Q2 2020 Providence Service Corp Earnings Call
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Ladies and gentlemen, please could you did a standby the conference for Providence, Excuse Me Providence Service Corporation will begin shortly I can please continue to standby the Providence Service Corporation will begin shortly thank you.
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Ladies and gentlemen, thank you for standing by greetings and welcome to the Providence Service Corporation second quarter 2020 financial results Conference call.
This time all participants are they listen only mode question answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Am I know this conference is being recorded it is now my pleasure to introduce your host Suzanne Smith, Chief Accounting Officer. Thank you you may begin.
Thank you operator, good morning, everyone and thank you for joining the Providence second quarter 2020 conference call. It a webcast with me today from the company, our Dan Greenleaf, President and Chief Executive Officer, and Kevin Dotts, Our Chief Financial Officer. During this call members of the management team will be referencing.
Presentation that can be found on our investor website under the event calendar and in the current form 8-K, which was furnished to the securities and Exchange Commission. This morning.
Before we get started I would like to remind everyone that during the course of today's call. The company's management will make certain statements characterized as forward looking statement under the private Securities Litigation Reform Act.
Statements involve risks uncertainties and other factors, which may cause actual results or events to differ materially.
Information regarding these factors is contained in today's press release, and then the company's filings with the FCC.
We will also discuss certain non-GAAP financial measures and an effort to provide additional information to investors a definition of these non-GAAP measures and reconciliation to the most comparable GAAP measures is included in our press release Investor presentation, and our form 8-K.
Finally, we have arranged for a replay of this call which will be available approximately one hour. After today's call on our website, which is www dot P. R. S C holdings Dot com.
Good morning, Dan Greenleaf, our Chief Executive Officer will begin with some opening remarks, after which Kevin Dotts, our Chief Financial Officer will provide a more detailed discussion of our financial results.
Then we will open the call for questions with that I will turn the call over to Dan Greenleaf Dan.
Oh, Thank you Suzanne and good morning, everyone and thank you for joining US today. This quarter, we made outstanding progress in our core initiatives to transform logisticare, while continuing to prioritize the health safety and well being of our teammates members and transportation partners. During your ongoing cobot 19 pandemic, our second quarter EBITDA 50.
6.4 million exceeded the prior year comparable figure of 5.8 million driven by operational improvements under a six core strategy incremental contribution from the national Med transact position and lower utilization under our Capitated contracts, while we anticipate increasing utilization during the second half of year.
We are in the midst of a fundamental transformation that will drive significant and sustainable operational improvements out logisticare. It all starts with the six pillars Act on the voice to the customer placed the right people know rights seats.
Well, then strategic technology enhancements optimize our contact centers rebranded drive cultural change and accelerate transformational gross [laughter] regarding the voice of the customer we've listened closely to members' needs during the pandemic weird utilizing our network to help deliver food and necessities to food and secure.
Members, many of whom can't rely on public transportation due to restrictions the safety concerns surrounding Kobin cobot 19, we're expanding our partnerships within with a growing number of schools food banks space based organization municipalities and government entities. For example, we recently collaborated with Philip London.
Liberty Church network to deliver more than 1200 meals to residents to need in Philadelphia. During the first two weeks of the partnership we also joining forces the Miami Dade County public schools deliver more than 5600 meals to date to vulnerable families in South, Florida, and we do not need with friends and action community.
And community food back in New Jersey, the latest multiple partnerships, New Jersey delivered more than 11700 meal since mid March.
The increase in trip bought volume for food delivery combined with the financial systems that we're providing transportation providers. That's helped sustain a healthy transportation network during cobot 19.
And our core non emergency medical transportation business. We also are paying careful attention to an acting on customer feedback and metrics such as net promoter scores improved the quality of our services. For example, we use net promoter scores to evaluate our transportation providers in place those with inadequate bar.
Next on corrective action plans and listening to our payers. We're hearing they want more information on a social determine stuff health and quality of life. These are all areas. We're working on it will have more to share in future quarters.
Moving to a second pillar, we've made excellent headway, placing the right people in the right seats since Catherine stall macro general counsel and I join Logisticare and the latter part of 2019. The company has appointed Kennedy Wilson as our Chief operating officer, well Mapper as our Chief information officer moral Emory as a senior VP of humor.
