Q3 2021 1Life Healthcare Inc Earnings Call
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Good day, and thank you for standing by welcome to the one medical fiscal 2021 third quarter earnings conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to.
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Thank you operator, Hello, everyone and welcome to one Medical's fiscal 2021 third quarter earnings call I'm joined today by any again Rubin chairman and CEO of one medical.
I'm, Paula <unk>, Chief Financial Officer of one medical.
Please disclosure of our results can be found in our press release issued earlier today as well as in our related form 8-K, all of which are available on our website at investor One medical dotcom.
As a reminder, today's call is being recorded and a replay will be available on our website.
As part of our comments today, we will make forward looking statements. These statements are based on management's current views expectations and assumptions and are subject to a multiple of risks and uncertainties.
Actual results may differ materially and we disclaim any obligation to update any forward looking statements or outlook.
Please refer to the risk factors in our most recent annual report and updated from time to time by our other reports and filings with the SEC, including our quarterly reports.
He believes that the COVID-19 pandemic continues to create particular complexity when it comes to providing a forward looking view of the business.
We are providing our guidance on a good faith basis per recent SEC recommendations.
We would like to specifically caution investors that our future performance will be harder to predict for the foreseeable future.
All forward looking statements are based on assumptions that we believe to be reasonable as of todays date November 3rd 2021.
Information contained in today's statements should not be relied upon as representing our estimates as of any subsequent date.
Of note. It is one medical's policy to neither reiterate nor adjust the financial guidance provided on today's call unless it is also done through a public disclosure such as a press release or through the filing of a form 8-K.
Today, we will discuss certain non-GAAP metrics that we believe even the understanding of our financial results all.
A historical reconciliation to comparable GAAP metrics can be found in today's earnings release.
Finally during the call we may offer incremental metrics to provide greater insights into the dynamic of our business.
These details maybe onetime in nature, and we may or may not provide updates in the future.
With that I shall turn the call over to Amir and beyond for their prepared remarks and to take your questions.
Thank you everyone for joining US Q3 was an exciting quarter for one medical as we welcomed in IRA and further expanded our services for the senior population and as we also launched in another new market Raleigh Durham North Carolina.
With that backdrop, we are pleased to share with you today results from our third quarter and update you on how we continue to perform innovate and grow.
We continued our strong financial performance in Q3, as our human centered and technology powered model continues to deliver results for our growing number of members employers and payers providers and partners. We ended the quarter with 715000 members.
18000 above the high end of our updated guidance from September 1st.
40% year over year.
Our revenue also has outperformed coming in at 151 million $3 million above the high end of our updated guidance from September up 49% year over year.
We also continued to show our ability to innovate.
Recently publicly showcasing results from our clinical programs. For example, we were delighted that New York State has recognized one medical for the second time in three years as the number one performer in New York's HIV care continuum program with one medical demonstrating 100% viral load suppress.
Among its patients with HIV.
Furthermore, we continued our strong growth this quarter, we grew organically through end market, a new market growth.
Including opening new offices going live with a partnership with Duke University Health system in Raleigh, Durham, North Carolina, and further growing our one medical now National Digital Health services, and our one medical mindset behavioral health services.
We also grew through the acquisition of <unk>, which closed on September one.
Our vision has always been to create the premier human centered and technology powered health care organization and we have been consistently executing against this vision well before we went public in January 2020.
Indeed, we've expanded the number of geographies we are in from eight markets at the end of 2018 to soon to be 28 markets. We have grown our membership from 397000 members as of September 32019 to 715000 members in two years.
We've expanded our care margin for the Standalone, one medical business from $80 million for the first nine months of 2000 $19 million to $153 million for the first nine months of 2020 'twenty one.
We have delivered positive adjusted EBITDA for several quarters in a row.
And as we announced previously expected to reach adjusted EBITDA breakeven one year earlier than expected at the time of our IPO and prior to the addition of <unk>.
We have done all of this while simultaneously, adding to our product portfolio, including with our one medical for kids pediatric services, one medical mindset behavioral health services, one medical now with $24 seven virtual National service offering and one medical impact chronic disease model.
Moreover, we have done this while navigating a global pandemic watching our healthy together services and supporting our members with COVID-19 screening testing vaccination and vaccination verification services.
Our incredible team has been able to keep medical offices are open and virtual services flowing to help our members and stakeholders returned to their wives jobs and school.
We believe our operating and technology model continues to position us to consistently execute against our vision and goal.
Furthermore, we are now also executing against this vision with the addition of IRA leveraging core strengths and enrolling and engaging members delighting and retaining members delivering outstanding care and experiences advancing health outcomes and reducing the total cost of care.
Leveraging our proprietary technology and dedicated providers to simultaneously address the needs of multiple key stakeholders.
We are further applying these competencies to now also care for seniors and at risk model, expanding our total addressable market to $870 billion across our market.
Markets and geographically positioning ourselves to reach nearly 40% of the U S population in the markets in which will be operated.
As we've previously noted we believe the addition of IRA creates many potential synergies, including an opportunity to serve parents and grandparents of one medical 683000 consumer and enterprise members.
Furthermore, we can now more seamlessly aging members as they transition from commercial insurance to Medicare and enter into Medicare advantage and other Medicare risk models further extending lifetime relationships with members.
The addition of IRR well allow us to further grow Medicare and Medicare risk and legacy one medical markets and also expand into consumer and enterprise services and legacy Iowa market.
At the same time, we are leveraging the one medical performance system of standard operations technology clinical and business practices across the enlarged enterprise leveraging approaches which have been successful in supporting our execution against our plan.
We are integrating our technology system into one combined platform to deliver differentiated differentiated results for multiple key stakeholders.
We'll be using the one medical brand across the enlarged business to extend growth opportunity we.
