Tabula Rasa HealthCare, Inc. (TRHC) Q4 2020 Earnings Call Transcript

Image source: The Motley Fool.

Tabula Rasa HealthCare, Inc. (TRHC)
Q4 2020 Earnings Call
Feb 24, 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 fourth quarter and full-year 2020 TabulaRasa HealthCare, Inc. earnings conference call. [Operator Instructions] I will now then turn the conference over to your host, Mr. Kevin Dill.

Kevin J. Dill -- General Counsel

Thank you and good morning. I'm Kevin Dill, Corporate Counsel for TabulaRasa 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 TabulaRasa 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 TabulaRasa HealthCare, please refer to our filings with the SEC, including the Risk Factors section of our 10-K. 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 will turn the call over to Dr. Calvin Knowlton, CEO, Chairman, and Founder of TabulaRasa HealthCare.

Calvin H. Knowlton -- CEO, Chairman, and Founder

Good morning, and thank you for joining us for our fourth quarter 2020 earnings call.

In addition to Dr. Dill, with me today are Dr. Orsula Knowlton, Co-Founder, Chief Marketing/New Business Development Officer; Mr. Brian Adams, Chief Financial Officer; and Dr. Kevin Boesen, Chief Sales Officer. Orsula and Kevin will both be available to respond to questions after we conclude our prepared remarks. As a reminder, this conference call and webcast is accompanied by a PowerPoint presentation available at the IR section of our website. And I would encourage you to use it to follow along.

We are pleased with our finish to 2020, delivering fourth-quarter revenue of $77.1 million, which was above the high end of our guidance provided in November 2020 of $74 million to $76 million and driven by solid execution across both our major operating segments. I'd like to focus my comments on four areas as reflected on slide 3. PACE, Pharmacists provider PrescribeWellness; third, 2021 and Future Growth Initiatives; and fourth, Research and Development Pillar Achievements.

First, while the pandemic has slowed the strong net growth that PACE programs have historically experienced, unfortunately, due to Covid19 deaths, this is temporary due to imminent vaccination programs and has further highlighted the benefits of enrolling in PACE. According to CMS and the National PACE Association, as of January 17, 2021, nursing homes at a 52.1% infection rate and a 10.3% death rate as compared with an infection rate of 16.

% and a death rate of 3.1% for PACE organizations. Further, PACE are 66% less likely -- PACE participants less likely to contract Covid19 or die during Covid19. With the resurgence of the virus in late 2020 and increased death rate among PACE participants, the strong recovery we initially saw on October weekend into the early part of 2021. With that said, we are encouraged by the recent trends as seen on slide 4. According to the National PACE Association, there has been a dramatic improvement in the first two weeks of February in terms of less new viral cases and less deaths.

Again, we believe this trend will hold as our PACE members receive vaccination in the coming weeks and months as enrollment continues along with the opening of new PACE centers. In fact, we are starting to see a good progress with vaccinations in PACE organizations throughout the United States. As an example, in California, where a new Covid19 vaccination site designed specifically for the community's most vulnerable seniors, opened on February 11, at West PACE, in San Diego County with a goal of vaccinating 500 or more seniors per day.

The second topic is pharmacists. The pandemic has emphasized the critical role pharmacists play and the even larger influence pharmacists will have in primary care as part of a long-term movement toward value-based care. In the short term, our PrescribeWellness network of pharmacies is contributing to the nationwide effort to vaccinate Americans, and as of February 11, PrescribeWellness has administered more than 1.5 million Covid19 vaccinations, across nearly 2,000 pharmacies. Pharmacies are leveraging PrescribeWellness contactless registration forms and integrations that we have with state vaccine databases. In early February, to accelerate vaccination efforts, the Biden administration announced the launch of the federal retail pharmacy program, a private partnership with 21 national pharmacy partners and network of independent community pharmacies, representing 40,000 pharmacy locations nationwide. Among those participating pharmacies are a number of PrescribeWellness clients, such as HEB, CPESN network, and Health Mart [Phonetic].