Resources in Jody Kepler as Chief compliance officer, we've all work together and some shape or form over the past decade. As a result, we have high level of trust and that has increased the speed of a cultural business transformation.
We have certainly been quick to tackle technology enhancements in contact center authorization, our third and fourth pillars on August 1st we launched a front and member technology platform in targeted markets. Its interface enables writers to track the rides via mobile App. In addition, the enhancement has text messages.
In voicemail alerts to provide real time status updates given a third approximately 30% of our calls are related to Where's My ride, we anticipate that this platform on the hands the member experience.
In conjunction with their technology enhancements, we are laser focused on expanding or network digitization as part of overall digital transformation strategy net worth Digitization connects our transportation providers towards technology platforms are real time.
It is designed to limit the number of calls needed to transport a member to and from a medical appointment. We're also in the process of implementing new and improved interactive voice response workflow management, an automated called distribution systems at all or contact centers, which we expect to be fully deployed in the fourth quarter.
The overall remember experience.
We're moving swiftly and the rebranding of our company as well and I believe we will be in a position to announce a new name for organization and X six nine months again, we are propelling real change to our cultural culture mission envision values not just words on the wall and not just a new company may name.
It's a good time to reset the organization with a single line culture in brand.
Which will replace Providence logistic air circulation national mid Trans regarding our six pillar accelerating transformational growth where focus on improving quality of service and generating a stronger bond with our existing customers. We spent a lot of time in the last three or four months strengthening our customer partnerships. We're also entering.
Or exploring a variety of new areas that could meaningfully expand our service offerings will strengthen our payer partnerships. In addition to the to the six pillars. We have demonstrated effective capital allocation highlighted recently by two accretive highly strategic transactions in the second quarter and May.
We acquired National met transfer approximately 80 million given our views that required business generates gross margins in line with our current business. This deal is considerably attractive currently on an economic basis, we believe the intrinsic value of national mid trans could be even more important to us in the long run as we park.
And we're close to with Unitedhealthcare, the migration of National Med Trans Andre platform has been seamless and on plan and we expect to migrate all of the contracts over by the end of October and June we announced and completed the initial conversion.
700003.
700300.
84240 shares of Providence, a convertible stock.
Cash tolling approximately $87 million <unk>.
Plus and approximately 925600 shares of Providence common stock the conversion of our preferred stock simplifies a capital structure and creates alignment among our shareholders returning to the industry backdrop, when we can't predict with precision are certainty the near term impact of Kobe 19 on a business Medicare.
Roles appear to be growing 7% to 10% longer term, we expect to benefit from an expanding Medicare advantaged market.
And increasing shifts and healthcare way from high cost institutional settings, and aging population and a greater emphasis on preventative care.
[noise] rotation medical appointments and pharmacies is one of the fastest growing supplemental benefits within Medicare damage. According to Medpac. The total number of Medicare eligible beneficiaries is expected to increase from roughly $59 million and 2018 to over $80 million by 2030, the national met Trans acquisition brought us a approximately 50 million.
Medicare advantage revenue and through our partnership with payers. We believe we can capitalize on an overall market that is poised to grow from an estimated 400 million today too too as much as $4 billion in the future.
Given all the internal and external opportunities we're executing upon we're fortunate to have an asset like business model with robust cash flow and a strong balance sheet, which enables us to invest in lead in pioneered the industry are balance she'd also enables us to pursue opportunistic acquisitions that can create additional value.
And clothing and exceptional amount of positive changes taken place during my first two quarters with the just to care and I expect much more to come given the uncertainty surrounded Cove 19, we will not be providing formal guidance. This quarter Directionally as I mentioned it started the call we anticipate an increase in utilization during the second half.
Which has been echoed by some of the leading payers in the industry. We also see the potential for higher sequential unit costs and the third and fourth quarter, given that changes were making a transport patients safely to treatments in light of Cove at 19 that said immaterial component of our adjusted EBITDA improvement this quarter came from durable operate.
Improvements and cost containment initiatives, we continued to work diligently on our operational strategy all our teammates and transportation providers are working collaboratively to meet the non emergency medical transportation needs of members during these unprecedented times.
