Q4 2019 Earnings Call
Ladies and gentlemen, thank you for standing by today's conference is scheduled to begin shortly please continue to stand by and thank you for your patience again today's conference is scheduled to begin shortly please continue to stand by and thank you for your patience.
[music].
Good afternoon, ladies and gentlemen, and welcome to the one medical's fourth quarter and full year 2019 earnings results Conference call.
At this time all participants are no listen only mode. After the speakers presentation. There will be a question and answer session to participate on that portion of the called simply press Star one.
Please be advised that today's conference is being recorded.
I would now like to turn the conference over to rose sell to put out director of Investor Relations at one medical you may begin.
They do Carmen good afternoon, and welcome to one medical fiscal 2019 fourth quarter earnings call with me on the call today are near Dan Rubin Chair, and CEO, and President and one medical and be aren't Holler, Chief Financial Officer, one medical.
A complete disclosure of our results can be found in our press release issued earlier today as well then our related form 8-K furnished to the FTC.
All of which are available on our website at Investor got one medical Dot com.
As a reminder, today's call is being recorded an a replay will be available on our website. Following the conclusion of the cool.
As part of our comments today, we will make forward looking statements.
These statements are based on management's current views expectations and assumptions and are subject to various risks and uncertainties.
Actual results may differ materially and we disclaim any obligation to update any forward looking statements or outlook.
Please refer to the risks factors in our most recent form S. One and form 10-K to be filed with the FTC in the coming weeks.
No it as one medical policy, neither reiterate nor just the financial guidance provided on today's call unless it has also done for a public disclosure the jobs a press release or through the filing of a form 8-K.
We will also discuss certain non-GAAP metrics. So we believe eight in the understanding of our financial results.
Oracle reconciliations to comparable GAAP metrics can be found in today's earnings release.
During the call we may offer incremental metrics to provide greater insights into the dynamic of our business <unk>.
The detailed maybe onetime in nature, and we may or may not provide updates in the future.
With that I'll turn the call over to a mere in New York their prepared remarks and to take your question.
Thank you rose and welcome everyone and thank you for joining us, particularly during these extraordinary times. We're so pleased to speak with you today.
It does we met during our IPO Roadshow, we're happy to reconnect today for those new to one medical welcome.
This is our first earnings call together, but its beginning with a brief overview of our one medical model strategy an opportunity. We will then review our 2019 result, and then we will also share comments with regards to Kobin 90.
One medical is a membership base and technology powered primary care platform with seamless digital health and inviting you know if its care convenient to where people work shop land and click our vision is to delight millions of members with better health and better care, while reducing costs.
Our mission is to transform health care for all through our human centered technology powered mall.
We believe that the current state of health care leap key stakeholders frustrated.
These stakeholders include consumers employers clinical providers and help networks consumers are dissatisfied with the health care experience with short in personal visits uninviting medical offices constrained accessibility and a lack of coordination across clinical studies.
Employer is often find their health benefit offering their health benefit offerings underperforming on attracting and engaging in boys improving productivity and managing cost providers nationally are showing symptoms of burnout driven in part by misaligned fee for service compensation approaches, which incentivized short in Iraq.
Actions and affordable referral and excessive administrative tasks from electronic Health Records.
And help networks inclusive of health systems, and health plans have been looking to develop more coordinated networks to better integrate primary care with specialty services and to better align with attributable lives yet despite their large investments many have struggled to deliver on these objectives.
Medical we believe we are uniquely positioned to deliver results for all of these key stakeholder groups. Our membership model combined seamless 24, seven digital health services with highly accessible and inviting innophos care routinely covered under commercial health insurance program.
Accordingly, we see that we're delighting consumers with our elevated experience and best in class clinical care as evidenced by our continued high 90, net promoter score and Ninetyth percentile quality scores.
For employers to sponsor in play memberships when medical is supporting employee engagement and productivity, while delivering cost savings for example by reducing emergency room visits by 41%, increasing generic prescription rates and driving total employer savings of 8% or more.
For providers, we're addressing root causes of burnt by providing a salary as opposed to fee for service compensation by leveraging a team based approach to longitudinal member relationships and by developing our own proprietary technology platform, which reduces many of the desktop medicine burdens and administrative household faced with cumbersome electro.
Sonic Health Records and for Health networks, we are clinically digitally integrated for better care coordination and reduced duplication of testing across primary in specialty care, setting and helping health network build alignment with employer account and commercially insured patients without them incurring many of the cost and risk based in there.
Developing their own practices on the route.
Overall, we believe that our unique ability to simultaneously simultaneously serve all these key stakeholders through our member based in technology powered model it delivering an enduring competitive advantage in a large and growing mark.
We indeed see a long runway for growth returns and impact currently members can access or digital services 24, seven from any location nationally and we have also scaled our medical office locations across nine markets today, including Boston, Chicago, Los Angeles, New York, Phoenix, San Francisco Bay.