The third area I'd like to discuss shortly is some of our key investment and growth initiatives in 2021 and beyond. As highlighted in our press release, we had a strong sales year led by our Health Plan Payer Division. Given the wealth of opportunities in our existing and new markets, we plan to aggressively invest in sales and marketing, first, by growing our sales force headcount by more than 50% in 2021. And second, by expanding our marketing initiatives, involving enhanced digital marketing efforts and adverse drug events through our leadership campaign and MedWise campaigns targeting health plans and pharmacists. Examples of five new or emerging markets we plan to further penetrate and in the years ahead. Our first large self-funded employer groups; second, pharma, using our unique multidrug simulation platform; third, at-risk provider groups; fourth, the broader Medicare market, including MA plans; fifth, state government Medicaid programs.

In fact, as part of his annual budget address yesterday, on Tuesday, February 23, New Jersey Governor Murphy announced his administration is supporting current legislation that will apply a risk reduction model to prescription drug services under the Medicaid program. This is the legislation that recently passed unanimously in the New Jersey Senate and now waits for the New Jersey Assembly. We have similarly exciting new opportunities that have recently closed or are in our sales pipeline and more on these initiatives in the coming months. Dr. Celynda Tadlock, one of our recent senior executives who joined our team is playing an integral role in enterprise cross-selling. Within our PACE membership base, we have an enormous opportunity to cross-sell our five-core solution, led by our bundled medication science offering and comprehensive pharmacy fulfillment. These offerings, for example, at the end of 2021, were adopted by just 35% of our base of nearly 45,000 PACE participants, providing us with significant opportunity for continued market share expansion.

Fourth, I wanted to share some of the major accomplishments from our research and development team. We had a record year in 2020 with 47 publications in peer-reviewed journals, which is more than the prior two years combined, along with 353 citations in these papers. Looking to 2021, we have some exciting new research peer-reviewed publications under way, including in six different categories. First, the Association of our MedWise Risk Score predicting premature mortality; second, a number of EMTM focused articles showing the significant savings we scored on the cohort of patients with whom we intervened; third, proven outcomes of one of our large self-insured employer groups; fourth, pharmacists-driven interventions for patient outcomes focused on payers; fifth, pharmacogenomics effective applications in opioid prescribing; and sixth, a robust multidrug simultaneous medication regimen simulation for pharma, as I mentioned previously.

With that, I now will turn it over to Brian.

Brian W. Adams -- Chief Financial Officer

Thanks, Cal. I'm going to focus my comments on our 2021 outlook but first wanted to provide some additional color on the fourth quarter. Our solid performance was driven by our organic and inorganic growth within our CareVention HealthCare segment. Personica contributed $3.6 million of revenue during the fourth quarter, which was nearly equally divided in PACE product and PACE solutions revenue. Turning to MedWise HealthCare. I'm pleased to report this segment performed as expected showing modest sequential growth versus the third quarter as we successfully addressed the challenges that negatively impacted our third quarter results.

For the full year 2021, we're introducing formal guidance as follows: total revenue in the range of $336 million to $356 million, the midpoint of which represents 16% growth. Our growth rate in the first quarter and first half of 2021 is depressed due to PACE census and client attrition, discussed in more detail in a moment. We expect our growth rate to improve significantly in the second half of 2021 and return to the historical levels we have experienced pre-Covid as these trends begin to subside. Non-GAAP adjusted EBITDA in the range of $26 million to $32 million, the midpoint of which represents 33% growth or two times the rate of growth for revenue, and a margin of 8% or 110 basis point improvement over 2020. Our profitability in the first quarter marks the low watermark for 2021 and is impacted by the modest revenue growth and higher cost structure coming into the year to support our growth plans.

Our press release in slide 6 provides the building blocks behind our revenue guidance. Relative to when we spoke in November, there are two notable changes: first, as Cal touched on, is the resurgence of Covid19 in late 2020 and early 2021. While our overall enrollment rates remain extremely strong across all of our PACE clients, we did see higher death rates in January and February, resulting in negative net enrollment for both months. Recent data from the National PACE Association has shown a progressive decline in death rates over the past four weeks, something that we have also seen in our client data. We are encouraged by these recent trends and expect it to return to a more normal growth rate by the second half of 2021 as vaccines become more widespread. Second, as noted in our earnings release, we did have some client attrition representing about 5% of revenue, primarily related to one customer. While this will have a more pronounced impact on the first half of the year, we expect to more than offset these losses with the significant expansions we are seeing at several key accounts secured in 2020 as well as incremental sales contracts secured by our growing sales team.

