Tabula Rasa Healthcare Inc (TRHC) Q3 2021 Earnings Call Transcript

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Tabula Rasa Healthcare Inc (TRHC)
Q3 2021 Earnings Call
Nov 5, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning ladies and gentlemen and welcome to the Q3 2021 Tabula Rasa HealthCare Incorporated Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to your host Mr. Kevin Dill General Counsel. Sir please proceed.

Kevin J. Dill -- General Counsel

Thank you and good morning. I'm Kevin Dill Corporate Counsel for Tabula Rasa HealthCare.

The company intends to avail itself of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain statements made during this call will be forward-looking statements within the meaning of that law. These forward-looking statements are subject to risks uncertainties and other factors that could cause Tabula Rasa HealthCare's actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include the developing nature of the market for technology-enabled healthcare products and services and potential changes to laws and regulations that may impact our clients. For additional information on the risks facing Tabula Rasa HealthCare please refer to our filings with the SEC including the risk factor section of our 10-K filed on February 26 2021. A recording of this call is accessible through a link on the Investor Relations page of our website and it will be available for 90 days.

I'll turn the call over to Dr. Calvin Knowlton CEO Chairman and Founder of Tabula Rasa HealthCare.

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Thank you Kevin. I want to open the call with a summary of our third quarter results including the key theme which is our organic revenue growth is improving.

Three points. Third quarter revenue grew 23% year-over-year to $86.6 million. This compares to four percent revenue growth last year and 6% revenue growth in the first half of 2021. This trajectory bodes well for us as we get close to 2022. Second third quarter organic revenue growth of 17% compares with one percent during the first half of 2021. Third MedWise HealthCare software subscription revenue of $11.8 million increased 16% year-over-year and 17% on a sequential basis as compared to the second quarter of 2021.

The focus in our board meeting earlier this week on Monday and Tuesday was maximizing long-term value for our shareholders. In the near term we are doing three things. First organizational leadership changes to better align strategy product and sales. And this will go into effect next week. Second evaluating options to unlock value in non-core assets. And third exploring new strategic and transformational relationships. We will provide greater detail in the coming weeks and months as our strategy execution progresses.

At this time I will turn it over to Orsula to discuss our CareVention Division which houses five offerings in PACE after which Kevin will discuss our MedWise Division and then Brian will discuss the financials. Orsula?

Orsula V. Knowlton -- Co-Founder President Chief Marketing & New Business Development Officer and Director

Thank you. During the third quarter our net census growth for the program of All-Inclusive Care for the Elderly remained at pre-pandemic levels in the range of one percent monthly sequential growth. The PACE population has benefited from the high level of vaccinations administered to seniors across the U.S. with the vaccination rates among those 65 and older at 84.5% as per October 31 per the CDC. In short we feel good about the future trajectory of PACE enrollment and our CareVention HealthCare business.

As part of our normal annual reporting we will provide detailed PACE metrics in conjunction with our fourth quarter earnings call but I wanted to highlight a few trends. First our average per member per month or PMPM revenue continued to grow at a healthy rate during the third quarter up four percent versus the second quarter and up nine percent versus the first quarter as we benefit from a growing base of CareKinesis clients our pharmacy services and medication risk mitigation utilizing. In fact the number of PACE participants served by CareKinesis is up 15% at the end of the third quarter versus a year ago.

Second PACE cross-sell revenue recognized through the first nine months of 2021 is 12% higher versus the same period a year ago and exceeds the total revenue recognized for the full year of 2020.

High-growth new start-ups and expansion activity are encouraging with existing states including Florida Massachusetts North Carolina New York Louisiana Ohio and Maryland. Expanding PACE in new states include Washington D.C. Kentucky and Illinois and those looking to add PACE. Startup organizations are relying on the expertise of CareVention HealthCare helping them enter the market with confidence. As of September 30 of 2021 our PACE implementation backlog stands at 47 with 17 projected to go live during the final quarter of 2021 and the remaining 30 scheduled for 2022 and 2023. During the third quarter of 2021 we completed four implementations bringing the total as of September 30 2021 to 19.

