Q4 2020 Evolent Health Inc Earnings Call
Welcome to Evelyn Health earnings conference call for the quarter and year ended December 31st 2020.
As a reminder, this conference call is being recorded.
Your host for the call today is Mr. Seth Blackley, Chief Executive Officer of Apple and health.
This call will be archived and available later this evening and for the next week via webcast on the company's website and.
And the section entitled Investor Relations.
There is some important introductory information.
This call contains forward looking statements under the U S. Federal Securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historic historical experience or present expectations. A description of some other risks and uncertainties can be found and the company.
As reports that are filed with the Securities and Exchange Commission, including cautionary statements included in the current and periodic filings.
For additional information on the company's results and outlook. Please refer to its second quarter News press release issued earlier today.
As a reminder, reconciliations of non-GAAP measures discussed during today's call to the most directly comparable GAAP measures are available and the Companys press release issued today and posted on the Investor Relations section of the Companys website I are thought of what health Dot com.
And the 8-K filed by the company with the SEC.
Earlier today.
At this time I will turn the call over to the company's Chief Executive Officer, Mr. Seth Blackley.
Thank you and good evening, and Seth Blackley, Chief Executive Officer of everyone's health and I'm joined by John Johnson, Our Chief Financial Officer.
I'll open the call. This evening with a summary of our recent results, including an update on the key themes of our strategic plan, which are one strong organic growth to expanding EBITDA margins and three optimal capital allocation net.
Next I'll provide an update on the market and macro environment.
Afterwards, I'll share insights and highlights from across the business and.
And how our differentiated solutions drive value for our partners I'll, then hand, it to John to take us through a more detailed financial review of the fourth quarter and full year, 'twenty and 'twenty results as well as provide 2021 guidance I'll close with an update on the organization and a summary of our key focus areas.
As always we'll be happy to take questions at the end of the call.
I will say that before turning to the financials that we are very pleased with our strong 2020 results and we feel we are well set up heading into 2021.
In terms of the financial overview and results for the quarter total revenue for the quarter ended December 31, 'twenty and 'twenty increased 15% to $271 9 million for the comparable quarter of the prior year adjusted EBITDA for the quarter ended December 31, and 2020 was $16 1 million.
Per to $8 2 million for the quarter ended December 31 2019.
Revenue increased 28% to $1 billion for the year ended December 31, and 2020 compared to $846 4 million for the year ended December 31, 2019, adjusted EBITDA for the year ended December 31, 2020 was $41 4 million compared to negative.
11 million for the prior year period.
As of December 31, 'twenty and 'twenty, we had approximately $3 6 million lives on our full platform plus an additional $6 2 million lives on our new century technology and services suite platform.
Overall, we're pleased that we executed on our key financial objectives for the year.
Next I'll provide an update on the status against our strategic plan with.
With respect to the first theme of strong organic growth, we continue to be on track and <unk>.
<unk> or exceeding our target growth rates, our differentiated products and strong market momentum led to strong performance through new partner additions and same store sales growth in 2020.
We added eight new payer and provider partners, and 2020, including Florida Blue Medicare neighborhood Health plan of Rhode Island and <unk>.
Health physicians accountable care of Utah and Molina.
This was at the top end of our six to eight new partner target and it demonstrates the diversity of our partner base and the depth across our services business.
And we continue to be on plan for our growth objectives for 2021 and beyond as we utilize our core solutions to drive value and the marketplace. Today, we're excited to announce our total cost of care solution and won't care partners has entered into partnerships with two new regional physician groups and large msas and encourage.
By the high growth potential and news respective markets given the strong clinical reputations and historical performance of these two physician groups. We continue to see demand for ethanol and care partners offering and the risk bearing total cost of care market by partnering with efficient high quality physicians, we unlock incremental value and build opportunities with these physicians.
And led organization, because we'd expand geographies.
In addition to these new partnerships have on care partners and expanded regionally, we increased our lives under management and the state of Texas by entering into a three year renewal with Blue Cross Blue Shield of Texas commercial.
Including the payer and provider network expansions announced today, our total lives under management for everyone and care partners for 2021 is up to approximately 90000, which represents 40% growth from 'twenty and 'twenty and a large base of total lives under a total cost of care arrangement like this.
Furthermore, we are seeing strong same store sales growth with our specialty management platform, New century, health, which successfully expanded with centene and several markets and the fourth quarter of 'twenty and 'twenty.