And with that, I'll turn it back over to Dr. Knowlton for closing comments. Cal?

Calvin H. Knowlton -- CEO, Chairman, and Founder

Thank you, Brian. Despite some early headwinds, notably with our PACE net population, we are looking forward to a much better year in 2021. We are making the necessary investments to advance our Medication science and suite of technology solutions as well as to expand our sales and marketing team to support even stronger growth in the years ahead.

Operator, please open the call for question and answer.

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from Ryan Daniels with William Blair.

Ryan Daniels -- William Blair -- Analyst

Yeah, guys. Thanks for taking the questions and the color. If we think about the sales and marketing investments, clearly, MedWise payer bookings are doing well and that pipeline looks robust. However, you still have this huge cross-sell and up-sell -- the core PACE client. So, can you talk a little bit about how you're going to allocate that pretty market uptick in sales and marketing spend going forward to your various products? Thanks.

Kevin Boesen -- Chief Sales Officer

Sure. Thanks, Ryan. This is Kevin Boesen. Appreciate the question. We have -- I think you're right. In terms of the comments that we've made, focused on some of the growth areas outside of the PACE market but we are also making tremendous amounts of our growth in the sales team, within the PACE organization as well. So we have about a 400% growth over the last year in the number of folks that we have selling in that -- in the PACE space. And then, further supported by the work that's Celynda's doing, cross-selling and leveraging some of the new assets that we brought into our total product offering there.

Ryan Daniels -- William Blair -- Analyst

Okay. Thank you for that. And then, maybe, one for Brian. Just as we think about new business conversion, I think the press release indicated that should drive about 700 basis points of your growth expectation. How does that compare to a normal year, say '19 or '20? And what level of visibility do you have based on the pipeline and conversion rates to actually hitting that kind of delta that seems like the biggest potential driver to either end of the range?

Thank you, guys.

Brian W. Adams -- Chief Financial Officer

Yeah. Thanks, Ryan. That's a good question. We based our forecast on 2021 which -- or excuse me, on 2020, which is relatively conservative, looking at the conversion rates by our existing sales infrastructure. And then rolled that forward with the incremental headcount that we've onboarded at the end of 2020, early 2021, and the additional folks that we're planning to bring on in the first half of the year. Anybody later in the year obviously wouldn't have the ability to really contribute to 2021 revenue. So, we used 2020 conversion rates as our baseline which we think is likely conservative.

Operator

Your next question comes from Glen Santangelo with Guggenheim Securities.

Glen Santangelo -- Guggenheim Securities -- Analyst

Yeah. Thanks for taking my question. Hey, Brian. I also want to follow up on the guidance a little bit. In the release, you talk about bookings being up 58% in the quarter and your sales pipeline now being up sort of 92% versus maybe where it was this time last year. Could you help us sort of reconcile those comments and put that into perspective relative to the 2021 guidance on the topline? And as part of that, I think you just suggested in your prepared remarks that you expected the growth [Phonetic], kind of, more normalized in the second half of the year. And, I guess, I just wanted to try to get an updated sense from you, like what is normalized growth at this point? How should we think about maybe the longer-term growth algorithm relative to what you discussed in the past? Thanks.

Brian W. Adams -- Chief Financial Officer

Yeah. Good questions, Glen. And I'll probably end up tag-teaming this with Kevin. But as you think about the -- and I was starting to describe this with Ryan's question, the effort required by the sales team to deliver on those numbers, we've got the pipeline today. And that's really what we were trying to communicate with some of those statistics is that the pipeline is there, it's really about continuing to onboard new sales professionals to pull those opportunities through the pipeline.

So, we feel really good about the conversion rates exiting 2020. And now, it's just about horsepower. So the new individuals we plan to bring on over the coming months, we think are going to be really impactful. And as you look toward the latter half of this year and the growth rates, our typical growth rate in PACE is about a little over 1%, sequentially, for each month. So, we've seen about 15% organic growth on an annual basis in a non-Covid year. So, I would expect it to get to that level starting in probably Q3. And the year-over-year growth rates in Q3 and Q4 that we're forecasting are about 25%, which we think based on the sales infrastructure and the investment that we're making is a good forward-looking expectation related to growth.