We are building on our aligned culture and vision to help drive effective and efficient health care for all our key stakeholders better care and better health for our members wherever cost for payers such as enterprise clients managed care plans and governmental payers are more rewarding environment in which to practice medicine for our providers and team members.
And critical and digital integration with our health network partners to deliver more coordinated care.
Yeah.
Even though we've been a combined company for just a little over two months, we are already advancing opportunities to drive results in combination we have lunched efforts in select legacy one medical geographies to extend our excellent care to all Medicare recipients, including those in at risk models, such as Medicare advantage and direct contract.
Which we expect to create incremental revenue for US beginning in 2022. For example, we are already engaging with current one medical Medicare Medicare members in these geographies, who have so far overwhelmingly confirmed what we believed all along that they look to us as their primary care provider and are voluntarily.
Using to align to us as their provider and the Medicare direct contracting program.
In addition to growing our at risk member enrollment. We're also working on taking advantage of our combined care management capabilities and programs, including for example, our modernized chronic care management model, which has demonstrated a two point reduction in average hemoglobin, a one C levels compared to baseline.
As a reminder, previous studies have found that a one point reduction in hemoglobin <unk> C is linked to a reduction in risk of death by 21% heart attacks by 14% and micro vascular complications by 37%. Additionally, we are building upon I always proven population health and competition.
Management approaches to serve even more at risk members.
Even as we pursue these synergies we continue to be pleased with I R. A standalone performance, which is in line with our overall expectations at the time of announcement of the transaction. Moreover, I or a standalone membership revenue and medical cost trends have performed in line or better than announced expectations for the quarter.
Turning more specifically to our overall Q3 performance, we are very pleased with the quarter.
We ended Q3 with 715000 total members growing our membership base, 40% year over year.
Added 94000 members during the quarter and have added more than 204000 members over the past 12 months.
We delivered $151 million in Q3, net revenue, which was up 49% year over year.
We delivered a Q3 care margin of $46 $8 million or 31% of net revenue.
We delivered Q3, adjusted EBITDA of negative $6 million.
As a result of our collective performance. We are pleased today to increase our full year guidance across all our guidance metrics membership revenue care margin and adjusted EBITDA.
Please note that as expected due to the addition of a euro our care margin as a percent of revenue decline this quarter and we expect it to decline further in the next quarter as Q3 only included IRA from September one onward.
Also as we've previously described with the addition of new Medicare risk courthouse quote cohorts as we grow members. We predictably expect the initial year of such cohorts to have higher relative to third party medical expense ratios and the slower care margin, while more mature cohort are expected to generate greater care.
Margins and adjusted EBITDA in the medium and long term as a reminder, we are targeting 17% plus adjusted EBITDA margins in the long term.
Together, we believe this will enable us to deliver continued strong membership and revenue growth, while achieving rising care and EBITDA margins in the long term.
While we are proud of our performance, we believe our human centered and technology powered innovative model sits at our core.
Through our model, we deliver a premier member experience and can also drive better health outcomes and lower costs with coordinated care and a better team environment.
As a reminder, on average for our consumer and enterprise members. We had 10 interactions last year, including approximately two times in person and eight times digitally.
Similarly for our senior population and now you're a health we averaged 19 interactions per member, including three to four times in person and about 15 to 16 times digitally this compelling combination of in person and digital member engagement.
Wrong with their salaried providers and proprietary technology platform.
<unk> supports our ongoing innovation and clinical performance and facilitates our continued deployment to an even greater population base. For example in Q3 as previously noted we were pleased to highlight that New York City Health departments.
HIV care continuum.
<unk> has ranked one medical is the leading HIV care provider and viral load suppression, among HIV patients achieving 100% viral load suppression among patients with HIV.
These outcomes come on the heels of our Q2 announcement of a peer reviewed published study, which highlighted how our model delivered outside outsized impacts and controlling diabetes. These.
These studies in turn followed a peer reviewed study published in Jama network opened last year that showed a 45% reduction in the cost of care for an employer.
As a result of our continued performance and innovation. We also continued to grow in.
In Q3, we continue to see strong membership growth across our consumer and enterprise as well as senior channel.
Our consumer membership continues to grow across our geographies benefiting from increased brand awareness as we continue to invest in our marketing and advertising campaign on.
On the enterprise side in Q3, we began new relationships with organizations in industries across the legal financial services manufacturing Entertainment real estate biotech and consumer goods amongst others are.
Our national Digital health services, and our increasing in person geographic reach soon to encompass 28. Your geography continues to be a growing competitive differentiator as the larger multi market employers look for multimarket solutions. This past quarter. We were excited to open our doors in the Raleigh Durham North Carolina.
I know region for consumer and enterprise members and to expand our in person presence with new locations in a number of our existing markets.
Look forward to upcoming launches of additional new markets as previously announced including Columbus, Ohio, Huston, Texas, Milwaukee, Wisconsin, The Miami, South, Florida region, and Dallas Fort Worth Texas.
Similarly, we continued to see strong interest in our growing set of service offerings with recent examples also including our vaccination verification program. In addition to one medical now one medical for kids healthy together workplace return services and mindset behavioral health services.
Turning to our senior business, which is largely represented by our acquisition of <unk> on September 1st. We believe we are off to a great start with at risk membership of 32000 coming in at the high end of our guidance as well as beating our revenue guidance by $3 million.
Also as previously mentioned, we are working to deliver care through our one medical for seniors at risk models in our legacy one medical market, including launching in select markets beginning in 2022.
We also continued to grow our health network partnerships.
Expanding with both existing and new Health network partners. Additionally, as a result of IRR now being multi payer rather than only contracting with the single health plan I R. Over the past several months has signed several new contracts with Medicare advantage plans, including Aetna, Centene Cigna devoted United Healthcare Blue Cross.
<unk> Blue Shield plans and other plans across a variety of geographies, thereby expanding our pool of potential at risk members Inc.
