Q3 2021 Oak Street Health Inc Earnings Call
Okay.
Good day and thank you for standing by welcome to the Oak Street Health third quarter 2021 earnings Conference.
At this time all participants are in a listen only mode.
The speaker's presentation, there will be a question and answer session.
I ask a question. During this session you will need to press star one on your telephone if you require any further assistance press star Zero I would now like the hand to conference over to your Speaker today, Sarah Clark. Please go ahead.
Good morning, and thank you for joining us today with me today are Mike Goss, Chief Executive Officer, and Tim Cook Chief Financial Officer. Please be advised that today's conference call is being recorded and that the Oak Street Health press release webcast link and the other related materials are available on the Investor Relations section of Oak Street Health Webster.
Today's statements are made as of November 9th 2021 reflect management's view and expectation at this time and are subject to various risks uncertainties and assumptions.
This call contains forward looking statements that is statements related to future not past events. In this context forward looking statements often address our expected future business performance and often contain words, such as anticipate believe contemplate continue could estimate expect.
<unk> may plan potential predict project should target willing would or similar expressions forward looking statements by their nature address matters that are to different degrees uncertain.
Brian its particular uncertainties that could cause our actual results to be materially different than those expressed in our forward looking statements included.
Our ability to achieve or maintain profitability, our reliance on a limited number of customers for a substantial portion of our revenue our expectation and management of future growth our market opportunity our ability to estimate the size of our target market the effects of increased competition as well as innovation by new and existing competitors in our market.
And our ability to retain our existing customers and to increase our number of customers.
Please refer to our annual report for the year ended December 31st 2020 filed on Form 10-K, with the Securities and Exchange Commission, where you will see a discussion of factors that could cause the company's actual results to differ materially from these statements.
This call includes non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute or superior to measures of financial performance prepared in accordance with GAAP. There a number of limitations related to the use of these non-GAAP financial measures. For example, other companies may calculate similarly titled.
Non-GAAP financial measures differently, where first the appendix of our earnings release for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.
With that I'll turn the call over to our CEO, Mike <unk> Mike.
Yeah.
Thank you Sir thank you to everyone for joining us this morning.
Looking back at the third quarter, we believe our results demonstrate strong operating performance along with significant accomplishments to advance our platform.
I want to first thank our team for their continued dedication and focus on our patients our communities and our mission necessary to make that happen our team had to navigate through a challenging operating environment, including the delta Covid surge and historically tight labor market.
Despite these headwinds operationally, we achieved strong results across all of the major drivers of performance for the third quarter.
Strong revenue growth driven by new patient adds in both new and existing centers.
To exceed our center opening protections.
Third party medical cross, which we'll cover in more detail as well as direct cost of care and corporate costs were all in line with expectations. Despite an increase in Covid hospitalization is driven by the Delta variant.
The net result is a quarter in which we exceeded the top end of our guidance range of <unk> revenue membership in adjusted EBITDA.
Additionally, as we continue to gain more insight into 2022, we remain confident that the COVID-19 driven headwinds in 2021 will begin to society and we returned to a level of performance in line with what we experienced pre pandemic.
Strategically we were thrilled to be selected by ERP is the only primary care provider to carry the ERP name.
We're also extremely excited about our recently announced acquisition of Rubicon MD to advanced specialty care delivery and the Oak Street model.
In the third quarter, we generated record revenue of $388 7 million in the quarter exceeding the high end of the guidance and representing 78% growth compared to Q3 2020.
Our revenue growth continues to be driven by our organic BTC marketing approach. This includes both central channels, such as digital marketing and our core community based Irish Inc.
Our <unk> team has continued to improve month over month, despite having to navigate COVID-19 surgeries in our communities. We are excited about the continued progress considering our teams were expecting significantly less COVID-19 restrictions that hasn't seen the community well Q3 began this.
This improvement solidifies our confidence we can grow through any future peaks and valleys from Covid. We're.
We're excited to see our results on this COVID-19 wave hopefully society and we have the power of the ERP brand behind us.
No cost to trend in line with the revised expectations, we share at all in Q2.
This combined with direct customer care sales and marketing corporate costs, all in line with expectations and higher than projected revenue growth resulted in adjusted EBITDA of negative $64 3 million, which is higher than the top end of our Q3 guidance.
Specifically on metal costs, we highlighted three areas of increases in costs that exceeded prior expectations and our Q2 earnings call.
These areas continue to be a headwind in 2021, but we also remain confident that they are largely temporary in nature as direct result of the pandemic and can be mitigated in 2022 and beyond.
First cost from Covid admissions.
And our Q2 earnings call, we shared that in the first half of the year Oak Street experienced 15 million of cost directly from Covid emissions.
In Q3, we estimate we experienced 10 million of additional COVID-19 costs and carbon emissions.
These costs were highest in August and declined slightly in September bringing the estimated total year to date direct cost of COVID-19 to $25 million.
Looking forward, our Covid hospitalization costs generally rise and fall proportionately with the hospitalization rates and our communities.
We are hopeful with the rollout of boosters in vaccines for children five to 12 that we will continue to see declining spread in the communities, we serve and declining hospitalization for our patients.
That said, we recognize the majority of patients we serve our northern markets that have historically experienced surges at the weather turn cold and people spend more time indoors.
Second non acute utilization in our Q2 earnings call, we discussed the non acute utilization, including specialist visits diagnostics and outpatient procedures increased $80 P. M. P M compared historical average in March following the vaccine role for older adults.
These costs have decreased by roughly $15 P. M. P M and the subsequent months, but remained elevated compared to historic averages.
Roughly a third of this increase would be expected for medical cost trend for 2019 until this year.
The net result is an estimated $35 million of increased cross creek costs across the first three quarters of the year above what we would have expected from increased trend.
We believe this increase is driven in part by increased comfort with patients to access medical care following vaccination relaxed payer standards to the public health emergency and specialist and hospital system behavior.
Currently based on the higher prevalence of chronic illnesses, we're seeing in our patients, especially those who've joined us over the past 18 months. We believe part of this increase in non acute musician, it's driven by greater patients' eastburn requiring more care.
Based on the diagnosis codes, we've captured for our patients here to date.
We will be able to offset the costs with additional revenue to compensate for the increase disease burden as well discuss in more detail shortly.
This is also the cost category, we feel the acquisition of Rubicon will have the greatest impact.
Third new patient medical costs in our Q2 earnings call, we shared that new patient metal costs were 50% higher than what we've historically seen and drove $20 million and higher costs in the first half of the year.
