Q1 2021 Signify Health Inc Earnings Call
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Ladies and gentlemen, and welcome to the cyclical health first quarter 2021 earnings conference call. My name is <unk> and I'll be the operating for today's cool if you'd like to ask the question off the formal comment you may decide the person for one of the conference from pads.
One of those by the web please click the request for speak like I call them I'll now hand over to ice Senegal, the Bauer head of Investor Relations, Sir the floor.
Please go ahead.
Good morning, and welcome to signify health first quarter 2021 earnings Conference call.
This call is being webcast live and a recording will be available on the events page of our investor website at signify health Dot Com through July 12 2021.
Throughout the call. This morning, we will be referencing the financial tables that appeared in our press release dated May 11 2021.
On today's call, we will lose does signify health business outlook that we will make certain forward looking statements within the meaning of the federal securities laws for.
Please note the cautionary language about our forward looking statements of presented in our earnings press release and in our quarterly report on form 10-Q, which will be filed later today.
The claim cautionary language applies to this conference call.
We will also discuss certain non-GAAP financial measures, including adjusted EBITDA and.
Adjusted EBITDA margin reconciliations to the relevant GAAP numbers for these non-GAAP measures are included in the earnings release filed on form 8-K yesterday and also in our form 10-Q, which will be filed later today.
We intend to participate in industry or sulfide sponsored conferences and we were of issuing a press release to announce each conference we will be posting our conference attendance from the events page calendar of our Investor Relations site at signify health Dot com.
Cause you to register for alerts on the investors site. So that you can receive an email notifications. Each time, we add of conference other events or any other update the investor relations calendar.
Joining me on the call today are Kyle Armrest are Chief Executive Officer, and Chief set of President Chief financial and administrative officer the.
The format, we will follow for today's call is a business overview from trial, followed by a financial review by Steve We will have an operator facilitated question and answer session. After our prepared remarks, now I will turn the call over the Kyle.
Thank you Jennifer.
Thank you for joining us.
The players continue to drive significantly better outcomes for individuals across the continuum of care.
The customers with a value based payment platform.
Our first quarter performance reflects the hard work and investments we've made to generate results.
Yesterday evening, we announced a very strong first quarter 2021 financial results driven by significant positive momentum in our home and community services segment and solid execution against our corporate strategy.
Our overall top line in the quarter by 37% to $180 million and delivered $34 4 million of adjusted EBITDA, an increase of 58% from a year ago for the corresponding adjusted EBITDA margin of 19, 1%.
We are off to a great start in 2021 with two highly complementary segments each of the.
The industry leader for the respective services at the <unk>.
Core of what we do is twofold.
One we improve patient outcomes for attending conditions into patients' homes.
Better assess their needs and provide decision support as they navigate the health care system to have more happy healthy days at home and two we reduced costs for insurers employers and health systems by deploying our data analytics software and contracted network of health care providers are.
Home and community services segment derives the majority of its revenue from Medicare advantage and managed Medicaid health plans, who are our customers.
These health plans for one of our nationwide network of over 9000 clinicians to reach the enrolled members in their homes.
These clinicians are supported by our member engagement teams and our logistical software to conduct comprehensive in home of evaluations, which we also refer to as IHS vs.
Of these evaluations are extremely valuable for our health plan clients.
Paint the full picture of the health status of needs of health plan members identifying patient health care needs enables us to connect these members to specific health care providers.
Evaluations also ensure that our members underlying health status is complete and accurate, which helps our customers ensure the are appropriately compensated for the risk of I assume and are providing appropriate services to the member's day manage.
A significant outcome is about 90% of individuals who had an in home health evaluation in 2019 had a follow up with the primary care physician or specialist key success factors of our home <unk> community services segment include how much of the health plans customers membership, we can assess and the breadth of diagnostic preventative services that can be delivered in the member's home.
In 2020, we performed one 4 million of IHS, including about 500000 virtually during the height of the pandemic.
We performed more than 460000 of valuations in the first quarter of 2021 the.
The majority of our customers are providing us with their full member lists and we're using our extensive data consumer engagement investments and analytics to drive stronger conversion to evaluations.
We also offer multiple diagnostic test of our connected device hub and we continue to add new tests for the portfolio.
Finally, we provide the social needs assessments and provide access of social services through a network of about 200 community based organizations and delegated social workers.
