Q3 2021 Oscar Health Inc Earnings Call
Good afternoon, My name is Maria and that'll be your country and stop or your day today at this time I would like to welcome everyone to Oscar how to third quarter 2021 earnings call. All lines have been pieced on mute to prevent any <unk>.
I count noise.
After just be curious presentation, there will be a question and answer session.
A question during this session you'll need to breath, sorry, one on your telephone keypad. If he acquired any further assistance. Please press the stars zero.
I would now like to turn it over to Kern Media Miller, Vice President of corporate development and Investor Relations to begin to conference.
Thank you Maria and good afternoon, everyone. Thank you for joining us for our third quarter earnings call verbal discuss our financial results the momentum in our business and our updated guidance.
Mario Schlosser after his co founder and Chief Executive Officer, and Scott Blackly, Oscars, Chief Financial Officer will host the Doctor News call, which can also be accessed through our Investor Relations website I R Dot high after dot com.
Full details of our results in additional management commentary are available in our earnings release, which can be found on our investor Relations website at I R. Dot I offer dot com.
Any remarks that Oscar makes about the future constitute forward looking statements within the meaning of Safe Harbor provisions under the private Securities Litigation Reform Act of 1995 actual results may differ materially from those indicated by those forward looking statements as a result of various important factors, including those discussing are currently report on Form 10-Q.
For the quarterly period ended June 30th 2021 filed with the S. C C and our other filings with the S E C.
Such forward looking statements are based on current expectations as of today off your anticipate that subsequent events and developments may cause estimates to change while the company may elect to update these forward looking statements at some point in the future. We specifically disclaim any obligation to do so the call will also refer to certain non-GAAP measures a reconciliation of these measures.
Directly comparable got measures can be found in our third quarter of 2021 press release, which is available on the company's Investor Relations website at I R. Dot high after dot com with that I would like to turn the call over to our C E O and co founder Mario Schlosser.
Thank you good media and good evening, everyone. Thank you for joining us in business would be always put you in order to do so thanks for being with us today.
We will provide you with the update from several topics artificial results for the third quarter of 2021.
Or 2021 full your outlook and the conflicts of a third quarter results and lastly, we're perspective, when a market position for 2022.
Let me start with the third quarter results, our revenue membership growth rates continue to be strong or.
Or directs them assume policy premiums increased 54% and you have a year.
Premium <unk> was seated reinsurance between 62 persons you have have you driven by your membership growth as well as business mix shifts towards higher premium plans.
We believe this growth as a result of a strong brands based in Glastonbury experience instead of distribution and provider relationships.
Quarterly results represents a second here in a row greater than 50 per cent top line growth.
With respect to membership we ended the third quarter with 594000 members an increase of 41% view of a euro representing over third consecutive quarter of growth as a public company.
This growth was largely driven by membership increases in our individual business as a result of a special enrollment periods.
<unk>, California, and fixes continue to drive the majority of our special and Goldman grilled.
Of the book level is C. P membership growth was slightly above the markets and we've seen intra <unk> stronger than in previous.
Medical lost my usual perspective. This special enrollment growth is the headwinds in 2021, largely because we have a more limited, but you needed <unk> adjustments course on these members.
We expect this to shifts to a tailwind 2022 because of membership retention and expected to improve our performance for this cohorts in the years ahead.
420, twenties, whom we continue to pursue discipline pricing the balance is growth and profitability.
Entering this open enrollment now we are the lowest price plan and fewer markets than we were in 2021, specifically, we have the lowest cost plan and just 5% of our markets next year.
We also priced for an endemic COVID-19 environments, including costs related to undoing Pissing and vaccinations My kids got the vaccine just this weekend, which I'm very happy balls.
Rob Me speaking, we increase our rates at the book level, and we price to achieve growth and improve margins next year.
Now we are 10 days into open enrollment and wish you a great traction in the markets and a private offering is meeting the market with it Amanda.
Heading into 20th 22, we announced arrangements with new health systems in several states, including Florida, Texas, Illinois, It in Colorado vs.
