Q3 2020 1Life Healthcare Inc Earnings Call
[music].
And welcome to the one light health care, one medical third quarter 2020 earnings results Conference call.
This time, all participants are in a listen only mode I.
So to speak or presentation, there will be a question and answer session ask a question. During the session you will need to press star one on your telephone.
If you acquire any further assistance. Please press star Zero I would now like to hand, the conference over to your speaker today from Salt sales director of Investor Relations. Please go ahead.
Thank you operator, Hello, everyone and welcome to one medical fiscal 2023rd quarter earnings call.
I'm joined today by years younger than Cherry CEO wonderful and be very tolerant Chief financial officer.
A complete disclosure of our results can be found in our press release issued earlier today.
Well as in our related 48.
All of which are available on our website under investor Dot one medical Dot com.
As a reminder, today's call is being recorded and a replay will be available on our website.
As part of our comments today, we will make forward looking statements.
These statements are based on management's current 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 risk factors in our most recent annual report.
From time to time buyer other reports and filings with the FTC, including our quarterly report.
We believe that the Coca 19, but then it creates particular complexity when it comes to providing forward looking.
We are providing our guidance on a good basis for reasons I think t. recommendations.
We would like to specifically caution investors that our future performance will be harder to predict for the foreseeable future.
Forward looking statements are based on assumptions that we believe to be reasonable as of today's date November 10 2020.
No. It did one medical policy than either we get everything or just the financial guidance provided on today's call unless it is also done through a public disclosure such as a press release or through the filing of a form 8-K.
Today, we will discuss certain non-GAAP metrics that we believe aid in the understanding.
Historical reconciliation to comparable GAAP metrics can be found in todays earnings release.
Finally during the call we may offer incremental metrics to provide greater insights into the dynamics of our business.
He tells me you onetime in nature, and we may or may not provide updates in the future.
And with that I'll turn the call over to a New York So their prepared remarks and to take your questions.
Welcome everyone. Today, we are pleased to share results from fiscal third quarter. In 2020, you had an excellent third quarter, demonstrating strong financial performance across our key metrics and achieving several notable milestones with 511000 members are never sure Kathleen Quirk.
Her surpassed the half a million Mark Q3 membership growth accelerated to 29% year over year with momentum across both consumer and enterprise channels, allowing us to reach our year end membership guidance a quarter early on.
Also surpassed $100 million in net revenue for the first time in a single quarter.
Every 102 million in total net revenue in Q3, which grew 46% year over year.
We delivered a care margin of $42.9 million or 42% of net revenue and positive adjusted EBITDA of 3.5 million or 3% of revenue.
These margin results demonstrate the strong leverage components of our model.
Given the strength of our Q3 results and in the meantime, heading into Q4, we expect to end 2020 with between 530000 to 540000 members and to deliver total full year 2020, net revenue of 362 million to $367 million with both members and revenue.
Exceeding our initial expectations, we started the year.
Our momentum in investments in our member based in technology powered model further supports our work in transforming health care for multiple key stakeholders, including consumers importers.
The recent health network, let US review our member centered in technology powered model supported these stakeholders in Q3.
For consumers, an important numbers or differentiated primary care model supports longitudinal care in population health, both digitally and in person.
Previously shared we enhanced your model throughout 2020, including three to falling approaches.
We launched a healthy together October 19th screening and testing program, we launched remote visits supporting members with schedule the longer video appointments with their primary care provider.
I watched one medical now an expansion of our 24 by seven on demand synchronous and asynchronous digital health solution to employees located outside of our physical markets. We expanded mindset by one medical and behavioral health service integrated within primary care.
We deepened our on demand digital health services, including further extending asynchronous care.
Two new prescription requests sexual health screenings and care for allergies, among other conditions and we added more health network partners to advance our clinically and digitally interconnected system of care for our members.
[noise] owning the complexity of navigating care across time and setting.
Enhance multi modal model of care, it's furthered our reach and impact to the like even more members with your 90 plus net promoter scores.
In addition, she seen continued strong member satisfaction with one medical employers have also continued to recognize the power of our model can support their wellbeing and productivity their employees.
Reduce health benefit spending and facilitate workplace reentry during cobot 90.
Employers can out or services at any point during the year and their program fits within existing insurance networks and is not restricted to watching so when open enrollment period.