We continue to be pleased with the growing support for PACE which remains the gold standard for value-based care. In September HHS published a report titled Comparing Outcomes for Dual Eligible Beneficiaries in Integrated Care which concludes the PACE program stands out from our analysis as a consistently high performer. The report found that dual eligible beneficiaries in PACE have better outcomes compared to regular Medicare Advantage enrollees. And this study evaluated dual eligible beneficiaries enrolled in three mutually exclusive plan types comparing them to PACE.

I'd like to turn the call over to Kevin Boesen our Chief Scientific Officer.

Kevin Boesen -- Chief Sales Officer

Thank you Orsula. And this is Kevin Boesen Chief Sales Officer. Thanks Orsula.

Orsula V. Knowlton -- Co-Founder President Chief Marketing & New Business Development Officer and Director

Sorry about that.

Kevin Boesen -- Chief Sales Officer

Appreciate the promotion. As part of our effort to provide greater transparency into our financial model I'll start reporting on our actual bookings figures. Excluding sales related to COVID testing in 2020 overall CareVention HealthCare and MedWise HealthCare Q3 bookings increased 87% compared to a year ago and totaled a record $15 million led by our MedWise segment. Notable third quarter deals included two Blues organizations self-insured employer groups several health plans serving Medicare and Medicaid and an exciting partnership with eHealth.

EHealth is one of the leading private online marketplaces for health insurance and a key driver in our Q3 record results. In August we went live with our eHealth-sponsored Medicare Plan Finder solution and this relationship has increased our retail pharmacy footprint by almost 1000 new community pharmacy rooftops during the third quarter. This is the largest growth in new community pharmacy customers in a single quarter since the 2019 acquisition of PrescribeWellness. At the end of Q3 our retail pharmacy footprint is close to one out of every four rooftops across the country. Our PrescribeWellness network represents an incredibly valuable asset as pharmacists play a more integral role in overall medical care. Growth in our pharmacy network is an important part of our payer sales strategy. The larger our network the more opportunity to enhance payer engagement for payers through the local pharmacist-patient relationship.

I'm also excited about our collaboration with McKesson Health Mart which officially launched in October to 5000 community pharmacies and will begin contributing meaningful revenue during the fourth quarter of 2021. Health Mart's digital portfolio is a new solution powered by the PrescribeWellness platform and provides pharmacies with a suite of digital tools and services including a consumer web portal a mobile app with the goal of strengthening critical interactions between a pharmacist and patient. We also have a subscription-based premium offering with a number of important features and functions for 2022 and beyond.

Turning to our year-to-date performance. Through the first nine months of 2021 our overall bookings across both the CareVention and MedWise HealthCare segments totaled $25.5 million an eight percent decline as compared to the same period in 2020. This bookings figure is a good proxy for annual recurring revenue or ARR as less than two percent of the $25 million represents one-time or non-recurring revenue. As of today we estimate 54% or $13.7 million of our 2021 bookings year-to-date will be recognized as revenue in 2021. Our in-year revenue target as part of our 2021 guidance was $21 million or seven percentage points of growth. Given that we have less than two months of selling remaining in the current fiscal year and our ability to convert bookings into recognized revenue decreases every month as we get closer to December 31 we will not be able to close the remaining $7 million gap.

The lower sales and lower conversion rate of bookings to recognized revenue are key factors in our Q4 guidance. The shortfall is due to several factors: one contract delays that pushed key wins to later Q4 starts; and two short-term hiring challenges which our peers have also commented on. The pandemic has elevated the role of retail pharmacies and created strong demand for pharmacists and pharmacy technicians.

