Investor FAQs

Consensus Cloud Solutions, (NASDAQ-CCSI) is the largest digital fax provider of secure cloud document and data transmission services throughout healthcare, finance, legal, insurance and other large corporate entities. We've been a leader in the digital fax space for over 25 years and have currently focused this service to address the needs of the healthcare industry, as the healthcare industry is currently the single largest user of digital fax services. We purposefully built a team focused on the healthcare industry needs, and have invested more than $100 MM to solidly position Consensus in that space.

Healthcare industry communication and workflow challenges occur because that ecosystem consists of multiple devices, systems, and vendors that must communicate with multiple protocols spanning a wide variety of endpoints. Think about hospitals, labs, insurance, clinics, etc. – each with their own chosen system of sending and receiving that are, most often, unique. It is a highly fragmented environment that forces participants to communicate in multiple protocols that are not compatible with each other. This adds significant complexity, cost, effort and capital outlay with no guarantee that messages will actually reach their destination. Think about the information flow from hospitals, labs, insurance, clinics, etc. using communication platforms that are unique to their segment. It is a highly fragmented environment that forces participants to communicate in multiple protocols that are not compatible with each other. This adds significant complexity, cost, effort and capital outlay with no guarantee that messages will actually reach their destination. There are also many different EHR systems with many different software versions, and the list goes on. In the current environment, if you send a message, you have no assurance that it got there, and if you receive a message, you have to go through many steps to attach it to the right platform and patient. On the receiving side, that same message may be in a format their system may not be able to recognize. The cost and complexity are staggering. Across that messy environment, fax is the embedded common denominator that verifies delivery, is highly secure, and is HIPAA compliant. Our position as the leading provider of digital cloud fax technology offers an important advantage in establishing relationships in the sector, proving the reliability of our service, demonstrating the security of our system and our commitment to high service levels. Consensus, through our long standing digital cloud fax network, has many established connections with hospitals, labs, pharmacies, health plans etc. and is a natural hub. Second, our secure, scalable cloud architecture eliminates the need for installed software and associated costs. Third, the Consensus product suite can deliver across the spectrum of protocols, allowing healthcare stakeholders to have a single vendor to manage. Consensus, by offering one simple connection to every major healthcare communication protocol, eliminates the need for all those interfaces. No other company is addressing the interoperability opportunity with this approach. We are unique in capabilities, well penetrated because of our position in digital fax and a known quantity in terms of service, security, and reliability. Scale gives us a large cost advantage, our best-in-class architecture allows fast product deployment as new technologies emerge and, as a public company, Consensus eliminates the risk associated with so many small private single-point vendors in the space. With single-point vendors slugging it out to displace each other in a one-protocol paradigm, administrative costs in healthcare continue to skyrocket. We solve that simply, elegantly, reliably, securely and at a fair price.

Most EHR solutions do a wonderful job communicating to other “like” systems (i.e., Epic to Epic, Cerner to Cerner etc.). Challenges arise when communicating from one EHR to another, and this is an area in which we excel. In addition, communication outside of a network has security implications that EHR vendors would generally want to avoid but the Consensus system is enhanced to ensure safe and secure delivery across networks. There are also complexities around protocol acceptance. For example, if a customer sends an HL7 message, can the counterparty receive it? We know from our own customers (many of whom are EHR systems where we often white-label our technology) that this is an area of technology EHRs are happy to outsource to a third-party expert.

The healthcare sector is an important market for the company, comprising over half of our SMBE revenue and roughly two thirds of new sales for that stream of revenue. Our success in healthcare grows from two distinct and differentiated value propositions. First, our integrated product set offers the ability to access every widely used and HIPAA compliant communication protocol from a single platform. The full suite of capabilities we offer is unique in the industry, and we are the only interoperability vendor that includes cloud fax in their solution set along with HL7, FHIR, Direct Secure Messaging, medical record query and electronic digital signature. Second, since we are a cloud solution, our communication package eliminates the need for costs associated with hardware, data center space, IT staff, and expense software maintenance costs. The Consensus solution is singular in our comprehensive approach to communication, security, process automation and transformation tools.

One of the interesting things about fax being so heavily used in these regulated industries is that it is a more secure means of transmission and digital fax even more so. If we talk about fax in general, one of the interesting things about fax as a transmission protocol is that it is not traveling over the traditional Internet where there are so many opportunities for that data to be intercepted, potentially siphoned off and yet still delivered without anybody really noticing it.