Kevin, anything you would add to that?

Kevin Boesen -- Chief Sales Officer

Yeah. I would say a couple of our core services, particularly, on the health plan side, there is a much better opportunity in 2021 as it was in 2020, comparatively. So some of the services where we were providing medication adherence support aligned with our MedWise time-of-day dosing slowed as the pandemic hit at the early [Phonetic] part of the year and patients were allowed extra fills, extra quantity. And so, as that returns to normal in 2021, that's also an opportunity for us to accelerate implementation of some of the deals that we're closing as well. So, we feel like we'll be back to what we would expect pre-pandemic this year.

Glen Santangelo -- Guggenheim Securities -- Analyst

Okay. Thanks for the comments.

Operator

Your next question comes from Sean Dodge with RBC Capital Markets.

Sean Dodge -- RBC Capital Markets -- Analyst

Thanks. Good morning. Maybe -- maybe staying on the sales pipeline for a moment. Can you give us a broad sense of the composition of that? It's up 92% now, year-on-year. Is the bulk of the pipeline now MedWise and these are relatively larger contracts you're going after or are these a bunch of smaller opportunities, are they expansions or new clients? And then, anything on how they could or you're expecting them to kind of flow in or convert into revenue over the course of the year, this January-centric stuff, or is this stuff that can kind of launch intra-year?

Kevin Boesen -- Chief Sales Officer

It's a great question. It's actually a mix of all of those. So, I think from a focus standpoint, clearly, what we've tried to transition to is a broader deeper relationship with our MedWise Science. So in some of the clients that we picked up in the last couple of years, it's much broader than a traditional MTM relationship. We're working on Medicare Part-C measures which are the medical [Phonetic] measures that appropriate medication management, really helps drive. So, much broader deeper relationships with larger clients or larger deal sizes on the health plan side. But also a tremendous amount of growth on the PACE side as well. So being able to leverage some of the assets that we have on the PACE side, particularly, with our Pharmastar acquisition and looking at clients that use Pharmastar as a PBM, but are not necessarily using our Pharmacy Services just yet, that's a big opportunity for us and those are large deal sizes as well.

And then, we do focus on plans that we can implement throughout the year. Traditional MTM is a calendar year start, but we've had some great wins in the Medicaid space that allows us to implement programs midyear. And then, other services, I mentioned adherence services that we can implement throughout the year as well.

Sean Dodge -- RBC Capital Markets -- Analyst

Okay. Thank you. And then, on the PACE guidance, you said the guide assumes a weak first half of the year, followed by an improving second half. Can you give us just a little bit more detail on what that means? Or are you assuming continued declines in census for the next couple of months? Or given what we've seen now in February, are you assuming some kind of stabilization? And then the back half, that it's improving mean just some growth, or are you expecting a pretty quick return to kind of the historical 1% per month kind of sequential cadence?

Calvin H. Knowlton -- CEO, Chairman, and Founder

This is Cal. Yeah, we have -- January showed negative net for us because of the tremendous amount of deaths. But yet we still had over 300-350 new admissions, and the same in February. February was about 10% -- 90% less deaths than we had in January, was almost a breakeven month. So we expect that margins in the rest of the months now are going to get back to normal [Speech Overlap] soon.

Brian W. Adams -- Chief Financial Officer

Sean, as it relates to the second half of the year, and as Cal was just describing, we're basically maybe kind of flat for Q1, given what happened in January and expecting a little bit of improvement in March. And then, seeing a slight uptick in the second quarter, going back to that normal growth rate, really starting in the July time frame of about 1% per month.

Sean Dodge -- RBC Capital Markets -- Analyst

Okay. All right. That's great. Thanks again.

Operator

Your next question comes from Sean Wieland with Piper [Phonetic] Sandler.

Sean Wieland -- Piper Sandler -- Analyst

Piper Sandler. Pretty close. Thank you. So you mentioned that you're going after some new markets next year, large self-funded employer groups, at-risk providers, Medicare Advantage, state Medicaid programs, and then I missed one, can you just maybe talk a little bit about your go-to-market strategy in these areas, where the area of focus is? And within your guidance that you outlaid, what some of your underlying assumptions are with respect to these new markets? Thanks.

