We’re first focused on these two areas where we have a really strong demonstrated track record both on the technology side and on the tech-enabled managed services side, where we’ve been managing this on behalf of plans for over eight years in a number of cases, but we’re also looking for opportunities to pilot some other potential expansion areas, and we’re grateful that clients seem willing to consider that together with us.
Bryan Hunt: Let me just add to that, Jared. It’s a good question. We do, as Dan mentioned, prioritize these areas first because we do have competitive differentiation in those areas. I think as Dan mentioned in the prepared remarks, like these opportunities are typically with existing clients, and they’re not going out to RFP in a competitive process. They’re more sole-sourced opportunities for expansion just based on that relationship of trust with that client. So we feel that that’s a meaningful differentiator for us. And then also to the earlier question from Anne, we want to be cognizant of balancing additional investment, if there were to be any needed for additional areas with the robust current market opportunity that we have today, where roughly 10% of our DOS clients are penetrated with this tech-enabled managed service opportunity now. And so there’s a lot of growth runway that we can do in a cost-efficient way moving forward with that opportunity.
Jared Haase: Great, make sense. And I’ll go ahead and hop back in the queue. Thanks.
Dan Burton: Thanks Jared.
Operator: Thank you. Our next question will come from Jessica Tassan with Piper Sandler. Your line is open.
Jessica Tassan: Hi, thank you guys so much for the questions. I was hoping you could maybe talk about any early experience in the migration to the multi-tenant architecture. So is there any incremental revenue or gross profit available to HCAT just kind of by virtue of those migrations? Or have they tended to be kind of P&L neutral?
Dan Burton: Yes. Thanks for the question, Jess. We continue to gather some additional experience in the migration path. We’ve had a few migrations already under our belt. And we do see, from a cost structure perspective, some long-term gross profit expansion that will likely take place as a result of this multi-tenant Snowflake and Databricks enabled platform infrastructure. So we’re encouraged by that. Now that will be offset in the near-term by some migration costs. And so that will take some time to show up. But we are already seeing, from a unit economics perspective, some meaningful additional leverage and the possibility of gross margin expansion, combined with our ability to potentially choose a little lower revenue price point and still maintain a strong gross profit margin. And so we’ll work our way through how we leverage that lower cost position, but we are seeing meaningful cost structure advantages in this multi-tenant infrastructure.
Bryan Hunt: Yes, the other area, in addition to the technology gross margin that is impacting our P&L now is the investment. So we are in the middle of the investment on the R&D side, development cost of the multi-tenant platform. We’ve made good progress. We also have some internal use capitalization of software that we’re allocating in terms of cost today. That will start to ramp down as we go into 2024 and beyond and is a meaningful opportunity for us to drive additional R&D efficiency as we kind of ramp down that investment.
Jessica Tassan: Got it. That’s really helpful. And then just €“ I had two quick clarification questions. So one was with the LifePoint contract at kind of full run rate in the fourth quarter and then two, could are you able to kind of help us understand what percent of the Professional Services revenue is this managed or tech-enabled services versus traditional Professional Services? Thank you.