As we head into 2022 we are in a better position than we were a year ago. First our sales team continued to expand during the third quarter and as of September 30 we are close to our target of 50 individuals across divisions with the largest headcount supporting our community pharmacy and payer markets the MedWise HealthCare segment. Second we feel good about the overall sales pipeline and the level of late-stage activity as we head into 2022. Our payer pipeline has continued to grow as a direct result of the increased headcount and a key return of live trade shows in recent weeks including Health Asembia Academy of Managed Care Pharmacy and LeadingAge to name a few.

In short we remain confident in the long-term growth for MedWise in our payer division leveraging the proven outcomes from our recent MedWise publications as well as our proven results around Star Ratings. In early October CMS released its 2022 Star Ratings and our clients continue to outperform. Among our existing Medicare Advantage clients seven contracts improved from a three to a five or a four to a five Star plan bringing the total number of five Star contracts to 38 or effectively one out of every four contracts we serve. This compares favorably to 16% of total Medicare Advantage contracts that attained a five star rating.

I'll now turn it over to Brian Adams.

Brian W. Adams -- Chief Financial Officer & Secretary

Thanks Kevin. As Cal mentioned earlier although we continue to see a healthy acceleration of our growth rate from the first half of the year we're not satisfied with the progress and we're taking actions to further enhance our growth.

Before commenting on guidance I want to dig into our MedWise results. As expected we saw the benefit of a large new contract go live during Q3 with the leading private online health insurance marketplace which led to 16% software subscription revenue growth and 7% revenue growth for the MedWise HealthCare segment. Unfortunately medication safety services fell short of our internal projections declining by four percent with the primary factor being hiring challenges within our telepharmacy call centers leading to a lower number of comprehensive medication reviews or CMRs being completed compared to our target during the quarter. As of today we are adequately staffed to deliver on our fourth quarter medication safety services revenue projections. And at the end of September our call center headcount excluding interns was 19% higher as compared to June 30 with strong hiring in both August and September.

It's important to note that the one large client loss in 2021 and the reduced fees for our EMTM program this year accounted for 14% of revenue last year and this headwind offset strong growth from new clients in 2021. Clear Spring Health is one example and continued gains at two major health plans where 2021 third quarter revenue more than tripled versus a year ago and now accounting for 18% of total medication safety services revenue in the quarter.

Now turning to Q4 and the full year outlook. When we provided our initial 2021 guidance back in February we highlighted five key assumptions bridging our actual 2020 results to our projected 2021 results. I want to revisit each of these and provide you with an update.

First our paid census growth is tracking to plan. Our October 21 monthly sequential census growth for CareKinesis was in the range of 1% and enrollment is up 9% versus a year ago. As a reference point the latest PACE data from CMS showed October enrollment up 5% versus a year ago. So we continue to grow well above the overall market.

Second Personica is right on target contributing five percentage points of inorganic growth.

Third new client contracts were expected to add three percentage points of growth during 2021 and we are behind primarily due to the delayed launch of McKesson Health Mart which has now gone live as Kevin mentioned.

Fourth is new business. And as Kevin discussed we're behind our sales plan and the weaker revenue outlook for the fourth quarter and full year is entirely related to the MedWise medication safety services line. Unfortunately we've experienced contracting delays expanding our relationship with a material existing customer for a program that was expected to be implemented during the fourth quarter. And that is a major factor leading to the weakness in our medication safety services revenue at the end of the year. Lastly revenue attrition is as expected.

The reduced revenue outlook is having a disproportionate impact on our adjusted EBITDA guidance given the ongoing investment in the business albeit these investments are at a more measured level heading into 2022. Our fourth quarter 2021 revenue guidance reflects growth of nine percent to 12% all organic as compared to a year ago. We expect CareVention HealthCare to increase at a faster rate than the overall growth range of 9% to 12% as we benefit from the growing PACE participant base. We expect MedWise HealthCare revenue to increase in the low to mid-single digit range with continued strength in software subscriptions.