All of these connections in the cloud fax, the digital fax actuation are now encrypted from start to finish as we use the telephony system not openly available to the general Internet, and it's much harder to get access to and therefore inherently more secure.

In addition, our first line of protection for customer data begins with all of the systems we have in place.

PCI Level One

Soc2 Type 2

HITRUST Certification

FedRAMP High Impact

Zero Trust in architecture

Internal Monitoring automating and dedicated internal security team

Ongoing training of employees

External auditing of security certifications

The VA is working on a large-scale digital modernization initiative, and we’re very happy to be partnered with Cognosante to deliver the ECFax platform. The idea of modernization here is very important because it characterizes the position of digital cloud fax – a modern solution for secure, reliable, verifiable and scalable secure document communication. It also highlights a key advantage that our fax products in particular have in this marketplace – a native cloud model that replaces physical servers to do the work. The first few locations went live in Spring of 2023. When the solution is meaningfully deployed across their more than 1,200 locations, we expect revenue of approximately $10 MM per year. While we expect this to occur sometime in 2024/2025, we do not control the timing of the rollout. In our arrangement, Cognosante provides the professional services/first line support and Consensus provides the cloud fax backbone.

FedRAMP high impact security is the gold-standard and the highest level for cloud offerings used by federal government agencies, and we will be the only FedRAMP high impact certified cloud fax offering in the market. FedRAMP as a risk profile standard has three levels of what they call security impact. There is low impact, moderate impact and high impact. And as you can imagine by the names, the higher up they go, the more secure the systems get. And as a result, the more secure sensitive data is going to be. HITRUST has 380 controls in a HITRUST certification. As a comparison, FedRAMP high impact, which is what we have in our system, has more than 570 different controls. The advantage from this deployment is the VA’s plan to make ECFax a facility open for use by the rest of the federal government – a federal service bureau. As a result, revenues could be in excess of our estimate.

In 2020 we launched Unite, a product that combines secure direct messaging – the recognized standard for healthcare specific secure email – cloud fax, patient record query via Kno2’s Carequality interface, workflow tools and the ability to switch mode of transport based on the sender’s preference. In 2021 we launched jSign, a secure digital signature product built with strong API integration capabilities, acquired Summit Healthcare, one of the leading interoperability integration platforms in the market, and in March 2022 we released Clarity, an advanced technology product that uses natural language processing technology and artificial intelligence to extract unstructured data and arrange it in a structured format. By themselves or in any given combination, these are powerful automated tools that can accelerate critical processes, specifically targeted at the healthcare industry. They can eliminate the need for humans to manually enter data into systems, streamline workflows that save time and money while improving accuracy of the ingested data. Moving forward, we are planning the release of Harmony, currently in early POCs and testing with first customers, a communication network that we believe will greatly simplify the ability for connected communities to share information with a minimum of transactional friction. This is Not only is this a great process and execution management improvement for many of our clients, but it also very much supports the idea of health equity. With Harmony, either side of the communication workflow can adopt to or deploy new technology at their pace of choice, but more importantly at their ability to do so.

Most telecommunications technology now runs on fiber using VoIP (Voice over Internet Protocol), and copper lines are disappearing. Telcos have moved away from copper to fiber, but one place it has persisted is fax due largely to the difficulties in delivering fax over VOIP. Our network has been almost completely VOIP for 3 years and we have been successful in eliminating the issues of fax over VOIP. Many of our competitors continue to rely on copper. We see this cut away from copper as a significant benefit. Because we have developed deep telco relationships over the past 20+ years, as the telcos either add new customers or force existing customers to adopt VOIP, we are their partner of choice. Many of them today already resell our digital fax solution to facilitate and accelerate a smooth VOIP migration.

While we would certainly anticipate advances in technology, the risk of those changes negatively impacting Consensus is low. Changes in healthcare communication are very slow to market. Any change that could be (eventually) widely adopted will require many years of testing and certification (including HIPAA) before it would become generally available. Since Consensus is committed to offering a full set of capabilities in our platform, we have the goal to incorporate any proven, utilized and approved technology in our tool set.

