Q4 2021 Evolent Health Inc Earnings Call
Welcome to Ireland Health earnings Conference call for the fourth quarter and year ended December 31st 2021.
As a reminder, this conference call is being recorded your host for the call today from ever let health are Seth Blackley, Chief Executive Officer, and John Johnson, Chief Financial Officer.
This call will be archived and available later this evening and for the next week via the webcast on the company's website and session.
In the section entitled Investor Relations.
I will now hand, the call to Seth Frank Avalanche, Vice President of Investor Relations. Please go ahead.
Thank you and good afternoon. This conference call will contain forward looking statements within the U S. Federal laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.
A description of some of the risks and uncertainties can be found in the Companys reports filed with the Securities and Exchange Commission, including cautionary statements included in our current and periodic filings for additional information on the company's results and outlook. Please refer to its fourth quarter press release.
<unk> issued earlier today.
Finally, as a reminder, reconciliations of non-GAAP measures discussed during today's call to the most direct comparable GAAP measures are available in the submarine presentation available on the company's Investor Relations section of our web site or in the company's press release issued today and posted on the Investor.
<unk> section of the company's website IR dot Evelyn Telfer Dot com.
The form 8-K filed by the company with the SEC earlier today.
During management's presentation and discussion, we will reference certain GAAP and non-GAAP figures and metrics that can be found in our earnings release as well as a summary presentation available on the events section of <unk> IR website, IR <unk> dot com and now I'll hand the.
Call over to <unk> CEO Seth Blackley.
Good afternoon, everyone and thank you for joining the call.
Today, I'll summarize results for the fourth quarter and full year 2021, as well as the outlook for 2022, then I'll turn to an update of our three primary investment themes of strong organic growth.
Spanning margins and optimal capital deployment.
I'll wrap up with a macro industry environment update John will provide a detailed dive on the Q4 numbers and our 2022 outlook and medium term revenue and margin targets.
As always we'll close by taking your questions.
Yeah.
Turning to the key financial results for the fourth quarter of 2021, and the December 31, 2021 everyone's health total revenue was $248 4 million.
Revenue, excluding divested assets was $245 9 million, reflecting a 39, 7% year over year revenue growth rate <unk>.
Adjusted EBITDA for Q4 was $24 3 million compared to our Q4 outlook of a range of $14 million to $18 million during the fourth quarter. We closed the acquisition of vital decisions, which contributed approximately $5 million of Q4 revenue and approximately $1 million of Q4, adjusted EBITDA consistent with X.
Spectation.
Underlying our strong performance as the year over year growth in lives under management, the key volume component of <unk> revenue.
As of December 31, 2021 have once services covered 20 million lives with $1 6 million managed within Avalon Health services and $18 4 million lives in our clinical solutions segment.
And our clinical solutions segments are composed of $1 5 million lives managed under our risk based performance suite through new century health and have wound care partners and as at the end of December we supported an additional $16 9 million lives through new century health technology and services platform inclusive of the vital decisions acquisition.
For perspective everyone's contracted solutions currently cover approximately 6% of the U S population.
For the full year 2021, we ended the year with total revenue of $908 million and $896 million of revenue excluding divested assets.
This reflects growth of 36, 7%.
Adjusted EBITDA for 2021 totaled $66 $3 million representing growth of 36, 5% year over year. These results are ahead of our medium term revenue targets and tracking to our 2024 adjusted EBITDA margin target. The results also exceeded the high end of our initial.
<unk> for 2021 of 830 million to $880 million of revenue and adjusted EBITDA between 40 and $50 million.
<unk> fourth quarter of 2021 marks the capstone of a highly successful year for evident across key performance metrics and we're pleased with the continued momentum driving our business as well as the impact of once delivering for our employees partners patients and our mission.
John will provide our complete 2022 outlook later in the call, but I'm also pleased that we expect 2022 total revenue growth between 23 and 30%.
And adjusted EBITDA of between 80 and $90 million.
Across the top and bottom lines, we continue to be on a path to deliver on or exceed our medium term revenue growth and adjusted EBITDA targets.
On behalf of Ellen's leadership team at <unk> Board of Directors I want to express my appreciation to all 3500 volunteers worldwide.
Their passion and commitment to improving health care through innovation continues to contribute to the quality and efficiency of healthcare delivery in the United States continue to be highly impressed with our team and I'm proud to report that even through the pandemic and upheaval in the broader economy. Our employee engagement score is at an all time high.
