Q1 2021 Alignment Healthcare Inc Earnings Call
[music].
Good afternoon.
And welcome to alignment healthcare first quarter 2021 earnings conference call and webcast.
All participants will be in a listen only mode.
After today's presentation there'll be an opportunity to ask questions.
So it's a question on the phone line, you will need to cross to start and the one key on your Touchtone telephone.
Please note this event is being recorded.
Leading today's call honestly, John co founder and CEO.
And Thomas Freeman, Chief Financial Officer.
Before we begin and we would like to remind you that certain statements made during this call will be forward looking statements as defined by the private Securities Litigation Reform Act.
These forward looking statements are subject to various risks and uncertainties and it's like our current expectations.
Based on our beliefs assumptions.
And information currently available to us.
Although we believe these expectations are reasonable we undertake no obligation to revise any statements to reflect changes soccer after this call.
Descriptions of some other factors that could cause actual results to differ materially from these forward looking statements are discussed in more detail and our filings with the SEC include.
The risk factors section of the prospectus for our initial public offering filed with the S. E. C. On March 29, 2021 and on.
Our form 10-Q for the quarter ended March 31, 2021.
In addition, please note that the company will be discussing certain non-GAAP financial measures that they believe are important and evaluating performance.
Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliation of historical non-GAAP financial measures can be found in the press release that was supposed to sit on the company's website and in our form 10-Q for the quarter ended March 31st 2021.
I would now like to hand, the conference over to your Speaker Mr.
Mr. John <unk>. Please go ahead Sir.
Thank you operator, and thank you all for joining our first earnings call as a public company.
I'm proud to report that we exceeded our expectations across all of our key performance metrics for the quarter, including our health plan membership revenue.
Revenue adjusted gross profit and adjusted EBITDA.
Increased health plan membership by 32% year over year from 62900 members to over 83000 members at the end of the first quarter.
Our strong growth over the last year reflects our seniors recognized the unique value of our rich offerings.
Our revenue of $267 million increased 19% year over year on a consolidated basis more importantly, we described to you on the Roadshow, Our health plan premium revenue saw very strong growth at 30% year over year.
Our adjusted gross profit came in at $23 million and our adjusted EBITDA came in at a loss of $14 million.
Taking a step back and Thomas and I had a chance to meet with many of you on our recent IPO roadshow, but for those of you who are new door story I'd like to spend a couple of minutes sharing what I believe are key differentiators and what truly makes alignment healthcare. Unlike any other company out there today.
We found and alignment healthcare and 2013 with the singular mission improving health care, one senior at a time.
We are and next generation consumer centric platform revolutionizing the health care experience for seniors.
<unk> of this company is based on the simple belief that we should treat all of our members like we would want our parents to be treated.
With decades of experience and lessons learned through my work and health plan.
Provider and healthcare it businesses I got firsthand experience with how the traditional health care system consistently falls short.
I realize there has got to be a better way.
We purpose built this company to create a better overall experience for our seniors and and doing so have established ourselves as the leader in this space combining high touch and high Tech.
Alignment business model is different than traditional legacy health insurance companies and unique compared to anything else and the market today.
Our model <unk> best in class Health plan and capabilities with the culture competencies and compassion of our provider organization all built around a unified data and technology platform, we call Eva.
We'd like to think of ourselves as a tech enabled pay biter.
All of this results in a distinct ability to consistently deliver a high quality bear better care experience for members that are low cost and.
And in turn we take the sustainable competitive advantage and create higher value next generation coverage and benefits for our members.
And I wanted to show you how we do this I need to first talk about our care model.
It is based on three key principles that we have developed over 30 years of serving seniors.
First 20% of the population accounts for 80% of the spend on the MH space. We therefore need to know who is in the 20% of the high risk population.
We use AI and ml and our Ava platform to help a stratified the member data by acuity.
Personalize the care plan for each member debt.
Type and level of care is based on each members' personal needs.
The delivery of this personalized care at least the next two lessons learned and principles.
Second we strongly believe and aligning with community doctors and nurses and give them the data the tools expertise and aligns incentives to enable them to thrive and value based care.
We have with the doctors has been a foundational to the company's success, we don't want to compete with them, we want to enable them and support them.