For the entire organization, we invest about $100 million per year across technology and analytics, our ability to scale quickly to address the changing environment. During the COVID-19 pandemic early in 2020 reinforced the value of our modeled where customers.
As our volume increases remember density also increases which allows us to deliver our services more efficiently and effectively than our customers could ever do themselves.
Our episodes of care and services segment provides a comprehensive platform that serve government programs health plans employers and health care providers, we deliver software analytics and clinical and operational services as well as develop contracted provider networks to help these organizations in the value based payment programs.
Our episodes of services are critically important to the financial and operational success of the customers, we serve and more importantly significantly improve patient outcomes are.
Our episode payment platform is offered as a comprehensive source solution for these large organizations.
Key success factors for the segment or how much the medical spend or program size is captured in a bundled payment contracts and the savings generated.
In 2020, we had $5 $2 billion of weighted average program size and of seven 3% savings rate.
These savings are then shared with both payers and providers.
Our pre COVID-19 2019 program size was about $6 1 billion.
And we anticipate returning to a similar run rate as we exit 2021, which assumes the COVID-19 impact subsides.
Our two businesses are highly complementary as we sit between payers and providers to help our customers measure understand and manage risk.
Both segments are of health plans, which enables cross selling to existing customers or episodes segment also serves large health systems and physician groups of increasingly assume risk in value based payment programs and therefore need the capabilities of our home <unk> community services segment, our consumer engagement and assessment capabilities in our HCN segment.
Are being leveraged to improve the performance of our episodes of care program through higher shared savings and better patient outcomes. We also have the ability to apply social and community services originating in our Acs business to our episodes of care business.
These resources facilitate the transition home with the network of approximately 200 community based organizations and delegated social worker teams.
We call this service transition to home and it is gaining strong traction with 20 hospital systems participating as the majority of patients offer the services opting in for the service.
Increasingly we're seeing our customers contract for multiple services across both segments, but can be region to the Prime example came.
<unk> regions of the regional health plan in the Pacific Northwest is the customer who signed on for our in home of valuations in 2018.
In 2019, the expanded with US the performed in home diagnostic services.
In 2020, the became a commercial episode of care client with the episodes of their Medicare advantage and commercial books of business.
Now in conjunction with the in home assessment, when our clinician identifies the candy of member who its condition for an injury, we can potentially avoid an emergency visits for the hospital.
And provider partners and direct carrier to of sub acute facility to provide quality care and get the patient back to their home to recover with the services as soon as practical.
We expect to continue to see more customers move up the value chain with us as they take advantage of the synergies in our two segments.
Those synergies increase as we continue to grow our commercial episodes of care business. We can now leverage our capabilities to build networks and utilize existing networks to expand value based payment opportunities for employers and plans.
We were able to move beyond procedure based episodes to address conditions, which drive significant costs for self insured employers such as maternity oncology or substance abuse.
We are also currently in the process of building out deep provider networks in three geographic regions to support our new commercial ECS clients. This is the top focus for the team as we scale or provide of recruiting efforts and stackable markets alongside our current customers to facilitate growth.
In the first quarter, we hired a senior vice President of the network development, whose sole responsibility will be breaking down barriers and accelerating our provider recruitment efforts across current and future risk bearing entities.
The total addressable market for our platform get substantial and growing and home of valuations could productively be applied to all commercial or government insurance programs.
Episode programs are proving to be successful for health plans governments and employers.
Our long term business to drive positive outcomes for our partners as their platform for value based care.
We simplify highly complex payment programs and enable health plans and health systems to successfully transition to value based payments we.
We may supplement our strong capabilities with the acquisitions or partnerships with other companies to add further functionality and innovation to our platform to drive increased value for our customers.
Before handing the call over to Steve I'd also would like to address a few common questions. We receive from our investors for.
Our home and community service segment is not a home health agency or a homecare agency.
We've observed some confusion on this point of.
Our network is made up of highly credentialed physicians nurse practitioners and physicians assistants, who go into the homes of health plan members, where they perform a comprehensive clinical evaluation full.
Full of medication review diagnostic tests pharmaceutical assessments and also support clinical trials and the home.
CMS rules require that highly credentialed providers such as those in our network performed these in home of evaluations.
Our assessments may identify the need for a home health agency or home care agency, but that is not a role we seek to fill.