Last we plan to provide formal 2022 guidance in connection with our fourth quarter 2021 earnings release but wanted to offer some preliminary thoughts for next year. For some history I'll remind you that in 2020 we experienced organic revenue growth of 3%. In 2021 we are projecting seven percent and are exiting the year in the range of nine percent to 12% for the fourth quarter. We expect organic revenue growth to continue to trend positively in 2022 and we feel comfortable we can generate 12% to 14% organic revenue growth in 2022 which includes two to four percentage points of growth from future unsigned contracts that we expect will be converted into revenue next year. If you exclude the revenue loss attributable to the planned end of the EMTM pilot program of 3% our growth rate next year would be 15% to 17%. Regarding adjusted EBITDA we are committed to driving margin expansion in the range of 100 basis points as compared to 2021. Current guidance reflects a range of 5.8% to 6.1%.

With that I'll turn it back over to Cal for closing comments.

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Thanks Brian. To close this management team and all of our team members are working incredibly hard to create value for our clients and our shareholders. The three initiatives that we launched I mentioned earlier: the organizational leadership changes the evaluation of options to unlock value in non-core assets and the exploring of new strategic and transformational relationships all bode well for increasing performance and shareholder value. As you heard our CareVention Division is back on track for a wholesome 2022 and our MedWise Division is headed in the right direction.

Operator would you kindly open the call for Q&A please

Questions and Answers:

Operator

Yes. [Operator Instructions] Your first question will come from the line of Ryan Daniels with William Blair. Please go ahead with your question.

Ryan Daniels -- William Blair -- Analyst

Yes. Good morning. Thanks for taking my question. This is Jared Haase in for Ryan. So certainly one of the themes here for the quarter is the hiring challenges and the way that that has sort of impacted the results in Q3. So I just wanted to kind of stick on that theme for a minute. I guess my question is can you sort of talk about what specifically the hiring challenges were? Was it sort of just falling short of some of your hiring goals? Did you see an increase in sort of attrition or have retention issues in the call centers? I'm just sort of curious what gives you comfort that at this point those issues are kind of alleviated as we go into Q4 and then into FY 2022?

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Yes this is Cal. We had a number of different issues with hiring but as many people did but the one thing that really hurt us was we usually have a few hundred student pharmacists working with us from the different schools of pharmacy. And I think because they're not in class but they're remote it's really cut down and less than half of what we normally have get every year signed up. We were well under 150. We do have a new initiative that we launched then to with a new liaison a full-time liaison with the schools and colleges of pharmacy in the country that we work with to try and bolster that. So that was a big hit on the MedWise side for us.

Brian W. Adams -- Chief Financial Officer & Secretary

Yes. I'd just add on to that Jared. Under Kelli Kovak's new leadership we've adjusted our staffing model and are going to continue to evolve that going into 2022 with more full-time individuals. And so you can see just based on the headcount change from the end of the second quarter to the end of the third quarter that we've made progress against that. We feel like we're very well positioned to staff to satisfy any of the future contracts. But as Cal described the students and recruiting those which happens typically twice a year and there's heavy churn there what was challenging this past quarter. And so we've made some adjustments to the model. And so we're excited to continue to promote that.

Ryan Daniels -- William Blair -- Analyst

Got it. Thanks for that caller. And then I guess just maybe a quick follow-up. So in terms of some of the sort of contract delays or the timing issues with closing contracts that's impacted the outlook I think that's been a theme that's cropped up maybe a couple times of late. So I guess I'm just sort of curious what specifically with this large renewal what specifically delayed that? Was any of it related to COVID where it's just harder to kind of get people's attention on certain projects or maybe harder to travel things like that? Just sort of curious to what extent this might be an issue that crops up in the future.

Kevin Boesen -- Chief Sales Officer

Yes. Thanks. Appreciate that question. This is Kevin Boesen. I'll take that. The contract issues and where we were confident in being able to close these earlier do closer starts our existing contracts where we're looking to add more of simple amendments. But what we found is that even simple amendments are difficult. And one of our largest customers is a retail community pharmacy that really struggled with bandwidth with COVID testing the employer mandates for COVID vaccines. And we just found that we were definitely over optimistic in our ability to get some of the share time for legal teams to get things done as quick as we thought we could get them done.