And third to further support our provider partners our care anywhere program utilizes our own dedicated clinical teams and a combination of high Tech and high touch care for our highest risk most complex members.
These cross disciplinary care teams, which include employed physicians and advanced practice clinicians case managers, social workers and behavioral health coaches and worked closely together to establish and customized care plans and to engage her high risk seniors.
Our high risk chronic and complex care management capabilities allow us to effectively manage risk provide better clinical outcomes and improve our seniors experience across the board.
This combination of working with both community based doctors and our own care anywhere team and and the line model represent lessons learned from over 30 plus years of experience.
If the heart of the company is rooted in our clinical model the brain relies on our Ava platform.
Teva is our modular component ties and tech platform that everything is built upon.
<unk> was designed specifically for senior care and provides and the and coordination of the health care ecosystem.
It has unique proprietary and the key to our successful growth and new markets.
Even more so it was critical to why our model works and how we intend to replicate and scale alignment across the country.
Ultimately our model is based on a flywheel concept, which we referred to as our virtuous cycle.
We use Eva to identify the 20% high risk members.
We partner with providers.
And use the care anywhere program to improve health care outcomes.
For example by reducing unnecessary hospital admissions and in turn and bring down overall costs.
Our unique ability to manage health care expenditures allows us to reinvest our savings into Richard coverage and benefits for all of our members such as our black card or grandkids on demand.
This in turn and propels our growth and revenue and membership due to the enhanced consumer value proposition.
Bottom line, it's high quality.
Low cost health care with a better senior experience.
We believe that by bringing together experienced mission driven team for that.
Our purpose built technology, we have found a way to address the unmet needs of our senior consumers and ultimately do well by doing good.
What's really important is how this all translates into results.
During our IPO Roadshow, we told many of you that we saw three key avenues for growth and the short term and I want to provide you an update on how each of these has progressed and the quarter.
Well there are numerous other growth avenues over the medium term our most immediate priorities are number one.
Our membership and our existing markets number two grow into new contiguous markets and our existing states.
And number three establish a new beachhead markets and new states either organically or through M&A.
In terms of our existing markets. Our health plan business was 16 counties in 2020.
As of the end of the first quarter, our 16th same store health plan markets grew from approximately 63000 to 78000 health plan members, which represents a 25% year over year growth rate.
All of our markets grew year over year, and 15 out of 16 same store markets increased their market share year over year as a result of our expanding provider relationships and our strong positioning of our diverse array of products.
For example, we introduced and ethnically diverse product for the Asian community.
We introduced several provider sponsored products that deepened our relationships with these provider partners and further differentiate ourselves from our competitors.
We launched products that help the socially and economically vulnerable.
This product innovation combined with our expansion of provider partnerships was instrumental to our same store growth.
In terms of expanding into new markets and our existing states. We added two new contiguous counties and central California for 2021.
We added approximately 2003 hundred and new members of our first three months and these two counties.
Additionally, these two new counties and expanded our total addressable market.
By approximately 200000 eligible members.
Also and the first quarter of 2021, we launched health plans and four new markets across two new States, North Carolina and Nevada.
While early these markets are progressing well and we expect them to expand our total addressable market from approximately $4 9 million to five 5 million eligible <unk>.
I think these can be really significant markets for us over the next five years.
As we've discussed.
And finally Likeminded provider partners is a key component of our expansion strategy.
An example of how we continue to grow and develop more integrated and empowered provider relationships can be seen on our North Carolina market.
And that state, we partner with a group of local provider organizations to participate and medicare's direct contracting program launching our joint venture on April one under the name Exceleron.
Combined our two Dcs are contracted with 16 primary care practices consisting of 56 clinicians.
The initial population of approximately 5800 members.
Exceeded our expectations and was meaningfully higher than the 1500 to 2000 members, we had indicated and our S. One.
While still early we believe that D C partnership and North Carolina is indicative of the value alignment can potentially deliver to a broader set of seniors and traditional Medicare overtime.
Leveraging historical investments and our data driven Eva technology platform and our comprehensive care anywhere clinical model will result in a distinct ability to deliver better care at a lower cost for chronically ill seniors.