These agencies are key partners of ours that of a completely different role to play on the care continuum.
Second based on statements from CMS, we believe the bundled payments will become mandatory which would move more spending in the bundled payments and create a significant growth opportunity for signify health.
CMS is also rolling out other innovative programs such as direct contracting, which we are well positioned to serve.
I will now turn the call over to Steve to walk you through the first quarter financial results.
Thank you Kyle and good morning, everyone I'm very excited to walk you through our strong first quarter results I'll be referring to the tables that appeared in the earnings press release issued yesterday.
You can see in table, one we had strong total revenue growth in the quarter of 37% to $180 million from compared to the same period last year.
Mind, you that revenue is net of the reduction relating to equity appreciation of rights for years in our home and community services segment in the first quarter of the impact of the years was $4 9 million.
And for the full year will be $19 7 million.
Revenue strength in the quarter was primarily driven by Acs growth of 48%, which reflects the strong momentum of IAG volume coming into 2021.
Evaluations of trend and strongly back to being performed in the home, we anticipate continuing to perform some level of vertical evaluations as part of our ongoing service offerings, but the strong customer preferences do them in the home.
Total evaluation volume for the first quarter was approximately 462000, including virtual evaluations compared to 303000 in the first quarter of 2020.
In response to the Investor requests to provide a more detailed number of items for the full year 2020 total <unk> volume was one for three 5 million in 2022.
2021 guidance for one seven to $1 75 million of evaluations.
Diagnostic preventative testing continues to contribute to Acs revenue growth as we grow our pipeline of new testing devices. We believe the services will be a larger contributor to Acs revenue in the future.
As I mentioned on our year end earnings call in March our expectations are that Acs revenue growth will continue to be strong in 2021, and overall revenue will also follow a more typical seasonality pattern. After the COVID-19 distorted 2020, where our cost and utilization is better spread out across the year, we expect the seasonality tends to be higher.
For a tab for IAG volume compared to the second half of the year with the fourth quarter projected to be our lowest quarter of the year still.
Still on table, one ECS revenue was 3% low end of quarter to $27 6 million.
It was within our expectations as EPS.
The revenue will continue to reflect the lagged effect of COVID-19.
As a reminder, and maybe the <unk> program, we recognize the revenue attributable to episodes of the savings based on our estimates of savings realized each quarter, we evaluate of any adjustments to our revenue estimates are required based on the monthly information we receive from CMS the.
The most significant adjustments tend to be in the second and for the calendar quarters. When we really see full reconciliations statements from CMS.
These statements include detailed information about our performance that we typically use the revised estimates in light of actual results and.
In the first quarter, we did not receive a reconciliation of reported for any additional information that would inform revenue estimates and the.
As such did not making the adjustments we will report on program size and savings rate on an annual basis, but the address requests to provide more of decimal places for modeling purposes. The previously reported 2020 of weighted average program size was five point per year of $7 billion.
Moving to the table for total company adjusted EBITDA for the first quarter increased 58% to $34 4 million compared to $21 9 million for the first quarter of 2020, driven primarily by strong revenue growth in home and community services and turn we had in the.
Adjusted EBITDA margin of 19, 1% in the quarter, a 250 basis point improvement from a year ago.
Back to the table one of the net loss from operations for the first quarter of 2021 was $51 7 million compared to a loss of $8 9 million in the first quarter of 2020.
The primary driver of the first quarter 2021 loss was required quarterly fair value of a reevaluation of the customer equity appreciation rates.
For years, which resulted in $56 $8 million of expense in the quarter compared to zero in the first quarter of 2020 the.
The incremental expense reflects the increase in value of the years largely related to the change in fair value of the company on the IPO.
Shipments are directly linked to the value of our equity.
I will touch briefly on a few other items you may notice in our financials and when you review of the 10-Q the related changes as a result of our IPO.
Just after our February IPO of the company was reorganized to implement a traditional up from the structure, which we used to go public but maintain an operating company that has an LLC.
The registrant entity signify health aimed but you'll also note that we now have a non controlling interest.
This represents investors, who still have a direct holding in the operating companies below signify.
You will note on the income statement of portion of our income now growth is attributable to the noncontrolling interest with corresponding amount in the equity section of the balance sheet over time, we anticipate the the noncontrolling interest percentage will decline as holders convert the operating company interest into class a common stock of Cigna.
<unk> Health, Inc.