Ryan Daniels -- William Blair -- Analyst

Okay. Thanks for that. Now I had to back in the queu.

Operator

Your next question will come from the line of Sean Dodge with RBC Capital Markets. Pease go ahead with your question.

Sean Dodge -- RBC Capital Markets -- Analyst

Yes. Thanks guys. Good morning. I wanted to go back to the comments Cal you made at the beginning of the call and the strategic focus is for 2022. One of the things you mentioned was evaluating options for non-core assets. Can you just give us a little bit more detail there? Maybe some sense of what you'd consider to be non-core right now? And then you also mentioned some leadership changes to come. I was wondering is there anything more you could share on that as well?

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Yes they're not well to be very honest I can't really share the non-core assets yet because we have employees there that don't know about what we're doing. So I don't want to I don't think I can do anything on that right now. But you will hear about that shortly. On the leadership changes we've added Kelli. She's been here 90 days. Very experienced on MedWise. And we're going to make a couple other leadership changes there to help us bolster our MedWise team. And you'll hear about that next week actually.

Orsula V. Knowlton -- Co-Founder President Chief Marketing & New Business Development Officer and Director

And that's Kelli Kovak.

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Yes I'm sorry Kelli Kovak. We brought her in. She's been here almost 90 days but we're going to make one more fairly substantial very senior leadership change.

Brian W. Adams -- Chief Financial Officer & Secretary

And Sean I'd just echo Cal's comments on Kelli. I mean she's been here for 90 days. Has some really exciting observations related to the business and changes that she wants to implement that I think are going to be really meaningful going into next year. So very pleased to have her on board.

Sean Dodge -- RBC Capital Markets -- Analyst

Is there so I guess I appreciate not naming non-core assets specifically. Is there anything more you can give on kind of what evaluating options means? Are these units that you're looking at divesting or shutting down or doing something else with?

Brian W. Adams -- Chief Financial Officer & Secretary

Sean unfortunately I don't think we could share more at this point.

Sean Dodge -- RBC Capital Markets -- Analyst

Okay. Fair enough. Okay. Maybe then I guess the third leg of the stool you mentioned was looking at maybe potential partnerships. Is there any examples or some ideas you can give us of what you're thinking there?

Brian W. Adams -- Chief Financial Officer & Secretary

I think what I would say on that front Sean at this point is we've been looking at a couple partnerships that would really put us in a position to align our growth strategy with some other businesses that are in certain markets that we're targeting. And you hopefully will be able to hear about those in the coming months. But they've been underway for some time now.

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

We're just expanding them. Yes we're expanding them a bit. Yes I'm sorry we can't get in the weeds on that too much Sean at this point.

Sean Dodge -- RBC Capital Markets -- Analyst

All right. I understand. Thanks again.

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Thank you, Sean.

Operator

Your next question will come from the line of Sean Wieland with Piper Sandler. Please go ahead with your question.

Sean Wieland -- Piper Sandler -- Analyst

Hi. Thanks very much. Good morning. So going back to the guidance that you gave in February my notes say that guidance is conservative. We need to do about $20 million in new business to hit it. Compare and contrast the $20 million you needed to hit your guidance in February to the $20 million cut that you made today?

Brian W. Adams -- Chief Financial Officer & Secretary

Yes Sean. So a big piece of it is the new contract that we had hoped to win not hope to win but is currently in contracting with an existing customer that is a material piece of the adjustment. As Kevin referenced and I think I did as well we did have some delays implementing contracts that were secured last year specifically the Health Mart contract that was delayed until really the fourth quarter. And that had a meaningful impact this year. We did have some delays with a couple of the contracts that did not come online as we had hoped most of that happening in the second half of the year. And then we had a couple of million dollar miss in Q3 related to some of those hiring challenges. So a lot of this is back-end weighted. And the most material is this contract with a very large chain pharmacy that we have an existing relationship with that was looking to expand clinical programs. And we have that contract underway but it has not been executed yet. And so that's the most meaningful piece heading into the end of the year.