And it remains a highly desired destination for a diverse and productive workforce.
Now, let's discuss our ongoing progress against <unk> three.
Three core operating objectives, one strong organic growth to expanding margins and three optimal capital allocation.
Okay.
Touching our first theme of strong organic growth, we're pleased to announce four new operating partners today.
As a reminder, we consider new operating partners to include both new partner logos as well as any significant geographic expansions with existing partners using our clinical performance suite. We're pleased to have added 10, new partners during 2021 versus our annual target of six to eight partnerships and we're off to a strong start in two.
22 with todays announcements.
Three of the four new partnerships announced are for new century health with Molina healthcare and important and growing partner, we have signed an agreement to bring our cardiology performance suite to Molina, Nevada. In addition, Molina healthcare in Kentucky, and Washington State of elected to migrate from our technology and services suite to our.
Cardiology performance suite.
With these three expansions in addition to the previously announced performance suite relationship with Molina, Ohio, We anticipate Molina will contribute more than $75 million of revenue in 2022 with the opportunity to continue to grow in future years.
Further we feel that the conversion from new century technology and services to our performance suite is further evidence of the value we provide to our partners.
And for the expansion opportunity, we see within our existing partner base.
And deploying the performance suite payers and risk bearing providers are seeking a partner who can guarantee cost reduction and quality improvements and high cost specialties. We believe we offer a compelling value proposition whereby a health plan partner transfers responsibility for scope of medical cost to everyone. We in turn drive our margin by capturing that.
Clinical savings, we create from that capitation rate using our advanced technology platform scaled services and our proprietary clinical intellectual property.
We are pleased that we have also extended this performance suite model to primary care through our Avalon care partners business as such our fourth New partnership announcement is the first primary care performance suite agreement for Avalon with Blue Cross Blue Shield of North Carolina.
Effective in January 2022, everyone care partners and its network of independent primary care physicians began managing over 10000 Blue Premier members.
Evelyn care partners will leverage our proprietary identified platform.
Moving care management, and patient engagement programs to improve quality and reduce unnecessary costs low cost and Blue shield of North Carolina is a leading payer in the value based care space and we look forward to collaborating with them to improve the health of communities across North Carolina.
Rounding out our growth news today, we are disclosing that our previously announced Evelyn health services National payer is bright healthcare beginning January one 2022, we went live with a multi year operational partnership whereby bright will leverage evidence health plan administrative services to initially support an estimated 350.
Thousands of commercial and Medicare advantage members, we're delighted to work with bright as they integrate vendor relationships and seek to expand their unique patient centered integrated payer provider model to the health plan market.
Moving to our second objective of margin expansion, we're pleased with our progress towards our medium term margin targets, given our high revenue growth rates and larger proportion of mix from performance, we products, which have lower year, one margins and higher margins. In later years, we will continue to see some fluctuations and year to year EBITDA margin percentage.
Yes.
Our high revenue growth rates give us greater conviction with our medium term outlook, including confidence of reaching our absolute adjusted EBITDA dollar goals, which we believe to be the best indicator of success on our margin expansion targets.
Finally, I'd like to discuss our third theme of shareholder value creation for Avalon, which is optimal capital allocation.
Even as we rapidly scale, our business, our execution and our differentiated solutions increasingly generate higher levels of operating cash flow, enabling us to further accelerate our market leadership.
As we think about capital deployment, our priority is to drive innovation and market leadership around our core three solutions first through continued R&D in our core business second through strategic M&A.
In the core and third through innovative capital light partnerships rigor.
Regarding R&D within the core we plan to continue steady and disciplined investment around our primary solutions for example, within Avalon Health services, we're leveraging artificial intelligence and other technology investments to scale high volume transaction processing activity more efficiently for our provider and health plan partners.
Regarding M&A, our 2021 acquisition of vital decisions is a good example of how we use M&A to extend our market leadership by integrating vital decisions in the new century health, we add important capabilities to better manage overall end of life quality and cost.
According to CMS and published studies.
Direct medical costs during the last 12 months of a person's life of approximately 20% of total Medicare spending.
A lot of decisions greatly enhances and deepens, our ability to impact those costs, especially within oncology and cardiology, which represent the majority of <unk> medical expenditures are vital integration is going well and is on schedule.