Area, Seattle, Washington, D.C. in San Diego in 2020, as we previously announced we plan to expand into three new markets, which include Orange County, California, Portland, Oregon, and Atlanta, Georgia together. These 12 markets alone represent an estimated $38 billion in total addressable.
Good for just a commercial population with the addressable market expanding to 159 billion when considering the commercial population across the entire United States and to 260 billion when considering all of primary care.
With that brief overview of our model strategy and opportunity, but it's turned a highlights from our 2019 results and how we've been able to perform innovate in Brazil.
[noise], we're very pleased with our financial performance during the past year and are happy to report that we closed out 29 team with a strong fourth quarter, which bjorn will dive into later on the call.
We ended 2019 with 422000 members expanding our membership base by 22% year over year for the full year, we delivered 276.3 million in annual net revenue an increase of 30% over year over year, we generated a care margin for 2019 of 100 and.
8.6 million, an increase of 42% year over year.
Adjusted EBITDA for 2019 of minus 25 million reflects continued investment in technology and capacity expansion of sales and marketing efforts and are public company readiness preparation costs.
Going forward, we anticipate adjusted EBITDA to improve given the leverage in our model and we expect to reach adjusted EBITDA breakeven around year end 2022.
In addition to delivering financial performance last year, we were widely recognized for our innovation in 2019, Forbes ranked us as number one on the west of the most consumer centric healthcare companies aligns Bernstein named us as their most disruptive private health care company fast company named US is one of their.
Most innovative companies and we were named a great place to work. We also reached new heights in or impacts for chronic and complex care patients last year. For example in late 2019, we are recognized by New York City as the number one performer for suppressing the HIV virus amongst all New York City providers.
We also continued with strong member engagement across our digital and in person setting.
During the 12 months of 2019, we engage with our members an average of seven times two times in person and five times digitally as one member but try to keep up the great work. Your model is revolutionary and a much needed change the doctor patient relationship. It is sure to have hugely positive impact on health health.
This little a member satisfaction is why we saw nine out of 10 consumer members renewing with us in 2019 and enterprise clients renewing at even higher levels.
We also continued our growth last year, including with their health network partnerships as we further believe clinical and digital integrations across the United States.
As of yearend partnerships covered 86% of our member base up from 51% in the prior year.
In January 2020, we announced a new partnership in Boston with Master I know Brigham also known as partners health care.
On a pro forma basis, 88% of members are now covered under these partnerships.
As we've already noted we plan on expanding into Orange County, California, Portland, Oregon in Atlanta, Georgia. This year with the addition of these three market by the end of 2020, we'll have grown our total markets by 50 55 zero percent over the prior 18 month.
These markets provide us with an outstanding opportunity to grow our enterprise and consumer enrollment into line with Premier partners and today, we're pleased to announce an additional new market and new partnership as we plan to enter Austin, Texas next year in partnership with Ascension Seaton Medical Center this way.
We'll be our 13th market and further extend our national reach to companies and consumers.
In addition to expanding health network partnerships in growing markets. We've continued to build outstanding relationships with new and existing enterprise class. We ended 2019 with more than 7000 enterprise class in Q4, specifically, we began new relationships in industries across technology retail professional.
Services consumer goods healthcare and education.
In Q4, we also launched one medical for kids across multiple markets, allowing us to further delve into care for the whole family and extend our services with both enterprise clients in consumer members, who also continue to grow.
Yeah. Patrick is just one example of our extended offerings, which now include an array of digital health and in office care services, including Immunizations and lab services behavioral health Women's Health men's health, LGBTQ, plus care sports medicine lifestyle, and well being programs.
Let me now turn to how we're demonstrating the power of our model. During this current a virus outbreak and implications for our business.
First let me acknowledged our entire team for the incredible support given to our members enterprise clients colleagues and communities. During this time they have been delivering outstanding care guided with the latest clinical insights and often have been the front line of health care for our members and employers in affected communities across the name.
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We're seeing that our model, which combined 24, seven bundled digital health along with our accessible in office Chair and lab services has been so highly valuable during this time of cobot 90.
Through our digital health services, we have been able to actively serve members virtually and then direct them for any further care needed in the first two weeks of March alone approximately 31% of our entire membership base sought care with us virtually we believe this is a remarkable demonstration of the deep.
Reach and power of our model and the incredible health care delivered by our team.
Additionally, when our providers have deemed inappropriate and in line with clinical in public health criteria Weve been able to support Kobin 19 testing services at designated one medical locations across the nation well testing volumes are still just ramping and capacity a centralized laboratories are still building up we estimate when medical has already facilitated.
About 1% to 2% of all the Kobin 19 testing to date in the entire United States, noting that we're not yet in many markets.