None of these could've anticipated, while none of us could have anticipated Cove at 19, I'm extremely proud of our teammates dedication and commitment during the pandemic in instances we've been detected positive Cove at 19 cases that are contact centres, we've been able to quickly mobilized resources one location to another this is.
Another advantage of our scale.
Finally, before I turn it over to Kevin I'd like to acknowledged two two at new analysts soup initiated coverage of Providence This quarter, Mike Matuska of Barrington Research and Brooks O'neill of Lake Street capital, we truly appreciate their support as we continue on our boys to transform with just scare in the industry now.
I would turn the call over to Kevin dots are Chief Financial Officer.
Thanks, Dan our second quarter revenue totaled 282 $3 million compared to 363 9 million.
And the prior year period, primarily reflecting lower trip volume across our book a business due to the Cove at 19 pandemic, partially offset by higher membership an incremental revenue from national Med Trans which we acquired on May 7th 2020.
Moving the service expense or gross margin defined as revenue less purchase services was 46, 3% of revenue and the second quarter of 2020 compared to 18, 3% and the second quarter of 2019.
Significant improvement reflects lower purchase transportation costs due to lower utilization across multiple contracts as a result of the Covid 19 endemic.
Pay that gross margin will decline in the second half of the year commensurate with an increase unexpected increase in utilization.
Are adjusted operating expense defined as all other expenses, excluding purchase services and after adjusting for add Back's was 26, 3% of revenue and the second quarter of 2020 versus 16, 7% and the second quarter of 2019.
The increase in Stang was primarily attributable to investments in our team processes and technology cash settled equity awards of six $3 million.
And national Med Trans transition cost, a three $8 million offset by lower contact center and other operating expenses driven by our six pillar operational strategy.
And the second quarter of 2020, Alright, just a EBITDA totaled 56 $4 million and are adjusted net income equal $38 million or $2 and 53 per diluted sure.
Moving to our cash flow statement cash flow provided by operations in the second quarter of 2020 was 108 $4 million.
Are strong cash flow allowed us to pay off borrowings under our revolving credit facility and fund the convertible preferred transaction payment, which totaled approximately 82 $8 million after transaction expenses, while cash used in investing activities totaled 78 4 million.
Primarily related to the net outlay for our acquisition of National Ned Trans and approximately $800000 of capital expenditures.
Are above average variance this quarter between adjusted EBITDA and operating cash flow was driven by an increase in potential rebates related to profit corridor and reconciliation contracts.
I'd like to remind everyone that we expect to collect 27 million and the third quarter of 2020 related to the carrier back of net operating losses. However, we will have higher taxes payable going forward due to the elimination of our ability to carry are Nols forward as it reflected in our current tax rate this quarter and the <unk>.
My twenties.
Moving to matrix.
For the second quarter of 2020 provenance recorded a gain a four 4 million related to the matrix equity investment.
On a standalone basis matrix generated revenue of 97 million and adjusted EBITDA of 32 6 million.
Both up from second quarter of 2019.
<unk> is positively impacted by its launch of a new employee health and wellness product developed for companies maintaining critical operations during Cove at 19.
Matrix quickly rolled out this new offering by leveraging it's national clinic staff and flee the mobile units.
As for Matrixes home assessment business due to the pandemic matrixes payer customers paused and home visits for a period during the second quarter, which adversely impacted home product volume.
In an effort to mitigate this impact matrix implemented a new telehealth alternative partially offsetting pause.
At the end of the quarter several on matrices payer customers began resuming in home visits.
As a reminder, we record make purchases value on a book basis.
Which may undervalue, our investment in matrix.
As of June 30th Matrix head stand alone net debt of 285 $2 million and our ownership interest was 43, 6%.
This concludes our prepared prepared remarks with that operator, please open the call for questions.
Ladies and gentlemen, we will now be conducting the question and answer session. If you would like to ask a question. Please press Taiwan on your telephone keypad. The confirmation tumbling. Thank you that your line as in the question Q you May price Star too if you would like to remove your question from the Q.