We are pleased to report that as of December 31, 2020.
Nine Centene plans are using our new century health technology and services suite, and we expect to add more states in Q1 2021.
In addition to expanding geographies. We've also added pediatrics and radiation oncology management services and related fees to select Centene markets, adding scope, we believe will enhance the value and rois for our partners.
Our momentum and our pipeline remains strong we see our solutions are increasingly in demand and the market and therefore, we have good visibility into 2021 with.
With the two new physician groups announced today, we're also well on our way towards our target of six to eight new partnerships and a diversified cost our solutions for 2021 and towards day long term growth target of mid teens organic topline growth.
Turning to our second strategic theme of expanding margins, we continue to make progress on our cost reduction effort in line with our expectations over the course of 'twenty and 'twenty, we're able to drive scale and reduce costs to expand EBITDA margins and achieve positive cash flow ahead of schedule.
Looking at the fourth quarter, our financial results exceeded our guidance driven mostly in part by strong results and our performance based arrangements, which John will discuss in more detail on a few minutes.
Continuing to deliver strong operational and clinical performance for our partner organizations, coupled with our dedicated overhead cost initiatives, we believe will position us to drive enhanced margins and 2021.
We're also on track to reach our medium term goal of mid teens EBITDA margins.
Finally, with respect to our third theme I want to provide and update on our strategic portfolio and balance sheet optimization and <unk>.
<unk> 'twenty and 'twenty, we delivered on our commitment to further focus on our core and exit the health plan businesses that we've now monetize or entered into agreements to monetize all health plan assets.
We closed the passport transaction with Molina and September 2020, and the lighthouse health transaction with anthem closed on February one 2021.
As previously announced at the J P. Morgan Conference, we've entered into a definitive agreement to sell true health and Mexico Health plan to bright health care and.
And entered into a definitive agreement to sell assets of Miami Children's health plan to anthem.
Both of these transactions are expected to occur during the first half of 2021.
We're confident that in aggregate the capital return from all health plan investments will exceed the capital invested and and the case of Molina and bright the transactions have led to ongoing services arrangements as well.
And monetization of our plants and our disciplined cost focus and allowed us to Delever, we paid down our senior term loan on January eight and as of today, we have a strong cash position and no senior debt.
In conclusion, we've made significant progress on our three key focus areas. We remain focused on our high growth services business and the strategic optimization supports our path to mid teens EBITDA margins.
Okay.
Before providing updates across the business I'd like to touch on what we see and the overall macro environment and how they need to control health care costs is continuing to drive strong momentum and the market.
First with the by the administration, we're seeing renewed energy to fight Covid.
Protection or expansion of the Affordable care Act and Medicaid populations and acceleration of the adoption cost reducing measures that will be a tailwind for solutions.
Second the erosion of the federal and state tax bases, and increasing pressure on Medicare and Medicaid budgets cause and CMS and state governments to continue to focus on ways to accelerate cost reduction.
Medicare part a trust fund and solvency is projected to occur and three to five years and we feel this pressure and similar pressure on state budgets will further accelerate the move to adopt solutions like ours.
Continued support of two sided risk is very encouraging for our partners and evergreen programs like and that's S. P pathways to success.
Newer models, such as direct contracting and the geographic model are likely to accelerate as those model designs are refined.
And we therefore view these as promising long term opportunities as well.
Third and finally, the combination of unemployment are challenging and risk coding environment for Medicare advantage plans and higher post Covid health care costs for accelerating sales opportunities across the business.
In summary, the macro environment is favorable and we feel that everyone is well positioned to take advantage and these trends.
Turning to our business updates I want to highlight achievements and recent activities across the other one solutions.
First new century health, our specialty management offering focused on managing the cost and quality of cardiac and cancer care continues to build across geographies.
Nope and through cross sell.
In addition to the Centene market expansion as mentioned earlier, we're pleased to announce new century health is now live and Florida, Blue Medicare and Molina Health care for Kentucky, and Molina, Washington is on track to launch later in the first half of the year.
And the uptake of our previously announced new century light technology solution was very strong across 'twenty and 'twenty was $6 2 million lives on this platform by December 31, 2020 and.
John will discuss in a moment given the rapid expansion and this product we will now published this membership separately.
From the lives on our full platform under the technology and services suite moniker.