During 2022, we'll continue to evaluate other strategic accretive acquisition opportunities given our market leadership position in high demand in the market, we continue to see particularly interesting opportunities to deepen and broaden the new century platform through continued M&A.
Third we also seek to innovate through partnerships with no or minimal use of R&D or M&A capital for example, with an oncology. We are partnered in the evolving pharmacogenomics space. This relationship seeks to further optimize treatments that maximize efficacy effectiveness and minimize.
The risk of side effects.
In addition, we're partnering with the Welsh Carson voucher was backed organization that seeks to expand oncology care capacity with a new hybrid value based delivery model finally.
Complementing our primary care centric focus with Avalon and care partners. We have partnered with an organization to support early identification and treatment in kidney care.
These relationships and others like them accelerate and enhance our existing solutions, allowing us to innovate without deploying significant capital.
Collectively across our R&D M&A and focused business partnerships, we remain optimistic regarding our ability to extend <unk> market leadership and to continue to build long term profitable growth.
To conclude I want to give you our perspective on where the current environment stands as it pertains to value based care in both the public and private sectors.
As many of you know there are many value based care models and experiments going on all attempting to bend healthcare's unsustainable cost curve, while improving quality.
On the public side as you are likely aware CMS seeks to ensure 100% of Medicare and most Medicaid beneficiaries are in value based relationships by 2030.
The Medicare shared savings program, Jennifer generated a seven fold increase in total earned shared savings between 2013 and 2020.
With dramatic savings acceleration between 2018 and 2020.
Also importantly, CMS reports average quality scores. So the programs for 2020, we're 97% the highest level since the initiation of the program.
As previously discussed we chose not to participate in the center for Medicare and Medicaid innovations direct contracting model and instead focus on the more proven but similar Medicare shared savings program called pathways to success, while the various model formats will surely evolve to reflect stakeholder feedback over time, we're highly confident in our near term.
<unk> opportunities with the current pathways to success program. We're also confident that there is broad bipartisan support for value programs in the years and decades ahead.
More importantly, we also continue to see a strong push to value models, and the private payer and risk based provider markets as evidenced by numerous national payers and risk bearing providers highlighting their efforts to drive cost down and quality up through engaging their provider networks. We continue to see strong demand for our solutions.
Taken together the impact of policy and the private market direction. These trends give us confidence that we'll have strong macro tailwind for years to come.
I'll now ask John to give some detail on the numbers this quarter and also provide our outlook.
Thanks, Jeff and good evening, everyone. Overall, we're very pleased with our achievements relative to our 2021 financial goals exceeding the high end of our initial and updated ranges for both our revenue and adjusted EBITDA targets and consistently delivering on all three of our strategic goals strong organic growth.
Expanding margins and efficient capital allocation.
We came into 2021 with a strong visibility to exceeding our mid teens organic growth target after adding 10, new partnerships as well as driving strong same store sales growth throughout the year, we further exceeded expectations, achieving 37% growth for $891 million in revenue <unk>.
<unk> divested assets compared to $652 million in 2020.
On the Bottomline. We ended 2021 with total adjusted EBITDA of $66 3 million or seven 3% of revenue 210 basis points ahead of the midpoint of our initial 2021 guidance.
Our strong margin expansion across 2021, the result of accelerated cost reduction efforts as well as the rapid maturation of some of our newer clinical partnerships puts us ahead of schedule coming into 2022.
This profitability expansion combined with a continued disciplined approach to investment in capitalized software development further allowed us to expand our operating cash flow during the year de lever our balance sheet and continue to bolster our cash reserves for future strategic investments we ended the year with $215 six.
Of available cash and net leverage of one one times, our trailing 12 months adjusted EBITDA down to one turn from where we began the year.
Now turning to our consolidated fourth quarter results total revenue of $248 4 million in the quarter represents an increase of <unk>, 7% year over year more importantly revenue less divested assets of $245 9 million increased 39, 7% from <unk>.
$176 million in the prior year due to growth from new partner additions as well as same store sales growth adjusted.
Adjusted EBITDA grew to $24 3 million compared to $20 4 million in the same period of the prior year the revenue and adjusted EBITDA outperformance was driven in part by approximately $6 million in positive revenue impact from strong performance on contracts within our clinical segment, which related.
The earlier months in 2021.
If these revenue impacts were allocated into the periods to which they relate Q4 adjusted EBITDA performance would have been in line with the high end of our Q4 guidance range, specifically 18 million with margin of seven 4%.