And we estimate we facilitated approximately 4% of all testing in California in New York, 18% in Arizona, and 45% in Washington DC.
For leadership at our enterprise clients, we have been serving as a key clinical resource as these employees worked through their workplace and team approaches.
For example, just last week, we had a conference calls between our clinical leadership in more than 200 and safety existing and potential enterprise class, providing further insights on cobot 19 and areas for consideration for their organization.
We know that are modeled membership base relationship and service to employers along with our seamless combination of digital health and you know if his care not only delivered in 2019 buddies delivering significant impact during these extraordinary times as well, we're continuing to see new employers and can sooners sign up with.
Yes, as they further recognized the power of our model while it's still early in 2020, we've already seen accelerated membership growth above our initial expectation and we expect to see long term tailwinds for him up for our business from our expanding membership base now we aren't being communities, we serve being directed by public health officials.
To adopt social dispensing and sheltering in place practices as for such public official pronouncements, we're being guided to defer elected in office visits when possible accordingly, while our revenues from membership fees and partnership revenues continue our patient services revenues from in office visits are anticipated to decline in the short.
Sure under such distancing and sheltering in place policies.
To relaxation of SUNS policies, we anticipate in office visits and related patient services revenues not only returning to prior levels, but potentially surpassing them for some period of time differs visits get scene for such need that chronic disease management of diabetes and heart disease cancer screening reproductive health sexually transmitted.
Infections behavioral health <unk> wellness visits and many other needs. Additionally, it is possible that Kobin 19 will drive an influx of demand for office space visits with lab testing services and at some point drive an influx of demand for any future vaccination or other treatments in supporting the healing of our name.
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In summary, we believed that our human centered and technology powered model can transform health care for all key stakeholders and deliver better help better care and lower costs at scale. Moreover, during these extraordinary times, we see our model further demonstrating its extraordinary impact we look forward to keeping you up.
Updated on our progress and he and appreciate your engagement with US now let me turn it over to our CFO you weren't taller.
Thank you Emil and Hello to everyone on today's call.
I'm very pleased was almost along poignant 19 result.
Rich, we previewed you know as one.
Yes. This is all girls call, we'd be osha extra colo on significant components of our business. In addition to the detailed numbers.
We ought to membership driven model Ns I really just cost Memphis that I've enjoyed your hobby economics.
And 29 team, we do our membership base, 22% ending the year was 422000 members.
We have many consumer focused companies since our founding and began building our enterprise strategy over the past several years.
And so you and 29 team our membership base was approximately 40 age costs and direct to consumer and 52% enterprise members.
Turning to revenue.
Report, so we put a revenue streams, specifically membership revenue partnership revenue and net patient service revenue.
In total we delivered $77.4 million in net revenue in Q4, Oh, Sunnis, 30% year or what do you.
Our Q4 membership revenue grew 23% year over year.
And was 18% of our total net revenue for the same period.
SMB Mindell membership revenue is generated some consumer and enterprise and Wolf membership fee.
Really see partnership revenue, primarily from our health network, Apollo knows which is and you won't revenue stream for us.
In markets, where the health network partners pay us a fixed through a member opco months fee or P. M. P M.
Well remember comes to draw office rebuild your insurance full game for the services provided on behalf of these health net book <unk> most.
As someone medical established such PMPM partnerships within our existing markets. We saw an increase in a percentage of total net revenue represented by partnership revenue was a corresponding decrease in net patient service revenue.
In Q4 2019 partnership revenue was 28% of our total net revenue.
Up from 13% in 20 E G.
Please note that partnership revenue also includes fixed payments from enterprise clients will onsite medical services and capitation payments from independent physician associations, well I P. Eight.
Taken together.
Membership revenue and partnership revenue in Q4 totaled 75.
<unk> $8 million were 46% of total net revenue.
Have you seen a contractual and recurring in nature.
And generally independent of the number of in office visits or digital in comatose by our members.
Next patient services revenue is generated from providing Q2 members in our offices and billing Dan or do you have insurance pulled them on the fee for service basis.
Some of this revenue stream is generated in markets, where we have health system partners.
Right and other markets be contract directly with health plans.
Given our focus on time really kale.
We believe just about when do you see is generally fairly visible.
As it is driven by the number of in person visits to our offices.
This is Barry do you have these visits and to the boss mandates of health plans.
In Q4 this represented 54% of total net revenue.
Well this percentage is down from 68% in Q4 2018. This decline is determined by the increasing shifts to partnership revenue as I mentioned earlier.
Turning to our Q4 results.
Partnership and net patient service revenue collectively increased 36% year over year.
This strong growth was driven predominantly by our membership base growing 22%.
So the main do have to go was largely driven by improved member engagement during Q4.
Including a strong flu vaccination campaign and improved pricing.