We remain mindful with respect to the long term and unit economics of the program given that we are only a couple of weeks in but.
But we feel the programs and is consistent with our model and in line with our area of expertise.
As we think about new markets and the future I can only tell you now that we are making very good progress engaging with likeminded providers and our targeted expansion markets.
While we've made significant progress on our growth avenues, and the first quarter our.
Our top priority has been the continued safety and wellbeing of our members through the ongoing COVID-19 pandemic we.
We did see higher COVID-19 related utilization from Q4 continue into January.
But as the quarter progressed, we saw that trend towards a more normalized level.
Outside of the financial impact, we have sought to keep our members engaged and informed.
And the first quarter, we hosted seven and virtual town halls with roughly 18000 members participated.
Sent and additional 5000 masks to our seniors the continuation of and effort. We started last spring and we've seen our members use their black cards and Q1 to purchase over the counter and necessities like tylenol toothpaste and miscellaneous grocery items.
Additionally, telehealth and virtual care still represent 73% of our care anywhere visits and the first quarter.
We've embarked on a number of other efforts to put our Senior's first during these challenging times, including.
Waving home delivery fees for prescriptions from our retail pharmacies, and establishing an expedited process to ensure a smooth customer experience if a member choose to move their prescriptions for retail pickup to home delivery.
Offerings zero cost sharing for telemedicine visits to all members for any reason while strongly encouraging that utilization of these telehealth solutions.
And partnering with a third party vendor to increase access to Telus psychiatry behavioral health support given the impact on ongoing isolation can have on our seniors will be.
I hope it's apparent to you all debt alignment healthcare is truly unique company with a differentiated position and the market.
We built this company on and incredibly solid clinical and technological foundation, and we've made even more powerful by bringing together a deep experienced team.
We are really well positioned for growth and I look forward to updating you as we capitalize on the opportunities ahead of us.
Finally, I want to recognize each and every one of our team members who work diligently every day to provide extraordinary care to our seniors achieve.
Achieving our mission wouldn't be possible without you.
With that I'll turn the call over to Thomas to review, our financial results and our outlook for the rest of the year and more detail.
Yes.
Alright, Thanks, John I would also like to thank everyone for joining today's call and for their interest and a lot of health care from a financial perspective, we were pleased with our first quarter results and the momentum we're seeing across the business and <unk>.
My prepared remarks today I'll briefly cover our recent IPO review, our first quarter results and conclude by providing our initial outlook for the second quarter and full year 2021.
I'll start with our IPO, which was successfully completed on March 26, including the Green shoe, we sold approximately $30 5 million shares at $18 per share, resulting in gross proceeds of approximately $550 million.
On a pro forma basis, we have approximately 187 3 million shares outstanding, including approximately 10, and a half million restricted shares that are subject to ongoing best and restrictions.
Turning to our first quarter results in spite of the broad COVID-19 related challenges to engage with the senior community. During our primary selling season, we were able to generate strong net new enrollment year over year and ended the quarter with 83000 health plan members or 32% health plan membership year over year growth rate continues to demonstrate our broad value proposition to <unk>.
Our senior consumers and addition to the significant growth opportunity embedded in our 22 markets.
Our health plan membership growth further translated to strong topline performance total revenue and the first quarter of $267 1 million increased 19% year over year normalizing for the termination of one of our third party payer capitation contracts and North Carolina are health plan premium revenue growth was quite strong at 30% year over year.
Exceeding our initial expectations.
Our revenue per member per month was consistent with our internal expectations for the first quarter for our.
Returning members, which we define as a member who was with alignment and 2020, our efforts to engage our seniors and document their underlying acuity and our second half of 2020 have made a positive impact on our full year visibility to the revenue PMT and of those members and 2021, however, our new members to alignment have come in at lower revenue.
M <unk> and 2021 than our prior experience would suggest is typical which we believe is due to the COVID-19 pandemic.
Given the fact that close to 25% to 30% of our health plan members will be neutral alignment and 2021, we don't expect to have full visibility on our overall revenue P. M. P. M until we receive the midyear sweep from CMS Accordingly, while we remain cautiously optimistic about the consolidated revenue PMT and for 2021, we have taken a conservative.