New patient metal costs remained elevated compared to <unk> levels, but not to the magnitude. We saw earlier in the year. However, new patient revenues further declined to a level less than what we received for new patients in 2019 on an absolute basis is significantly less than what we would've expected when considering trend.
The net result is a decline of new patient economics, driven by a combination of higher costs and lower revenue than what we have experienced historically.
This resulted in an estimated $36 million in lower patient contribution in the first three quarters.
We've looked at new patients by geography Center vintage provider tenure and marketing channel and we see a similar decrease of patient contribution across all cuts of the data for that reason, we do not believe the new patient economics are being negatively impacted by new centers in markets, but instead, we continue to believe the primary driver of lower new patient economics as lower engagement of older adults, especially those in the low <unk>.
<unk> by the health care system in 2020.
Lower engagement results and higher medical cost because of unaddressed medical conditions, and lower revenue because those conditions weren't and documented.
As a reminder, risk scores wagged by year and depend on diagnosis captured during provider visits.
The lack of engagement like we had a double effect of reducing incoming risk score will also likely increasing disease burden.
When we consider the disease burden, we are capturing for our new patients year to date, we believe that the economics will revert back to what we normally see for a second year patient in 2022.
We are optimistic that increased engagement across the health care system for patients will lead to new patient economics more in line with what we have seen historically although.
Although it remains to be seen how long it will take for new patient economics to revert to previous swaps.
Smaller factor impacting new patient economics was a lower mix of patients coming from community based marketing channels compared to store performance.
While patients from comedian marketing channels had similarly, lower patient contribution in 2021 compared to <unk> 19, as new patients overall patients from communion market channels tend to be our most profitable channel in their first year at Oxford, So as mix shifts back to community channels. This should improve new patient economics overall.
We've continued to focus on operating our care model to keep our patients healthy and out of the hospital because of these efforts we've seen a decrease in non COVID-19 acute care for our tenured patients compared to the same period in 2019.
This decrease is largely offset the increase in COVID-19 and non acute cost for these patients resulting in equivalent patient contribution for existing patients this year compared to 2019.
Yeah.
Because of this the overall decrease in patient contribution in 2021 is largely driven by the decrease of new patient contribution.
As we discussed above we believe is mainly caused by lower engagement with health care system in 2020.
As we discussed in Q2 based on the data collected year to date.
We have seen that the disease burden of our patient population substantially increasing compared to prior years, which we believe the trend that began in 2020, both master less effective patient assessments due to more Caribbean delivered virtually.
The data we've captured year to date is more representative of our patient actual disease burden and we expect that the increase in revenue per patient in 2022 will drive significant improvement to the patient economics, we've seen this year.
If COVID-19 related metal cross receipt, causing metal cost to revert to a level more in line with what we win is prior to the first half of the year.
Under our care models able to further impact the cost trend, we will see significant improvement in per patient contribution compared to 2018.
This combined with the continued strong results on patient growth in operating costs gives us confidence in the continued strength of our center economics and center and.
We plan to share additional details around 2021% and forecasted 2022 Center economics in comparison historical performance and our year end call following Q4.
Okay.
Looking forward our mission Oak Street is to rebuild healthcare as it should be.
For us that means redesigning the way older adults are cared for across the healthcare continuum.
This includes Howard also engaged by the health care system. The composition operating model. The team that provides them care the resource available to them beyond traditional primary care and the data and technology that bring it altogether. We believe oaktree has driven transformational change across all of these dimensions.
We continue to innovate across all parts of our model and we'll continue to do so long in the future to advance our position at the forefront of value based care.
I am proud of our performance to date and the impact of our teammates and our patients and communities every day and I'm confident we'll continue and improve along all dimensions as we build out our model.
Q3 was an exciting quarter for Oak Street, as we announced our relationship with AARP and the acquisition of Rubicon MD. Both have been in works for a long time before Q3 began and were made possible by hard work and perseverance from our team.
Being the only primary care provider selected by AARP is an exciting milestone grocery and a testament to the quality of care and outstanding patient experience we deliver.
We are the only senior focused primary care provider nationally to carry the ERP name and we believe will enhance our ability to attract and engage patients.
We often face a challenge when engaging with potential patients and getting them comfortable trying something it sounds too good to be true.
AARP as the most trusted brand for older adults and by going to Mark with AARP and a co branded manner over time, we believe we can more quickly build trust leading to faster patient growth in deeper patient engagement.
<unk> has a long track record of helping organizations grow across a range of industries, including within health care.
Additionally, we are collaborating with AARP and waste to bring wellness activities enhance patient education, and other benefits Oak Street patients and AARP members.
A few weeks ago, we closed our acquisition of Rubicon MD the largest virtual specials network covers our.
Our acquisition of <unk> will allow us to include specialty expertise in the primary care setting.
I will also give us the ability to provide new specialty care quickly and be tightly coordinated while reducing our need a specialist business we.
We believe this is the way of specialty care should be delivered.
In a similar manner to how he resigned primary careful they're adults from the ground up that Rubicon MD acquisition philosophy. The same for specialist care for our patients. The result will be better access lower cost superior outcomes and an improved experience.
We believe both our exclusive AARP relationship and the Rubicon MD acquisition further differentiate Oak Street, both for nutritional primary care providers and we'll continue.
To drive our long term success.
One additional item to comment upon.
We disclosed in our 10-Q filed yesterday November one we received an inquiry from the department of Justice seeking information related to our relationships with third party agents or entities and also regarding any advertising or promotion of our transportation services.
Yes.
At this point, we've had no meaningful conversation with the department and do not cause us any additional details beyond the information requested an increase.
Since the early days of Oak Street Health, we've aimed to create a compliance focus culture and maintain what we believe to be an effective compliance program, including utilizing both internal and external compliance advisors.
<unk> strives and all of our business operations to operate complying and transparently.
Our team is currently working on responding to the department of Justice inquiry, and we intend to cooperate with the department's request.
At this point, we don't have enough enough, we do not possess enough information to speculate on the precise reasons for the outcome of or the duration of the department of Justice inquiry, Although we understand that it is not unusual, particularly in health care industry for these inquiries six months or even years to be fully resolved.
While we respond to the department of inquiry, we intend to remain focused on our mission of providing high quality care to dose on Medicare.
In summary, we are encouraged by the performance across the quarter on our key operating metrics.
Also thrilled with the strategic vision of our AARP relationship and Rubicon of the acquisition.
Over the last quarter, our team is navigate through COVID-19 surge challenging labor markets driving near term results. While at the same time setting the platform up for differentiator long term success transforming health careful to adults.
I'll now turn it over to Tim Cook, who will walk you through our financial results in more detail Jim.
Thank you, Mike and good morning, everyone.