We continue to hear enterprise I am sure. They love the one medical benefit and how we support seamless access to care for employees independent.
We'll take a c., we also advanced employee health outcomes and productivity levels, while reducing benefit costs.
As you May recall, you've demonstrated total imports savings of 8% plus in a case study.
Little study published in Jama network opened earlier this year showing 45% in important plastic.
Accordingly, we see or model applying broadly to clients of all sizes across diverse industries and across economic cycles.
During Q3, we began relationships with clients across education financial services Entertainment Krogers media real estate biotech hospitality and the non profit sector among others. Furthermore.
Furthermore, with our healthy together type in 19 program, we are supporting enterprise clients with a clinically driven approach for employee screening testing in medical care.
In Q3 healthy together also drove additional interest from the education sector and drove strong engagement in flu vaccination campaign.
Turning to our providers.
Total sports delivery of outstanding acute and chronic care inbound respective care and outbound population health as well as seamless coordination of specialty care for their health network partners.
We have continued to see are salaried provider model with a streamlined workflows innovative technology attract even more clinicians to our team.
Moreover, our technology platform has been built from the ground up to support outstanding patient care population health and care coordination across time teams and setting.
In Q3, we continued to showcase the strength.
For example, our technology platform and team together with their membership model enabled us to analytically identify members who needed cancer screenings are chronic disease management.
Digitally offering personalized care plans to address such gaps in care and then to engage members to address these care gap today modalities of their choosing in person or remotely digitally synchronous link or asynchronously drink.
During Q3, our population health action items included follow ups on deferred annual exams chronic condition check in cancer screenings women's health issues and immunizations to name a few.
Its population health activation contributed in part to our strong results, while also promoting positive health outcomes and strengthen the value of one medical membership.
I could say about her membership model better help starts here.
During the quarter, we also advanced partnerships with more of the nation's top health network.
Our members employer clients providers and partners have benefited from our clinical and digital integration that facilitate better coordination across primary care diagnostic specialty and acute care setting the.
At the same time, we have helped reduce administrative burden and avoid duplicative testing while facilitating in network access.
Our members appreciate our role in navigating the complexity of health care referral scheduling optimization and the exchange of medical information to their partners.
Imports appreciate reduce wait times for employees improved employee productivity battles and support in addressing employee benefits question.
Health network partnering with one medical can be a more expeditious economical and less risky way to develop coordinated care networks.
We're now operating in 12 markets across the United States up 50% over the last 18 months.
Correct 2020, you have expanded into new markets in partnership with both new and existing health network partners.
Sample last year, we began partnering with provident thinks it should help in Seattle and messenger and this year. We further expanded our partnership into Portland, Oregon in Q1 in Orange County, California in Q3.
We also went live with a new partner in Q3, Medstar health in Washington, DC with that partnership 100% of our members across or 12 markets are now covered under health network partnerships.
Building on our successes in 2020, we already announced plans to expand into five new markets with health network partners and 2021.
New markets in 2021 will include Austin, Raleigh, Durham, Milwaukee Columbus in Houston.
We currently have virtual presence across the nation.
At the end of 2021, we plan to have established physical presence in 17 markets, a 40% increase from our 12 markets today more than double the market from where you were 18 months ago.
Our partnerships and market expansion and provide long runways for growth impact in return they increase their reach and value proposition to companies and consumers, while leveraging our technology and operating infrastructure.
In closing I'd like to share my gratitude to our entire team for their continued efforts in supporting our key stakeholders consumers import providers and health network through their perseverance and innovation, we are delivering a better experience and better health outcomes for consumers, we are improving employee wellbeing and reducing benefit costs.
We're creating a more fulfilling work environment for our providers and team and we're advancing primary and specialty care coordination in partnership with leading health network.
Through these efforts, we achieved new milestones this quarter, serving more than half a million members and delivering more than $100 million in quarterly revenue while at the same time advancing margin and profitability did those falling or advancement. We thank you for your continued engagement in our mission to transform healthcare now let me turn the call over.
Of yarn our CFO.
Thanks for your meal and Hello to everyone on today's call I.
I appreciate the opportunity to speak with you today.
