Q4 2021 Oak Street Health Inc Earnings Call
Yes.
Hello, and welcome to the Oak Street Health fourth quarter 2021 earnings Conference call. My name is Alex that'll be coordinating the call today, if you'd like to ask a question at the end of the presentation. You can press star one on your telephone keypad. If you would like to withdraw your question you May Press Star two.
I'll hand over to your highest Sarah Clark head of Investor Relations over to you Sarah.
Okay.
Good morning, and thank you for joining yesterday with me today are Mike <unk>, 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 other related materials are available on the Investor Relations section of Oak Street.
Health website.
Today's statements are made as of March 1st 2022, and reflects 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 intend may plan potential predict project should target will end.
Would or similar expressions.
We're looking statements by their nature address matters that are to different degrees uncertain.
Okay.
Particular, uncertainties that could cause our actual results to be materially different than those expressed in our forward. Looking statements include 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 innovations 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 31, 2021 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.
Yeah.
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 are a number of limitations related to the use of these non gun non-GAAP financial measures. For example, other companies may calculate similarly titled non-GAAP .
Financial measures differently.
Refer to 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.
Thank you Sir and thank you everyone for joining us this morning.
Joining me on today's call. In addition to Sir Tim Cook, Our Chief Financial Officer.
In this call I will start with a review of our 2021 performance then turn it over to Tim to discuss more specifics around 2021 financial performance.
I will then turn to 2022 and I'll share more on our goals for the year and Tim will provide guidance for Q1 and the full year of 2022.
Okay.
I want to first thank our team for their continued dedication and focus on our patients our communities and our mission.
Our team continues to navigate through a challenging operating environment, including the common chronic COVID-19 surge and historically tight labor market, especially in health care.
Despite these headwinds we achieved strong results across all the major driver of the performance for the fourth quarter. We had strong revenue growth driven by new patient adds in both new and existing centers. We finished the year with 129 centers, including 50, new centers opened in 2021.
Third party milk cost, which will cover more detail or in line with expectations going into the quarter. Despite significant headwinds from <unk> acquisitions, which were obviously not back into the guidance. We gave in early November .
Our cost of care corporate costs were all in line with expectations as well.
The net result is a quarter in which we exceeded the top end of our guidance range because revenue membership and adjusted EBITDA.
Yes.
The fourth quarter, we generated record revenue of $394 1 million in the quarter exceeding the high end of our guidance range and representing a 58% growth compared to Q4 2020.
For the year, we generated 143 billion in revenue, representing 62% growth compared to 2020.
Our revenue growth continues to be driven by organic DTC marketing approach. This.
This includes both central channels, such as digital marketing and our core community based average team.
Metal costs are kind of in line with guidance, we shared in Q3.
This combined with cost of care sales and marketing corporate costs, all in line with expectations and higher than projected revenue growth resulted in an adjusted EBITDA loss of $228 9 million for the year, which is favorable to the top end of our Q4 guidance.
When we look back at 2021 as a whole we exceeded our revenue center growth in patient growth targets.
Our third party metal costs were higher than anticipated driven directly and indirectly by the COVID-19 pandemic, leading to lower adjusted EBIT performance.
We'll cover in more detail, how the trends progressed across the year and their expected impact in 2022.
Beyond the financial metrics, we took a big step forward in 2021, and our mission to rebuild help because it should be.
We made significant accomplishments across the key components of our business.
This will lead to a greater impact on our patients and communities, which will drive our future financial performance.
We opened 50, new centers in both existing markets with world across eight new states.
To put that into context, it took us seven years to put up our first 50 centers.
This expansion will allow us to serve additional Canadian patients invest in continuous improvement and our care model and patient experience and greatly increases the embedded profitability of the business.
To help mitigate headwinds and running our community based marketing model from the Delta in Amazon surges, we markedly scaled our central marketing channel to help fill the gap and continue to see strong results in the channels.
We are excited for the time when we can have both our community and central marketing channels working in concert.
We were selected by the ERP as our exclusive primary care partner our relationship that we believe will lead to increased patient growth and retention, while being a differentiator for years to come.
Additionally, we continue to build on our core platform, adding new care model capabilities and services for patients, which we believe will continue to improve health outcomes and lower third party milk costs. For example, we published results from the impact of enhancements to our data and technology platform, such as implementing new machine learning algorithms to better risk stratify our patients.
We expect the acquisition of <unk> will allow us to integrate their virtual specialty network into our care model, creating an innovative and differentiated approach to specialty care, resulting in improved care quality lower unnecessary medical costs and improve patient experience.
We accomplished all of the above will navigate the twists and turns in 2021, we operated vaccine clinics earlier in the year and delivered 200000, plus vaccine doses, we navigated COVID-19 surgeons in the second half of the year, while still executing against all aspects of our business.
We hired thousands of team members, including hundreds of providers. Despite this shortly tight labor markets.
Shouldn't be prouder of what our team accomplished in 2021 and I'm excited to see what they can accomplish in 2022.
Before I turn it over to Tim to recent topics I'd like to address quickly.
The Department of Justice inquiry that we disclosed in November and the recent announcements from CMS related to the direct contracting program.
On the status of the Doj inquiries.
We have begun and will continue to provide documents in response to that inquiry.
Our discussions with the Doj has largely been around the scope of their requests in the document collection process and not about the substance of the inquiry.
We are currently unable to make any meaningful predictions about the timeline or outcome in this matter.
As we have said previously we strive to operate in a compliant manner and we will work with the Doj and our collaborative and transparent manner as we address their inquiry.
Andre contracting and the recently announced changes to the program.
We are participants in the direct contract program has enabled us to provide our care model with patients with traditional Medicare with increased supporting services that are typically provided in primary care, Patricia Medicare patients and.
In fact in 2021, 100% of Oak Street health patients in the direct contracting program were located in areas designated by HHS as medically underserved mental health provider shortage areas for both.
Last week, CMS announced important changes to the program aimed at.
We are advancing health equity to bring the benefits of accountable care to underserved communities.
<unk> provided leadership and governance and protecting beneficiaries in the model with more persistent daily monitoring and transparency.
Having been a Medicare shared savings program ACO participants for several years prior to joining our contracting we are excited to participate in the ACO reach program and appreciate the time and effort CMS sincere my invested to modify the program while also taking into account stakeholder concerns.
We believe these changes for Wellbore excuse model given the communities, we serve and our longstanding focus on health equity.