We produced another strong quarter with record revenue of $388 $7 million, representing 78% growth from a year ago and exceeding the high end of our guidance range by approximately 8%.
For the year to date period, we crossed the $1 billion of revenue Mark for the first time in the company's history.
We also continue to see strong demand for Oak Street services as we've provided care to 100500 at risk patients, which include our direct contracting patients during the third quarter, resulting in growth of 69% compared to Q3 2020.
At the end of the third quarter, we operated 110 centers and increase of 15 centers compared to Q2, 2021, and 43 more centers than we operated at the end of Q3 2020, we are operating 123 centers as of today.
Capitation revenue for the third quarter of $376 $7 million, representing growth of 78% year over year.
Additionally, $15 $4 million of caviar revenue in the third quarter 2021 was related to prior periods.
The largest driver of this prior period amount was paid retroactivity.
Pertaining to the first half of 2021.
Excuse me as a reminder, patient retroactivity is typical and occurs when health plans pay Oak Street retroactively for patients managed in prior periods, but not previously included in <unk> and therefore, not previously recognized in revenue or medical claims expense.
Other patient service revenue for the third quarter was $12 million representing growth of 97% year over year.
$3 $9 million of this growth was attributable savings to savings generated in 2020 for the performance of our Acorn ACO.
As you may have seen our ACO generated the fourth highest savings rate across the 513 participants in the Medicare shared savings ACO program in 2020.
Our medical claims expense for the third quarter 2021 of $309 7 million.
Presenting growth of 100% compared to third quarter 2020.
We recorded $9 four.
$4 million of medical claims expense, primarily due to an increase in prior period incurred claims primarily driven by the same patient retroactivity.
Impacting kept stated revenue.
Our cost of care, excluding depreciation and amortization was $76 3 million for the third quarter, a 77% increase year over year, driven by higher salaries and benefits expense from increased head count as well as greater occupancy costs medical supplies and pitched patient transportation costs all related to the significant.
And the number of centers, we operate and our patient base.
Sales and marketing expense was $35 million during the third quarter, representing an increase of approximately 97% year over year and was driven by a $9 $4 million increase in advertising spend to drive new patients to our clinics.
As well as an increase in salaries and benefits related to head count growth.
As a reminder growth and year over year sales and marketing expense was artificially inflated as it was partially depressed during Q3 2020 due to the Covid pandemic, which included the temporary suspension of community outreach activities and other marketing initiatives.
Corporate general and administrative expense was $77 million in the third quarter, an increase of 35% year over year, primarily driven by head count costs necessary to support the continued growth of the business.
We generated significant operating leverage year over year with corporate general administrative expenses, excluding stock based compensation and transaction expenses expenses.
Decrease in that 10% of revenue in Q3, 2021 compared to 13% in Q3 2020.
I will now highlight three non-GAAP financial metrics that we find useful in evaluating our financial performance.
Patient contribution, which we define as Capex you did revenue less medical claims expense grew 17% year over year to $67 million during the third quarter.
We expect at risk per patient economics to improve along with that our patients are part of the Oaktree platform.
Mike mentioned the spectrum has been impacted by the number of new patients to the Oak Street platform in 2021.
Platform contribution, which we define as total revenue was to some of the medical claims expense and cost of care, excluding depreciation and amortization was $2 7 million.
And 87% decrease year over year from $20 2 million.
The year over year decrease was driven by the previously discussed increase in medical claims expense as well as the significant recent growth in our center base and therefore, the portion of our centers, which are immature.
Over 50% of our centers have been open for less than two years and approximately two thirds had been open for less than three years.
EBITDA, which we calculate by adding depreciation and amortization transaction and offering related costs and stock and unit based compensation, but excluding other income to net loss was a loss of $64 $3 million in the third quarter of 2021 compared to a loss of 2020 of $22 8 million in the third quarter of 2020.
We finished the third quarter with a strong balance sheet and liquidity position as of September 30, we held over $1 billion in cash restricted cash and embarked on debt securities.
Note that those balances are prior to the effect of our acquisition of Rubicon MD in October.
Our liquidity position will support our continued growth initiatives, primarily our de Novo Center base expansion.
For the nine months ended September 30 of 2021 cash used by operating activities was $125 $9 million.
While our capital expenditures were $40 6 million.
Finally, I'll provide an update on our 2021 financial outlook.
For fiscal 2020, one we are increasing our guidance for total centers to 128 to 129, which represents a 49 to 50 new centers in the year 2021.
Our at risk patients to a range of 111500 to 113500 <unk>.
Our revenue guidance to a range of $1 four 2 billion to one <unk> 5 billion note. The low end of the revenue range was inaccurately shown as one 4 billion in the 8-K released last night, but it's been amended to reflect this 142 billion.
We are narrowing our adjusted EBITDA.
<unk> loss to a loss of $235 million to $230 million we.
We expect headwinds in Q4 relative to our prior guidance of approximately $6 million roughly.
Roughly half of which relates to supporting Rubicon and these EBITDA loss and the other half is associated with investments in growth, including greater new centers and previously contemplated and investment in sales and marketing during the annual enrollment period to capitalize on our AARP relationship.
We also remain focused on potential kouba costs in Q4, given our experience in Q4 2020 per Mike's earlier comments.
We're taking a cautious view heading into the last quarter of year adjusting.
Adjusting for these factors our Q4 guidance is effectively in line with the high end of our full year guidance provided during our Q2 earnings call.
And with that we will now open the call to questions.
Operator.
Thank you Sir at this time I would like to remind everyone in order to ask a question simply press Star then the number one on your telephone keypad.
First question comes from the line of Justin Lake of Wolfe Research.
Thanks, Good morning.
Wanted to follow up on the.
Doj inquiries.
First can you tell us if you have any.
What the Doj might be getting at and specifically.
A lot of us would benefit from.
You are kind of insight.
Due to the some of the mechanics around what they were talking about in terms of third party agent relationships.
Thanks, Justin I appreciate the question.
Honestly at this point, we really don't have enough information about being prudent to answer those questions.
We got we got a week ago, we haven't had any meaningful dialogue with the Doj. So we're well we're still learning as well.
Sure It really what we know in the statement.
Okay, but can you tell us entity.
Talk to a few of your peers and.
It just sounds like you guys are you buying leads.
From third party agents like Ehealth et cetera.
How does that work like are you finding are you finding your patients that way and do you think that's a standard industry practice.
Have you been doing more of this more recently and then I guess just lastly.
Is there any relationship between these third party relates to these relationships and provider transportation that you think could have link between the two.
Hi, Justin.
Sure.
Again, I'm not really sure what what the linker is I mean, we've.