Approach and our projections for the rest of the year.
Moving on to non-GAAP measures in order to provide a more representative view of our operations when discussing the following Q1 metrics. We are adding back equity based compensation expenses of $31 8 million of which $25 2 million was charged to SG&A and $6 6 billion with sharp and medical expense and note that the vast majority of the equity based compensation.
And expense and our quarter was related to our IPO.
Adjusted gross profit was $22 6 million for the quarter as we continue to put our Senior's first during the COVID-19 pandemic consistent with the broader state of California. We first began to experience a material increase and COVID-19 related hospitalizations and the fourth quarter of 2020, which carried over and through the first half of Q1 2021.
As we continue to deploy our clinical resources, we saw a reduction and COVID-19 related hospitalization and the second half of the first quarter of 2021 <unk>.
This resulted in a net favorable mix of COVID-19 versus non COVID-19 admissions for the quarter versus our internal expectations, which has a favorable impact on our overall claims per member per month.
We also experienced some temporary favorability and some of our internal clinical model costs as well as our part D. Gross profit relative to our internal expectations, both of which we would anticipate to reverse over the course of the year.
While we exceeded our internal expectations and in spite of some of the favorable utilization trend and the second half of the quarter. Our overall medical benefits ratio was 91, 5% and the first quarter seasonality and a normal year would typically reflect Q1 is a higher MBR quarter, given the impact that flu season can have on our results Q4.
<unk> is similarly off a higher MBR quarter. However, our 2021 and Q1 and Dr was higher than we would typically anticipate and a normal calendar year, given the impact of COVID-19 on our consolidated revenue and him as well as our overall claims trends. We believe that there will likely continue to be some abnormal seasonality and our MBR for 2021. However.
We project that we will ultimately and in a high 80 for the full year.
Our SG&A and the first quarter was $64 9 million. However, excluding equity based compensation expense of $25 2 million and SG&A, our SG&A and the first quarter was $39 7 million, which increased 21% year over year. The increase was a combination of higher expenses to support our growth and incremental expenses really.
And being a public company.
This quarter's SG&A was slightly lower than we initially anticipated due to the timing of certain expenses and investments contemplated in 2021, we expect these expenses will be incurred in future quarters.
All of these factors resulted in an adjusted EBITDA loss of $14 million.
We also finished the first quarter with a strong balance sheet and liquidity position. Following our successful IPO. We ended the quarter with approximately $377 million of net cash on the balance sheet.
I'll wrap up my comments today by discussing our initial financial outlook for the second quarter and full year. We continue to see improved visibility to full year 2021 performance as we have concluded our primary selling season, which lends itself to our predictable and recurring revenue model.
For the second quarter of 2021, we expect health plan membership to be between 83380 3700 members.
Revenue to be and the range of 265 million to $270 million and.
Adjusted gross profit to be between 32, and $34 million and adjusted EBITDA to be and the range of a loss of $9 million to a loss of 10 million.
For the full year 2021 outlook, we expect health plan membership to be between 83000 and 584500 members.
Revenue to be and the range of $1 billion 40 billion to $1 billion and $55 million.
Adjusted gross profit to be between 116 and $122 million.
And adjusted EBITDA to be and the range of a loss of $56 million to a loss of $51 million.
I'd like to provide a little more color on some of our underlying simple we've ever used to frame our guidance for.
Membership, we expect continued sales and this enrollment throughout the remainder of the year based on our prior experience as a reminder, a majority of our net membership growth occurs by for one of a given calendar year due to the timing of the annual enrollment period or AEP and open enrollment period or OSP. We therefore expect more modest membership growth from March of 2021 to <unk>.
Timber at 2020, one and we then expect a step up and membership effective January 2022, after our upcoming AEP. This fall.
In terms of revenue per member per month, we anticipate seeing continued improvement and our visibility for our revenue and PMT and for 2021 returning members over the next several months for new members. However, we will not have complete visibility until the midyear sweep, which generally occur sometime in the second quarter of a typical calendar year until we receive that information we believe it is.
Prudent to remain appropriately conservative and Arkansas dated revenue P. M. P M outlook.