Adam Your notes, we are seeing strong demand in our molecule, which combines in person and virtual kill ambitious cooling to fix the ability to scale. This new service offerings and unprecedented demand spike element boasts 40.
Formation and scale.
Oh employees.
No in office and virtual Platos administrative staff the bottom is technologists and many of those have allowed us to steal from warm and boasts the cost more product offerings, and so more interactions than ever before.
The investments we have made over more than a decade to serve our men boasts enterprise sponsor those employees and health networks give us distinct competitive advantages.
Abled, our strong execution in shoes to the.
And I'll be reflected in our full year outlook.
You have reached a key milestone in our membership count and ended the quarter was 511000 samples.
We saw accelerated growth quarter over quarter in both consumer and enterprise channels reach.
Reaching our young and membership guidance one quarter.
Adam You mentioned key attraction to employers is do you have any ability to turn up on quickly at any point in did you.
As a result, we had continued outsized strength.
This twaddle from enterprise adoption in particular is our customer seeks to improve access to digital and intelligent health benefits dealing COVID-19.
Please keep in mind that our membership count continues to exclude we community memberships for example for frontline will close.
Any paid shorts true enterprise memberships, the down less than 12 months.
And and you build for only one medical now when users, which is a service offering did he is away a little bit to employers in geographies, where we don't have physical footprint.
Turning to revenue.
In total we delivered $101.7 million in net revenue in Q1 to be up 46% year over year.
This includes an income grant of zero point $2 million related to decline by WD Fund established under the Cures Act, which we report is a distinct line item on our personnel.
As a reminder, in Q2, we received an income grant of $2.4 million related to the polite or can be found.
At this point, we cannot predict how much if any additional funds we may receive in the future.
Our membership revenue in Q1 city was $17.3 million, which grew 29% year over year in line with our membership cool.
We delivered net patient services revenue of $40.2 million and partnership revenue of $43.9 million.
Collectively net patient services revenue and partnership revenue grew 50% year over year.
This revenue performance was driven by our strong membership cool.
Well as an increase in total billable service volumes.
As a reminder, all billable services include among others in office visits.
Vaccinations.
And our newly launched service offerings.
As discussed in our last earnings call home at night, you initially cost our billable volumes to decline when compared to levels immediately prior to the pandemics.
Yeah, I think she will be missed away largely cobley no aggregate number of billable services, which for the full quarter exceeded COVID-19 levels.
As you heard me say earlier.
We believe our revenue outperformance was in part driven by our ability to identify gaps in patient care and engage our members to fill these gaps in their way, Dave we fill in person or remote synchronous or asynchronous.
In addition to this pent up demand from do you feel like you know we only deal.
Our strong revenue performance was driven in part by higher than expected demand for COVID-19 testing.
And along the same elite install installed new vaccinations.
One final item I would like to note on no revenue performance.
As discussed on prior calls over the past deal Weve seen an ongoing mix shift of revenue out of the net patient services revenue and into partnership with revenue as we have signed up additional health network partners did to reimburse us on a per member per month basis.
We expect to ship to moderate going forward as all of our men Bose I know cobbled lighthouse network partnerships.
Moving down the piano.
We delivered Q3 key a margin of $42.9 million or 42% of net revenue.
Which represented an increase of $18.3 million over Q2.
This was our highest quarterly key option ever reported EPS demonstrates the leverage that can be done from a revenue outperformance on our largely fixed cost profile.
You know Barry please predictable strong Kim auction results.
Well at the same time, making continued investments to fuel our future growth.
Which included opening our third World you market. This year Orange County in addition to opening additional offices across all existing markets.
And ongoing populations to open new markets in offices going forward.
We have opened 20, new offices, you up to date 2020 teaching us to Honda did well the total offices across our 12 small kids at the end of Q3.
Oh operating expenses below cost of capital and excluding non cash charges, such as depreciation and amortization and stock based compensation.
Assuming he $9.3 million and very possibly flat told you to spend.
As a result of old she was sort of your revenue Tailwinds and expense performance our Q3 adjusted EBITDA.
Was positive $3.5 million or 3% of total net revenue.
Similar to care margin. This was our highest adjusted EBITDA Apple reported.
We are pleased to demonstrate our ability to deliver accelerated revenue growth, which improved operating profitability.
Which was made possible by the investments we continue to make in our people and technology.