Second everyone care partners, our total cost of care management offering focused on a provider driven population health approach to improve quality and lower costs continues to achieve strong provider engagement and clinical outcomes mentioned earlier, we're excited to expand our physician network and health plan partnerships and our existing.
Markets, we now have over 1000 physicians and our network managing approximately 90000 lives, which is approximately 1% of the total lives and in these regions.
And 90000 lives represent over $900 million and annual premium equivalent under management for 2021.
While we don't recognize gross revenue on this $900 million, our net EBITDA opportunity for Apple on care partners is based on a combination of fixed fees and the savings generated on the entire $900 million and premium.
Across 'twenty and 'twenty, our performance and Neville and care partners exceeded our expectations contributing to our positive Q4 results. We view this solution as a strategic opportunity for 2021 and beyond.
Our decade of experience, leading the market and population health provides three major differentiators that drove these physician groups and select definitely care partners over the alternatives and the market first got proprietary technology platform identify provides physicians with real time information and automated reporting allowing them to identify the most vulnerable patients and the highest prior.
Please.
And as an example, we launched a new module in 'twenty and 'twenty called panel insight and prioritizes and scores and all the critical interventions for each physician practice.
Prioritization makes it easy for the practice to focus on the highest yield interventions, including risk adjustment and clinical interventions across our suite of proprietary clinical programs. While also understanding GAAP goal for reaching target and Max incentives for those physicians.
Second our clinical program strategy is based on a personalized approach to population health and targets impactful patients are care advisers and community health workers are and direct communication with patients and providers to avoid readmissions increase engagement and coordinate preventable care. We act as an extension of the physician office and the <unk>.
<unk> group can remain independent, while providing better care at a lower cost.
Third we have a proven track record of success and enabling providers to drive cost savings and deliver superior quality care and.
As a reference point for the value created by the Evelyn and care partner solution CMS recently announced that for 2019, the five acos that everyone's supported and the Nextgen ACO program earned a combined $84 million and savings for Medicare receiving share and saying that's savings payments of more than $66 million.
In addition, they outperformed other acos and the program on average savings by approximately 40% as well as outperforming on quality scores and next Gen. ACO program is a good example of our total cost of care solutions proven track record and can be leveraged with private payer populations, where we're beginning to gain traction.
And as previously discussed as well as with other future CNS programs such as direct contracting.
And finally, everyone health services art administrative simplification offering.
Focus on helping payers streamline operations and provide outstanding service to members and providers continues to achieve strong operational performance with current and new customers. We're on.
Also pleased to share the team led a successful launch at Maryland Physicians care, which went live on January one 2021 to support more than 200000, Medicaid beneficiaries and Maryland. Recent go live exemplifies the unique value provide health plans and risk bearing and providers, a couple and our industry, leading clinical solutions with our.
And administrative solution, our intense focus on machine learning drives cost savings for our customers and ultimately lowers the cost for consumers.
Overall, we have confidence and our performance and we feel we're very well positioned entering 2021.
Before I turn it to John and I wanted to provide a preview on how we'll be organizing and for 2021.
What are the expected divestiture true health, we will reorganize our services business into two segments the for.
And this will be clinical solutions, which will include our specialty management and physician oriented total cost of care solutions, along with new century health and care.
Care partners and brands.
The second segment will be everyone health services, which will house, our administrative simplification solution and certain supporting and population health infrastructure.
We will begin to report the results of these segments with our Q1 2021 financials with that I'll turn it to John to give additional details on our financial performance as well as to provide guidance.
Thanks, Seth and good evening everyone.
Overall, we're pleased with our achievement relative to our 2020 financial goals exceeding the high end of ranges for both our revenue and adjusted EBITDA targets. Our consistently strong results across 2020 demonstrate our commitment to execute against our attractive financial model and we carry that same disciplined momentum into 2021.
We entered 2020 with high visibility into our base and strong revenue growth and.
As Jeff mentioned, we exceeded our growth expectations, adding eight new clients throughout the year and addition to driving strong same store growth.
For the full year of 2020, we had revenue of 1 billion, including $925 million and services revenue, which represented 34% organic growth and services over 2019.
On the bottom line, we achieved sequential improvement across the year, primarily due to strength and our performance based arrangements and continued focus on cost control efforts and.
Adjusted EBITDA for the full year was $41 4 million for $4 one per cent of revenue, representing a 535 basis point improvement over our 2019 adjusted EBITDA margin.