We obviously provide transportation to our patients as part of getting access to primary care.
We have.
A number of different page acquisition channels. The vast majority of them, we talked about our through through.
Through our community based marketing approach and then followed by our central digital channels.
So there's that.
A number of a number of different different programs out there and things we need to get patients.
I'm.
I'm still trying to get our hands around again, what the what the inquiry is really based on what information. There are they are looking for.
Okay.
Thanks for the color.
Your next question comes from the line of Ricky Goldwasser of Morgan Stanley.
Yeah, Hi, good morning.
Trying to get some more clarity on the commentary on fourth quarter excuse me. If I heard you right. I think you said that youre going to be at the high end of your guidance range for <unk>.
Q can you give us more clarity also on where should we expect.
Range.
At all.
Yes Ricky.
<unk>.
Yes.
Tim Thanks for the question.
Full year EBITDA loss range, we provided in the Q2 call was $220 million and $240 million loss. The revise range. I mentioned this morning is $230 million to $235 million loss.
Yeah, as we narrowed that range I just wanted to.
Make sure folks understood.
That as we narrowed it we incorporated data points that we didn't have at the time that we closed Q2 predominantly around.
The Rubicon of the acquisition as well as the AARP relationship. So we factor those things and those are.
Those plus again, taking a cautious approach in Q4 to COVID-19 costs.
Those would have we would've guided $10 million lower had we known those things.
In early August and so as we think about the $2 32 to 35 in our minds, it's actually from an operational perspective or sort of a run rate perspective more.
Into the $2 20 to kind of Covid.
But the high end of the prior range being the 220 $220 million.
On the MLR for the second half of the year.
One comment I want to make sure is clear for folks.
As Mike has said you know our new patients are.
Coming in at a lower patient contribution that we've seen historically, which means the MLR for those patients is higher one thing that we're very focused on Oak Street is our 10 year adjusted MLR. So we look at MLR not at the aggregate level, but at the specific patient 10 year level.
But that's just that's important because.
The MLR for a patient will change significantly the longer that patients on the <unk> platform.
So as we grow more quickly than we anticipated that growth is coming from as you would expect more new patients that we expected more new patients would mean all else equal a blending of the MLR at least for the current period. So.
I think we had previously discussed second half.
MLR to be.
82% ish range, let's say we are if we if we look at Q3.
We were slightly higher than that including the COVID-19 costs that Mike mentioned, excluding those COVID-19 costs.
We are kind.
It had been at 81% range for Q3.
For Q4, I would expect it to be obviously higher than Q3, just given the quarterly trends that we see.
But.
Yeah.
Hard to give a specific number at this point I'd say.
The guidance I gave earlier.
Q2 is still relevant when we kind of strip out.
The impacts of some of these.
Onetime items, both being prior period development as well as COVID-19 related costs.
Okay, and just one follow up here, you talked about being cautious in terms of COVID-19 costs.
What are you seeing an opinion on population.
October and November.
Timeframe because it seems that everybody also we're talking about are shaded.
Covid costs.
The meeting will be dropped off.
Yeah, I would say our experience has been similar Ricky and that obviously as Mike mentioned, we saw a surge in the latter half of August into September as we've seen more data those costs have.
Tailed off.
As we got early into Q3.
That being said you know most of our patients are in the northern climates.
Don't know what its like in New York, and Chicago turn Cold very quickly last week. So we will see what happens in.
In November and December and the dollars that debt.
Our sort of incorporated in that EBITDA guidance had mentioned before are relatively small compared to the overall COVID-19 costs. We've seen for the year. So if I think back to Q2 for instance, where there was relatively little if either relatively fewer COVID-19 cases, we still had a couple of million dollars of COVID-19 costs in Q2.
Okay. So it sounds like maybe some more culture.
Flu and cold season.
Embedded in November and December.
Sources direct COVID-19 costs, that's out there.
Yes.
Sure I mean, yes, I mean like I <unk>.
While COVID-19 costs going to be lower in Q4. Unfortunately, we're not in the world, yet where COVID-19 costs are going to be zero.
Understood. Thank you.
Your next question comes from the line of Jessica <unk> of Piper Sandler.
Hi, Thank you for taking the question.
Can you maybe help us understand some of the dynamics impacting cap Cana revenue rates pantheon going forward.
Specifically direct contracting is expected to be dilutive to the growth rate that we might otherwise forecast for at risk patients given the year over year increase in average risk levels.
Yes.
Sure. Sarah this is Ken Thanks for the question so generally speaking.
If we had very steady state and consistent growth and everything.
We were.
Paid for every member we served in every period I E. There wasn't this patient retroactivity dynamic what we would see over the course of the quarter is Q1 P. M. P. M revenue would be the highest Q4 <unk> revenue will be lowest in we'd step down over the course of the year.
And the reason for that being that.
Our our patient in Q1 are the most the longest tenured and as tenured patients attrit over the course of the year youre, replacing those tenured patients with new patients and new patients coming into lower revenue <unk> predominantly because the patients that we're serving are generally unearned gauge of the health care system.
Therefore.
Historically speaking.
Their disease burden has been less accurately recorded documented by the health care system.
So that.
That is the general dynamic to your so what we're experiencing in 2021, Sarah is consistent what you outlined which is.
And what Mike discussed right new patients are coming in with a lower revenue <unk> that we've seen historically the reason being that in 2020 those patients were even less engaged in health care system, given all of us.
Given the impacts of Covid and their ability to access to health care system. So that would otherwise all other things being equal that would exacerbate this downward trend in revenue P. M. P. M from Q1 to Q4.
Offsetting that a bit in Q2 of 2021 would be the impact of direct contracting patients coming into that patient.
Cohort direct contracting patients just to remind everyone come in at a higher revenue P. M. P. M. So that would distort that quarter to quarter change.
As we look from Q2 to Q3 or Q3 to Q4.
Direct contracting patients will impact that trend of beds.
But I would say likely not significantly enough to make it to reverse it.
And.
Yeah, I'd say as you look at that as you look at those changes from period to period. It's obviously, it's important to adjust for prior periods because.
That would be revenue that were booking in the period, but not related to that quarter's actual performance in the membership count that youre looking at the end of the quarter doesn't include all the member months, we were paid for in that quarter, if that makes sense.
Yeah. That's helpful. Thank you and as Jeff by the way, but just as I'm, sorry, Yes, I apologize early morning.
Yes, good morning.
As a follow up can you kind of help us understand what percent of your 133000 patients have been able to see an in person or in an oak street, either in an Oaktree center or in their homes year to date.
And kind of what are you doing qualitatively to reengage some of the older patients who.