The up sea structure also teams of our tax environment Cigna.
Signify Health, Inc. Is now subject to corporate tax on a per approximately 75% share of income from the operating company below it.
As an LLC, we were taxes of flow through entity. So when you compare to prior year, you seemed very low attacks in 2020 as.
As a result for the first quarter of 2021, we reported an income tax benefit of $9 $9 million, reflecting the quarterly loss.
The reorganization of the impact of the up sea structure make some aspects of earnings comparability with the prior year, a little more challenging as the result of different share counts mid quarter reorganization and add in the non controlling interest we do provide GAAP earnings per share, but for the reasons I just mentioned I would encourage you to focus on revenue and <unk>.
For the EBITDA to evaluate the financial progress of the business as those are the indicators that management is measured against the internally over time, our year over year EPS will become more comparable when all periods are on the same basis.
Moving on as you can see in table two we ended the quarter with $756 $5 million in the unrestricted cash including $610 million from the IPO proceeds we ended the quarter with debt outstanding of $411 4 million $77 million in Quebec.
The under our revolving credit facility and a negative net leverage position given our cash exceeds current debt levels. We plan to continue to invest directly back into the business and evaluate potential bolt on acquisitions.
We are maintaining our 2021 guidance, although based on our first quarter results. We are trending towards the higher end of the revenue and adjusted EBITDA range is the following the estimates are for the for year and assume that the COVID-19 pandemic subsides throughout 2021.
Total GAAP revenue in the range of 725 million to $760 million net of a $19 7 million reduction in revenue due to equity appreciation rates discussed earlier and total adjusted EBITDA in the range of $150 million to $160 million.
We're also maintaining 2021 estimates for the key performance indicators of our Kpis for our Mcs segment, we estimate in the home of valuations in the range of $1 7 million to $1 $75 million.
For our ECS segment, we estimate our weighted average program size will be in the range of $5 1 billion to $5 3 billion and we project that we will need a 25% to 50 basis point improvement in our weighted average savings rate from 'twenty to 'twenty levels I look forward to being able to update you on our financial results next quarter.
Now I would like to turn the call back to Kyle for closing remarks.
Thanks, Steve.
<unk> 2021 is off to a great start teams signify is relentlessly focused on the incredible market opportunity. We have in front of us to drive value based care payment models forward, while expanding services to better serve our customers and individuals.
We believe we will drive significant future value for all constituents.
Now I will turn the call over to the operator to take your questions operator.
Thank you Kyle if he would like to ask the question. Please press star one for your terrific.
Keypad now please share your line is on mute the blakeney and may be a short pause for questions of being by the fitness.
Our first question comes from Debbie Jones from Goldman Sachs.
Line is open. Please go ahead.
Great. Good morning, Thanks for thanks for taking the question I guess you touched on some of this but maybe just wanted to go back to thinking about the full year in the context of the very strong results.
You posted for.
<unk> any more thoughts around maybe why not raise the guidance range for the year I mean, clearly the performance here was above expectations and just curious if theres things that you're thinking about over the balance of the year.
It could have results.
Degradation of the way that would actually get to the to the maintained guidance range for the for the full 2021.
Hey, Robert the Steve.
Yes. Good question look we gave.
Gave guidance for the end of March to begin with so we kind of knew that.
Quarter, one was coming in coming in strong that said, we are really excited with where we came in at I mean, while in the community services segment hit another all time record in revenue this quarter after coming off of Q for all time record. So it really sets us up well for going forward.
We're going to take a look at where Q2 comes in we feel bullish about the the trends that's why we said.
Feel like it's towards the high end and after Q2 will fewer ads and we of the re kind of in Q2, which is the big event for us on the episode side. So once we've taken that data and see how the trends continue then we will reevaluate guidance.
No that makes sense and I guess, maybe Kyle just looking at the IAG growth in the quarter clearly extremely strong COVID-19 dynamics I would imagine are at play and in some part given the lack of IAG is they were able to get done last year could you talk a little bit just about how youre thinking about the growth in the quarter kind of.
The underlying demand versus kind of pull forward or catch up related to what wasn't able to get done last year.
Yes, and I would keep in mind the.
The.
Sure.
Please the resets on January 1st range, So anything that happened in last year in general there is theres no ability to catch backup to it for the previous calendar year. So it's a completely new year when January rolls around that being said I mean, our conversion rate on the chain size of lift is higher than historical averages.