<unk> strategic contracts demonstrate the ongoing interest from health systems and providers looking to work with Oscar as we broaden our network and P markets.
We expect these to drive additional membership growth and improve uberoi them, the economics and our individual business in the coming yes.
We also socially performance and a Sigma Oscar business, we've nearly doubled our membership over the last quarter driven by continued growth in Connecticut and that works punishment that comes with the Missouri.
We're optimistic about a potential in this modem segments.
Cause you know we are currently in the midst of <unk> in your living room with you would for me to get bandage and we look forward to sharing more about a growth vieira at the next quarterly owning skull.
Our primary focus and expanding Medicare advantage is onboarding or health first members, which I would talk about more than just a minutes.
Now turning to a medical loss ratio Scott would be spending more time on the shortly but I want to note that'd be a pressure on the email or this quarter.
Our consolidated medical lost we should put the quarter was 99.7%.
This is clearly higher than anticipated driven in part by nets, COVID-19 utilization that was higher than expected.
By higher than expected special enrollment growth.
And by some adverse risk adjustment audits results.
Looking through these drivers we believe they are predominantly issues that we anticipate with not nuts carry you into next year based on the landscape you see today.
As I said, Scott <unk> unpack this in more detail later in the call.
<unk>, we saw costs rise in the third quarter compared to the second quarter, largely driven by the Delta variance.
East coast to a partially offset by the fruit non COVID-19 utilization.
We saw these COVID-19 cause peak in August and reduce and both September and further in October.
A vanilla ones at the end of October we so 70% production for Covid hospitalizations, but it would have to be August peak.
Today, we are tracking M. Two a COVID-19 conversation volume consideration KFC and that is in line with pre does have eve levels.
We anticipate the acute impact of Covid to continue the subsides borrowing additional variant strains and we will keep a close eye on the landscape for the remainder of the year.
Turning now to plus Oscar or technology platform business, just as a reminder, any plus Oscar we are enabling insurers and providers to become will consumer rights to be a risk and bitter provide linda two milk here you see these training b three trends continue to ripples from the overall health care markets providing.
A fertile ground for further both of Us Oscar.
Our conversations with prospective clients are advancing in the pipeline and we continue to build off the top of a tunnel and.
In fact, one piece of feedback we are hearing in our conversations of the bundle is that providers are looking to build up <unk> wallets in their local communities.
<unk>, we believe that growing our insurance book of business is also a positive for pitching hour plus Oscar solutions.
And we continue to view both parts of our business insurance and platform is gonna just.
Ah keep focused currently in the bus off the strategy is quality execution for a curtains that's off the clients.
We're actually today about seven weeks out from the cup over for health bursts to apply for them.
Doximity 60000 of health Paris numbers was 20 transfer onto the bus Oscar platform.
Today, we have actually already successfully becomes a source of truth for all health first plan you're at 22 enrollments.
And we are supporting via growth strategy for their M. A an individual business wise.
Let's ask was already managing the health first enrollment processing and the members are being on board it'll be plus Oscar powered digital experience.
In 2022, we anticipate an additional approximately $50 million plus Oscar a fee based revenue from the arrangements based on current membership.
But she'll primary care as a part of our Blessed Oscar platform continues to perform well in the markets. We are offering it in in 2021.
This offer any delivered by the Oscar Medical group.
Now representing about 20% of our members primary care delivered several of our largest markets.
Beginning in 2022, we are expanding our butcher primary care offering into more individual markets and for the first time into Signup as Oscar markets.
Looking ahead, we remain focused on continued growth to increase the scale of our businesses, which would be a driver or improve bottom line results of our time.
And we are targeting profitability in the insurance business in 2023.
Alright, Sean strategy continues to focus on lowering the total cost of Kia and achieving greater economies of scale operations.
We strive to be a best in class insurance business, which requires balancing our member focus and improving our business fundamentals.
And then can we speak components, one rolling revenue at a rate faster than being in the streets when police market share and building additional insurance capabilities.
Two.