Kevin Boesen -- Chief Sales Officer

I'll -- this is Kevin. Thanks for the question. I'll address some of the go-to-market in the areas that we mentioned. So, one of the areas are still core for us on the risk side and those are the Medicare Advantage programs. One of the things that -- leveraging our PACE assets, so we've typically thought about TabulaRasa as our health plan side and our PACE side. But, there's a lot of new assets and things that we have on the PACE side that are applicable and attractive to our health plan market. So, we have traditional Medicare services that we've offered relative to things like traditional MTM, our MedWise programs, our opioid solutions. But we've recently contracted with start-up MA plans that are looking at also leveraging our PBM and TPA services. So part of our Medicare strategy has been to also look at some of those smaller start-up plans with a more broader set of services that we can provide to them as an example.

In the employer space, it's very similar in terms of what we're looking at relative to what the health plan's like. Self-insured employers that have risk on the medical side that really haven't paid attention to how they can leverage a pharmacy benefit to manage that is really a key portion of that. We've contracted with, to supplement the sales team, companies that live in that employer space that benefit broker space to help us bring some of those solutions together that similarly can include our PBM Services, MedWise Science services, and even some of the other assets that we have. Our pharma strategy is really built around using our science to help pharma companies predict the safety of medications in general populations, using our MedWise risk score. And then, in the health system space, very similar to where we're looking at the Medicare space is those health systems have to take risk relative to the same things that Medicare Advantage companies are looking for, really supporting them in a population health strategy and helping manage that through appropriate medication use.

And then, I know we spent a little bit of time talking about our state strategy. We're looking at Medicaid programs and really modeling the work that we're doing in New Jersey.

Sean Wieland -- Piper Sandler -- Analyst

How much of the guidance is leaning on these new market opportunities?

Brian W. Adams -- Chief Financial Officer

So, Sean, today the majority of our guidance is focused on the Commercial Medicare-Medicaid space, which is where we've been spending the most time. And there is very little baked into our guidance related to the pharma and average [Phonetic] providers at this point. But those are just emerging opportunities. You know, I would say, it's pretty much immaterial for 2021.

Sean Wieland -- Piper Sandler -- Analyst

Okay, great. And then, the vaccine rollout and the participation among some of your independent pharmacies, is there any revenue associated with that or any tangential revenue opportunities associated with that?

Orsula V. Knowlton -- President, Chief Marketing/New Business Development Officer

Not necessarily. I think there are opportunities just for really identifying pharmacists as primary care providers and expanding their practice. In addition, we're providing our MedWise system our MedWise technology right in the patient engagement centers. So there are greater opportunities for client engagement in that regard. Generally, the vaccines are -- generate revenue for the pharmacists themselves in -- the initial vaccine and then the follow-up vaccine administration. The vaccines themselves are covered by the healthcare system.

Sean Wieland -- Piper Sandler -- Analyst

Okay

Brian W. Adams -- Chief Financial Officer

I think there's also -- Sean, there's also -- in order to access our state vaccine databases registries that we have for every state, they have to be a client of PrescribeWellness and get a certain module, buy a certain module from us. So it's -- there is revenue on them.

Orsula V. Knowlton -- President, Chief Marketing/New Business Development Officer

Yes, absolutely.

Sean Wieland -- Piper Sandler -- Analyst

Okay. Thanks so much.

Operator

Your next question is from David Grossman with Stifel.

David Grossman -- Stifel -- Analyst

Thank you. I wonder if I could just follow up a little bit on some of the kind of the changes or additions you're making to the sales and marketing organization? I'm just curious, what type of person do you target to add given how unique your model is? And maybe just a follow-up to that. What has really been the biggest gating item to the new sales efforts that you face thus far in the non-PACE markets? And what can you do to kind of address some of those obstacles?

Kevin Boesen -- Chief Sales Officer

David, thanks for the question and the opportunity to do a little recruitment. So for that sales team, we are looking for people that have a really good understanding of the HealthCare system or the markets that we're evolved in. And I think, to your point, one of the opportunities that we have is to really look at all the things that TabulaRasa has to offer and being able to work with our health plans are at-risk providers, community pharmacies, to really understand how the pieces can fit together from a solutions standpoint.