And I noted earlier, our medical benefits ratio and the first quarter benefited from some reduced COVID-19 related utilization relative to expectations, which led to some outperformance.
Said, we remain cautious on full year trends for <unk>.
Our full year outlook reflects a natural rebound and system wide utilization as our members continue to ramp up their vaccination rates and seek deferred care and also reflects the reversal of some of the temporary favorability we experienced in Q1 related to our internal clinical model spend as well as our part D benefits.
Finally for adjusted EBITDA, we expect to see a reversal of a few million dollars of early in the year SG&A favorability in particular, we have continued to gain visibility to several expenses related to being a public company such as our director and officer liability insurance, which we anticipate will cost approximately $4 million more in 2021, and we previously anticipated.
And we otherwise I believe we are on track with our internal expectations for SG&A that we will continue to look for ways to reinvest our outperformance towards further growth initiatives for 2022 and 2023.
In summary, we were very pleased with our first quarter results and think as a solid start to the year. Our team is executing on our strategic initiatives and our markets and I want to thank each of them for all their hard work I believe we are well positioned to capitalize on a meaningful growth opportunity ahead of us and I look forward to keeping you updated on our progress throughout the year at this point I'd like to open the call to questions.
Operator.
Thank you, ladies and gentlemen to ask a question you will need to press. The Star then the one key on your Touchtone telephone.
On your question press the pound key please standby, while we compile the Q&A roster.
And our first question coming from the line of Lee.
Goldman and Morgan Stanley Your line is open.
Yeah, Hi, good morning, and congrats on the first quarter.
So first.
First of all thank you for all the details I wanted to just to take a little bit deeper into what you're seeing in terms of member and utilization and acuity level of how theyre progressing versus how you were kind of like shaping and reuse.
For the remainder of the year and then how you sort of a risk scoring activity.
Going on with both new and.
And the older cohorts.
Yeah.
Yes, Thanks Regina.
So I'm just trying to take that one.
Sure sure I can kick it off and and John why don't you.
And then as well so pretty nice too.
And with you this evening.
And I'll start on the utilization side and everything we can turn towards risk adjustment here. So as we mentioned and I think we spoke a little bit on our roadshow, we did see higher utilization, particularly on the inpatient setting and the beginning of the quarter, which is really a carryover from the fourth quarter of 2020, and and as the quarter progressed and as vaccination rates continued to improve.
We did begin to see a decline and utilization that trended back towards what we would kind of referred to it and more of our normal normalized baseline or trademark.
Right now however, as we think about the outlook for the year. We are seeing continue utilization through the first part of the second quarter consistent with that and more normalized trend and that is obviously reflected in our guidance that we put forth today and so I think we feel good about it we've not seen anything in terms of surprises related to it.
Acuity increases outside of what we would typically expect for a population like ours and so I think we feel real confident but.
And that's probably all we can say in terms of outlook at the moment.
And then in terms of risk adjustment and I can maybe comment a little on 'twenty, one and and also maybe on 2022 and so in terms of 2021, we are seeing continued visibility on our returning members which of those and we had in 2020 and that's really a result, and a lot of engagement and activity. We did in the second half of last year and in order to try to get our clinicians and front of our.
Members, either through virtual means or through face to face means and and as a result, I think we're feeling pretty comfortable with with how are our full year outlook on revenue per member per month will trend for those returning members and that being said on a new members, which have joined US on the first four five months of the year.
Not really have full visibility on shows on those until we receive the midyear sweep.
And so right now the way we contemplated our outlook in terms of guidance is where essentially reflecting that our our payments for the second half EBITDA remained consistent with what we've received and the first half of the year. So we're not really assuming they increase or decrease significantly and so I think once we get that information from CMS hopefully during the second quarter, we'll have more fulsome.
Kind of views and we can share on our second quarter earnings call and.
And lastly in terms of the outlook for 2022, obviously, we're early in the year, but what I can say with a lot of R. F.
Efforts and engagement activities for our seniors and the back half of 2020 have absolutely carried forward into the first now for five five months of 2021 and.
We're feeling good about how that may translate into 2022 results, but obviously, we've got another six five months ago. This this year and we've got to continue to pursue all those outbound.
Engagement efforts.