Our Q4 performance continued I was strong momentum from earlier in 2019, which drove total net revenue for the you'll have to other than $76.3 million up 60% year over year.
We couldn't see the cost of care into key a margin to be important measures of our efficiency levels and I will apply see effectiveness.
Cost of care excludes depreciation and amortization, but includes the costs for both our office and which will provide us and support staff as well as occupancy costs medical supplies malpractice insurance and novel and other operating costs.
Our membership model gives us a distinct advantage in managing cost of kill enemies art can kill margins as a membership provides line of sight as to when we need to expand our vote for what you know for staffing.
And bad debt or when we need to extend into additional office locations.
By most of our cost of care is driven by staffing and so do you mind, though we begin increasing expenses when you offices several months in advance of opening typically as soon as we signed a lease.
Each new office, besides being a modest step up in fixed costs, primarily from additional occupancy expense, which is diffused overtime as we go members.
To manage new offices efficiently, we typically how youre only if you pull by does it off his opening and overtime glow staffing as membership close.
Including growing old mutual team as digital needs increase as well.
We ended 2019 was a total of easily offices and increase of 17% year or will you.
During 2019, we opened a total of 12 new offices.
Six of dogs in Q sleep and six in Q4.
Additionally, in the second half of 2019, we began each messy in two new office growth for 2020.
As soon as old she on margin in Q4 was 28.4 million or 37% of net revenue.
In dollar terms, just entered a year over year increase of $6.1 billion.
As a percentage of revenue.
<unk> decreased slightly compared to 38% of net revenue in Q4, 20 gene driven primarily by I wouldn't you offices.
Even with these capacity investments in Q4.
The real pleased with our demonstrated the ability to device efficiency you when do you and deliver strong year over year Nokia margin improvements in 29 cheap.
40, he'll come out from $108.6 million or sooty, 9% of total net revenue.
Yeah, Hi, yes, and won't keep them option percentage and all of his study.
And up from 76.5 million was 36% automated revenue in 20 cheap.
In terms of operating expenses below the cost of Caroline this.
This past year, we make investments to continue to fuel growth and took we pay up to be a public company.
Specific totally <unk>, what technology team to food to build out old platform for member engagement.
As well its integration was our health network of partners.
And she was to be 2019, we ought to move into new corporate headquarters.
Overall image or do you have these investments will fixed costs and we expect to see additional efficiencies as we go into them over time.
Lastly was in sales and marketing reinvested in brand awareness, new member growth and member engagement.
That's a result.
For 2019, adjusted EBITDA was a loss of $9.4 million, what 12% of net revenue.
Compared to a loss of $6.8 million also 12% of net revenue in Q4 20 cheap.
2019, adjusted EBITDA was a loss of 25 million one 9% of total net revenue compared to a loss or $13.9 million in 28, Jean was 7% of total net revenue.
As some you mentioned, we expect to drive meaningful leverage you know operating expenses, particularly busy in DNA over the next several years.
Our balance sheet remains strong as we ended 2019 responded and 46.5 million of cash and short true marketable securities and only $3.3 million over that.
We were pleased to complete our IPO in January 31st which generated 263.4 million in net proceeds providing additional liquidity. In addition to our year end cash balance.
Lastly on our statement of cash flows let me provide brief Carlo in our 2019 Capex investments of $54.4 million, which was up from 10.8 million in 20 AG.
In 2019, approximately $22 million off Capex was related to our when you corporate headquarters.
The remaining $32.4 million was primarily used to open 12 offices in 2019 was an additional 10 offices in coal glass to opening early 2020.
<unk> average of approximately $1.5 million in Capex office.
Going forward, we have begun to modestly increased the size of office for claims.
It was new offices, having on average one to two additional exam rooms.
And some even more.
As such we expected that age to be flat to modestly up heading into 2020.
Now turning to our Q1 2020 guidance.
As I mentioned, while it is still early in 2020, we have seen an acceleration in membership go.
As we continue to demonstrate to high impact and Pablo of our model during these unprecedented times.
As a result, we expect to and stick Twaddle Reis total membership between 440 sleep thousands and 447000 members.
For revenue.
Why do we had just along January and February and we are seeing accelerated membership growth.
If you days into March we began to see a decrease in office utilization.
As communities are increasingly promoting Coleman gene and cell isolation.
For example earlier this week to San Francisco Bay area has required to all residents shelter, India homes until April Sevens.
And by itself and we are seeing other communities. They commend all the twilio seamless cell isolation practices generally so early April.
This situation is fluid was public health and government instructions involving often.
Well I mean financial perspective, we generated approximately $3 million in weekly net patient service revenue.
We currently expect student to deliver Q1 net revenue between 74 million and $77 million and display revenue guidance assumes a reduction of approximately $6 million to $8 million in net patient services revenue as a result.
He's calling gene measures.