The exact details of the <unk> is still pending but is the ultimate changes are consistent with what was communicated last week, we do not expect a material impact.
With that I'll turn it over to Tim to cover some more of the details regarding our financial performance in 2021.
Thank you, Mike and good morning, everyone.
We continue to generate strong growth for the Oaktree platform in 2021 to recap the year, we eclipsed $1 billion in revenue generating 143 3 billion in revenue in 2021, representing growth of 62% from 2020.
We exceeded the high end of our initial 2021 revenue guidance issued in March 2021 by 8% and better than the high end of the revenue guidance provided during our third quarter 2021 call.
As of December 31, 2021, we cared for approximately 114500 patients on an at risk basis, 4% ahead of the high end of our initial 2021 guidance and above the high end of our guidance range on our Q3 call.
We opened 50, new centers in 2021, increasing our total center count to 129 as of December 31.
This represents eight more centers in the high end of our initial guidance range.
<unk> revenue for the year of $1 397 billion, representing growth of 64% year over year, driven by increases in our at risk patient base and our capture rates.
Total prior period development related to cap did revenue from prior years, primarily 2020 was favorable favorable by $28 million driven by the results of our 2020 full year risk adjusted payments compared to our accruals and patient retroactivity.
Other revenue for the year was $36 million representing.
Representing growth of 13% year over year.
Approximately $6 $5 million of the $36 million.
It was related to favorable prior period development from our performance in 2020 under our shared savings arrangements. The majority of which was related to the results of our Acorn ACO.
Our medical claims expense in 2021 was 110 9 billion representing growth of 80% compared to 2020, driven by the increase in patients under complicated arrangements and an increase in medical cost per patient.
Total prior period development from prior years, primarily 2020 related to medical cost was unfavorable by approximately $6 7 million.
Driven primarily by patient retroactivity. The majority of these costs were directly offset by the capsid revenue prior period development.
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 our rosters and therefore were not previously recognized in revenue for medical claims expense.
During our last two earnings calls we highlighted will highlighted three drivers of our elevated medical costs. These areas represented an estimated $110 million headwind in 2021, but we continue to believe they are a direct result of the pandemic and largely temporary in nature.
The first cost from Covid admissions and our Q3 earnings call. We shared that in the first three quarters of the year <unk> experienced approximately $25 million of costs directly related to Covid admissions.
We estimate full year COVID-19 costs were approximately $38 million in 2021, including an estimate for the surge in Covid cases related to the omicron variant in December .
We expect January and February 2022 to have elevated costs from COVID-19 admissions as well.
We remain focused on ensuring our patients are vaccinated and have received their booster shots.
We also have programs in place to ensure patients have access to new oral anti virals we.
We hope as these therapies become more available there'll be effective introducing hospitalizations and other poor outcomes and future COVID-19 waves for our patients.
The second element was non acute utilization.
And our Q2 earnings call, we discussed that non acute utilization, including specialist visits diagnostics and outpatient procedures increased in March and April following the vaccine rollout for older adults compared to our historical experience.
We believe the increase in costs during the spring was partially driven.
By patients increased comfort accessing medical care once they were vaccinated relax payer standards through to the public health emergency and specialist and hospital system behavior.
In our Q3 earnings call. We shared that these costs began to decrease in late spring into the summer.
As the year progressed this trend continued.
Comparing to our historical experience, we estimate non acute utilization was $35 million headwind in 2021, driven in large part by the elevated costs in the spring. However, we do not expect it to be a significant headwind in 2022, given the lower run rate exiting the year.
This is also the cost category, where we feel the acquisition of <unk> will have the greatest impact.
The final driver was new patient economics, and our Q3 earnings call. We discussed our new patient medical costs were elevated compared to historical levels, while per patient revenue for new patients declined to a level less than what we received for new patients in 2019.
On an absolute basis and significantly less than what we would've expected when considering premium trend.
The net result is a decline of new patient economics, driven by a combination of higher cost and lower revenue and what we have experienced historically.
We estimate patient contribution for new patients was $38 million lower than 2021 compared to our 2019, new patient economics.
We have looked at new patient contribution by geography, central vintage provider tenure and marketing channel and we saw a similar decrease across all cuts of the data for this reason, we do not believe the new patient economics in 2021 were negatively impacted by new centers or markets, but instead continue to believe the primary driver of lower <unk>.
Patient economics as lower engagement of adult older adults, especially those in lower income communities by the health care system in 2020.
Lower engagement result in both higher medical cost because of unaddressed and medical conditions and lower revenue because these conditions go and documented.
As a reminder, restores lagged by a year and depend on diagnosis captured during provider visits thus the lack of engagement before joining oak street likelihood of double effect of reducing the incoming risk score while also increasing disease burden.
As discussed on prior calls we expect the increase in per patient revenue in 2022 for these patients who joined in 2021 to be larger than our historical experience, which we believe will largely offset the higher medical costs from these patients at.
At this point in 2022, it is too early and we have <unk> patients have a firm view on what revenue medical costs, and therefore patient contribution will look like for our new patients in 2022.
While these three drivers led to higher than anticipated medical claims expense and therefore lower profitability than we expected coming into the year. We are seeing these higher cost begin to subside and continue to believe that the remainder will subside over time as COVID-19 evolves from pandemic to endemic.
Okay.
Moving onto cost of care.
Cost of care, excluding depreciation and amortization in 2021 was $294 million or 57% year over year increase driven by higher salaries and benefits expense from increased head count as well as greater occupancy costs medical supplies and patient transportation costs. The growth in these costs were related to the significant growth in our patient base.
At our existing centers as well as the growth in number of centers we operate.
Sales and marketing expense was $119 million during the year, representing an increase of 86% year over year and was driven by a $36 million increase in advertising spend to drive new patients to our clinics.
As well as an increase in salaries and benefits of $17 million related to head count growth.
As a reminder growth and year over year sales and marketing expense was artificially inflated as our costs were partially depressed during Q2 and Q3 of 2020 due to the pandemic, which included a temporary suspension of community outreach activities and other marketing initiatives.
Corporate general and administrative expense was $307 million in 2021, an increase of 65% or $121 million year over year, primarily driven by head count costs necessary to support the continued growth of the business.
Stock based compensation represented $156 million of total corporate general and administrative costs in 2021 and $79 million of the year over year growth.