Overall, while we do not expect some of our revenue tailwinds in choosing to persist such as pent up demand for do you feel to kill.
We do believe did Oh excuse me results demonstrate our strong and growing value proposition to men Bose as a trusted and convenient health care provider.
Entry employee appliance SDLP, ultimately, providing affordable high quality care and in real time actually couple of solutions to the other two onto book challenges.
Lastly, we ended Q3 with a strong balance sheet and liquidity position.
With $682.3 million in total cash and short term marketable securities.
We have ample capital to continue to fuel responsible though.
And to take advantage of potential dislocations in the market.
No let me take a few minutes to discuss our current outlook and provides 2020 guidance.
Coming off of our strong Q3 results.
No. They are using our membership outlook as we now expect to finish Q4. It was a total membership count in the range of 560000 to 540000 members.
This guidance shows our belief in our strong and growing value proposition to consumers and enterprise customers.
Turning to the PML, we expect to deliver Q4 net revenue in the range of $104 million $209 million.
Q4 kill margin individual $67 billion to $42 million.
And Q4, adjusted EBITDA between a loss of $4 million to positive adjusted EBITDA of $1 million.
This guidance highlights the continued strong demand, we expect for our membership and services as well as our continued investments as we expand our capacity in existing and new markets.
For the full year 2020, Oh Q4 guidance implies that we will deliver total annual net revenue of approximately 362 million to see hundred and $67 million.
Total and won't see a margin of approximately $132 million 277 million bottles.
And totally adjusted EBITDA that approximates a loss of $29 million to a loss of $24 million.
We are encouraged by the trends did we see no business and data. They flex did you know guidance and which put us on a path to deliver higher 2020 net revenue and adjusted EBITDA results can be expected to be co bid as we shared with you on our earnings call for Q4 29 cheap.
At the same time, we also want to acknowledge the uncertainty is domain such as regional differences in profit 19 incident states and associated policies.
As to communities that we still have largely east yeah Shelton please declines.
Well Q4, and full year 2020 guidance assumes dose communities remain open.
And it does not anticipate any you well increased shelter in place the requirements for behavior.
So the more you know several swing factors, which could impact our results suggest to evolving policies for employers schools and universities and the timing and amount of demand for flu vaccines to name a few.
These uncertainties will be quiet for us to continue to dynamically adapt our business and operations.
And maybe potentially also impact our financial results.
In closing.
We delivered a very strong quarter for financial results in Q3 and feel they remain focused on executing against the opportunity ahead.
I'd like to think how long that boasts employees most <unk> most she members and shareholders what do your continued support.
Yes, we've looked we improved the way healthcare is delivered.
One member at the time.
We will now open up the call for your questions.
Thank you as a reminder to ask a question you need to press star one on your telephone switch on your question press the pound key.
The interest of time, we ask that you limit yourself to one question any additional questions. Please reenter the queue. Our first question comes from Lisa Gill of Jpmorgan. Your line is now open.
Thanks, very much and good afternoon, I'm here and be yarn. Thanks for all that detail I just from what I understand a couple of things a little bit better based on your comments one would be around one medical now I can you just remind us how that's accounted for in your membership I and how we how we think about those services.
As I you know again from a revenue perspective, my guess would be that you're not seeing anything there with the enterprise relationships. So that should be coming through I mean, the the net provider side. So just want to understand how that that revenue flows and then secondly beyond just a follow up to your comments around the shelter in place and that we saw the pull through in the third quarter.
Okay, and you don't have an anticipation in the fourth quarter as we continue to see Kobe I cases device and the U.S. have you seen anything change here in the last couple of weeks. This round two people coming into office visits et cetera are they utilizing more virtual care because of that or are you still seeing people come into the office.
Great Lisa. Thank you. This is a mere appreciate the questions and so in the first part of your question on on one medical now is is you may recall.
One medical now was launched to help employers serve employees in all their markets, whether or not we have a physical presence in those markets. We do not count when medical now services as a one medical members. So the membership count we have.
His encapsulated.
It includes just our full one medical members had not our one medical now or any revenues for one medical now would be included in our membership.
Revenue.
In terms of.
Covidien what's happening.
It's certainly hard hard to speculate or what's going to happen I'd say in general, though weve been able to.