We also expects to deliver Q1 key a margin between 22 million and $25 million and Q1 adjusted EBITDA between a loss of 18 million and lots of $15 million, both of which impacted by the same dynamics I just mentioned.
Turning to Twentytwenty.
We are seeing heightened interest by consumers and deploy us in our member focused combined virtual and you know for service offerings, which is strong and growing pipeline.
Over the long term, we things just really accelerate the demand for our model.
We remain focused on caring for our members and delivering high impact skewing. This time.
Which is shining a light on the importance of combining virtual and in office Kale.
Based on that we are pleased to report did we now expect to end fiscal year 2020 with membership between 495005 funded and 10, so I wasn't members, which we believe sets us up well to drive long term incremental revenue.
Particularly given <unk> nine out of 10 points you more members can use us youre will yield and enterprise clients when you even higher levels.
Turning to revenue.
Based on our performance in January and February we had expected to provide for your revenue guidance into 338 million to see hundred $44 million range and adjusted EBITDA guidance off the loss of 74 million twin loss of $41 million Port just correction.
Lots of.
That's great and.
Thank you.
Adjusted EBITDA guidance off the loss of $47 million to a loss of $41 million.
However, based on the aforementioned dynamics, we believe full year results will be negatively impacted by into leased to $6 million to $8 million in reduction expected in Q1 Twentytwenty.
Any impact do you have apto will depend on the level incubation of cell isolation packages team to communities we serve.
As a result, we do not provide formal twentytwenty guidance beyond the membership numbers I just discussed at this time.
As I pointed out earlier in 2019, 46% of our total net revenue was contractual and be growing in nature and generally independent of the number of in office visits or digital in comatose by all the members and be seen continued strength in new member enrollment.
At the same time, we typically generated approximately $3 million in weekly net patient services revenue.
Actually related to in office utilization.
Notwithstanding the comp reduction on Oh in office utilization used for increasing social distancing.
As I mean I previously mentioned, we believe we are well positioned to service the opportunities into account environment, including the potential to see significant demand for coal with 19 examination and testing services.
Increased visits due to pent up demand for in person Kale and higher than anticipated membership.
As such we believe we have strong business momentum did real help mitigate some of these near to cope with 19 related headwinds.
We also believe did our strong balance sheet will allow us to take advantage of to comment just location into marketplace, allowing us to accelerate I would draw New York responsible growth, including opening more than 20, new offices this year.
Overall, we remain committed to reaching adjusted EBITDA bleach, even if you and 2022 with significant leverage generated Xinjiang a two each set targets.
And you also remain committed to the long term financial targets, we shift your novel boat show, which include mid 20% net revenue globe.
45% to your margins and 20% adjusted EBITDA margins.
To close we delivered strong financial results in 2019 and be remain focused on executing against the opportunity ahead of us in 2020 and beyond.
And food approving the power of our model.
I'd like to think Oh man boasts employers paulson those team members and shareholder goes what do you have continued support engagement asked me real between pools to weigh housekeepers delivered one member at a time.
Thank you for taking the time to join US on our call today and was that we'd be happy to take any of your questions at this time.
Thank you and I saw a reminder, ladies and gentlemen to ask a question you would need to press star one on your telephone to withdraw your question press the pound key please standby well, we compile the <unk> roster.
And our first question is from Lisa Gill with JP Morgan. Please go ahead.
Great. Thanks, very much and I understand how fluid everything is night I. Appreciate your comments I'd be aren't as we think about that that weekly net patient.
Revenue, but if we think about visit is are we to break down how many of those visits he would say our acute because its meaning that it's something so you know so isolating they go I feel like I might have yeah, strep throat or something so whenever they choose I'm just gonna go in and see what virtual carries with it and so therefore I'm never going to come to the visit versus Oh, you know.
I need to get my wellness is it for the year and you have no bite my checkup, whether it's for me or my kids et cetera.
Hi, Lisa. Thank you for your question. This is a mere and and you know we have always had very high engagement with our members both digitally and in office. So before these extraordinary times, we had seven engagements per member per year about five.
Digitally and two in person and so we always were able to handle a lot of things that didnt require in office care digitally we haven't fundamentally seen I'd change is that at this time and thus we see the things that we more typically would have seen in office.
Or longer more extended visit as currently being deferred in till they can come back in.
Okay. So the way we should think about this marriage that if you believe that this is more of a deferral that up replacements have a service that that went digital persist in office.
That's correct. Moreover, during this time as I mentioned, we [laughter], we've had 31% of our entire membership population seek virtual care with us.
Now a lot of that has been around the preoccupation.
Hi, everybody with Coven 19 in the concerns there.
But people will continue to be concerned about their blood sugar levels, there sexually transmitted infections. Their C. O P. D. A their long acting reproductive care. So we believe these conditions, we will need to turn back to them, but we're trying to defer those until inappropriate type.