Disappearance, even speaker equipment, and maybe necessary to pick up your handset pressing the sarkies one moment. Please let me pull for questions.
Thank you My first question comes from the line of Bob Lybeck with CJ Securities. Please proceed with your question.
Good morning, and congratulations on some remarkable results obviously trying time.
Thank you Bob nice to hear from you Okay.
Yeah, absolutely no super excited for Ya.
I wanted to start you talked a little bit about the utilization, obviously trending higher than.
Kind of a burnt of the pandemic shutdowns Q2 can you give us a sense, though as we look at the second half do you expect where do you expect utilization versus preschool mid level. So.
All the way back to creek over it or is it somewhere in between obviously.
Those of this quarter and <unk>.
<unk> and how should we think about normalization over the next few quarters for months.
Yeah, I think the normalization, Bob is going to be hard to determine.
Would say there'll be incremental.
Increases.
That's that's kind of I think are whereas we've create our models, we are modeling or more incremental increases in necessarily back to normalize utilization or more historical utilization rates.
Alright, Okay that makes sense.
Part of the improvements that you guys have had an even starting in Q1 free Cove it.
But obviously still benefiting from issue.
Worked really hard from the end of last year through known proving your transportation network.
Given the upheaval and everything else can you describe the health of the transportation network now versus maybe a year ago and.
How how it's looking going forward.
Yeah, I think we've done a really good job of keeping our transportation network engaged.
And I think as I described some of the initiatives, we've been driving with with food deliveries. An example of that Bob and we'll look to continue to expand that and we've also done some things in area. A bridge loans. We are also done some things in the areas of insurance that.
I think we've really I think done a pretty remarkable job of putting our best foot for because we understand how valuable that network is particularly there's a local providers because one thing I will say.
They've gone above and beyond during the Kobe crisis <unk>.
We hear about these national companies that are struggling during the Covid crisis.
But our our local transportation network people have.
Again, I think I've gone beyond the call of duty and obviously this is a network that we built up over 20 years.
And I think there's a high degree of loyalty between both parties and I think when we do things like bridge loans, we do things like looking to two four ways to expand our business. So we can keep them working as we look for ways that we can provide financial systems to them. They only strengthens that relationship and only increases the health of the network.
The last thing I'll say as we've spent a lot of time during the Kobe crisis, focusing on the quality of our network.
And.
One of the the the underutilized assets. We have is this the net promoter scores Bob and we've been.
Is something we've been tracking on our providers for years, but we we haven't used them to the extent that we are using them now.
And and so we are doing evaluations of our network to see if they're matching the kind of quality that we need to.
Be able to just say that we have when we're working with payers in states and other people like that so this is also been an opportunity for us to evaluate our network, particularly in the area quality and I think that's.
That's been something has come out of this too, which again I think only bodes.
Bodes well for our members.
Got it okay, great and then you touched on briefly Medicaid potential medical enrollment trends I guess and obviously this isn't a normal recession, given the speed, which it came about I think you mentioned something along the lines of 7% to 10% expected Medicaid enrollment crew just curious if that was.
Seen in the current quarter, if that's what we should expect to see by the end of this year.
Q for whatever going into next year, how should we think about that growth is it I think I've looked at it going forward I think sorry, I didn't mean interrupt you.
I'll, let you finish.
Oh no no that was just yet.
Really just trying to understand what did you benefited from it this quarter or is that more kind of common so to speak.
Yeah, that's going board.
Got it we've seen an increase in a rolls of about $1 million already.
Year to date, Bob, but we would expect that increase the subject to 10% to take place the latter part of this year.
Wow, Okay, Great and then last one for me I promise I'll get back in Q, but obviously unbelievable cash flow.
And as you said you if that's the 160 million accretive uses and you still have net cash with more coming so just maybe help us to talk about your priorities for cash and free cash flow going forward.
Yeah, I think I think I'll turn it over to Kevin for the for the.
I mean, we are in a very good position no question, Bob I mean with no that we've already <unk> address the preferred we've addressed.
A pretty.
And acquisition in this space with we'd combine the number one and number three companies together.
<unk> also I think did a very nice job as you know in the first quarter around.
Sure Bipack program, which again we bought.