In closing we delivered an outstanding Q3 is our team and technology help us continue to perform innovate and grow with their strong performance. We are now expecting our full year membership to reach 728000 to 736000 members our full year revenue to reach six.
6 million to $615 million and our annual adjusted EBITDA to be between minus 37 million to minus $32 million.
We continued to perform delivering impacts to our members in all our stakeholders as our multimodal model technology platform geographic reach and breadth and depth of services differentiate us in the market. We continue to innovate with our model recently, highlighting how our technology powered and team based approach.
<unk> and bedding chronic care management into a member based primary care model delivers better results for consumers employers and payers team members and partners.
And we continue to execute across our many growth opportunities.
More consumers and enterprise clients, expanding our footprint aligning with premier payers and partners and growing our service offerings.
While we have seen much success to date. We believe we are just getting started in our mission to transform health care. We're excited to further perform innovate and grow with the addition of IR of health expanding our model to further serve the senior population and expanding our reach to serve members of all ages and across every stage of life.
As we look forward to 2022 and beyond we will continue to invest in our service offering our team members our technology, our care programs and our digital and physical presence there.
We look forward to keeping you updated on our progress and appreciate your engagement with US now let me turn it over to our CFO Bjorn Thaler.
Thank you Emil and Hello to everyone on today's call.
I look forward to providing you an update today when I was third quarter results, which highlight the continued momentum in our business.
Well as an update on our full year 2021 outlook.
It's just so first earnings call after the acquisition of Iota.
I will also take some extra time to provide you with additional details on our financial performance and our disclosures going forward.
And finally I will also share a brief update on our integration efforts to date.
First turning to Q3.
Please keep in mind that acquisition closed on September 1st and as such our financial results include the impact of one month of Iola.
We finished the third quarter was just total membership count of 715000 members exceeding the high end of our total membership guidance of 697000 members by 18000 members and growing 40% year over year.
Yes.
Specifically, we finished the quarter with 683000 consumer and enterprise members exceeding the high end of our September 1st guidance for consumer and enterprise members by 18000 members and growing 34%.
Yeah.
Please note. This membership count includes approximately so he saw was in consumer and enterprise members familiar with us as well as an estimated 18 to 25000 consumer and enterprise members, who we believe have signed up predominantly for employer mandated vaccine verification purposes and.
This is who we know has a great opportunity to engage with on the rest of our service offering.
These incremental members will impulse included in our updated guidance issued in connection with the closing of the acquisition of you with US if they signed up predominantly in August and September.
Turning to our <unk> membership we ended the quarter was 32000 at risk members.
High end of the guidance issued in connection with the closing of the acquisition.
As a reminder, and enter this command booz at Pearson for whom one medically and financially responsible for managing that members health care costs for example, through Medicare advantage or Medicare direct contracting.
Yeah.
Moving onto revenue in total we delivered $151.3 million in net revenue in Q3 up 49% year over year.
And $3.3 million above the high end of our guidance.
This revenue includes $75 million in Medicare revenue as well as $129 million in commercials that menu.
Please note that our Medicare revenue, which includes can't be treated Medicare you exclusively associated with our interest Memphis.
Well as fee for service and other Medicare revenue.
It's the result of our acquisition of Yoga effective on September 1st.
Our strong Medicare revenue performance was driven in part by strong risk membership number I shared earlier.
It's higher than you expected per member revenue.
Our commercial revenue, which continues to include partnerships with revenue net fee for service revenue and membership revenue.
Is up 19% or $19 million.
Year over year.
This commercial revenue growth was driven in part by a continued strong growth in membership revenue.
Which was $21 5 million up 24% or $4 $2 million year over year.
And which reflects in part the higher than anticipated membership number I shared earlier.
Our strong commercial revenue performance was also driven by our third quarterly partnership and that fee for service revenue.
$99 $4 million in total.
Which was up 18% or $15 $2 million year over year.
This growth was driven in part by our continued strong membership growth and the normalization of primary care consumption compared to the same period last year during shelter in place orders and other restrictions implemented as a result of the COVID-19 pandemic.
Looking at the revenue performance for all our Standalone business prior to any reclassifications.
Contributed $36 million of those to our total revenue and you choose to eat.
$2 $6 million more than the high end of our guidance for the our yogurt business at the time of closing.
Similarly, the one medical is that of a new player to do yoga yoga contribution was $127 million or zero point $7 million above the high end of our revenue guidance at the time of closing and up 19% year over year.
We are providing display kept at this times solely to ease the transition to our combined financial reporting going forward and we will notch Blake I'll give you a new performance if you will.
Well, one medical excluding our yoga past 2021 as we integrate our businesses.
Moving down to P&L.
We recorded medical claims expense in Q3 of $26 $1 million.
Medical claims expenses associated with Stuart Polyptychial received by our advancement bus will be a financially responsible for a range of health care services.
We start seeing any medical claims expense ratio of 87%.
This medical claims expense ratio was approximately in line with our expectations both at the signing of the transaction and at the time, if it's clothing.
As a result, we are pleased with the medical claims performance of our at risk membership to date, which shows the power of longitudinal relationship based chaos.
This is on improving the health outcomes for our members.
Our combined cost of cable was $78 $4 million up 33% year over year.
This increase reflects the continued growth in membership and investments in our reservations as well as the addition of Iowa.
And so he was asked if I was Avenue medical claims expense and cost of care performance, our combined camo Ocean for Q3 was $47 million.
It was 31% of net revenue.
As we demonstrated over the last few quarters, we have been able to drive increasing language in our care delivery assets and we look forward to improving the utilization and efficiency of our combined operations, including a yoga overtime.
While ensuring continued strong focus on managing the health of our members.
Excluding getting picked off by you all we estimate the one medical care them out she was $49 3 million or 41% of net revenue.