Great. Thank you.
Our next question coming from the line of Ryan Daniels with William Blair. Your line is now open.
Yes, thanks for taking the questions John very helpful introductory comments and I'm, hoping you can go into a little bit more detail, perhaps on some of the key investments that youre, making and Eva as we look out through 2021 and into 2022, that's obviously key to the platform and the <unk>.
Other interest growth model, so I'd be curious what youre doing there number one and then number two perhaps you can tie and of that some other novel offerings like the industry's first virtual plan that I think you've launched curious with the member reaction was to that and what kind of traction youre seeing there and with some of the novel PPO products as well.
Hey, Ryan Thanks, a lot.
Yeah, we are continuing to invest and Eva.
Not only on the.
Kind of algorithm side, so that we get more and more personalized medicine.
Medicine for all of the members so youll see more refined stratification algorithms.
But also more streamlined workflows associated with their case management and patient management platforms.
And so on.
And really excited about that.
We are everything is designed to allow us to have this notion of predictable repeatable and scalable outcomes.
And I'm.
And I'm really happy with Q1.
Happy with the investments and Eva.
I will say that we're continuing to make.
I would call it.
Back office systems.
Investments debt enabled us to scale and.
And I'm happy with the progress, we're making along that front.
I think the degree of provider engagement, you're seeing and will continue to get more streamlined also.
Better dashboards more specific faster and.
Ingestion of data. So we can get information back out to the provider organizations that we partner with faster all of that is as is and the works.
With respect to your second question.
Yeah.
Product innovation and just.
Just I'm really proud of the team we're going to have some exciting products coming out in 2022.
We have piloted the Ava product, which is really a virtual product.
It's getting very good outcomes very good engagement.
And we'll see more of that in 2022 and.
And I think I think from a from a provider sponsored co branded perspective as well as.
And I'd call it ethnically diverse products.
Youre going to see more more coming from us.
And and.
All of that I think is going to kind of fold into what I would refer to as just more personalized care.
For the seniors and you'll see more and more refinement. So that we can customize and custom tailor.
On the care plan the products etcetera for individual consumers.
Okay perfect. Thank you so much for that and I'll hop back in the queue.
Thanks, Ron.
And our next question coming from the line of Kevin Fischbeck with Bank of America. Your line is open.
Great. Thanks.
One other things that we've been tracking for all the companies and then how you guys are thinking about.
The impact of COVID-19. This year on your results and how we should think about that as we think about future earnings.
Is there a headwind kind of embedded in here that we should expect it to be a lift either to radar or MLR.
In future years or is that something that's kind of.
Embedded in here and you're just going to work through.
And maybe thanks, Kevin and off on that one.
Yes.
Good good good times.
Yes, so and in terms of how how COVID-19 has impacted kind of our full year outlook.
Would say that we believe it has had a several sort of percentage point impact in terms of both the revenue side and the cost side and as a reminder, on the cost side, it's not just the utilization rate, but its the actual sort of cost of and average hospitalization or our average case rate associated with COVID-19 cases, so and that has an impact on on 2012.
We won.
But in terms of 2022.
I was not going to comment specifically on how that may flow through in the future, but what I would probably remind everyone as well.
The way, we think about our business and how we balance sort of consolidated MBR performance and this notion of growth versus profitability is we're really trying to track our metrics over time, along those individuals kind of cohorts and so to the extent and we continue to invest and growth and we continue to see our cohorts mature we would expect those returning.
Known as loyal populations to continue to see MBR performance improvement overtime, which is typically offset by those newer members that come on with typically higher mbr's. So if you think about our outlook for future years. The consolidated MBR performance won't just be a function of how does COVID-19 sort of dissipate and <unk>.
And into future years, but also how does our rate of growth both within our existing markets and new markets also impact on consolidated and VR. So just some of the variables to kind of keep in mind and the future and we look forward to speaking to you guys and more specificity and those at all.
Alright Thats helpful. Thank you just remind me what the stock comp related to the MLR what is that related to the IPO and does that anniversary at some point next few quarters or is that something that you should kind of.
<unk> persist longer term.