This profitability expansion combined with a disciplined approach to investment and capitalized software development for.
Our other allowed us to achieve our positive free cash flow target for the year.
And the fourth quarter, specifically, our strong revenue and adjusted EBITDA result was positively impacted by the higher than forecasted shared savings and our performance based arrangements and lower than forecasted medical utilization driven in part by the ongoing coronavirus pandemic.
While we expect the pandemic to continue to add volatility to the industry and the near term the underlying earnings power of our business driven both by our growth and our operating cost containment efforts continues to be strong.
Now let me take you through our detailed results for the quarter before turning to guidance.
Beginning with our consolidated fourth quarter results revenue increased 15% year over year to $271 9 million, mostly through the impact of new partner additions and cross sell and.
Adjusted EBITDA grew to $16 1 million relative to $8 2 million and the same period of the prior year.
Adjusted loss available for class a common shareholders was minus $26 million for minus one cents per common share for the quarter compared to minus $5 8 million for minus seven per common share and the same period of the prior year.
Turning to our fourth quarter results by segment and our services segment fourth quarter services revenue increased 28% for $246 5 million up from $204 million and the same period of the prior year.
The increase and services revenue was primarily driven by new partner additions and cross sell expansions within our existing partner base.
Adjusted EBITDA from our services segment for the quarter was $20 4 million compared to $6 5 million and the prior year.
Turning to our true health segment, which we have entered into an agreement to sell to bright health, we had premium revenue of $30 2 million and the fourth quarter.
Claims expense as a percentage of premium revenue was 82% and the fourth quarter and increase of roughly 10% over the first nine months of the year and reflective of both on modest bounce back of medical expenses as well as a premium deficiency reserve accrual that was taken against the plan that are alive and fitness.
Adjusted EBITDA from true health for the quarter was minus $4 3 million.
Turning to the balance sheet, we finished the fourth quarter with $355 3 million and cash cash equivalents and investments, including $119 4 million and cash held and regulated accounts related to the wind down and passport.
Excluding cash held for passport disrupt and does that $235 9 million of available cash and increase of $76 9 million versus the and the third quarter and principally driven by our strong adjusted EBITDA performance as well as 64 million and cash returned from passport and the quarter.
Cash deployed for capitalized software development and the quarter was $5 9 million.
Two January events to note on the balance sheet for.
First we repaid our $75 million term loan with Ares Capital Corporation with the associated warrants granted to Aries from our December 2019 financing also retired and cash we.
Also received an additional $20 million and cash from passport and early January.
Pro forma for these two items, our 12 31, and 2020 available cash balance was $157 3 million.
We have no other outstanding senior debt in place today and assai.
And the $27 million balance on our 2021 convertible notes, we have no other debt maturities until 2024 and continue to expect adjusted EBITDA less capex to be positive and 21 and beyond which will give us the ability to invest and differentiating our core services, while maintaining a strong balance sheet.
And important strategic achievement across 2020 was the development and rapid expansion of our technology and services suite for oncology and cardiology.
This product delivered strong ROI for our partners at gross margins that can be three to five times higher than our dominant performance suite offering.
In addition to driving attractive margins from.
Our go to market perspective, this offering gives us the opportunity to demonstrate the value of our platform and new partners, serving as a foothold for further expansion and.
And to potential upsell to the performance suite.
By the end of 'twenty and 'twenty. This platform was deployed across health plan partners covering $6 2 million lives at an average fee of 40 per member per month.
Given the strategic importance of this product and our portfolio.
We will delineate these lines separately and we announced lives on the platform each quarter going forward.
On a full services platform, which includes members on the new century health performance suite.
And as of December 30, <unk> 2020, we had approximately $3 6 million lives up modestly from $3 5 million in Q3.
Our average full services platform P. M. PMT for the quarter was $22 65, compared to $17 55, and the same period for the prior year.
Turning now to our 2021 outlook with a signed agreement to sell true health, New Mexico, We're making some changes and how we report on our financials for 'twenty and 'twenty, one to provide greater depth and transparency on the business consistent with our evolving strategy.
Does that and we are reorganizing our services statements into two reportable segments, and we are adding the new century Tech and services numbers and this separately reported membership number.
True health segment financials will be reported at the discontinued operations held for sale beginning with our Q1 results and as such we are only guiding for our services business.
