident that the numbers for your model will be about $1.1 million and a little under $1 million for Q3 and Q4.

Thanks for that color. And then, could you give us an update on the M&A market, have valuations gotten any better out there. What does it look like?

I’m not seeing -- I’m not sure of seeing valuations get any better, but we’re pretty selective in what we’ve been doing lately. You can see from our last couple, we brought in some assets and people that we think are really leverageable across our network. So that's an exciting new area. And I would say that the pipeline is active for all three segments. So we’re not looking in any one area. We have a couple of ideas in each area, and we’re going to chase them all down and keep investing in this area. Because we do think that we have a strong network, and part of our network is to deliver a network effect in the long run for shareholders, and so there are definitely more technologies and assets that can lever the breadth and scope of our network.

And do you have any potential acquisitions in your pipeline that would involve proprietary content on the workforce development side?

Well these last two actually were just that. If you think of content more broadly as data or database, in this case tests and databases and benchmark. And so, what we’re really excited about is these two acquisitions we just announced is that they have historical datasets that allow for proprietary benchmarking and the test themselves are a form of proprietary content. So both the test questions and the test answers which we have a lot of history on now will form a new type of content for us that I’m pretty excited about.

Okay. Thanks for answering my questions.

Thank you, Vince.

Thank you. And our next question comes from the line of Frank Sparacino of First Analysis. Your line is now open. Please go ahead.

Okay. So I’ll keep it short since we’re running out of time. I just wanted to go back to an earlier comment around the provider segment and the shift to more of a subscription versus pure perpetual license model. Can you give us a sense just to the magnitude of that change, maybe what the business was when you acquired in terms of license and where it is today, what you think it's going?

Yes, I don’t think I have those numbers in front of me. I should have them, but I don’t. And so we might have to save that for next quarter. But the business had been around for almost 30 years and it sold all forms of software in its history including purely installed software. And along the journey they moved to a subscription selling model, and then a web hosted subscription selling model. And increasingly of course we’re selling at every turn that we can the subscription based web delivered model. But there is still a little bit of the legacy installed, revenue recognition and some installed sales but at a lower rate. So I don’t have the magnitude of those shifts and that's something that we can make a note of and talk about in the third quarter.

Thank you, Bobby.

Thank you, Frank.

Thank you. And our next question comes from the line of Ryan Daniels of William Blair. Your line is now open. Please go ahead.

Yes, good morning. Thanks for taking the questions and the color so far on the record sales. I have one more follow-up there. Just curious probably if you could talk about what in particular is resonating. I know you talked about the necessitation products, but I guess in particular any specific platforms that are proprietary there selling well or other content that is accounting for those record levels?

Well the really nice thing about the sales, well there were no huge single deals that carry that record, and they were spread across a lot of exciting areas. And so, for example our new knowledge queue product which you can think of as the third generation of our OSHA mandatory training product which really is what put us on the map is starting to get some traction. And so was it a couple of million in orders -- right, about a couple of million in orders on the new knowledge queue product which you remember we own wholly. So we own the content, the data, the platform, it's a fully vertically integrated product and so it also will have high gross margins as well. So it's fun to see a little traction in the -- in that particular product. Some of the used based products that involved control centers which that one in the knowledge queue as one of them are getting in the market. And so, we’re seeing steady contribution in the clinical area, I mentioned that as well. CE center well not breaking any records has been steady. The clinical association content has performed well. We mentioned the 22% growth rate across the clinical product portfolio. Really we -- and we had that big win, a really solid win in the post-acute setting where they brought across the entire portfolio, so it's really a nice balance selling quarter. Now I wish that it was balanced across the first six months of the year. It all seemed to occur in the last 50 days of the two quarters. So it didn’t quite happen the way we hoped, but it did happen.

Okay. That's helpful. And then you mentioned now that you have the sales, the key is implementing those clients. Can you talk a little bit about your confidence level there both with your internal staff to do that, and then I’m curious of the clients bandwidth take that on and ensure that the revenue is recognized through the back half of the year as you anticipate?

Well, some of it is depending on the customers. In all these cases when you sell this type of service software and solutions. And so, we try to carefully weigh that with our historical ability to execute. And we had some new execution areas like in the provider solutions segment where they’ve been working on improved and enhanced implementation processes for the last several months that we think will come to provision in the next coming quarters. So it is an execution challenge, but I think we’re up for it. We’ve got good teams there wherever the challenge. And I mean it gave us the confidence to reiterate our guidance. So we try to access all the risks involved with that, and we still feel like we’re going to deliver it.

Okay, great. Thanks for the color.

Thank you. And I’m showing a follow-up question from the line of Robert Close -- Richard Close of Canaccord Genuity. Your line is now open. Please go ahead.

Yes. One thing I did want to ask is, with respect to the two acquisitions, I know they were small in nature. But when do you expect those to get ramped up and begin -- really beginning to contribute to revenue?

Well, they had a small contribution revenue in the remaining two quarters, but it does represent a new investment area. To be clear, these are two small platforms and we’ll want to reengineer parts of them and add technologies to them like we do expect those technologies to leverage our investments in Juice Analytics [ph]. So we’ll be building new analytics capabilities wrapped around those products. And so it will take a little time to integrate. But we’ll see some revenue -- smaller revenue contributions even in the second half of this year.

And then finally, as you look out and see what the purchasing trends are. Are you more optimistic about the long-term growths of the company or less optimistic, any thoughts there?

Well no, I’m not going to provide color going out into ’17 and ’18 and ’19. I think we clearly had some challenges this quarter that kind of converged on us, and the timing of things did happen as planned and we spent more in our big enterprise infrastructure system. But we dug deep and thought hard about second half this year and feel good about our guidance. And I think Richard, we go through a really detailed planning process in the remaining four months of every year, and we’ll come back out and share the plans for growth and opportunity in ’17 forward here. We always do that around February.

Great. Thank you.

Thank you, Richard.

Yes.

Thank you. And I’m showing no further questions at this time. I would now like to turn the call over to Mr. Robert Frist for closing remark.

Thank you to everyone following our company. The analysts in particular who work hard to convert our annual guidance into quarterly guidance and into quarterly modeling, which I know is difficult. We clearly had some challenges for the quarter. But there is some optimism [indiscernible] all throughout the Company, in all of its segments. And so we’re going to work really hard to deliver the second half of this year as we’ve just guided. We look forward to reporting our third quarter, and thank you to all employees working so hard through this period to put all these new systems, software infrastructure and execute the implementations that we need to deliver the second half of the year. Thank you. Look forward to the next quarter earnings report.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today’s program. You may all disconnect. Everyone have a great day.