Excluding stock based compensation corporate general and administrative expense grew 39% compared to our total revenue growth of 62%.
As a reminder, the vast majority of our stock based compensation expense is related to the accounting treatment of equity awards issued prior to our IPO in 2020.
I will now highlight three non-GAAP financial metrics that we that we find useful in evaluating our financial performance.
Patient contribution, which we defined as capex into revenue with medical claims expense grew 23% year over year to $288 million.
We expect at risk per patient economics to improve the longer that our patients are part of the Oak Street platform.
Platform contribution, which we define as total revenue less systems medical claims expense and cost of care, excluding depreciation and amortization was $31 5 million or 59% decrease year over year from $77 $5 million.
This 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.
The data we provided during our Jpmorgan presentation reflected in the losses, we expect for new centers as their performance ramps over time, we expect new centers to generate an operating loss for the first two years of operation and approximately breakeven in year three.
As of December 31, approximately 60% of our centers have been open for less than two years and approximately 70% had been open for less than three years.
Adjusted EBITDA, which we calculate by adding depreciation and amortization transaction offering related costs in.
Taxes and stock for unit based compensation, but excluding other income to net loss was a loss of $228 $9 million in 2021 compared to a loss of $92 6 million in 2020.
We finished the year with a strong balance sheet and liquidity position as of December 31, we held approximately $790 million in cash restricted cash and marketable debt securities. In Q4, we closed our acquisition of Rubicon MD. The base purchase price was $130 million and was paid in cash or liquidity position will support our continued growth.
<unk>, primarily our de Novo center base expansion.
For the year ended December 31, 2021 cash used by operating activities was $197 2 million, while our capital expenditures were $81 3 million.
I'll turn it back to Mike now to discuss our focus areas for 2022.
Thanks, Tim.
Turning to 2022, we're excited to continue on our journey to transform care for older adults.
Our focus for 2022 will be on our four core objectives at Oaktree.
Provide the best care anywhere.
Delivering unmatched patient experience.
Grow the number of patients and communities, we serve and be the best place to work in health care.
For the last two years, we required a huge amount of nimbleness and flexibility from our teams in order to meet the needs of our patients and communities.
In Q2, 2020, we essentially morphed into a telehealth company for a time going from near zero to 90% of our business being virtual.
In Q1, 2021, we ramped up vaccine clinics across dozens of our locations to ensure equal access to vaccine for older adults in the neighborhoods we serve.
I'm incredibly proud of these and many more efforts from our teams to be there for our patients and communities.
In 2022, we're excited to have our teams both at our corporate offices and in our centers focusing on the core of what we do and advancing our performance across all of our objectives.
We believe this focus will result in continued improvement to and scalability of our model.
As we shared in our January <unk> Jpmorgan Health care Conference presentation, we expect the Oaktree platform to drive strong center economic performance in 2022.
Our expectation is that our centers that are over six years old will continue to be highly profitable with a subset of these centers that are 2300 and wireless patients driving center contribution of approximately $8 million each.
Additionally, as we shared at the conference our intermediate centers are ramping better financially than our mature centers at this point in the maturation and our newest vintage is starting off similar to a stronger than our mature centers from key kpis that drive results.
It is for these reasons that we are confident in the unit economics of our centers and the return they will generate for investors, while improving the wellbeing of thousands of patients.
As Tim will share in more detail in a couple of minutes.
Our view of 2022 center level performance that we shared at the conference remained unchanged and as a basis for our guidance.
Because of our confidence in our unit economics, the differentiation of our model and the massive market opportunity that will enable sustained growth over the next decade. We believe we can pursue a strategy that delivers meaningful near term and longer term value creation for all stakeholders, while mitigating risks from current market volatility.
We are updating.
Our new center target to 40, new centers in 2022.
Our plan is to open 30 to 40, new centers per year through 2024.
By trading growth of 40, new centers per year over the next few years, both street will achieve substantial growth with an expected revenue compounded average growth rate of over 40%, while reaching profitability in or before 2025.
Additionally, <unk> will continue to grow our already substantial embedded in EBITDA with embedded EBITDA of over $1 billion for centers opened by year end 2022, and more than $1 5 billion presented opened by year end 2024, assuming the unit economics, we shared in January .
As we have previously indicated we have considerable control over our capital consumption through the cadence of New center growth.
If we are able to further improve our unit economics lowering capital needed over the next couple of years, we will reinvest that capital into an accelerated pace of center openings.
Tightfitting, our new center growth in this way, we believe that we have sufficient capital to fund center growth until the business is cash flow positive without the need to raise equity capital now or in the future.
Given the recent market volatility. We think this is the most prudent path to control our own destiny mitigate any risk from market volatility and build value for our shareholders.
As noted above we remain confident in our unit economics, and the team's ability to execute across a range of new center openings we've considered.
We believe this approach allows us to build a fast growing value, creating transformative organization with sustained compounded annual revenue growth of greater than 40% and significant embedded profitability.
We remain excited to continue to execute our mission to rebuild health care they should be.
I'll turn it over Tim discussing more detailed guidance for 2002.
Thanks, Mike.
As Mike just discussed we are setting our initial guidance for our set of growth at 40 centers, resulting in a year end center count to 169 centers.
We expect to care for total at risk patients in a range of 152500 to 157500 and generate revenue for the year in the range of $2 1 billion to $2 <unk> 5 billion.
Our resilient growth of approximately 45% over 2021.
We expected our adjusted EBITDA loss to be $325 million to $290 million.
Implicit in our adjusted EBITDA loss guidance range as platform contribution performance within the range that we outlined at the Jpmorgan conference for each vintage recall that our JP Morgan range took into account unknowns around future direct costs from Covid hospitalizations as well as new patient economics.
Our guidance incorporates the reality that there will be COVID-19 costs, particularly given the <unk> in Q1, and new <unk>, New patient economics are largely unknown at present, we have relatively few of them at this point in the year.
Note that due to the fewer centers in 2022, we will not generate the same level of operating leverage as we would have had we opened 70 centers.
<unk> continued to invest in our platform to drive future performance.
We will manage our 2022, new centers to minimize potential costs from delayed openings, but we do expect to incur onetime debt costs included in our guidance related to centers. Originally scheduled to open in 2022 that we'll now open in 2023.
As we look forward to 2023 and 2024, we would expect to open 30 to 40 centers in each of these years at this pace. We will continue continue to strategically grow the business, while minimizing the potential for a future equity raise with.