Humans, Alex usually adjusted EBITDA was negative $6 million when they get a 4% off and I said Avenue compared to positive sleep $5 million or 3% of total net revenue one years ago.
[noise] turning color balance sheet.
As of the end of Q3, we had $590 million in total cash and short term marketable securities.
<unk> Ducks in total cash and short term marketable securities compared to Q2 was predominantly the result of cash needs related to the acquisition if I order.
Let us know turn to guidance.
For the full year, we expect to finished 2021 with a total membership count in the range of 728000 to $736.
Which continues to reflect our strongest growing value proposition in the market place.
This membership guidance includes approximately 695000 to 702000 consumer and enterprise members and 33000 to 34000 editors commandos.
We also expect to deliver annual Netroots Avenue of approximately $606 million to $615 million.
Including one medic Phillip Avenue, executing a yoga of $483 million to $490 million.
And are you of Avenue of 123 million to $125 million.
As a reminder, we are providing display code of our revenue guidance at this time solely to eat the transaction travel combined financial reporting going forward and will not take out the revenue performance offer you order or one medical excluding a yoga past 20th 21 S. We integrate our businesses.
We also expect to generate N will kill margin of approximately 184 million to $189 million and adjusted EBITDA of approximately negative $37 million to negative so the $2 million.
In total we are pleased to increase all of our guidance metrics.
Membership revenue.
<unk> and adjusted EBITDA, when compared to our prior guidance demonstrating continuing strong execution and Tailwinds, we expect for the remainder of 2021.
Before we close let me briefly share a few thoughts on our ongoing integration efforts yoga.
The transaction closed on September 1st and our teams typically works tirelessly since then to refine and execute our integration plain.
As we noted previously reconsidered the ability to devise profit triple a membership growth.
Engage with our members improve their health and lower their health care costs.
Sure strengths of one medical.
And we are the main very excited about doubling down on these strengths with yoga and Medicare Eligibles in education programs.
We have already made meaningful progress in bringing our two organizations together, having consolidated our leadership teams technology roadmap and real estate strategy just to name a few.
Additionally, we will over time combined both organizations under the one medical branch it costs all of our geographies and we go further rollout T editors model to von medical senior population.
We continue to believe that this transaction will provide the trash different Avenue go with opportunities coupled with an increase in to our adjusted EBITDA margin profile.
These financial opportunities will support us in delivering even credo value and impact.
For all our key stakeholders.
In closing we are pleased to deliver another clauda, a strong financial results, including strong membership and revenue growth medical claims and cost of care expense management topic of his continued SG&A lunch.
Really mean on track to deliver a great 2021.
And feel incrementally even more positive about one medicals and I all of US 20th 21 Standalone performance.
With the addition of a yoga, we can now sort of nearly 40 per cent of the U S population at cause every stage of life in person in our combined existing and announced 28 markets.
Nationally swallow virtual offering.
Helping us create a national model for exceptional high quality and high value chaos.
We thank you for your time today and will now open up the call for questions.
We will now begin the question and answer session. Northern task of question you will need to press star one and your telephone again, it's star one on your telephone keypad. Please stand Bible compiled between a roster.
Your first question is from the line Lisa go with J P. Morgan Your line is open.
Good afternoon, and thank you for all the details P. R and I'm I'm disappointed that that this is the one and only time right. We're gonna get this detailed that I. Appreciate your gonna put the two entities together as I think about the one traditional one medical pass S and we think about the Delta Marianne and testing is.
<unk>, she talked about vaccine verification as well as vaccine administration can you talk about you know what the impact in the quarter was for testing and vaccination and then secondly to that do you see an opportunity, especially now that you had the pediatric practices to be able.
To do the the vaccine for pizza and as we think about I R and the aging population opportunity around boosters. So if if you can help us to starting there with how we think about what we stopped for testing vaccines I keep the same verification in the corner and then what you see in your fourth quarter as well it would be helpful. Thank you.
Yeah, absolutely. Thank you Lisa.
So I think let me when you look at the impact of Covid suddenly under consumer and enterprise business I would probably describe it as sort of a a modest tailwind right. We've said in the past that that the relationship between revenue and and a coke.
<unk> vaccination efforts Covid testing efforts is not necessarily a state line given that a big part of our with Avenue is to know comes from Hello partnerships as <unk>, sometimes they actually get the diet extra Avenue from from Covid testing for example, but certainly on.
On balance I think we saw a little bit of a tailwind certainly on the consumer and enterprise side for that and De-clawed, a which thinks he was part of what drove the the outperformance you're on the revenue side.
I think I think you know on the on the senior side of the business obviously.
The idea of of ins and outs, you had certainly a little bit of a.
Okay pent up demand that did you see across the it cost industry and frankly B C. It is true I, particularly in the 2021 cohort Aida members that just recently joined US Yeah, we see that they're coming in unmanaged, often times with with health conditions.
Thankfully all things that he can manage much better better that's on the carnage kill side, but it it is just making sure that they get the appropriate scale.
And yeah S. A resolved with you actually really proud of is when you look at the cohorts.
2020, and Pryor really most of them I actually trending better than last year. Despite all of the all of the noise that's out there.
Covid, so that really goes to show the power of dementia Tweedle model. It goes to show the power of the execution. That's both some show that one medical Ikea you walk outside I'll I'll known for Andrea a pretty proud of that and go to continue to show that.
And just as a follow up to that let me think about the cohorts you know anything about the data you'll give going forward will you give us some data around cohorts and then secondly, how do we think about the timeline to wear those members become profitable is is it you know X number of years.
Will you break down those cohorts of here's those in your one and by year whatever it is is where they're profitable like you know just just so we have a timeline that has had to think about is those members come online and thanks and congratulations on a good corner.
Yeah, absolutely I mean, we obviously she had some cohort David as part of the at four in the way. We think about this right now is to be continue to shed is probably about annually as part of our 10-Q.
Sorry 10-K.