Sean Wieland -- Piper Sandler -- Analyst

So this contract that the expansion is delayed first can you quantify the impact of that? And second was that contract expansion in part of the $20 million of revenue that you needed to win? Or was that part of the what you thought you had visibility into?

Brian W. Adams -- Chief Financial Officer & Secretary

No that was in the 20 that we needed to win and it was a pretty meaningful piece of that. I think that's what I could say at this point. I don't know Kevin if you would expand on that at all.

Kevin Boesen -- Chief Sales Officer

Yes. It is meaningful. It is something that we anticipated. It was part of what we was a new win. Something that we expected would have launched sooner. But I think what we've learned over the course of this year is that while we've been able to shorten many aspects of the sales cycle by some of the folks that we brought in the back-end aspects of the sales cycle continue to be a challenge and we need to be much more conservative in terms of some of those time lines.

Sean Wieland -- Piper Sandler -- Analyst

So it just looks like comparing the original guidance to where we are today it looks like you didn't win any business throughout the year. And that just I just don't see how that is that right?

Kevin Boesen -- Chief Sales Officer

No. We had as we reported from a transparency standpoint is we do have $25 million in new business wins and almost $14 million of that contributed to 2014 or 2021 revenue. So there are some of the other factors of that Brian mentioned relative to staffing challenges that we faced in Q3 that caused us to miss a little bit. And then the slowness of the Health Mart launch which we're very excited that it launched but it was much later in the year than we anticipated.

Sean Wieland -- Piper Sandler -- Analyst

Okay. Thanks very much.

Orsula V. Knowlton -- Co-Founder President Chief Marketing & New Business Development Officer and Director

Thank you Sean.

Operator

Your next question will come from the line of Stephanie Davis with SVB Leerink. Please go ahead with your question.

Stephanie Davis -- SVB Leerink -- Analyst

Hi team. Thank you for taking my question. I do appreciate that it takes a lot to own some of these shortfalls and take a hard look at the business. So happy you're doing that. So I've got two questions. One of them very broad strokes on financials and one of them pretty granular. First up Brian just in light of how the year has progressed how do you think your guidance philosophy has changed? And how are you approaching guidance on a go-forward basis maybe looking even beyond 2022?

Brian W. Adams -- Chief Financial Officer & Secretary

Yes. Thanks Stephanie for the question because I think that this is important to address. Coming into this year I think we clearly were aggressive with our target. And while we've been in the process of building out the sales team as Kevin mentioned the sales cycles continue to be a lot longer than were originally assumed in our guidance. And so going into next year as you probably noted we're looking at a contribution of really two to four percent of top line contributed from new contracts versus we were and that's the equivalent of six million to $12 million versus the $20 million-plus that we were focused on this year. So coming off of a bigger base we've got a much lower target in order to get to the numbers that we're forecasting. As Cal mentioned we've got fantastic growth across the majority of the business and there's one area that we're working to correct that growth rate.

And so we want to take a more conservative approach to our expectations related to new sales at this point. We're going to continue to update you as we make progress against those targets but we've got a significant reduction in that assumption for next year. And I think that's going to continue to be our philosophy going forward.

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

And I think it's the philosophy the philosophy of the board has changed too on this matter. So I think we're pretty coherent now throughout the company and the board at how we're going to forecast. And as Brian said it was a little we were a little aggressive but we dialed that back.

Stephanie Davis -- SVB Leerink -- Analyst

Good. Good to hear. Now on a very granular question as the complete opposite of philosophy. How should we think about your debt covenants and cash flow needs in light of the past few quarters?