With performance consistent with our 2022 guidance. This pace would result in 2022 being the trough of our adjusted EBITDA losses, and cash burn and will position us to be adjusted EBITDA positive in 2025, while generating a revenue CAGR from 2021 through 2025 in excess of 40%.
For the first quarter of 2022, we expect the following total centers in the range of 138 to 139.
At risk patients in the range of 122500 to 123500 as of March 31.
Total revenue in the range of $505 million to $510 million.
And an adjusted EBITDA loss of 45 million to $50 million.
And with that we will now open the call to questions operator.
Thank you we will now proceed with the Q&A, if you'd like to ask a question a compression star one on your telephone keypad.
I'd like to withdraw your question you May press Star two please.
Please ensure you're on mute locally when asking your question.
Please night foot state, we will be limiting questions to one question and one follow up question only.
Okay.
Our first question for today comes from Lisa Gill of J P. Morgan Alicia Your line is now open.
Thanks, very much and thank you for all the details Mike and Tim.
Just going back to our conference where you talked about 70 centers opening.
What's really in the last seven to eight weeks is it just simply the current markets and not wining tap to go back to the equity markets to gain additional capital.
Something else changed.
And the way Youre thinking about center growth for 2020.
We thank you for the question.
From an operational or a market opportunity standpoint, and our view nothing has changed as Tim noted the the range of center ramps that we shared seven weeks ago. The conference remains the basis for our guidance.
I think we still see a huge market opportunity out there for us in some ways I think the change in center growth was actually somewhat driven by that size of that market opportunity. We don't feel like this is a land grab we feel like we'll be putting up centers over the next decade and beyond and so when we looked at the market volatility we didn't want to be in a position where we had to.
Access the equity capital markets in the future, we want to make sure we really control our own destiny and felt that.
This level of growth we can achieve.
Discuss very strong.
Growth.
Up.
<unk> line to profitability.
And it really removes the need for an equity capital raise in the kind of a combination felt like the right. The right approach to us given the given the volatility in the markets.
That's very helpful. And then Mike just a quick follow up you kind of brushed across PJM, new direct contracting that that CMS came out with.
Two areas that I feel people are really focused on one governance and maybe you can just suggest that I don't think thats an issue for you since you and play your doctors, but then secondly, how we think about risk adjustment and the cohort of patients that theyre looking at.
Yes on the governance I think we have the same read you did on that one that we are a provider organization. So I think the governance rules will.
It will be more relevant for for organizations that are more contractual or aggregated with doctors versus <unk> Street wear.
So we are so that one that was pretty straightforward for us.
With all things risk adjustment the Devil is always in detail so.
We'll pay close attention as more and more details are released but our initial read is this shouldn't be a big change or impact on Oak Street.
One thing Thats unique about Oak Street, and I think we're very proud of is we've been taken care of traditional Medicare patients since since the onset of the company and.
Over that time period, we don't we haven't differentiated quality of care and the investment we make in our patients based on insurance type and so the.
The type of care that patients received in $2040 $50 fixed income to 819.
All before direct contracting was the program was very similar.
Our.
Baseline patient population was a patient population with directly cared for by Oak Street at that time, as well and so because of that kind of changing the reference here or kind of how youre measuring that baseline of patients. We believe limited impact on <unk> III. Therefore should have limited impact going forward. So obviously, there's more details come out will it well Dave.
Pension, but our initial read is that shouldn't really make a big difference for us in the program.
Great. Thanks for the comments.
Yeah.
Thank you. Our next question comes from Ryan Daniels of William Blair. Ron Your line is now open.
Yes, good morning, guys. Thanks for taking the questions. Thanks for all the data as well.
More Mike maybe one for you guys regarding the arc type model that you shared recently at J P. Morgan with the various vintages and I'm curious if you could compare contrast that to kind of where we were maybe pre IPO a few years ago.
That's evolved now I realize COVID-19 , probably has an impact here that's transitory in nature, but just any commentary there would be helpful.
Thanks, Brian This is Tim I'll handle that.
Yes, I know.
There were some unintended confusion after JP Morgan regarding how the cohort data shared at that time compared to our expectations at IPO.
I kind of think of this through three different lenses. The first point of your question is what has changed.
Our initial model archetype model has created in the latter half of 2019 ahead of a potential 2019 IPO that we subsequently delayed until 2020.
When we updated the model in the summer of 2020.
At that time, we were hopeful like I think many of the marketplace, where that code will be relatively short lived and the financial impact would be eliminated and also time bound.
As we sit here today.
Continue to be impacted by Covid, both via direct costs as well as indirect cost impact or excuse me indirect impacts such as the growth of our centers as well as a slower growth we experienced in 2020, which has a cumulative effect our second results today. So.
So as we step back and think about the net present value of the center, which is how we evaluate our center performance. We believe the impact from all these changes related COVID-19 was about 5% so relatively immaterial.
Overall, just given the fact that our centers are still achieving the same level of ultimate profitability that we thought they would at the time of IPO.
The second lens is just a number of proof of what proof points substantiated. Our performance. So at the time of the IPO. We had four centers that were that we categorize as most scaled and they generated approximately $8 million each of annual contribution.
Today that number is 10 centers that we expect to generate $8 million each of contribution in 2022 <unk>.
Additionally, we had 19 centers.
Today that are six years or older versus only seven at the time of the IPO and we expect those 19 centers to generate on average about $6 $5 million of contribution in 2022 and that can only be the third which is our IPO archetype wasn't based upon our oldest centers performance.
Whereas what we provided in January is based more upon historical performance and our more recent centers that are outperforming that historical performance, which is why we have a lot of confidence as we think about our future results.
Okay. That's super helpful color clarifies a lot and then just my follow up just looking at growth in the expected at risk lives it looks a little bit lower on a absolute basis year over year versus 2021. So I'm curious if you can go into some thoughts around that and maybe as part of that you can address just.
Your marketing May change here as Covid appears to be winding down and we head into the spring with things warming up do you expect your community based marketing to ramp up a little bit here past punch good day. Thanks.
Yes.
Hi, Ryan I'd like to highlight the references data.
So Chicago referenced right there as opposed to a new Iot.
Thanks.
Great.
Yeah.
On the on the.
The kind of patient acquisition front.
Our assumptions that we're using for guidance projected a similar level of kind of growth per center as we saw in.
<unk> 2021.