Thank you.
Your next question is from Craig heading back with Morgan Stanley. Your line is open.
Oh, yes. Thank you it's Craig on for Ricky could you provide any more color on the conversion and I are from people service at risk you talked about 20 twenty-two kind of a step up now how do you think about the Caden next year and in the subsequent years and and what about some kind of a P. M. P M perspective.
Yeah. Thanks, there's obviously a lot in that question, but yeah, maybe it just takes a step back you know at the end of March are you over the head about $21. Instead of editors members and if you hit on today. We just went about 32, so really a step up off 11000.
<unk> Oh.
Overdose six months and yeah.
This step up it's really driven both by continued close on D. M. A side and vice director contracting, but certainly the direct contacts being site is has outperformed sort of D. D. Medicare advantage side, certainly mostly driven on the voluntary alignment side.
And I think that's really.
Goes again to the to the thanks, I'll stick relationships frankly at that hour providers and also as a company a building was elementals, but they really looks to us to take care of them and I think they are voluntary alignment with US is is a testament to that obviously that will.
<unk>, a little bit of a tailwind into 2022 in terms of P. M. P. M revenue certain women you just think about the fact that they're coming and sort of pulled auto or sort of sort of swallowed to D. C. O. Obviously next year will have you know to the extent that we hang onto those members retreat fully expect we'll.
Have obviously, hi, yoga Avenue or cost of you.
Got it and then just as a follow up for the the strength and the membership constantly above the high and is there anything in particular, you would call out there that helped it and how do you think about you know, perhaps the sustainability of some of the momentum you're seeing there as you go into next year.
Yeah, well, we we think this continues to show the power of our model and the proof points that we've been putting up in the market.
You know, we're known for people loving.
When medical loving the experience we've talked in the past about are very high retention rates 90, plus percent attention. We talk today and are prepared remarks about the additional clients. We've brought on an additional enterprise accounts, we brought on across multiple industries.
We've kept putting up more and more proof point, whether it's serving the whole family with one medical for kids, whether it's R. One medical mindset, whether it's serving employees in multiple markets through our one medical now and the various studies that we pointed to early this year that peer reviewed studies showing.
Approximately two extra performance on on managing diabetes and other published results, we talked about the Jama study last year, showing 45% cost reduction and we talked about the chronic disease management in managing complex cases, like H I V that we mentioned again today on our call. So I think yeah.
These are strong proof points and I think they are very sustainable and I think we've shown that we can.
Not only delight members Ah, but help them live healthier lives help important payers produce costs and we can retain them and we can do this across the and consumer and enterprise populations, but also across the senior population. So yes. We believe this is a really good signal.
I appreciate the color things.
Your next question is from the line of J Linder thing, where the credit your line is open.
Thank you and thanks for taking my questions quick clarification will be on you mentioned that you will not report I wrote Avenue separately, but he was still report the breakdown between commercial and Medicare revenue right.
That's correct okay.
So my question is around the Medicaid M. A lot of 87 person I know that's only for one month of IRA <unk> in line with your expectations can you give us some color word was pro forma for the whole quarter for Iowa, and I mean, if you can compare with the historical trends and as we think about the puts and takes off.
Enter the issue on Covid cause a non COVID-19 cost anything you can share their how transfer what are you expecting for queue for it on you know euthanize from friends built into your guidance.
[noise], Yeah, let me start out than a mere feel free to to jump in here as well, we only when you think about the 87%. It goes a little bit back to what I mentioned earlier. It. It's really a lot of that is driven by the rapid close that we had in 2021.
Will fall on the other side.
As we've always said.
As a new member sort of comes in they tend to run at higher Mlr's because their house conditions tend to not be documented health conditions tend to not be managed uhm and that's really where some of our model of care can shine or what time and if that's something they wanted to go see so yeah that the folks who are coming in managed.
D C.
Near the honey at at the medical claims expense ratios that thankfully, Ohio, then once he's typically seen as each that's a little bit to weigh over you see some of that ketchup chaos I'm 54, Okay and also some of the some of the.
Ah challenges as soon as out of Covid coming in here, but as I mentioned earlier I really when you look at the various that's how the cohorts perform once you know part of one medical and a yoga.
Once we actually have a chance to to manage it and we hope you're quite pleased with that performance and this is really in many ways to resolve our strong close at USC.
On the on the the rest of the question relative to relative to Covid, Yeah, I think we certainly.
Seen in a couple of geographies E trees, and Covid cases, just like a nation that was all that's all beached into into that 87% on the other side and certainly also based into out with with your guidance.
Okay and another issue several health care companies, having to highlight thing and experiencing the labor sharp edge and pressure then donated heart cause. That's wondering if you can she had what you are seeing in your business Bullock on one medical side, and <unk> side, and where does come to off set you back with Pakistan.
Yeah, well Oh overall, we are continuing to add and grow a ton of team members. Obviously, we're we're growing from eight markets. One medical stand alone, where we were a couple of years ago 228, combined with with I already so we're adding a lot of team members and.
We felt very well positioned there we believe that part of our approach is to simultaneously address the needs of multiple stakeholders and that's certainly members and consumers and employers and payers, but it's also to be the best place.
To be a team member and as we've talked about in the past, we think we have a differential.
Model here that helps to attract and retain team members. So for example, we try to reduce the burdens of desktop medicine with her old Bill for purpose technology, we reduce those tasks. We are have a virtual medical team that not only serves the the the members directly but can take tax software providers. So.
Overall, we're we're feeling very good about the team our ability to recruit and retain I think overall well.
Well there might be some puts and takes in terms of recruitment in one area or another we feel we're continuing to be a very attractive and Porter and we thank all of our kind of.
Labor costs and everything else is all built into the to the forecast and into our protection.
Great, Thanks, and congrats and good <unk>.
Your next question is from the line of Stephanie Rethink with Jeffries. Your line is open.