Thanks, that's very helpful. And then just a follow up when you talk about when Youre talking about fourth quarter 2022, EBITDA breakeven if I remember correctly that previously with fourth quarter 2021 is that because that's cope with 19 that you're pushing out that timeline.
No I think we Ah we are always said I'm going to be a EBITDA breakeven about Uh huh.
Eight 910, while those out of the Oh, the IPO So does no change yet.
Okay, great. Thank you.
Thank you. Our next question comes from Ricky Goldwasser with Morgan Stanley.
Yeah, Hi, good afternoon, I have some awful lot of questions on your commentary on on the Covidien Pos So when we think if he doesn't give us a little bit more context about that's $6 million to $8 million. So we think about it has an impact across all your regions is this just for the Stan.
Francisco market, we've seen where we've seen the most social isolation activity so far.
And it is we as we think about did they did the net impact.
I used to six to eight mainly.
Related to your partnership fee for service given the fact that the membership revenues are already kind of like paid up front and they do you know the P. M. P. I mean is paid regardless to the visits so should we think about as a percent off that partnership fee for service.
And then lastly have you seen any benefit from C. Membership revenues and maybe you can help kind of I quantified taught us how much more new members do you think that youve.
Seen in the quarter answer we sell to so.
Oh the situation it we're seeing in the marketplace.
Yeah, absolutely so maybe I'll I'll start and then a I'm you cannot shed additional color on a on membership in sales efforts.
Yeah, as we speech about the a hold me to L. aided impact on on March.
Its obviously $6 million to $8 million in total is all estimate all of the impacts and really when you think about what happens to our Walliams right. The first two weeks of March we saw volume declines in Embeda I'd off different models.
Kids and that's probably the most about one through all of that seeks to $8 million you total and Dan for the remaining two any half weeks or so much given that whether it's New York Twitter San Francisco, whether it's a really across the country, we see a and increase.
Are you seeing demand and requests to socially isolate so for the last two anyhow, we Oh, Oh my gosh.
She was asking about two cents off that impacts and it also helps you I think box D. A potential impacts and how many acute visits do you happen to US is how many business can you do so.
Yeah, and just to add to Bjorn yeah on your you know on your question. So so that is it impacting that fee for service oriented patient services revenue.
Ricky and then in terms of the kind of a market opportunities.
We're where you're at seeing increased interest and increased enrollment on both the enterprise and the consumer side.
We've been seeing its strong that through the beginning of 2020, but we're also seeing increased interest during these extraordinary times. So it's some level. These this cobot 19 time is further proving the power of our model I think we'd all record.
Ignite that health and care is the primary thing on People's Minds. These days I I also mentioned, some pretty dramatic or testing volumes and how one medical already is a significantly facilitating a large percentage of the testing and in most of our markets and and even adding it up.
Across the United States and so I think this also shows the potential of.
What might not just be pent up.
In office visits, but new level of care and testing services that that might be needed and so.
Those are some of the kind of a tailwind on the demand side.
[noise] understood. So just wonderful opt to clarify if we think about where our estimates where for a fee for service and into DC market.
I mean, we were modeling around $30 million to $39 million, so within that context to $6 million to $8 million, it's around 20% decline in in two weeks just to make sure that I'm thinking about this correctly. That's one and then the other pop is just how should we think about see additional expenses.
The cost associated with entering into into often maybe when should we start filling those through our model as we updated is this more of kind of like a second half of 2020 type incremental cost.
Yeah. So can you walk to your first part of to question just $6 million to $8 million is really the full impact for the full month.
So its not just the last two in the house, we excuses all March or wherever you see the $6 million to $8 million impact again, probably out probably about the old offered it impacts. So do you see percentage is what you saw in to fill those two weeks and probably both.
66% offset impact is one of your projecting for the last two anyhow. So so it seems that that gives you had pretty good sense and again, John Muse point that is because all of all fee for service markets not just specific markets.
And then relative to the expansion into Austin, we are real openness and plan to open Austin and we only 2021 as you heard him yesterday.
We do we expect to a stocking drilling some cost predominantly related to the build out all from offices, probably here into second half off this year, but I'm.
Going back to our general a general Commons, we do plan overhaul to open about 20 or more offices gifts yield and ER and the build out of Austin is certainly contemplated in debt.
Thank you.
Thank you. Our next question comes from Ralph Giacobbe with Citigroup.
Thanks, Good afternoon, I guess wasn't interested and hoping you can do delve a little bit warranted or you are sort of capacity and I guess ability to continue to serve your base on sort of the tell outside with your existing staff. Obviously, some big numbers you threw out there in terms.
Although the telehealth visits so just wondering on the other side of that you know where are you on sort of the capacity on that end or whether you need to sort of build out your out your position sat at this point.
