Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from Ryan Daniels with William Blair.
Ryan Daniels – William Blair
You both discussed a little bit some of the implications of losing the revenue and the run rate there, and I am curious how much of that was reflected in the November period results? Did we see a run rate of that or just a portion of that during the period? Any color there?
Mary Chaput
I think we did, Ryan. I think at the end of the second quarter, during our earning call, we actually talked about a $10 million reduction in the second half versus the first half of the year, and that has continued to decline.
Ryan Daniels – William Blair
So we should look at around $90 to $100 that you’re talking about in loss revenue, we would want to take that out of ’08 fiscal revenue and then start growth from that point?
Mary Chaput
Actually you could take the fourth quarter and annualize it and probably take it out of that, and that will get you close to the answer. Now remember that MHS revenue in the quarter annualized is close to $10 million, and that we are not going include that in our guidance at this point for the 2009 calendar year.
Ryan Daniels – William Blair
In regards to the MHS revenue recognition during the period, was that again on the refreshed population or is that actually going back to the original population where some of the data now that the program is over is actually improving in the second half of the pilot?
Ben Leedle
It’s in both the original cohort and in the refreshed.
Ryan Daniels – William Blair
Ben, this is an opportune time to talk about this too because the Research Triangle Institute came out with its report, and I guess in some regards broke the veil on the vendors by putting names and data. Is your data consistent with what was reported in theirs after the first 18 months, and therefore it must be a pretty big improvement in the back half for you guys to be recognizing revenue now?
Ben Leedle
I think that’s a good assumption. One of the things you’ll see in that report, and there’s lots of data and information in there, and again that is the look that CMS has it as and recognizes for the timeframe that it is, so at 18 months, you have to go back in the history of how we reported to you guys and what we saw happening. That was the time when we saw ourselves not hitting savings and concerned that something was fundamentally awry inside of the data and the comparability of the groups. So at this point in time, the report that you’re referencing has some really critical important information in there. It shows in there that we had engaged and retained engagement once we had gotten consent at the highest level of all the different combination between those two things. And I think the other piece in there that you say, that’s critical mass that we were able to get in terms of not only getting a consent but keeping people actively engaged with us in the program with their providers, and then we’ve always taken the approach as you know and believe that we were different in that in all of our interventions are designed to drive improved health and that cost savings follow, moving the needle, and if you go back into that report and you look at the top two by a long shot in terms of performance around the clinical indications here which would indicate that health is improving in those participants was our standalone and the deep work with that we did with Cigna while they participated in this on that other pilot. So, it is not a surprise to us, and I think the tenor that we have taken for some time has been don’t be quick to judge too early in terms of how this going to move in terms of likely opportunity to capture the financial impact that everybody is looking for, so while I can’t speak probably much further past than what Cardiomediastinal silhouette and RTI has shared with the marketplace, I can validate based on the financial reporting that we’re doing that we’ve continued since the back half of 18 months that aren’t represented here to continue to recognize more and more revenue as a function of our continued performance as the maturity of the data and the information in time that’s gone by.
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