Hey, It's correct me I'm on the phone for stuff. Thanks for the call Center. Congrats on a great quarter sounds like you guys are having pretty good tracks and what potential enterprise clients on the one medical side of the house could you give us any color on how those conversations are really involving I'm thinking really about the expanding menu of offering the long side I aura uhm.
That in a different market expansion. So does that change anything in the way your sales team go to market the better resonate and then on top of that if I my how our activity levels in those conversations trending versus prior your Empire expectation and I know you talked about a few different industries I'm wondering or anything any changes in terms of customer size. Thanks.
Yeah. Thanks, Chris.
Yeah overall, we're continuing to see you know great uptake with a range of and porters, we're now and more and more market. So multimarket employers are even more interested in us and with our one medical now services, we can even turn our services on in markets, where we don't yet have a.
Physical presence so that those are certainly positive as we mentioned on our our last call in September Oh, you know a big proportion of our top accounts are using us for multiple services and that might include our one medical mindset behavioral health services, we talked about her healthy together services.
So, they're just kind of more and more reasons four important to work with US I think clearly for many employers their health and wellbeing of their employees is on their mind, they're thinking about vaccine and verifying vaccination, they're thinking about testing now people are thinking about their kids and what to do.
Do and having that partner with the importer in with the employee has been incredibly valuable. So we continue to see that I think the the combination with I Alright is is also intriguing.
As we mentioned before we now have on the consumer and enterprise side. You know 683000 members. Many of those folks have parents or grandparents, who might be eligible and be interested I should say enjoining, our senior health programs.
It might be something of interest to employers to help reach out to.
To the parents and grandparents of their employees. So we just see continued tailwinds and kind of more proof points on the employer side, but also frankly on the consumer side. So we're seeing a strong growth there as well.
That's great and then just a quick point of clarification, you met some kind of I'll take a multiple services that just among new client wins or is that inclusive of upsells among existing clients.
Yeah get clarification.
We certainly are also seeing that on.
Existing clients, certainly with new ones, but also with existing for sure.
Awesome. Thank again.
Your next question is from Elizabeth Anderson with Evercore. Your line is open.
Hi, guys. This is eduardo on for Elizabeth I was just wondering if he could circle back to the 87% MLR and I mean pretty say are reported you know and 81 per cent MLR in 2020 at 78% MLR in Q1.
So is this step up.
Primarily all related to this you know the the new direct contracting members and maybe if you could just bifurcate the to the traditional M. A members in direct contracting and how we should think about that M O R.
Yeah, I <unk> I would probably say that this step up is related to their meaningful growth that we've seen this year alright. So when you look S. T. A M C again I think.
Essentially it is.
Those new members come in thankfully, both under Medicare advantage size, certainly maybe just cause better date than S. L. Us on the signage contradiction side way, obviously to pull gonna be staying relatively new but as those new members come in they do come in at a meaningfully high <unk>, even relative to the hill.
For context. So this is again misunderstand longitudinal keel over time lately comes in and comes into play and it really helps us manage these people create value for them, So who better health and then also we used a total health care cost it always tossed it with them. So it's really the function of meaningful <unk>.
<unk> and for the most part it this year.
So would it be fair to say that those members that were sort of in a Q1 cohort were you know that there's a member there in Q1, where you had a 70 per cent of them are are.
Did not see US you know a 99 percentage point increase in their MLR. It was just it was more of this this new these new members plus direct contracting that started in April.
Yeah, I I don't know that it's particularly helpful to look at cohorts between like <unk> like who you think of these as is.
Members to join US <unk> as I said earlier and Relocates actually at all members, who joined US in 2020 and before most of these cohorts actually showing improvement year over year, which again goes towards each depaolo off the model here and.
And I think that's sort of follow how how we how we look at this you are.
Alright, thank you.
Your next question is from the line of George Hill is Deutsche Bank. Your line is open.
Good evening, guys and I. Appreciate you taking the question I'd just be very interested in me or to hear you guys talk about what your conversations have been linked with your health system in provider partners post to close or they are a transaction and what opportunities they see their thank you.
Yeah. Thank you George Yeah. This is a really exciting opportunity I think one of the things that are partners look to us for his ways to innovate and in the consumer and enterprise side, where a great way to innovate in a very consumer driven technology powered.
Director employer model for attributable commercial wives and here are similarly, with our senior health with an R. R. R. A program, where a great way to partner in how do you start edging into risk Ah on on the health system side, and and certainly for health systems.
It it may be quite difficult to go global capitation for their entire system given their multiple service lines and tertiary care, but they can do it with us and we can take on that risk and we can coordinate care with them and they can but that's what we participate in sun portion of that risk as we think about this going forward. So those are I think really exciting opportunities.
Moreover for us on the care delivery side.
Now we have these built clinically integrated technology integrated models, where we can have tighter relationships with our health network partners with their providers. So we can coordinate that care, even more tightly for our seniors whether or not there is sure address. So we think this is a tremendous differentiator.
In the one medical model great for our members and also great for our Parker. So that's that's quite exciting and we're <unk>. We're pushing ahead on that park with our partners.
Thank you.
Your next question comes from the line of Richard Chloe Smith can't afford your line is open.
Yeah things congratulations on the closing of the transaction B R.
Was curious on the membership number if you could go back to that the commercial and enterprise.
You said 683000, and then you you mentioned the 18 to 25000 I think it was members can you just go over the details of that was was that originally included in the September 1st guidance.
And I just wanted to be clear on all that.
Yeah. Thanks for the question. So suddenly some of those members real included into September 1st guidance, Yeah. As I mentioned earlier today, we really saw it an uptick on on vaccination notification members a cost of months of August and September So part of that May include.
India August guidance, sorry into September guidance, the way I think about this is really that if you sort of normalize the guidance.