Yeah. Thank you, we feel well position to handle and have already handled oh large volume of that demand leveraging our own technology, which is inclusive of synchronous video asynchronous community station structured tax so we have a multi modal virtual care.
For a that's allowing us to handle as the sad tremendous tremendous influxes and we feel very well positioned to continue to do so.
Okay. All right. That's a that's helpful and I did want to go back to you know the discussion around sort of the 3 million and weekly you on that patient service revenue against.
The 60 million that you sort of implied I guess the question is if you just I mean, if you just take the numbers all land you called it sort of 12 to 13 million a net patient service revenue a month and the impact of 60 million Bucks and that's.
50 per cent impact if not more so it does does go for a full quarter. I mean is it fair to think of it as a 50% reduction again just for a quarter on that net patient service revenue piece, obviously, it sounds like you're going to get some of that back because it's tougher to oppose last but not a fair way to kinda for.
Based on what your guidance is even just for the last couple of weeks Mark.
Yeah.
I think if you do that math did you outlaid youre effectively saying there is no fee for service revenue coming in and what do you. Obviously see is frankly, the opposite there's still a fair amount of fee for service revenue coming in there.
Sort of good at $6 million to $8 million of impact is coming in and two I'm. Just point, we are now increasingly ramping up our testing capabilities for cold with 19, which will also generate fee for service revenue up we do believe that while folks are generally.
Electing not to do bounded mountainous visits today that will create pent up demand than it is up it is.
And everybody's guests at this point how long these extraordinary times due to be a in will last but we have a high degree of confidence that once we also these extraordinary times, there's going to be huge pent up demand.
Our services that we are ready to Eddie too so on top of the incremental membership that VR signing up right now so we feel better about a good about our long term prospects.
Okay, Alright fair enough if I could just squeeze in one more I you know it sounds like new membership he always it sounds like it's accelerating and you know maybe cobot 19 in the headlines it's helping to drive.
Individuals so maybe just give us a little bit of context of that of what you're seeing or hearing from a those individual finding up is it sort of an issue around sort of you know I'm challenges around seeing primary care given everything that's sort of going on out there candour, what's happening sort of on the enterprise side I'm, just not being driven 50 50 or.
More individual in terms of where you're seeing that incremental membership base coming from thanks.
Yeah, we're really seeing the growth on both the enterprise side and on the consumer side or in the enterprise side. Some of this has been with accounts that we've been talking to you and now want to push ahead, but we've even had brand new accounts that have gone.
From initial conversation to go live sometimes within a matter of days as people are realizing that our model is quite powerful a combination of digital health to address the needs of their employees as well as in office services, including Cobot 19.
Yes that facilitation of testing services that is seen is very powerful and so as people are looking for virtual care solutions as they're looking for testing location, they're finding that whether their consumers or whether they're employers that one medical has a unique model. It's also a model that scaled. So we're also engaged.
With consumers in multiple markets as well as not only imports in multiple markets, but employers that cross markets and we're uniquely positioned to do that.
Thank you and ladies and gentlemen, they need to ourselves time, please limit yourself to one question and our next question is from Shaun White line with Piper Sandler. Please go ahead.
Hi, Thank you very much and I hope you and your families are all staying safe there in San Francisco.
What do you mean exactly by facilitated testing can you just that said you know shockingly high numbers of of Ah as a percentage and I just want to get a better understanding of what you mean by facilitated and exactly what you're doing in there and how you're getting access to test.
Delivering a service that it seems like the rest of the health care system is unable to.
Yeah. So what I mean is the actual laboratory test is done. Thank you Sean for the question. The actual laboratory test is done by Central core laboratories, like Labcorp or other local lab. So what I mean is we are doing a specimen collection. We are donning the personal protective equipment, we are examining.
The patients. We you are collecting the specimen we are then getting back the results. We are getting those results back in our App. We are then calling back to patients. We are then assessing those results where that making clinical decisions whether to examine those patients further whether to send them into hospitalization, so everything around except we.
Do not on the PCR machines that do the actual laboratory testing. So that's what I I mean by that facilitating a the b. The test the actual PCR test is that mechanism that is now being used is is done by the labcorp than others such as laboratories.
Thank you and our next question is from Jamie Stockton with Wells Fargo.
Hi, Thanks for taking my question I guess, just on on the Tele health, which obviously thing very strong inflection for.
Can you talk about you know maybe this isn't as much of a 2020 of them, but just I'm happy having conversations with insurers.
Around you know flipping to getting those encounters reimbursed I'm, obviously, we're seeing Medicare expand tele health reimbursement, that's not a big piece of your member base, but just any any thoughts or color around that would be great.
Well I think thank you Jamie for the question I think in general what we're seeing the power of our model, which is combining they digital health and the you know it's care and we've certainly seen a tremendous demand a we're continuously looking at ways too.