Fell off the radar and 2020 or 2021 early 'twenty.
Thanks.
Yes.
The number I have.
Kind of.
Randy regarding engagement is the completion of annual.
Wellness visits for a patient so obviously some of our patients we've seen but haven't done the annual Mrs itself, but I believe we are in the kind of.
Low to mid eighties on and your walnuts into the completion against our patients so far this year.
And so I think we've certainly seen it those are all.
In home or in person. So we can only see more than that if you include I'm kind of just normal checking visits but I hope that gives you a sense of engagement so far this year.
Awesome. Thank you and that compares to the sorry, what at this time last year.
That is significant higher than this time last year. When you when you takeaway virtual visits because last year, a fair amount of our annual wellness visits were completed virtually.
It is similar to what we experienced I think slightly slightly ahead of what we saw in 2019 and 2018.
Thank you.
Okay.
Your next question comes from the line of Gary Taylor of Cowen.
Yes.
Hi, good morning.
Just wanted to hit a couple of things maybe I missed this in the Q with a lot of Qs flying.
Yesterday did you give us your direct contracting.
Enrollment and then I thought last quarter, we sort of talked about the MLR youre booking or the contribution so.
So I may just missed that.
No we did not break out direct contracting separately.
Membership, nor nor drug contract economics so.
You may be thinking of another cute at Blue chip.
Okay. So what.
But I thought last quarter, you guys, maybe on the call disclosed that we're looking at 6500.
Members.
That's not something you're updating corridor.
Yes, sorry, Gary on.
On our Q2 call we did talk about.
If direct countries starting in Q2, we expected to start the program with about six to 7000 patients 6500 being the midpoint that is roughly right. We also mentioned we expect to add about two to 3000 patients a quarter of the program all of that guidance is still largely relevant or accurate I would say the the one caveat.
The reason why we're more focused on total at risk patients is where we are agnostic predominantly between those two programs. So.
We are most focused on growing our at risk patient base.
And he has direct countering patients we engage.
We set up initially ultimately enrolling MA right. So they may never even show up in our direct customer counts and as we're continue to drive more and more patients to our centers, a little less relevant to us which buckets. They fall into I would think about our growth in the quarter. Our growth was driven almost entirely by our EMEA book just given it's it's proportional size.
From a contribution perspective, we have not broken out those details those patients are profitable to us today.
Albeit we're six quarters into the program our students six months into the program.
Got it.
And then on Rubicon, when we when we see that in the fourth quarter.
External sales are just going to go in other patient.
Service revenue in there.
It would be eliminations for the.
Consultations with the Oak Street members as to how do we think about it.
That's correct.
And is there a.
I know you had talked about some of the EBITDA impact for the <unk>, but just sort of thinking about.
Revenue EBITDA, either quarterly or kind of run rate, how should we be thinking about that into the model.
As you're talking about going into 2020.
So excuse me 2022.
Either for the <unk> impact if that's easier just 2020 to thinking about that yes.
So.
Obviously, there's an implied Q4 performance given the kind of a 1.42 to $1 $45 billion in revenue for the quarter.
Yes.
Q4 is obviously, a starting point for Q1, but a lot of changes from Q4 to Q1, one being obviously the resetting of risk scores based on 2021 documentation tubing all the growth we're experiencing right now or.
Embarking on right now as part of AEP. So.
There is a step function change every year as we move from Q4 to Q1, so it's hard to take Q4 and use that.
Sort of a run rate basis, particularly on the profitability line to Mike's point right.
Just speaking Rubicon specifically.
Yeah, Yeah, sorry, Gary.
Sorry, I wasn't trying to back towards the 22 guidance yet.
Alright, Okay, sorry, Gary I totally missed that yes, rubicon relatively I apologize Rubicon is a relatively small contributor on the revenue line also obviously a small drag on EBITDA. So from a top line perspective, it's.
High single digits of revenue.
Yeah, and Gary how do we think about this going forward.
Obviously in the fourth quarter, where we just finished the acquisition. We're just starting the integration work et cetera.
In 2022.
Well, we're hopeful we'll get the straw.
Strategy with Rubicon up and running.
And we hope we start to see an impact which should offset that.
Burn from operations from Rubicon, and then in 2023 is where we will start to see the full benefit we believe that's kind of the ramp period.
From a revenue perspective, as Tim said, I mean, it will contribute to other revenue, but it's not going to be a major contributor.
Rubicon, but for Oak Street health.
It's a business that's losing money today I think it certainly can be a breakeven outside of Oak Street health over time.
But really the real value and why we are incredibly excited by the acquisition is for what it can do to our our metal costs are.
<unk> care and our patient experience and so we're I think youll see the benefit in 2023 is a relatively small amount of external revenue.
But hopefully that will offset some of the operating costs for the platform.
But the real benefit being.
Lower lower cost of care and better patient experience and.
An improved model for specialty care for our patients.
Last one for me is the AARP relationship is that any exclusive in terms of primary care clinics are.
Are some category.
Yes. It is it is exclusive for primary care.
Thanks Kerry thank you.
Your next question comes from the line of Lisa Gill of Morgan Stanley.
Of J P. Morgan.
Thanks very much.
Mike you know one of the comments that stuck out to me was when you talked about the headwind of lower mix from community market channels.
When we think about members who joins from the community market channels versus others being more profitable can you maybe just spend a minute and talk about what the differential is with those members versus other channels and then typically what a new joiner mix looks like by channel.
Yeah, so to kind of reverse your question. If you go if you go back to kind of 2018 prior the pre pandemic yours.
The majority or maybe even the vast majority of our patients were coming through our community marketing approach that was really the core of what we did.
It was quite effective and I think.
Because you are generally finding people at community events that he was more active channel.
Thank the patients who came in and tend to be a bit more engaged and I'll also just not as media on health care services. It was much more engaging people kind of it's almost people obviously, we're coming in very much meeting a doctor's appointment that always happens but.
I think when you when you shift the mix of more things for example, digital marketing now people are actually kind of clicking on it because they want a doctor which tends to mean they have a more health care concerns.
So if you look at what that looks like for kind of a year or two and beyond patient.
Two channels converge. So you really don't see a meaningful difference between them going forward because you have enough of an offset from.
Kind of disease burden to the patients who are coming in.
Who really need your chair.
But when we do find is because people who are finding you need your care generally have higher metal cross writing year, one theres different economics.
It's.
It's not it's not it's not massive but but it's real so I think kind of that combined with all the other pieces I think the biggest piece being the lack of engagement in 2020 and health care system I.
I think those are the reasons why we are seeing obviously works patient economics this year than we've ever seen for new patients.