Both for a new Orleans to 25000 door agent to 25000 vaccine verification members. The way I think about disarming underlying business trends is that'd be really beach. The the the heightened off the September guidance by 8000, alright, and in many ways they not a way to speak about.
This is relative to what relative to August guidance, which didn't include any of these members the kind of beat by by 10000, just kind of the way I'm thinking about this once everything is that's been done and then yeah. We are amazing to fool, obviously by 11000, So I think she said.
It sort of goes to the strength of the of the of the membership didn't go skiing, so far this year.
Okay and are are they actually members or did they just sign up for a trial period and get the vaccine and you said something about you know you have the opportunity to you know bring.
Bring them in or.
Are you afraid that.
Yeah. So do you do you remember the days they need our definitions of a membership alright [noise].
And in many ways, we are now on their cell phones.
And asked it installed wisdom, we know details do you actually know used to interacting with us so similar to what we did with Kobe to testing early last year and I hope you'll be said look we're going to open up our membership model, they're going to have others come in are those experienced it one medical difference.
And in many ways, we use this as an opportunity to really showcase all the way abilities. We have now the ability to showcase dose incremental vaccine notification members, which are full fledged members, which have access to one of our services. We can't really know showed EM yeah, what it means to be a one.
Medical remember what does too I missed levels, what they can expect and it will engage wisdom onto your health the message that's going to be a great opportunity for us over time to to to.
<unk> get them familiar with we'll see what we saw something and really have them use us 40 on a day to day longitudinal weekend needs.
Do do you guys have any like conversion rates in terms of how you know how they convert in terms of two full membership or anything along those lines.
Yeah. So again they they are full of members right. So I'm going to be very clear day, all day awful Memphis today, and it's a little bit too early to say you know how how all of those engagement definitely where they're gonna land, but just suddenly belly encouraged by the tends to be a seating sofa.
Okay. Thank you.
Your next question is from the line of Daniel Crossnine with City. Your line is open.
Hi, Thanks for taking the question incorrect congrats on the corner.
See the Capitated primary care space become increasingly competitive Walgreens made a big investment village M. D. Oak Street is getting into virtual, especially consult with respect with ocean.
As we head into 2022 would be great to get your view on the Medicare competitive landscape and how you intend to stay competitive and as we think about Medicare membership growth. In 2022, do you think that will be driven by members outside of Humana.
Yeah. Thanks for the question Yeah.
Inc.
A number of things that are very differentiated about us at one medical and when medical now serving across pediatrics adults aging adults and.
Seniors I think the first point is we have a model here that's known for an incredible experienced an incredible performance at scale right. We've been delivering historically 90 net promoter scores. We have a model that is very digital to it as well as in person. So it it it one medical we have about 10.
Touches per member per year.
About two of those are in person the remaining eight or so our digital at I or a health similar in about 19 touches per member per year.
With about four to five to one ratio of digital to in person. So that's very different high digital touches in both models very high service levels as we've talked about in the past 90 net promoter scores very high retention levels across one medical we've talked about 90 plus percent retention and they asked for we talked about it or.
At 80 plus percent retention. So these are quite differentiated and now we have the opportunity to not only served this whole.
Range across every stage of life, we can age people in right. So we've been serving people for years and now they might agents Medicare and we've talked about this in the past we have thousands of seniors and legacy when medical who are over 65, who we can now look to bring into at risk relationships should they choose to do so whether it <unk>.
Literally aligning in direct contracting or whether they choose to join Medicare advantage plans.
We also have those aging and every year and then we have the parents and grandparents and then we will have to reach into 28 market. So if you think about who has a really high service level very technology powered has showed they could scaled nationally into 28 markets and Ken H people in across pop.
Relation we think that is very highly differentiated of course Medicare is a giant market 60 million or so people out there are huge Tam 870 billion for us 40% of seniors now in Medicare advantage, let alone indirect contracting. So we believe what we've done is extremely differentiate it and we.
<unk> model is the model that will serve a wide swath of people and will be frankly People's preferred choice [laughter]. If you had a choice would you choose this would you choose this one medical approach digital an in person care very high service.
And we're the ones who published demonstrated outcomes demonstrated results. So we feel very great about our positioning going into the new year.
Got it that makes sense and maybe in that same vein of differentiation and you launched a new chronic care management program this quarter impact.
Revenue model for that program and is that available to both commercial and the caffeinated Medicare any details around.
The revenue from that and any adoption, you're saying heading into next year.
Yeah. Thank you so impact by one medical indeed is our chronic care disease management model and it is part of our membership and it's available as part of our program to both our enterprising consumer accounts and it's building upon the great chronic disease management that we've done in the past we mentioned that.
To X results on diabetes management, we mentioned the ability to manage complex chronic patients, including those with conditions like HIV and that means titrated medications that means reaching out to people. It's sometimes means seeing your P. C. P. It sometimes means having a health coach or a guide sometimes requires care navigation across.
A health network partner that is all built into our impact program and that is available.
To our population base and.
One of the things that we can do given our technology and our membership model is we can risk stratify, our population and we can do proactive outbound outreach too.
<unk> population that that might be eligible.
Four or a need I should say of those programs everybody's eligible but might have diabetes or <unk>.
Hypertension, or anxiety or stress and often it multiple comorbidities and that's part of what's so powerful about our impact model. It's embedded it's a chronic disease management model embedded in a primary care system because people usually are not just one condition. They just don't have diabetes or anxiety.
Or stress or or pre diabetes or hypertension, it's usually a combination of these things.
And when we can embed this in our model. We can show this really powerful impact that's the name [laughter] impact and now we're extending these programs across our.
Commercial and are at risk senior population. So this is super exciting as well and the kind of leverage that we're getting by bringing I aura and one medical together.
Got it thanks for the color.
Your next question is from the line, Sean Leland with Piper Sandler line is open.