Most of those chairs and a 40 to $50 range. So we think again that's another area I think we've done a really good job it I mean listen.
We're we're going to get after this I mean, we are we are doubling depth on our technology investments are already shared with you. What we're doing the area of digital transformation Rver workflow management automatic call distribution.
Also with partners in the area of business process outsourcing and even with a partner like we have with United.
Who is also willing to make some level of investments I again, I think we're an incredibly.
Unique position to truly transformed this industry.
And to really transform.
In many respects the member experience and.
I would also share with you is that I've got the team around me to do it.
This transformation starts at the top and some shape or form and the people that we put into the seats or the exact people who should be driving these these transformations going forward. So I'll I'll.
I'll also say that now and the other thing I would also say Bob is listen work.
We are opportunistic.
The national Med trends as an example of an opportunistic acquisition and we're going to we're going to be looking for those types of things and.
We're in a very.
I think we're in a very.
I think.
Strong position to do these types of things and and and again, we're thinking out of the box on this to Bob I'm not going to disclose what that might look like but I can tell you it might not be as the middle of the fairways, you might think but I think at the end of the day, we think.
It will improve the member experience and and we're spending a lot of time focusing on what that's going to be like in the future and what that should like in the future and again I think that we're in a very unique position to to really set the bar in that area.
Kevin.
Bob the only thing I would add to the cash flow discussion is if you will see in the investor presentation. We put out there obviously the 65 million are working capital change and that was a big driver of what happened in the quarter, that's $65 million from literally just just under 700000 in the first quarter.
So the $65 million really kind of relates to the idea that we have these.
These risk corridor contracts that kind of toggle on basically our margin rates and so we reduce revenue.
From an accounting perspective on those.
At some point that cash if we don't use it for other means such as food.
<unk> and things like that.
Back to the actual payers themselves.
The other part of it toggles on these recon contracts, which is really driven off.
Trips, so and the cost of those trips. So what we are also talking about is a lot of that working capital will be paid back over time, but.
Is really volume dependent on a go forward basis and from right now we're seeing that go all the way from let's say.
Third quarter paybacks, all the way through Allen 2022.
Okay, well, great I appreciate that thank you and and.
Since obviously I'm, such a strong quarter and outlook.
Yes. Thank you bye. Thanks I appreciate all your sport.
Thank you. Our next question comes from the line of Mike Pitofsky with Barrington Research. Please proceed with your question.
Good morning, guys.
Remarkable quarter.
Guess, Dan I'd Love for you to sort of and I understand every restate.
Entity in Mci O as in a little bit different but.
How are you guys approaching sort of the management of those relationships given sort of the dramatic shift and utilization I understand that it's likely to begin to return to more normalised levels, so probably going to be slow for awhile.
Obviously, what you're talking about at the top food delivery et cetera, but can you just talk about.
How discussions with.
Your customers are going along those lines things.
Yeah, I think for the most part.
Mike.
Positive I mean, they're seeing an uplift in their performance as well so.
The anthem resolved so solve unitedhealthcare results I saw the 17 results in.
The Cvs set in the results and they're benefiting from this as well so and obviously when they benefit from things I think what they would share with you as they're they're they're making reinvestments back in the business and that's exactly what we're doing.
And we're viewing them as a partner.
Whether it be in the areas as I discussed in areas of social determined chappelle or quality of life or or anything in the area as a member experienced and how can we make that member experience.
More seamless more fluid.
Interactive and those are all things that that I know they value I think some of the other things that we're working hard on is making sure that the quality of reports information that we're sharing with them is accurate timely and and we've got a significant effort that front and in fact.
We have assigned analysts to specific.
Large pay your account so that they have a go to person on that front I'll also share with you and this was one of the blessings of of the people I get to work with here.
Most of us have a significant amount of experience in the pay your marketplace and we're actively involved in it could be catherine or Kennedy or myself for Walt or Jody I mean, we are all actively involved in our.
R R payer relationships and those go up and down the chain and we're on the weekly calls in and so I think I noticed I know because we're receiving these notes from from a variety of payers that they are they have notice a significant difference and how.
Logistic care.
Goes to market and how we handle things in and they understand because we're talking to them about our six pillows as well and they're seeing the kind of commitment we're making to the member in the member experience and I think obviously.
