Topic: Government deal closures, Gen AI pilots, cash flow, contract structure
Key points:
Q3 deal closings were flattish year-on-year; government shutdown delayed federal deals (e.g., CMS approvals for Medicaid/healthcare), but revenue stream unaffected.
Gen AI pilot in Government: fraud reduction in Direct Express (address validation); expanding to Medicaid/SNAP. In Commercial: customer experience (fraud, language translation, agent assist) and scanning/indexing for claims adjudication.
Negative operating cash flow noted; 87% of divestitures done. Stranded costs from Phase 1 divestitures are through; Phase 2 portfolio rationalization will have some impact in 2026.
No changes to contract clauses; government shutdown affects timing of milestones/sales, not revenue.
Mgmt stance: Neutral on deal timing (delays from shutdown, but revenue intact); bullish on Gen AI (expense reduction already visible in P&L for Government fraud, Commercial also seeing benefits); neutral on cash flow (stranded cost work ongoing, cost discipline continues).
Q2 — Marc Riddick
Topic: Client mix in AI, Commercial growth opportunities, sales talent
Key points:
AI focus: 30%–40% of Commercial business is healthcare; Government AI centered on Medicaid processing/eligibility and fraud reduction. Both verticals are early movers in healthcare.
Commercial product penetration: less than 2 products per client; targeting top 60–80 clients. New business development team being formed to improve pipeline top-of-funnel.
Year-to-date new capability sales up year-over-year in Commercial and overall; excluding largest client, other top 24–25 clients growing year-over-year.
Adding sales talent needed in Q4 2025 to affect 2026 performance.
Mgmt stance: Bullish on Commercial growth (penetration upside, new software licensing like HSP in California, pipeline improvements); neutral on current sales (not satisfied with 2025 Commercial sales, but growth seen excluding one client).