Hi, Thanks, It's just two quick clarification questions Uhm. These these vaccine verification members is it reasonable to expect there to be some greater level of turn in that or should <unk>. Our model just treat them like all the rest of the numbers.
Yeah, Great question, I mean, one of the reasons why and pointing gives out so I put Lee is they probably are the little lump yoda nodose right. So if you think about I will grow sitting at your 2022 as we speak about retention of a still certainly has the opportunity for for for the to be.
A little more true than than with other members, having said that as I said earlier. It is early days I think she is now a great opportunity for us to engage wisdom to have the conversation about your health, which is really what we what we are good at and sort of doing day in and day out because all of our members. So I just need to.
Just a great opportunity, but you also a little bit of your risk of incremental chew them for sure.
And is there a pipeline of new vaccine verification members like it's it's gonna become a a thing every quarter.
Yeah, I mean, it's obviously hard to predict Tonight I mean, we just gave guidance earlier today for where we think shake the fourth quarter, we land.
I'm not seeing specific chundin vaccine verification has been based in there at this point, so I'm not sure that as we speak I would bet too much on that going forward.
Okay and then the second one was the.
Where should we target and MLR for for the I R I or a business.
Yeah. So again I don't noted we all got quite a idiot to give 2022 guidance.
As you know last year, we gave 22 guidance and hopefully I'll call in February So I think that's a little bit too early to tell and again.
When I'm coming from is.
Gross early on actually his advantage to the <unk>, but.
These are investments that we'd be happy doing because we since we are going to get a great return on the dollar invested capital on those men boss S. V retained M. S. We managed to house. So yeah in many ways, it's sort of the balance between growth and and then the law, but given the longterm nature of all will view here.
And I will will approach to to really changing to health outcomes for these members in the long too mm mm desk more important for us and and yet you're all <unk> target.
Okay. Thank you very much.
Your next question comes from the line of Rhymed Daniels with William Blair. Your line is open.
Hey, guys. Thanks for taking the questions in the interest of time I'll stick with just one and this is around I or on their future growth. If we think about the business model. It seems like it would be more natural to have care transitions from one medical into the I R. A segment if you have physical locations.
In the same area and number two you know it seems like a big strategic advantage potentially for your organization managing.
A risk longer term if you can move into markets, where you have health system partnerships, because that's a huge you know.
Downstream costs, and you might be able to get either referral relationships are centers of excellence are you a better rate. If you will for that institutional care, which is a big piece of the cost pie impacting the MLR a longer time. So can you talk a little bit about your thoughts on the future of I order in that regard.
Yeah. Thanks, Thanks for that I I think a few things I think one as we think about growing together going forward. We will likely have you know a blended operations blended locations you know as we've moved in a legacy one medical from the city center into the suburbs right you have.
Children and adults and seniors so we'll have that opportunity and we don't necessarily need to migrate a person from <unk>.
One model or one location to another we still may have certain locations that are more focused on seniors and ones that may have pediatrics, but I think.
What you'll see here is the blending of this and the blending of the technology blending of the capabilities and then we'll have a continuum of capabilities will be able to re stratify all of our population will be able to have chronic disease management programs for all of our population.
And then we can figure out on the continuum of complexity, where that where that remember is I'm clinically and what services do they need in terms of the opportunities with our partners. Absolutely. This is an opportunity to partner more closely on coordinating care across the continuum, whether it's on specialty care and.
And the cost of that care, whether it's they want to take some risks whether it's tighter post discharge management or a hands off because we have the clinical and technology integration already with those partners, we know that our our system speak to each other so we.
We believe it is a tremendous tremendous opportunity and differentiator for us.
Great. Thank you so much.
[noise]. Your last question is from David Larsen with B T. I T. Your line is open.
Hi, congratulations on a good quarter just one very quick one for me can you maybe talk about your expectations around like Medicare pricing. So.
Plans they get there you know caffeinated amounts from CMS and then they turn around and.
K I R. A piece of that what are your expectations around you know the dollars coming into I or with respect to temptation, giving.
Given like the utilization levels that we've seen in 2000 22021. Thanks.
Yeah, So yeah, obviously.
There is a little bit of an uptick but keep in mind that this is really in many ways. The the Medicare reimbursement Tonight is based on on the health status of your members that you're sort of documents and in many ways into play Yo Yo so.
I think I think.
Yeah.
Would be able to see here over the next.
A couple of months is.
Certainly a continued focus on making sure that we understand the health needs of our members did we document them and I think yeah over time, you'll see certainly you'll certainly have the opportunity for not blessed in DIAM, which reimbursement of H <unk> now heavy.
He said that we should take a step back and actually look at our members hostile.
Our members D pretty much looks like the average Medicare recipients alright. So this is not a model that goes still sort of a niche within Medicare. This is something that really works for the average mississippians as well. So yeah. That's something that I think you should keep in mind here is.
Just need to about way of the potential P. M. P. M goes over time.
Okay. So that's great. So it sounds to me like there's no. There's no challenges there's no headwinds that you might foresee like lower utilization in 21 because of the Delta very uncovered might result in lower reimbursement in 2022, you're not seeing that is what I'm hearing.
You know things look normal and good quite frankly is that right.
Well [laughter], it's interesting to say what is normally used in these trying times was cold with ice in it it's sort of hard to decipher, but we feel very good about our engagement who's Elementalist, we feel very good about yeah D. D times did <unk> did you feel very good about our documents.
Asian, and I won't be able to to manage <unk> conditions over time. So we feel good about where we are relative to the.
Great. Thanks, very much congrats again.
And that concludes the question and answer session for the call I'll hand conference back to I'm ever been for closing remarks, Sir.
Well great well. Thank you so much everybody. Thank you for engagement. Thank you for your support and we look forward to seeing you next time have a great evening. Thanks, everyone.
Ladies and gentlemen, this concludes today's conference cool. Thank you for joining have a great night.
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