See in this quarter kind of great momentum signing up more employers and consumer members.
Across markets and a as you know importers can turn to someone at any point during the year and so we've seen that momentum, we certainly see people coming to us for cobot screening and testing, but also for flu vaccines were seeing people I need a as we mentioned in our prepared.
Remarks to address their gaps.
Gaps in care like their immunizations for themselves or their children were there.
Well person while woman care so.
So hard to speculate what happens going forward, but we've certainly seen momentum on all this.
Thank you and the next question comes from Daniel.
Your line is now open.
Hi, guys. Congrats on the quarter next for taking the question here.
Obviously I think you know you guys will you will play a very important role in.
Administering the Cobi 19 vaccine when that becomes available. So I'm wondering if there's a way to kind of analogize that to what you guys typically see with the administration of the flu vaccine what percent of your members typically get a flu shot out of one medical facility and are you able to kind of use.
That as a way to perhaps perform higher acuity visits.
Yeah, I think they thank you for the question Daniel and.
You know I think a good analogy here is maybe what we've seen with our healthy together a covert services, so far which basically added another proof point to our model people always loved her on demand digital health or in person care as well as their testing services and what we saw with our cobot screening in test.
Services as people loved how they can get on the App.
Book, an appointment or.
Come into an office or come to one of our drive thru locations, where we would do kobin testing and flu vaccination soon.
Two and certainly this is the kind of thing that we've been doing and we believe were well positioned to do the same with the COVID-19 vaccines as they get more broadly.
Broadly distributed.
Thank you and our next question comes from George Hill with Deutsche Bank. Your line is now open.
Oh, Hey, good afternoon, guys. Thanks for taking the call I'm here I guess my question is is it too early to start talking about the selling season for one 121 to employer sponsored customers on.
And I guess, just as a follow up to that can you talk a little bit about how the individual market over the last three months has responded to the Cobi crisis.
People coming in looking for alternatives to the normal way primary care channel.
Yeah, George Thanks for the question.
One of the nice thing about our model is that we can sign up members be they consume remembers or enterprise members at any point in the year and we certainly seen that in in this quarter and in other quarters.
In network with insurance plans and were easy to roll out so importers can roll us out so in that regard, it's less of a selling season than us being able to roll out at any time.
And certainly in the individual marketplace of course, the same thing.
We are in network in the major insurance plan, so consumers can and do sign up at any point.
That that is a nice feature about her benefit that it does not need to be rolled out and hope in enrollment, but can be rolled out at any point throughout the year.
Thank you.
Thank you and our next question comes from Rishi go Wise or Morgan Stanley. Your line is that open.
Yeah, Hi, good afternoon, I have a quick follow up on that one and then my real question. So just when we think about this membership I mean, clearly you meaningfully exceeded membership growth targets. So just to clarify these clients that you did were planning to start maybe in January into Europe.
And to me or they can start whenever they opt to maybe accessed.
Service ahead of schedule <unk> or should we sort of continue to to model. This additional step up in one Q and then my second question. My real question is around Lou you talked about still being a big contributor.
From just kind of like hearing from some from others in the marketplace. It sounds there was pent up demand for food vaccine. So how much vaccine are you assuming in the in the fourth quarter I'm in comparison.
Yeah, Ricky Thank you for the great questions.
I think on the first question in terms of the Q3 and membership growth no Weve continued to see both the consumer and enterprise enterprise membership growth each quarter and sue.
It's it's hard to say if it pulled.
Pulled forward or not we just continue to see great traction with employers and frankly, we've always seen in the past at the fact that we can sell it at any given point in time and certainly can turn on the benefit in any point in time so.
Yeah.
In terms of the membership we continue to believe we can we can sell quarter in quarter out and continuing to see a continued growth there a in.
In terms of the flu, but we certainly have always been involved and engaged in flu vaccination.
Efforts for that consumers and importers so it's some level.
Well there was great enthusiasm in that this year and it isn't actually a new thing to us its things weve.
We've done in the past.
As you know our revenue model has both a membership based revenue and partnership base per member per month revenue as well as patient services revenue and say and that kind of flu vaccine or revenue can flow in different places.
And then there may be puts and takes on that in general, but we anticipate we will continue to.
Vaccinate folks and in due time.