Turning to our segment results within our clinical solutions segment revenue in the fourth quarter increased nine 9% to $161 1 million up from $146 6 million in the same period of the prior year.
Excluding revenue from divested assets clinical solutions revenue grew 47, 7%.
Q4, adjusted EBITDA from clinical solutions, with $29 5 million compared to $8 6 million in the prior year.
This EBITDA outperformance was largely driven by the aforementioned revenue true ups.
Membership in our performance suite for clinical solutions was $1 $5 million relative to $1 6 million in Q4, the prior year with <unk> of $32 33.
Versus $28 55.
Membership in our technology and services suite preclinical solutions was $16 9 million relative to $6 2 million in Q4 of the prior year with APM PMT a 39.
Versus <unk> 43 in Q4 of the prior year.
The <unk> decrease was in line with expectations as we saw faster growth in Medicaid and commercial lines of business.
Sequentially, our technology and services suite lives grew five 2 million versus Q3, largely driven by both continued new market rollout progress across existing new century customers as well as the addition of $2 3 million lives from vital decisions.
Within our everyone's health services segment fourth quarter revenue decreased 12, 7% to $87 2 million excluding revenue from divested assets, everyone Health services revenue grew 26, 5% membership in our performance suite for Avalon Health services was $1 $6 million compared.
The $1 9 million in Q4 of 2021 with a <unk> of $17 25.
Versus $17 63.
Adjusted EBITDA from our <unk> Health services segment for the quarter was $7 9 million compared to $21 4 million in the prior year.
Looking at the year over year comparison element health services EBITDA in the same quarter of 2020 was positively impacted by a performance payment related to certain of our divested health plan assets.
Finally, corporate costs increased to 37% to $13 1 million up from $9 6 million in the same period of the prior year. This increase was primarily related to onetime and seasonal costs and we expect corporate costs in 'twenty two to return to levels consistent with the first three quarters of 2021.
John .
Turning to the balance sheet, we finished the quarter with $266 4 million in cash cash equivalents and investments, including $58 million in cash held in regulated accounts related to the wind down of passport.
Excluding cash held for passport, we have $215 6 million of available cash an increase of $24 $7 million versus the end of the third quarter. This increase was principally driven by our strong adjusted EBITDA performance as well as strong collections activity to close out the year.
Cash deployed for capitalized software development and other capex in the quarter was $6 5 million.
One subsequent event of notes from a cash perspective in January we received the second half of the earn out payments owed to us by Molina as part of the passport transaction, adding another $23 million of available cash to our balance sheet, but not yet reflected in the $215 6 million cash balance at the end of Q4.
We have no upcoming debt maturities until late 2024 and continue to expect our operating cash flow to be positive across all of 2022 and beyond giving us the ability to continue to invest in differentiating our core services, while maintaining a strong and flexible balance sheet.
Turning now to our 2022 outlook on the top line, we again come into the year with strong visibility and the vast majority of revenue at the midpoint of guidance under contract on.
On the bottom line, we come into the year with our unit cost profile right, where we want it and with our recent clinical segment go lives ramping nicely toward run rate profitability.
As Seth noted our outsized growth rate is driven principally by a higher mix of performance suite products and these have lower year, one margin that progressively move higher annually over three years.
Given these dynamics, we are focused on absolute adjusted EBITDA dollars and the midpoint of our outlook represents 28% year over year growth and dollar based adjusted EBITDA compared to our strong 2021 results.
Now, let me turn to guidance.
For the full year, we expect total revenue of $1, one 2 billion to $1 8 billion.
With respect to full year adjusted EBITDA, we are forecasting a range of $80 million to $90 million, we anticipate deploying approximately $25 million to $30 million in cash for capitalized software development across the year.
For the first quarter of 2022, we are forecasting total revenue of 280 million to $295 million and adjusted EBITDA of 20 million to $25 million.
Finally, we anticipate some modest seasonality in performance payments this year with the first and third quarters of the year projected to be slightly higher revenue and EBITDA than quarters, two and four.
With that we are ready to take your questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Okay.
And our first question will come from Ryan Daniels of William Blair. Please go ahead.
Yes, good evening guys. Thanks for taking the question and kudos on a very strong year and outlook.
Maybe I'll start with one for you can you talk a little bit more about the upsell to Molina, maybe as a case study just in regards to any learnings on the upsell.