On the topline we come into the year with strong visibility to exceed 20% organic growth and the services business, excluding passport and facts, we have over 95% visibility into the midpoint of our revenue guidance.
In terms of profitability the progress on our cost work combined with the strength of our performance based arrangements, we will increase our adjusted EBITDA, even on top of our outperformance in 'twenty and 'twenty. Despite the disposition of passport.
Specifically the midpoint of our 2021 guidance projects, an incremental 120 basis points improvement over our 2020 results.
These profitability initiatives also set us up well for future margin expansion according to our plan.
Looking across the year, our inter quarter EBITDA will vary as the usual based on timing of new partner go lives shared savings revenue recognition performance based economics and other factors.
Now, let me turn to guidance for the full year, we expect total revenue and $830 million to $880 million with respect to full year. Adjusted EBITDA, we are forecasting a range of $40 million to $50 million for the <unk>.
First quarter, specifically, we are forecasting total revenue of $205 million to $215 million.
And finally, we are forecasting adjusted EBITDA for the first quarter of 10 to 14 million and with that I will turn it back over to Seth.
Thanks, John.
I want to close with a few updates on our organization as well as a summary of our key messages.
And at the organization, we have a very strong leadership team in place with decades of experience and a deep bench to execute on the key themes of our strategic plan.
That only continues to be a destination for health Care's top talent and talent will continue to be a differentiator for us.
Our focus on employee engagement strong individual and leadership development and transparent communication has allowed us to retain top performers across the organization as well as achieve a firm wide engagement score for close to 90 per cent for 2020.
This world class talent gives us a long term competitive advantage and a strong culture.
As a mission driven organization our company culture reflects an atmosphere of respect honesty and humility.
Government recently received a perfect 100 score on the human rights campaign Foundation's corporate equality index for 2020.
Across 2020, we also appointed a diversity equity inclusion and leader and have fostered the development of eight business resource groups for employees that focus on promoting inclusion edgy.
And educate and unbiased and culture and supporting the Eni initiatives.
Also proud to report that our newly launched firm wide inclusion score debuted at close to 90 per cent and trended positively across the year.
In summary, John are honored to work alongside our deeply talented and dedicated team and executed on our strategy of driving strong for.
Organic growth and achieving our mid teens growth target with our differentiated solutions and <unk>.
Scaling the business to drive enhanced margins and third and efficiently allocating capital on.
High level of visibility into 'twenty and 'twenty, one gives us strong confidence in achieving our targets for the year.
Thanks to everyone for participating and tonight's call without will and our formal remarks, and we're happy to take questions.
Thank you for what I'll begin the question and answer session.
And I ask a question you May Press Star then one on your Touchtone phone.
And if you're using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Ryan Daniels with William Blair. Please go ahead.
Yeah.
Yeah, guys. Thanks for taking the questions and for all the color.
I apologize if you hit on this and the prepared comments on another call. So hopped on late but it seems like a lot of momentum lately and physician partnerships versus health care systems, and I know the market in general with risk bearing and appears to be shifting a little bit towards doctor groups. I'm curious if you can comment on that phenomenon and what it means to ever went and how that's rare.
And anything in your pipeline and close rates.
Yeah, Ryan happy too.
I think youre right within our provider sales segment, we are selling more frequently to physician groups and particular independent physician groups over the last couple of years and that's based on the last decades and experience, where we've had some experience on both health systems and physician groups and have.
We have found is that the slightly more nimble entrepreneurial nature on the physician groups and the kind of starting point they have.
Without the health system assets allows them to be more aggressive at attacking the total cost of care.
And when you look at the results that we're getting and and the Nextgen ACO results and that sort of thing kind of proves out that point and so we have shifted our sales activities over the last few years in that direction and got a lot of success I think particularly and the last 12 months to 18 months as you've heard lots of announcements on this category Ryan.
Two new groups that we signed and we announced today are good examples of that and I think that I won't care partners business now is as a unit and when you think about $900 million and premium we have an opportunity and.
And EBITDA opportunity on that entire $900 million based on the savings off of that premium and so obviously, having efficient align providers is critical to that and we.
We couldnt feel better about the setup, we have and I think you'll continue to see more down the position sector overtime.
That's very helpful. And then just in regards to the new metric you reported Tonight on the new century Tech.
<unk> technology and services platform is that $6 2 million exclusively been newer kind of lighter version of the offering that you launched this year or does that include lives from the the.