To the COVID-19 vaccination is that becomes readily available.
Thank you and our next question comes from Sean Wieland of Piper Stanley. Your line is now open.
Hi, Thank you and I I, just want to keep digging a little bit on this on the the strong membership count.
I am can you give us a sense was it did it lead more direct to consumer versus employee or did it lead more new market versus existing how many the temporary members that you've had that didn't count towards members convert over to paying members just any kind of context, you can give would be helpful. Thank you.
Yeah. Thanks, John appreciate that you know.
I think one thing to point out is we did sign up numbers a.
Across a range of different enterprise.
Yeah categories. This this time period, including in education, and you know that's including in a kind of.
Middle and high school as well as higher education and universities said that is.
A unique thing that that we've seen and will continue to add to take a look at but otherwise we saw growth across different employer categories.
Financial services Entertainment Commerce media real estate biotech hospitality.
Non profit and said seem that you know across the country in in and across.
Across the accounts, we also see that our model can not only support kind of these traditional enterprise accounting consumers, but but an interesting model to support schools, whether its faculty staff students, whether it's screening and testing a slingshot thinking about allergies asthma.
Andrew will help and all of these needs host of other common conditions that are model, a surge really well I'd say the the other thing too is were seeing uptake in new clients faster than.
Maybe historically.
On <unk> again are modeled to easy to roll out and we're seeing great uptake. So those are some things that weve noticed in Q3.
All right that's super helpful. Thank you.
Thank you and our next question comes from Sandy Draper <unk> Securities. Your line is now open.
Thanks, so much and not all stuck in my congrats on a really strong quarter, so I'll sort of pick it. The one thing that that metric that Didnt look is strong and told love some comment either a mirror or be more on.
On the membership revenue and sort of the implied per member revenue on membership that that Didnt. Obviously members grew at time, but you didnt see quite the same level of at least on a sequential basis. The type of growth in membership revenue. So just wondering any any color on what what drives.
What drove that that'd be great. Thanks.
Yeah. Thank you for for the question, then and Yeah. If you seem to bolt that's a revenue line that will take you back to one of the things to them. You know said earlier today, which is our membership count does not include among other things she wants to.
Short term contracts whale thankfully oftentimes Ah companies came in and said Hey, I need somebody to keep my employees help people in months, so true until I see that this out and you know as some you discussed earlier today gives revenues of this was sort of recorded in that membership revenue line.
So Ah yes. Thank you some of those are I would call it more transactional cost the most.
Decided that Oh, yeah. The pandemic is going on too long and they wanted to do stops testing or stopped some of all a services you see that sort of flowing through that line and therefore, you see a little bit off the oh for different trend in deadline or Dobias steel valley value.
Bullish obviously on what we've been able to deliver I mean, yeah, we've seen a very strong uptick in real value. Please all financial results, but that's why the quarter over quarter comparison of this particular line yeah shows a little bit of fluctuation.
Great. That's really helpful commentary I appreciate it.
Thank you and our next question comes from your lenders Singh of Credit Suisse. Your line is now open.
Thank you and congrats on the good quarter I want to talk about your health system partnership because I believe that's a very critical part of the story here are you guys signed some partnership in Q2, and you've been very busy at all and utilization and the mix up utilization have you seen any changes and there's some economic spicing or the baby's contracts are being structured what's involved there.
Have been historically and a quick little clarification. So you have partnership in all the markets you currently have for them.
We think about 17 markets you would be in next year.
In terms of timing how should we think about you guys locking down new partners in those markets.
So Andrew Thank you so much thanks for the question, maybe starting with that the latter part of your question first that we have fab partners and announced partners and all of our markets, including the new markets. So all 17 markets, we will have 100%.
Ah partnerships and and I think really speaking to the first part of your question. We think our partnership model is a stronger stronger than ever.
And is very compelling all the way around certainly for our members. We are coordinating care across primary and specialty care owning the complexity of care navigating care, avoiding duplicative testing sharing medical records across multiple systems employers like this because they want their employees and frankly productive and working.
Waiting a long time on intermodal I can navigate those patients and also frankly, we show as per the Jama study about 40, 50% lower referrals, because we can handle so much more enough to her and her primary care model for.
For our partners, it's compelling because they're seeing that we could be more.