Growing a cost of the rate lower than a revenue growth as a result of the efficiencies in Brussels improvements came from the best off the technology stock.
And three reducing overall medical costs by continuing to extract value and the two would you be a bit. So we can get you a members and to engage in an email provider partners. Therefore will continue to make health care more affordable and accessible for our members.
Well, that's let me turn the call over to Scott's.
Thank you Mario and good afternoon, everyone.
Today I'll walk you through the positive topline momentum in the business explained periods of pressure in the underwriting results and how we're thinking about the future as we look towards next year.
Beginning with membership we ended the third quarter with 594000 members an increase of 41% year over year driven by growth in our individual Medicare advantage and Signet plus Oscar books of business membership growth continued to exceed our expectations. This quarter as consumers selected our plants during the extended special enrolling.
Period, which ended August 15th and all but three of our 18 states.
From the start of S. G. P. Through September 30th we've been rolled 187000 members. We believe are nearly 600000 member.
<unk> represents a great base as we go into 22.
Third quarter direct and assumed policy premiums increased 54% year over year to 899 million driven by our membership growth as well as business mix shift towards higher premium plants.
Premiums before she did reinsurance where $673 million and a quarter up 62% year over year, driven by higher premiums and lower your over your risk adjustment percentage.
Turning to risk adjustment, we recognized approximately 20 million of risk adjustment expense this quarter related to a risk adjustment data validation audit or read the results.
The red the exercise is a typical this year due to COVID-19. It spans two years 2019 and 2020 the majority of the Rabbi headwinds relate to the 20th 19 out of results, which were recently completed we're seeing the market improvement in 2020 at a results and thus far we have we've seen.
Better results in 2020, excuse me and we have made further enhancements and a risk adjustment process in 2021.
As such we expect this is a headwind for the quarter, but not going forward.
Premiums net of reinsurance where premiums earned was 442 million increasing 346% year over year.
This increase is driven by a reduced quota share session rate of 32% in the third quarter of 21 versus 80% in the third quarter of 20.
Our medical loss ratio was 99.7% in the third quarter. There were three items that impacted you in the water.
The first item was the effect of the Covid spike in the third quarter, which inclusive of our Covid pricing of 2021 was approximately 500 basis points unfavourable on a year over year basis.
Net COVID-19 spent to the Delta wave accounted for approximately 600 basis points of M. A lark in the current quarter, which was modestly above our expectations.
Lower non COVID-19 utilization offset roughly half the direct COVID-19 expense in the quarter is.
As Mario mentioned Covid cost spiked in August and declined through October, suggesting a potential lower impact in the fourth quarter all else equal.
The second item impacting MLR was the adverse risk adjustment.
Date of validation results, which drove approximately 300 basis points of MLR impact on a year over year basis. As I mentioned this is a headwind in the quarter, but it's not impacting our baseline.
The third item impacting your over your MLR was the growth in our S. G P membership, which was higher than we anticipated.
We estimate that the growth in our S. E. P. Membership drove approximately 100 basis points of pressure on the MLR versus the same quarter last year.
As we mentioned in our last call S. C. P members run less favourably than a row population driven largely by risk adjustment dynamics for the partial year we've.
We have seen this effect come through in a results as we expected and as we have more STP members than last year are MLR verse was higher versus the same period last year looking forward growth in S. E. P membership as a headwind for 2021, MLR, but we expect that retaining S. C. P member stirring R. O 822 will be a tailwind to next.
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Turning back to our insurance company metrics or third quarter insurance company administrative expense ratio of 23.1% increased 70 basis points year over year, largely due to a combination of the risk adjustment items impact on premiums and distribution costs associated with a C. P members.
These were partially offset by the lack of the health insurance fee and operating leverage.
Our overall combined ratio just the some of the medical loss ratio and the insurance company administrative ratio was 122.8 per cent and a quarter and $106, 7% on a year to date basis.
Our adjusted EBITDA loss of $189 million increased 118 million year over year, largely driven by overall higher membership volume volatility in the MLR and cost driven by higher than expected membership.