And again the thing that gives me confidence despite that is seeing that next year. When we actually are able to capture the disease burden on patients. We're bring in that will be on track and that actually for our existing patients. We're seeing similar economics and MLR, what we saw in 2019 on those patients. So.
Obviously, something something we need to work through and I think.
We need to focus on really getting our patients engage very quickly understanding their conditions very quickly in taking great care of them, but.
But I do think.
The health care system normalizes more after 2020, and how patients are interacting with and how they are engaged.
And we're able to keep opening up more of our channels again.
Hi.
Optimistic that we'll start to see a reversion back to what we've seen for years historically.
And then just my follow up would just be your comments around that.
Three headwinds with number one being COVID-19 admissions $25 million as we think about the new antiviral treatments that are coming to market with the potential of about four to $500 type of price tag.
How should we think about COVID-19 costs going into 2022 is the expectation that you would be able to manage those patients. So roughly 90% of them are not hospitalized based on the data that we see from Pfizer.
Just how do we think about that opportunity on the antiviral medications that are coming first as hospitalization.
Yes.
If those results, which obviously, we all we all rallied with a lot of excitement at those at those play out I think it's another really valuable tool in the toolkit and so obviously, we and much much much rather spend $500 on medication and keep our patients out of the <unk>. Most importantly, keeping our vision of the hospital.
And so whether that be breakthrough infections or people, who have chosen not to not to be vaccinated, either either way youre going to reduce hospitalizations and obviously that would most importantly lowered the number of patients who we have that are in the hospital have poor outcomes, but obviously it would be it would be nice cost favor too so any anything that keeps patients out of hospital.
Is it a potential tailwind for us okay.
Okay, great. Thank you.
As a reminder, if you would like to ask a question Press Star then the number one on your telephone keypad. Please limit to one question and one follow up.
Businesses.
With industry trends.
Your next question comes from the line of Kevin Fischbeck of Bank of America and beyond.
Alright, great. Thank you.
I wanted to ask.
In your prepared comments that you manage through labor tight labor market can you just talk a little bit about.
Where those pressures might.
Most likely manifest themselves as far as pressure on you guys and how youre dealing with it.
Yes, absolutely.
Totally I mean first off we've expanded a lot this year as I know youre aware, which means both for our existing centers and for new centers, we've hired a good deal providers.
Kind of hiring as you know our team will tell you. It's never it's never easy, but actually I think over the years I've actually gotten easier even even today, because I think we're getting more well known and Oak Street and.
People I think providers are very excited to join our model and practice medicine differently more of the challenges have come in and kind of some of the well.
Lower skilled jobs.
Job growth should help the west licensed jobs like.
Call Center team members reception as things of that nature.
And to be clear I'm proud of our team for really managing through it and still putting up the strong results and not let them not only not become a headwind but.
It is certainly the most difficult to hire kind of that type of role.
That has been.
Since we started the organization.
Nine years ago and.
The team I think is doing a very nice job of building a great culture and generating.
Referrals from our team members and using easing tactics like that too.
To fill the roles, but just you know just posting rolling expecting job applicants to come it is not a it's not a strategy that works anymore. So we've had that we've had to really.
Work with our teams and be creative.
Make sure we get Roseville.
Alright, great and then as far as the medical cost commentary is there anything that you would spike out against obviously made comments about.
10 year.
So I guess, probably new sites.
Acting differently than an existing sites, but anything else that you've kind of spike out and I think geographically going on around costs are.
But I wouldn't I wouldn't even say that on sites.
Sites that have been around since.
2014 2015.
Seeing the same challenges with with new patients.
That are in brand new markets and our new <unk>.
Care teams that had been around for for years right. Its moves those early sites.
And providers that have been around for years are seeing the same challenges as they bring on new patients through there. So I think it is definitely something that assistant why which is again one of the reasons why.
We believe.
More and more of that it really is driven by kind of the <unk>.
Strange engagement with health care to the criticism, especially for lower income older adults in 2020.
And not something that is a function of our model are behaving differently and obviously when we look at our tenured patients and 10 year patients can be patients who joined us in 2020, and a new market in 2020.
10 year patient with someone who's been with Oak Street for six years, when you look at that group right.
Is essentially the same patient contribution as it was in 2019. So we're not we're not seeing that inaccurate, which which again I think makes sense to us because those patients are seen by us in 2020 and by US. So we don't have some of those kind of other other challenges so.
Again it really.
I think it's an issue we have our we have our hands around as far as the new patients go up I think it's going to take into into 2022 before we can kind of have a reset.
From what happened in 2020 for patients who weren't in our control in 2020.
Alright, great. Thanks.
Your next question comes from the line of Jamie Paris of Goldman Sachs.
Hey, good morning.
So you guys had made some comments just about revenue stepping up next year on a <unk> basis and that mitigating some of that higher cost youre seeing this year I wanted to follow up on that comment you also mentioned just this higher disease burden of your patient base.
So with that in mind in 2020 being kind of a last year from a risk standpoint, how should we think about the step up in revenue P NPN going into 2022.
Yeah.
Hey, Jamie it's Tim.
Thanks for the question.
<unk>.
Okay.
As we think about <unk> revenue going into 2024 are new patients.
Okay.
We tend to be more focused on patient contribution down <unk> patient countries in dollars. Obviously, the net of the revenue and the medical cost central were saying is the medical costs well.
We believe we can more effectively manage them then the 2021 results may suggest particularly with COVID-19 being less of a factor from a financial perspective.
Let's assume for a moment that is not the case to Mike's earlier commentary, what we believe is no.
The revenue increase in associate with those patients will enable us to get back to 2019 levels of P. M. P. M profitability for the patients that are new to us. This year that next year will be second year patients.
Okay. Thanks for that and just wanted to go to the center guidance that stepped up a little bit this quarter just wanted to get your thoughts on that for 2022 as well in a longer term basis. So you'll be up something like $20. This year versus last year in terms of the increase in de novo's.
What are your thoughts just in the context of the elevated MLR currently as it relates to new center openings.
Next year.
Yes, I mean for us and again I think Tim Tim mentioned this but you know for US MLR is really much more of a function of mix. When you look at MLR on the top line. So we really look to is what is our MLR by cohort right and then what is actually more important than this MLR by cohort what that means for our data release, what that means to our <unk>.
Economics, and so the thing that we're very focused on is how do we think our centers are going to perform in 2022, Brian because we know 2021 is going to be a strange year really driven by both new patient dynamics and you guys you guys <unk>.
Our growth rate a lot of our patients by this time of the year and especially in Q4 will be will be new patients. So the question is what are those new patients going to look like what are the patients who joined us in 'twenty 'twenty. One next year with our existing patient base that joined US in 2020 prior to look like next year and what does that mean for the unit level economics of centers next year and beyond and then when we do that math.