Brian W. Adams -- Chief Financial Officer & Secretary

Great question. We've been getting this from a few investors. To be honest from a covenant perspective no concerns on that front based on current business performance and what we forecasted. What I will note for you Stephanie is that we have been taking actions even during this year to improve the cash burn and I'll give you an and to lower our operating expenses. And I'll give you an example. We recently outsourced a significant portion of our IT infrastructure to Accenture. That's a fiscal savings for 2022. The transition is happening right now but that is an action we did take earlier this year. And we expect to continue to evaluate all areas of our operating expenses to see where we can do things more efficiently.

And even thinking about our footprint from a rent perspective there are areas where we're really looking across the board to drive that down. And also as Cal mentioned we are exploring ways to unlock value in some non-core assets that I think could meaningfully contribute to our cash position in the coming months. So I think that's the way I'd comment for at this point.

Stephanie Davis -- SVB Leerink -- Analyst

Given all these moving pieces in the near term is there a time where you would recommend we start retaking a temperature check for when you guys should be wrapping all of these changes up?

Brian W. Adams -- Chief Financial Officer & Secretary

So I would say you're going to continue to hear from us on progress over the next three months or so as it relates to a lot of this activity.

Stephanie Davis -- SVB Leerink -- Analyst

Helpful. Thank you, guys.

Brian W. Adams -- Chief Financial Officer & Secretary

Thanks, Steph.

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of David Grossman with Stifel. Please up with your question.

David Grossman -- Stifel -- Analyst

Hi. Good morning. Thank you. I'm wondering if we could just go back to the 2022 guidance or preliminary guidance. And perhaps you could just help us better understand how much visibility you have today based on the 2021 bookings and things that you planned starting up in the fourth quarter so that we can get a better sense of on that guide of 12% to 14% just how much visibility we have today providing some caveats for risks around hiring and any other items that are important.

Brian W. Adams -- Chief Financial Officer & Secretary

Yes. So that's a good question David. And so we're sitting here today with about 10% that we've got very clear visibility into for next year and then factoring another two to four percent related to new sales. And so there's a lot of activity in the pipeline right now. And as Kevin mentioned we've got some deals that are late stage that we would expect to convert for that two to four percent of incremental revenue for next year. So we're that yes. So over 80% of that number is currently accounted for.

David Grossman -- Stifel -- Analyst

Got it. And how much of that 80% is or maybe asked differently how much of the 20% is MedWise or medication safety specifically I guess?

Brian W. Adams -- Chief Financial Officer & Secretary

So it's a mix. Maybe I'll defer to Kevin in terms of the pipeline and how you spread the wins that we have projected for next year.

Kevin Boesen -- Chief Sales Officer

Yes. Thanks Brian. The majority of the headcount that we have in place is on that MedWise Division side. So it's the community pharmacy growth as well as the payer growth. So I would say what we expect in new sales continues to be on that MedWise side. On the PACE side of the business there are as Orsula has mentioned we do have a really strong pipeline there. We continue to grow in that business. In terms of the wins there there's a mix between some of the new start-ups that give us gradual growth along with transitioning some of the larger PACE programs to our CareKinesis pharmacy which drives some of the larger wins. We are really conservative on some of those large PACE wins as far as forecasting and really putting our energy into the MedWise division. So that's how I would balance it is I would expect to see much more growth in wins on the payer side of the business.

David Grossman -- Stifel -- Analyst

Yes. Kevin maybe I could just rephrase that I didn't do a very good job the first time is that of the 20% that you don't have visibility on for 2022 how much of that are you expecting to come from medication safety?

Kevin Boesen -- Chief Sales Officer

I would say in terms of what we're shooting for that probably north of 50% of that. So maybe in the 75 percentile. So it's really our focus is to continue that payer growth.

David Grossman -- Stifel -- Analyst

Got it. And just you Brian you gave several metrics for 2022. And sorry can you just repeat them? I got the 12% to 14% growth with three percent headwind from the EMTM. But I think you gave a couple of other metrics for 2022 and I'm hoping you can just repeat those really quickly.