Turning to the balance sheet.
We ended the quarter with 1 billion of cash and investments at the parent and another $1.5 billion of cash and investments at our insurance subsidiaries and our $200 million revolver remains undrawn.
Let me now turn to updated guidance for 2021 and offer some color until Winston headwinds for the next year.
We are raising our expectations for direct in this room policy premiums. This year to 335 billion to 345 billion at the midpoint. This represents roughly 50% year over year increase in annual premiums. This also represents $150 million increase from prior guidance at the midpoint.
Given by higher FCP rope.
We are updating our full year MLR guidance for 2021, 89% to 91% of 400 basis point increase at the midpoint. The largest driver of the increase was the fact that our STP number ship growth has exceeded our expectations.
While this is driving an increase in premiums. It also puts pressure on our 2021 MLR.
We've also updated for the full your impact of the risk adjustment data validation of cool and finally inclusive of the third quarter results neck Covid related costs in 2021 are expected to be modestly higher than our prior estimates.
We are maintaining our insurance company administrative guidance of 21% to 22%.
Based on the aforementioned adjustments, we are updating our insurance company combined ratio guidance to 110% to 112% in our guidance for adjusted EBITDA lost two 452 $480 million.
Pulling up the results. This quarter reflects strong continued top line growth that will serve as a higher than expected starting point as we head into next year.
While we experienced some volatility in our underwriting results. This quarter, we think the drivers of the volatility will have a muted effect in 2022.
The red the accrual this quarter is expected to be a typical we do not expect this to be a headwind going forward the.
The growth in membership to the special enrollment gives us a larger base to carry into 2022, and it's unlikely to reoccur next year absence of shift and regulations.
With respect to Covid, we have captured endemic level, COVID-19 cost and or twenty-two pricing.
And while higher levels of vaccinations heading into 22 and continued evolution of therapeutics to treat COVID-19 patients may mute the effects of any future stranger outbreaks as an industry the impacts of such events remain a potential risk.
All told we are optimistic heading into next year and anticipate giving 20 twenty-two guidance with our fourth quarter results with that I'll turn the call back tomorrow.
Thanks clubs, thanks for taking us to this before we take questions I want to reiterate in just a few points.
Versus that'd be as we head into Twenty-twenty until we see many tailwinds in our business and we are confident that our insurance business as well positions and we continue to target for a full year profitability in that business in 2023.
And now you've all heard me discuss several times the key trends that we see shaping healthier today with a post skiing and increased individualization as clearly as across the health care cause some are realizing the buying power of consumers and how much value. There is in a great member experience. We believe that's what we're seeing here the individual market.
Growth continues this gradual paradigm shifts towards further individualization and we think we are best positions for a world likes that's in to serve members in this kind of individualized type of markets.
And the year after IPO, our membership is significantly higher than we anticipated.
And that isn't a coincidence it as a result of a value brands of a best in class products and have a consumer oriented DNA and we expect to 2022 to bring another review of strong growth.
All of the insurance business lines.
Now these same trends are would work in providing a fertile ground for the growth about plus ask a business as well.
And via we're excited about the coming step change with respect to the number of lives you have on a platform heading into 2020 tool.
And with that I will turn the call over to the operator to open up the line for your questions.
We will now begin ice tea and a session. Just a reminder, we were only allowed one question and one follow up at this time to ask a question you'll need to press sorry, one on your telephone keypad to withdraw your question press the pound key.
Sorry, just a moment to compile the kidney roster.
And your first question comes from the line of Kevin Fishback from Bank of America. Your line is open.
Alright, great. Thanks, I appreciate the color so it sounds to me like you're saying that.
You still feel like you're on track for 20th twenty-three profitability at the insurance level Uhm and that the issues. In 2021 are largely kind of one time I guess without giving specific I. That's why I try to like do you think that twice. My two is largely kind of a back on track year or the reason to believe that there may be some some headwinds.
That linger into next year that that make it a little bit less of.
Straight line back to the the profitability targets your effort for 2023.
Sure. Thanks, Kevin Uhm I appreciate the question so.