I think obviously what were projecting two is net growth.
Multiple factors that go into more centers, but obviously, a larger installed patient base et cetera last year was buoyed by direct contracting coming in in Q2 with us obviously and the baseline starting this year.
But.
Our numbers today arent assuming.
We reached what I talked about earlier.
Our goal of maintaining our central channels, but getting our community marketing back to where we had in 2019.
That's our goal and as.
Covid transmission from.
Pandemic to endemic and people become more and more comfortable beyond the communities. Our hope is we can get our key events ramping back up again and really get back to the the types of activities from our center based teams as we were doing a couple of years ago.
We still have the same kind of staffing and approach there. So that's certainly our hope operationally, but that that kind of both of those working in concert is not baked into our guidance because theres one thing ive learned over the last couple of years right too.
SaaS stopped predicting what's going to happen in the twist and turns of this pandemic.
So we'll keep assuming kind of performance in 2021 and hope we can improve from there.
Thank you. Our next question comes from Justin Lake of Wolfe Research Justin Your line is now open.
Hi, This is Harris in Ontario, and <unk>.
Touched on this a little bit earlier, but I want to make sure I'm not missing anything.
At this correctly currently here.
<unk> key risk base.
Guidance implies eight 5000 any patient adds in the first quarter.
Would appear to imply 11000 patient adds.
Following quarters ahead to full year guidance I think historically, we kind of seeing.
It's more weighted towards the first quarter versus the other quarters.
We have a unique this year that's driving the shift in cadence is it maybe the voluntary attribution of BCE patients or anything else to call out.
Yes, I do think drug contracting has.
Slightly change the shape of our growth across quarters. Historically, we had a fair amount of traditional Medicare patients coming into the period.
Those would change from traditional Medicare to Medicare advantage and so they would go from non risk that risk.
Obviously in which our contract in place.
A large portion of our traditional Medicare patients are in that program.
And so theyre already at risk and so if those patients who are under a contract and choose to move over to Medicare advantage right. They move they remain at risk and you don't really see that movement in our numbers. So I think that what used to be a time in AEP are getting a bump in beginning of the year from traditional Medicare patients moving to risk.
Good news is those pages are already at risk.
It is an improvement overall, but I think you will see.
More.
And.
I would say the word kind of similar growth quarter over quarter.
Where you wont have as much seasonality, which again I think that's a nice positive for us that we can be very consistent growth across the year versus being reliant on one period of the year.
Got it Super helpful and maybe one last one.
<unk>.
Operating leverage would you wanted to expanding upon maybe your updated thoughts on the pacing of the leveraging of the cost ratios.
That you are slowing down our growth.
Presumably yes.
You'll have.
Overhead spread across <unk> and <unk>.
Just relative to how youre thinking got it prior to the changing.
And with that answer.
Yeah.
Sure Eric This is Tim Thanks for the question.
As you know what you're referencing is we provided a framework about G&A growth during the JP Morgan conference.
That was sort of is the simple heuristic, we think about it in a more nuanced level.
G&A costs have theres, a theres a fixed component as a component is more driven by patient.
Volumes and Theres a component is more driven by center volumes that fixed cost component. Obviously is what it is there will be any change to that based upon the change in the number of centers, we're going to open let's say the patient driven cost will not be that significantly reduced this year given the relatively few patients. The 30 centers that were pushed would've had because those are slightly Saturday we opened later.
In the year anyhow.
I was ready to open in April obviously, we weren't going to push it to 2023 and incur the debt cost of almost an entire year for those centers.
And then on the center based cost they're going to be some savings here, but much of these costs are regional in nature, and we may be opening fewer centers that isn't necessarily fewer regions. In this instance, so we're going to have six centers in the region before it might be for today, we will get the benefit of that in future years as we ultimately view open those.
Incremental two centers in that example, so.
We are still going to see nice year over year improvement in operating leverage just not at the same degree that wed expected at JP Morgan.
<unk> just given the fact that we were doing the math based upon center month's end.
There's going to be obviously fewer center months in 2022 than we had contemplated at that time.
Got it.
Thank you. Our next question comes from Kevin Fischbeck of buy.
Bank of America, Kevin Your line is now open.
Great. Thanks, maybe just to follow up a little bit on that question there.
When you think about opening up 40, new sites a year versus maybe the 70 plus that you might have been thinking about previously is there changed at all about where those sites are being opened you mentioned.
You entered eight new states.
This past year would you expect the new sites to be concentrated in states that you're already in or would you still expect to be entering new geographies entering new states.
Thanks, Kevin appreciate the question.
I think the approach is.
The same.
We'll open centers both in existing markets like some of our centers. We plan to open will be in Chicago as we continue to see opportunity to take care of more patients and the demand that exceeds the number of centers. We currently have we will also be opening up in new markets in.
In Q1, we opened up our first centers in Phoenix, Arizona, We will continue to build out though so it'll be it'll be a combination of both as it was prior probably the way I think about a bit more 70% as we were planning to open. This year, we'll still open all of those catchments.
Put some of those into into 2023.
I don't think the approach is different.
Okay, and then maybe just to better understand the economics of opening up new centers.
It does opening up a center adjacent to an existing center.
Is that a better.
Long term investments.
Albeit maybe at the risk of short term dilution from an existing or surrounding centers, we're entering a new market and have a better.
Two vestments.
I don't think the huge divergence between a new center in an existing market.
Or a new center in a new market.
We have if you look at our kind of mature centers. The first 19, we've put up once Tim referenced earlier.
There's a huge amount of variability in the types of markets those centers are in.
It's obviously a number are in Chicago, our first market, but even in Chicago some of them are in kind of more.
Blue collar middle class kind of think retired teachers that neighborhood. Some of them are kind of density density neighborhoods that are.
We have a much higher higher rate of poverty.
Some of them are in predominantly Hispanic communities.
But also in addition, Chicago Disbursed 19 centers are in places like Rockford, Illinois and <unk>.
Wayne, Indiana, where we have one center each in those centers is actually doing.
Doing quite well and certainly in line or better than that.
The average in those in those vintages.
We're also in Hammond in Gary, Indiana, Indianapolis, Detroit and all of those places are are part of those those first 19.
The reason I say that I think our approach remains similar to go through that breadth and that type of market. Both from a size of market perspective, and from a kind of demographic income perspective.
And when we look at kind of the the ramps of the centers, it's very very similar to the speaks to the scalability and replicable.