Coroner century that or and that as well.
That's the newer the newer platform.
Ryan and it's you know look I'd, just say, it's a bright spot across the year. We had several bright spots I think this is one of them.
It's a nice way to rollout quickly across the larger plan and it has a nice margin profile and then it creates a really nice opportunity for us to come back around on those $6 2 million lives and.
And have opportunities around the full performance suite.
Which you know is the Florida Blue relationship that we announced last year as an example of that and so it's a nice kind of one two punch that and setup with the rollout of this light product.
Yes, I guess, it's just.
And my math, if it's right it seems like about $30 million run rate, which seems.
Very impressive for a product you just launched less than 12 months ago. So I don't I don't know if he would agree with that math, but is it around that $30 million run rate.
Hey, Ryan This is John your math about right and.
And yes, we're very pleased with the rapid rollout of.
And and expansion of that product.
And then last one for me, how how and how should we consider the pipeline there versus kind of the core new century, I mean, we've talked about this and the past, but I'm curious now that they have this lighter stars starter version of more clients or perhaps looking at this is afoot and the water before they go Oh and says it all cannibalizing other sales.
Or do you think it is incremental because youre getting a client base that otherwise might not have approached or services. Thanks guys.
Yeah, sure Ryan to setting and I can take that yeah, we view it as incremental.
And if you look at where we rolled out these lives a lot of it with some of our national relationships and the larger payers and what's nice about it is that you can you can go across the country state by state very quickly you don't have to align on what a benchmark is which you have to do for the performance product and that takes more time. So you can kind of get to a place where the math.
There's a lower P M P M and higher margin, but a lot more lives and then we will.
We will see opportunities to come and behind and set up the full performance suite as a follow on.
And.
The Affordable example, which I mentioned and then it goes and example, where that's only 125000 lives is $75 million of revenue and so it doesn't take many of that $6 2 million to convert over to make the whole thing work really well.
So we view it as additive and really.
Really excited about it.
Okay, well I congratulate you on a great year and all the success and the progress you've made thanks so much.
Thanks, Ryan and I appreciate it.
Our next question comes from Robert Jones with Goldman Sachs. Please go ahead.
Great. Thanks for taking my questions and this is Jack rogoff on for Bob and I apologize and so I jumped on late.
I guess, our Centene and Molina, the only customers of yours that are using new century white or are there others that are also and this group.
No we have a couple of others and.
Within within some of our partners they may have a little bit of both right.
Some performance and somewhat dependent on the regions and the markets.
Got it and that makes sense and then I apologize if I missed this but how do you define the full platform is that the full suite of new century or is that the full suite of Evelyn services and some sense.
Trying to delineate if that's like Oh.
Pure new century lives or is that more of a broad bucket.
Yes, the full platform life. Jack This is John and think of that as our traditional life metric. So that's inclusive of new century performance suite lives as well as the Avalon care partners lives otherwise on the administrative platform and so on.
Perfect, that's what I thought and that makes sense and then last one for me I guess did you disclose what specific programs they'll be supporting with these two new regional physician groups.
It's our it's our total cost of care management solution, which as you know.
Focus on the clinical side and the clinical work of reducing the total cost of care on the total premium dollar.
For for Medicare lives. So it's sort of a 10000 dollar annual per member number that we run out and it's a total cost of care clinical solution.
Makes sense, thanks, a lot.
Welcome Jeff.
Our next question comes from Charles Rye with Cowen. Please go ahead.
Yeah, Hi, this is <unk> on for Charles.
A question on N C H so it.
It looks like it's been having a lot of success there on the payer side with.
With just the oncology and cardiology solutions. So curious if there are any other high cost high acuity practices that youre exploring to maybe expand the N C H platform.
Yes for Calix, Seth I can take that.
We are thinking about it right now we're very focused on cardiology and oncology because we still have actually quite small market share nationally. If you think about the number of lives relative to several hundred million life opportunity. So the first opportunity is to expand market share with those two but certainly.
On the approach that we're taking to do and this management, which is I would say provider led and a way that maybe some other traditional specialty management offerings have not been I think does resonate and other areas and it's something that eventually we will do.
And the timing as you know.
As later and right now we're focused on cardiology and oncology.
It makes sense.
And then you know.
And I know with Centene and Molina and they both have a big presence and the exchanges I'm curious if and with any of the other payers you guys have as well.