Yes.
We feel very confident that we will still have a very strong center ramp which is something I think I said in my comments, we won't we will share kind of the embedded center ramp.
In guidance when we're looking at and I think that it will.
When we look at the data I think it shows that every center you put up as a fantastic investment I think it shows that we're still seeing very strong results on the kind of intermediate tenures centers in the new centers compared to what we saw for our early centers, which are which are very profitable and so.
That gives us confidence that we.
We still have very strong unit economics, we're not really seeing a degradation of the economics as we scale.
So assuming that's still the case and so far every every Q.
Q3 results procurement strengthen that doing amongst our team.
And then I think you know I think we will see a step up in the number of centers, we put up for for 2022.
Because again I think that.
Right now, we're just trying to grow through a period of time, where we really don't have that many.
Mature centers, who we didn't grow that faster in 2013, 2014, 2015 2016 2017.
Got it we got to play a little bit of catch up and get a big enough installed base, because there's a huge need for what we do and that's the period we're in.
Alright, thanks for the color.
Your next question comes from the line.
Lizabeth Anderson of Evercore ISI.
Hi, guys. Thanks, so much further question maybe following up on some of the prior questions about the MLR, if we think about a traditional maybe.
Non COVID-19 effective change between say first your patience to Oak Street, and maybe your two or three patients to Oak Street can you talk about.
That MLR difference.
Yeah.
Yeah, I mean look.
As you can tell based on my comments if were similar to the patient contribution we saw in 2019 on existing patients and we are not where we were.
On an overall MLR basis compared to what we were in 2019 overall like you can tell that new basins, obviously got significant worsening in the gap has widened between.
Kind of more tenured patients and new patients.
As I shared I think that the same new patients. This year that are headwind will be back on track.
No longer a headwind in.
In 2022 based on what we've captured to date on their disease burden. So we do think it's a very large as you run around under documentation.
Generally there is a step up every year, we see a patient the longer you have them the more properly.
The step up is not nearly the stat function.
Historically that we're seeing this year.
Goes up after you too, but it also goes up when we get to from year to year, three and it goes up from here three or four et cetera.
And so I think this is again this is a this is certainly an outlier year from every other year we've had results.
And we think we have again on why.
And so again there is some there is some tactics, we can certainly mitigate to take better care of our patients faster, which we will obviously always try to do regardless of what their economics are.
But I think when we look at our tenured patients when we look at the kind of expected revenue even for our new patients next year. We do believe our model is working and working to the same if not better effectiveness than it was in 2019 and earlier.
Now it's a question of working through this this last.
Lingering impact of what happened in 2020.
That's helpful. And then there's also the Capex stepped up a bit in the quarter relative to prior quarters spend can you talk about what drove that increase and should we sort of run rate that maybe 23 million dollar amount going forward.
Elizabeth It's Tim.
Yes.
Generally speaking.
Thinking that the largest the two largest drivers of capex youre going to be new center development as well as anything related to development and labor.
With the latter being.
A minority contributor so typically speaking youre seeing increases in capex can be driven by.
Increased center opening ramp and remember.
Because we open a certain number of centers in the quarter and we've got several people.
Look at the guidance right Robin.
17, 18 centers in Q4 so.
As you think about that those centers are underway now obviously are they were under way as we were coming out of Q3. So it's not just the centers that opened in that period. So predominantly that's going to be that center opening.
The pace of center openings essentially so yes.
I would expect Capex to increase.
Commensurately with the number of centers were opening at any given time period.
Okay. Thank you.
Your next question comes from the line of Richard close of Canaccord Genuity.
Yeah. Thanks for the question just maybe expand on Kevin's labor question, a little bit Tim can you quantify any.
Meaningful changes in the recruitment costs or wage inflation.
Youre seeing maybe on those lower.
Lower positions and then anything to speak of on.
Turnover.
Maybe more mature centers.
Sure sure Thanks for that Richard.
On the impact.
Of the tight labor market on costs I'd say at this point the impact of cost has been relatively.
Minimal.
No.
We benefit from.
They are unique mission of Oak Street, which really resonates with our employees and thus far that has enabled us to manage through the labor more conditions fairly well, obviously, its a challenging market to recruit folks and so retaining talent has been less of an issue we have not had a situation where.
We've experienced significant labor cost pressures across our book of business. So at this point the answer the simple answer your question is.
Relatively minimal.
Okay. Thank you.
Your next question comes from the line of Lance Wilkes of Bernstein.
Yes, just a couple of quick clarifications.
The first one is on on medical cost management and just interested in addition to the three major drivers of kind of incremental costs medical claims expense costs. This year.
The core operations.
What are the major medical cost action plan items that you guys are focused on.
You know kind of beyond the acquisition of Rubicon or new patients for Covid admissions and then the second question is just related to the ERP.
Relationship just trying to understand.
The economic model, a little better there kind of where will the cost be.
Housed within the P&L as it fixed or variable costs. He was there any sort of splitting with AARP where is it.
Where it's more like a licensing agreement.
Yes on the first question I mean, the core of what we do is keep our patients happy healthy and out of hospital and the majority of our spend despite some of the movements in 2021 from assortment joining our spend so maintains its still remains hot patients and hospitalizations and so.
Our big focus of our care models is understanding our patients' needs and engaging them in our model.
<unk> seen them on a regular cadence based on that need enrolling them in other programs such as behavioral health or care in the home if they need that for our sickest patients and really keep them keep them out of hospital.
There's a very consistent approach across all of our centers. We use the same operating model at the same data the same technology the same team structures.
That remains a large focus and will continue to focus on as well as we've done reducing hospitalization by about 50%.
I am confident we can do better but part of that doing better as you mentioned is making sure we're understanding our new patients and engaging them faster. So we can have a quicker impact on their medical costs.
Part of that part of that will be.
Again, making sure all of our patients are complying with our instructions and making sure we're providing them with a great experience.
And then obviously for the other third of the spend the non acute utilization I think this is where I think rubicon will be a huge part of our strategy because.
We can both provide.
Provide a better alternative than referring patients to the specialist that's a better alternative for coordination of care Thats also a better alternative for the patient experience.
If we can bring a lot more expertise into our model faster is to again to arrest a chronic illnesses and.
Drive Jive better quality of care. So those are those are really big focus is and I think.
We continue to learn is that our model works very well and while we'll always be adding things to the model oftentimes, but we also really focus on is making sure that all of our patients are engaged in the model and getting the care that we know they need.
And then to your second question on.