Upsell process and how that could translate into similar growth opportunities in the other accounts in the future.
Yes happy to you Ryan so.
In general the way that things work with a situation like that or some of our other relationships.
Is that we have two vectors for growth right. One is if we already have the technology and services.
Suite in place, which is the lower <unk> PM, we have an opportunity to talk to those markets, where we're already live or to have their data about the opportunity to convert that opportunity into the full performance suite, which obviously has much higher <unk> as we've talked about and ultimately has I think better.
Savings from our partner the payer, but also higher margin for us over time. So that's one factor. The second factor is around just new geographies right. So we already have a relationship with a couple of states we have relationship with corporate.
They are willing to introduce us to the other states and there is an opportunity to go do that and obviously with Molina, we've had a little bit of both in this announcement.
And I think whats interesting, which we try to continue to talk about Ryan is that we've got within our top handful of customers 40 million lives and if you think about.
$35 <unk> PM on those 40 million lives obviously thats.
<unk> $15 billion, plus higher than $15 billion of opportunity and that would be kind of a fuller penetration opportunity, but we are methodically looking at whether it's with the relationship you mentioned or any of our others with those 40 million lives those kinds of opportunities and so we'll see I think more of those.
Over time, and it's a great tailwind to our growth in addition to obviously, adding adding new logos.
Yes.
And the reason I ask it it's a great case study and the data point you just mentioned is such a large opportunity for you what it is.
Especially when you have the relationship on the technology side and have the data and you can kind of validate the potential savings what tends to be.
Anything the roadblock to moving to the performance suite.
Yes.
Look I think we do have a good track record. It is all about creating value to your point, we have to prove the value we have to prove our good partner we have to do what we say, we're going to do and execute so we've had good track record of doing that from there. It really is about two things one is sort of dynamics within that organization, how much pressure they are feeling it.
If it's.
An organization that wants to drive savings or secondly, how good of a job can we do it proving that we can help drive incremental savings are opportunities and.
The barriers on the second one really is just about the first one sort of market driven the second one is it would be really around.
Proving the actuarial case around the savings and it takes a little bit of time to do that but we feel really confident in the fact that the value proposition is typically there and so we see lots of opportunities like this.
Got it. Thank you and then one for John as you move more of the business to the performance suite.
Just based on the new contracts you've sold do you envision a larger percentage of your revenue coming from performance based fees.
2022 relative to past years.
Hey, Ryan it's a good question.
On the whole.
If you look over the a number of years here, we have had an increase in our overall revenue.
Moving towards the performance suite.
Short answer yes, I think we do expect that here in 'twenty two.
Two things that I just point out on that one is obviously significant opportunity on the top line and two while it takes as you know a couple of years, maybe to get to full run rate the opportunity for dollar <unk> EBITDA on those performance fee contracts.
<unk> is among the highest in our portfolio of products. So we really like that opportunity.
Great. Thank you and then one last one.
Seth for you I ask this.
It gives me every few quarters, but I am curious if you look at the.
Pipeline, if youre seeing any inflections in demand for different products or.
Current end markets, whether it's Medicare Medicaid commercial.
Kind of what are you seeing as you look at the pipeline on a go forward basis.
Alright, I got something called my throat.
No problem that time of year.
Yeah.
Ryan we do see I'd say.
The inflection in the pipeline over the last really year to add.
It really I think is across all three solutions right now we've had really good success across all three I would say if I wanted to point out particular places of inflection.
Where we can guarantee results through our performance suite, whether thats in new century, or with our newly announced that won't care partners relationship I think those are particularly interested in the marketplace and within that that group of solutions, we've seen I'd say cardiology and oncology.
<unk> has high cost specialties, and now end of life as places, where the payer risk bearing provider community are looking for ways to drive down cost.
Can guarantee it and do in a way that's better for members higher quality as a lot of demand for that.
Okay.
Great. Thank you so much guys nice quarter.
Thanks, Ron.
The next question comes from Anne Samuel of Jpmorgan. Please go ahead.
Hey, guys. Congrats on the terrific results and thanks for taking the question.
My question was a little bit more on your longer term revenue target you did 36% growth. This year when you back out the divestitures youre expecting to see north of 20% organic growth next year.
Is it fair to think that maybe can continue on the trajectory a little bit north of that mid teens in the future.
Yes, great.
Great question.