What we do.
And I didn't get all the way to think about it almost in a more retail in nature, what what drives your market is the are the center the center.
Is the catchment around the center.
And so whether you go into Rockford or south of Chicago. It is really about or the 20 or so in older. Adults are trying to serve and are you able to engage in that community and bring people in and our teams have been historically very good at that across a wide type of a wide range of markets.
Alright, great. Thanks.
Thank you.
Question comes from Jessica <unk> of Piper Sandler Jessica Your line is now open.
Hi, Thank you for taking my question.
So.
And if that's the case can you just remind us of the impact that payer diversification has sanitation equipment revenue.
And operating expenses.
You broke up there in the middle of your question do you mind asking it again.
Just that.
Sorry, My apologies Jessica you align the agent the by strong gas Okay. If I can just disconnect from Atlanta.
And if you press the star one that you can.
We asked a question.
Apologies for that our next question comes from Jamie Pos of Goldman Sachs. Jamie Your line is now open.
Hey, Good morning, guys I wanted to go through some of those areas of increased medical cost this year and what you're assuming for 2022 it sounds like.
Non acute utilization youre expecting that to be.
In line with prior trends on a <unk> basis, and adjusted Jenkins and all that and just if you can confirm that and then in the range at the low and high end of your guidance range. What are you assuming for COVID-19 costs and.
Or the new patient economics.
Relative to prior trends.
Sure sure. This is Tim Thanks for the question I think you categorized the non acute utilization well.
My guess is there's probably going to be.
Some carryforward effect, particularly given omicron.
And how it impacted not just patients, but more of the system's ability to manage patients even at our centers. We had a number of employees who were out because they were sick. So we will see if there is any.
Yes.
Any potential carryforward into 2022, just from the end of the year, but I would expect it to be relatively limited from a quote from the from a COVID-19 a new patient experience I think that it's hard to it's hard to.
Be overly specific with Covid, just given the number of unknowns at this point in the year and sitting here with.
The overcrowding surge knock on wood behind us and.
If we look think back to 2021, Steve when we got to May we all felt pretty comfortable that with the level of vaccinations, increasing vaccination rate increasing that.
We were done with Covid and then we had delta in omicron. So.
Yes, we had about $35 million or excuse me $35 <unk> were about $38 million of Covid costs in 2021, and I would say that <unk> would be implicit in the bottom end of our range.
And then new patient economics are.
Again, very much an unknown, but I'd say at the low end of the range.
Assuming a similar level of experience than what we had in 2021.
Okay. Thanks for that.
There's been a lot of discussion on just the M&A environment in the last couple of months just curious what youre seeing in terms of mcl pricing for MA patients and how that impacts you on a longer term basis.
For your <unk> assumptions when you.
That $1 billion and $1 4 billion in contribution for your 22% and 24 centers just any thoughts around.
What's going on in the M&A market and impact on Oak Street.
Yes, obviously, the M&A market and this is Eric.
<unk> have a trend that's been going on for probably a decade now.
I continue to get more competitive with.
More new plan entrance in the large existing players.
To expand into new markets and invest to grow share.
And so we're obviously seeing.
Youre, while were higher benefits across across markets and across plans.
And so that.
Chris kind of Q2.
Kind of implications for Oak Street.
On the one hand, obviously being at risk. We are also at risk for the benefits and so if.
Richard supplemental benefits or.
Richard cost sharing.
That obviously creates.
For Oak Street, although oftentimes that expenses also offset by higher benchmarks and higher rates to the plans are higher stars performance et cetera.
The other side of it as Medicare advantage penetration increases a higher percentage of the people that we mean the community are already in Medicare advantage, which obviously helps us get a higher percentage of our patients at risk faster and and so there is also some benefits from that increasing penetration as Medicare advantage becomes more and more compelling for people.
There are some countervailing factors there as we think about not just 2022, but but into the future.
Obviously, a higher higher percentage of our patients at risk helps obviously and plans are in investing is something we'll watch closely.
Got it.
Yes.
I think there are positive trends overall, because what it means is that patients, especially the phase III silver getting more benefits to help them to help them increase their overall being and so that that's the most important thing and that also does help us take care of them.
Okay. Thank you.
Thank you. Our next question comes from Elizabeth Anderson of ethical Elizabeth Your line is now open.
Hi, guys. Thanks, so much for the question.
Tim mentioned that part of the difference in terms of how youre thinking about the model for this year versus maybe some of the expectations you laid out earlier in the year with sort of a result of the deferral of center openings. Originally plan from 2022 to 2023 is it possible just to quantify the impact on that you can sort of see kind of the run rate.
And does sort of core versus some of that which is presumably.
More onetime cost shifting.
To the center openings in 2023.
But it's Tim Thanks for the question I would say for those 30 centers as you can imagine Mike walked through before our thought process on reducing number from 70 to 40.
We did not we were focused.
Set accuracy.
We've had great success across all of the synergy open overtime never closed the center and therefore, as we thought about one versus another we're fairly indifferent.
With rare exception and therefore, we had a mind towards what can we move most effectively both from a from a teen bandwidth perspective, as well as the cost perspective into 2022 and you can imagine the centers that were slated to open earlier in the year, we will by and large are going to open earlier in the year and the centers that that were moved to 2023, where centers that were.
Going to probably open later so on average those centers, we're going to have less of an impact in 2022 from a loss perspective than what an average.
New center might have in 2022 from a dead cost perspective, I'd say, it's going to be.
Probably about $5 million of costs that will incur in 2022 that we otherwise wouldn't had we opened 70 centers.
Obviously.
The benefit is.
We would have lost far more than that on.
On the 30 centers that we are no longer going to open.
Got it that's helpful and I know, you've probably been helpful in providing us updates.
Previously do you have anything to say in terms of the.
Hiring market in terms of both doctors and then sort of the other clinical staff at each of the each of the centers in terms of just your desk.
Wages and hiring pace.
Yes.
Italy.
A more challenging hiring market than we've seen in the past.
But from a provider standpoint, we provide our hiring has obviously never been easy to administer it providers since the day, we started Oak Street.
And we've had a lot of success over the past months and year.
Moving to expand to hire more providers, both for new centers and also more providers to give us capacity existing centers.
I think that speaks to our team and our provider service team with us that work right.
For us we really feel like we have a differentiated value proposition for our providers I think we probably we have a great value proposition for our patients.