On the ERP I think your hypothesis correct.
And any costs associated with it will be in sales and marketing and I think a license agreement probably a good a good frame of reference.
Okay, and just on that first part as.
As far as trying to keep people out of the hospitals and keep them healthy.
Are you guys doing anything with respect to either.
Hospitalists are embedding care management downstream like that or different network contracting strategies may be driver pay.
<unk> two.
More narrow network of hospitals.
So we have a transition program.
That involves nurses and other providers, including non conductors and nurse practitioners, depending on the patient need who are managing.
Where the patient goes from a post acute setting making sure that it's the right value. The right length of stay. They are also really focused on readmissions, how do we make sure that we're doing medication reconciliation.
Identifying factors for readmission, and really making sure our patients don't go back to the hospital that go. So so both kind of the what everything on everything around what happens after the emissions, it's a big focus and we have a very soon.
Specific program against that but again its integrated fully with their care team <unk> technology and process. So again, it's very good.
Coordinated from the patient perspective is not a siloed program. So yes to that question.
We don't have as much focus today on kind of.
Rates in contracting individual hospitals I mean, our model obviously is much more geographically spread so take take a place like Chicago, where any of our markets. We generally cover the majority of neighborhood within those markets, which means we have to work with majority hospitals and for most of our patients they're going to go to the hospital closest to their home.
Or.
They are taken and so.
We think we need a strategy that doesn't just work at a couple of hospitals and frankly, our strategy is less focused on kind of rate arbitrage and pushing patients to places and it's more focused on patient choice and higher quality care and keeping patients out there. So that's that's our focus today, we do these things around utilization management to make sure of that.
Hospitals are doing the right level of care and the rate.
Level level of care that the patient need is happening and so it's beyond just just keep patient healthier, but the core is really keen patients out there.
Great. Thanks.
Your next question comes from the line of Ryan Daniels of William Blair.
Hi, guys. This is Jackson I'm done for Ryan Daniels.
I think most of our questions were answered, but I guess, just keeping on the labor front.
Are you guys seeing any trends of folks who are kind of facing burnout, but still coming to oak Street. After the passenger stress in other markets.
And then I might just be kind of bolstering Oak Street.
Some of these pressures and demonstrating no kind of your insulation from the labor pressures and it's not I guess kind of what are you seeing on that front.
Thanks, Greg.
Great question I think you have to divide up team members across Oak Street by five kind of role and function right. We have a we have a.
Workforce that spans a lot of different different types of team members and I'm. Just wondering as I think we are as effective as we are that it is very multi disciplinary and look for opportunities to go to work at the top of their license and so I absolutely think thats. The case for providers, we hear that all the time from from doctors under traditional joining Oak Street health that this is this is the holiday and looking for and this is the way to practice.
Medicine.
That's a big reason why they they come to Oak Street health is because they actually get the resources they need to do what they went to medical school Forbes just keeping patients healthy right. So that.
Certainly if the case.
I think thats the case when you kind of talk through health care professionals generally I think as you move to other roles.
The example, I think is probably the other extreme is.
Call Center team members.
I think that.
There are less coming to Oak Street, because the normal burnout pressures in primary care I think they are coming to us because they believe in our mission and I think we can create a really great culture.
Cross utilization, so thats really what we tried to it uses are.
Our biggest.
Factor two to.
Attract and retain employees. This is this is a great place to work. We recently received an award from Chicago streaming actually around being one of the best places to work.
And so we take we take our culture in being we have we have four.
Objectives.
<unk>.
Bringing bringing on more patients and growing from to help more people, providing the best care anywhere providing unmatched patient experience and being the best place to work in health care and I think you need all four of those to really achieve our mission I think employees feel that that one of your kind of four objectives is about them.
Understood. Thanks, and thanks for taking the question.
Your next question comes from the line of David Larsen of BTG.
Hi, just one really quick one for me can you maybe just comment on the competitive environment like we're obviously seeing keno, one medical and <unk>.
Walgreens is putting a big investment into village M D.
And is this having any impact on like.
Let's call it adverse risk selection, where maybe older.
Medicare members are potentially joining oak street as compared to those perhaps in our Sixty's just any color there would be very helpful. Thanks.
Yes, obviously over the last I don't know 15 months or whatever its been since we since we went public.
There's been a lot more organizations, who are public and growing in this space, which is which is great I think for our country, because we need more value based care, we need better quality of care for people.
So we're definitely hearing all of those groups along as well because.
At least at this point in time, we don't we don't really feel like there's a lot of.
Pressure or competitive dynamics influencing our performance.
We have we have some centers that are near.
Our competitors operations, we have some centers that theres no competitors in the market and we really don't see a difference in performance against any dimensions, whether that be growth or economics et cetera. I think the reality is the vast vast vast majority of older. Adults are still receiving their care from traditional primary care doctors office or even worse in the neighborhoods, we serve oftentimes receiving their care from the emergency room and so.
What what is the <unk>.
Naval or of our success and I think it will be for a while is our ability to engage people in their communities and educate them about why primary care is important and I think they are wanting to see a doctor wanted Julien three health is a great place to get that care. We think our experiences is very strong and obviously you have a 90 net promoter score that backs that up.
For us, it's all about maintaining our culture, leveraging our technology, our data our model and frankly.
I believe and I'm biased, but I believe a phenomenal team too.
Doing what we do and in 10 years, we may have a different conversation about stealing share in.
And.
And that'll be that'll be that'll be that'll be a very good problem to have for everyone.
We're confident with the platform, we're building and we will certainly be one of the big players in the space in 10 years.
We can we'll cross the bridge on competition that because right now it's really all about what we control.
Do you have any desire to get into the commercial markets.
No I think that one of the reasons why we are so successful and will continue to be successful because of our focus and.
Maybe maybe we would take six to eight people, who are 16 up who have chronic illnesses, but thats really just an extension of our core population.
I think that our model works incredibly well for our patients, but it's obviously a resource intensive and extensive model and if you had a patient population that was statistically healthier.
It Wouldnt necessitate the level of investment, we make and now we wouldn't be taking cost out of the system, we'd be adding cost to the system and I joke with my wife, and I wish I was in Oaktree patient because the experience is pretty darn good.
But the reality is I don't I don't need to add to that level.
Focus right in that level resources, because I don't have enough expected milk cost too to necessitated so that's why we're going to keep focusing on what we do rather than really build a differentiated experience in care model for our patient population.
Great. Thanks, very much congrats on your success.
Thanks I appreciate it.
This concludes today's conference call is there any closing remarks.
Okay.
Alright. Thank you everyone for joining the call and we look forward to talking to you again soon thank you.
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