Expeditious efficient.
And affected wait for them to build the network and certainly we have a differentiated model.
With our membership in our technology as well as our in person care add that connects directly to employers. So I think at some level, that's maybe more compelling than ever.
Health systems look to develop our relationships with employers look to advance digital health.
Look to grow consumerism. So we feel very good about the strength of those those models.
Okay. Thanks.
Thank you and our next question comes from Richard close of Canaccord Genuity. Your line is now open.
Excellent. Thank you congratulations obviously positive member growth here were there any headwinds in the corridors from lay off that you overcame any thoughts on that going forward as well.
Thank you Richard well, it's certainly in our projections we.
Take into consideration any macro.
Macro factors that might might be there and so we feel very good about our performance and we've put forward increased guidance for the next quarter and upped our guidance for the year. So we feel good.
Good about those projections, but certainly there's uncertainties out there.
To keep our eye on them.
Okay, and then as a follow up beyond the no obviously, great improvement in terms of the adjusted EBITDA.
And maybe any thoughts on it if you're reiterating the timeline to profitability and if you could just give us an update on that when you're expecting the crossover.
Yes, absolutely and.
No. We obviously well be pleased to deliver just on keep marching into <unk> adjusted EBITDA that we had and just claudel bossa bleach, but highest quarterly margins that we've been able to report today.
And I teach about our Q4 guidance boasts a little bit back to your earlier question actually on the membership and also on the EBITDA side. It obviously incorporates and we seem to be no today and.
As you know we are still in range of different industries to be Sofia. They each have different geography is yeah, including the not for profit sector, though including manufacturing, including no services.
So we feel like we are pretty well diversified on on on that front and again and we think we can see so far is implemented and part of our Q4 guidance.
And frankly, the same applies to our EBITDA guidance why what adjusted EBITDA guidance for Q4 twin twin.
So I'm sort of thinking beyond that yeah, yeah on a couple of things that I would like to point out obviously some of their revenue tailwinds that we talked about on the call you choose to the we don't necessarily expect them to persist for example, the pent up demand for the threw up kill that we talked about.
And at the same time will also going to keep growing and investing in our business you know you.
You noted Weve announced five new markets for next year, and we'll continue to invest in our technology and you know a physical footprint both in those five new markets as well as no existing markets. So generally speaking we continue to believe to deal with each sort of sustained adjusted EBITDA.
Probably keeping it on July 22.
Okay. Thank you congratulations.
Thank you and our next question comes from Ryan Daniels William Blair. Your line is now open.
Yeah, Thanks for taking the questions and congrats on a great quarter I wanted to go back to some of the commentary you mentioned on the preventive care campaigns now I know the organization is constantly innovating and always does he type of campaigns, but I'm curious if that.
As more of a focus in this quarter given the pandemic and some of the gaps in care the probably emerge earlier in the year with people not getting the preventive care they need it. So number one that's a question number two.
Anything new that you're doing on the analytics front door or data management front to enable you to better screen these patients and to determine what type of care gaps they might have thank you.
Ryan Thank you for the question so.
And a number of points you're absolutely correct. We have always done population health and always leveraged our technology to analyze their members into reach out that were always advancing those analytic models, including our machine learning models, which increasingly are kind of on their own analyzing the gaps in care and then.
In many cases are all have automated follow up.
In those gaps he helped close both so we absolutely have been advancing our technology to do that kind of in a more automated fashion.
And because we have this very high membership engagement and frankly, because we have the membership model. We have members engaged in our technology to follow up now we certainly saw I'll say some rising gaps during a lot of the shelter in place where people put off routine care like Pap smear.
As or immunizations, or other well person care or chronic disease care. So certainly the sell some widening if you will of gaps in care and that that we close. So it was a combination of deferred to care advancing your population health and advancing our technology to be able to do that in automated fashion.
Thank you for the color.
Thank you and our next call.
Question comes from Matthew Gilmore Baird. Your line is now open.
Hi, Thanks, I'm, you're talked about a greater diversity in the types of new employer clients that you're bringing on board I was curious if the buying decision for these new employer clients is any different than some of the legacy clients and in particular, if some of the savings studies like Jim always having any impact on the decision making.
These newer clients.
Yeah, Thanks, Matthew and.