Continue to innovate on our model and coming out of the as covert 19 times, we will reflect further on any additional opportunities that there might be.
Thank you and our next question is from Ryan Daniels with William Blair.
Yeah. Thanks for taking my question guys. We've talked a lot about the revenue impact of a co bid on the business I'm curious if you can go a little bit into the EBITDA impact and I guess my question. There is twofold one.
In the markets, we're getting a PMPM it could be beneficial as you still get the recurring revenue without having to treat the patient but in the markets where your fee for service, obviously, it's gonna be impacted and I'm curious to the bulk of increase telehealth visits which already included in the membership fee could pressure margins as well.
Again as you see volume shift to something that's already included versus something you could bill for thanks.
Yeah. Good. Good question. Thank you I mean, the short answer is that we really don't expect any meaningful impact on margins and EBITDA at this point yeah. Other than obviously on the my 20 percentage basis the impact from a sum this change in the revenue.
And the reason for that in many ways. It goes back to our technology and I will leverage model.
Yeah, we do see a reduction in ER in summer fall in office visits what you're doing is actually be a redeploying those who buy those that are now having extra capacity in our offices to help us onto it falls off so you know our own team is doing.
Yeah, great great dashboards to make sure that we continued to have from what we believe <unk> industry, leading response times on we watch will help.
We are really doing this law with technology and also was utilizing that capacity that is now not necessarily utilized in the near to you know offices. So we think we can probably relatively nicely.
In a in yourself.
Thank you and our next question comes from Matthew Gilmore with Baird.
Hey, Thanks had a follow up to Jamie's question on Telehealth I know, it's very fluid situation, but the Trump administration announced a relaxation of some telehealth regulation.
Which could allow practicing telehealth across state lines.
I don't have any bearing on the business either near term long term and I was curious more specifically if you're seeing any interest from employers. So just pay front the tele health access for one medical doesn't cats have an office location in that state.
Okay.
Yeah, I think we are seeing interest from employers to do all kinds of things at this point with us into a we will continue to innovate on that and I think in general the direction of.
Such Tele health policies has been helpful. I'm not sure. It it is instrumental to making the difference in our model in the near term, but in the longer term I think these are our are helpful moves.
But yes, we are seeing importers reach out to us because they're seeing better model I can can help them not only address their current issues, but remember all of these importers are gonna have to figure out how to get back to work and you know will that involve a lot of testing well there hopefully one day being immunization.
Will that be screening virtual if it's any of those things, it's likely to leverage yes, Tele health, but also a combination of tele health in office testing in office Immunizations, you know just wait till the next the flu vaccine season, we'll see what people are like if they're going to want.
That vaccine and hopefully we'll have a cobot 19 vaccine. So Ah, yes, we see opportunities on tele health, but Moreover, we see continued a differentiation with our model that combines a digital health and in office care.
Got it thinking.
And our next question is from Sandy Draper with Suntrust.
Oh, Thank you very much and good afternoon, and again well wishes to to you and your families and then but obviously challenging times. So my question a lot of my questions have been asked but maybe just in terms of office openings. You know what do you think about building out the offices hiring is there any risks to the there.
As being delayed or the flip side as well would there be opportunities or would you ever consider delaying opening so lets say this is prolong you see more shelter in place some more cities.
Do you actually say you know what we can.
Served the patients in those new markets Telephonically, but we don't need to start turning on light staffing turning on computers and the offices until we actually get through that so just trying to think how much flexibility what your thoughts are around the office opening implications. Thank you.
Yes, Andy. Thank you for the question you know obviously these are fluid times, but we really see one medical as a key public health resources, well. So should we be in a severe kobin 19 situation and the hospitals or a this country our flooded we're in ideal place.
C patients in an outside of a hospital setting in so in that regard that night say, Hey, you want more distributed location look at just the volume of testing we've been able to do we've got a national model, we've been able to get to standardize protocols going we've got interfaces with Nash.
No laboratories, we have teams you can call back and results results. So were built for that so one can foresee a scenario.
And like I said, it's fluid well, we'll have to examine the timing, but you could also foresee a scenario, where we might want to accelerate the timing as well pending what the needs are in their communities.
Thank you answered this concludes that queuing <unk> session I will pass the call back to Amir down Rubin for his final remarks.
Well, we really want to thank everybody for joining us here today and as a health care organization, let us leaves [laughter] with a guidance to a Ah stay healthy wash your hand, but also to be positive together, we will work threed.
Yes.
We certainly are incredibly proud.
The role that were playing to get our communities not only hopefully he'll, but a lot, but reducing their anxiety or we have a tremendous group of at technologists and providers, who are on the front line and are proving their merits everyday with our membership base.
With our employers and with our communities. So thank you so much for being here today, and we'll talk to you, saying thanks, everyone.
And with that we thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect.
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