And we expected this to happen we've been investing deeply in analytics and we've hired a bunch of folks and invested deeply in our consumer engagement.
The team in technology. So we're seeing deeper conversion into the same size. The list. If you kind of kept it as a control group.
The other big thing nobody our customers have had a big mindset shift over the last few years and while they used to.
Many of them prioritize and kind of tear out list. The nature of these visits really are holistic and preventative in nature and the.
Pushing us to do more and more in the home and as a result of that.
They're giving us their full of member list right and so the overall pie of what we're able to deliver our great services in partnership with our customers and driving the value of the members is just increasing dramatically as well and so.
We're feeling great across all fronts.
And it's Super exciting for me and the team I think currently to see all of the vast kind of technology. The analytic investments that we've done over the years.
Really start to pay off.
Yes, just adding to the avid.
Sure.
Just one last thing there by the on the pull forward piece of that.
The beauty of that is the conversion is coming out of higher and stronger. So yes. It is pulling forward, but that gives us more opportunity in the back half of the year to go deeper into the lift and also work with our clients to get additional list. So that's the piece that we'll continue to watch in Q2 net debt conversion stays up then we'll be very optimistic.
Maybe over achieving guidance.
Got it no that all makes sense. Thank you both.
Yes. Thank you.
Thank you for your questions.
Our next question comes from Kevin Kelly.
Calling day from UBS. Please go ahead your line is open.
Thanks, Thanks for taking my call.
Thats on the quarter.
Really the question is the balance sheet.
And the cash you talked about acquisitions and the like what's your appetite for leverage whats your appetite to buy sort of whether what are the parameters under which you would look to do M&A.
Either from a financial return, but also thinking about the current leverage on the balance sheet, where you might be willing to go with that.
And where it.
What's the environment like right now.
40 for the targets in terms of the valuations and and the.
Just the pipeline.
Yeah, Great question and thanks for it.
I'd say were in a great position like we like having the cash on the balance sheet. It gives us a lot of flexibility to invest in our current product portfolio.
There is a.
Never ending kind of demand from customers to do more and more for them, which is of great place to be and so we've made the choice to up some investments and to move some of that cash instead of pushing forward some of that product portfolio. We just had a.
<unk> fully vaccinated in person.
Site in Dallas of few weeks here with the management team and it was a fantastic the whole team kind of said it was the highlight of the year, that's part of being able to be together and how much we were able to collaborate and cycle time is just reduced of making some of these investment decisions.
On the M&A for on the market, there's a lot of.
The opportunities out there I mean, I think our primary goal is looking for good tuck in acquisitions, the tied right into our product and strategy at work.
Watched our road show, we talked about that flywheel, where we aggregate data generate insights deliver actions and then make positive outcomes. We're looking for folks to plug into those for kind of quadrant of that flywheel and we've been pretty active end market. We've looked at the <unk>.
Several companies and we've got a really strong corp, Devin integration and finance team that gives us a lot of ability to.
Move in and out quickly on diligence of company and stuff.
I'd say that for quite active.
And we just see a lot of potential given the platform you built out the deep multiyear client relationships, we have both on the health system and.
In health plan side, and now increasingly as we start to move into the employer space.
With our episodes of business.
It really puts us in a great position to.
Take some of these smaller indoor scaled companies and turbocharge the ability to make a positive impact across our clients.
I'll, let Steve answer the leverage question, but I would tell you that our primary focus in general is the long term like we're not looking and doing Q accretion dilution math and just trying to go out and buy revenue for the sake of it we want to underwrite real synergies that are strategic for our business and our mission and vision and are going to really make a tangible impact inside of the clients that we touch.
That is the first and most important bar.
We're applying to any M&A activity.
Yes, I don't know if I have a lot to add I would just say we continue to look at our capital structure and what the M&A pipeline that's out there.
And to make the best decision of.
For the future, but as Kyle said, we got.
A lot of cash on the balance sheet net negative leverage so we do have opportunity to to lean in and not really impact our leverage in a big way.
That's really helpful. If I can ask a quick follow up just.
Can you talk a little bit about the reimbursement background backdrop.
And how that's progressing on the virtual visits as.
Has anything changed there or anything unexpected as it and better than you had expected or held up better.
Any commentary around that would be would be helpful.