Brian W. Adams -- Chief Financial Officer & Secretary

Sure. No problem. So just as kind of a little bit of history as I was mentioning before just organic revenue growth in 2020 was three percent. We're projecting seven percent this year exiting at nine to 12% for the fourth quarter. And so as you mentioned 12% to 14% organic growth for 2022 which includes two to four points of growth from future unsigned contracts. So that's the piece that we were just discussing that Kevin was giving you the breakdown on. The EMTM pilot program contributed three percent to revenue this year and so that's a headwind going into next year. And if you excluded that it would be 15% to 17% growth. And then on adjusted EBITDA we are expecting to drive at least 100 basis points of expansion which the current guidance is 5.8% to 6.1%.

David Grossman -- Stifel -- Analyst

Got it. And then just one last question. You mentioned Kelli Kovak's name a couple times and some of the changes that she has under a very short period of time been able to identify. Perhaps you could just highlight the most important things that she's done and the potential impact those may have.

Brian W. Adams -- Chief Financial Officer & Secretary

David I think I want to just clarify a point because I'm not sure that we're all speaking the same language here. Just in terms of what is what we have visibility into for next year right? So I think we're saying it's very small. It's over 95% in terms of total revenue that we have visibility into. And I'm not sure if we were discussing earlier just the go-get but I want to make sure that we're clear that our overall target for next year where we still need to sign some business it's two to three percent of total revenue. So we've got visibility into north of 95% sitting here today.

David Grossman -- Stifel -- Analyst

All right. Great. Thank you for that.

Brian W. Adams -- Chief Financial Officer & Secretary

Okay. Sorry. I just I wanted to make sure that we're all clear on that point.

David Grossman -- Stifel -- Analyst

And just the second question was really around Kelli Kovak. I think you had mentioned her name several times and some of the changes she's making. I was wondering if you could just kind of highlight the most important ones and the impact it may have on the business.

Brian W. Adams -- Chief Financial Officer & Secretary

Yes. I would say there's a couple areas of focus for her right now. One is on obviously the staffing model and making sure that we've got a scalable solution. And she's made and implemented some changes already as we were talking about. The second is really a full review of kind of contractual relationships and focusing on existing customers to make sure that we're meeting all of their expectations. And the third is really on growth and making sure that we've got models that are being well received by customers. And Cal would you add anything to that?

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Well I think she's pushing big time on enhancing the relationship partners we have with current clients. She felt that --

Orsula V. Knowlton -- Co-Founder President Chief Marketing & New Business Development Officer and Director

Account management.

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Account management. Yes I'm sorry. Yes. She felt that we were under the norm there and so she's already boosted that to start with anyway. But that was an important observation. We had a meeting with her 30 60 to 90 days after and the board did too this week just to get opinions from what she sees on that division. And she was very insightful and she's working on it. I think it's going to make a big difference.

David Grossman -- Stifel -- Analyst

Okay. Great. Thanks very much. Good luck.

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Thank you.

Orsula V. Knowlton -- Co-Founder President Chief Marketing & New Business Development Officer and Director

Thank you.

Operator

I am showing no further questions at this time. I would now like to turn the conference back over to our host for today. Do you have any closing remarks?

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

No but thank you very much and thank you for everyone who attended.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

Kevin J. Dill -- General Counsel

Calvin H. Knowlton -- Co-Founder Chairman of the Board & Chief Executive Officer

Orsula V. Knowlton -- Co-Founder President Chief Marketing & New Business Development Officer and Director

Kevin Boesen -- Chief Sales Officer

Brian W. Adams -- Chief Financial Officer & Secretary

Ryan Daniels -- William Blair -- Analyst

Sean Dodge -- RBC Capital Markets -- Analyst

Sean Wieland -- Piper Sandler -- Analyst

Stephanie Davis -- SVB Leerink -- Analyst

David Grossman -- Stifel -- Analyst

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