Ultimately the proof is into pudding, but I think they're really seeing that we're distinguishing ourselves from the competition that that we're making the investment because we can just like they are and we feel like together we can create.
Extra ordinary experience for our members.
Perfect.
Speaking of investments.
Into my next question can you talk specifically in terms of.
Second half, what you hope to sort of rule out to your and use their customers and sort of the cadence and.
Of that if you would things.
Yeah, I mean, we're going to the Ibrd workflow management.
The automatic called distribution will all be fully implemented in our contact centres by the end of the fourth quarter.
<unk> is already in place in and operational right now and so we will continue to use them to help us in the area of flexibility in scale, particularly during the Cobra 19 crisis and I can't emphasize enough or scale in sizes has really I think separated us from from much of.
Competition because again.
If you do a.
A contract with a smaller company in the state and they they have a kobe crisis in there one center.
Out of business.
This this is real and for these smaller companies, who don't have multi sites are multi states. So I think they put the I think they put the patient and remember a significant risk and so that's something again that as we look to make our investments contact centres one of the things along.
With a PPO as we're looking to increase the the flexibility as well as the scale as well as the member experience. So that's those are all in flight as we talked about.
Where's my ride out with the tech seeing.
With the tracking of the automobile those those initiatives had been launched August 1st and that's all part of our broader strategy around network Digitization and we are going to lead the way in network Digitization.
And.
<unk> already formed.
Some fairly significant strategic partnerships that I'm not <unk>.
Physician to mentioned, but those are those are all well underway.
Mike and and I feel really good about the progress, we're making on that front and and again it all comes back to the member experiences like how do we enhance the member experience how do we make ourselves easier to do business with and.
So those are those are the items that that I think are going to make the biggest difference here and then ultimately.
<unk> digitize.
The flow of information to and from our our transportation providers as well as to our payers into a referral partners and again, we think we will be very much in the center of that ecosystem given the changes that were driving within the industry as well as within our organization.
Okay great.
Real quick one follow up on on the answer you could just gave so if I'm in and use it or.
Customer of yours.
How how how did they become aware or have I'd become aware of the Where's My App, because I know, whereas my right out because I know you guys get a lot of call simply with and user customer thing.
The van Where's the car et cetera.
I like is that something that all all end user customers have become aware of it in the past week or or is that sort of a slower rollout or can you can you to speak to them.
Yeah. So what we'll do is I mean, we're going to run our proof of <unk>. So we've got.
30% of our network digitized already.
So we're going to.
We will launch these pilots.
And once the pilots has been launched and they've demonstrated the proof of concept and it's going to be.
We're.
We are going to roll the sound as fast as we possibly can and I don't again I don't think these pilots are going to take a long time to figure out the proof of concept, but there are some moving parts and once the proof of concept of locked and loaded it's all systems go.
Great. Thank you so much.
Thank you Mike.
Thank you. My next question comes from Brooks O'neill with Lake Street Capital Markets. Please proceed with your question.
Good morning, guys, it's nice to be on board year, but it's been a long time since I with so badly.
Quarter out of the shoe.
Good news is you blew me away so congratulations.
Thank you Brooks.
Yeah. So.
<unk>.
Sort of a follow up question for Kevin He was talking about the contract that it just.
I'm just hoping he can help all of us understand a little bit more about the nature of those contracts sort of maybe.
What percentage of contracts adjust and.
Obviously, they're all different but sort of.
<unk>, what's the nature of the judgment mechanism. So we can try to think about it a little bit better going forward.
So yeah, it's it's a bit of an accounting thing right books. So we.
Have the great corridor contracts.
Secondly think of them is kind of looking at a margin is agreed to with the actual payor.
And so when we see that we are with the lower utilization seeing that we have lower volume then inherently we have to record effectively a all at a revenue rebates. So we we accrue for that and so that's why you'll see the reduction in revenues and as I do that.
Working capital flow that I mentioned earlier, the 65 million and at some point theoretically that cash and gets paid back to the players now if volume comes back.
Utilization goes up then it could flip the other way.