So, it is complicated in terms of making sure that you do understand HealthCare. So that's an important part of that. We brought on some great people in 2020 and we're really excited about their success from Q3 to Q4. It was really one of the first times that, typically, we would have seasonal decline in Q4, in our MedWise business, and we didn't see that this year. So showing signs of really turning around that health plan business and coming back out of the pandemic. The challenges that we faced, probably mostly last year, were just relative to access. It was very difficult to see clients, the trade shows were canceled. And so, if you didn't have relationships with people, it was difficult to get in the door and get started. So, that's certainly something that we look for as well as the opportunity to have some relationships with clients.

But we're starting to see that the market really adapt, sort of come out of the pandemic, be much more forward-looking, meetings with health plans are easier to get, virtual trade shows are starting to turn back to regular trade shows. And so, I think that access will help as well. So, hopefully, that answers the question.

Brian W. Adams -- Chief Financial Officer

Kevin, do you just want to touch on for a second that how we started the year in 2020 versus how we ended the year with the types of sales professionals we had on that?

Kevin Boesen -- Chief Sales Officer

Sure. That's a great comment too. So, heading into 2020, we had, primarily, regional-based director level salespeople with the intent of really driving that lead generation through a number of -- we had planned to attend probably 100-plus different health plan and pharmacy-related trade shows. And so we've transitioned away from that as those -- those shows were canceled. Then, we brought in some Executive level, Vice President level sales folks that have broad levels of experience in the PBM space and the health plan space. So, really understanding benefit design and where these opportunities are.

So, we transitioned in 2020 to a higher level salesperson and we're starting to see the benefits of that.

David Grossman -- Stifel -- Analyst

[Speech Overlap] Great.

Orsula V. Knowlton -- President, Chief Marketing/New Business Development Officer

From a marketing perspective, focus on brand awareness and medication safety issue awareness, we had launched a Medication Safety Campaign in 2020 and had reached millions of people through broadcast media. And we're seeing the benefits of that, but still the idea of medication safety and the problem with it is where we're providing thought leadership and education.

David Grossman -- Stifel -- Analyst

Great. Well, thank you -- thank you for that. And just one more question if I may? Just on the guidance. The '21 guide is in a range of $21 million which looks to be equal to the 7% of revenue growth that's contributed from in your bookings, should we take from that that you feel -- strong visibility on the low end of the range today or -- and if not, what are the components of the guide that remain that have the lowest visibility? Is it that reacceleration of PACE at the end of the year or do you feel that with the new openings, that you mentioned in the press release, that you still have a pretty good read on that today?

Brian W. Adams -- Chief Financial Officer

David, we feel very good about the low end of the range, especially what we've seen happen throughout 2020 with PACE census. I mean, there was a little bit of a stall as the pandemic emerged in the spring time frame and then we saw progressive growth, despite not having vaccines at the time. So, there was a kind of a resurgence of that growth. So now that the dynamics are pretty different and the decline in the number of deaths over the past four weeks, as we've seen, has been really aggressive, we feel really confident in getting back to a normal growth rate. But that is that, you know, kind of the biggest piece of our guidance that we remain watching very closely. But we feel really good about the bottom end based on all the factors that we've described and where we sit today.

David Grossman -- Stifel -- Analyst

And is -- just if you can remind me, was the opening of PACE centers delayed significantly in 2020 as a result of the pandemic? I'm just trying to get a read on just how visible kind of the new openings are. I know they're not that material for this year, but it certainly will impact 2022.

Orsula V. Knowlton -- President, Chief Marketing/New Business Development Officer

Well, there were some delays but they were not significant. And the programs that we're expecting to open did open, and of course, in 2021, we have quite the pipeline of existing and new client expansion sites that are scheduled to start.

David Grossman -- Stifel -- Analyst

I see. All right, very good. Thank you very much.

Kevin Boesen -- Chief Sales Officer

Thank you.

Operator

[Operator Instructions] And your next question is from Stephanie Davis with SVB Leerink.

Stephanie Davis -- SVB Leerink -- Analyst

Hey, guys. Thank you for taking my question.

Orsula V. Knowlton -- President, Chief Marketing/New Business Development Officer

Hi, Stephanie.