I think there's a few factors that I would point to going into next year. The first is that we.
We see an opportunity for improvement in the MLR next year and as you just mentioned the items that are putting pressure on the MLR. This this year and particularly this quarter are really largely uhm transitory and so we think that we can see a better performance and MLR next year and then <unk>.
Lee as Mario talked about Uhm, we really tried to take a thoughtful approach and our pricing for 22, where we're balancing growth and margin and we think that we have enough for a a really good opportunity for another year strong growth.
And I would just point out that the scale at Oscar is going to be the driver profitability overtime. So bigger is certainly better. So we're excited about the potential there and then the last thing I would just mentioned is that at the total company level. We're also going to start having plus Oscar deals contributing meaningful amounts of.
Revenue in March and next year. So we see a lot of reason for optimism as we go into next year.
The final thing I've My Dad's this.
We can do the innovates and I think the longer we are able to run the longer we keep it up the longer we're able to get value out of the two would sleep I'm visiting does this has been bidding.
<unk>, we will get that all of this as well.
Okay. That's helpful I guess.
The guidance for queue for them all our alright, so for the year M. A R. B 200 basis points lie to get supplies like a very wide range for two for them all or so just wanted to get some color as to why that that's still a 200 basis points.
<unk> at this point in the ear.
Yeah.
Probably because I'm a conservative CFO honestly.
And you know it is a pretty dynamic environment, but I would just say this based on what we've seen.
In the third quarter, we updated to.
For everything that we were seen in the environment and.
I would expect that that that guidance represents a a a reasonable effort at trying to capture all the stress.
Okay. Thanks.
And your next question comes from that Garry Peeler from Cow in your line is open.
Hi, Good afternoon, I wanted to just hear your thoughts on how you're thinking about the.
The folks and that Medicaid coverage get the <unk> the budget reconciliation legislation.
<unk> given that could be several million people, which is a positive probably a lot of people with deferred care and higher set.
Central care costs is probably a negative and then also wondering how their introduction into the the risk pool.
For individual might drive some greater volatility, but you just have some overall thoughts on on the outlook for that population.
Yeah. Thanks, Gary So we've been monitoring this closely of course.
I do think there's a high chance that's something with past there and that's a membership will come into the markets.
We have a favorite of excuse none of the prior year's with accepting segments of membership into the individual market. So we've seen sort of like people leave some people come back into the markets and as the various individual markets regulations change the I.
I think one comparison hidden in this direction. Eventually is the utilization was seeing in this year's SCP population, where we actually it largely feed the M. A R issue was coming from that is C population attributable to the fact that we just can't collect risk for so long enough in the year and that's the major headwinds the euro utilization.
Point of view of these folks so coming in the air and the kind of couple of places where they look a little bit out of line is they have some higher arguable ization, which potentially could be the good with the fact that some that some self selection going on that when folks get sick and they come back into the market. They are but the other thing will also.
There is a bit higher preventative care utilization if it says it should be population.
And so I think if that repeats and that is very manageable and in fact actually I think we're very much set up for that one member <unk> point of view to grab those folks and make sure we can get them to the right channels of <unk> and things like that and I.
I repeat this interesting statistic for my virtual K a business from from I think you mentioned last one of the only spoke with just out of the folks we have attributes now to a virtual primary care physicians, 45% that they didn't have a P. C. P before and so I think we've got those channels to attribute them. There we've talked a bit about how we run a member outbound campaigns to get folks. So in order to build a P. C. P in <unk>.
Person to get them to go to P. C P in person, but with all the machinery machineries, we can run overall.
I think unequivocally say this is a net positive for a business insulin besides the fact that.
It's in a positive or a business I'm thrilled about the fact that we're gonna get more towards a football coverage for people across the country and I think that's just a great thing generally is a good tailwinds.
Okay. Thank you.
And your next question comes from Jonathan Young from Credit Suisse. Your line is open.
Hi, Thanks for taking my question, just with respect to the discipline pricing commentary uhm physician habit, you're kind of growth for next year. If at all and then are there any geographic areas, where you feel you are better positioned.