Where they can really and practice medicine.
The way that.
He wants you to help care for patients to have all of our resources to help them care for patients their incentives are all.
Against quality of care versus volume et cetera.
And we see that in our scores were at 95% of our provider and say they would recommend oak Street as a place to work to to friends or family and 99% of <unk> allows them to do their best work and we're very proud of that and so I think that you know despite it being a tough labor market hiring I think that that value proposition.
Allows us to continue to hire and be successful in this environment and so.
No.
Our recruiting I'd be in trouble, if I said of our recruiting team would be outside the door waiting for me.
But theyre doing a great job in a tough environment and kind of.
Kind of allowing us to execute.
Far.
Labor shortages haven't had an impact on Oi.
Our ability and our goals.
And thats too on the other clinical staff as well as the provider level.
Yes, I think that obviously.
Highlighted providers, but I think that same concept is true across the board.
Okay perfect. Thanks.
Thank you as a reminder, if you'd like to ask a question.
One on your telephone keypad.
Our next question comes from Jessica <unk> of Piper Sandler Jessica Your line is now open.
Thanks for coming back.
So.
Curious to know if 2022 is the first year, where Oak Street has BRL exclusive center.
And if so just what's the impact of that payer diversification on patient recruitment.
Revenue per patient in Opex at the impacted cohort and Tony Tony James Thanks.
Okay.
Thanks for the question, Jeff We Havent, we Havent opened exclusive centers up for for a number of years now and that was really that was really something that was.
A large number of them in 2015, 2016 and 2017.
Very different period of time for Oaktree.
They're a good learning experience and I think we learned is I mean.
You kind of alluded to that.
Harder to grow extended our exclusive to that.
Impacts the economics and so.
We also didn't have any last year the year before that are I think the year before that either.
So I think I think that would be kind of ramps we shared seven.
Seven weeks ago.
That's kind of our expected ramp going forward that kind of takes into account. These are all multi payer centers and we actually highlighted that in that presentation kind of what kind of look like for the cohort looks like without the exclusivity. So I kind of would guide you to the nonexclusive boxes in that presentation.
Got it I thought there were a couple still rolling off this year that my mistake and then just as a follow up can you clarify of the 190000 sales and marketing G&A per month per center is still kind of the correct way to think about opex in 2020, given that that slower.
While our San Marcos Thanks.
Hey, Jeff its Tim Thanks.
I would say that 190000 number that we provided a few weeks ago is more.
<unk> contemplated more center months in the year, obviously going from 7% to 40%.
We are still going to need to make many of the <unk> investments, we are otherwise going to make so based on my earlier comments that number will be higher I believe I'm doing this from memory that number in 2021 was about $215000. So it won't be that I will still see some year over year leverage, but it won't be as low as 190 just given.
Many of those costs, we will still incur.
Got it thank you.
Thank you. Our next question comes from Gary Taylor of Cowen Gary Your line is now open.
Hey, good morning, I think that that.
That last answer sort of hit.
But I was wanting to get after just from a little bit other angle, but when we think about your archetype with a lower center openings. It looks like platform contribution would kind of be targeting around $80 million.
This year, and then I am presuming the <unk>.
$35 million EBITDA range in your guidance is probably more around the platform contribution than the G&A spend.
By platform countries, yes.
Yes.
Correct, Gary I would say the range is really driven by the two variables that I mentioned around COVID-19 costs and new patient economics.
There is we have a.
High degree of control over our G&A expenses as well as our sales and marketing and so those there's relatively little range for that included in the guide.
Got it and then just a follow up.
<unk> were up a lot sequential and year over year, but also the days claims payable or just your third third party medical expense payable was up a lot year over year and sequentially I know usually that medical claims is more tied to health plan final settlement timing less so than your reserving but.
Can you comment on either one of those days are the medical claims data.
Yeah, Gary I apologize, Jason sirens in the background, we had a car accident at our office, but.
The way our contracts work and I'll be brief and happy to follow up folks if there's questions.
Some of our contracts we are paid.
I'll call it sort of on an ongoing basis, where we're making an estimate of what our surpluses are surplus being the premiums that the plans would pay to Oak Street last in medical costs that are being paid to third party providers.
And so for sensitive our contracts were paid sort of an estimate of what that net amount will be because obviously you don't ultimately know what that net amount is until all the medical claims level for a period.
That's about half of our contracts and the other half are paid more in a manner where were given a payment upfront by the health plan to cover some fixed costs.
This is an arbitrary number called $150 <unk> and then what we're doing is we're settling up at 150 relative to our actual surplus performance in arrears.
Because of the way the accounting works until that.
Until we settle with the health plan for that period of time, we're carrying that full balance of both the receivable related to the revenue and the payables related medical claims and so youre going to see that buildup over time is actually not <unk>. It's just a function of how those contracts settled.
Nothing unusual in there or different in Q4 than there would have been in periods past on the fact that we're continuing to grow the business and Thats, obviously going to grow those amounts and direct contracting has also been a factor in that a bit at year end, because it's a bit of a different flavor, but more akin to that.
That last.
The second structure, I mentioned, where we're not getting paid an estimate from CMS as to our performance.
Okay. Thank you.
Thank you. Our next question comes from Ricky Goldwasser of Morgan Stanley Ricky Your line is now open.
Yes, hi, good morning, so when we think about slower center <unk> 'twenty two 'twenty three 'twenty four.
This is a compounding effect.
Two hundreds of centers ultimately.
How does that impact your long term topline targets beyond 2022.
Is my first question.
Then second question just going back to the question about labor and you being successful in hiring physician, which clearly is great but.
It will cost I E. What are you seeing in terms of wage inflation and how.
Does that impact your.
'twenty two guidance and.
SG&A trajectory.
Yes, Thanks, Ricky on the first part of your question around the growth.
Maybe just nomenclature, but I wouldn't I wouldn't say hunter.
100 definitive impact if we're thinking 70 centers and now were update that to 40 centers over over the three years it would be it would be 30% of your 90 centers.
Innovate decrease, but we will still have by the end of 2024, we'll still have.
250 centers.
That should give us an embedded.
EBITDA of over 1 billion $5. So I mean, it's still building large profitability and then from a revenue growth rate.
We think that the compound average growth rate over the next three years will be 40% plus so again, we still think there'll be a robust revenue.
Growth rate.
To your second question around at what cost.
I think our physician compensation packages.