Yes.
Important context, they are approved right now during the public health emergency Alright, and Tms has not commented one way or the other of what's going to happen after that that being said.
Almost every single one I would say the overwhelming majority of extreme overwhelming majority of our clients have taken a home for strategy and so we're pushing harder and harder.
And the number of vessels are going down because everyone wants us back into the home you can't take the connected devices virtually you candidly is on the member in the senior living condition all of the benefits of having the human touch we think and our clients finger is super important and in fact as Steve mentioned on the recording our transition to home service.
We're hoping of physically move folks back into the home. After the procedure is starting to surge of inside the client base as well and so we think that continues to be the strategic asset. The cool thing to me is we've got the flexibility to go virtual when and where we need it right and so some of them Super rural or if we're just checking in and somebody we built all of the capabilities out of the pandemic.
So we're always going to have a virtual components of our business.
But we believe our bread and butter and what drives the best value to the lives of we touch it allows us to have a positive impact of physically spending time with each individual's many of them that have fallen off the kind of traditional chassis of health care.
That's really great. Thanks, Thanks, so much guys really helpful.
Yes, great question. Thank you.
Thank you for your question.
Question comes from George Hill from Deutsche Bank Securities George Your line of Aitken. Please go ahead.
Yes, good morning, guys and appreciate you taking the question I guess call you made the interesting comment that you think that Medicare is going to mandate the bundle of Murphy to provide any more color around that and whenever you think about timing and then maybe my follow up of these could you talk about kind of the outlook for promotional bundles and penetrating the employer space and how you guys are seeing the competitive environment there.
Yeah, absolutely so on the Medicare front I mean, they issued a letter in Q3 Q4 of last year.
The director day, basically stating debt.
Im not going to be expanded the mandatory after the 2023 period I think that the BPI and BPI programs have been fantastic successes for the federal government, we guaranteed them and delivered on a lot of savings to the trust, which you and I and everybody in this country needs to continue to happen if we want the Medicare to stay around.
For for all of Us and our kids and the future providing that critical safety net for seniors.
We've had great conversations with them. Since then this year talking about.
Continuing expansion into ambulatory thinking about prospective payments, which we're pioneering and spending a lot of money and time of capital line and then also just thinking about what chronic conditions and other moves towards the mandatory could and should look like and share. We continue to have great positive engaged conversations a lot of the <unk> staff that has been.
They're really doing a superlative job of been there for quite some time.
Focused on fee net program become mandatory two of its the capstone of their career and renting of pioneering and working with them to make that happen and so I have all of the belief in the world. That's going to continue to track down that path I think to that what I am excited about is we're seeing our services regardless of the value based care program.
Out of CMI or in general from CMS inside of a lot of our clients our services transitioning into the home reducing unnecessary readmissions, taking holistic care of individuals it's translating to the ACO books.
Talks of a lot of the current participants in direct contracting to help them out inside.
The homes and doing a lot of our services as well and so we're bullish in general I would just say on value based care.
Administration and keep in mind have been pretty public about seating and we're super excited to be one of their largest partners nationwide, helping to deliver innovation and insights to keep driving this momentum forward.
So that's question one on the commercial Brian we're seeing great momentum we're seeing.
Deeper conversations with health plans more employers stepping into the arena of wanting to understand how they can provide better quality services at a lower cost for their employees because they've just been getting killed on the medical spend for years.
<unk> also seen in for you guys saw our press release with the Aspen physician networks and Dallas Super innovative cardiology.
Cardiology group there had generally for those guys a few weeks ago, we're seeing providers come out ahead of the risk bearing entities, saying. This is actually the best way to provide care for patients and so risk bearing entities like Aston physicians did we're open to do business like this and we believe this is the way forward to get off of this fee for service.
Cash thats been saddling the U S health care system for far too long. So we're seeing continued great momentum there I mentioned in the script.
We just hired a fantastic SVP of network development excuse formulae, often instead of several large health systems. He's an expert at recruiting providers in value based care centric contraction. So we're going to be amplifying our density in a lot of our core markets, adding more volume and working hand in hand, with the risk bearing entities the employer.
Or is the Dsos in the end of health plans continue to increase that program size inside of that business from so we feel very bullish about it and delivered a bunch of great stuff on our product roadmap. Good integration with patient blocks of acquisition. We did late last year, we had a bunch of our integration milestones. So we're feeling very good about it and feel like we.