And when we get a fair bit we obviously have been trending well above we're not changing the target right now on the mid teens, but we have been beating it and we want to continue to.
Set numbers and expectations that we can exceed and we're focused on doing that each and every year and.
Per Ryan's question is just a fantastic end market that we're selling into and great products with great traction. So we feel really good about continuing to do well on the revenue side.
That's great and then I was wondering if maybe we could get a little bit more color on the new partnerships around lives unexpected pm.
Hey, Andy I'll take that John .
So on that.
I'll start with Blue Cross.
That was the one that we referenced in the J P. Morgan.
Presentation back in January and I expect that to be north of $50 million in revenue here at 10000 members.
Brighthouse and about 330 incremental members assets 350 total.
And <unk> will vary based on the market.
Yeah.
And specific scope and line of business as for shipping a number of different markets with them to think in the range between seven and 11.
And on Molina.
They're expecting.
As those.
Migration happen over the course of this year, but up to the performance.
Performance suites in that going live in Nevada, and Ohio that will be an addition of north of 500000 members that performance suites.
New century.
Ramping over the course of the year.
That's really helpful. Thanks, and maybe if I could just sneak in one more I was hoping you could provide any color on the.
County, RFP thats up for renewal.
Yes.
Cook County, we continue to expect a decision sometime later in Q1 can be the last few days of February it could be in March feel very good about where we stand relative to the process.
I'm excited to get that outcome back unexpected pretty soon.
Great. Thanks, guys.
Thank you thanks Jay.
The next question comes from Charles <unk> of Cowen. Please go ahead.
Yes, thanks for taking the questions and congrats on the results.
Maybe first just wanted to ask a little bit about the Blue Cross Blue Shield North Carolina.
Contract Yaron.
And maybe talking about when we think about our performance suite offering.
I assume that's what you're already doing with your.
Partners in Abilene care part is there are there any differences here or is that just a new part of new member within the emblem chair partners anything structurally that's different.
Serving North Carolina.
Yes, Charles Great question. So it is very similar to what we're doing with Avalon care partners on the pathways to success side and some more frankly than what we've been doing for a while in North Carolina.
What's different is the nature of the arrangement with the private payer in this case.
Is structured as a.
Align capitation style arrangement does give us some incremental controls on the cost side, which we think allow us to drive incremental value and the way that the revenue recognition and again the margin dollar opportunities are I think are obviously higher but the fundamental work that we're doing is a little different.
The edges, because some of those incremental controls we have but it is pretty similar and it's one of the reasons, we feel very confident about.
Our ability to drive the performance here, both because we know that these specific members have been in the state for a long time and because its very similar to the scope of work that we have been doing for a period of time, but for those reasons. It is a little different than our traditional ECP arrangement.
Okay. That's helpful and maybe to follow up I think Ryan was asking kind of alluded to a little bit earlier right vital decisions. Those lives are sitting in the tech and services suite.
Obviously, you are taking risk on the oncology and cardiology is it possible to take risk for end of life care or is that kind of unique in the way that kind of curious delivered for you, Dave you're able to do so.
Yes, I mean, it's a good question is or the way we the way we think about that is to use the vital decisions capability with our performance suite lives within new century right. So we already are in the performance sweet situation and deploying vital there against cardiology and oncology.
We're about 70% of end of life cost set to begin with and so that that's the way we think about it.
For a host of reasons, we are not contemplating taking risk directly just on end of life.
Although that could be an opportunity one day will really focus on is the true integration into the new century around.
Cardiology and oncology.
Okay.
And then maybe one last question on the guidance.
Obviously strong revenue outlook can you give us any more more segment.
Level revenue guidance as we think between.
Clinical solutions versus health services.
Like what like where would more of the growth would you expect to be coming from it sounds like.
Because the performance is meeting with Molina, maybe more of the growth we should expect clinical solution side.
Yes, Charles historically over the last couple of years. The majority of our growth has come from the clinical side as we look at 'twenty, two it's pretty balanced.
Given the strength of the growth across the business.
Okay and would that be the same on EBITDA as well.
I think youll continue to see EBITDA profiles.
B.
Similar to <unk>.
Where they've been in the last couple of years in terms of EBITDA margins.
By segment Okay.
Alright, well worry about thanks, a lot and congrats.
Thank you thanks Chuck.
The next question comes from Matthew <unk> of Piper Sandler. Please go ahead.