Yeah. So the the equity expense that sits inside of the medical expense line means that it's related to either our internal folks who are their salaries are otherwise classified as medical expense. So it's primarily our internal care delivery teams.
And a lot of that kind of a onetime nature of the expenses was in fact, the way to the IPO. You mentioned it also is where some of your expenses and it to a one time payment for some of our business partners also associated with the IPO, but either way I would tell you you'll see some equity based comp and medical expense line and the future, but not to the same degree that we saw.
And the first quarter, which was it was.
More on materially higher just given the IPO.
Alright, great. Thanks.
Our next question coming from the line of John Ransom with Raymond James Your line is open.
Hey, good afternoon.
Where do you guys think newell debt as we move through the year in terms of catching up on the backlog of the risks that could definitely scores.
Yeah.
Well, we've got pretty good visibility on that.
The members that debt.
And that we've had for longer than a year.
And and we did a very good job at the back end of last year. So I think you'll see some of those members already embedded in the revenue for 2021.
Thomas mentioned earlier, you know we had over 18000 new members.
And it's just unclear to us.
No visibility per se on whether the.
And plans that they were with because again remember 85% of our our growth comes from switches and people like us and they're switching from other other legs.
Legacy plants.
Whether they did the coding or not.
They did the work or not to actually get the accurate codes defined and and so will we just have to wait and see and the midyear sweeps.
Great and.
And another company mentioned and this week debt there is the backlog of <unk>.
Something like 1 billion you know nicer.
And nice round number 1 billion and office visits physician office visits and people are getting diagnosed and they are getting.
And I'm just wondering I know you've got the other types of gaps of care model.
That's for your population is there and your opinion and as we think about the algorithm and costs.
COVID-19 receipts, but is there a <unk>.
And on elective wave that you're modeling that would relate to people finally be able to see the doctor without having to quarantine for two weeks and do you think is that part of your assumption for the back half of the year, So if more and more elective type of procedures.
Let me get it John let me take a crack at them and Thomas I know you've got some comments on this.
I think the the algorithms that we have the reason I'm.
Very comfortable it's a buzz algorithms with respect to kind of the the prioritization of.
Hum.
Kind of.
And who and when we.
And kind of get the MRA completed.
Is really with resources that we have internally.
And remember we have the care anywhere team.
That takes care of the members, particularly the high acuity high risk members and so we're seeing them all the time and so we make sure that all the information that we.
Capture is included in our thinking with respect to risk adjustment.
And.
And so that.
That part of it is is really good.
And I think I think with respect to.
Acuity.
Thomas what do you think on that.
Yeah.
And like I said earlier I don't think right now we're seeing any any change in terms of pent up demand or increases and underlying acuity relative to what we would typically experience or anticipate.
Back in 2020, when COVID-19 really first began and we did see sort of debt more significant ebb and flow on things like elective, but at this point, where we're seeing I think what we would consider to be more more standard and customary. So I think we are as I mentioned earlier, we went and obviously keep an eye on that ourselves as and when you think about the rest of year outlook.
But right now there's really no kind of yellow flags or red flags that you would highlight for you.
Investors and analysts today.
Great, Thanks, John and Jeff.
Yeah, John and I mean, just to finish the thought also and February back into February and March April I mean, it's it's all kind of back down to normal.
In terms of admissions per thousand.
Right.
Thank you.
Yes.
Our next question and coming from the line on Jeff Garro with Piper Sandler Your line is open.
Yeah.
Yeah, I guess good afternoon, congrats on the first quarter and thanks for taking the questions I wanted to ask a little bit more on member enrollment and <unk>.
Mentioned, the modest expectations for the remainder of the year, but I wanted to ask one other key factors that determine how you might perform capturing new members for the rest of the year here in 2020, one relative to what's in your internal plan.
And can take that one and.
Thomas again please.
And color.
Yeah, I mean, as you know I mean, AEP is such a material part of our membership growth and.
And I think we had a very good O E P, which is January through the end of March.
And that's and during that period members can switch.
Plans and we did a very good job.
And of growing that.
And then once you get into the April to December timeframe, and its just a little bit more unpredictable.
And and so I think we're taken a.
And probably a.
A conservative view, but again, it's it's just.
It's a little unpredictable and but.