You know I think we just continue to add proof points to that model, a kind of more and more reasons to purchase so certainly the Jama article with a seminal article not just for us but in primary care animal model of primary care showing.
Showing this 45% reduction in costs. So that is certainly a compelling to employers. He you know across economic cycles are saying, hey, how can I better manage my health benefits here is a model that does that certainly.
Certainly things like that are helping together for cobot screening and re entry has been powerful and testing and vaccinating, including for educational institutions and other there's others that are trying to reopen manufacturing I'm. So those are compelling for some it's been also in it.
Gration of medical and behavioral with our mindset behave.
Behavioral health programs integrated into primary care.
For others, it's been one medical now adds incremental benefits such that I'd multi geography employer can turn on the one medical program with kind of a semblance of benefits parity across the country with everybody having access to that on demand digital health.
Now we've also as I mentioned in my remarks, I did more of our asynchronous on demand capability things like new prescriptions addressing a sexual health conditions or allergies, just making it easier for more members to access a and as for the pride prior question, adding more pop.
Relation health capabilities. So we continue to nudge people follow up with them assist them in in in living healthy or healthier lives. So.
All of these.
Continued advancements in or benefits, just getting more and more reasons are more and more proof points.
For in importers and other institutions to join in for consumers to continue to join.
Okay. Thanks, a lot.
Thank you and our next question comes from Steven channels as TV Leerink. Your line is now open.
Good afternoon, guys. Thank you for taking the question I just want to make sure I understand sort of the moving pieces that patient service revenue in partnership revenue. If we kind of look at those amounts per average member on the net patient service side. It was down just about 7% year on year, which would be the smallest decline we've seen going back years despite that.
That's been playing out so I guess my question would be how much room is there to drive that metric up and more specifically in what ways kind of paying eat. The fact that the hospital partnerships are in place now covering most markets and any color on maybe what you think the amount of pull forward of revenue that number beyond that you just mentioned would be helpful as well it kinda can.
Firstly on the partnership side, just thinking about that same per member metric or we had a run rate now at 100% of members are covered by partnerships or does that could that actually go higher still.
Yeah. It's a good question yeah, when you take a step back as you know.
Although health network, a polyp knows tend to pay us in one or two ways Ah yes.
Continuing to pay us on new fee for service basis, what they pay us a fixed PMPM a fixed per member per month basis, and they're all structured <unk> did a bit differently each from each other but well big picture wise, but those are the two models.
And what we've seen in Q. So the frankly as it results among other things off a us entering into health network partnership in Washington, D.C. dead, what's sort of the remaining membership that'd be half it was not cobbled on Doe health net book.
<unk> ownership so.
And.
In this particular market. For example, we are getting paid on a PMPM basis. So what that does to all what that does to our revenue basis is it sort of moves the revenue out from the net patient services revenue line item inserted partnership revenue line item and given that we now have 100% of all.
But she covered under Dos health net book <unk>, most really other than if you want to put it that way sort of that the annualization already quarterization, often one big shift in between to quality, though we do seem to be at the end of offset secular shift.
So Ah you know really from you on out if you see shifts in between those two line items. It's really a question of mix shift in between geographies and Dennis is that you know each individual of relationship has.
As its own separate ins and outs, but big picture wise really view at the end of that shift and we are now you know if you now see a shift is going to be driven by by a relative change in geographic mix for the most though.
Great and just a patient service I know there.
Yes, so the net patient service revenues, obviously, you all set off that light so to the extent that we have independent had health system partnerships that we've signed up digital revenue Aldo Aldo the net patient services revenue side into the.
Partnership revenue line item now again, if we keep growing in some of our markets you'll be keep being paid on easy for service basis, obviously deadline item they'll continue to grow and we obviously are looking to grow in all of our markets, including no fee for service markets.
And then yeah, those are really sort of to the big picture items. So I I really expect things to be both line items to continue to contribute to a a little glow feel as we laid out for our Q4 revenue guidance.
Thank you.
Thank you and ladies and gentlemen, this does conclude our question answer session I would now like to turn the call back over to Mr. Rubin for any further remarks.
Well, thank you I'd like to thank everybody for joining us in the call today for your great questions into our model and for engaging with us in transforming healthcare so have a great day and we look forward to the next occasion be well everybody. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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