Stephanie Davis -- SVB Leerink -- Analyst

I'm sure you're probably never going to want to talk about this topic again after this, but could you tell us a little bit more about the large contracts attrition? Are there any readthroughs relative to prioritization of the MTM program or is this a company-specific or competitive takeaway sort of situation?

Kevin Boesen -- Chief Sales Officer

Yes, Stephanie. That's a good -- it's a good question. It's good to talk to you. This is Kevin. I'll address that. We -- regarding that client, we did decide -- we did not renew the MTM contract with them. We did not -- not sever all relationships with them. So there are programs that we'll be supporting. We see, from time to time, that plans look to outsource, insource, and that's part of some of the challenges that we face. We -- with that client, in particular, we had lost some of the business due to a merger in the HealthCare space, and a number of the clients and patients went to a new client of ours, so we actually, over the last couple of years, have picked up a lot of the business through growing relationship that we have on the WellCare side of things, too. So, I wouldn't personally read too much into that.

I think it's -- we've made the adjustments and we're confident in terms of where we are today.

Stephanie Davis -- SVB Leerink -- Analyst

All right. Understood. That's helpful. Maybe you'll never talk about that contract again.

Brian, I'd love to hear a little bit more about kind of the cadence of the ramp-up from this low single-digit growth in 1Q to double-digit exiting yearend. Could you help us reconcile?

Brian W. Adams -- Chief Financial Officer

Sure. So, as you're looking at the first part of the year, clearly, the PACE census, it is having an impact as well as the contract that we were just discussing. Those two things are primarily what are depressing the numbers in the first quarter as we come in. Kevin and his team have done a phenomenal job building the pipeline and we have seen an acceleration of conversion rates, with that team, as he mentioned, we've migrated to a bit of a different structure. And I think that that's been extremely helpful in terms of win rates. And so, we do continue to see those accelerate. And as we begin to bring on new sales folks, we do expect that those win rates are going to increase throughout the year.

So, you're right, first quarter, second quarter, we are looking at single-digit growth rates, but getting to about 25% in both Q3 and Q4. The biggest piece of that is, as we expect, PACE growth rates to really accelerate throughout the second quarter into the third. That's going to have a very material impact and coupled with an increase in contribution from the sales team. So, I think, we're seeing really positive signs on all fronts, despite having a negative net enrollment in January and February. The fact that we're sitting here with the vaccine rollout across PACE, on a very aggressive rate right now, I think that it's very reasonable to assume that we get back to that 25% growth rate in the second half of the year, which is very much in line with what we saw pre-Covid for the entire business. So -- [Speech Overlap] yep.

Stephanie Davis -- SVB Leerink -- Analyst

And so, more of a step function, kind of a gradual ramp, and then exiting then with that 25% growth more normalized?

Brian W. Adams -- Chief Financial Officer

Yeah. That's what we believe, 25% on a more normalized basis. So the -- in past years, the -- at least over the past couple, it's been a little bit more lumpy throughout the year and our target is to have more predictable sequential growth. And Kev the -- the types of organizations that Kevin and his team are targeting right now, as he was describing earlier, can launch at any point throughout the year. So, we're not held to that Medicare calendar year timeframe. It's -- we do have the ability to launch those programs and there's been a couple of wins recently that that will help us to meet those goals going into Q3.

Stephanie Davis -- SVB Leerink -- Analyst

Perfect. That's super helpful. Thank you, guys.

Brian W. Adams -- Chief Financial Officer

Sure.

Calvin H. Knowlton -- CEO, Chairman, and Founder

Thanks, Steph.

Operator

At this time there are no further questions. [Operator Closing Remarks]

Duration: 49 minutes

Call participants:

Kevin J. Dill -- General Counsel

Calvin H. Knowlton -- CEO, Chairman, and Founder

Brian W. Adams -- Chief Financial Officer

Kevin Boesen -- Chief Sales Officer

Orsula V. Knowlton -- President, Chief Marketing/New Business Development Officer

Ryan Daniels -- William Blair -- Analyst

Glen Santangelo -- Guggenheim Securities -- Analyst

Sean Dodge -- RBC Capital Markets -- Analyst

Sean Wieland -- Piper Sandler -- Analyst

David Grossman -- Stifel -- Analyst

Stephanie Davis -- SVB Leerink -- Analyst

More TRHC analysis

All earnings call transcripts