Okay from a recon counteract which is another large grouping you basically have contracts that our call. It think of it more than a cost plus basis. So okay have higher volume.
You're going to actually have those again those payments back right now because of the volumes low again, we record. The fact that we're going to have a payback to the to the actual power themselves.
Could you say what percent of the contract.
With a group them together so your.
Go ahead.
So Brooks I mean, we'll say where 85% <unk> or 15% transactional.
And I think that's probably as far as we can go on that and again.
It's it's it's really contract by contract.
That we have this.
This dynamic.
Yep.
Again, all that so let's move on and obviously tremendous rebounded matrix I know minority you don't have a control investment.
Operation right now, but can you say anything about what you see the outlook from a Providence perspective matrix.
Over the next year or two.
Well I'll say this I'm I'm certainly happy with the improved performance I mean, I think that's something that.
I think the investors have been looking for for some time here.
And it's really good to see what they've done and how they pivoted and and the improvements they made and our cents is that these improvements should be sustainable and that.
And that there and they're in a much better position than they were just.
Few quarters ago, So my house off to what they're they're management team is done and how they position a company and I think that.
I think it remains of an attractive part of our our our company overall, we own approximately 43% of it.
And.
And again I can't speak to what.
Frasier of the private equity firm will will ultimately do with it but obviously is it becomes more valuable or as they continue to perform it up a much higher level. Then they have historically, then obviously that's going to drive additional value for whatever transaction might occur down the road here.
Sure, Okay, I got that and then obviously.
Small contribution from mid Trans acquisition this quarter.
How should we be thinking about the contribution in Q3, when when they will be in there for the whole quarter and beyond.
Yeah. So it it was small but right now Brooks as we and again not to get off of an accounting. We've right. We are doing this on a net revenue basis, because effectively unitedhealthcare is still has direct line a relationship is those contracts poured over to also go to.
A direct revenue.
Larger revenue basis that will fit in that transition, we'll finish kind of late October early November. So it will still be I would say from our revenue perspective somewhat muted for an annualized basis next year, you'll see a much larger fulsome total revenue basis.
And just you know Brooks I mean, a couple a couple of things about that contract worked highlighting 85% complicated just like our businesses. So there were seeing some of the advantages of that.
And then secondly, we picked up $50 million Medicare advantage and again I couldn't think of a better partner in the area of Medicare advantage then United.
And.
We're going to work very close to one of them in terms of expanding.
That business and then there's a couple other lines of business that were actively involved with them.
And to that we think will obviously broaden are offering as well and again they have been a incredible partner for us so far.
That's great and just following up on that then.
I assume you'd see opportunities with.
Many payers for Medicare advantage.
Pretty broadly utilized across the health insurance marketplace and growing fast.
Yes, we do Brooks and again I think we've been the leader in this space to date and.
We think it's a significant opportunity for us and and again I think we're very well positioned too.
To advantage ourselves to the trends in this marketplace.
Yeah, and just as you think about that business.
The.
Elderly population as opposed to the disadvantage population that.
And your core marketplace.
Contract.
More.
And then pages to you guys.
Medicare advantage market or is it more or less the same.
Fundamental structure.
It's in line with what we have seen her within range of what we see in our our contracts with okay cool.
Yep. Thanks, a lot throw does that help here.
Yes. Thank you Brooks. Thanks, a lot of your support to even like really appreciate you guys coming on board.
It means a lot and obviously Bob has been a long time supportive, but if we appreciate all you guys.
Thanks, a lot.
Thank you we have reached the end of our question and answer session, we'd like to turn the floor back over to Mister Greenlee for any additional closing comments.
Thank you all for participating on a call. This morning, while we won't be on the road for Investor conferences near term given Cobra 19, we will be participating in the Barrington Virtual conference on September 9th.
Lake Street capital Virtual annual Best ideas Conference on September 17th and will remain accessible for one on one Kohl's. Please reach out to our Investor relations firm the equity group, if you're interested in scheduling scheduling a follow up call. We look forward to reporting back to you in November when we release her.
Third quarter 2020 financial results, they safe and have a wonderful day.
Ladies and gentlemen, this does conclude today's teleconference. Once again, we thank you for your participation and you may disconnect your lines at this time.
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