We're in a real competitive advantage given all of the investment we've done for four of five years to get us to the place for it today.
Yeah.
Okay, I don't know if I can sneak a quick follow up on that kind of selling many of the self insured employer sponsor market is pretty different from selling into the MA plan market. I guess can you talk about any sales capacity of infrastructure capacity you need to build.
Yes, so its actually super related on one hand, right. So we're going in and doing these episodes for Medicare advantage and managed Medicaid individuals'. So the same people that were in their own right and we can triggered those episodes directly out of the home. So it's actually selling frequently and at the same book I mean, sometimes we get down into the regional level or the market president level.
It's given us the ability to tie together a lot of our services and frankly some of the big synergies of why we brought all of this organization together because of those relationships and visibility and data and analytics, we have into these members' lives.
On the other hand with the employers.
We've gone through a lot of there's a lot of trade groups.
Brokers that have deep relationships. There. So it has been building out of different channel, but going for them with the value prop of guaranteed savings on their medical spend is pretty compelling and it's also something that not of lot of folks.
Our in change of them a lot of folks are looking for a <unk> for some model the disconnected from the specific outcome and so its Stephen and given US a lot of traction with folks like the state of Connecticut, which are doing fantastic work with to go in and make the real impact and then keep in mind our goal once we get an anchor risks.
Current entity of self insured employer health plan et cetera, and we then we recruit provider volume our goal is to stack more risk bearing entities on top and more provider volume in those markets the change the dialogue.
In that market to be predominantly one of using episodes of the means to drive better quality lower cost of care for the individuals that we touch and we're starting to see that pick up in earnest in terms of our core markets.
Super helpful. Thank you.
Yes, good question.
Thank you for your question. Our next question comes from not from Murray from William Blair. Your line is Nathan. Please go ahead.
Hi, Good morning, guys I just wanted to ask as programs starting to build back up if there are of particular clinical areas.
But youre seeing scale up more quickly and then when you talk about.
Subside with respect to COVID-19.
Curious if that includes the potential bump in the fourth quarter when of normal flu season that occurred of tired I guess thinking about subside with Nick that ex COVID-19.
Yes, I'll, let Alex events for the segment, but on the first one is really across the board for your first question is kind of what's coming back it's really across the board. It's obviously some electric procedures that goes without saying, but I would say that the U S health care system. The Mckinsey issued of Great report like the the volume is just coming back right. It's not like these procedures or other things disappeared and Steven mentioned that they're in.
The road show and so.
We're excited about early signs here and it's something we need to continue to watch that.
Without a doubt.
Feeling more engagement.
Stress with our health system clients the <unk>.
Endemic not hitting the much harder obviously as it was.
You guys are well aware of the vaccination rates and the positive momentum we've had in the country and so folks are showing back up the back out and.
Without a doubt of tailwind to procedural volume in general across the U S and I think Thats why were seeing the slight uptick and we're cautiously optimistic about program size as a result.
Yes, just a follow up on that Q1 came in exactly where we thought it would for the ECS segment net of lot of news to report there waiting for the reconciliation that will hopefully drop any day now, but the one thing to your question on the program size, we are seeing positive trends there that as we.
The projected early on.
The Q4 that we would see that program size growth throughout the year and at a run rate any of the year of close to where we were at 2019 or above and so there is nothing in the metrics of data that has taken us off of that protection. So yes, we would expect.
The year that will continue to grow for being our largest programs this quarter.
Okay.
The point that.
In terms of doctors after the opening vaccination rollout.
All pointed out on the last call some of the benefits of the assessment, taking place obviously of the home relative to the physician office, we've seen a number of sort of site of care system the home.
Showing signs of sticking around.
And sort of this post vaccination world just curious what youre seeing in terms of any potential share gains you might impact of the stack offices already activity. The market is the Doc offices now are back open for business.
Yes, we don't compete at the very often right and keep in mind, 90% of the time.
Pre COVID-19 the folks we were inside the folks' homes, we were getting the unemployment book back in the Doctor's office. So we're a big tailwind to that I would say.
Just a completely different service that we're offering and I think that our higher conversion rates and the bigger lift that we're getting from our.
Our partners in the multiyear contracts many of them extended with us during the pandemic are an indication that the type of work. We're doing is going to continue to grow.