Hey, Thanks, guys. Thanks for the question and congratulation on another strong quarter wanted.
I wanted to touch on Melena again.
Encouraging to see the upsell motion, but was particularly surprised with the full suite deploying in Nevada.
As you continued to penetrate Molina.
Potentially some of these other payers that you've proven out the value proposition with you expect that you could launch in new geographies with the performance suite.
From day, one or do you still expect kind of an up sell motion from tech enabled services to the whole suite.
Yes, Matt I think.
Youre going to see some of both is the short answer.
Can do it either way for the reasons, we've mentioned in the past sometimes the tech services way is an easier way to get started particularly with I think a national plan because of the ability to scale very quickly and then come in behind and the ways that we might want to support select geographies I think in the case of a regional.
Plan.
That's really trying to drive performance in a quick period of time, you also might see US go live straight with the performance suite. So it could go either way and again, we'd like to have both options because it gives us flexibility based on the needs of our customers.
Got it.
And then circling back to Cook County.
Curious on the PSEG consulting partnership if that was all at all related to winning the RFP.
And if so or if not would love to just hear more about that relationship and the plans that you have for it.
Yes, it looked at it we're very excited about the <unk> relationship, it's really all about our corporate commitment to diversity equity inclusion.
And also about making sure that from a supplier diversity perspective, as we think about <unk>.
Our operations around the country, we are meeting the needs and objectives of our clients and our partners and so it really is all about that it's part of a very long standing commitment we've had.
In that space inside of Avalon and outside and we're going to keep the foot on the gas pedal for a host of reasons.
On the DNI ESG side of our work and so this will be one of many things that I think youll see across the year.
Got it thanks, guys Congrats again.
Thanks.
The next question comes from David Larsen of BTG. Please go ahead.
Hi, congratulations on a very good quarter.
Can you talk a little bit more about the arrangement that you have I think in North Carolina.
It sounds to me like you say, it's a large primary care group and are you bearing risk.
With that primary care arrangement it sounds like you've actually created a virtual primary care solution is that correct or not.
And then did you say that was the first one of its kind on a large scale.
Thanks, any color there would be helpful.
Sure David.
Yes. So we are partnered up with actually a handful of groups in North Carolina primary care groups.
Yes, with Avalon care partners, our model is to work with the payer community or with CMS to take.
Manage a population the total costs for that population under the.
Pathways to success program, we Rev. Rec net revenue because it's more of a gain share model. This is more of a capitation model. So yes, absolutely theres risks included in it.
We feel really confident about the margin profile similar to other performance suite opportunities right where.
The <unk> our margin profile in year, one we have very high confidence what thats going to look like and how it will ramp in years, two or three which again has been the main driver of the acceleration of EBITDA that we've had at the company.
Over the last couple of years and this just snaps right into that same framework and the same model. So we're very comfortable with it it.
It is a capitation model, we see really interesting opportunity in North Carolina to expand what we have already started with here, but we also see opportunities to do this in other geographies.
Under the same Avon care partners model.
Great. That's very helpful. And then just one more quick follow up there are some primary care entities in the market that has been facing some challenges related to their Medicare advantage margins.
Either from higher claims costs related to Medicare members, you know being impacted by Colgate and having longer hospital stays or perhaps some premium pressure in MAA in some areas can you maybe talk about what you're seeing there if anything.
And how do you guard yourself against.
That type of a thing.
Packaging your.
Risk sharing side thanks.
Yes.
Yes, so look our models a bit different than sort of the.
Some of the other primary care models artist and more of a capital light model right. This is a network of physicians that we put together we don't employ them.
And we have close to a decade of experience doing this and it's pretty similar to what we've been doing for the last decade, a couple of years ago, we evolved a little bit in terms of how we set it up economically but it's the same thing we've been doing for a long time, and we have a long track record and a lot of confidence in what we're doing and.
And I think the short answer is no we're not seeing a spike in claims costs or issues associated with our populations and some of that may be due to a different model different geographies et cetera, but no. We're not seeing that we had really good results last year in the core of wound care partners business as we've talked about.
Recently.
Having the same results over the past months as well so we feel we feel good about it and feel like there's a lot of upside to grow.
Great. Thanks, very much congrats again.
Thanks, David.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Seth Blackley for any closing remarks.
Thanks for everybody's time, we will look forward to connecting on the road or virtually have a good night.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.