Nurses, others for 2022 and the exchanges.
Yeah, and the question as well so we the way we think about pricing.
Mentioned in the script briefly in Frostweed. He has a balance of growth and profitability. We've been doing this long enough I think we know how to get to work. This balance now and borrowing sort of like a very dynamic environment and the way. We had this year with a lot of stuff happens somebody was hard to foresee it.
Let me kind of Reground isn't the numbers with a quick on a weighted average basis, we increase the rates across the before you for next year. So if you really look at what membership is some which meadows yesterday and you multiply this all out we.
We increased our rates from 2021 to 2022, so let me start there.
And I mentioned this in the script I'll want to repeat this again as well last year, we were the lowest price plan about 10% of the markets. We are in now will only the lowest price in about type of our markets and for next year. So that's sort of like the overall backdrop, now where we lean in and where we need.
What pricing perspective is really driven by how much of a rights to when we feel we have in certain markets and markets and we have the strongest provider partner relationships, we might even have to provide our partners at risk and together with us in markets, where we have great distribution relationships those are markets, where we really say alright, that's that's been more sheer here.
<unk> judging from just again I'm very early and open Romans first 10 days, but I do think we can deliver on that on the booth expectations and the strong growth as I called it in the in the prepared remarks and for next year and I really think that's.
We are now at a point after doing this so many many yes, where the product we have is when you're resonating with people and with members and brokers and providers and so on that's the anecdotal information I really gets from.
From anything out there talking members of brokers and so one I'd say two more things one of them.
Some of this is in implant design really important leather we have and we again launched a bunch of innovative stuff for next year. They are that's I think already helping and the second thing is then then yes. We can didn't have a iron profitability in the insurance business in 2023 mm nothing as soon as I view of that's that's a part of it too cheap and shoko profitability in 2023.
Okay, Great and then just kind of going along side Gary's question. There. We determinations are expected to come back next year cause that kind of factored into your thinking in pricing and kind of how are you looking at that component given that that seems to be a moving target right now. Thank you.
Yeah look I think that we build our pricing based on the the environment that that we saw at the time that we put that out there certainly this is one of the if those members come into the market, we will be super excited to have them they'll or as we talked about that are likely to come with some of them and a lot of pressure.
Sure, but over time, we think that that's a net tailwind for our company.
Thank you.
And your.
And your next question comes from the Iraqi Goldwasser from Morgan Stanley. Your line is open.
Hey, guys. This is Michael huh onto Ricky I think you might've mentioned in your prepared remarks or how much was the red the impacts revenue this quarter and she could just talk a little bit about the results of that audit I know you mentioned that had been which May may 20th 19, and there has been improvement in 2020th but what changed between 2019 and 20.
<unk> 20, and lastly, you mentioned changes are being made in your processes. This year could you talk about what what changes, though dry thank you.
Sure Uhm, so the impact of the Rab the.
Ah cruel that we made was was roughly $20 million and you know as I said in my prepared remarks, it's a it's an unusual addict because it covers two years 2019 and 2020.
And I would just say that first off the results are below what we had expected and we've identified causes. There's there's some that are just operational about how we got the data together to to execute the audit and then I would say the other thing is that on a relative performance basis the market.
Our performance is high but others improved a bit more than we did we've seen 2020 have better results and and and that's just through the the audit that's ongoing at the moment and then the the types of things that we're doing in 2021 and beyond are really just taking the opportunity to continue to enhance.
<unk> R.
That gives us our collection of scores and make sure that that we build in a process, where we can support all of the.
The retrospective review through the validation exercise.
Got it thank you.
And your next question comes from a Stephen Baxter from Wells Fargo. Your line is open.
Hi, Thanks couple on MLR to try and identify some of the core trends that are a little more clearly.
I think the key to call you said it in the back half of the year, you're expecting about 600 basis points of pressure from Covid I'd also assuming no offset from lower not COVID-19. So it sounds like you did indeed see the 600 basis points of Covid. This quarter and I think mentioned, an offset of about 300 basis flights from lower non COVID-19 utilization so that.