Our unique differentiator is that Consensus promotes a variety of HIPAA compliant protocols for the transmission of documents and data under one common platform. Whether a customer uses fax, HL7, FHIR, Direct Secure Messaging, or a customer needs to use a digital signature as a vessel for delivering documents, Consensus will supply all of those technologies and the capability to transform it in route. Easy choices.We have competitors for individual technologies; cloud fax (OpenText, Concord Technologies, BisCom), Direct Messaging (HISPs - MedAllies, Secure Exchange Solutions etc.) HL7/FHIR (InterSystems, Lyniate) and each competes with us in their own sector.The Consensus difference lies in our ability to deliver a full-service multi-protocol secure cloud platform. This platform eliminates the need for an entity to manage multiple communication applications, delivering a single robust cloud solution that is reliable, secure and affordable. It enables the sender to use the technology that fits with their workflow, and similarly affords the receiver the ability to choose the inbound protocol that best suits their needs. There’s no longer a need to compromise on how an information flow is optimized. With Consensus, not only can our technology accept the protocol that the customer frequently uses, our transformation engine will allow delivery in exactly the way the receiver would like to have it. For example, a sender sends a fax, but the receiving party gets an HL7 message, by their choice.

Research indicates it is in excess of $11B and growing.

Our healthcare customers are across a full spectrum from small offices to large EHRs across all disciplines. Healthcare comprises 44% of all customers, 62% of corporate customers and about two thirds of new sales in our corporate channel. Along with healthcare, our corporate customers range include financial services, legal, manufacturing, insurance and government agencies.

The most research we have seen on the revenue size of the small, medium business and enterprise (SMBE) market at roughly $2.3 billion and expected to grow at about 10% CAGR over the next 5 years (Arizton Fax Services Market Global Outlook 2022 - 2027.) There are multiple factors that keep fax a relevant and growing communication technology. We’ve done our own industry surveys and the top reason for faxing is that the recipient requires it – that’s the power of workflow. Other reasons are convenience, strong security, the ability to confirm receipt, reliability and legal compliance. People are just trying to get their job done in the most convenient way possible, and digital fax is often part of that solution. We’re a consumer of market research on the subject of cloud fax and there’s certainly consistency in the reports we see that forecast the on-line fax market to grow in the high single digits for the foreseeable future. And as for the why? The need to share documents securely and reliably is increasing due to the exponential growth of electronic data available to share.

There are a number of barriers to entry to this market that afford advantages for Consensus. First, is the continued misconception that the demand for digital cloud fax is diminishing, discouraging potential entrepreneurs and suppliers of seed capital from considering entry. Past that, building an enterprise grade cloud fax system is technically challenging and capital intensive. Over the past 25 years Consensus has amassed 125 patents in the area of fax technology, pioneered the ability to integrate fax with email systems, built applications for corporate administration of their fax environments, invented fax-integrated workflow systems and pioneered auto scaling for on demand capacity management. Finally, the expertise required for integration of fax systems into central systems of record like EHRs, ERP and SFAs is a specific technological capability that is not easily replicated.

While we still will report the “SOHO” segment, accounting for ~46% of our revenue by now, for investor and analyst modeling, we have shifted the go-to-market away from thinking in terms of SOHO vs Corporate. What we have found is that the reach of eCommerce extends far past just small and home offices, and strongly influences our success upmarket in larger accounts. We can clearly see that sales through the Web Channel - self-service sales - are a preferred option for customers that clearly fall outside the traditional definition of SOHO. Our eCommerce program attracts a very diverse customer set, and one that presents new opportunities for wallet share expansion. It remains a critical part of our go-to-market. We continue to invest in that channel and our broad set of brands that enable us to meet many different demands for our services. What is important to note is that at this entry level to our services, the revenue is >90% fixed and <10% variable, basically all subscription revenue. The further up-market customers grow or already are, the more the variable component increases all the way to 100% with some of our largest customers.

We see the eCommerce Channel as an area rich in opportunity for revenue growth. First, since we can clearly see that large customers often enter a relationship with Consensus through the Web, it presents a strong source of leads for our Sales Team. Using a set of analytics tools employed by the Marketing Team, we are able to identify customers who benefit from a discussion about our full product set, and we are able to upgrade a number of those opportunities. At the same time, there are a number of customers who prefer to purchase on-line and we have opened access to self-service purchase of our Corporate products - including jsign - through the Consensus Web Store.

Unite and Signal incorporate Cloud Fax as a key delivery method alongside the other digital protocols. We view jSign as a fax companion specifically for signature workflows across several industries. Our revenues primarily come from our cloud fax business with a modest, but growing, amount from our additional interoperability products (as they are new to the market) and there is still a large transition opportunity Cloud Fax to replace on-premise fax solutions.