We've had a very good first quarter.
And and.
And we'll see what happens and when we have the Q2.
Announcements.
I was having on that.
The debt.
And that's as well said and spot on Jeff the only other thing I might add in terms of segments of the population.
And they're really the principal growth you might see and the second through the fourth quarter would be people, who are aging in to Medicare and kind of cheating and maybe for the first time or corporate.
You know potentially duly eligible members those who are eligible for both Medicare and Medicaid are allowed to.
Change plants.
Aside of AEP, but you wouldn't see a lot of plan switching obviously happening on our side of the AEP period.
Hi.
That helps.
One more follow up from me wanted to ask about <unk>.
Take hold or reception to the IPO and growth so far in 2020, one and I I know you've mentioned that raising awareness with part of the rationale for going pulp, but somewhat and ask what the feedback has been I think most importantly from providers that either are or could join alignment networks, but also from brokers or other stakeholders.
Yes, Geoff I can take that and thank you for that question.
Fantastic.
And the provider community is working with US is as I mentioned, particularly and our existing states and existing markets part of the growth is going to be fueled by additional providers and the existing geographic footprint and that's exactly what's happening and the team.
And are working on not only provider contracts, but really strategic kinds of relationships.
And it particularly in some of the new markets.
And what other providers really want as market share gains and.
And so what we've been able to prove is kind of consistent high quality low cost translating into these products.
And our innovative and these innovative competitive products versus the other plans out there is what's driving market share growth and.
So the providers are seeing that and and.
And and.
It's really interesting they love it they love it.
Clinical model.
From from a lot of the strategic level dialogue, it's around product and product leadership.
So that's to go and grade the brokers are excited and.
The other.
Love the innovation they love the fact that we and they just keep saying to us. It's just so good yeah. You've got you guys. Just keep doing what you say you're going to do and you keep doing it.
So both both had been fantastic responses. Thank you for that question.
Thanks, so much.
And as a reminder, ladies and gentlemen to ask a question. Please press. The Star then the one key on your Touchtone telephone.
Our next question coming from the line of John Ransom with Raymond James Your line is open.
And sorry, if I, so let me sneak one more and.
Yeah, if you think of yourself as that kind of same or a marketing company and I know, it's more complicated and that and you.
And look out as you get bigger.
Do you think your funnel for new patients and the way that has come in some word of mouth on broker or some other it and you look at it and moved that funnel on anyway is that something you can do as you get bigger tomorrow.
Debt, it's going to continue to be likely going forward.
Yeah. That's a great question, John Thank you and when we think about that all the time.
And and really the growth that we've experienced over the past several years.
Has been.
Really word of mouth.
We have not.
As of yet invested and the brand.
Alignment healthcare and and so it's really been the performance.
And living our values and just put the senior first you know support the Doctor and use data and technology to revolutionize care and then do it all with a serving heart.
That's what we've been focusing on and we've been executing those values and.
And and and that's what's led to the growth and so now and so we get bigger and bigger and.
And as we are expanding the geographic footprint not only within the existing states, but increasing states. It starts making a lot more sense for us to invest and that Brad.
And so we're spending a lot of time determining what that means and how we position that and I think that I think the growth that stems from that it's going to be very very exciting.
And are you I mean, it's certainly job share are you I'm thinking.
More like rifle shots on.
Website.
And our prospects Mike.
Visit or you think and like more of a mass market like a branding exercise.
And how you're thinking about how you think about spreading the word.
Efficiently.
I would say I would say, both and but we would have really you know.
As usual, we'll be very financially disciplined.
And B data driven metrics driven outcomes driven.
And and so, but but I think we're gonna be very tactical.
And specific markets I'm down to the ZIP code level in many respects.
But I do think theres going to be some more broad awareness of the brand.
And again I think it makes sense that the bigger we get.
Well I'm looking forward to your tagline I mean, it taste great less sales.
And that's the bad and that they're going to have pleasure I think about that going on and then it'll kind of breakthrough.
[laughter] worth it and that's right yes.
Thanks, John.
Ladies and gentlemen, that's all the time, we have for questions.
That that Luca conference for today. Thank you for your participation you may now disconnect.
Okay.
Yeah.
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