Sounds to me like outside of a C P and red date at the trends are actually better than I expected, but then I think you also set an indoor prepared remarks that neck COVID-19 costs for worse than expected just hoping you could clarify which one of those it is sort of what the pieces are that there might be awesome.
Sure No I appreciate that this is a complicated topic. So first of all on Covid, our prior guidance, we increase our guidance uhm.
Last quarter for direct Covid cost with roughly doubled what we had previously assumed.
And we assumed that are non COVID-19 utilization would be at baseline that was really create in a little bit of a natural hedge of what would be the net COVID-19 costs that the company would incur we didn't really try to Oprah complicate the estimate five forecasting precisely here's the direct costs, but here's the offset.
For utilization, we knew that there was a risk that direct COVID-19 costs could exceed our estimates and we expected if that would happen that we would see utilization basically at lower levels that would offset and we stopped that happened.
What didn't happen is that utilization didn't decrease enough to fully offset the increase in COVID-19 expense. So you know I would say that the as I mentioned, we had $600 million of net COVID-19 costs and that was in excess of our.
Got it just to put a yeah, hopefully put a fine clouded by the only like I said million. It was basis point 600 basis points excuse me.
Got it just just to be totally clear, though it sounds like in the second half you were expecting 600 basis points of Covid cost with no upset you got 600 basis points and said that there was 300 basis points of non COVID-19 as an offset so it makes sense do you did see some all set so I'm just confused about how in the quarter. It seems like overall this is an issue that was worse.
For me with that expected, but it sounds like it was actually better than that guy. So it is there something there that needs to be factored in that I'm, just not missing I'm sorry, if that's okay.
Repetitive.
No I look I think that on the guidance side I would just say that net COVID-19 costs were higher than what our guidance had assumed that was marginally higher not by not by a lot. So you know I'm happy to pull that up offline and we can give you the the talk but it's six.
Hundred basis points of net including the offset yeah, but gross was higher than we thoughts and didn't get upset enough.
Got it Okay and then just the just the last clarification part for me is just can you repeat and clarify the D. S. T P impact of the quarter and how much of the the 400 basis points that that into your your guidance for the ear. Thank you.
Yep. So S. C. P on a year over year basis was 100 basis points of additional MLR and that's on a year over year basis in the quarter. The discreet SCP costs were 200 basis points. So that's the that is the impact we rode those into.
Guidance, and we would expect that the SEC T effect in the fourth quarter accelerating and so we built that into our full year guidance.
[noise] and your last question comes from Joshua asking that's a napkin your line is open.
Hi, Thanks, I. Appreciate you guys squeezing me in here, so parent cash was down I think about $100 million and I know subsidiary cash was down I think it was about 500 million and I think about 200 million dollar loss in EBITDA for the fourth quarter in terms of guidance and you have to be seen on 2022, but it sounds like obviously expecting a lot. So I guess just questions.
<unk> capital needs, where you think your plan is now has this impacted you know your thoughts on you know longer term capital needs or maybe even you know shorter term over the next year or two.
Sure. Thanks for the question and.
I would just say with regard to the cash that's at the insurance subsidiaries, we make a payment on the risk adjustment that occurred in the third quarter. Those the driver of the decrease of cash there.
Broader speaking kind of pulling up I would just say first of all.
We had a $1 billion to parent cash at the end of the quarter.
We've got all of our insurance entities are well Capitalised uhm, there's excess there which offers you know an additional buffer and then on top of that we have you know.
Untapped liquidity with a revolver as I've talked about in the past, we always look at reinsurance as an option for us to mitigate the effects of growth and so I think of that as a lever. So as we enter into 22 I feel like we've got a strong liquidity position and we have.
Levers there that we haven't pulled you know should we need to do something to slow down the cashback.
Very clear thank you.
And this gives me this question and answer session and then Alright conference call. Thank you all for participating you may know test cannot Caroline.
Thank you very much.
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