Our current roadmap remains largely focused on on the corporate markets, with offerings that run the gamut from SOHO to the largest enterprises on the planet:

• Ramping up our newer product offerings in the advanced interoperability space, including unite, jSign, and Conductor
• Rolling out our FedRAMP High Impact system ECFax for US Government agencies;
• Consolidating our various Digital Cloud Faxing platforms into a global, unified, best-of-breed offering featuring our flagship eFax Corporate;
• And launching our Clarity intelligent data extraction platform, with an early emphasis on the Healthcare market through a collection of specialized Clarity apps that focus on key use cases;

We are also continuing to build out Harmony, which unifies our product offerings in a comprehensive cloud interoperability platform, with plans to launch a pilot program later this year or early 2024.

1. HL7- is a Standards Developing Organization accredited by the American National Standards Institute (ANSI) to author consensus-based standards representing a broad view from healthcare system stakeholders. HL7 has compiled a collection of message formats and related clinical standards that define an ideal presentation of clinical information, and together the standards provide a framework in which data may be exchanged.

2. FHIR- stands for Fast Healthcare Interoperable Resource. This emerging standard combines the best features of HL7 V2, HL7 V3, and CDA, while leveraging the latest web service technologies. The design of FHIR is based on RESTful web services. With RESTful web services, the basic HTTP operations are incorporated including Create, Read, Update and Delete. FHIR is based on modular components called “resources,” and these resources can -be combined together to solve clinical and administrative problems in a practical way. The resources can be extended and adapted to provide a more manageable solution to the healthcare demand for optionality and customization. Systems can easily read the extensions using the same framework as other resources.

3. Direct Trust- The DirectTrust organization is dedicated to build and strengthen the security and trust framework for the exchange of health data using the Direct Project protocol. DirectTrust members agree to participate in work groups dedicated to security, trust, and growth of the use of the Direct Project; attend monthly educational sessions; become involved with the Direct community; and support the membership growth of DirectTrust.

4. Direct Project- stands for Fast Healthcare Interoperable Resource. This emerging standard combines the best features of HL7 V2, HL7 V3, and CDA, while leveraging the latest web service technologies. The design of FHIR is based on RESTful web services. With RESTful web services, the basic HTTP operations are incorporated including Create, Read, Update and Delete. FHIR is based on modular components called “resources,” and these resources can be combined together to solve clinical and administrative problems in a practical way. The resources can be extended and adapted to provide a more manageable solution to the healthcare demand for optionality and customization. Systems can easily read the extensions using the same framework as other resources.

5. ScriptStandard- is the electronic prescribing (e-prescribing) standard created to facilitate the transfer of prescription data between pharmacies, prescribers, intermediaries, facilities, and payers.

6. EHR- An electronic health record (EHR) is a digital version of a patient’s paper chart. EHRs are real-time, patient-centered records that make information available instantly and securely to authorized users. While an EHR does contain the medical and treatment histories of patients, an EHR system is built to go beyond standard clinical data collected in a provider’s office and can be inclusive of a broader view of a patient’s care.

7. The 21st Century Cures Act- On April 5, 2021, federal rules implemented the bipartisan 21st Century Cures Act specifying that 8 types of clinical notes are among electronic information that must not be blocked and must be made available free of charge to patients.

8. Kno2’s Carequality interface- Carequality brings together a diverse group of representatives, including electronic health record (EHR) vendors, record locator service (RLS) providers and other types of existing networks from the private sector and government, to determine technical and policy agreements to enable data to ?ow between and among networks, platforms, and geographies.

Our current product roadmap is disclosed through the end of 2022. In early 2023, we will release the product roadmap for the next two years. Our first set of milestones is hitting the release date for these services and we have thus far. Most of these will map to the corporate channel. From a data standpoint, it’s important to look at the metrics that we report, the total number of customers, most notably the ARPU, the average revenue these accounts produced per month and the retention rate. The advance of these products is not expected to cannibalize existing revenue streams as new products which are being developed represent a complimentary product suite to stand together with fax. We have commercialized eFax and jSign for our SOHO and Corporate customers.

The sales approaches are very different, with SOHO being virtually exclusively an eCommerce channel that’s marketed and sold in a self-service environment with pre-packaged subscriptions. The Corporate segment is always sales-assisted and offers a host of options for configuration, customization, integration and bespoke solutions. SOHO certainly has growth opportunities – we can see usage levels in the subscriber base continuing to grow triggering usage charges for customers who exceed their plan limits, we also have the ability to position a product like jSign to market as both a bundle with one of the fax solutions as well as a stand-alone subscription. There is generally an incorrect view that the number of subscription accounts is the measurement of growth in SOHO. This is a larger story than that. We would not characterize the SOHO as the company’s growth engine; however, it provides a steady source of revenue.