For many years to come which is only amplified by the diversity of more devices more social coordination deeper clinical insights that we're driving inside of these homes to better coordinate care for these items that were touching.
We don't want to compete with primary care doctors surgeons, we want to be in amplifying for so.
Increased their value based care panels and help them better manage the individuals' lives right there our partners not our competitors.
Yes that makes sense.
Last one you hosted an interesting event in April.
Episode of business for percent of commercial partners and just curious if you could share any feedback or any metrics in terms.
The catching the exit success.
Yes.
We had a few either the few webinars. They were very well attended by current and prospective clients. So we're very satisfied with the results and I think of general just folks are kind of waking up after the pandemic and figuring out the strategy of getting back to what can we do to.
Promote growth better patient outcomes cut unnecessary waste out and our message of episodes as of vehicles has really resonated in market and so we had a fairly diverse set of attendees of yet employers health plans health systems, the whole batteries in some of our existing clients and prospects.
On on those webinars, and they're going to be doing more and more of their we've really.
Upgraded a lot of our marketing and go to market efforts over the last three years.
And I'm excited to see all of the hard work that's been put in there and all of the reception that we're getting out of end market as the result of that great content and thought leadership that we're promoting.
Thanks Scott.
Yes for your questions.
Thank you for you.
For your question. Our next question comes from Sean Wyman from Piper Sandler Your line of Nathan. Please go ahead.
Hi, Thanks for taking the question next desktop line on for Shaun.
I think we are interested you guys could give us maybe incentive pricing trends and <unk>.
And your expectation for the full year I think by our net price for IHT was down a little bit year over year interest into now.
What are the factors.
Of that.
Cause that fluctuation.
Yes look we have not seen any pricing pressure to drive turns out of that in fact, I think it's the actually the opposite because of we're seeing the rebound in the ancillary and the devices being added onto the visits. So we feel we feel bullish about that trend continuing you'll also.
We'll also start to see the lift from the price differential between virtually in the home and so those two items alone will be positive pricing trends when you take of the total revenue divided by the volume.
Got it.
And the pool.
What are some of the most.
All of our diagnostic add ons.
The plan.
Thanks, Adam holes from the rate of COVID-19.
And the fact that you can offer the diagnostic add on kind of the key reason why health plans.
Thanks <unk>.
Hi, Thanks for taking my call.
First of all.
Yes.
And then from for lack of volume.
Yes, I would say.
The reason I wouldnt seasonally the key reasons. The main reason they outsource to us as our share in every county of the United States with 9000, plus credential providers. So we have vast Utah.
Utilization capacity and can you just do it at a lower cost and at a higher fidelity of services given the density that we have out in market and so thats been the key driver of a lot of our success you couple that with our 100 million plus dollar year, R&D and analytics, but we're just getting better and better at engaging these folks and so its created a real economies of scale now.
We have of device hub connect identity native iOS iPad application and it's without a doubt a technological advantage that we have to the big ones that we're doing of bone density scans eye exams were actually doing infusion writing the homes that we started to do.
<unk>.
And a lot of these devices are directly related to the clinical trials that we've really scaled up nicely and of the home as well directly with Big life Sciences companies and so I think the without a doubt of differentiator you asked about the mix changing during the pandemic. It's actually stayed pretty consistent these had been a very high demand innovative part of our business for some time.
We're seeing more demand for them, but I would say the mix is not materially shifting its high really across the board we've got a really.
Great pipeline of additional devices that we are mid flight in integrating into as well, which will help us identify more conditions help us more proactively manage with conditions and get the whole care team activated to provide better care for these loans that were talking to it.
Fully staffed in the.
Net R&D operations.
And customer support all attached to it and it's really becoming.
A well running chunk of the business.
Tremendously over the last few years with all of that R&D investment.
Thank you.
Yes.
Final reminder, if you'd like to ask the question from a question. Please press star one on your kind of thank you.
Now please share your line is from Richard Mike Lee of <unk>.
The question.
It appears we have Nathan asked the question for hand back over to Carl on for Seth.
For any closing remarks.
Great well. Thank you all so much that's of great quarter, and we really appreciate all the support of our shareholders employees network, everybody who's done for months to help.
Continue to make the positive impact normalized retouching do you of any additional questions. Please reach out for Jennifer and have a nice beat everybody. Thank you so much.
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