It remains similar to what they had been in the past.
We haven't we haven't.
Change in a meaningful way, obviously, we always have cost of living increases every year and had a small adjustments but.
As Tim shared in the.
The guidance right. It's still based on the same range, we did for that Jay.
JP Morgan presentation, and one other note I would say about inflation. This is more of a longer term view, but.
Oh Street, it's actually very insulated from inflationary pressures in health care in the longer term because.
Our revenue is.
Derived from the bench market costs right for Medicare and to the extent that there is higher costs for labor and healthcare REIT without doctors or nurses or metal systems et cetera that will directly impact the cost of traditional Medicare, which obviously directly impacts.
The benchmarks right, which directly impacts our revenue and so obviously in any given year.
The benchmark doesn't automatically increase real time.
It may have some headwinds in any given year, but thinking about 234567 year period of time.
Any inflationary pressure that the whole health care market is viewing.
Maybe felt by Oak Street, but it will be offset by an increase in our revenue and actually.
If you think about it very simply.
The cost of operation will go up to the extent that health care labor costs go up and that means the value of the operation. We save will also go up.
Yeah.
Thank you.
Next question comes from Brian <unk> of Jefferies. Brian Your line is now open.
Hey, good morning, Jack Sullivan on for Brian Thanks for taking my questions.
Not to belabor it on SG&A, but maybe I'll ask the question a slightly different way.
We're shaking out at about a $30 million gap.
That is SG&A is $30 million higher at the high end of your guidance range versus the low end.
Assuming that the cohort data you provided is it consistent.
For the low and high end of the range that you had provided previously so I guess.
Just want to understand.
What sort of driving that Delta and I know, Mike you alluded to it a little bit in terms of the variable costs that are in those buckets, but is it is it more sales and marketing to hit a higher patient number.
Is it systems cost that comes in on a per member basis, I guess any any color to help us bridge that gap would be helpful.
Hey, Jack it's Tim maybe best.
Compare notes on I'm, not exactly certain what numbers youre using to get to that as I mentioned to getting at was the Gary.
We have a relatively narrow range or.
Assumption around G&A and sales and marketing between behind loan to the range Im not certain if it is something my guess is it something whatever is driving that is more on platform contribution maybe it would just.
<unk> assumptions around what's going into that number.
Because I wouldn't expect to see that wider range on the.
For G&A and sales and marketing.
Okay got it yes, no worries on that and then maybe just a quick follow up.
An interesting point on conversions from direct contracting to MMA I guess.
Along that line have you seen conversion from either MSP lives under a corn into MMA consistently or anything from direct contracting in 'twenty one over into 'twenty. Two is that something that's actually happening and worth noting.
And if so how should we be thinking about impacts on <unk>. Thanks.
Yes, historically, we've always seen some patients who will beyond traditional Medicare and Medicare advantage.
Honestly there are some patients who are Medicare advantage that moved back to cheer for Medicare. It works both ways. Although in general we see a net kind of increase in the number of agents issue.
Compared to those that move back out of it and that's obviously micro for Oaktree, but that's a macro trend across health care over the last decade, MA penetration continues to increase.
So we certainly see that and.
Direct contracting.
The Medicare shared savings program ACO with obviously our claims based alignment.
Patient.
Frankly, you generally didn't know that existed or that were part of the program and the shared savings program and so that program has zero impact on the patient's choice of health plan coverage right.
So definitely when we get shared savings or not is relatively irrelevant to the how the patient thinks about their health plan coverage and direct comps I think it's a little more known to the patient because they have to sign a form to voluntary line.
Do some of them are still flying blind.
But.
From a patient standpoint, direct contracting and now the ACO reach next year. It doesn't have an impact on what the patient gets from there is no it's not.
It's not insurance coverage not benefits it's.
It's about how we get paid and so Ah patients that don't have the same choice is Medicare advantage.
A better way to get my Medicare covers then venture for Medicare right. So thats really hasnt changed just because obviously you get paid differently for the patient's care and so that's why I think you still see the same movement <unk> seen in past and passengers.
Awesome. Thank you.
Thank you. Our next question comes from Whit Mayo of SVP Leerink.
Your line is now open.
Thanks for keeping the call going for just a little bit can you guys just spend a minute on just the competitive landscape I mean, we're obviously seeing.
More providers, but our strategy around primary care and it just feels like perhaps we're seeing a little bit more capacity in some of your.
Legacy or new markets.
Just obviously a lot of new look alike Oak Street models, which is flattering of probably frustrating at the same time I guess im just trying to get a handle on how this has maybe coloring your views internally about some of the economics in your existing legacy markets and future market just how do you guys.
Think about what feels like more and more people sort of encroaching on your your turf. Thanks.
Yes, I appreciate the question look I think overall I think we think it's a positive that more and more people are entering value based care and investing in diabetes care. It is the right answer for health care.
We need higher quality at a lower cost in this country and so I think one of the things that we're proud of <unk> that there are.
You hear term look alikes out there because that means we're we're helping catalyze change and so we think thats great.
Yeah, there's a lot of obviously investing in the space and from Griffith space, but yes.
There's a huge variety of how people are addressing the problem, how theyre going to market and our relative performance and so.
Value based care with around one before <unk> started in.
It's hard to do what we do.
And I think we've really proven out a level of success and scalability.
So from our perspective, the market is still massive.
As many as much of you here kind of noise around different groups doing things et cetera.
Lot of them aren't center based models were more partnering reducing provider groups, which we don't really feel like.
That's a competition per se because from a patient perspective their experience is still the same right even if their doctors get paid differently.
From our perspective is all about creating a really compelling page.
Patient experience, which is what really drives our growth.
So I think a lot of groups that are attacking the problem I hope they are very successful, but they're really not doing it. The same way. We are we don't think it is really directly competitive.
And even the small number of groups that are more similar to Oak Street and kind of more of a center based model.
We're all just the drop in the bucket compared to the number of providers out there I think we shared JP Morgan Theres something in the magnitude of 450000 primary care doctors in primary care nurse practitioners at this time.
So even the folks who had.
Full centers right with <unk>, we would still be like percent percent in half.
Of the total providers out there so and again, what we know.
We're a long way from 1000 Boltzmann's. This time, so again I think that that just highlights the massive size of the market and so I think it's great more people are doing it and I think over the next decade I hope.
Others can really transform the way care is delivered in along.
Along the way.