And if there would be any benefit to the business from the special enrollment period, which could add new members or anything from enhanced subsidies.
Cross your partnerships do cover any individual lives and is any benefit there reflected in your guidance.
And.
Hey, Kyle this is John and.
So we do have individual business on the platform.
And so certainly if there were a bump and membership there.
It could be beneficiaries of that.
I would not expect that to be significant it's a reasonably small portion of our business and.
But we do have individual members on the platform.
Great. Thank you.
Yeah. Thanks for question.
Our next question comes from Sean Weiland with Piper Sandler. Please go ahead.
Hey, Thanks for the question and this is actually Matt Shea on for Shaun.
It seems like we've been hearing more about specialty management on earnings calls and curious if you see the competitive environment changing meaningfully.
And how you kind of think you stack up against other programs and the competitive space, maybe C. B S's oncology management program for example.
Yes, Matt.
So.
I would say, we have not seen and meaningful shift and the competitive landscape.
The focus of our work is very deep, obviously youre on oncology and cardiology. There are some other players that I would say our broader.
Evercore might be and example.
And our.
Our work tends to be a dip.
Differentiated by our ability to drive outsized cost savings based on our focus in these areas I think the good news and particularly for oncology and such a pain point and the payer community and the trends are so high.
That.
Been a dedicated focused player that provides differentiated results is I think a good a good spot to be in and so generally comp.
Competition is not the main issue we run into so we feel we feel good about the outlook for that solution and both for.
Oncology, but also for cardiology.
Okay, good to hear and and then with the leaf and Blue Cross Blue Shield Board addition, did that play any role and expanding the partnership with Blue Cross Blue Shield, Texas, and maybe stepping back and bad how should we think about further penetration with the blues plans.
Yes, I mean, its interest and we have obviously.
Couple blue relationships now out of I think 36 total so in general the way to think about it is that there is close to a 100 million incremental lives that are available that we want to do our best to go serve debt that community.
And that network, we're building credibility there.
And it comes addition to the board is an important part of that but you know a lot of the work is frankly do on a great job for Florida, Blue and having that word of mouth go out to the other plans and so we're pretty focused right now on execution supporting our partners that we have and doing a fantastic job. So that the references are the place we want them to be and I think that's good.
And b, the probably the biggest driver of our of our success and the Blue segment and we're off to a good start there.
Okay got it thanks for the question guys congrats on the quarter.
Thank you thanks.
Again, if you'd like to ask a question. Please press Star then one our next question comes from David Larsen with <unk>. Please go ahead.
Hi, Congrats on a good quarter can you maybe talk a bit about the impact that COVID-19 is having on your book of business and you're selling efforts.
And Theyre more pressure on state budgets for example, and is that pushing you into the Medicaid market on and and <unk>.
Continue to be receptive.
And any thoughts there. Thank you.
Sure David So I'd say in general the Covid impact is pretty modest for us overall.
On the sales side.
No.
The increased pressure that you describe on the budgets I think will help some over time.
So that's probably a slight positive going forward on the kind of performance side and our ability to execute COVID-19 COVID-19 adds volatility to life right.
In general, it's probably a slight tailwind to us and 2020 for 2021 day that it's probably more neutral and.
I would say in general all the the guidance. We gave you obviously reflects our views on all of this and the fact that it's pretty modest overall for us.
Okay I appreciate it and.
I hopped on a bit late sorry, if you've covered this but with the Molina.
And some potential for new century health have you have you sized that like and.
Any thoughts there thank you.
We haven't sized it I mean, we were alive and Kentucky, we're going live in Washington, and and all soon.
They obviously have and that represents a reasonably modest portion of the total lives again kind of like the blue comment I'd say right and how we're focused on doing a great job for them as a partner and.
And as we do that hopefully will have opportunities to expand and it's obviously, a very large opportunity, depending on which states and what form it takes.
And can use some of the examples like the Florida Blue example.
As a for instance on what a block of lives can mean, so theres, a very large opportunity, but our task right now is to execute deliver.
Have them feeling great about it and we'll hopefully have opportunities to address that opportunity overtime.
Okay I appreciate that thank you.
Sure welcome.
This concludes our question and answer session I would like to turn the conference back over to Seth Blackley for any closing remarks.
Great nice to connect and everybody and we'll hope to talk to your limestone and thanks a lot.
Hello.
And I.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.